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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q/A
AMENDMENT NO. 1
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER 1-13045
------------------------
IRON MOUNTAIN INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
PENNSYLVANIA 23-2588479
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
745 ATLANTIC AVENUE, BOSTON, MA 02111
(Address of Principal Executive Offices, Including Zip Code)
(617) 535-4766
(Registrant's Telephone Number, Including Area Code)
------------------------
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Number of shares of the registrant's Common Stock outstanding as of
August 2, 2002: 84,747,435
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EXPLANATORY NOTE
This Amendment No. 1 on Form 10-Q/A is being filed primarily for the purpose
of amending Items 1 and 2 of the Company's Form 10-Q for the quarter ended
March 31, 2002 as filed with the Securities and Exchange Commission on May 15,
2002. The changes reflect the Company's initial adoption of Statement of
Financial Accounting Standard ("SFAS") No. 142, "Goodwill and Other Intangible
Assets" as of January 1, 2002. The adoption of SFAS No. 142 resulted in a
goodwill impairment charge of approximately $6.4 million (net of minority
interest) and has been recorded as a cumulative effect of change in accounting
principle as required by SFAS No. 142.
IRON MOUNTAIN INCORPORATED
INDEX
PAGE
--------
PART I -- FINANCIAL INFORMATION
Item 1 -- Unaudited Consolidated Financial Statements (Revised, see
Explanatory Note above and Note 4 of Notes to Consolidated
Financial Statements)
Consolidated Balance Sheets at March 31, 2002 and December
31, 2001 (Unaudited)...................................... 3
Consolidated Statements of Operations for the Three Months
Ended
March 31, 2002 and 2001 (Unaudited)....................... 4
Consolidated Statements of Cash Flows for the Three Months
Ended
March 31, 2002 and 2001 (Unaudited)....................... 5
Notes to Consolidated Financial Statements (Unaudited)...... 6-21
Item 2 -- Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 22-26
Item 3 -- Quantitative and Qualitative Disclosures About Market
Risk...................................................... 26
PART II -- OTHER INFORMATION
Item 1 -- Legal Proceedings........................................... 27
Item 6 -- Exhibits and Reports on Form 8-K............................ 27
Signature................................................... 28
2
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
IRON MOUNTAIN INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
MARCH 31, DECEMBER 31,
2002 2001
---------- ------------
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 11,419 $ 21,359
Accounts receivable (less allowances of $17,873 and
$17,086, respectively).................................. 228,399 219,050
Deferred income taxes..................................... 31,668 31,140
Prepaid expenses and other................................ 40,502 37,768
---------- ----------
Total Current Assets.................................... 311,988 309,317
Property, Plant and Equipment:
Property, plant and equipment............................. 1,245,258 1,190,537
Less--accumulated depreciation............................ (261,749) (238,306)
---------- ----------
Net Property, Plant and Equipment....................... 983,509 952,231
Other Assets, net:
Goodwill.................................................. 1,506,773 1,529,547
Customer relationships and acquisition costs.............. 39,756 32,884
Deferred financing costs.................................. 19,666 19,928
Other..................................................... 15,053 15,999
---------- ----------
Total Other Assets, net................................. 1,581,248 1,598,358
---------- ----------
Total Assets............................................ $2,876,745 $2,859,906
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt......................... $ 37,415 $ 35,256
Accounts payable.......................................... 69,476 64,596
Accrued expenses.......................................... 159,695 153,105
Deferred revenue.......................................... 85,474 85,894
Other current liabilities................................. 17,599 20,158
---------- ----------
Total Current Liabilities............................... 369,659 359,009
Long-term Debt, net of current portion...................... 1,465,812 1,460,843
Other Long-term Liabilities................................. 20,309 23,705
Deferred Rent............................................... 18,370 17,884
Deferred Income Taxes....................................... 58,704 47,213
Commitments and Contingencies
Minority Interests.......................................... 51,469 65,293
Shareholders' Equity:
Preferred stock (par value $0.01; authorized 10,000,000
shares; none issued and outstanding).................... -- --
Common stock (par value $0.01; authorized 150,000,000
shares; issued and outstanding 84,441,736 shares and
84,294,315 shares, respectively)........................ 844 843
Additional paid-in capital................................ 1,008,460 1,006,836
Accumulated deficit....................................... (97,573) (103,695)
Accumulated other comprehensive items..................... (19,309) (18,025)
---------- ----------
Total Shareholders' Equity.............................. 892,422 885,959
---------- ----------
Total Liabilities and Shareholders' Equity.............. $2,876,745 $2,859,906
========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
3
IRON MOUNTAIN INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------
2002 2001
-------- --------
Revenues:
Storage................................................... $183,436 $167,865
Service and storage material sales........................ 129,743 116,057
-------- --------
Total Revenues.......................................... 313,179 283,922
Operating Expenses:
Cost of sales (excluding depreciation).................... 148,427 139,820
Selling, general and administrative....................... 82,022 70,317
Depreciation and amortization............................. 25,074 35,718
Merger-related expenses................................... 300 801
-------- --------
Total Operating Expenses................................ 255,823 246,656
-------- --------
Operating Income............................................ 57,356 37,266
Interest Expense, Net....................................... 32,880 33,987
Other Expense, Net.......................................... (262) (9,187)
-------- --------
Income (Loss) Before Provision (Benefit) for Income
Taxes and Minority Interest........................... 24,214 (5,908)
Provision (Benefit) for Income Taxes........................ 9,962 (8,837)
Minority Interest in Earnings (Losses) of Subsidiaries...... 957 (270)
-------- --------
Income before Extraordinary Item and Cumulative Effect
of Change in Accounting Principle..................... 13,295 3,199
Extraordinary Charge from Early Extinguishment of Debt (net
of tax benefit of $445)................................... (777) --
Cumulative Effect of Change in Accounting Principle (net of
minority interest)........................................ (6,396) --
-------- --------
Net Income.............................................. $ 6,122 $ 3,199
======== ========
Net Income per Share--Basic:
Income before Extraordinary Item and Cumulative Effect of
Change in Accounting Principle.......................... $ 0.16 $ 0.04
Extraordinary Charge from Early Extinguishment of Debt.... (0.01) --
Cumulative Effect of Change in Accounting Principle....... (0.08) --
-------- --------
Net Income per Share--Basic............................. $ 0.07 $ 0.04
======== ========
Net Income per Share--Diluted:
Income before Extraordinary Item and Cumulative Effect of
Change in Accounting Principle.......................... $ 0.15 $ 0.04
Extraordinary Charge from Early Extinguishment of Debt.... (0.01) --
Cumulative Effect of Change in Accounting Principle....... (0.07) --
-------- --------
Net Income per Share--Diluted........................... $ 0.07 $ 0.04
======== ========
Weighted Average Common Shares Outstanding--Basic........... 84,372 83,141
======== ========
Weighted Average Common Shares Outstanding--Diluted......... 86,002 84,890
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
4
IRON MOUNTAIN INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------
2002 2001
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 6,122 $ 3,199
Adjustments to reconcile net income to income before
extraordinary item and cumulative effect of change in
accounting principle:
Extraordinary charge from early extinguishment of debt
(net of tax benefit of $445)............................ 777 --
Cumulative effect of change in accounting principle (net
of minority interest)................................... 6,396 --
-------- --------
Income before extraordinary item and cumulative effect of
change in accounting principle............................ 13,295 3,199
Adjustments to reconcile income before extraordinary item
and cumulative effect of change in accounting principle to
cash provided by operating activities:
Minority interests........................................ 957 (270)
Depreciation and amortization............................. 25,074 35,718
Amortization of deferred financing costs and bond
discount................................................ 1,224 495
Provision for doubtful accounts........................... 3,838 2,381
Foreign currency loss and other, net...................... 66 9,693
Changes in Assets and Liabilities (exclusive of
acquisitions):
Accounts receivable....................................... (14,133) (9,558)
Prepaid expenses and other current assets................. 1,268 (7,375)
Deferred income taxes..................................... 10,300 (6,428)
Accounts payable.......................................... 5,170 (4,630)
Accrued expenses and other current liabilities............ 3,792 2,183
Deferred revenue.......................................... (269) (739)
Deferred rent............................................. 488 391
Other assets and long-term liabilities.................... 199 (1,161)
-------- --------
Cash Flows Provided by Operating Activities............. 51,269 23,899
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................... (57,643) (48,198)
Cash paid for acquisitions, net of cash acquired.......... (7,756) (34,773)
Additions to customer acquisition costs................... (1,622) (2,307)
Proceeds from sales of property and equipment............. 227 29
-------- --------
Cash Flows Used in Investing Activities................. (66,794) (85,249)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayment of term loans............................... (98,750) (250)
Repayment of debt......................................... (27,547) (35,484)
Proceeds from borrowings.................................. 134,323 82,355
Debt repayment to minority shareholders................... (2,147) (6,560)
Equity contributions from (distributions to) minority
shareholders............................................ (18) 24,529
Proceeds from exercise of stock options................... 1,388 2,539
Financing and stock issuance costs........................ (1,955) (235)
-------- --------
Cash Flows Provided by Financing Activities............. 5,294 66,894
Effect of exchange rates on cash and cash equivalents....... 291 (1,841)
-------- --------
Increase (Decrease) in Cash and Cash Equivalents............ (9,940) 3,703
Cash and Cash Equivalents, Beginning of Period.............. 21,359 6,200
-------- --------
Cash and Cash Equivalents, End of Period.................... $ 11,419 $ 9,903
======== ========
Supplemental Information:
Cash Paid for Interest...................................... $ 19,684 $ 16,551
======== ========
Cash Paid for Income Taxes.................................. $ 800 $ 1,144
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
5
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(1) GENERAL
The interim consolidated financial statements presented herein have been
prepared by Iron Mountain Incorporated (the "Company") without audit and, in the
opinion of management, reflect all adjustments of a normal recurring nature
necessary for a fair presentation. Interim results are not necessarily
indicative of results for a full year.
The consolidated balance sheet presented as of December 31, 2001 has been
derived from the consolidated financial statements that have been audited by the
Company's predecessor independent public accountants. The unaudited consolidated
financial statements have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in the annual financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to those rules and regulations, but the Company believes that the
disclosures are adequate to make the information presented not misleading. The
consolidated financial statements and notes included herein should be read in
conjunction with the consolidated financial statements and notes included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2001.
Certain reclassifications have been made to the 2001 financial statements to
conform to the 2002 presentation.
(2) COMPREHENSIVE INCOME (LOSS)
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income," requires presentation of the components of comprehensive
income (loss), including the changes in equity from non-owner sources such as
unrealized gains (losses) on hedging transactions, securities and foreign
currency translation adjustments. The Company's total comprehensive income
(loss) is as follows:
THREE MONTHS ENDED
MARCH 31,
-------------------
2002 2001
-------- --------
Comprehensive Income (Loss):
Net Income.............................................. $ 6,122 $ 3,199
Other Comprehensive Loss:
Foreign Currency Translation Adjustments.............. (2,329) (788)
Transition Adjustment Charge.......................... -- (214)
Unrealized Gain (Loss) on Hedging Contracts........... 1,045 (4,040)
------- -------
Comprehensive Income (Loss)............................. $ 4,838 $(1,843)
======= =======
(3) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Effective January 1, 2001, the Company adopted the provisions of SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS
No. 133 requires that every derivative instrument be recorded in the balance
sheet as either an asset or a liability measured at its fair value. The adoption
of SFAS No. 133 resulted in the recognition of a derivative liability and a
corresponding transition adjustment charge to accumulated other comprehensive
items of approximately $214 as of March 31, 2001.
6
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(3) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (CONTINUED)
Periodically, the Company acquires derivative instruments that are intended
to hedge either cash flows or values which are subject to exchange or other
market price risk, and not for trading purposes. The Company has formally
documented its hedging relationships, including identification of the hedging
instruments and the hedge items, as well as its risk management objectives and
strategies for undertaking each hedge transaction.
The Company has entered into three interest rate swap agreements, which are
derivatives as defined by SFAS No. 133 and designated as cash flow hedges. These
swap agreements hedge interest rate risk on certain amounts of its term loan as
well as certain variable operating lease commitments. For all qualifying and
highly effective cash flow hedges, the changes in the fair value of the
derivatives are recorded in other comprehensive income. As a result of these
interest rate swap agreements, the Company has recorded a derivative liability
of and a corresponding charge to accumulated other comprehensive loss of $7,903
($5,026, net of tax) and $9,857 ($5,857, net of tax) at March 31, 2002 and
December 31, 2001, respectively.
For the three months ended March 31, 2002 and 2001, the Company recorded
additional interest expense of $1,797 and $59 resulting from interest rate swap
settlements and $439 and $9 in additional rent expense, respectively. All
interest rate swap agreements were determined to be highly effective whereby no
ineffectiveness was recorded in earnings.
(4) GOODWILL AND OTHER INTANGIBLE ASSETS
The Company is revising its previously filed financial statements as of and
for the quarter ended March 31, 2002 to reflect the initial application of SFAS
No. 142, "Goodwill and Other Intangible Assets". As required by that standard,
the Company performed an initial transition assessment of the recoverability of
all of its recorded goodwill at January 1, 2002 in the amount of $1,529,547,
which was completed during the quarter ended June 30, 2002. The results of that
transitional assessment indicated that impairment existed in the goodwill
recorded on the books of the Company's South American reporting unit. In
accordance with the requirements of SFAS No. 142, the Company is revising its
financial statements as of and for the quarter ended March 31, 2002 to reflect
the charge associated with this impairment as a cumulative effect of a change in
accounting principle.
The effect of these changes is as follows, as of and for the quarter ended
March 31, 2002:
AS PREVIOUSLY
REPORTED AS REVISED
------------- ----------
Balance Sheet:
Goodwill.......................................... $1,521,576 $1,506,773
Total Assets...................................... 2,891,548 2,876,745
Minority Interests................................ 62,062 51,469
Total Shareholders' Equity........................ 896,632 892,422
Statement of Operations:
Cumulative Effect of Change in Accounting
Principle....................................... $ -- $ (6,396)
Net Income........................................ 12,518 6,122
7
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(4) GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)
The following disclosure has also been revised to reflect implementation of
SFAS No. 142 and completion of its transitional requirements.
Effective July 1, 2001 and January 1, 2002, the Company adopted the
provisions of SFAS No. 141, "Business Combinations" and SFAS No. 142,
respectively. SFAS No. 141 requires all business combinations initiated after
June 30, 2001 to be accounted for using the purchase method. Under SFAS
No. 142, goodwill and intangible assets with indefinite lives are no longer
amortized but are reviewed annually for impairment or more frequently if
impairment indicators arise. Separable intangible assets that are not deemed to
have indefinite lives will continue to be amortized over their useful lives. Had
SFAS No. 142 been effective January 1, 2001, goodwill amortization expense would
have been reduced by $14,376 for the first quarter of 2001.
The result of testing the Company's goodwill for impairment in accordance
with SFAS No. 142, as of January 1, 2002, was a non-cash charge of $6,396 (net
of minority interest of $8,487), which is reported in the caption "cumulative
effect of change in accounting principle" in the accompanying Consolidated
Statement of Operations. The charge relates to the Company's South American
reporting unit within the Company's international reporting segment. The South
American reporting unit failed the impairment test primarily due to a reduction
in the expected future performance of the unit resulting from a deterioration of
the local economic environment and the devaluation of the currency in Argentina.
As goodwill amortization expense in the Company's South American reporting unit
is not deductible for tax purposes, this impairment charge is not net of a tax
benefit. Under SFAS No. 142, the impairment adjustment recognized upon adoption
of the new rules is reflected as a cumulative effect of change in accounting
principle in the Company's financial results as of January 1, 2002. Impairment
adjustments recognized after adoption, if any, are generally required to be
recognized as operating expenses.
The Company has a controlling 50.1% interest in Iron Mountain South America,
Ltd ("IMSA") and the remainder is owned by another unaffiliated entity. IMSA has
acquired a controlling interest in entities in which local partners have
retained a minority interest in order to enhance the Company's local market
expertise. These local partners have no ownership interest in IMSA. This has
caused the minority interest portion of the non-cash goodwill impairment charge
($8,487) to exceed the Company's portion of the non-cash goodwill impairment
charge ($6,396).
The changes in the carrying value of goodwill attributable to each
reportable operating segment for the period ended March 31, 2002 are as follows:
BUSINESS OFF-SITE
RECORDS DATA CORPORATE TOTAL
MANAGEMENT PROTECTION INTERNATIONAL & OTHER CONSOLIDATED
---------- ---------- ------------- --------- ------------
Balance as of December 31, 2001....... $985,038 $236,850 $265,760 $41,899 $1,529,547
Goodwill acquired during the period... -- -- -- 4,769 4,769
Adjustments to goodwill............... (4,206) 35 (8,396) (93) (12,660)
Impairment losses..................... -- -- (14,883) -- (14,883)
-------- -------- -------- ------- ----------
Balance as of March 31, 2002.......... $980,832 $236,885 $242,481 $46,575 $1,506,773
======== ======== ======== ======= ==========
8
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(4) GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)
In connection with adopting SFAS No. 142, the Company reassessed the useful
lives and the classification of its identifiable intangible assets and
determined the useful lives of customer relationships and acquisition costs to
be between 5 and 30 years. The components of the Company's amortizable
intangible assets at March 31, 2002 are as follows:
GROSS CARRYING ACCUMULATED
AMOUNT AMORTIZATION
-------------- ------------
Customer Relationships and Acquisition Costs....... $49,030 $ 9,274
Non-Compete Agreements............................. 20,002 13,831
Deferred Financing Costs........................... 24,450 4,784
------- -------
Total.............................................. $93,482 $27,889
======= =======
Amortization expense for intangible assets (excluding deferred financing
costs which are amortized through interest expense) during the first quarter of
2002 was $1,339. Estimated amortization expense for the remainder of 2002 and
the five succeeding fiscal years is as follows:
ESTIMATED AMORTIZATION EXPENSE
------------------------------
2002 (remainder).................................. $3,998
2003.............................................. 3,423
2004.............................................. 2,562
2005.............................................. 1,879
2006.............................................. 1,607
2007.............................................. 1,248
9
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(4) GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)
Actual results of operations for the three-month period ended March 31, 2002
and pro forma results of operations for the three-month period ended March 31,
2001 had the Company applied the non-amortization provisions of SFAS No. 142 as
of January 1, 2001 are as follows:
THREE MONTHS ENDED
MARCH 31,
-------------------
2002 2001
-------- --------
Net Income (Loss) before Provision for Income Taxes and
Minority Interest....................................... $24,214 $(5,908)
Add: Goodwill Amortization................................ -- 14,376
Provision for Income Taxes................................ 9,962 4,624
Minority Interest in Earnings of Subsidiaries............. 957 415
------- -------
Adjusted Income before Extraordinary Item and Cumulative
Effect of Change in Accounting Principle................ 13,295 3,429
Extraordinary Charge from Early Extinguishment of Debt.... (777) --
Cumulative Effect of Change in Accounting Principle....... (6,396) --
------- -------
Net Income................................................ $ 6,122 $ 3,429
======= =======
Net Income per Share--Basic
Net Income before Extraordinary Item and Cumulative Effect
of Change in Accounting Principle, as Reported.......... $ 0.16 $ 0.04
Add: Goodwill Amortization, Net of Change in Provision for
Income Taxes and Minority Interest...................... -- --
------- -------
Adjusted Income before Extraordinary Item and Cumulative
Effect of Change in Accounting Principle................ 0.16 0.04
Extraordinary Charge from Early Extinguishment of Debt.... (0.01) --
Cumulative Effect of Change in Accounting Principle....... (0.08) --
------- -------
Net Income per Share--Basic............................... $ 0.07 $ 0.04
======= =======
Net Income per Share--Diluted
Net Income before Extraordinary Item and Cumulative Effect
of Change in Accounting Principle, as Reported.......... $ 0.15 $ 0.04
Add: Goodwill Amortization, Net of Change in Provision for
Income Taxes and Minority Interest...................... -- --
------- -------
Adjusted Income before Extraordinary Item and Cumulative
Effect of Change in Accounting Principle................ 0.15 0.04
Extraordinary Charge from Early Extinguishment of Debt.... (0.01) --
Cumulative Effect of Change in Accounting Principle....... (0.07) --
------- -------
Net Income per Share--Diluted............................. $ 0.07 $ 0.04
======= =======
10
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(5) ACQUISITIONS
During the three months ended March 31, 2002, the Company purchased
substantially all of the assets, and assumed certain liabilities, of two
businesses.
Each of the 2002 acquisitions and all 16 of the records management
businesses acquired during 2001 were accounted for using the purchase method of
accounting and, accordingly, the results of operations for each acquisition have
been included in the consolidated results of the Company from their respective
acquisition dates. In connection with certain 2001 acquisitions, related real
estate was also purchased. For the 2002 acquisitions, the aggregate purchase
price exceeded the underlying fair value of the net assets acquired by $4,769
which has been assigned to goodwill and, consistent with SFAS 142, has not been
amortized.
In connection with the 2002 and 2001 acquisitions, the Company has
undertaken certain restructurings of the acquired businesses. The restructuring
activities include certain reductions in staffing levels, elimination of
duplicate facilities and other costs associated with exiting certain activities
of the acquired businesses. These restructuring activities were recorded as
costs of the acquisitions and were provided in accordance with Emerging Issues
Task Force Issue No. 95-3, "Recognition of Liabilities in Connection with a
Purchase Business Combination." The Company finalizes its restructuring plans
for each business no later than one year from the date of acquisition.
Unresolved matters primarily include completion of planned abandonments of
facilities and employee severance costs for certain 2002 and 2001 acquisitions.
The following is a summary of reserves related to such restructuring
activities:
MARCH 31, DECEMBER 31,
2002 2001
--------- ------------
Reserves, Beginning Balance........................... $16,225 $28,514
Reserves Established.................................. 780 3,751
Expenditures.......................................... (1,435) (7,805)
Adjustments to Goodwill, including currency effect.... (489) (8,235)
------- -------
Reserves, Ending Balance.............................. $15,081 $16,225
======= =======
At March 31, 2002, the restructuring reserves related to acquisitions
consisted of lease losses on abandoned facilities of $9,705, severance costs for
approximately 29 people of $937 and other exit costs of $4,439. These accruals
are expected to be used prior to March 31, 2003 except for lease losses of
$5,956 and severance contracts of $517, both of which are based on contracts
that extend beyond one year.
11
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(6) LONG-TERM DEBT
Long-term debt consists of the following:
MARCH 31, 2002 DECEMBER 31, 2001
--------------------- ---------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- -------- ---------- --------
Revolving Credit Facility................................. $ 107,751 $107,751 $ -- $ --
Tranche A Term Loan....................................... -- -- 150,000 150,000
Tranche B Term Loan....................................... -- -- 198,750 198,750
Term Loan................................................. 250,000 250,000 -- --
9 1/8% Senior Subordinated Notes due 2007 (the "9 1/8%
notes")................................................. 115,328 125,100 115,106 126,000
8 1/8% Senior Notes due 2008 (the "Subsidiary notes")..... 123,235 135,675 122,758 136,350
8 3/4% Senior Subordinated Notes due 2009 (the "8 3/4%
notes")................................................. 249,697 260,313 249,687 257,500
8 1/4% Senior Subordinated Notes due 2011 (the "8 1/4%
notes")................................................. 149,591 153,750 149,580 151,875
8 5/8% Senior Subordinated Notes due 2013 (the "8 5/8%
notes")................................................. 437,991 456,750 438,059 448,050
Real estate mortgage...................................... 18,937 18,937 19,337 19,337
Seller Notes.............................................. 11,540 11,540 12,383 12,383
Other..................................................... 39,157 39,157 40,439 40,439
---------- ----------
Total Debt................................................ 1,503,227 1,496,099
Less Current Portion...................................... (37,415) (35,256)
---------- ----------
Long-term Debt, Net of Current Portion.................... $1,465,812 $1,460,843
========== ==========
The estimated fair values for the long-term debt are based on the borrowing
rates available to the Company at March 31, 2002 and December 31, 2001 for loans
with similar terms and average maturities. The fair values of the 9 1/8% notes,
8 3/4% notes, 8 1/4% notes, 8 5/8% notes (collectively, the "Parent notes") and
the Subsidiary notes are based on the quoted market prices for those notes on
March 31, 2002 and December 31, 2001.
On March 15, 2002, the Company entered into a new amended and restated
revolving credit agreement (the "Amended and Restated Credit Agreement"). The
Amended and Restated Credit Agreement replaced the Company's prior credit
agreement. The Amended and Restated Credit Agreement has an aggregate principal
amount of $650,000 and includes a $400,000 revolving credit facility and a
$250,000 term loan facility. The revolving credit facility matures on
January 31, 2005 while the term loan is to be paid in full on February 15, 2008;
however, if the 9 1/8% notes are not redeemed or repurchased prior to April 15,
2007 the term loan will mature on April 15, 2007. The interest rate on
borrowings under the Amended and Restated Credit Agreement varies depending on
the Company's choice of base rates and currency options, plus an applicable
margin. All intercompany notes are now pledged to secure the Amended and
Restated Credit Agreement. As of March 31, 2002, the Company had $107,751 of
borrowings under the Company's revolving credit facility, including balances
denominated in Canadian dollars of 78,910 and British pounds sterling of 7,900.
The Company also had various outstanding letters of credit totaling $27,667. The
remaining availability under the revolving credit facility was $264,582 as of
March 31, 2002.
12
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(7) SELECTED FINANCIAL INFORMATION OF PARENT, GUARANTORS AND NON-GUARANTORS
The following financial data summarizes the consolidating Company on the
equity method of accounting as of March 31, 2002 and December 31, 2001 and for
the first quarter of 2002 and 2001. The Guarantor column includes all
subsidiaries that guarantee the Parent notes and the Subsidiary notes. The
Canada Company column includes Iron Mountain Canada Corporation ("Canada
Company") and the Company's other Canadian subsidiaries that guarantee the
Subsidiary notes, but do not guarantee the Parent notes. The Parent and the
Guarantors also guarantee the Subsidiary notes issued by Canada Company. The
subsidiaries that do not guarantee either the Parent notes or the Subsidiary
notes are referred to in the table as the "non-guarantors."
MARCH 31, 2002
------------------------------------------------------------------------------
CANADA NON-
PARENT GUARANTORS COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED
----------- ---------- -------- ---------- ------------ ------------
ASSETS
Current Assets:
Cash and Cash Equivalents............ $ -- $ 5,509 $ -- $ 6,667 $ (757) $ 11,419
Accounts Receivable.................. -- 190,684 14,467 23,248 -- 228,399
Intercompany Receivable.............. 710,385 -- -- 10,743 (721,128) --
Other Current Assets................. -- 62,346 1,492 8,332 -- 72,170
----------- ---------- -------- -------- ----------- ----------
Total Current Assets............... 710,385 258,539 15,959 48,990 (721,885) 311,988
Property, Plant and Equipment, Net..... -- 797,144 74,948 111,417 -- 983,509
Other Assets:
Long-term Intercompany Receivable.... 53,260 -- -- -- (53,260) --
Long-term Notes Receivable from
Affiliates......................... 1,094,773 -- -- -- (1,094,773) --
Investment in Subsidiaries........... 365,054 74,627 -- -- (439,681) --
Goodwill, net........................ -- 1,261,494 115,369 119,633 10,277 1,506,773
Other................................ 30,506 46,944 10,696 1,077 (14,748) 74,475
----------- ---------- -------- -------- ----------- ----------
Total Other Assets................. 1,543,593 1,383,065 126,065 120,710 (1,592,185) 1,581,248
----------- ---------- -------- -------- ----------- ----------
Total Assets....................... $ 2,253,978 $2,438,748 $216,972 $281,117 $(2,314,070) $2,876,745
=========== ========== ======== ======== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Intercompany Payable................. $ -- $ 568,778 $ 93,329 $ 59,021 $ (721,128) $ --
Other Current Liabilities............ 48,224 232,128 16,693 73,371 (757) 369,659
Long-term Debt, net of current
portion............................ 1,313,332 1,662 125,411 25,407 -- 1,465,812
Long-term Intercompany Payable....... -- 53,260 -- -- (53,260) --
Long-term Notes Payable to
Affiliates......................... -- 1,094,773 -- -- (1,094,773) --
Other Long-term Liabilities.......... -- 106,460 908 4,763 (14,748) 97,383
Commitments and Contingencies
Minority Interests................... -- -- -- (9,036) 60,505 51,469
Shareholders' Equity................. 892,422 381,687 (19,369) 127,591 (489,909) 892,422
----------- ---------- -------- -------- ----------- ----------
Total Liabilities and Shareholders'
Equity........................... $ 2,253,978 $2,438,748 $216,972 $281,117 $(2,314,070) $2,876,745
=========== ========== ======== ======== =========== ==========
13
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(7) SELECTED FINANCIAL INFORMATION OF PARENT, GUARANTORS AND NON-GUARANTORS
(CONTINUED)
DECEMBER 31, 2001
-----------------------------------------------------------------------------
CANADA NON-
PARENT GUARANTORS COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ---------- -------- ---------- ------------ ------------
ASSETS
Current Assets:
Cash and Cash Equivalents..... $ -- $ 11,395 $ 1,696 $ 8,268 $ -- $ 21,359
Accounts Receivable........... -- 181,640 14,415 22,995 -- 219,050
Intercompany Receivable....... 685,601 -- -- 24,404 (710,005) --
Other Current Assets.......... -- 64,378 460 4,094 (24) 68,908
---------- ---------- -------- -------- ----------- ----------
Total Current Assets........ 685,601 257,413 16,571 59,761 (710,029) 309,317
Property, Plant and Equipment,
Net........................... -- 778,804 72,839 100,588 -- 952,231
Other Assets:
Long-term Intercompany
Receivable.................. 45,193 -- -- -- (45,193) --
Long-term Notes Receivable
from Affiliates............. 1,086,823 -- -- -- (1,086,823) --
Investment in Subsidiaries.... 379,816 82,434 -- -- (462,250) --
Goodwill, Net................. -- 1,261,598 115,832 141,463 10,654 1,529,547
Other......................... 31,419 40,660 11,754 1,085 (16,107) 68,811
---------- ---------- -------- -------- ----------- ----------
Total Other Assets.......... 1,543,251 1,384,692 127,586 142,548 (1,599,719) 1,598,358
---------- ---------- -------- -------- ----------- ----------
Total Assets................ $2,228,852 $2,420,909 $216,996 $302,897 $(2,309,748) $2,859,906
========== ========== ======== ======== =========== ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Intercompany Payble........... $ -- $ 560,699 $ 92,555 $ 56,751 $ (710,005) $ --
Other Current Liabilities..... 34,526 233,111 16,786 74,610 (24) 359,009
Long-term Debt, Net of Current
Portion..................... 1,308,367 1,289 125,075 26,112 -- 1,460,843
Long-term Intercompany
Payable..................... -- 45,193 -- -- (45,193) --
Long-term Notes Payable to
Affiliates.................. -- 1,086,823 -- -- (1,086,823) --
Other Long-term Liabilities... -- 98,481 887 5,541 (16,107) 88,802
Commitments and Contingencies
Minority Interests............ -- -- -- (1,352) 66,645 65,293
Shareholders' Equity.......... 885,959 395,313 (18,307) 141,235 (518,241) 885,959
---------- ---------- -------- -------- ----------- ----------
Total Liabilities and
Shareholders' Equity...... $2,228,852 $2,420,909 $216,996 $302,897 $(2,309,748) $2,859,906
========== ========== ======== ======== =========== ==========
14
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(7) SELECTED FINANCIAL INFORMATION OF PARENT, GUARANTORS AND NON-GUARANTORS
(CONTINUED)
THREE MONTHS ENDED MARCH 31, 2002
---------------------------------------------------------------------------
CANADA NON-
PARENT GUARANTORS COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED
-------- ---------- -------- ---------- ------------ ------------
Revenues:
Storage............................ $ -- $160,077 $ 8,519 $14,840 $ -- $183,436
Service and Storage Material
Sales............................ -- 109,147 9,993 10,603 -- 129,743
-------- -------- ------- ------- -------- --------
Total Revenues................... -- 269,224 18,512 25,443 -- 313,179
Operating Expenses:
Cost of Sales (excluding
depreciation).................... -- 125,862 9,356 13,209 -- 148,427
Selling, General and
Administrative................... 12 72,090 2,904 7,016 -- 82,022
Depreciation and Amortization...... -- 22,068 1,438 1,568 -- 25,074
Merger-related Expenses............ -- 300 -- -- -- 300
-------- -------- ------- ------- -------- --------
Total Operating Expenses......... 12 220,320 13,698 21,793 -- 255,823
-------- -------- ------- ------- -------- --------
Operating Income (Loss).............. (12) 48,904 4,814 3,650 -- 57,356
Interest Expense, Net................ 2,965 24,908 3,297 1,710 -- 32,880
Equity in the (Earnings) Losses of
Subsidiaries....................... (9,391) 5,630 -- -- 3,761 --
Other Income (Expense), Net.......... 485 (717) (481) 451 -- (262)
-------- -------- ------- ------- -------- --------
Income Before Provision for Income
Taxes and Minority Interest...... 6,899 17,649 1,036 2,391 (3,761) 24,214
Provision for Income Taxes........... -- 8,605 691 666 -- 9,962
Minority Interest in Earnings of
Subsidiaries....................... -- -- -- 957 -- 957
-------- -------- ------- ------- -------- --------
Income before Extraordinary Item... 6,899 9,044 345 768 (3,761) 13,295
Extraordinary Charge from Early
Extinguishment of Debt (net of tax
benefit of $445)................... (777) -- -- -- -- (777)
Cumulative Effect of Change in
Accounting Principle (net of
minority interest of $8,487)....... -- -- -- (6,396) -- (6,396)
-------- -------- ------- ------- -------- --------
Net Income (Loss)................ $ 6,122 $ 9,044 $ 345 $(5,628) $ (3,761) $ 6,122
======== ======== ======= ======= ======== ========
15
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(7) SELECTED FINANCIAL INFORMATION OF PARENT, GUARANTORS AND NON-GUARANTORS
(CONTINUED)
THREE MONTHS ENDED MARCH 31, 2001
---------------------------------------------------------------------------
CANADA NON-
PARENT GUARANTORS COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED
-------- ---------- -------- ---------- ------------ ------------
Revenues:
Storage............................ $ -- $146,575 $ 8,402 $12,888 $ -- $167,865
Service and Storage Material
Sales............................ -- 99,988 8,267 7,802 -- 116,057
-------- -------- ------- ------- -------- --------
Total Revenues................... -- 246,563 16,669 20,690 -- 283,922
Operating Expenses:
Cost of Sales (excluding
depreciation).................... -- 119,490 8,737 11,593 -- 139,820
Selling, General and
Administrative................... 75 62,273 2,751 5,218 -- 70,317
Depreciation and Amortization...... -- 30,488 2,484 2,746 -- 35,718
Merger-related Expenses............ -- 772 -- 29 -- 801
-------- -------- ------- ------- -------- --------
Total Operating Expenses......... 75 213,023 13,972 19,586 -- 246,656
-------- -------- ------- ------- -------- --------
Operating Income (Loss).............. (75) 33,540 2,697 1,104 -- 37,266
Interest Expense, Net................ 13,170 14,881 4,050 1,886 -- 33,987
Equity in the (Earnings) Losses of
Subsidiaries....................... (16,444) 85 -- -- 16,359 --
Other Expense, Net................... -- (2,892) (6,294) (1) -- (9,187)
-------- -------- ------- ------- -------- --------
Income (Loss) Before Provision
(Benefit) for Income Taxes and
Minority Interest................ 3,199 15,682 (7,647) (783) (16,359) (5,908)
Provision (Benefit) for Income
Taxes.............................. -- (9,100) 617 (354) -- (8,837)
Minority Interest in Losses of
Subsidiaries....................... -- -- -- (270) -- (270)
-------- -------- ------- ------- -------- --------
Net Income (Loss)................ $ 3,199 $ 24,782 $(8,264) $ (159) $(16,359) $ 3,199
======== ======== ======= ======= ======== ========
16
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(7) SELECTED FINANCIAL INFORMATION OF PARENT, GUARANTORS AND NON-GUARANTORS
(CONTINUED)
THREE MONTHS ENDED MARCH 31, 2002
---------------------------------------------------------------------------
CANADA NON-
PARENT GUARANTORS COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED
-------- ---------- -------- ---------- ------------ ------------
Cash Flows from Operating Activities:
Cash Flows Provided by (Used in)
Operating Activities............. $ (9,179) $ 57,744 $ 2,281 $ 1,180 $ (757) $ 51,269
Cash Flows from Investing Activities:
Capital expenditures............... -- (37,887) (3,382) (16,374) -- (57,643)
Cash paid for acquisitions, net of
cash acquired.................... -- (7,819) -- 63 -- (7,756)
Intercompany loans to
subsidiaries..................... 451 (16,864) -- -- 16,413 --
Investment in subsidiaries......... (2) (2) -- -- 4 --
Additions to customer acquisition
costs............................ -- (1,486) (26) (110) -- (1,622)
Proceeds from sales of property and
equipment........................ -- 224 3 -- -- 227
-------- -------- ------- -------- -------- --------
Cash Flows Provided by (Used in)
Investing Activities........... 449 (63,834) (3,405) (16,421) 16,417 (66,794)
Cash Flows from Financing Activities:
Net repayment of term loans........ (98,750) -- -- -- -- (98,750)
Repayment of debt.................. (26,188) (119) (127) (1,113) -- (27,547)
Proceeds from borrowings........... 134,235 -- -- 88 -- 134,323
Debt repayment to and equity
distributions to minority
shareholders..................... -- -- -- (2,165) -- (2,165)
Intercompany loans from parent..... -- 321 (772) 16,864 (16,413) --
Equity contribution from parent.... -- 2 -- 2 (4) --
Proceeds from exercise of stock
options.......................... 1,388 -- -- -- -- 1,388
Financing and stock issuance
costs............................ (1,955) -- -- -- -- (1,955)
-------- -------- ------- -------- -------- --------
Cash Flows Provided by (Used in)
Financing Activities........... 8,730 204 (899) 13,676 (16,417) 5,294
Effect of exchange rates on cash and
cash equivalents................... -- -- 327 (36) -- 291
-------- -------- ------- -------- -------- --------
Decrease in cash and cash
equivalents........................ -- (5,886) (1,696) (1,601) (757) (9,940)
Cash and cash equivalents, beginning
of period.......................... -- 11,395 1,696 8,268 -- 21,359
-------- -------- ------- -------- -------- --------
Cash and cash equivalents, end of
period............................. $ -- $ 5,509 $ -- $ 6,667 $ (757) $ 11,419
======== ======== ======= ======== ======== ========
17
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(7) SELECTED FINANCIAL INFORMATION OF PARENT, GUARANTORS AND NON-GUARANTORS
(CONTINUED)
THREE MONTHS ENDED MARCH 31, 2001
---------------------------------------------------------------------------
CANADA NON-
PARENT GUARANTORS COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED
-------- ---------- -------- ---------- ------------ ------------
Cash Flows from Operating Activities:
Cash Flows Provided by (Used in)
Operating Activities............. $(21,070) $ 45,009 $ 1,642 $ (1,682) $ -- $ 23,899
Cash Flows from Investing Activities:
Capital expenditures............... -- (42,528) (1,592) (4,078) -- (48,198)
Cash paid for acquisitions, net of
cash acquired.................... -- (19,813) 206 (15,166) -- (34,773)
Intercompany loans to
subsidiaries..................... (20,204) 2,537 -- -- 17,667 --
Investment in subsidiaries......... (6,523) (6,523) -- -- 13,046 --
Additions to customer acquisition
costs............................ -- (2,051) (75) (181) -- (2,307)
Proceeds from sales of property and
equipment........................ -- 8 5 16 -- 29
-------- -------- ------- -------- -------- --------
Cash Flows Used in Investing
Activities..................... (26,727) (68,370) (1,456) (19,409) 30,713 (85,249)
Cash Flows from Financing Activities:
Net repayment of term loans........ (250) -- -- -- -- (250)
Repayment of debt.................. (633) (34,043) (60) (748) -- (35,484)
Proceeds from borrowings........... 46,116 35,686 -- 553 -- 82,355
Debt repayment to minority
shareholders..................... -- -- -- (6,560) -- (6,560)
Equity contributions from minority
shareholders..................... -- -- -- 24,529 -- 24,529
Intercompany loans from parent..... -- 14,791 4,937 (2,061) (17,667) --
Equity contribution from parent.... -- 6,523 -- 6,523 (13,046) --
Proceeds from exercise of stock
options.......................... 2,539 -- -- -- -- 2,539
Financing and stock issuance
costs............................ (166) (69) -- -- -- (235)
-------- -------- ------- -------- -------- --------
Cash Flows Provided by Financing
Activities..................... 47,606 22,888 4,877 22,236 (30,713) 66,894
Effect of exchange rates on cash and
cash equivalents................... -- -- (4,044) 2,203 -- (1,841)
-------- -------- ------- -------- -------- --------
Increase (Decrease) in cash and cash
equivalents........................ (191) (473) 1,019 3,348 -- 3,703
Cash and cash equivalents, beginning
of period.......................... 191 3,336 302 2,371 -- 6,200
-------- -------- ------- -------- -------- --------
Cash and cash equivalents, end of
period............................. $ -- $ 2,863 $ 1,321 $ 5,719 $ -- $ 9,903
======== ======== ======= ======== ======== ========
18
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(8) EARNINGS PER SHARE
In accordance with SFAS No. 128, "Earnings per Share," basic net income
(loss) per common share is calculated by dividing net income (loss) by the
weighted average number of common shares outstanding. The calculation of diluted
net income (loss) per share is consistent with that of basic net income (loss)
per share but gives effect to all potential common shares (that is, securities
such as options, warrants or convertible securities) that were outstanding
during the period, unless the effect is antidilutive. Potential common shares,
entirely attributable to stock options, included in the calculation of diluted
net income per share totaled 1,630,357 shares for the three months ended
March 31, 2002.
(9) SEGMENT INFORMATION
An analysis of the Company's business segment information and reconciliation
to the consolidated financial statements is as follows:
BUSINESS OFF-SITE
RECORDS DATA CORPORATE TOTAL
MANAGEMENT PROTECTION INTERNATIONAL & OTHER CONSOLIDATED
---------- ---------- ------------- --------- ------------
THREE MONTHS ENDED MARCH 31, 2002
Revenue............................ $ 202,544 $ 52,180 $ 43,488 $ 14,967 $ 313,179
Adjusted EBITDA.................... 54,169 14,128 10,965 3,468 82,730
Total Assets....................... 2,114,032 349,617 517,090 (103,994)(1) 2,876,745
THREE MONTHS ENDED MARCH 31, 2001
Revenue............................ 189,299 44,916 36,879 12,828 283,922
Adjusted EBITDA.................... 50,146 10,811 8,679 4,149 73,785
------------------------
(1) Total corporate & other assets include the intersegment elimination amount
of $1,618,775.
Adjusted EBITDA is defined as EBITDA (earnings before interest, taxes,
depreciation and amortization) adjusted for extraordinary items, other income
(expense), merger-related expenses, stock option compensation expense and
minority interest. The Company uses Adjusted EBITDA as an internal measurement
of financial performance of, and as the basis for allocating resources to, the
Company's operating segments.
The Company has several hybrid business units, each generating revenues and
incurring expenses from a combination of different product lines such as
business records management, off-site data protection and confidential
destruction. To the extent that certain operations are reclassified between
segments, the related revenues and expenses are reported under the new segment.
To the extent practicable, the prior period amounts shown above have been
adjusted to reflect these changes.
19
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(9) SEGMENT INFORMATION (CONTINUED)
A reconciliation from EBITDA to Adjusted EBITDA and income (loss) before
provision (benefit) for income taxes and minority interest is as follows:
THREE MONTHS ENDED
MARCH 31,
-------------------
2002 2001
-------- --------
EBITDA...................................................... $ 81,211 $ 64,067
Other Expense, Net........................................ 262 9,187
Merger-related Expenses................................... 300 801
Minority Interests in Earnings (Losses) of Subsidiaries... 957 (270)
-------- --------
ADJUSTED EBITDA............................................. 82,730 73,785
Depreciation and Amortization............................. (25,074) (35,718)
Merger-related Expenses................................... (300) (801)
Interest Expense, Net..................................... (32,880) (33,987)
Other Expense, Net........................................ (262) (9,187)
-------- --------
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES
AND MINORITY INTEREST..................................... $ 24,214 $ (5,908)
======== ========
Information about the Company's operations in different geographical areas
is as follows:
THREE MONTHS ENDED
MARCH 31,
-------------------
2002 2001
-------- --------
Revenues:
United States............................................... $269,691 $247,043
International............................................... 43,488 36,879
-------- --------
Total Revenues.......................................... $313,179 $283,922
======== ========
MARCH 31, DECEMBER 31,
2002 2001
---------- ------------
Long-lived Assets:
United States............................................... $2,143,776 $2,118,828
International............................................... 420,981 431,761
---------- ----------
Total Long-lived Assets................................... $2,564,757 $2,550,589
========== ==========
(10) COMMITMENTS AND CONTINGENCIES
On March 28, 2002, the Company and Iron Mountain Information
Management, Inc., one of the Company's wholly owned subsidiaries, commenced an
action in the Middlesex County, New Jersey, Superior Court, Chancery Division,
captioned IRON MOUNTAIN INCORPORATED AND IRON MOUNTAIN INFORMATION
MANAGEMENT, INC., V. J. PETER PIERCE, DOUGLAS B. HUNTLEY, J. MICHAEL GOLD, FRED
A. MATHEWSON, JR., MICHAEL DIIANNI, J. ANTHONY HAYDEN, PIONEER CAPITAL, LLC, AND
SEQUEDEX, LLC. In the complaint, the
20
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(10) COMMITMENTS AND CONTINGENCIES (CONTINUED)
Company alleges that defendant J. Peter Pierce, a member of the Company's Board
of Directors and the former President of Iron Mountain Information
Management, Inc. until his termination without cause effective June 30, 2000,
has violated and is continuing to violate his fiduciary obligations, as well as
various noncompetition and other provisions of an employment agreement with the
Company, dated February 1, 2000, by providing direct and/or indirect financial,
management and other support to defendant Sequedex, LLC. Sequedex was
established in October 2000, and competes directly with the Company in the
records and information management services industry. The complaint also alleges
that Mr. Pierce and certain of the other defendants, who were employed by or
affiliated with Pierce Leahy Corp. prior to the merger of Pierce Leahy with the
Company in February 2000, have misappropriated and used the Company's trade
secrets and other confidential information. Finally, the complaint asserts
claims against Sequedex and others for tortious interference with contractual
relations, against all of the defendants for civil conspiracy in respect of the
matters described above, and against defendant Michael DiIanni for breach of his
employment agreement with Iron Mountain Information Management, Inc., dated
September 6, 2000. The litigation seeks injunctions in respect of certain
matters and recovery of damages against the defendants. On April 12, 2002, the
Company also initiated an arbitration proceeding against Mr. Pierce before the
Philadelphia, Pennsylvania office of the American Arbitration Association on
account of an arbitration clause in the employment agreement between the Company
and Mr. Pierce. The Company intends to prosecute the litigation vigorously.
21
IRON MOUNTAIN INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of our financial condition and results
of operations for the three months ended March 31, 2002 and 2001 should be read
in conjunction with the consolidated financial statements and footnotes for the
three months ended March 31, 2002 included herein, and the year ended
December 31, 2001, included in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 20, 2002.
Effective July 1, 2001 and January 1, 2002, we adopted the provisions of
SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other
Intangible Assets", respectively. SFAS No. 141 requires all business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method. Under SFAS No. 142, goodwill and intangible assets with
indefinite lives are no longer amortized but are reviewed annually for
impairment or more frequently if impairment indicators arise. Separable
intangible assets that are not deemed to have indefinite lives will continue to
be amortized over their useful lives. Had SFAS No. 142 been effective
January 1, 2001, goodwill amortization expense would have been reduced by
$14.4 million for the first quarter of 2001.
The result of testing our goodwill for impairment in accordance with SFAS
No. 142, as of January 1, 2002, was a non-cash charge of $6.4 million (net of
minority interest of $8.5 million), which is reported in the caption "cumulative
effect of change in accounting principle" in our Consolidated Statement of
Operations. The charge relates to our South American reporting unit within our
international reporting segment. The South American reporting unit failed the
impairment test primarily due to a reduction in the expected future performance
of the unit resulting from a deterioration of the local economic environment and
the devaluation of the currency in Argentina. As goodwill amortization expense
in our South American reporting unit is not deductible for tax purposes, this
impairment charge is not net of a tax benefit. Under SFAS No. 142, the
impairment adjustment recognized upon adoption of the new rules is reflected as
a cumulative effect of change in accounting principle in our financial results
as of January 1, 2002. Impairment adjustments recognized after adoption, if any,
are generally required to be recognized as operating expenses.
We have a controlling 50.1% interest in Iron Mountain South America, Ltd
("IMSA") and the remainder is owned by another unaffiliated entity. IMSA has
acquired a controlling interest in entities in which local partners have
retained a minority interest in order to enhance our local market expertise.
These local partners have no ownership interest in IMSA. This has caused the
minority interest portion of the non-cash goodwill impairment charge
($8.5 million) to exceed our portion of the non-cash goodwill impairment charge
($6.4 million).
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO THREE MONTHS ENDED MARCH 31, 2001
Our consolidated revenues increased $29.3 million, or 10.3%, to
$313.2 million for the first quarter of 2002 from $283.9 million for the first
quarter of 2001. Internal revenue growth for the first quarter of 2002 was 8.8%,
comprised of 8.4% for storage revenue and 9.3% for service revenue. We calculate
internal revenue growth in local currency for our international operations.
Consolidated storage revenues increased $15.6 million, or 9.3%, to
$183.4 million for the first three months of 2002 from $167.9 million for the
first three months of 2001. The increase was primarily attributable to:
(1) internal revenue growth of 8.4% resulting primarily from net increases in
records and other media stored by existing customers and sales to new customers;
and (2) acquisitions. The total increase in storage revenues was partially
offset by the unfavorable effects of foreign currency
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IRON MOUNTAIN INCORPORATED
translation of $1.2 million as a result of the strengthening of the U.S. dollar
against certain currencies, primarily the Argentine peso, the Canadian dollar
and the British pound sterling.
Consolidated service and storage material sales revenues increased
$13.7 million, or 11.8%, to $129.7 million for the first three months of 2002
from $116.1 million for the first three months of 2001. The increase was
primarily attributable to: (1) internal revenue growth of 9.3% resulting
primarily from net increases in service and storage material sales to existing
customers and sales to new customers; and (2) acquisitions. The total increase
in service and storage material sales revenues was partially offset by the
unfavorable effects of foreign currency translation of $0.6 million as a result
of the strengthening of the U.S. dollar against certain currencies, primarily
the Argentine peso, the Canadian dollar and the British pound sterling.
Consolidated cost of sales (excluding depreciation) increased $8.6 million,
or 6.2%, to $148.4 million (47.4% of consolidated revenues) for the first three
months of 2002 from $139.8 million (49.2% of consolidated revenues) for the
first three months of 2001. The dollar increase was primarily attributable to
the required costs to support our revenue growth. The decrease as a percent of
consolidated revenues is primarily attributable to: (1) improved labor
management (a decrease of 0.8%); (2) improved transportation efficiencies (a
decrease of 0.5%); and (3) improved management of facilities costs including
rent (a decrease of 0.2%) and decreased utility costs in comparison to high
levels in 2001 (a decrease of 0.6%) offset by increased insurance expense due to
increased premiums for property and casualty insurance (an increase of 0.3%).
Improvements in labor and facilities management as well as increased
transportation efficiencies are the result of the increasing scale of our
business and efficiencies gained through our merger integration with Pierce
Leahy Corp.
Consolidated selling, general and administrative expenses increased
$11.7 million, or 16.6%, to $82.0 million (26.2% of consolidated revenues) for
the first three months of 2002 from $70.3 million (24.8% of consolidated
revenues) for the first three months of 2001. The dollar increase was primarily
attributable to the required costs to support our revenue growth, while the
increase as a percent of consolidated revenues was primarily attributable to:
(1) our expenditures for our marketing and information technology initiatives
related to the development of complementary technology-based service offerings
(an increase of 0.3%); (2) increased information technology costs primarily as a
result of higher data communications costs resulting from network deployment and
migration activities (an increase of 0.6%); (3) increased investment in sales
force (an increase of 0.4%); and (4) an increase in the provision for doubtful
accounts (an increase of 0.4%) offset by improved labor absorption (a decrease
of 0.3%).
Consolidated depreciation and amortization expense decreased $10.6 million,
or 29.8%, to $25.1 million (8.0% of consolidated revenues) for the first three
months of 2002 from $35.7 million (12.6% of consolidated revenues) for the first
three months of 2001. Depreciation expense increased $4.1 million, primarily due
to the additional depreciation expense related to the 2001 and 2002
acquisitions, and capital expenditures including storage systems, information
systems and expansion of storage capacity in existing facilities. Amortization
expense decreased $14.7 million, primarily due to eliminating amortization
expense related to the goodwill in accordance with SFAS 142 (See Note 4,
Goodwill and Other Intangible Assets, of Notes to Consolidated Financial
Statements).
Merger-related expenses are certain expenses directly related to our merger
with Pierce Leahy that cannot be capitalized and include system conversion
costs, costs of exiting certain facilities, severance, relocation and
pay-to-stay payments and other transaction-related costs. Merger-related
expenses were $0.3 million (0.1% of consolidated revenues) for the first three
months of 2002 compared to $0.8 million (0.3% of consolidated revenues) for the
same period of 2001.
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IRON MOUNTAIN INCORPORATED
As a result of the foregoing factors, consolidated operating income
increased $20.1 million, or 53.9%, to $57.4 million (18.3% of consolidated
revenues) for the first three months of 2002 from $37.3 million (13.1% of
consolidated revenues) for the first three months of 2001.
Consolidated interest expense, net decreased $1.1 million, or 3.3%, to
$32.9 million for the first three months of 2002 from $34.0 million for the
first three months of 2001. This decrease was primarily attributable to a
decline in our overall weighted average interest rate as a result of a general
decline in interest rates coupled with our refinancing efforts. Savings
attributable to these rate reductions have been partially offset by interest
expense attributable to increased long-term borrowings through our 2001 bond
offerings.
Consolidated other expense, net was $0.3 million for the first three months
of 2002 compared to $9.2 million for the first three months of 2001. The change
was primarily attributable to a non-cash foreign currency loss of $9.2 million
recorded in the first three months of 2001, primarily due to the effect of
further weakening of the Canadian dollar against the U.S. dollar from the
previous year end, as it relates to Canada Corporation's 8 1/8% notes, and the
intercompany balances with our Canadian and European subsidiaries.
As a result of the foregoing factors, consolidated income (loss) before
provision (benefit) for income taxes and minority interests increased
$30.1 million to income of $24.2 million (7.7% of consolidated revenues) for the
first three months of 2002 from a loss of $5.9 million (2.1% of consolidated
revenues) for the first three months of 2001.
The provision for income taxes was $10.0 million for the first three months
of 2002 compared to a benefit of $8.8 million for the first three months of
2001. The effective tax rate for the first quarter of 2002 was 41.1%.
Minority interest in earnings (losses) of subsidiaries increased
$1.2 million to income of $1.0 million (0.3% of consolidated revenues) for the
first three months of 2002 from a loss of $0.3 million (0.1% of consolidated
revenues) for the first three months of 2001. This represents our minority
partners' share of earnings in our majority owned international subsidiaries
that are consolidated in operating results. The increase is primarily a result
of the elimination of goodwill amortization expense in accordance with SFAS
No. 142 and increased profitability in our emerging businesses in Europe and
South America in 2002.
Consolidated income before extraordinary item and cumulative effect of
change in accounting principle increased $10.1 million to $13.3 million (4.2% of
consolidated revenues) for the first three months of 2002 from $3.2 million
(1.1% of consolidated revenues) for the first three months of 2001.
In the first quarter of 2002, we recorded an extraordinary charge of
$0.8 million (net of tax benefit of $0.4 million) related to the early
retirement of debt in conjunction with the refinancing of our credit facility.
The charge consisted primarily of the write-off of unamortized deferred
financing costs associated with the extinguished debt. There was no such charge
in the same period of 2001.
In the first quarter of 2002, we recorded a non-cash charge for the
cumulative effect of change in accounting principle of $6.4 million (net of
minority interest of $8.5 million) as a result of our implementation of SFAS
No. 142. There was no such charge in the same period of 2001.
As noted in Note 9, Segment Information, of Notes to Consolidated Financial
Statements, Adjusted EBITDA, defined as EBITDA (earnings before interest, taxes,
depreciation and amortization) adjusted for extraordinary items, other income
(expense), merger-related expenses, stock option compensation expense and
minority interest, is used as our internal measurement of financial performance
of our operating segments. In addition, substantially all of our financing
agreements
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IRON MOUNTAIN INCORPORATED
contain covenants in which Adjusted EBITDA-based calculations are used as a
measure of financial performance for financial ratio purposes.
As a result of the foregoing factors, consolidated Adjusted EBITDA increased
$8.9 million, or 12.1%, to $82.7 million (26.4% of consolidated revenues) for
the first three months of 2002 from $73.8 million (26.0% of consolidated
revenues) for the first three months of 2001. Excluding the $1.8 million of
development costs, net of recorded revenues, for the first quarter of 2002 and
$0.9 million of development costs, net of recorded revenues, for the first
quarter of 2001 related to our new technology-related service offerings, our
Adjusted EBITDA margins were 27.0% and 26.3% for the first quarter of 2002 and
2001, respectively.
Adjusted EBITDA as a percent of segment revenue for our business records
management segment increased from 26.5% to 26.7%, primarily due to an increase
in gross margin as a result of labor and transportation efficiencies as a result
of the increasing scale of our business, efficiencies gained through the
integration of Pierce Leahy and lower cost of sales associated with facility
management, including utilities. This increase was partially offset by: (1) an
increase in cost of sales from higher insurance premiums for property, casualty
and healthcare insurance; and (2) increased overhead expenses from information
technology spending including higher data communications costs resulting from
network deployment and migration activities.
Adjusted EBITDA as a percent of segment revenue for our off-site data
protection segment increased from 24.1% to 27.1% primarily due to an increase in
gross margin as a result of improved labor, transportation and real estate
management. This increase was partially offset by: (1) higher insurance premiums
for property, casualty and healthcare insurance; and (2) an increase in the
provision for doubtful accounts.
The Adjusted EBITDA margin for our international segment increased from
23.5% to 25.2% primarily due to: (1) facilities management improvements and
efficiency gains from the economies of scale achieved through the integration of
the December 2000 acquisition of FACS Record Centre Inc., a Canadian company;
and (2) improved margins from our European operations. This increase was
partially offset by higher insurance premiums for property, casualty and
healthcare insurance and reduced margins in our South American operations due to
the deteriorating economic conditions and the devaluation of the currency in
Argentina.
LIQUIDITY AND CAPITAL RESOURCES
On March 15, 2002, we entered into the Amended and Restated Credit
Agreement. The Amended and Restated Credit Agreement replaced our prior credit
agreement. The Amended and Restated Credit Agreement has an aggregate principal
amount of $650.0 million and includes a $400.0 million revolving credit facility
and a $250.0 million term loan facility. The revolving credit facility matures
on January 31, 2005 while the term loan is to be paid in full on February 15,
2008; however, if our 9 1/8% notes are not redeemed or repurchased prior to
April 15, 2007 the term loan will mature on April 15, 2007. The interest rate on
borrowings under the Amended and Restated Credit Agreement varies depending on
our choice of base rates and currency options, plus an applicable margin. The
margin applicable to the term loan under the Amended and Restated Credit
Agreement is lower than the margin applicable to term loans under our prior
credit agreement and will result in reduced interest expense on our borrowings
as compared to the previous credit agreement. All intercompany notes are now
pledged to secure the Amended and Restated Credit Agreement. As of March 31,
2002, we had $107.8 million of borrowings under our revolving credit facility,
including balances denominated in Canadian dollars of 78.9 million and British
pounds sterling of 7.9 million. We also had various
25
IRON MOUNTAIN INCORPORATED
outstanding letters of credit totaling $27.7 million. The remaining availability
under the revolving credit facility was $264.5 million as of March 31, 2002.
In addition, as of March 31, 2002, our synthetic leasing program had a total
capacity of $204.3 of which $165.0 million had been utilized for property
acquisitions and $39.3 million is currently available for future property
acquisitions.
We have made significant capital investments, including: (1) capital
expenditures, primarily related to growth, including investments in real estate,
racking systems, information systems and expansion of storage capacity in
existing facilities; (2) acquisitions; and (3) customer relationship and
acquisition costs. Cash paid for these investments during the first three months
of 2002 amounted to $57.6 million, $7.8 million and $1.6 million, respectively.
These investments have been funded primarily through cash flows from operations
and borrowings under our revolving credit facilities. Included in capital
expenditures is $3.8 million related to our technology-based service offerings.
Net cash provided by operations was $51.3 million for the first three months
of 2002 compared to $23.9 million for the same period in 2001. The increase
resulted primarily from an increase in operating income, accounts payable,
accrued expenses, deferred income taxes, and a decrease in prepaid expenses,
which was partially offset by an increase in accounts receivable.
Net cash provided by financing activities was $5.3 million for the first
three months of 2002, consisting primarily of the proceeds from borrowings under
our credit facilities of $134.3 million, which was partially offset by net
repayment of term loans of $98.8 million and repayment of debt under our credit
facilities and other debt of $27.5 million.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In December 2000 and January 2001, we entered into certain derivative
financial contracts, which are variable-for-fixed swaps of interest payments
payable on an aggregate principal amount of $195.5 million of our term loan and
certain variable operating lease commitments.
Our investments in Iron Mountain Europe Limited, Iron Mountain South
America, Ltd. and other international investments may be subject to risks and
uncertainties relating to fluctuations in currency valuation. One of our
Canadian subsidiaries, Iron Mountain Canada Corporation, has U.S. dollar
denominated debt. Gains and losses due to exchange rate fluctuations related to
this debt are recognized in our consolidated statements of operations.
After consideration of the swap contracts mentioned above, as of March 31,
2002, we had $189.4 million of variable rate debt outstanding with a weighted
average variable interest rate of 5.35%, and $1,313.8 million of fixed rate debt
outstanding. If the weighted average variable interest rate on our variable rate
debt had increased by 1%, such increase would have had a negative impact on our
net income for the quarter ended March 31, 2002 of $0.3 million. See Note 6 of
Notes to Consolidated Financial Statements for a discussion of our long-term
indebtedness, including the fair values of such indebtedness as of March 31,
2002.
26
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On March 28, 2002, Iron Mountain and Iron Mountain Information
Management, Inc., one of our wholly owned subsidiaries, commenced an action in
the Middlesex County, New Jersey, Superior Court, Chancery Division, captioned
IRON MOUNTAIN INCORPORATED AND IRON MOUNTAIN INFORMATION MANAGEMENT, INC., V. J.
PETER PIERCE, DOUGLAS B. HUNTLEY, J. MICHAEL GOLD, FRED A. MATHEWSON, JR.,
MICHAEL DIIANNI, J. ANTHONY HAYDEN, PIONEER CAPITAL, LLC, AND SEQUEDEX, LLC. In
the complaint, we allege that defendant J. Peter Pierce, a member of our Board
of Directors and the former President of Iron Mountain Information
Management, Inc. until his termination without cause effective June 30, 2000,
has violated and is continuing to violate his fiduciary obligations, as well as
various noncompetition and other provisions of an employment agreement with Iron
Mountain, dated February 1, 2000, by providing direct and/or indirect financial,
management and other support to defendant Sequedex, LLC. Sequedex was
established in October 2000, and competes directly with us in the records and
information management services industry. The complaint also alleges that
Mr. Pierce and certain of the other defendants, who were employed by or
affiliated with Pierce Leahy Corp. prior to the merger of Pierce Leahy with Iron
Mountain in February 2000, have misappropriated and used our trade secrets and
other confidential information. Finally, the complaint asserts claims against
Sequedex and others for tortious interference with contractual relations,
against all of the defendants for civil conspiracy in respect of the matters
described above, and against defendant Michael DiIanni for breach of his
employment agreement with Iron Mountain Information Management, Inc., dated
September 6, 2000. The litigation seeks injunctions in respect of certain
matters and recovery of damages against the defendants. On April 12, 2002, Iron
Mountain also initiated an arbitration proceeding against Mr. Pierce before the
Philadelphia, Pennsylvania office of the American Arbitration Association on
account of an arbitration clause in the employment agreement between Iron
Mountain and Mr. Pierce. We intend to prosecute the litigation vigorously.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- ------------------------------------------------------------
*10.1 Amendment No. 1 and Consent to Lease Agreement, dated March
15, 2002, between Iron Mountain Statutory Trust--1998 and
IMRM.
*10.2 Amendment No. 5 and Consent to Unconditional Guaranty, dated
as of March 15, 2002 between the Company and Iron Mountain
Statutory Trust--1998, and consented to by the lenders
listed therein and the Bank of Nova Scotia, as Agent Bank
for such lenders.
*10.3 Amendment No. 1 and Consent to Lease Agreement, dated March
15, 2002, between Iron Mountain Statutory Trust--1999 and
Iron Mountain Information Management, Inc.
*10.4 Amendment No. 4 to Unconditional Guaranty, dated as of March
20, 2001 between the Company and Iron Mountain Statutory
Trust--1999, and consented to by the lenders listed therein
and Wachovia Capital Investments, Inc., as Agent Bank for
such lenders.
*10.5 Amendment No. 5 and Unconditional Consent to Guaranty, dated
as of March 15, 2002 between the Company and Iron Mountain
Statutory Trust--1999, and consented to by the lenders
listed therein and Wachovia Capital Investments, Inc., as
Agent Bank for such lenders.
*10.6 Amendment to Master Lease and Security Agreement and
Unconditional Guaranty, dated March 15, 2002, between Iron
Mountain Statutory Trust--2001, Iron Mountain Information
Management, Inc. and the Company.
99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
--------------------------
* Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the period ended March 31, 2002, as filed with the Commission on
May 15, 2002.
(b) REPORTS ON FORM 8-K
None.
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IRON MOUNTAIN INCORPORATED
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Amendment No. 1 on Form 10-Q/A to be signed on
its behalf by the undersigned thereunto duly authorized.
IRON MOUNTAIN INCORPORATED
August 14, 2002 By: /s/ JEAN A. BUA
------------------------------------------- -----------------------------------------
(date) Jean A. Bua
VICE PRESIDENT AND CORPORATE CONTROLLER
(PRINCIPAL ACCOUNTING OFFICER)
28