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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

For the Fiscal Year Ended December 31, 20012003

or

For the transition period from                             to                             

Commission File Number 1-13045

IRON MOUNTAIN INCORPORATED
(Exact name of registrant as specified in its charter)

617-535-4766
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:  None

        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 ý    No o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ý    No o

        As of March 1, 2002,June 30, 2003, the aggregate market value of the Common Stock of the registrant held by non-affiliates of the registrant was $2,155,654,992.48$2,658,636,421 based on the closing price on the New York Stock Exchange on such date.

        Number of shares of the registrant's Common Stock at March 1, 2002:        84,384,0492004:    85,775,503

IRON MOUNTAIN INCORPORATED
20012003 FORM 10-K ANNUAL REPORT

Table of Contents

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        References in this Annual Report on Form 10-K to "the Company", "we", "us" or "our" include Iron Mountain Incorporated and its consolidated subsidiaries, unless the context indicates otherwise.

DOCUMENTS INCORPORATED BY REFERENCE

        Certain information required in Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K is incorporated by reference from our definitive Proxy Statement for the Annual Meeting of Shareholders to be held on or about May 27, 2004.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

        We have made statements in this annual reportAnnual Report on Form 10-K that constitute "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995 and in other federal securities laws. These forward-looking statements concern our operations, economic performance, financial condition, goals, beliefs, strategies, objectives, plans and financial condition.current expectations. The forward-looking statements are subject to various known and unknown risks, uncertainties and other factors. When we use words such as "believes," "expects," "anticipates," "estimates" or similar expressions, we are making forward-looking statements.

        Although we believe that our forward-looking statements are based on reasonable assumptions, our expected results may not be achieved, and actual results may differ materially from our expectations. Important factors that could cause actual results to differ from expectations include, among others:

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the costchanges in customer preferences and availability of appropriate storage facilities;demand for our services;



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changes in the price for our significant indebtedness and services relative to the cost of providing such services;



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the cost and availability of financing for contemplated growth;



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changes in customer preferencesour ability or inability to complete acquisitions on satisfactory terms and demand for our services;to integrate acquired companies efficiently;



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rapidin the various digital businesses in which we are engaged, capital and significant changes in technology;technical requirements will be beyond our means, markets for our services will be less robust than anticipated, or competition will be more intense than anticipated;



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uncertainties related tochanges in the political and economic environments in the countries in which our international expansion;subsidiaries operate, including foreign currency fluctuations;



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difficulties related to the integration of acquisitions;



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uncertainties related to expansion into digital businesses, includingpossibility that business partners upon whom we depend for technical assistance or management and acquisition expertise outside the timing of introduction and market acceptance of our products and services;



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effects of future changes in regulatory standards and requirements;U.S. will not perform as anticipated; and



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other generaltrends in competitive or economic and business conditions.conditions affecting our financial condition or results of operations not presently contemplated.

        You should not rely upon forward-looking statements except as statements of our present intentions and of our present expectations, which may or may not occur. You should read these cautionary statements as being applicable to all forward-looking statements wherever they appear. We assumeundertake no obligation to update or reviserelease publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to updatereflect the reasons why actual results could differ from those projectedoccurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures we have made in this document, as well as our other periodic reports filed with the forward-looking statements.Securities and Exchange Commission (the "Commission" or "SEC").

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PART I

Item 1. Business.

A. Development of Business.

        We are the leader in outsourced records and information management services ("RIMS").services. We are an international, full-service provider of records and information management and related services, enabling customers to outsource these functions. We have a diversified customer base that includes more than halfcomprised of the Fortune 500 and numerous commercial, legal, banking, healthcare, accounting, insurance, entertainment, and government organizations. We provideorganizations, including more than half of the Fortune 500 and more than two thirds of the FTSE 100. Our comprehensive solutions help customers save money and manage risks associated with legal and regulatory compliance, protection of vital assets, and business continuity challenges.

        Our core business records management services include: records management program development and implementation based on best-practices to help customers comply with specific regulatory requirements; implementation of policy-based programs that feature secure, cost-effective storage for all major media, including paper, which is the dominant form of records storage, magnetic media (including computer tapes), microfilmflexible retrieval access and microfiche, master audioretention management; digital archiving services for secure, legally compliant and videotapes,cost-effective long-term archiving of electronic records; secure shredding services that ensure privacy and a secure chain of record custody; and specialized services for vital records, film and optical disks, X-rayssound and blueprints.regulated industries such as healthcare, energy and financial services.

        Our principaloff-site data protection services providedinclude: disaster preparedness planning support; secure, off-site vaulting of data backup media for fast and efficient data recovery in the event of a disaster, human error or virus; electronic vaulting to provide managed, online data backup and recovery services for personal computers and server data; and intellectual property escrow services to protect and manage source code and other proprietary information with a trusted, neutral third party.

        In addition to our storage customers include courier pick-upcore records management and delivery, filing, retrieval and destruction of records, database management, customized reporting and disaster recovery support. We alsooff-site data protection services, we sell storage materials, including cardboard boxes and magnetic media, and provide confidential destruction, consulting, facilities management, fulfillment and other outsourcing services.

        Iron Mountain was founded in 1951 in an underground facility near Hudson, New York. Now in our 5153^strd year, we have experienced tremendous growth and organizational change, particularly since successfully completing the initial public offering of our common stock in February 1996. Since then, we have built ourselves from a regional business with limited product offerings and annual revenues of $104 million forin 1995 into the global leader in outsourced records and information management services, providing a full range of services to customers in 124 markets around the world. For the year ended December 31, 2001,2003, we had total revenues of nearly $1.2$1.5 billion.

        The growth since 1995 has been accomplished primarily through the acquisition of 79 domesticU.S. and 17 international records management companies, including two acquisitions completed in the first quarter of 2002.companies. The goal of our current acquisition program is to supplement internal growth by continuing to establish a footprint in targeted international markets and adding fold-in acquisitions both domesticallyin the U.S. and internationally. Having substantially completed our North American geographic expansion by the end of 2000, we shifted our focus from growth through acquisitions to internal revenue growth. In 2001, as a result of this recent shift, internal revenue growth exceeded growth through acquisitions for the first time since we began our acquisition program in 1996. In addition, our capital expenditures, made primarily to support internal growth, exceededThis was also the aggregatecase in 2002 and 2003, and in the absence of unusual acquisition considerationactivity, we conveyed in 2001. We expect this trend to continue andcontinue. We expect to achieve thisour internal revenue growth through a sophisticated new sales and account management coverage model that is designed to drive incremental revenue by acquiring new customer relationships, increasing the use of aggressive selling efforts to acquire new customersrevenue generated by existing customer relationships and by offeringeffectively selling a wide range of complementary and ancillary services to expand our new and existing customer relationships.

        On February 1 2000,

        In July 2003, we and Iron Mountain Europe ("IME"), our European joint venture, completed the acquisition of the records management operations of Hays plc ("Hays IMS") in two simultaneous transactions for aggregate cash consideration (including transactions costs) of approximately 205 million British pounds sterling ($333 million). IME acquired the European operations and we acquired the U.S. operations. IME's acquisition of Hays IMS has more than doubled our most important acquisition to date by merging with Pierce Leahy Corp.revenue base in a stock-for-stock merger valued at $1.0 billion, including the assumption of debtEurope and related transaction costs.has significantly strengthened our energy and U.K. public sector business lines. Since the merger,acquisition, we have been integrating the cultures, operating systems and procedures, and information technology systems of Iron MountainIME and Pierce Leahy. The integration processHays IMS.

        In February 2004, we completed the acquisition of Mentmore plc's 49.9% equity interest in IME for total consideration of 82.5 million British pounds sterling ($154 million) in cash. Included in this amount is continuingthe repayment of all trade and is expectedworking capital funding owed to proceed through 2002. See Note 6Mentmore by IME. Completion of Notesthe transaction gives us 100% ownership of IME, affording us full access to Consolidated Financial Statements.all future cash flows and greater strategic and financial flexibility.

        As of December 31, 2001,2003, we provided services to over 150,000200,000 customer accounts in 8082 markets in the United StatesU.S. and 4458 markets outside of the United States,U.S., employed over 11,00013,000 people and operated over 650approximately 800 records management facilities in the United States,U.S., Canada, Europe and Latin America.

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B. Description of Business.

The Records and Information Management Services Industry

Overview

        Companies in the RIMSrecords and information management services industry store and manage information in a variety of media formats, which can broadly be divided into paperphysical and electronic records, and provide a wide range of services related to the records stored. We refer to our general paperphysical records storage and management services as "businessbusiness records management." Paper We define physical records are defined to include paper documents, as well as all other non-electronic media such as microfilm and microfiche, master audio and videotapes, film, X-rays and blueprints. Electronic records include various forms of magnetic media such as computer tapes and hard drives and optical disks. We refer toinclude in our electronic records storage and management services as "data security services" and "e-Vaulting" (collectively,(1) off-site data protection)protection and "digital(2) digital archiving services."

PaperPhysical Records

        PaperPhysical records may be broadly divided into two categories: active and inactive. Active records relate to ongoing and recently completed activities or contain information that is frequently referenced. Active records are usually stored and managed on-site by the organization that originated them to ensure ready availability. Inactive paperphysical records are the principal focus of the RIMSrecords and information management services industry. Inactive records consist of those records that are not needed for immediate access but which must be retained for legal, regulatory and compliance reasons or for occasional reference in support of ongoing business operations. Based on industry studies, we believe that inactive records make up approximately 80% of all paper records. A large and growing specialty subset of the paperphysical records market is medical records. These are active and semi-active records that are often stored off-site with and serviced by a RIMSrecords and information management services vendor. Special regulatory requirements often apply to medical records.

Electronic Records

        Electronic records management focuses on the storage of, and related services for, computer media that areis either a back-upbackup copy of recently processed data or archival in nature. Back-upCustomer needs for data backup and recovery and archiving are distinctively different. Backup data exists because of the need of many businesses to maintain back-upbackup copies of their data in order to be able to operaterecover the data in the event of a system failure, casualty loss or other disaster. It is customary (and a

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best-practice) for data processing groups to rotate back-upbackup tapes to off-site locations on a regular basis and to require multiple copies of such information at multiple sites. We refer to these services as "data security services."off-site data protection.

        In addition to the managementphysical rotation and storage of physical copies of back-upbackup data, we are introducing newoffer electronic vaulting services as an alternative way for businesses to transfer data to us, and to access the data they have stored with us. Electronic vaulting is a Web-based service that allow forautomatically backs up computer data over the direct transfer, storageInternet and retrievalstores it off site in one of back-up data between our customers and our secure data centers. In early 2003, we announced an expansion of the electronic media storage facilities via public broadband communications networks. We refervaulting service to these services as "e-Vaulting."include backup and recovery for personal computer data, answering customers' needs to protect critical business data, which is often orphaned and unprotected on employee laptops and desktop personal computers.

        ArchivalThere is a growing need for better ways of archiving data is generally retained for legal, regulatory and compliance reasons orand for occasional reference in support of ongoing business operations. Historically, archivalbusinesses have relied on backup tapes for storing archived data, as well as back-upbut this process can be costly and ineffective when attempting to search and retrieve the data has been stored on physical mediafor litigation or other needs. In addition, many industries, such as computer tapes or optical disks.healthcare and financial services, are facing increased governmental regulation mandating the way in which electronic records are stored and managed. To help customers meet these growing storage challenges, we introduced digital archiving services. We are collaborating with other companieshave experienced early market adoption of these services, especially for e-mail archiving, which enables businesses to develop technologies to provide storageidentify and related services for this data electronically in its original digital format. Customers' data will be captured via telecommunication lines or the Internet. Based on the nature of the data, customers can choose to store their data on-line for real-time access, near-line access for a slightly lower cost or off-line on computer tapes or disks for less time-critical data. We refer to these developing services as "digital archiving services."retrieve electronic records quickly and cost-effectively, while maintaining regulatory compliance.

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Growth of Market

        We believe that the volume of stored paperphysical and electronic records will continue to increase for a number of reasons, including: (i)(1) the rapid growth of inexpensive document producing technologies such as facsimile, desktop publishing software and desktop printing; (ii)(2) the continued proliferation of data processing technologies such as personal computers and networks; (iii)(3) regulatory requirements; (iv)(4) concerns over possible future litigation and the resulting increases in volume and holding periods of documentation; (v)(5) the high cost of reviewing records and deciding whether to retain or destroy them; (vi)(6) the failure of many entities to adopt or follow policies on records destruction; and (vii)(7) audit requirements to keep back-upbackup copies of certain records in off-site locations.

        Despite the growthWe believe that paper-based information will continue to grow, not in spite of, but because of, new "paperless" technologies such as e-mail and the Internet and e-mail, we believe that stored information remains predominantly paper-based.Internet. These technologies have prompted the creation of hard copies of such electronic information and have also led to increased demand for data securityelectronic records services, such as the storage and off-site rotation of back-upbackup copies of magnetic media, and outsourcing support services that address the needs of data center operations and disaster recovery programs.media. In addition, we believe that the proliferation of digital information technologies and distributed data networks has created an emerging need for efficient, cost-effective, high quality solutions for electronicdigital archiving and the management of electronic documents.

Consolidation of a Highly Fragmented Industry

        Over the past several years, there has beenThere was significant consolidation inwithin the highly fragmented RIMS industry.records and information management services industry from 1995 to 2000. Most RIMSrecords and information management services companies serve a single local market, and are often either owner-operated or ancillary to another business, such as a moving and storage company. We believe that thisthe consolidation trend will continue because of the industry's capital requirements for growth, opportunities for large RIMSrecords and information management services providers to achieve economies of scale and customer demands for more sophisticated technology-based solutions.

        We believe that the consolidation trend in the industry is also due to, and will continue as a result of, the preference of certain large organizations to contract with one vendor in multiple cities and countries for multiple services. In particular, customers increasingly demand a single, large, sophisticated company to handle all of their important paperphysical and electronic records needs. Large,

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national and multinational companies are better able to satisfy these demands than smaller competitors. We have made, and intend to continue to make, acquisitions of our competitors, many of whom are small, single city operators.

Description of Our Business

        We generate our revenues by providing storage for a variety of information media formats, core records management services and an expanding menu of complementary products and services to a large and diverse customer base. Providing outsourced storage for records and information is the mainstay of our customer relationships and provides the foundation for our revenue growth. The core services, which are a vital part of a comprehensive records management program, are highly recurring in nature and therefore very predictable. Core services consist primarily of the handling and transportation of stored records and information. In our confidential destructionsecure shredding business, core services consist primarily of the scheduled collection and handling of sensitive records. In 2001,2003, our storage and core service revenues represented approximately 86%87% of our total revenues. In addition to our core services, we offer a wide array of complementary products and services such as performing special project work, selling RIMS-relatedrecords and information management services related products, providing fulfillment services and consulting on records management issues. These services address more specific needs and are designed to enhance our customers' overall records management programs. These services complement our core services; however, they are more episodic and discretionary in nature. Revenue generated by our business records and off-site data protection businesses includes both core and complementary components.

3        Our various operating segments offer the products and services discussed below. In general, our business records management segment offers records management, secure shredding, healthcare information services, vital records services, and service and courier operations in the U.S. and Canada. Our off-site data protection segment offers data backup and disaster recovery services, vital records services, service and courier operations, and intellectual property protection services in the U.S. Our international segment offers elements of all our product and services lines outside the U.S. and Canada. Our corporate and other segment includes our fulfillment, consulting and digital archiving services. Some of our complementary services and products are offered within all of our segments. The amount of revenues derived from our business records management, off-site data protection, international, and corporate and other operating segments and other relevant data for fiscal years 2001, 2002 and 2003 are set forth in Note 12 to Notes to Consolidated Financial Statements.

Business Records Management

        The hard copy business records stored by our customers with us by their nature are not very active. These types of records are stored in cartons packed by the customer. We use bar-coded tracking technologiesa proprietary order processing and inventory management system known as theSafekeeper™ system and theSafekeeperPLUS™ system, which combines the architecture of thePierce Leahy User Solution® ("PLUS®") system and the enhanced functionality ofSafekeeper™, and other procedures to ensure the integrity of the contents of a customer's cartons and to efficiently store and later retrieve a customer's cartons. As a central component of our integration plan for the Pierce Leahy transaction, we developedSafekeeperPLUS™ and continue a city-by-city conversion program that is expected to be completed in 2002. Storage charges are generally billed monthly on a per storage unit basis, usually either per carton or per cubic foot of records, and include the provision of space, racking, computerized inventory and activity tracking and physical security.

Off-Site Data Protection

        Data securityOff-site data protection services consist of the storage and rotation of back-upbackup computer media as part of corporate disaster recovery and business recoverycontinuity plans. Computer tapes, cartridges and disk packs are transported off-site by our courier operations on a scheduled basis to secure, climate-controlled facilities, where they are available to customers 24 hours a day, 365 days a year, to facilitate data recovery in the event of a disaster. We use various proprietary information technology systems such asMediaLink™MediaLink™ andSecureBase™SecureBase™ software to manage this process. We also manage tape library relocationrelocations and support disaster recovery testing and execution. We are now in the early stages of offering e-VaultingIn addition, we have introduced electronic vaulting services as part of our off-site data protection services product line. E-Vaulting allows customers to utilize different levelsOur electronic

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vaulting service automatically backs up personal computer and server data over the Internet and stores it off site in one of electronic transfer, storage and recoveryour secure data centers, always available in the event of critical back-up data ranging from real time transfers using storage silos to electronic transfer and off-line storage for less immediate needs.a disaster.

Healthcare Information Services

        Healthcare information services principally include the handling, storage, filing, processing and retrieval of medical records used by hospitals, private practitioners and other medical institutions. Medical records tend to be more active in nature and are typically stored on specialized open shelving systems that provide easier access to individual files. Healthcare information services also include recurring project work and ancillary services. Recurring project work involves the on-site removal of aged patient files and related computerized file indexing. Ancillary healthcare information services include release of information (medical record copying), temporary staffing, contract coding, facilities management and imaging.

Vital Records Services

        Vital records contain critical or irreplaceable data such as master audio and video recordings, film, software source code and other highly proprietary information. Vital records may require special facilities or services, either because of the data they contain or the media on which they are recorded. Our charges for providing enhanced security and special climate-controlled environments for vital records are higher than for typical storage functions. We provide the same ancillary services for vital records as we provide for our other storage operations.

Service and Courier Operations

        Service and courier operations are an integral part of a comprehensive records management program for all physical media including paper and electronic records. They include adding records to storage, temporary removal of records from storage, refiling of removed records, permanent withdrawals from storage, and destruction of records. Service charges are generally assessed for each procedure on a per unit basis. TheSafekeeper andSafekeeperPLUS systems control® system controls the service processes from order entry through transportation and invoicing for business records management whileMediaLink™ andSecureBase™ systems manage the process for the off-site data securityprotection services business.

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        Courier operations consist primarily of the pickup and delivery of records upon customer request. Charges for courier services are based on urgency of delivery, volume and location and are billed monthly. As of December 31, 2001,2003, we were utilizing a fleet of more than 2,000 owned or leased delivery vehicles.

Confidential DestructionSecure Shredding

        Confidential destructionSecure shredding is a natural extension of our records management services, completing the lifecycle of a record. The service involves the shredding of sensitive documents for corporate customers that, in many cases, also use our services for management of less sensitive archival records. We believe that customers are motivated by increased privacy regulation and the desire to protect their proprietary trade secrets. These services typically include the scheduled pick-up of loose office records which customers accumulate in specially designed secure containers we provide. Complementary to our shredding operations is the sale of the resultant waste paper to third-party recyclers. We currently perform theseThrough a combination of plant based shredding operations and mobile shredding units comprised of custom built trucks, we are able to offer secure shredding services to our customers in 23all of our existing business records management markets throughout the U.S. and Canada. We seek to expand our presence in this business through acquisitions and internal start-ups.start-ups that leverage our existing records management infrastructure.

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Intellectual Property Protection Services

        We provide intellectual property protection services through our wholly ownedwholly-owned subsidiary, DSI Technology Escrow Services, Inc. DSI specializes in third party technology escrow services that protect intellectual property assets such as software source code. In addition, DSI assists in securing intellectual property as collateral for lending, investments and other joint ventures, in managing domain name registrations and transfers, and provideprovides expertise and assistance to brokers and dealers in complying with the Securities and Exchange Commission (the "Commission") electronic records regulations.regulations of the SEC.

Digital Archiving Services

        Our digital archiving services focus on archiving digital information with long-term preservation requirements. These services represent the digital analogy to our paperphysical records management services. Because of increased litigation risks and regulatory mandates, companies are increasingly aware of the need to apply the same records management policies and retention schedules to electronic data as they do physical records. Typical digital records include electronic mail,e-mail, e-statements, images, electronic documents retained for legal or compliance purposes and other electronic recordsdata documenting business transactions. Digital archiving services are offered for image-based records as well.

        The growth rate of mission-critical digital information is accelerating, driven in part by the use of the Internet as a distribution and transaction medium. The rising cost and increasing importance of digital information management, coupled with the increasing availability of telecommunications bandwidth at lower costs, may create meaningful opportunities for us. We are cultivatingcontinue to cultivate marketing and technology partnerships with technology providers whose products can interface with our digital archives.to support this anticipated growth.

        We believe the issues encountered by customers trying to manage their electronic records are similar to the ones they face in their business records management programs and consist primarily of: (i)(1) storage capacity and the preservation of data; (ii)(2) access to and control over the data in a secure environment; and (iii)(3) the need to keepretain electronic records due to regulatory compliance or for litigation support. Products and services are currently being developedOur digital archiving service is representative of our commitment to address theseevolving records management needs and expand the array of services we may offer for electronic records.offer.

Complementary Services and Products

        We offer a variety of additional services within all of our business lines, which customers may request or contract for on an individual basis. These services include conducting records inventories, packing records into cartons or other containers, and creating computerized indices of files and individual documents. We also provide services for the management of active records programs. We can provide these services, which generally include document and file processing and storage, both off-site at our own facilities and by supplying our own personnel to perform management functions on-site at the customer's premises.

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        Other complementary lines of business that we operate include fulfillment services and professional consulting services. Fulfillment services are performed by our wholly ownedwholly-owned subsidiary, COMAC, Inc. COMAC stores customer marketing literature and delivers this material to sales offices, trade shows and prospective customers' sites based on current and prospective customer orders. In addition, COMAC assembles custom marketing packages and orders, and manages and provides detailed reporting on customer marketing literature inventories.

        We provide professional consulting services to customers, enabling them to develop and implement comprehensive records and information management programs. Our consulting business draws on our experience in RIMSrecords and information management services to analyze the practices of such companies and assist them in creating more effective programs of records and information management. Our consultants work with these customers to develop policies for document review, analysis and evaluation and for scheduling of document retention and destruction.

        We also sell: (i)(1) a full line of specially designed corrugated cardboard, metal and plastic storage containers; (ii)(2) magnetic media products including computer tapes, cartridges and drives, tape cleaners

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and supplies and CDs; and (iii)(3) computer room equipment and supplies such as racking systems, furniture, bar code scanners and printers.

        The amount of revenues derived from our business records management, off-site data protection, international and other operating segments and other relevant financial data for fiscal years 1999, 2000 and 2001 are set forth in Note 12 of Notes to Consolidated Financial Statements.

Financial Characteristics of Our Business

        Our financial model is based on the recurring nature of our revenues. The historical predictability of this revenue stream and the resulting EBITDA (earnings from continuing operationsoperating income before interest, taxes, depreciation and amortization) and Adjusted EBITDAamortization (OIBDA)¹ allow us to operate with a high degree of financial leverage. Since 1995, we have invested approximately $2.8 billion in acquisitions and capital expenditures for property, plant and equipment to support our growth. Our primary financial goal has always been, and continues to be, to increase consolidated Adjusted EBITDAOIBDA in relation to capital invested, even as our focus has shifted from growth through acquisitions to internal revenue growth. Adjusted EBITDA is a source of funds for investment in continued growth and for servicing indebtedness. Our business has the following financial characteristics:

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Adjusted EBITDA is defined as EBITDA adjusted for extraordinary items, other income (expense), merger-related expenses, stock option compensation expenseFor a more detailed definition and minority interest. Merger-related expenses are primarily those expenses directly relatedreconciliation of OIBDA and a discussion of why we believe this measure provides relevant and useful information to our merger with Pierce Leahy that cannot be capitalizedcurrent and include severancepotential investors, see Item 7. "Management's Discussion and pay-to-stay payments, costsAnalysis of exiting certain facilities, system conversion costsFinancial Condition and other transaction-related costs. Stock option compensation expense represents non-cash charges resulting from the acceleration and extensionResults of previously granted stock options as part of separation agreements with certain executives.

Adjusted EBITDA and Adjusted EBITDA-based calculations are used by the holders of our publicly issued debt as important criteria for evaluating our business and, as a result, all of our bond indentures contain covenants in which Adjusted EBITDA-based calculations are used as the primary measure of financial performance. In addition, we use Adjusted EBITDA as the basis for evaluating the performance of and as a basis for allocating resources to our internal operating segments. However, you should not consider EBITDA or Adjusted EBITDA to be substitutes for operating or net income (as determined in accordance with generally accepted accounting principles, or GAAP) as indicators of our performance or for cash flow from operations (as determined in accordance with GAAP) as measures of liquidity.

Operations—Non-GAAP Measures."



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Recurring RevenuesRevenues..  We derive a majority of our consolidated revenues from fixed periodic, usually monthly, fees charged to customers based on the volume of records stored. Our quarterly revenues

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from these fixed periodic storage fees have grown for 5260 consecutive quarters. Once a customer places paperphysical records in storage with us and until those records are destroyed or permanently removed, for which we typically receive a service fee, we receive recurring payments for storage fees without incurring additional labor or marketing expenses or significant capital costs. Similarly, contracts for the storage of electronic back-upbackup media consist primarily of fixed monthly payments. In each of the last five years, storage revenues, which are stable and recurring, have accounted for approximately 60%58% of our total revenues. This stable and growing storage revenue base also provides the foundation for increases in service revenues EBITDA and Adjusted EBITDA.

OIBDA.



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Historically Non-Cyclical BusinessStorage Business..  We have not experienced any significant reductions ofin our storage business as a result of past general economic downturns, although we can give no assurance that this would be the case in the future. During this most recent economic slowdown some customers delayed or postponed expenditures for certain complementary records management projects. Additionally, the rate at which customers added new cartons to their inventory with us slowed somewhat, which may be a result of current economic conditions. We believe that companies that have outsourced RIMS programsrecords and information management services are less likely during economic downturns to incur the move-out costs and other expenses associated with switching vendors or moving their RIMSrecords and information management services programs in-house. However, during this most recent economic slowdown, the rate at which some customers may cancel or delay certain non-recurring or discretionary expendituresadded new cartons to their inventory was below historical levels. The net effect of these factors is the continued growth of our storage revenue base, albeit at a lower rate.



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We define "Carton" as a meansmeasurement of reducing their short-term costs.volume equal to a single standard storage carton, approximately 1.2 cubic feet.


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We define "Net Carton Growth From Existing Customers" as the net increase in Cartons attributable to existing customers. This calculation excludes our Latin American and European operations as well as a portion of our medical records operations.



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Inherent Growth from Existing PaperPhysical Records Customers.  Our paperphysical records customers have on average generated additional Cartons² at a faster rate than stored Cartons have been destroyed or permanently removed. From January 1, 19961998 through December 31, 2001, our annual Net Carton Growth From Existing Customers³ has averaged in excess of 5%ranged from approximately 4% to approximately 6%. For the years ended December 31, 2002 and 2003, Net Carton Growth from Existing Customers was between 3% to 4%. We believe the consistent growth of our paperphysical records storage revenues is the result of a number of factors, including: (i)(1) the trend toward increased records retention; (ii)(2) customer satisfaction with our services; and (iii)(3) the costs and

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inconvenience of moving storage operations in-house or to another provider of RIMS.

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2

The term "Carton" is defined as a measurement of volume equal to a single standard storage carton, approximately 1.2 cubic feet. The number of cartons stored does not include storage volumes in our vital records services and data security services, which are described below.

3

The term "Net Carton Growth From Existing Customers" is defined as the increase in net Cartons attributable to existing customers without giving effect to the loss of approximately 1.0 million Cartons in fires attributed to arson in March 1997 in two of our facilities in South Brunswick Township, New Jersey. See "Item 3. Legal Proceedings." This calculation also excludes our Latin American and European operations as well as a portion of our medical records operations.

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information management services.

•

Diversified and Stable Customer BaseBase..  As of December 31, 2001,2003, we had over 150,000200,000 customer accounts in a variety of industries. We currently provide services to more than half of the Fortune 500 and numerous commercial, legal, banking, healthcare, accounting, insurance, entertainment and government organizations.organizations, including more than half of the Fortune 500 and more than two thirds of the FTSE 100. No customer accounted for more than 2% of our consolidated revenues for the year ended December 31, 2001.2003. From January 1, 19961999 through December 31, 2001,2003, average annual permanent removals of Cartons, not including destructions, represented approximately 4%3% of total Cartons stored.



•

Capital Expenditures Related Primarily to GrowthGrowth..  Our RIMSrecords and information management services business requires limited annual capital expenditures made in order to maintain our current revenue stream. From January 1, 19961999 through December 31, 2001, approximately 90%2003, over 85% of our aggregate capital expenditures were growth-related investments, primarily in storage systems, management informationwhich include racking, building and leasehold improvements, computer systems new buildingshardware and improvements to existing facilities.software, and buildings. These growth-related capital expenditures are primarily discretionary and create additional capacity for increases in revenues EBITDA and Adjusted EBITDA.OIBDA. In addition, since shifting our focus from growth through acquisitions to internal revenue growth, our capital expenditures, made primarily to support our internal revenue growth, have exceeded the aggregate acquisition consideration we conveyed in both 2001 and 2002. Although this was not the case in 2003 due to the acquisition of Hays IMS, we expect this to be the case in 2004 and thereafter absent unusual acquisition activity.

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Growth Strategy

        Our objective is to maintain our position as the leader in records and information management services. Domestically,In the U.S. and Canada, we seek to be one of the largest RIMSrecords and information management services providers in each of our geographic markets. Internationally, theour objectives are to continue to capitalize on our expertise in the RIMSrecords and information management services industry and to make additional acquisitions and investments in selected international markets. Our primary avenues of growth are: (i)(1) increased business with existing customers; (ii) additions(2) the addition of new customers; (iii)(3) the introduction of new products and services such as e-Vaulting,secure shredding, electronic vaulting and digital archivingarchiving; and confidential destruction; and (iv)(4) selective acquisitions in new and existing markets.

Growth from Existing Customers

        Our existing customers storing paperphysical records contribute to storage and storage-related services revenueservice revenues growth because on average they generate additional Cartons at a faster rate than old Cartons are destroyed or permanently removed. In order to maximize growth opportunities from existing customers, we seek to maintain high levels of customer retention by providing premium customer service through our local account management staff.

        ThroughOur new sales coverage model is designed to identify and capitalize on incremental revenue opportunities by reallocating our local accountsales resources based on a more sophisticated segmentation of our customer base and selling additional business records management staff, weand off-site data protection services within our existing customer relationships. We also seek to leverage existing business relationships with our customers by selling complementary services and products. Services include records tracking, indexing, customized reporting, vital records management and consulting services.

AdditionsAddition of New Customers

        Our sales force isforces are dedicated to twothree primary objectives: (1) establishing new customer account relationships, (2) generating additional revenue from existing customers and (3) expanding new and

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existing customer relationships by offeringeffectively selling a wide array of complementary services and products. In order to accomplish these objectives, theour sales force drawsforces draw on our nationalU.S. and international marketing organizationorganizations and senior management. As a result of acquisitions and our decision to recruit additional qualified sales professionals, we have increased the size of our sales force to approximately 390600 such professionals as of December 31, 2001.2003 from approximately 450 as of December 31, 2002.

Introduction of New Products and Services

        We continue to expand our menu of products and services. We have significantly increased ourestablished a national presence in the confidential destructionU.S. and Canadian secure shredding industry and are in the process of developingoffer new e-Vaultingelectronic vaulting and digital archiving services. These new products and services allow us to further penetrate our existing customer accounts and attract new customers in previously untapped markets.

Growth through Domestic Acquisitions

        Our acquisition strategy includes expanding geographically, as necessary, and increasing our presence and scale within existing markets through "fold-in" acquisitions. We have a successful record of acquiring and integrating RIMSrecords and information management services companies. See "—Completed Acquisitions."Between January 1, 1996 and December 31, 2000, the height of our acquisition activity, we completed 78 acquisitions in the U.S., Canada, Europe and Latin America for total consideration of approximately $2 billion. During that period, we substantially completed our geographic expansion in the U.S. and Canada and began to expand in Europe and Latin America. Between January 1, 2001 and December 31, 2003, we completed an additional 34 acquisitions for total consideration of approximately $500 million (including the Hays IMS acquisition in July 2003 for approximately $333 million), primarily in the secure shredding industry in the U.S. and the records and information management industry in the U.S., Canada, Europe and Latin America.

Acquisitions in the U.S. and Canada

        We intend to continue our domestic acquisition program.program in the U.S. and Canada focusing on the secure shredding industry, expanding geographically, as necessary and building scale in some of our smaller markets through "fold-in" acquisitions. However, given the small number of large acquisition prospects and our increased revenue base, future acquisitions are expected to be less significant to overall domesticU.S. and Canadian revenue growth than they have been historically.were prior to 2001.

International Growth Strategy

        We also intend to continue to make acquisitions and investments in RIMSrecords and information management services businesses outside the United States.U.S. and Canada. We have acquired and invested in, and seek to acquire and invest in, RIMSrecords and information management services companies in countries, and, more specifically, markets within such countries, where we believe there is sufficient demand from existing multinational customers or the potential for significant growth. Since beginning our international expansion program in January 1999, we have directly and through joint ventures, we have

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expanded our operations into Canada,19 countries in Europe and Latin America. These transactions have taken, and may continue to take, the form of acquisitions of the entire business or controlling or minority investments, with a long-term goal of full ownership. In addition to the criteria we use to evaluate domesticU.S. and Canadian acquisition candidates, we also evaluate the presence in the potential market of our existing clientscustomers as well as the risks uniquely associated with an international investment, including those risks described below.

        The experience, depth and strength of local management are particularly important in our international acquisition strategy. As a result, we have formed joint ventures with, or acquired significant interests in, target businesses throughout Europe and Latin America. We havebegan our international expansion by acquiring a 50.1% controlling interest in each of our Iron Mountain Europe

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Limited, Iron Mountain South America, Ltd. and Sistemas de Archivo Corporativo (a Mexican limited liability company) subsidiaries. Iron Mountain South America has in some cases bought controlling, yet not full, ownership in local businesses in order to enhance our local market expertise. We believe this strategy, rather than an outright acquisition, may, in certain markets, better position us to expand the existing business, although our long-term goal is to acquire full ownership of each such business. The local partner benefits from our expertise in the RIMSrecords and information management services industry, our access to capital and in certain cases, our technology, and we benefit from our local partner's knowledge of the market, relationships with customers and their presence in the community. Our long-term goal is to acquire full ownership of each such business, as evidenced by our recent acquisition of Mentmore's 49.9% equity interest in IME discussed previously under "—A. Development of Business."

        Our international investments are subject to risks and uncertainties relating to the indigenous political, social, regulatory, tax and economic structures of other countries, as well as fluctuations in currency valuation, exchange controls, expropriation and governmental policies limiting returns to foreign investors. At this time, there can be no assurance as to whether any international investment will be successful in achieving our objectives.

        The amount of our revenues derived from international operations and other relevant financial data for fiscal years 1999, 20002001, 2002 and 20012003 are set forth in Note 12 ofto Notes to Consolidated Financial Statements. During 2001,For the year ended December 31, 2003, we derived approximately 13%19% of our total revenues from outside of the United States.

Completed Acquisitions

        As part of our growth strategy, from January 1, 1999 through December 31, 2001, we acquired 45 RIMS businesses. The following table presents certain information with respectU.S. We expect this percentage to the acquisitions completed by us between January 1, 1999 and December 31, 2001 (dollarsincrease in millions):

							Components of Purchase Price Consideration
		Number		Total Aggregate Revenues Represented (1)			Cash Paid and Debt Assumed and Issued			Fair Value of Common Stock and Options Issued			Total Purchase Price
1999 Acquisitions		17		$	98		$	215		$	46		$	261
2000 Acquisitions (2)		12			401			732			447			1,179
2001 Acquisitions		16			37			83			0			83

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(1)

Total annual aggregate revenues were calculated in each case by reference2004 due to the revenues of each of the acquired businesses during the year in which they were acquired. This calculation includes an estimate of total revenues for the portion of the year of acquisition during which any such acquired business was not included in our results of operations.



(2)

The total purchase price for the 2000 Acquisitions includes $1.0 billion for the acquisition of Pierce Leahy on February 1, 2000.

9the European operations of Hays IMS.

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Customers

        Our customer base is diversified in terms of revenues and industry concentration. We track customer accounts based on invoices. Accordingly, depending upon how many invoices have been arranged at the request of a customer, one organization may represent multiple customer accounts. As of December 31, 2001,2003, we had over 150,000200,000 customer accounts in a variety of industries. We currently provide services to more than half of the Fortune 500 and numerous commercial, legal, banking, healthcare, accounting, insurance, entertainment and government organizations.organizations, including more than half of the Fortune 500 and more than two thirds of the FTSE 100. No customer accounted for more than 2% of our consolidated revenues for the year ended December 31, 2001.2003.

Competition; Alternative TechnologiesCompetition

        We compete with our current and potential customers' internal records and information management services capabilities. We can provide no assurance that these organizations will begin or continue to use an outside company such as Iron Mountain for their future records and information management services.

        We compete with multiple RIMSrecords and information management services providers in all geographic areas where we operate. We believe that competition for customers is based on price, reputation for reliability, quality of service and scope and scale of technology and that we generally compete effectively based on these factors.

        We also compete with other RIMSrecords and information management services providers for companies to acquire. Some of our competitors may possess substantial financial and other resources. If any such competitor were to devote additional resources to the RIMSrecords and information management services business and such acquisition candidates or focus their strategy on our markets, our results of operations could be adversely affected.

Alternative Technologies

        We derive most of our revenues from the storage of paper documents and storage-related services. This storage requires significant physical space. Alternative storage technologies exist, many of which

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require significantly less space than paper.paper documents. These technologies include computer media, microform, CD-ROM and optical disk. To date, none of these technologies has replaced paper documents as the principal means for storing information. However, we can provide no assurance that our customers will continue to store most of their records in paper documents format. A significant shift by our customers to storage of data through non-paper documents based technologies, whether now existing or developed in the future, could adversely affect our business. We are collaborating with other companiescontinue to develop e-Vaultinginvest in additional services such as electronic vaulting and digital archiving, service products designed to address our customers' emerging need for efficient, cost-effective, high quality solutions for electronic archivingrecords and the management of electronic documents.information management.

Employees

        As of December 31, 2001,2003, we employed approximately 8,700 full-timeover 9,000 employees in the United States.U.S. Directly and through majority-owned joint ventures, as of December 31, 2001,2003, we employed approximately 2,600 full-timeover 4,000 employees outside of the United States.U.S. A small percentage of our employees are represented by unions. These unionized employees are located in California and one citytwo cities in Canada. As of December 31, 2001,2003, the aggregate number of unionized employees was approximately 365.less than 450.

        All domestic non-union employees are generally eligible to participate in our benefit programs, which include medical, dental, life, short and long-term disability, retirement/401(k) and accidental death and dismemberment plans. Unionized employees receive these types of benefits through their unions. In addition to base compensation and other usual benefits, all full-time domestic employees participate in some form of incentive-based compensation program that provides payments based on revenues, profits, collections or attainment of specified objectives for the unit in which they work. International employees participate

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in separate benefit and incentive-based compensation programs. Management believes that we have good relationships with our employees and unions.

Insurance

        For strategic risk transfer purposes, we maintain a comprehensive insurance program with insurers that we believe to be reputable and that have adequate market security in amounts that we believe to be appropriate. Property insurance is purchased on an all-risk basis, including flood and earthquake, subject to certain policy conditions, sublimits and deductibles, and inclusive of the replacement cost of real and personal property, including leasehold improvements, business income loss and extra expense. Separate excess policies for California earthquakeinsurer defined Critical Earthquake Zone exposures are maintained at what we believe to be appropriate limits and deductibles for that exposure. Included among other types of insurance carried by usthat we carry are: workers compensation, general liability, umbrella, automobile, professional and directors and officers policies.liability policies, subject to certain policy conditions, sublimits and deductibles. In 2002, we established a wholly-owned Vermont domiciled captive insurance company as a subsidiary; through the subsidiary we retain and reinsure a portion of our property loss exposure.

        Our standard form of storage contract sets forth an agreed maximum valuation for each carton or other storage unit held by us, which serves as a limitation of liability for loss or damage, as permitted under the Uniform Commercial Code. In contracts containing such limits, such values are nominal, and we believe that in typical circumstances our liability would be so limited in the event of loss or damage to stored items for which we may be held liable. However, some of our agreements with large volume accounts and some of the contracts assumed in our acquisitions contain no such limits or contain higher limits or supplemental insurance arrangements. See "Item 3. Legal Proceedings" for a description of claims by particular customers seeking to rescind their contracts, including limitations on liability, as a result of the fires experienced at our South Brunswick Township, New Jersey facilities in 1997.

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Environmental Matters

        Some of our currently and formerly owned or operated properties were previously used by entities other than us for industrial or other purposes that involved the use or storage of hazardous substances or petroleum products or may have involved the generation of hazardous wastes. In some instances these properties included the operation of underground storage tanks or the presence of asbestos-containing materials. Although weWe have from time to time conducted limited environmental investigations and remedialundertaken remediation activities at some of our former and current facilities,properties. Although we regularly conduct limited environmental reviews of real property that we intend to purchase, we have not undertaken an in-depth environmental review of all of our owned and operated properties. Under various federal, state and local environmental laws, we may be potentially liable for environmental compliance and remediation costs to address contamination, if any, located at theseowned and operated properties as well as damages arising from such contamination. Environmental conditions for which we might be liable may also exist at properties that we may acquire in the future. In addition, future regulatory action and environmental laws may impose costs for environmental compliance that do not exist today.

        We currently transfer a portion of our risk of financial loss due to currently undetected environmental matters by purchasing a pollutionan environmental impairment liability insurance policy, which covers all owned and leased locations. Coverage is provided for both liability and remediation exposures.costs.

Internet Website

        Our Internet address iswww.ironmountain.com. Under the "Investor Relations" category on our Internet website, we make available through a hyperlink to a third party SEC website, free of charge, our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") as soon as reasonably practicable after such forms are electronically filed or furnished to the SEC. We are not including the information contained on or available through our website as a part of, or incorporating such information by reference into, this Annual Report. Copies of our corporate governance guidelines, code of ethics and the charters of our audit, compensation, and nominating and governance committees may be obtained free of charge by writing to our Secretary, Iron Mountain Incorporated, 745 Atlantic Avenue, Boston, Massachusetts, 02111 and will be available on our website www.ironmountain.com under the heading "Corporate Governance" prior to our Annual Meeting of Shareholders to be held on or about May 27, 2004.


Item 2. Properties.


        As of December 31, 2001,2003, we conducted operations through 519582 leased facilities and 134207 facilities that we own or are owned by variable interest entities that we consolidate. Our facilities containingare divided among our reportable segments as follows: Business Records Management (524), Off-Site Data Protection (60), International (187) and Corporate and Other (18). These facilities contain a total of 41.549.3 million square feet of space. Rent expense was $134.4 million for the year ended December 31, 2003. The leased facilities typically have initial lease terms of ten years with options to renew for an additional five to ten years. In addition, some of the leases contain either a purchase option or a right of first refusal upon the sale of the property. Our facilities are located throughout North America, Europe and Latin America, with the largest number of facilities in California, Florida, Illinois, New Jersey, Texas, Canada and the United Kingdom.U.K. We believe that the space available in our facilities is adequate to meet our current needs.needs, although future growth may require that we acquire additional real property either by leasing or purchasing. See Note 13 of

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to Notes to Consolidated Financial Statements for information regarding our minimum annual rental commitments.

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Item 3. Legal Proceedings.


Sequedex, H-W Associates, Pioneer and Pierce Proceedings

        On March 28, 2002, Iron Mountain and Iron Mountain Information Management, Inc. ("IMIM"), 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, Sr., 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 alleged that defendant J. Peter Pierce, Sr., a former member of our Board of Directors and the former President of IMIM until his termination without cause effective June 30, 2000, violated 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. Sequedex was established in October 2000, and competed directly with us in the records information management services industry. The complaint also alleged 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, misappropriated and used our trade secrets and other confidential information. Finally, the complaint asserted 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 IMIM, 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 a related arbitration proceeding against Mr. Pierce before the Philadelphia, Pennsylvania, Office of the American Arbitration Association (the "AAA") pursuant to an arbitration clause in the employment agreement between Iron Mountain and Mr. Pierce. In the arbitration, Mr. Pierce counterclaimed for indemnification of his expenses, including attorneys' fees. We disputed Mr. Pierce's claim. On July 19, 2002, the litigation was stayed pending the outcome of the arbitration proceeding. On February 25, 2003, in response to Iron Mountain's request, the AAA removed the arbitrator. The arbitration proceeding was transferred by agreement of the parties to ADR Options, Inc. On February 4, 2004, the arbitrator rendered a decision. The arbitrator did not find the evidence provided by us in our action against Mr. Pierce sufficient to rule in our favor on the particular claims at issue. In addition, the arbitrator ruled that, pursuant to an indemnification provision in Mr. Pierce's employment agreement, we must pay Mr. Pierce's attorneys fees and costs that are attributable to this single arbitration. The arbitrator has established a procedure to ascertain the amount of these fees and expenses, which, in any case are not expected to be material to our financial position or results of operations. We have recently filed a motion to vacate the arbitrator's decision and award in Middlesex County, New Jersey, where the pending action against Mr. Pierce and others is currently stayed.

        On December 16, 2002, Hartford Windsor Associates, L.P. ("H-W Associates"), Hartford General, LLC, J. Anthony Hayden, Mr. Pierce, Frank Seidman and John H. Greenwald, Jr. commenced an action in the Court of Common Pleas, Montgomery County, Pennsylvania, against Iron Mountain Incorporated. In the complaint, the plaintiffs allege that H-W Associates purchased a warehouse property in Connecticut to serve as a records storage facility, and entered into a lease for the facility with Sequedex, then a competitor of ours, and that the remaining plaintiffs were limited or general partners of H-W Associates. The plaintiffs also allege that we tortiously interfered with Sequedex's contractual relations with an actual or prospective customer of Sequedex and, as a result, caused Sequedex to default on its lease to H-W Associates. The complaint seeks damages in excess of $100,000. We have denied the material allegations in the complaint filed against us by H-W Associates and the other plaintiffs and have since filed counterclaims against the plaintiffs alleging tortious

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interference with our business relationship with one of our longstanding customers. Discovery is proceeding.

        Also on December 16, 2002, Pioneer Capital L.P. ("Pioneer"), Pioneer Capital Genpar, Inc. ("PCG"), the general partner of Pioneer, and Mr. Pierce, the President of PCG, commenced an action in the Court of Common Pleas, Montgomery County, Pennsylvania, against Iron Mountain Incorporated, C. Richard Reese, John F. Kenny, Jr., Garry Watzke, Schooner Capital LLC ("Schooner") and Vincent J. Ryan. The named individuals are Directors and/or officers of Iron Mountain and Schooner is a shareholder of Iron Mountain. In the complaint, the plaintiffs allege that the defendants had numerous conversations and arrangements with Mr. Carr, one of Mr. Pierce's and Pioneer's business partners in a company named Logisteq LLC. The plaintiffs further allege that, as a result of such conversations and arrangements, defendants conspired to, and did intentionally, interfere with Pioneer's relationship with its partner and Logisteq. The plaintiffs also allege that defendants damaged Mr. Pierce's reputation in the community by telling Iron Mountain employees and other third parties that Mr. Pierce breached his employment agreement with Iron Mountain, misappropriated and used Iron Mountain's confidential information, breached his fiduciary duties to Iron Mountain's shareholders and assisted Sequedex, then a competitor of Iron Mountain, in unfairly competing with Iron Mountain. Finally, the complaint alleges that the business partner in Logisteq taped conversations with Mr. Pierce and others which allegedly violated privacy laws, that the defendants knew, or should have known, that the tapes were being made without the consent of the individuals and, as a result, Mr. Pierce was harmed. The complaint seeks damages in excess of $5,000,000. Iron Mountain and the other defendants have challenged the legal sufficiency of the plaintiffs' pleadings in each of these cases.

        On September 10, 2003, IMIM filed a complaint in the Court of Common Pleas, Montgomery County, Pennsylvania in a matter related to the litigation between the Company and Sequedex, Mr. Pierce and others disclosed above. The new matter names Sequedex, J. Michael Gold and Peter Hamilton as defendants, and alleges that in 2000 defendants Gold and Hamilton, both former IMIM employees, used confidential and proprietary business information that they had obtained while employed by IMIM to form their own records management company, Sequedex. The complaint also alleges unlawful interference with IMIM's contractual relationship with a certain customer and other matters. The defendants filed preliminary objections to our complaint and Iron Mountain has answered those preliminary objections.

        Prior to the litigation directly pertaining to Mr. Pierce having been filed, in approximately October 2000, three former management employees of IMIM became employed by or otherwise associated with Sequedex. IMIM commenced actions against these three former employees to enforce its rights under their confidentiality and non-competition agreements. IMIM has also asserted claims against Sequedex for tortious interference with these agreements, and against both Sequedex and the former employees for misappropriation and use of IMIM's trade secrets and confidential information.

        The defendants in all three cases have denied the material allegations in IMIM's complaints and asserted various affirmative defenses. In addition, Sequedex and the individual defendants filed counterclaims against IMIM and third party complaints against Iron Mountain. The counterclaims and third party complaints assert claims for tortious interference with certain contracts and prospective business relations between Sequedex and its current and potential customers as well as a claim for trade disparagement and defamation. The defendant in one of these actions sought a declaratory judgment regarding the enforceability of the confidentiality and non-competition agreements at issue in that case and filed a motion for summary judgment seeking to have the non-competition agreement declared void, or to limit its scope. IMIM and Iron Mountain filed motions in all three cases to dismiss the various counterclaims and third-party complaints. All of these motions, i.e., the defendants' motion for summary judgment and IMIM's and Iron Mountain's motions to dismiss, were denied by the court following a hearing on May 7, 2002. As previously disclosed in our quarterly report on Form 10-Q for the quarter ended September 30, 2003, Sequedex furnished a preliminary statement of damages with an

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estimate of compensatory damages of approximately $172 million and an indication that Sequedex intended to seek punitive damages of approximately $1.5 billion. Sequedex is no longer seeking damages in this amount and in connection with its proposed amended counterclaim, Sequedex has recently furnished a litigation expert's report of damages claiming approximately $59 million plus approximately $6.6 million of pre-judgment interest. Sequedex has indicated that it also intends to seek punitive damages in an undisclosed amount. Extensive discovery has been conducted in the three cases and is ongoing; on the basis of that discovery, it is our belief that Sequedex has not produced any material evidence that we or IMIM acted wrongfully in any respect. Further, limited discovery has been conducted in respect of Sequedex's damages claim; on the basis of that discovery, we do not believe that Sequedex has any foundation, and we believe that it cannot provide any foundation, for its damages calculations. We believe that the damages calculations submitted by Sequedex are not supported by credible evidence and are subject to serious legal, methodological and factual deficiencies. A trial of the three actions in which the Sequedex counterclaims and third party complaints have been asserted is scheduled to commence in April of 2004. IMIM, Sequedex and one of the individual defendants recently filed dispositive motions, including motions for summary judgment as to certain of the claims. All of these motions were denied by the court following a hearing on February 24, 2004.

        Discovery is proceeding in each of these cases, other than the arbitration. We intend to prosecute these actions vigorously, as well as to defend ourselves vigorously against the counterclaims and the third party complaints.

South Brunswick Fires Litigation

        In March 1997, we experienced three fires, all of which authorities have determined were caused by arson. The fires resulted in damage to one and destruction of our other RIMSanother records and information management services facility in South Brunswick Township, New Jersey.

        Certain of our customers or their insurance carriers have asserted claims as a consequence of the destruction of, or damage to, their records as a result of the fires, including claims with specific requests for compensation and allegations of negligence or other culpability on the part of Iron Mountain. We and our insurers have denied any liability on the part of Iron Mountain as to all of these claims.

        We are presently aware of five pending lawsuits that have been filed against Iron Mountain by certain of our customers and/or their insurers, and of two lawsuitsone pending lawsuit filed by the insurers of abuttersan abutter of one of the South Brunswick facility, and of one lawsuit filed by a fire official who claims that he was injured in the course of fighting the first fire. Sevenfacilities. Five of these eightsix lawsuits have been consolidated for pre-trial purposes in the Middlesex County, New Jersey, Superior Court. The eighthsixth lawsuit, brought by a single customer, is pending in the Supreme Court for New York County, New York. A ninthseventh lawsuit, also brought by a single customer, was tried before a federal judge in New Jersey in February 2000. After trial, judgment was2000, with a defendant's verdict entered in favor of Iron Mountain; no appeal wasMountain. An eighth lawsuit filed by an injured firefighter is currently being settled by our insurer for a nominal amount. Several other claims that were originally filed in this matter.relation to these lawsuits have been voluntarily dismissed without prejudice by the customers, abutting business owners, and/or their insurance carriers.

        We have denied liability and asserted affirmative defenses in all of the remaining cases arising out of the fires and, in certain of the cases, have asserted counterclaims for indemnification against the plaintiffs. Discovery is ongoing. We deny any liability as a result of the destruction of, or damage to, customer records or property of abutters as a result of the fires, which were beyond our control. We also deny any liability for the injuries allegedly sustained by the fire official. We intend to vigorously defend ourselves against these and any other lawsuits that may arise.

        We were paid byOur professional liability insurer, together with our general liability and property insurance carrier for costs incurred as a result of business interruption and property damage due to the fires, and/or the related defense cost of third party claims. However, our errors and omissions carrier made an initial determination denying coverage as to these third party claims. In November 1998, we filed an action in the United States District Court for the District of Massachusetts seeking a declaration of coverage and other relief. The parties, together with the general liability and property carrier,carriers, have entered into a settlementbinding agreement with us regarding reimbursement of defense costs and have agreed to ongoing discussions regarding any remaining coverage issues.

        The outcomeissues, further defense and/or settlement of these proceedings cannot be predicted with certainty. Based on our present assessment of the situation, after consultation with legal counsel, management does not believe that the outcome of these proceedings will have a material adverse effect on our financial condition or results of operations, although there can be no assurance in this regard.claims.

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General

        In addition to the matters discussed above, we are involved in litigation from time to time in the ordinary course of business with a portion of the defense and/or settlement costs being covered by various commercial liability insurance policies purchased by us. In the opinion of management, no other material legal proceedings are pending to which we, or any of our properties, are subject.

        The outcome of the South Brunswick fires, Sequedex, H-W Associates, Pioneer and Pierce proceedings cannot be predicted with certainty. Based on our present assessment of the situation, after consultation with legal counsel, management does not believe that the outcome of these proceedings will have a material adverse effect on our financial condition or results of operations, although there can be no assurance in this regard.


Item 4. Submission of Matters to a Vote of Security Holders.


        There were no matters submitted to a vote of security holders of Iron Mountain during the fourth quarter of the fiscal year ended December 31, 2001.2003.

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PART II



Item 5.    Market for the Registrant's Common Stock and Related Shareholder Matters.


        Our common stock is traded on the New York Stock Exchange ("NYSE") under the symbol "IRM." On December 5, 2001, our board authorized and approved a three-for-two stock split effected in the form of a dividend on our common stock. We issued the additional shares of common stock resulting from this stock dividend on December 31, 2001 to all shareholders of record as of the close of business on December 17, 2001.

The following table sets forth the high and low sale prices on the NYSE, for the years 20002002 and 2001, giving effect to such stock split:2003:

			Sale Prices
			High			Low
2000
	First Quarter(1)		$	23.25		$	18.50
	Second Quarter			24.54			19.75
	Third Quarter			24.67			20.67
	Fourth Quarter			25.00			19.67
2001
	First Quarter		$	28.43		$	21.08
	Second Quarter			29.97			22.77
	Third Quarter			30.00			26.50
	Fourth Quarter			30.47			25.33

			Sale Prices
			High			Low
2002
	First Quarter		$	32.83		$	29.19
	Second Quarter			33.17			29.10
	Third Quarter			31.30			22.72
	Fourth Quarter			34.20			20.14
2003
	First Quarter		$	39.49		$	30.23
	Second Quarter			40.64			36.63
	Third Quarter			39.94			33.56
	Fourth Quarter			40.15			34.78

---

(1)

The high and low sale prices on the NYSE for the first quarter of 2000 include only the months of February and March as our merger with Pierce Leahy occurred on February 1, 2000.

        The closing price of our common stock on the NYSE on March 1, 20022004 was $31.02.$45.23. As of March 1, 2002,2004, there were 603576 holders of record of our common stock. We believe that there are more than 9,40015,000 beneficial owners of our common stock.

        Our board currently intendsWe have not paid dividends on our common stock during the last two years. Any determinations by our Board to retain future earnings, if any, for the development of our businesses and does not anticipate payingpay cash dividends on our common stock in the foreseeable future. Future determinations by our board to pay cash dividends on our common stock wouldfuture will be based primarily upon our financial condition, results of operations and business requirements. Cash dividends, if any, would be payable at the sole discretion of our board out of the funds legally available for that purpose. Some of our credit agreementsOur Fifth Amended and indentures containRestated Credit Agreement dated March 15, 2002 (the "Amended and Restated Credit Agreement") contains provisions that limit the amount of cash dividends we may pay and stock repurchases that we may make.

        We have not paid dividends on our common stock, other than stock dividends, during the last two years.


Item 6.    Selected Consolidated Financial and Operating Information.Data.


        The following selected consolidated statements of operations, and balance sheet and other data have been derived from our audited consolidated financial statements. The selected consolidated financial and operating information set forth below should be read in conjunction with Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our Consolidated Financial Statements and the Notes thereto included elsewhere in this filing.

        On December 5, 2001, our board authorized and approved a three-for-two stock split effected in the form of a dividend on our common stock. We issued the additional shares of common stock resulting from this stock dividend on December 31, 2001 to all shareholders of record as of the close of business on December 17 2001. All accompanying share and per share amounts have been restated to reflect the stock split.

13

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				Year Ended December 31,
				1997			1998			1999			2000			2001
				(In thousands, except per share data)
Consolidated Statements of Operations Data:
Revenues:
	Storage			$	125,968		$	230,702		$	317,387		$	585,664		$	694,474
	Service and Storage Material Sales				82,797			153,259			202,162			400,707			476,642
		Total Revenues			208,765			383,961			519,549			986,371			1,171,116
Operating Expenses:
	Cost of Sales (excluding depreciation)				106,879			192,113			260,930			482,771			561,936
	Selling, General and Administrative				51,668			95,867			128,948			246,559			306,934
	Depreciation and Amortization				27,107			48,301			65,422			126,810			153,591
	Stock Option Compensation Expense				—			—			—			15,110			—
	Merger-related Expenses				—			—			—			9,133			3,673
		Total Operating Expenses			185,654			336,281			455,300			880,383			1,026,134
Operating Income					23,111			47,680			64,249			105,988			144,982
Interest Expense, Net					27,712			45,673			54,425			117,975			134,742
Other Income (Expense), Net					—			1,384			17			(6,045	)		(18,371	)
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes and Minority Interest					(4,601	)		3,391			9,841			(18,032	)		(8,131	)
Provision (Benefit) for Income Taxes					(80	)		6,558			10,579			9,125			26,036
Minority Interest in Earnings (Losses) of Subsidiaries					—			—			322			(2,224	)		(1,929	)
Loss from Continuing Operations before Extraordinary Item					(4,521	)		(3,167	)		(1,060	)		(24,933	)		(32,238	)
Income from Discontinued Operations					—			201			241			—			—
Loss on Sale of Discontinued Operations					—			—			(13,400	)		—			—
Extraordinary Charge (net of tax benefit)					—			—			—			(2,892	)		(11,819	)
Net Loss Applicable to Common Shareholders				$	(4,521	)	$	(2,966	)	$	(14,219	)	$	(27,825	)	$	(44,057	)
Net Loss per Common Share — Basic and Diluted:
	Loss from Continuing Operations			$	(0.18	)	$	(0.08	)	$	(0.02	)	$	(0.31	)	$	(0.39	)
	Income from Discontinued Operations				—			0.01			0.01			—			—
	Loss on Sale of Discontinued Operations				—			—			(0.27	)		—			—
Loss Before Extraordinary Charge					(0.18	)		(0.07	)		(0.28	)		(0.31	)		(0.39	)
	Extraordinary Charge (net of tax benefit)				—			—			—			(0.04	)		(0.14	)
Net Loss Applicable to Common Shareholders				$	(0.18	)	$	(0.07	)	$	(0.28	)	$	(0.35	)	$	(0.53	)
Weighted Average Common Shares Outstanding — Basic and Diluted					25,758			41,205			50,018			79,688			83,666

				Year Ended December 31,
				1999			2000(1)			2001(1)			2002(1)(2)			2003(2)
				(In thousands, except per share data)
Consolidated Statements of Operations Data:
Revenues:
	Storage			$	317,387		$	585,664		$	694,474		$	759,536		$	875,035
	Service and Storage Material Sales				214,002			418,501			491,244			558,961			626,294
		Total Revenues			531,389			1,004,165			1,185,718			1,318,497			1,501,329
Operating Expenses:
	Cost of Sales (excluding depreciation)				272,770			500,565			576,538			622,299			680,747
	Selling, General and Administrative				128,948			246,998			307,800			333,050			383,641
	Depreciation and Amortization				65,214			126,662			153,271			108,992			130,918
	Stock Option Compensation Expense				—			15,110			—			—			—
	Merger-related Expenses				—			9,133			3,673			796			—
	Loss on Disposal/Writedown of Property, Plant and Equipment, Net				208			148			320			774			1,130
		Total Operating Expenses			467,140			898,616			1,041,602			1,065,911			1,196,436
Operating Income					64,249			105,549			144,116			252,586			304,893
Interest Expense, Net					54,425			117,975			134,742			136,632			150,468
Other (Income) Expense, Net					(17	)		10,865			37,485			1,435			(2,564	)
Income (Loss) from Continuing Operations Before Provision for Income Taxes and Minority Interest					9,841			(23,291	)		(28,111	)		114,519			156,989
Provision for Income Taxes					10,579			6,758			17,875			47,318			66,730
Minority Interests in Earnings (Losses) of Subsidiaries, Net					322			(2,224	)		(1,929	)		3,629			5,622
(Loss) Income from Continuing Operations before Discontinued Operations and Cumulative Effect of Change in Accounting Principle					(1,060	)		(27,825	)		(44,057	)		63,572			84,637
Income from Discontinued Operations (net of tax)					241			—			—			1,116			—
Loss on Sale of Discontinued Operations (net of tax benefit)					(13,400	)		—			—			—			—
Cumulative Effect of Change in Accounting Principle (net of minority interest)					—			—			—			(6,396	)		—
Net (Loss) Income				$	(14,219	)	$	(27,825	)	$	(44,057	)	$	58,292		$	84,637
Net (Loss) Income per Common Share—Basic:
	(Loss) Income from Continuing Operations			$	(0.02	)	$	(0.35	)	$	(0.53	)	$	0.75		$	0.99
	Income from Discontinued Operations (net of tax)				0.01			—			—			0.01			—
	Loss on Sale of Discontinued Operations (net of tax benefit)				(0.27	)		—			—			—			—
	Cumulative Effect of Change in Accounting Principle (net of minority interest)				—			—			—			(0.08	)		—
Net (Loss) Income—Basic				$	(0.28	)	$	(0.35	)	$	(0.53	)	$	0.69		$	0.99
Net (Loss) Income per Common Share—Diluted:
	(Loss) Income from Continuing Operations			$	(0.02	)	$	(0.35	)	$	(0.53	)	$	0.74		$	0.98
	Income from Discontinued Operations (net of tax)				0.01			—			—			0.01			—
	Loss on Sale of Discontinued Operations (net of tax benefit)				(0.27	)		—			—			—			—
	Cumulative Effect of Change in Accounting Principle (net of minority interest)				—			—			—			(0.07	)		—
Net (Loss) Income—Diluted				$	(0.28	)	$	(0.35	)	$	(0.53	)	$	0.68		$	0.98
Weighted Average Common Shares Outstanding—Basic					50,018			79,688			83,666			84,651			85,267
Weighted Average Common Shares Outstanding—Diluted					50,018			79,688			83,666			86,071			86,718

(footnotes on following page)follow)

1418

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		Year Ended December 31,
		1997			1998			1999			2000			2001
		(In thousands)
Other Data:
EBITDA		$	50,218		$	97,365		$	129,366		$	228,977		$	282,131
EBITDA as a Percentage of Total Revenues			24.1	%		25.4	%		24.9	%		23.2	%		24.1	%
Adjusted EBITDA(1)		$	50,218		$	95,981		$	129,671		$	257,041		$	302,246
Adjusted EBITDA as a Percentage of Total Revenues			24.1	%		25.0	%		25.0	%		26.1	%		25.8	%
Ratio of Earnings to Fixed Charges			0.9	x(2)		1.1	x		1.1	x		0.9	x(2)		1.0	x(2)

		As of December 31,
		1997			1998			1999			2000			2001
		(In thousands)
Consolidated Balance Sheet Data:
Cash and Cash Equivalents		$	24,510		$	1,715		$	3,830		$	6,200		$	21,359
Total Assets			636,786			967,385			1,317,212			2,659,096			2,859,906
Total Debt			428,018			456,178			612,947			1,355,131			1,496,099
Shareholders' Equity			137,733			338,882			488,754			924,458			885,959

		Year Ended December 31,
		1999			2000(1)			2001(1)			2002(1)			2003
		(In thousands)
Other Data:
OIBDA (3)		$	129,463		$	232,211		$	297,387		$	361,578		$	435,811
OIBDA Margin (3)			24.4	%		23.1	%		25.1	%		27.4	%		29.0	%
Ratio of Earnings to Fixed Charges			1.1	x		0.8	x(4)		0.8	x(4)		1.6	x		1.8	x

		As of December 31,
		1999			2000(1)			2001			2002			2003
		(In thousands)
Consolidated Balance Sheet Data:
Cash and Cash Equivalents		$	3,830		$	6,200		$	21,359		$	56,292		$	74,683
Total Assets			1,317,212			2,659,096			2,859,906			3,230,655			3,892,099
Total Long-Term Debt (including Current Portion of Long-Term Debt)			612,947			1,355,131			1,496,099			1,732,097			2,089,928
Shareholders' Equity			488,754			924,458			885,959			944,861			1,066,114

Reconciliation of EBITDAOIBDA to Adjusted EBITDA
Operating Income and IncomeNet (Loss) Before Provision for
Income Taxes and Minority Interest:Income:

			Year Ended December 31,
			1997			1998			1999			2000			2001
			(In thousands)
EBITDA			$	50,218		$	97,365		$	129,366		$	228,977		$	282,131
	Other Expense (Income)			—			(1,384	)		(17	)		6,045			18,371
	Merger-related Expenses			—			—			—			9,133			3,673
	Stock Option Compensation Expense			—			—			—			15,110			—
	Minority Interests in Earnings (Losses) of Subsidiaries			—			—			322			(2,224	)		(1,929	)
Adjusted EBITDA				50,218			95,981			129,671			257,041			302,246
	Depreciation and Amortization			(27,107	)		(48,301	)		(65,422	)		(126,810	)		(153,591	)
	Stock Option Compensation Expense			—			—			—			(15,110	)		—
	Merger-related Expenses			—			—			—			(9,133	)		(3,673	)
	Interest Expense			(27,712	)		(45,673	)		(54,425	)		(117,975	)		(134,742	)
	Other Income (Expense)			—			1,384			17			(6,045	)		(18,371	)
Income (Loss) Before Provision for Income Taxes and Minority Interest			$	(4,601	)	$	3,391		$	9,841		$	(18,032	)	$	(8,131	)

			Year Ended December 31,
			1999			2000(1)			2001(1)			2002(1)(2)			2003(2)
			(In thousands)
OIBDA			$	129,463		$	232,211		$	297,387		$	361,578		$	435,811
Less: Depreciation and Amortization				65,214			126,662			153,271			108,992			130,918
Operating Income				64,249			105,549			144,116			252,586			304,893
Less: Interest Expense, Net				54,425			117,975			134,742			136,632			150,468
	Other (Income) Expense, Net			(17	)		10,865			37,485			1,435			(2,564	)
	Provision for Income Taxes			10,579			6,758			17,875			47,318			66,730
	Minority Interests in Earnings (Losses) of Subsidiaries			322			(2,224	)		(1,929	)		3,629			5,622
	Income from Discontinued Operations (net of tax)			(241	)		—			—			(1,116	)		—
	Loss on Sale of Discontinued Operations (net of tax benefit)			13,400			—			—			—			—
	Cumulative Effect of Change in Accounting Principle (net of minority interest)			—			—			—			6,396			—
Net (Loss) Income			$	(14,219	)	$	(27,825	)	$	(44,057	)	$	58,292		$	84,637

(footnotes follow)

19

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(1)

Adjusted EBITDA is defined as EBITDA adjusted for extraordinary items, other income (expense), merger-relatedOn February 1, 2000, we completed a merger with Pierce Leahy in a transaction valued at approximately $1,036,000. The results of the Pierce Leahy merger are reflected in the table above beginning with 11 months of activity in 2000. In addition, we recorded specific charges associated with the integration of the operations of Pierce Leahy in 2000, 2001 and 2002 within merger related expenses and recorded non-cash stock option compensation expense and minority interest. We use Adjusted EBITDA as our internal measurement of financial performance and as the basis for allocating resources to our operating segments. In addition, substantially all of our financing agreements contain covenants in which Adjusted EBITDA-based calculations are used as a measure of financial performance for financial ratio purposes. Adjusted EBITDA and Adjusted EBITDA-based calculations are used by the holders of our publicly issued debt as important criteria for evaluating our business and, as a result all of the Pierce Leahy acquisition in 2000. This merger impacts the comparability of results before and after the merger.



(2)

Effective January 1, 2002, we ceased amortizing our bond indentures contain covenants in

15

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which Adjusted EBITDA-based calculations are used as the primary measure of financial performance. However, you should not consider EBITDA or Adjusted EBITDA to be substitutes for operating or net income (as determinedgoodwill balance in accordance with generally acceptedStatement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets." The accounting principles, or GAAP)change impacts the comparability of results to previous years. See Note 2(g) to Notes to Consolidated Financial Statements.



(3)
OIBDA is defined as indicatorsoperating income before depreciation and amortization expenses. OIBDA Margin is calculated by dividing OIBDA by total revenues. For a more detailed definition and reconciliation of OIBDA and a discussion of why we believe these measures provide relevant and useful information to our performance or for cash flow from operations (as determined in accordance with GAAP) as a measure of liquidity. Seecurrent and potential investors, see Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" for discussions of other measures of performance determined in accordance with GAAP and our sources and applications of cash flow.

Operations—Non-GAAP Measures."



(2)(4)

We reported a loss from continuing operations before provision (benefit) for income taxes and minority interest for the years ended December 31, 1997, 2000 and 2001. We would have needed to generate for the years ended December 31, 2000 and 2001 additional income from operations before provision for income taxes and minority interest of $4,601, $18,032$23,291 and $8,131$28,111, respectively, to cover our fixed charges of $37,489, $154,975 and $177,032, respectively.

20

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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.


        The following discussion should be read in conjunction with "Item 6. Selected Consolidated Financial and Operating Information"Data" and the Consolidated Financial Statements and Notes thereto and the other financial and operating information included elsewhere in this filing.

        This discussion contains "forward-looking statements"statements," as that term is defined in the Private Securities Litigation Reform Act of 1995 and in other federal securities laws. These forward-looking statements concern ourSee "Cautionary Note Regarding Forward-Looking Statements" on page ii of this filing.

Overview

        Our revenues consist of storage revenues as well as service and storage material sales revenues. Storage revenues, which are considered a key performance indicator for the records and information management services industry, consist of largely recurring periodic charges related to the storage of materials (either on a per unit or per cubic foot of records basis), which are typically retained by customers for many years, and have accounted for approximately 58% of total consolidated revenues in each of the last five years. Our quarterly revenues from these fixed periodic storage fees have grown for 60 consecutive quarters. In certain circumstances, based upon customer requirements, storage revenues include periodic charges associated with normal, recurring service activities. Service and storage material sales revenues are comprised of charges for related service activities and courier operations economic performance and financial condition. The forward-looking statementsthe sale of storage materials. Related service revenues arise from additions of new records, temporary removal of records from storage, refiling of removed records, destructions of records, permanent withdrawals from storage and other complementary and ancillary services, and sales of specially designed storage containers, magnetic media including computer tapes and related supplies. Courier operations consist primarily of the pickup and delivery of records upon customer request. Customers are generally billed on a monthly basis on contractually agreed-upon terms. Our consolidated revenues are subject to various knownvariations caused by the net effect of foreign currency translation on revenue derived from outside the U.S. For the years ended December 31, 2003 and unknown risks, uncertainties2002, we derived 19.0% and 14.0%, respectively, of our total revenues from outside the U.S. We expect the percentage of total revenues that we derive from outside the U.S. to increase in 2004 due to our acquisition of the European operations of Hays IMS.

        Cost of sales (excluding depreciation) consists primarily of wages and benefits for field personnel, facility occupancy costs including rent and utilities, transportation expenses including vehicle leases and fuel, other product cost of sales and other factors. Whenequipment costs and supplies. Of these, wages and benefits and facility occupancy costs are the most significant. Trends in total wages and benefits dollars and as a percentage of total consolidated revenue are influenced by changes in headcount and compensation levels, achievement of incentive compensation targets, workforce productivity and variability in costs associated with medical insurance and workers compensation. Trends in facility occupancy costs are similarly impacted by the total number of facilities we use words such as "believes," "expects," "anticipates," "estimates" or similar expressions,occupy, the mix of properties we are making forward-looking statements.

        Althoughown versus properties we believe that our forward-looking statements are based on reasonable assumptions, our expected results may not be achieved, and actual results may differ materially from our expectations. Important factors that could cause actual results to differ from expectations include, among others:

•

the cost and availability of appropriate storage facilities;



•

our significant indebtednessoccupy under operating leases, fluctuations in per square foot occupancy costs, and the levels of utilization of these properties.

        The expansion of our European and secure shredding operations have resulted in changes to the mix of certain cost and availability of financing for contemplated growth;



•

changes in customer preferences and demand for our services;



•

rapid and significant changes in technology;



•

uncertainties related to international expansion;



•

difficulties related tosales components. We expect that until we complete the integration of acquisitions;the European operations of Hays IMS, rationalize our European facilities and maximize their utilization, our facilities costs may increase as a percentage of consolidated revenue, as our European operations become a greater percentage of our consolidated results. Our European and secure shredding operations are more labor intensive; therefore, our labor expense will be higher as a percentage of revenue as compared to our mature operations. In addition, our secure shredding operations incur higher transportation costs and lower facility costs, as a percentage of consolidated revenue, as compared to our mature operations.

21

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•

uncertainties

        Selling, general and administrative expenses consist primarily of wages and benefits for management, administrative, information technology, sales, account management and marketing personnel, as well as expenses related to expansion into digital businesses, includingcommunications and data processing, travel, professional fees, bad debts, training, office equipment and supplies. Trends in total wages and benefits dollars and as a percentage of total consolidated revenue are influenced by changes in headcount and compensation levels, achievement of incentive compensation targets, workforce productivity and variability in costs associated with medical insurance. We expect our adoption of the timingmeasurement provisions of introductionSFAS No. 123, "Accounting for Stock-Based Compensation," as amended by SFAS No. 148, "Accounting for Stock-Based Compensation—Transition and market acceptanceDisclosure," will result in increasing amounts of selling, general and administrative expenses in the future. We began using the fair value method of accounting in our financial statements beginning January 1, 2003 using the prospective method. The prospective method involves recognizing expense for the fair value for all awards granted or modified in the year of adoption and thereafter with no expense recognition for previous awards. As we continue to grant new options subject to these standards and amortize compensation expense associated with options granted after January 1, 2003, we expect our stock compensation expense will grow significantly over the $1.5 million we recorded for such expense in selling, general and administrative expenses for the year ended December 31, 2003. It is not possible to predict the increase in stock compensation expense for 2004 as it is dependent upon the number of options that will be granted throughout 2004 and the valuation assumptions in use at the time those options are granted. The overhead structure of our productsexpanding European operations, as compared to our mature operations, is more labor intensive and services;



•

effectshas not achieved the same level of overhead leverage, which may result in an increase in selling, general and administrative expenses, as a percentage of consolidated revenue, as our European operations become a more meaningful percentage of our consolidated results.

        Our depreciation and amortization charges result primarily from the capital-intensive nature of our business. The principal components of depreciation relate to storage systems, which include racking, building and leasehold improvements, computer systems hardware and software, and buildings. Amortization relates primarily to customer relationships and acquisition costs.

        Effective July 1, 2001 and January 1, 2002, we adopted the provisions of SFAS No. 141, "Business Combinations" and SFAS No. 142. SFAS No. 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting. 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 $59.2 million ($50.9 million, net of tax) for the year ended December 31, 2001. See Note 2(g) to Notes to Consolidated Financial Statements.

        In February 2004, we completed the acquisition of Mentmore plc's 49.9% equity interest in IME. This transaction should have no impact on revenue or operating income since we already fully consolidate IME's financial results. Since we will be using the purchase method of accounting for this acquisition, 49.9% of the net assets of IME will be adjusted to reflect their fair market value if different from their current carrying value. As a result, we expect this transaction will increase depreciation and amortization expenses going forward. Additionally, we will record an increase in interest expense, net associated with debt used to fund this acquisition and will no longer record the minority interest in earnings of subsidiaries, net related to Mentmore's ownership interest in IME.

        All of our costs are subject to variations caused by the net effect of foreign currency translation on costs incurred by our entities outside the U.S. During 2003, we have seen increases in costs as a result of the strengthening of the British pound sterling, the Euro, and the Canadian dollar against the U.S. dollar, based on an analysis of weighted average rates for the comparable periods. It is impossible to predict how much foreign currency exchange rates will fluctuate in the future and how those

22

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fluctuations will impact individual balances reported in our consolidated statement of operations; however, given the relative increase in our international operations, these fluctuations may become material.

Reclassifications and Changes in Presentation

        Previously, consolidated losses (gains) on disposal/writedown of property, plant and equipment, net were recorded within various captions of our consolidated statements of operations based on the nature of the underlying asset. During the first quarter of 2003, we determined that it was more appropriate to record these gains and losses separately within our results from operations. We have reflected this change in all applicable tables and discussions for all periods presented within the following discussion of results of operations.

        Previously, debt extinguishment expenses were recorded as an extraordinary charge within our consolidated statements of operations. Effective January 1, 2003, we have reflected these charges to other (income) expense, net in accordance with recent changes in regulatory standardsaccounting pronouncements. We have reflected this change in all applicable tables and requirements;discussions for all periods presented within the following discussion of results of operations.

Non-GAAP Measures

Operating Income Before Depreciation and



•

Amortization, or OIBDA

        OIBDA is defined as operating income before depreciation and amortization expenses. OIBDA Margin is calculated by dividing OIBDA by total revenues. Our management uses these measures to evaluate the operating performance of our consolidated business. As such, we believe these measures provide relevant and useful information to our current and potential investors. We use OIBDA for planning purposes and multiples of current or projected OIBDA-based calculations in conjunction with our discounted cash flow models to determine our overall enterprise valuation and to evaluate acquisition targets. We believe OIBDA and OIBDA Margin are useful measures to evaluate our ability to grow our revenues faster than our operating expenses and they are an integral part of our internal reporting system utilized by management to assess and evaluate the operating performance of our business. OIBDA does not include certain items, specifically (1) minority interest in earnings (losses) of subsidiaries, net, (2) other general economic(income) expense, net, (3) income from discontinued operations and business conditions.

loss on sale of discontinued operations and (4) cumulative effect of change in accounting principle that we believe are not indicative of our core operating results. OIBDA also does not include interest expense, net and the provision for income taxes. These expenses are associated with our capitalization and tax structures, which management does not consider when evaluating the profitability of our core operations. Finally, OIBDA does not include depreciation and amortization expenses, in order to eliminate the impact of capital investments, which management believes is better evaluated by comparing capital expenditures to incremental revenue generated and as a percentage of total revenues. OIBDA and OIBDA Margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with accounting principles generally accepted in the Unites States of America, or GAAP, such as operating or net income or cash flows from operating activities (as determined in accordance with GAAP).

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Reconciliation of OIBDA to Operating Income and Net (Loss) Income (In Thousands):

			Year Ended December 31,
			2001			2002			2003
OIBDA			$	297,387		$	361,578		$	435,811
Less: Depreciation and Amortization				153,271			108,992			130,918
Operating Income				144,116			252,586			304,893
Less: Interest Expense, Net				134,742			136,632			150,468
	Other Expense (Income), Net			37,485			1,435			(2,564	)
	Provision for Income Taxes			17,875			47,318			66,730
	Minority Interest			(1,929	)		3,629			5,622
	Income from Discontinued Operations			—			(1,116	)		—
	Cumulative Effect of Change in Accounting Principle			—			6,396			—
Net (Loss) Income			$	(44,057	)	$	58,292		$	84,637

Critical Accounting Policies

        The following "Management's DiscussionOur discussion and Analysisanalysis of Financial Conditionour financial condition and Resultsresults of Operations", as well as disclosures included elsewhere in this filing,operations are based upon our audited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.States of America. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the

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financial statements and for the period then ended. On an on-going basis, we evaluate the estimates used, including those related to the allowance for doubtful accounts, impairments of tangible and intangible assets, income taxes, purchase accounting related reserves, self-insurance liabilities, incentive compensation liabilities, litigation liabilities and contingencies. We base our estimates on historical experience, actuarial estimates, current conditions and various other assumptions that we believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities and are not readily apparent from other sources. We use these estimates to assist us in the identification and assessment of the accounting treatment necessary with respect to commitments and contingencies. Actual results may differ from these estimates under different assumptions or conditions. We believe the followingestimates. Our critical accounting policies involve more significant judgmentsinclude the following and estimates usedare in the preparation of the consolidated financial statements.no particular order:

Accounting for Acquisitions

        Part of our growth strategy has included the acquisition of numerous businesses. The purchase price of these acquisitions has been determined after due diligence of the acquired business, market research, strategic planning, and the forecasting of expected future results and synergies. Estimated future results and expected synergies are subject to revisions as we integrate each acquisition and attempt to leverage resources.

        Each acquisition has been accounted for using the purchase method of accounting as defined under the applicable accounting standards at the date of each acquisition, including, Accounting Principles Board Opinion No. 16, "Accounting for Business Combinations",Combinations," and more recently, Statement of Financial Accounting Standard ("SFAS") 141, "Business Combinations."SFAS No. 141. Accounting for these acquisitions has resulted in the capitalization of the cost in excess of fair value of the net assets acquired in each of these acquisitions as goodwill. We estimated the fair values of the assets acquired in each acquisition as of the date of acquisition and these estimates are subject to adjustment. These estimates are subject to final assessments of the fair value of property, plant and equipment, intangible assets, operating leases and deferred income taxes. We complete these assessments within one year of the date of acquisition. We are not aware of any information that would

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indicate that the final purchase price allocations for acquisitions completed in 20012003 would differ meaningfully from preliminary estimates. See Note 7 to Notes to Consolidated Financial Statements.

        In connection with each of our acquisitions, we have undertaken certain restructurings of the acquired businesses to realize efficiencies and potential cost savings. Our restructuring activities include the elimination of duplicate facilities, reductions in staffing levels, and other costs associated with exiting certain activities of the businesses we acquire. TheseThe estimated cost of these restructuring activities are included as costs of the acquisition and are recorded as goodwill consistent with the guidance of Emerging Issues Task Force ("EITF") Issue No. 95-3, "Recognition of Liabilities in Connection with a Purchase Business Combination." While we finalize our plans to restructure the businesses we acquire within one year of the date of acquisition, it may take more than one year to complete all activities related to the restructuring of an acquired business.

        Our acquisitions have resulted in a significant accumulation of goodwill which, for acquisitions prior to July 1, 2001, we amortized over an estimated benefit period of 20 to 30 years. We have not amortized any goodwill for our acquisitions completed after July 1, 2001 and will no longer amortize any goodwill beginninggoodwill. Beginning on January 1, 2002, we ceased to amortize goodwill in accordance with SFAS 142, "Goodwill and Other Intangible Assets". Through December 31, 2001, weNo. 142. We reviewed our existing goodwill for impairment consistent with the guidelines of SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and determined that no amounts of goodwill were impaired using the undiscounted future cash flow methodology of SFAS 121. Effective January 1, 2002, we will review goodwill for impairment consistent with the guidelines of SFASNo. 142 using a discounted future cash flow approach.approach to approximate fair value. The methodology for determining impairment under SFAS 142 is significantly different and could result in different determinations than under SFAS 121. Pursuant to SFAS 142, we will testof testing our goodwill for impairment upon adoption and, if impairmentin 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, consistent with SFAS No. 142, is indicated, record such impairment as a cumulativereported in the caption "cumulative effect of change in accounting change. We are currently evaluating the effect that the adoption may have onprinciple" in our consolidated resultsstatement of operationsoperations. Impairment adjustments recognized in the future, if any, are generally required to be recognized as operating expenses. The $6.4 million 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 financial position.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. We have a controlling 50.1% interest in Iron Mountain South America, Ltd ("IMSA") and the remainder is owned by an 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). In accordance with SFAS No. 142, we selected October 1 as our annual goodwill impairment review date. We performed our annual goodwill impairment review as of October 1, 2003 and noted no impairment of goodwill at our reporting units as of that date. As of December 31, 2003, no factors were identified that would alter this assessment.

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Allowance for Doubtful Accounts

        We maintain an allowance for doubtful accounts for estimated losses resulting from the potential inability of our customers to make required payments or disputes with customers regarding payment terms.payments. When calculating the allowance, we consider our past loss experience, current and prior trends in our aged receivables, current economic conditions, and specific circumstances of individual receivable balances. If the financial condition of our customers were to significantly change, resulting in a significant improvement or impairment of their ability to make payments, an adjustment of the allowance may be required. As of December 31, 2002 and 2003, our allowance for doubtful accounts balance totaled $20.3 million and $18.3 million, respectively. The decrease in the allowance for doubtful accounts as of December 31, 2003 compared to December 31, 2002 is primarily attributable to the success of our centralized collection efforts within the U.S. and Canada, which resulted in improved cash collections and an improved accounts receivable aging that enabled us to significantly reduce our allowance for doubtful accounts in the year ended December 31, 2003. The decrease in the allowance for doubtful accounts was partially offset by an increase in the

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allowance for doubtful accounts associated with businesses acquired during the year ended December 31, 2003, including Hays IMS.

Accounting for Synthetic LeasesVariable Interest Entities

        We participate in several synthetic leasing programs that involve 30 of the 519 leased facilities that we occupy. Under these synthetic lease facilities, special purposeThree variable interest entities arewere established to acquire properties and subsequently lease those properties to us. TheThese leases arewere designed andto qualify as operating leases for accounting purposes, where the monthly lease expense iswas recorded as rent expense in our income statement. We doconsolidated statements of operations and where the related underlying assets and liabilities were not consolidate the assets or liabilities related to these facilitiesconsolidated in our consolidated financial statements.

        Synthetic lease facilities requirebalance sheets. We changed the application of complex leasecharacterization and special purpose entitythe related accounting rules and interpretations. We are aware that the Financial Accounting Standards Board is currently reviewing these accounting rules and interpretations and is considering their current and future application. In the course of applying these complex accounting rules and interpretations, we have made certain judgments, estimates and assumptions relative to their treatment.

        We hadfor properties in one variable interest entity ("VIE III") during the third quarter of 2002 and prospectively for new property acquisitions in the fourth quarter of 2002. In addition, anticipating the requirement to consolidate, and in line with our synthetic lease facilitiesobjective of transparent reporting, we voluntarily guaranteed all of the at-risk equity in VIE III and our two other variable interest entities (together, the "Other Variable Interest Entities" and, collectively with a lessor's original cost of $74.3 millionVIE III, our "Variable Interest Entities") as of December 31, 2000. During 2001, we added 16 properties2002. These guarantees resulted in our consolidating all of our Variable Interest Entities' assets and liabilities.

        Our Variable Interest Entities were financed with real estate term loans. These real estate term loans have always been and continue to be treated as indebtedness for purposes of our financial covenants under our Amended and Restated Credit Agreement. As of the date they were consolidated into our financial statements, they were also considered indebtedness under our indentures for certain of our senior subordinated notes. As of December 31, 2003, these real estate term loans amounted to $202.6 million. No further financing is currently available to our synthetic lease program with an original costVariable Interest Entities to fund further property acquisitions. See Note 5 to Notes to Consolidated Financial Statements.

        As of $77.6 million bringingDecember 31, 2002, we voluntarily guaranteed all of the total original cost of propertiesat-risk equity in VIE III. This resulted in our synthetic lease programconsolidating all of its remaining assets and liabilities. VIE III's remaining assets and liabilities relate to $151.9an interest rate swap agreement, which it entered into upon its inception. This swap agreement hedges the majority of interest rate risk associated with VIE III's real estate term loans. Specifically, VIE III has swapped $97.0 million of floating rate debt to fixed rate debt. Since the time it entered into the swap agreement, interest rates have fallen. As a result, the estimated fair value of the derivative liability held by VIE III, and now consolidated on our balance sheet, related to the swap agreement was $11.0 million at December 31, 2003. This swap has been since inception and continues to be, as of December 31, 2001. If2003, an effective hedge in accordance with SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." During the years ended December 31, 2002 and 2003, we recorded depreciation expense of $1.7 million and $1.8 million, respectively, associated with the properties and interest expense of $6.2 million and $8.2 million, respectively, associated with the real estate term loans. See Notes 3, 4 and 5 to Notes to Consolidated Financial Statements.

        In addition, as of December 31, 2002, we voluntarily guaranteed all of our synthetic leases were accounted for as capital leases rather than operating leases or if these special purpose entities were consolidatedthe at-risk equity in the Other Variable Interest Entities. This resulted in our 2001 historical financial statements: (1) our grossconsolidating all of their assets and liabilities. As of December 31, 2002, the total impact of consolidating the Other Variable Interest Entities was an increase of $103.9 million both in property, plant and equipment and long-term debtdebt. The underlying leases associated with the Other Variable Interest Entities were treated as operating leases from inception (as early as 1998) through consolidation on December 31, 2002. As a result, during the years ended December 31, 2001 and 2002, we recorded $6.7 million and $5.9 million, respectively, in rent expense in our consolidated statements of operations related to these leases. In 2003, we began recording depreciation expense associated with the properties, interest expense associated with the real estate term loans and no longer have rent expense related to leases associated with the Other Variable Interest Entities in our consolidated financial results. During the year ended December 31, 2003, we recorded depreciation expense of $2.0 million associated with the properties and interest expense of $5.5 million associated with the real estate term loans. If the Other Variable Interest Entities had been consolidated in our historical financial statements as of January 1, 2002: (1) depreciation expense would each be

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have increased in an amount equal to $151.9 million as of December 31, 2001; (2) depreciation expense would increase in an amount equal to $2.2$2.0 million for the yeartwelve months ended December 31, 2001 for the properties leased pursuant to the synthetic lease facilities;2002; and (3)(2) rent expense for these properties would behave been reclassified as interest expense in an amount equal to $8.5$5.9 million for the yeartwelve months ended December 31, 2001.2002. Consequently, our EBITDA, Adjusted EBITDA,OIBDA, operating income and interest expense would have increased by $8.5$5.9 million, $8.5 million, $6.3$3.9 million and $8.5$5.9 million, respectively.respectively, for the twelve months ended December 31, 2002. In addition, net income before taxprovision for income taxes would have decreased by $2.2$2.0 million for the yeartwelve months ended December 31, 2001. See "—Liquidity2002.

        In January and Capital Resources—Synthetic Leases."

        We believe thatDecember 2003, the following pro forma information will further assistFinancial Accounting Standards Board ("FASB") issued FASB Interpretation No. 46 ("FIN 46") and No. 46, revised ("FIN 46R"), "Consolidation of Variable Interest Entities." These statements, which address perceived weaknesses in the understandingaccounting for entities commonly known as special-purpose or off-balance-sheet, require consolidation of this topic. If we had occupied all 30 properties on January 1, 2001 and allcertain interests or arrangements by virtue of our synthetic leases were accounted for as capital leases rather than operating leases or if theseholding a controlling financial interest in such entities. Certain provisions of FIN 46R related to interests in special purpose entities were applicable for the period ended December 31, 2003. We must apply FIN 46R to our interests in all entities subject to the interpretation as of the first interim or annual period ending after March 15, 2004. Adoption of this new method of accounting for variable interest entities did not and is not expected to have a material impact on our consolidated in ourresults of operations and financial statements: (1) our gross property, plant and equipment and long-term debt would each be increased in an amount equal to $151.9 millionposition. As a result of the actions described above, as of December 31, 2001; (2) depreciation expense would increase in an amount equal to $2.9 million for the year ended2002 and December 31, 2001 for the properties leased pursuant to the synthetic lease facilities; and (3) rent expense for these properties would be reclassified as2003, we did not have any unconsolidated variable interest expense in an amount equal to $11.4 million for the year ended December 31, 2001. Consequently, our EBITDA, Adjusted EBITDA, operating income and interest expense would have increased by $8.5 million, $8.5 million, $5.6 million and $11.4 million, respectively. In addition, net income before tax would have decreased by $5.8 million for the year ended December 31, 2001.entities.

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Accounting for Derivative Instruments and Hedging Activities

        SFAS No. 133 "Accounting For Derivative Instruments And Hedging Activities", establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), and for hedging activities. SFAS No. 133 requires an entity to recognize all derivatives as either assets or liabilities on its balance sheet and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as (1) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment; (2) a hedge of the exposure to variable cash flows of a forecasted transaction; or (3) a hedge of the foreign currency exposure of a net investment in a foreign operation, an unrecognized firm commitment, an available-for-sale security, or a foreign-currency-denominated forecasted transaction. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and resulting designation. Unrealized and realized gains and losses are recognized each period as components of other comprehensive income which is a component of accumulated other comprehensive items included in shareholders' equity, assets and liabilities or earnings depending on the nature of such derivatives.

        For cash flow hedges, the effective portions See Note 4 to Notes to Consolidated Financial Statements for a detailed description of the gains and losses are recorded to other comprehensive income and are recognized in earnings concurrent with the disposition of the hedged risks. For fair value hedges, the gains and losses are recorded in earnings each period along with the change in the fair value of the hedged item. For hedges of foreign currency the accounting treatment generally follows the treatment for cash flow hedges or fair value hedges depending on the nature of the foreign currency hedge.our derivative instruments.

        In order for a derivative contract to be designated as a hedge, the relationship between the hedging instrument and the hedged item or transaction must be highly effective. The effectiveness test is performed at the inception of the hedge and each reporting period thereafter, throughout the period that the hedge is designated. Any amounts determined to be ineffective are recorded currently in earnings.

        For fair value hedges, the gains and losses are recorded in earnings each period along with the change in the fair value of the hedged item. For cash flow hedges, the effective portions of the gains and losses are recorded to other comprehensive income and are recognized in earnings concurrent with the disposition of the hedged risks. For hedges of foreign currency the accounting treatment generally follows the treatment for cash flow hedges or fair value hedges depending on the nature of the foreign currency hedge.

Although we apply some judgment in the assessment of hedge effectiveness to designate certain derivatives as hedges, the nature of the contracts used to hedge the underlying risks is such that the

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correlation of the changes in fair values of the derivatives and underlying risks is generally high. We had $10.1$25.6 million of interest rate risk management liabilities and had a corresponding amount for unrealized losses to other comprehensive income ($6.116.2 million, net of tax) primarily related to cash flow hedges at December 31, 2001.2003.

        We provided the initial financing totaling 190.5 million British pounds sterling to IME, our European joint venture, for all of the consideration associated with the acquisition of the European operations of Hays IMS using cash on hand and borrowings under our revolving credit facility. We recorded a foreign currency gain of $27.8 million in other (income) expense, net for this intercompany balance for the year ended December 31, 2003. In order to minimize the foreign currency risk associated with providing IME with the consideration necessary for the acquisition of Hay IMS, we borrowed 80.0 million British pounds sterling under our revolving credit facility to create a natural hedge. We recorded a foreign currency loss of $11.5 million on the translation of this revolving credit balance to U.S. dollars in other (income) expense, net for the year ended December 31, 2003. In addition, we entered into two cross currency swaps with a combined notional value of 100.0 million British pounds sterling. These swaps each have a term of one year and at maturity we have a right to receive $162.8 million in exchange for 100.0 million British pounds sterling. We have not designated these swaps as hedges and, therefore, all mark to market fluctuations of the swaps are recorded in other (income) expense, net in our consolidated statements of operations. We have recorded, for the year ended December 31, 2003, a foreign currency loss of $19.0 million in other (income) expense, net.

        One of our interest rate swaps was used to hedge interest rate risk on certain variable operating lease commitments. As a result of the December 31, 2002 consolidation of one of the Other Variable Interest Entities ("VIE I"), the operating lease commitments that were hedged by this swap are now considered to be inter-company transactions and we determined that this hedge was no longer effective on a prospective basis. We have consolidated the real estate term loans of VIE I and we will prospectively record interest expense instead of rent expense as we make cash interest payments on this debt. The unrealized mark to market losses previously recorded in other comprehensive income attributable to this swap ($1.9 million and $0.8 million, net of tax, as of December 31, 2002 and 2003, respectively) will be amortized through other (income) expense, net in our consolidated statement of operations based on the changes in the fair value of the swap each period that the remaining interest payments are made on VIE I's external debt. We are accounting for mark to market changes in the derivative liability of this swap agreement through other (income) expense, net in our consolidated statement of operations. This accounting has a net zero impact within our consolidated statement of operations as it relates to the amortization of unrealized mark to market losses and the fair valuing of the derivative liability.

Accounting for Internal Use Software

        We develop various software applications for internal use. We account for those costs in accordance with the provisions of Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use".Use." SOP 98-1 requires computer software costs associated with internal use software to be expensed as incurred until certain capitalization criteria are met. SOP 98-1 also defines which types of costs should be capitalized and which should be expensed. Payroll and related costs for employees who are directly associated with, and who devote time to, the development of internal use computer software projects, to the extent time is spent directly on the project, are capitalized and depreciated over the estimated useful life of the software. Capitalization begins when the design stage of the application has been completed and it is probable that the project will be completed and used to perform the function intended. Depreciation begins when the software is placed in service. Computer software costs that are capitalized are evaluated for impairment in accordance with SFAS 121.No.144, "Accounting for the Impairment or Disposal of Long-Lived Assets."

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        It may be necessary for us to write-off amounts associated with the development of internal use software if the project cannot be completed as intended. Our expansion into new technology-based service offerings requires the development of internal use software that will be susceptible to rapid and

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significant changes in technology. We may be required to write-off unamortized costs or shorten the estimated useful life if an internal use software program is replaced with an alternative tool prior to the end of the software's estimated useful life. General uncertainties related to expansion into digital businesses, including the timing of introduction and market acceptance of our services, may adversely impact the recoverability of these assets.

Accounting for Investments See Note 2(f) to Notes to Consolidated Financial Statements.

        We hold investments in companies having operations or technology in areas within our strategic focus. We record an investment impairment charge when we believe an investment has experienced a decline in value that is other than temporary. Future adverse changes in market conditions or poor operating results of underlying investments could result in losses or an inability to recover the carrying value of the investments that may not be reflected in an investment's current carrying value, thereby possibly resulting in an impairment charge in the future.

Overview

        Our primary financial objective has been to increase consolidated EBITDA and Adjusted EBITDA, which is a source of funds for investment in continued growth and to service indebtedness. We use Adjusted EBITDA as our internal measurement of financial performance and as the basis for allocating resources to our internal operating segments. In addition, substantially all of our financing agreements contain covenants in which Adjusted EBITDA-based calculations are used as a measure of financial performance for financial ratio purposes. Adjusted EBITDA and Adjusted EBITDA-based calculations are used by the holders of our publicly issued debt as important criteria for evaluating our business and, as a result, all of our bond indentures contain covenants in which Adjusted EBITDA-based calculations are used as the primary measure of financial performance. However, you should not consider EBITDA or Adjusted EBITDA to be substitutes for operating or net income (as determined in accordance with generally accepted accounting principles, or GAAP) as indicators of our performance or for cash flow from operations (as determined in accordance with GAAP) as a measure of liquidity.

        We have benefited from our growth in consolidated EBITDA and Adjusted EBITDA. EBITDA has increased from $129.4 million for 1999 to $282.1 million for 2001 (a compound annual growth rate of 47.7%). Adjusted EBITDA has increased from $129.7 million for 1999 to $302.2 million for 2001 (a compound annual growth rate of 52.7%). However, the focus on generating EBITDA and Adjusted EBITDA has negatively affected other measures of our financial performance, such as consolidated net income.

        ForDuring the years ended December 31, 1999 through 2001,2002 and 2003, we experienced consolidatedreplaced internal use software programs, which resulted in the write-off to loss on disposal/writedown of property, plant and equipment, net losses of $14.2 million, $27.8the remaining net book value of $1.1 million and $44.1$0.7 million, respectively.

Deferred Income Taxes

        We attribute such lossesrecord a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. We have considered estimated future taxable income and ongoing tax planning strategies in partassessing the amount needed for the valuation allowance. If actual results differ unfavorably from those estimates used, we may not be able to significant charges associated with the pursuitrealize all or part of our growth strategy, namely:net deferred tax assets and additional valuation allowances may be required.

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increases

Stock-based Compensation

        As of January 1, 2003, we adopted the measurement provisions of SFAS No. 123 and SFAS No. 148. As a result we began using the fair value method of accounting in depreciationour financial statements beginning January 1, 2003 using the prospective method. The prospective method involves recognizing expense associatedfor the fair value for all awards granted or modified in the year of adoption and thereafter with expansionno expense recognition for previous awards. We will apply the fair value recognition provisions to all stock based awards granted, modified or settled on or after January 1, 2003 and will continue to provide the required pro forma information for all awards previously granted, modified or settled before January 1, 2003 in our consolidated financial statements. During the year ended December 31, 2003, we recorded $1.7 million of storage capacity as well as development and acquisition of information systems assets;



•

increases in goodwill amortization associated with acquisitions accounted for under the purchase method prior to July 1, 2001;



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increases in interest expense associated with the borrowings used to fund acquisitions;



•

in 2000, charges for non-cash stock option compensation expense and in 2000 and 2001, merger-related expenses, both primarily associated with the integration of the operations of Iron Mountain and Pierce Leahy;

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•

in 2001, extraordinary charges for early extinguishment of debt associated with the retirement of our 11¹/8% senior subordinated notes due 2006 and 10¹/8% senior subordinated notes due 2006, or the 11¹/8% notes and the 10¹/8% notes, respectively; and



•

in 2000 and 2001, non-cash foreign currency losses primarily due to a change in the value of the Canadian dollar as compared to the U.S. dollar, as it relates to the U.S. dollar denominated debt and intercompany balances of our principal Canadian subsidiary.

        Our revenues consist of storage revenues as well as service and storage material sales revenues. Storage revenues consist of periodic charges related to the storage of materials (either on a per unit or per cubic foot of records basis) and have accounted for approximately 60% of total revenues in each of the last five years. In certain circumstances, based upon customer requirements, storage revenues include periodic charges associated with normal, recurring service activities. Service and storage material sales revenues are comprised of charges for related service activities and courier operations and the sale of storage materials. Related service revenues arise from additions of new records, temporary removal of records from storage, refiling of removed records, destructions of records, permanent withdrawals from storage and sales of specially designed storage containers, magnetic media including computer tapes and related supplies. Courier operations consist primarily of the pickup and delivery of records upon customer request. Customers are generally billed on a monthly basis on contractually agreed-upon terms.

        Cost of sales (excluding depreciation) consists primarily of wages and benefits for field personnel, facility occupancy costs, vehicle and other equipment costs and supplies. Of these, wages and benefits and facility occupancy costs are the most significant.

        Selling, general and administrative expenses consist primarily of wages and benefits for management, administrative, information technology, sales, account management and marketing personnel, as well as expenses related to communications and data processing, travel, professional fees, bad debts, training, office equipment and supplies.

        Our depreciation and amortization charges result primarily from the capital-intensive nature of our business and the acquisitions we have completed. The principal components of depreciation relate to storage systems and related equipment, new buildings and leasehold improvements, equipment for new facilities and computer system hardware and software. Amortization relates primarily to goodwill arising from acquisitions and customer acquisition costs. We have accounted for all of our acquisitions under the purchase method. Since the purchase price for companies in our industry is usually substantially in excessconsolidated statement of operations. Had we elected to recognize compensation cost based on the fair value of all options as of their net assets, these purchasesgrant dates as prescribed by SFAS No. 123 and No. 148, we would have given rise to significant goodwillrecorded stock compensation expense of $4.9 million, $4.5 million and accordingly, significant levels$5.6 million in our consolidated statements of amortization. Although amortization is a non-cash charge, it does decrease reported consolidated net income. Because certain of our acquisitions have given rise to nondeductible goodwill, our effective tax rate historically has been higher thanoperations for the statutory rate. See "—Recent Pronouncements."

        We acquired 17 businesses in 1999, 12 in 2000 and 16 in 2001. With the exception of the Pierce Leahy merger in 2000, most acquisitions had lower Adjusted EBITDA margins than the rest of our business. We generally do not realize anticipated synergies relating to acquisitions immediately. We were able to increase our recent Adjusted EBITDA margins through improved overall operating efficiencies, economies of scale and the realization of synergies in connection with earlier acquisitions, as well as the addition of the higher-margin Pierce Leahy business in 2000. This increase was partially offset by additional labor expense due to wage and incentive compensation equalization in conjunction with the Pierce Leahy integration. As a result of the foregoing factors, consolidated Adjusted EBITDA margins were 25.0% for 1999, 26.1% for 2000 and 25.8% for 2001. Included in Adjusted EBITDA for 2001 is $5.4 million (0.5% of consolidated revenue) of development expenses for our new technology-based services.

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        On December 5, 2001, our board authorized and approved a three-for-two stock split effected in the form of a dividend on our common stock. We issued the additional shares of common stock onyears ended December 31, 2001, to all stockholders of record as of the close of business on December 17, 2001. All share2002 and per share amounts have been restated to reflect the stock split.2003, respectively.

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Results of Operations

        The following table sets forth, for the periods indicated, information derived from our consolidated statements of operations, expressed as a percentage of total consolidated revenues.

				Year Ended December 31,
				1999		2000		2001
Revenues:
	Storage			61.1	%	59.4	%	59.3	%
	Service and Storage Material Sales			38.9		40.6		40.7
		Total Revenues		100.0		100.0		100.0
Operating Expenses:
	Cost of Sales (excluding depreciation)			50.2		48.9		48.0
	Selling, General and Administrative			24.8		25.0		26.2
	Depreciation and Amortization			12.6		12.9		13.1
	Stock Option Compensation Expense			—		1.6		—
	Merger-related Expenses			—		0.9		0.3
		Total Operating Expenses		87.6		89.3		87.6
Operating Income				12.4		10.7		12.4
Interest Expense, Net				10.5		12.0		11.5
Other Income (Expense), Net				0.0		(0.5	)	(1.7	)
Income (Loss) from Continuing Operations Before Provision for Income Taxes and Minority Interest				1.9		(1.8	)	(0.8	)
Provision for Income Taxes				2.0		0.9		2.2
Minority Interest in (Losses) Earnings of Subsidiaries				0.1		(0.2	)	(0.2	)
Loss from Continuing Operations before Extraordinary Item				(0.2	)	(2.5	)	(2.8	)
Income from Discontinued Operations				0.1		—		—
Loss on Sale of Discontinued Operations				(2.6	)	—		—
Extraordinary Charge from Early Extinguishment of Debt (net of tax benefit)				—		(0.3	)	(1.0	)
Net Loss				(2.7	)%	(2.8	)%	(3.8	)%
Other Data:
EBITDA from Continuing Operations				24.9	%	23.2	%	24.1	%
Adjusted EBITDA from Continuing Operations				25.0	%	26.1	%	25.8	%

				Year Ended December 31,
				2001		2002		2003
Revenues:
	Storage			58.6	%	57.6	%	58.3	%
	Service and Storage Material Sales			41.4		42.4		41.7
		Total Revenues		100.0		100.0		100.0
Operating Expenses:
	Cost of Sales (excluding depreciation)			(48.6	)	(47.2	)	(45.3	)
	Selling, General and Administrative			(26.0	)	(25.3	)	(25.6	)
	Depreciation and Amortization			(12.9	)	(8.3	)	(8.7	)
	Merger-related Expenses			(0.3	)	(0.1	)	—
	Loss on Disposal/Writedown of Property, Plant and Equipment, Net			—		(0.1	)	(0.1	)
		Total Operating Expenses		(87.8	)	(80.8	)	(79.7	)
Operating Income				12.2		19.2		20.3
Interest Expense, Net				(11.4	)	(10.4	)	(10.0	)
Other (Expense) Income, Net				(3.2	)	(0.1	)	0.2
(Loss) Income from Continuing Operations Before Provision for Income Taxes and Minority Interest				(2.4	)	8.7		10.5
Provision for Income Taxes				(1.5	)	(3.6	)	(4.4	)
Minority Interest in Losses (Earnings) of Subsidiaries				0.2		(0.3	)	(0.4	)
(Loss) Income from Continuing Operations before Discontinued Operations and Cumulative Effect of Change in Accounting Principle				(3.7	)	4.8		5.6
Income from Discontinued Operations (net of tax)				—		0.1		—
Cumulative Effect of Change in Accounting Principle (net of minority interest)				—		(0.5	)	—
Net (Loss) Income				(3.7	)%	4.4	%	5.6	%
Other Data:
OIBDA Margin (1)				25.1	%	27.4	%	29.0	%

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(1)

See "Non-GAAP Measures—Operating Income Before Depreciation and Amortization, or OIBDA" for definition, reconciliation and a discussion of why we believe this measure provides relevant and useful information to our current and potential investors.

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Year Ended December 31, 20012003 Compared to Year Ended December 31, 20002002 Consolidated Results (in thousands)

				Year Ended December 31,
										Dollar Change			Percent Change
				2002			2003
Revenues:
	Storage			$	759,536		$	875,035		$	115,499		15.2	%
	Service and Storage Material Sales				558,961			626,294			67,333		12.0	%
		Total Revenues			1,318,497			1,501,329			182,832		13.9	%
Operating Expenses:
	Cost of Sales (excluding depreciation)				622,299			680,747			58,448		9.4	%
	Selling, General and Administrative				333,050			383,641			50,591		15.2	%
	Depreciation and Amortization				108,992			130,918			21,926		20.1	%
	Merger-related Expenses				796			—			(796	)	—
	Loss on Disposal/Writedown of Property, Plant and Equipment, Net				774			1,130			356		46.0	%
		Total Operating Expenses			1,065,911			1,196,436			130,525		12.2	%
		Operating Income			252,586			304,893			52,307		20.7	%
Interest Expense, Net					136,632			150,468			13,836		10.1	%
Other Expense (Income), Net					1,435			(2,564	)		(3,999	)	(278.7	%)
Income from Continuing Operations Before Provision for Income Taxes and Minority Interest					114,519			156,989			42,470		37.1	%
Provision for Income Taxes					47,318			66,730			19,412		41.0	%
Minority Interest in Earnings of Subsidiaries					3,629			5,622			1,993		54.9	%
Income from Continuing Operations before Discontinued Operations and Cumulative Effect of Change in Accounting Principle					63,572			84,637			21,065		33.1	%
Income from Discontinued Operations (net of tax)					1,116			—			(1,116	)	—
Cumulative Effect of Change in Accounting Principle (net of minority interest)					(6,396	)		—			6,396		—
Net Income				$	58,292		$	84,637		$	26,345		45.2	%
Other Data:
OIBDA (1)				$	361,578		$	435,811		$	74,233		20.5	%
OIBDA Margin (1)					27.4	%		29.0	%

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(1)

See "Non-GAAP Measures—Operating Income Before Depreciation and Amortization, or OIBDA" for definition, reconciliation and a discussion of why we believe these measures provide relevant and useful information to our current and potential investors.

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Comparison of Year Ended December 31, 2003 to Year Ended December 31, 2002

Revenue

        ConsolidatedOur consolidated storage revenues increased $184.7$115.5 million, or 18.7%15.2%, to $1,171.1$875.0 million for the year ended December 31, 2001 from $986.4 million for the year ended December 31, 2000. Internal revenue growth for the year ended December 31, 2001 was 10.5%, comprised of 11.1% for storage revenue and 9.5% for service and storage material sales revenues. We calculate2003. The increase is attributable to internal revenue growth in local currency for our international operations and as if Pierce Leahy had merged with us on January 1, 2000.

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        Consolidated storage revenues increased $108.8 million, or 18.6%, to $694.5 million for the year ended December 31, 2001 from $585.7 million for the year ended December 31, 2000. The increase was primarily attributable to: (1) internal revenue growth of 11.1%(8%) resulting primarily from net increases in records and other media stored by existing customers and sales to new customers;customers, acquisitions (5%), primarily consisting of $30.0 million from the operations of Hays IMS, and (2) acquisitions, particularly the inclusion of Pierce Leahy's revenue for twelve months of 2001 versus eleven months of 2000. The total increase in storage revenues was partially offset by the unfavorable effects of foreign currency translation of $3.8 million as a result ofexchange rate fluctuations (2%). Foreign currency exchange rate fluctuations were primarily due to the strengthening of the U.S. dollar against certain currencies, primarily theBritish pound sterling, Canadian dollar, and Euro against the British pound sterling.U.S. dollar, offset by a weakening of the Mexican peso and Brazilian real against the U.S. dollar, based on an analysis of weighted average rates for the comparable periods.

        Consolidated service and storage material sales revenues increased $75.9$67.3 million, or 19.0%12.0%, to $476.6$626.3 million for the year ended December 31, 2001 from $400.7 million for the year ended December 31, 2000.2003. The increase was primarilyis attributable to: (1)to acquisitions (7%), including revenue from the Hays IMS operations of $24.6 million, internal revenue growth of 9.5%(3%) resulting primarily from net increases in service and storage material sales to existing customers and sales to new customers;customers, and (2)foreign currency exchange rate fluctuations (2%). Foreign currency exchange rate fluctuations were primarily due to the strengthening of the British pound sterling, Canadian dollar, and Euro against the U.S. dollar, offset by a weakening of the Mexican peso and Brazilian real against the U.S. dollar, based on an analysis of weighted average rates for the comparable periods.

        For the reasons stated above, our consolidated revenues increased $182.8 million, or 13.9%, to $1,501.3 million. Internal revenue growth for the year ended December 31, 2003 was 6%. We calculate internal revenue growth in local currency for our international operations.

Internal Growth—Eight-Quarter Trend

		2002										2003
		First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Full Year		First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Full Year
Storage Revenue		8	%	9	%	9	%	8	%	8	%	8	%	8	%	9	%	8	%	8	%
Service and Storage Material Sales Revenue		9	%	10	%	15	%	10	%	11	%	8	%	3	%	2	%	1	%	3	%
Total Revenue		9	%	9	%	11	%	9	%	10	%	8	%	6	%	6	%	5	%	6	%

        Our internal revenue growth rate represents the weighted average year over year growth rate of our revenues after removing the effects of acquisitions particularlyand foreign currency exchange rate fluctuations. Over the inclusionpast eight quarters, the internal growth rate of Pierce Leahy'sour storage revenues has ranged between 8% to 9%. Our storage revenue internal growth rate trend for twelve monthsthe year ended December 31, 2003 reflects higher growth rates in our international businesses, primarily Europe, stabilized net carton volume growth in our North American records management business and higher growth rates in our digital businesses. We experienced higher volumes of 2001 versus eleven monthscarton destructions and permanent removals in the fourth quarter of 2000.2003 as compared to the first three quarters of 2003, which contributed to the decline in our internal growth rate for storage revenue from the third quarter to the fourth quarter of 2003. We experienced similar volumes of destructions and permanent removals in the fourth quarter of 2002. Net carton volume growth is a function of the rate new cartons are added by existing and new customers offset by the rate of carton destructions and other permanent removals.

        The total increase ininternal growth rate for service and storage material sales revenue is inherently more volatile than the storage revenue internal growth rate due to more discretionary services we offer such as large special projects, data products and carton sales and recycled paper. These revenues was partially offsetare impacted to a greater extent by economic downturns as customers defer or cancel the unfavorable effectspurchase of foreign currency translation of $3.3 millionthese services as a result way to reduce their short-term costs. As a commodity, recycled paper prices are subject to the volatility

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of that market. The quarterly growth rates in 2003 were negatively impacted by several factors: (1) large special project service revenue did not achieve the strengtheningsame high levels experienced in the corresponding periods of the U.S. dollar against certain currencies during 2001,2002, (2) product sales, primarily the Canadian dollardata product sales, decreased and the British pound sterling.(3) carton destructions and other permanent removals have decreased relative to prior periods. In addition, our off-site data protection business continued to operate in a market experiencing downward pressure on information technology spending as companies look to reduce their costs.

Cost of Sales

        Consolidated cost of sales (excluding depreciation) is comprised of the following expenses (in thousands):

													% of Consolidated Revenues
		2002			2003			Dollar Change			Percent Change		2002		2003		Percent Change (Favorable)/ Unfavorable
Labor		$	318,707		$	344,761		$	26,054		8.2	%	24.2	%	23.0	%	(1.2	)%
Facilities			184,988			211,597			26,609		14.4	%	14.0	%	14.1	%	0.1	%
Transportation			56,972			65,142			8,170		14.3	%	4.3	%	4.3	%	—
Product Cost of Sales			34,552			30,987			(3,565	)	(10.3	)%	2.6	%	2.1	%	(0.5	)%
Other			27,080			28,260			1,180		4.4	%	2.1	%	1.9	%	(0.2	)%
		$	622,299		$	680,747		$	58,448		9.4	%	47.2	%	45.3	%	(1.9	)%

Labor

        Labor expense decreased as a percentage of revenue as a result of improved labor management in our North American operations and lower incentive compensation expense for the year ended December 31, 2003 as compared to the year ended December 31, 2002. This improvement was offset by increases in wages, medical expenses, and headcount due to growth and acquisitions in our secure shredding operations and the acquisition of Hays IMS. We expect labor expenses as a percentage of consolidated revenues in 2004 may increase as we report a full year of integrated Hays IMS operations.

Facilities

        The largest component of our facilities cost is rent expense, which increased $79.2$6.9 million or 16.4%,for the year ended December 31, 2003 primarily as a result of increased rent in our European operations of $9.0 million attributable to $561.9new facilities and properties acquired through acquisitions, including our acquisition of Hays IMS. In addition, after adjusting for the consolidation of properties owned by our Variable Interest Entities, we have increased the number of leased facilities we occupy in the U.S. and Canada as of December 31, 2003 compared to December 31, 2002 primarily due to acquisitions. The increase in rent is offset by the consolidation of 38 properties owned by our Variable Interest Entities during the third and fourth quarter of 2002. The leases associated with these properties were accounted for as operating leases prior to December 31, 2002. We recorded $5.9 million (48.0%of rent expense for these 38 properties during the year ended December 31, 2002 and no rent expense in the year ended December 31, 2003. Rather than rent expense, we recorded interest expense and depreciation expense associated with these properties for the year ended December 31, 2003. Excluding our European operations, the dollar increase in facilities expenses is attributable to property taxes, utilities, and property insurance, which increased $5.5 million, $4.0 million, and $1.9 million, respectively, for the year ended December 31, 2003 compared to the year ended December 31, 2002. Facilities expenses in our European operations increased $6.4 million primarily due to the growth of operations and acquisitions for the year ended December 31, 2003 compared to the year ended December 31, 2002.

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We anticipate that reporting a full year of integrated Hays IMS operations and no longer having the offsetting impact caused by our Variable Interest Entities could cause an increase in rent expense and possibly in total facility costs as a percentage of consolidated revenues in 2004.

Transportation

        Our transportation expenses, which were flat as a percentage of consolidated revenues, are influenced by several variables including total number of vehicles, owned versus leased vehicles, use of subcontracted couriers, fuel expenses, and maintenance. In the year ended December 31, 2003, we experienced a $3.4 million increase in transportation expenses in our European operations as compared to the year ended December 31, 2002, which is primarily attributable to an increase in fleet size and vehicles under operating lease resulting from the acquisition of Hays IMS and growth of operations. Transportation efficiencies achieved in our North American operations, partially offset by higher fuel costs and an increased percentage of vehicles under operating lease, mitigated the impact of our European operations on transportation expenses as a percentage of consolidated revenues.

Product Cost of Sales and Other Cost of Sales

        Product and other cost of sales are highly correlated to complementary revenue streams. Product cost of sales for the year ended December 31, 2003 was lower than the year ended December 31, 2002 as a percentage of product revenues due to more focused selling efforts on higher margin products and improved product sourcing.

Selling, General and Administrative Expenses

        Selling, general and administrative expenses are comprised of the following expenses (in thousands):

													% of Consolidated Revenues
		2002			2003			Dollar Change			Percent Change		2002		2003		Percent Change (Favorable)/ Unfavorable
General and Administrative		$	179,550		$	206,575		$	27,025		15.1	%	13.6	%	13.8	%	0.2	%
Sales, Marketing & Account Management			85,932			111,408			25,476		29.6	%	6.5	%	7.4	%	0.9	%
Information Technology			55,971			67,950			11,979		21.4	%	4.2	%	4.5	%	0.3	%
Bad Debt Expense			11,597			(2,292	)		(13,889	)	(119.8	)%	0.9	%	(0.2	)%	(1.1	)%
		$	333,050		$	383,641		$	50,591		15.2	%	25.3	%	25.6	%	0.3	%

General and Administrative

        The increase in general and administrative expenses as a percentage of consolidated revenues for the year ended December 31, 2003 is primarily attributable to a $16.4 million increase in general and administrative expenses in our European operations due to the growth of operations and acquisitions. In our North American operations, general and administrative expenses increased as a result of higher wages due to normal inflation and merit increases, and increases in worker's compensation and medical expenses. The increase in labor expenses was partially offset by decreases in general insurance expenses and lower incentive compensation expenses. We anticipate increased pressure on our general and administrative expenses as a percentage of consolidated revenues as we integrate the operations of Hays IMS.

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Sales, Marketing & Account Management

        The majority of our sales, marketing and account management costs are labor related and are primarily driven by the headcount in each of these departments. Increased headcount and commissions are the most significant contributors to the increase in sales and marketing expenses for the year ended December 31, 2003. Throughout the years ended December 31, 2002 and 2003, we continued to invest in the expansion and improvement of our sales force and account management personnel. Excluding our European operations, since December 31, 2002, we added 66 sales and marketing employees, a 16% increase in headcount, increased our account management force and initiated several new marketing and promotional efforts to develop awareness in the marketplace of our entire service offerings. The costs associated with these efforts have contributed to the increase in our sales, marketing and account management expenses. In addition, costs associated with our European sales and account management teams increased by $4.1 million for the year ended December 31, 2003 as compared to the year ended December 31, 2002, due to the hiring of new personnel and the expansion of our European sales force. We expect that sales, marketing and account management expenses will continue to increase as a percentage of consolidated revenues as we continue to expand and train our sales force and develop new marketing initiatives.

Information Technology

        Information technology expenses increased $12.0 million for the year ended December 31, 2003 principally due to higher compensation costs resulting from increased headcount, normal inflation and merit increases, as well as an increase in external resources, which was partially offset by lower incentive compensation expenses. As our technology initiatives mature, less of our efforts are development related, thus decreasing capitalizable expenditures, which results in increased information technology expenses. In addition, we incurred additional costs to expand bandwidth and international connectivity in the year ended December 31, 2003 as compared to the year ended December 31, 2002 to satisfy growth of our business and to integrate acquisitions.

Bad Debt Expense

        The decrease in consolidated bad debt expense for the year ended December 31, 2003 compared to the year ended December 31, 2002 is primarily attributable to the success of our centralized collection efforts within the U.S. and Canada during 2002 and 2003, which resulted in improved cash collections and an improved accounts receivable aging that enabled us to significantly reduce our allowance for doubtful accounts in the year ended December 31, 2003. We do not expect to experience a similar decrease during 2004 and expect bad debt expense to be approximately 0.5% of consolidated revenues in 2004.

Depreciation, Amortization, Merger-Related Expenses and Loss on Disposal/Writedown of Property, Plant and Equipment, Net

        Consolidated depreciation and amortization expense increased $21.9 million to $130.9 million (8.7% of consolidated revenues) for the year ended December 31, 20012003 from $482.8$109.0 million (48.9%(8.3% of consolidated revenues) for the year ended December 31, 2000. The dollar increase was2002. Depreciation expense increased $19.8 million, primarily attributabledue to the requiredadditional depreciation expense related to recent capital expenditures, including storage systems, which include racking, building and leasehold improvements, computer systems hardware and software, and buildings, and depreciation associated with facilities accounted for as capital leases. Depreciation associated with our digital initiatives increased $5.4 million during the year ended December 31, 2003 as a result of software and hardware assets placed in service throughout the years ended December 31, 2002 and 2003. The consolidation of the properties owned by our Variable Interest Entities during the year ended December 31, 2002 resulted in $2.2 million of additional depreciation in the year ended December 31, 2003. Amortization expense increased as a

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result of the amortization of intangible assets associated with acquisitions we completed in the fourth quarter of 2002 and during the year ended December 31, 2003.

        Merger-related expenses are certain expenses directly related to our merger with Pierce Leahy that cannot be capitalized and included system conversion costs, to support our revenue growthcosts of exiting certain facilities, severance, relocation and waspay-to-stay payments and other transaction-related costs. Merger-related expenses were $0.8 million for the year ended December 31, 2002. All merger related activities associated with the Pierce Leahy merger were completed in 2002.

        Consolidated loss on disposal/writedown of property, plant and equipment, net consisted of disposals and asset writedowns partially offset by operating efficiencies at our U.S.$4.2 million of gains on the sale of properties in Texas, Florida and Canadian operations, particularly related to the decreaseU.K. in rent as a percent of consolidated revenue of 0.7% offset by a 0.2% increase in other facilities costs as a percent of consolidated revenuesthe year ended December 31, 2003 and a 0.2% increasegain of $2.1 million on the sale of a property in utility expenses (primarily, gas and oil charges) asthe U.K. in the year ended December 31, 2002.

Operating Income

        As a percentresult of the foregoing factors, consolidated revenues. In our U.S. and Canadian operations, facility costsoperating income increased $22.1 million and labor costs increased $33.7 million, which represented a decrease of 0.3% and 0.8% of consolidated revenues, respectively. The decrease as a percent of consolidated revenues was offset by relatively lower gross margins in our emerging confidential destruction services business, which increased cost of sales by 0.9% of consolidated revenues.

        Consolidated selling, general and administrative expenses increased $60.4$52.3 million, or 24.5%20.7%, to $306.9$304.9 million (26.2%(20.3% of consolidated revenues) for the year ended December 31, 20012003 from $246.6$252.6 million (25.0%(19.2% of consolidated revenues) for the year ended December 31, 2000. The dollar increase was primarily attributable to2002.

OIBDA

        As a result of the required costs to support our revenue growth, while the increase as a percent offoregoing factors, consolidated revenues was primarily attributable to: (1) higher overhead levels in our emerging confidential destruction services business (an increase of 0.6% of consolidated revenue) and our Latin American and European operations (an increase of 0.4% of consolidated revenue); (2) higher data communications costs resulting from network deployment and migration activities (an increase of 0.4% of consolidated revenues); and (3) expenditures for our marketing and information technology initiatives related to the development of complementary technology-based service offerings (an increase of 0.5% of consolidated revenues). These increases were partially offset by a decrease in the provision for doubtful accounts for our U.S. and Canadian operations (a decrease of 0.4% of consolidated revenues).

        Consolidated depreciation and amortization expenseOIBDA increased $26.8$74.2 million, or 21.1%20.5%, to $153.6$435.8 million (13.1%(29.0% of consolidated revenues) for the year ended December 31, 2003 from $361.6 million (27.4% of consolidated revenues) for the year ended December 31, 2002.

Interest Expense, Net

        Consolidated interest expense, net increased $13.8 million to $150.5 million (10.0% of consolidated revenues) for the year ended December 31, 2003 from $136.6 million (10.4% of consolidated revenues) for the year ended December 31, 2002. This increase was primarily attributable to (1) $7.4 million of interest expense associated with real estate term loans held by our Variable Interest Entities that were consolidated in the second half of 2002, (2) borrowings under our revolving credit facility and the issuance of our 6⁵/8% Senior Subordinated Notes due 2016 (the "6⁵/8% notes") which were used to finance the Hays IMS acquisition, and (3) an increase in our overall weighted average outstanding borrowings. The increase was offset by a decline in our overall weighted average interest rate from 8.3% as of December 31, 2002 to 7.7% as of December 31, 2003 resulting from our refinancing efforts and a decline in variable interest rates.

Other Expense (Income), Net (in thousands)

		2002			2003			Change
Foreign currency transaction gains		$	(5,045	)	$	(30,220	)	$	(25,175	)
Debt extinguishment expense			5,431			28,174			22,743
Loss on investments			901			(462	)		(1,363	)
Other, net			148			(56	)		(204	)
		$	1,435		$	(2,564	)	$	(3,999	)

        Foreign currency gains of $30.2 million based on period-end exchange rates were recorded in the year ended December 31, 2003 primarily due to the strengthening of the Canadian dollar and British pound sterling against the U.S. dollar as these currencies relate to our intercompany balances with our Canadian and U.K. subsidiaries, U.S. dollar denominated debt held by our Canadian subsidiary,

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borrowings denominated in foreign currencies under our revolving credit facility, and our British pound sterling denominated cross currency swap.

        During the year ended December 31, 2003, we redeemed the remaining outstanding principal amount of our 9¹/8% Senior Subordinated Notes due 2007 (the "9¹/8% notes"), resulting in a charge of $1.8 million, the remaining outstanding principal amount of our 8³/4% Senior Subordinated Notes due 2009 (the "8³/4% notes"), resulting in a charge of $13.8 million, and $115.0 million of the outstanding principal of the 8¹/8% Senior Notes due 2008 of our Canadian subsidiary (the "Subsidiary notes"), resulting in a charge of $12.6 million. During the year ended December 31, 2002, we recorded a charge of $1.2 million related to the early retirement of debt in conjunction with the refinancing of our revolving credit facility and a charge of $4.2 million related to the early retirement of a portion of our 9¹/8% notes. The charges consisted primarily of the call and tender premiums associated with the extinguished debt and the write-off of unamortized deferred financing cost and discounts.

Provision for Income Taxes

        Our effective tax rate for the year ended December 31, 2003 was 42.5%. The primary reconciling item between the statutory rate of 35% and our effective tax rate is state income taxes (net of federal benefit). The disallowance of certain intercompany interest charges by states, including a change in Massachusetts tax laws, retroactive to January 1, 2002, increased our provision for income taxes for the year ended December 31, 2003 by 1.1%. Our effective tax rate was 41.3% for the year ended December 31, 2002. There may be future volatility with respect to our effective tax rate related to items including unusual unforecasted permanent items, significant changes in tax rates in foreign jurisdictions and the need for additional valuation allowances. Also, as a result of our net operating loss carryforwards, we do not expect to pay any significant international, U.S. federal and state income taxes during 2004.

Minority Interest, Discontinued Operations, and Cumulative Effect of Change in Accounting Principle

        Minority interest in earnings of subsidiaries, net resulted in a charge to income of $5.6 million (0.4% of consolidated revenues) for the year ended December 31, 2003 compared to $3.6 million (0.3% of consolidated revenues) for the year ended December 31, 2002. This represents our minority partners' share of earnings in our majority-owned international subsidiaries that are consolidated in our operating results. The increase is a result of the improved profitability of our European and South American businesses.

        In the fourth quarter of 2002, we recorded income from discontinued operations of $1.1 million (net of tax of $0.8 million) as a result of resolving several outstanding contingencies remaining from the sale of the Arcus Staffing Resources, Inc. business unit in 1999. There was no such income recorded in 2003.

        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 2003.

Net Income

        As a result of the foregoing factors, consolidated net income increased $26.3 million, or 45.2%, to $84.6 million (5.6% of consolidated revenues) for the year ended December 31, 2003 from net income of $58.3 million (4.4% of consolidated revenues) for the year ended December 31, 2002.

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Segment Analysis (in thousands)

        The results of our various operating segments are discussed below. In general, our business records management segment offers records management, secure shredding, healthcare information services, vital records services, and service and courier operations in the U.S. and Canada. Our off-site data protection segment offers data backup and disaster recovery services, vital records services, service and courier operations, and intellectual property protection services in the U.S. Our international segment offers elements of all our product and services lines outside the U.S. and Canada. Our corporate and other segment includes our corporate overhead functions and our fulfillment, consulting and digital archiving services.

		Business Records Management			Off-Site Data Protection			International			Corporate & Other
Segment Revenue
Year Ended
December 31, 2003		$	1,022,335		$	251,141		$	198,068		$	29,785
December 31, 2002			944,845			239,081			109,381			25,190
Increase in Revenues		$	77,490		$	12,060		$	88,687		$	4,595
Percentage Increase in Revenues			8.2	%		5.0	%		81.1	%		18.2	%
Segment Contribution (1)
Year Ended
December 31, 2003		$	286,208		$	71,240		$	46,825		$	32,668
December 31, 2002			262,541			61,729			21,988			16,890
Segment Contribution (1) as a Percentage of Segment Revenue
Year Ended
December 31, 2003			28.0	%		28.4	%		23.6	%		109.7	%
December 31, 2002			27.8	%		25.8	%		20.1	%		67.1	%

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(1)

See Note 12 to Notes to Consolidated Financial Statements for definition of Contribution and for the basis on which allocations are made and a reconciliation of Contribution to net income (loss) on a consolidated basis.




Business Records Management

        During the year ended December 31, 2003, revenue in our business records management segment increased 8.2% primarily due to increased storage revenues, growth of our secure shredding operations and acquisitions (including revenue from the U.S. operations of Hays IMS of $8.2 million), and was offset by lower special project service revenue and lower permanent removal and destruction fees. In addition, favorable currency fluctuations during the year ended December 31, 2003 in Canada increased revenue $9.6 million when compared to the year ended December 31, 2002. Contribution as a percent of segment revenue increased primarily due to lower bad debt expense and lower incentive compensation expense which were partially offset by higher property taxes, utilities and our increased investment in our sales and account management force. Items excluded from the calculation of Contribution include the following: (1) depreciation and amortization expense for the year ended December 31, 2003 of $71.7 million compared to $67.7 million for the year ended December 31, 2002, (2) foreign currency gains of $29.5 million and $1.6 million for the years ended December 31, 2003 and 2002, respectively, and (3) gain on disposal/writedown of property plant and equipment, net of

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$0.6 million for the year ended December 31, 2003 and a loss on disposal/writedown of property plant and equipment, net of $1.5 million for the year ended December 31, 2002.

Off-Site Data Protection

        Revenue in our off-site data protection segment increased 5.0% primarily due to internal revenue growth from both existing and new customers in the face of increasing pressure in the marketplace to reduce information technology related spending. Contribution as a percent of segment revenue increased primarily due to reduced bad debt expense, increased product sales margins and improved labor management. This increase was partially offset by the growth of our sales and account management force. Items excluded from the calculation of Contribution include the following: (1) depreciation and amortization expense for the year ended December 31, 2003 of $13.8 million compared to $12.8 million for the year ended December 31, 2002 and (2) a loss on disposal/writedown of property plant and equipment, net of $1.9 million and $0.2 million for the year ended December 31, 2003 and 2002, respectively.

International

        Revenue in our international segment increased 81.1% primarily due to acquisitions completed in Europe, including $46.4 million from the acquisition of Hays IMS, and in South America, as well as increased sales efforts and a large service project in the U.K. Favorable currency fluctuations during the year ended December 31, 2003 in Europe increased revenue, as measured in U.S. dollars, by $17.5 million compared to the year ended December 31, 2002. This increase was offset by $1.2 million of unfavorable currency fluctuations in Mexico and South America during the year ended December 31, 2003 compared to the year ended December 31, 2002. Contribution as a percent of segment revenue increased primarily due to improved gross margins from our European, South American, and Mexican operations and overall increased direct labor utilization and lower bad debt expenses. This increase was partially offset by increased overhead expenses associated with the growth of these emerging businesses. Items excluded from the calculation of Contribution include the following: (1) depreciation and amortization expense for the year ended December 31, 2003 of $16.0 million compared to $7.1 million for the year ended December 31, 2002, including $3.6 million associated with the acquisition of Hays IMS in the year ended December 31, 2003, (2) gains on disposal/writedown of property plant and equipment, net of $0.8 million and $2.1 million for the years ended December 31, 2003 and 2002, respectively, and (3) a foreign currency gain of $1.2 million in the year ended December 31, 2003 compared to a loss of $0.3 million in the year ended December 31, 2002.

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Year Ended December 31, 2002 Compared to Year Ended December 31, 2001 Consolidated Results (in thousands)

				Year Ended December 31,
										Dollar Change			Percent Change
				2001			2002
Revenues:
	Storage			$	694,474		$	759,536		$	65,062		9.4	%
	Service and Storage Material Sales				491,244			558,961			67,717		13.8	%
		Total Revenues			1,185,718			1,318,497			132,779		11.2	%
Operating Expenses:
	Cost of Sales (excluding depreciation)				576,538			622,299			45,761		7.9	%
	Selling, General and Administrative				307,800			333,050			25,250		8.2	%
	Depreciation and Amortization				153,271			108,992			(44,279	)	(28.9	)%
	Merger-related Expenses				3,673			796			(2,877	)	(78.3	)%
	Loss on Disposal/Writedown of Property, Plant and Equipment, Net				320			774			454		141.9	%
		Total Operating Expenses			1,041,602			1,065,911			24,309		2.3	%
Operating Income					144,116			252,586			108,470		75.3	%
Interest Expense, Net					134,742			136,632			1,890		1.4	%
Other Expense, Net					37,485			1,435			(36,050	)	(96.2	)%
(Loss) Income from Continuing Operations Before Provision for Income Taxes and Minority Interest					(28,111	)		114,519			142,630		507.4	%
Provision for Income Taxes					17,875			47,318			29,443		164.7	%
Minority Interest in (Losses) Earnings of Subsidiaries					(1,929	)		3,629			5,558		288.1	%
(Loss) Income from Continuing Operations before Discontinued Operations and Cumulative Effect of Change in Accounting Principle					(44,057	)		63,572			107,629		244.3	%
Income from Discontinued Operations (net of tax)					—			1,116			1,116		—
Cumulative Effect of Change in Accounting Principle (net of minority interest)					—			(6,396	)		(6,396	)	—
Net (Loss) Income				$	(44,057	)	$	58,292		$	102,349		232.3	%
Other Data:
OIBDA (1)				$	297,387		$	361,578		$	64,191		21.6	%
OIBDA Margin (1)					25.1	%		27.4	%

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(1)

See "Non-GAAP Measures—Operating Income Before Depreciation and Amortization, or OIBDA" for definition, reconciliation and a discussion of why we believe these measures provide relevant and useful information to our current and potential investors.

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Comparison of Year Ended December 31, 2002 to Year Ended December 31, 2001

Revenue

        For the year ended December 31, 2002, our consolidated revenues increased $132.8 million, or 11.2%, compared to the same period of 2001. This increase was principally a result of internal revenue growth, which for the year ended December 31, 2002 was 10%, comprised of 8% for storage revenue and 11% for service and storage material sales revenue. We calculate internal revenue growth in local currency for our international operations.

        Consolidated storage revenues increased $65.1 million, or 9.4%, to $759.5 million for the year ended December 31, 2002. The increase was primarily attributable to internal revenue growth of 8% resulting from $126.8net increases in records and other media stored by existing customers and sales to new customers. The net effect of foreign currency translation on storage revenues was a decrease in revenue of $2.4 million. This was a result of a weakening of the Argentine peso, the Canadian dollar, and the Brazilian real against the U.S. dollar, offset by a strengthening of the British pound sterling and the Euro against the U.S. dollar, based on an analysis of weighted average rates for the comparable periods.

        Consolidated service and storage material sales revenues increased $67.7 million, or 13.8%, to $559.0 million for the year ended December 31, 2002. The increase was primarily attributable to internal revenue growth of 11% resulting from net increases in service and storage material sales to existing customers and sales to new customers. The net effect of foreign currency translation on service and storage material sales revenues was a decrease in revenue of $0.7 million. This was a result of a weakening of the Argentine peso, the Canadian dollar, and the Brazilian real against the U.S. dollar, offset by a strengthening of the British pound sterling and the Euro against the U.S. dollar, based on an analysis of weighted average rates for the comparable periods.

Internal Growth—Eight-Quarter Trend

		2001										2002
		First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Full Year		First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Full Year
Storage Revenue		13	%	12	%	11	%	10	%	11	%	8	%	9	%	9	%	8	%	8	%
Service and Storage Material Sales Revenue		9	%	9	%	5	%	11	%	8	%	9	%	10	%	15	%	10	%	11	%
Total Revenue		11	%	10	%	9	%	10	%	10	%	9	%	9	%	11	%	9	%	10	%

        The consecutive quarter storage revenue internal growth trend over the last eight quarters, as calculated quarterly comparing the current quarter to the applicable quarter in the prior year, is primarily attributable to a decline in the rate at which customers have added new cartons to their inventory, which may be a result of current economic conditions. However, we have not seen a decline in the duration that our customers maintain their cartons in inventory nor an increase in the rate of cartons destroyed or permanently removed from inventory as a percentage of the total population. In addition, growth from new sales was adversely affected in 2001 and 2002 as a result of the disruption caused by the merging of our sales force with that of Pierce Leahy in 2000. The sales force reorganization has been completed and growth from new sales has begun to increase.

        Service and storage material sales revenue internal growth is subject to fluctuations in the timing of non-recurring service projects ordered by customers and in some cases can be affected by delays or cancellations as some customers seek to reduce short-term costs. During the year ended December 31, 2002, we benefited from a number of large non-recurring service projects in North America and Europe. The volatility in the service revenue growth for the third and fourth quarters of 2001 and 2002 is primarily due to a disruption in the normal pattern of services we provide to our customers following

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the events of September 11, 2001 and the resulting shift of some services and related revenue, to the fourth quarter of 2001. This caused a favorable comparison for the service revenue growth rate in the third quarter of 2002 and a difficult comparison in the fourth quarter of 2002.

Cost of Sales

        Consolidated cost of sales (excluding depreciation) is comprised of the following expenses (in thousands):

													% of Consolidated Revenues
		2001			2002			Dollar Change			Percent Change		2001		2002		Percent Change (Favorable)/Unfavorable
Labor		$	286,951		$	318,707		$	31,756		11.1	%	24.2	%	24.2	%	—
Facilities			173,610			184,988			11,378		6.6	%	14.6	%	14.0	%	(0.6	)%
Transportation			55,167			56,972			1,805		3.3	%	4.7	%	4.3	%	(0.4	)%
Product Cost of Sales			31,363			34,552			3,189		10.2	%	2.6	%	2.6	%	—
Other			29,447			27,080			(2,367	)	(8.0	%)	2.5	%	2.1	%	(0.4	)%
		$	576,538		$	622,299		$	45,761		7.9	%	48.6	%	47.2	%	(1.4	)%

Labor

        The dollar increase in labor expense is primarily attributable to increases in headcount and changes in our labor mix resulting from the expansion of our secure shredding operations. Our secure shredding operations are more labor intensive, therefore, labor expense will be higher as a percentage of revenue as compared to our mature operations. In the year ended December 31, 2002, this impact was mitigated by improved labor management in our off-site data protection segment. In addition, our operations in the U.S. and Canada, which comprise approximately 75% of our workforce, experienced an overall increase in wages due to normal inflation, merit increases and significant increases in medical insurance and worker's compensation expenses of approximately $12.0 million. The majority of these increases are attributable to higher premiums and self-insurance requirements.

Facilities

        Our property management activities combined with a higher utilization of our space has driven the decrease of our facilities expenses as a percentage of consolidated revenues from 14.6% in the year ended December 31, 2001 to 14.0% in the year ended December 31, 2002. The largest component of our facilities cost is rent expense, which decreased $0.3 million for the year ended December 31, 2002. We reduced the number of leased facilities we occupy by 23 in the year ended December 31, 2002 primarily through the consolidation of our property portfolio as we exited less desirable facilities and consolidated our remaining properties subsequent to the Pierce Leahy merger.

        The decrease in leased properties is also a result of the recharacterization of eight properties held by our Variable Interest Entities at the end of 2001, which are now consolidated on our balance sheet at the end of 2002. During the years ended December 31, 2001 and 2002, we recorded $1.8 million and $0.0 million of rent expense for these eight properties, respectively. An additional 23 properties held by our Variable Interest Entities were consolidated as of December 31, 2002; however, they were accounted for as operating leases during the year ended December 31, 2002 and their costs were included in rent expense. For the years ended December 31, 2001 and 2002, we recorded rent expense of $6.7 million and $5.9 million, respectively, on these 23 properties and we recorded rent expense as interest expense beginning in 2003.

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        The dollar increase in facilities expenses is attributable to property insurance, which increased $4.7 million for the year ended December 31, 2002 compared to the year ended December 31, 2001. The market-wide increase in property insurance premiums in the wake of the events of September 11, 2001, in addition to experience based annual premium adjustments, resulted in this dramatic increase. Increased rent and facilities expenses in our European operations of $4.6 million and higher property taxes in the U.S. and Canada of $1.8 million have also contributed to the dollar increase in facilities expenses.

Transportation

        Our transportation expenses are influenced by several variables including total number of vehicles, owned versus leased vehicles, use of subcontracted couriers, fuel expenses, and maintenance. For the years ended December 31, 2002 and 2001 our fleet of vehicles used in operations totaled 2,140 and 2,032, respectively, of which 1,429 and 1,269, respectively, were under operating leases. The net increase in vehicles is primarily attributable to an increase of 40 vehicles in our secure shredding division that were either acquired through acquisitions or added to support growth in the business. We reduced our operating lease expense by $0.6 million during the year ended December 31, 2002 as a result of our fleet leasing program, which has benefited from an overall reduction in interest rates and our improving credit rating.

        The results of our ongoing transportation efficiency projects and the completion of our conversions to theSafeKeeper Plus® system have been significant in reducing transportation expenses, including fuel and outside courier fees, as a percentage of consolidated revenues. In the year ended December 31, 2002 we had an overall reduction in fuel consumption and a decrease in fuel expense of $0.4 million in spite of an average increase in the price per gallon of fuel during the year ended December 31, 2002. We also benefited from a $0.9 million decline in subcontracted courier expenses, which we believe is the result of better management of internal transportation resources. Our improvements in transportation have been partially offset by increased vehicle insurance and repair costs of $0.7 million and $0.9 million, respectively, for the year ended December 31, 2002 over the year ended December 31, 2001, as a result of the increased size of our fleet. We experienced a $2.0 million increase in transportation expenses in our European operations, which is primarily attributable to the growth of operations and is also impacted by the weakening of the U.S. dollar in comparison to the British pound sterling in the year ended December 31, 2002 versus the year ended December 31, 2001.

Product Cost of Sales and Other Cost of Sales

        Product and other cost of sales are highly correlated to complementary revenue streams. Product cost of sales for the year ended December 31, 2002 was consistent with the year ended December 31, 2001 as a percentage of product revenues. The decrease in other cost of sales of $2.4 million is directly attributable to decreases in variable expenses from our changing mix of complementary services and will vary as our mix of special projects changes from period to period.

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Selling, General and Administrative Expenses

        Selling, general and administrative expenses are comprised of the following expenses (in thousands):

													% of Consolidated Revenues
		2001			2002			Dollar Change			Percent Change		2001		2002		Percent Change (Favorable)/Unfavorable
General and Administrative		$	175,639		$	179,550		$	3,911		2.2	%	14.8	%	13.6	%	(1.2	)%
Sales, Marketing & Account Management			70,956			85,932			14,976		21.1	%	6.0	%	6.5	%	0.5	%
Information Technology			50,866			55,971			5,105		10.0	%	4.3	%	4.2	%	(0.1	%)
Bad Debt Expense			10,339			11,597			1,258		12.2	%	0.9	%	0.9	%	—
		$	307,800		$	333,050		$	25,250		8.2	%	26.0	%	25.3	%	(0.7	)%

General and Administrative

        The dollar increase in general and administrative expenses is primarily attributable to an increase in professional fees, office facilities, telephone, and supplies expenses. However, these costs were consistent with the increasing scale of our business, as indicated by the decrease of 1.2% as a percentage of consolidated revenues. Increased overhead leverage offset an increase in wages due to normal inflation and merit increases.

Sales, Marketing & Account Management

        The majority of our sales, marketing and account management expenses are labor related and are primarily driven by the headcount in each of these departments. Throughout the year ended December 31, 2002, we continued to expand our sales force and account management teams. We added approximately 60 new sales and marketing employees since December 31, 2001, a 15% increase in headcount.

Information Technology

        Information technology expenses increased $5.1 million, or 10.0%, to $56.0 million (4.2% of consolidated revenues) for the year ended December 31, 2002 principally due to increased compensation costs as a result of increased headcount and normal inflation and merit increases, as well as, a decrease in capitalizable projects. Additionally, these costs were offset by savings of $1.7 million realized through improved management of information technology telecommunication expenses and a reduction of $1.1 million of information technology equipment lease expenses.

Bad Debt Expense

        Consolidated bad debt expense increased $1.3 million, or 12.2%, to $11.6 million (0.9% of consolidated revenues) for the year ended December 31, 2002. Our projects to centralize collection efforts within our divisions have contributed significantly to holding bad debt expense flat as a percentage of consolidated revenues.

Depreciation, Amortization, Merger-Related Expenses and Loss on Disposal/Writedown of Property, Plant and Equipment, Net

        Consolidated depreciation and amortization expense decreased $44.3 million, or 28.9%, to $109.0 million (8.3% of consolidated revenues) for the year ended December 31, 2002 from $153.3 million (12.9% of consolidated revenues) for the year ended December 31, 2000.2001. Depreciation

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expense increased $20.3$16.7 million, primarily due to the additional depreciation expense related to the 2000 and 2001 acquisitions, particularly the inclusion of Pierce Leahy's depreciation expense for twelve months of 2001 versus eleven months of 2000 and capital expenditures, including storage systems, informationwhich include racking, building and leasehold improvements, computer systems hardware and expansion of storage capacity in existing facilities. Amortization expense

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software, and buildings, and depreciation associated with facilities accounted for as capital leases. Depreciation associated with our digital initiatives increased $6.4$3.7 million primarily due to the additional amortization expense related to the goodwill generated by our 2000 and 2001 acquisitions completed prior to July 1, 2001, particularly Pierce Leahy.

        Stock option compensation expense of $15.1 million forduring the year ended December 31, 2000 represents a non-cash charge resulting from the acceleration and extension of previously granted stock options2002 as a partresult of separation agreements with certain executives. There were no such costs forsoftware and hardware assets placed in service during late 2001 and throughout the years ended December 31, 2002. In the year ended December 31, 2001.2002, the recharacterization of eight properties added in the year ended December 31, 2001 under one of our synthetic lease programs, as well as nine properties added to such program in the year ended December 31, 2002, resulted in $1.7 million of additional depreciation. Amortization expense decreased $61.3 million, primarily due to eliminating amortization expense related to goodwill in accordance with SFAS No. 142. See Note 2(g) to Notes to Consolidated Financial Statements and "—Critical Accounting Policies—Accounting for Acquisitions."

        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 $3.7$0.8 million (0.3%(0.1% of consolidated revenues) for the year ended December 31, 20012002 compared to $9.1$3.7 million (0.9%(0.3% of consolidated revenues) for the same period of 2000.2001. All merger related activities associated with the Pierce Leahy merger were completed in the year ended December 31, 2002.

        Consolidated loss on disposal/writedown of property, plant and equipment, net for the year ended December 31, 2002 consisted of disposals and asset write-downs partially offset by a gain of $2.1 million recorded on the sale of a property in the U.K. during the second quarter of 2002.

Operating Income

        As a result of the foregoing factors, consolidated operating income increased $39.0$108.5 million, or 36.8%75.3%, to $145.0$252.6 million (12.4%(19.2% of consolidated revenues) for the year ended December 31, 20012002 from $106.0$144.1 million (10.7%(12.2% of consolidated revenues) for the year ended December 31, 2000.2001.

OIBDA

        As a result of the foregoing factors, consolidated OIBDA increased $64.2 million, or 21.6%, to $361.6 million (27.4% of consolidated revenues) for the year ended December 31, 2002 from $297.4 million (25.1% of consolidated revenues) for the year ended December 31, 2001.

Interest Expense, Net

        Consolidated interest expense, net increased $16.8$1.9 million, or 14.2%1.4%, to $136.6 million for the year ended December 31, 2002 from $134.7 million for the year ended December 31, 2001. This increase was primarily attributable to $6.2 million of interest expense associated with 17 properties within one of our Variable Interest Entities and increased long-term borrowings through our 2001 bond offerings. These increases were offset by a decline in our overall weighted average interest rate resulting from $118.0a general decline in interest rates coupled with our refinancing efforts.

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Other (Income) Expense, Net

        Significant items included in other (income) expense, net include the following (in thousands):

		2001			2002			Change
Foreign currency transaction (gains) and losses		$	10,437		$	(5,045	)	$	(15,482	)
Debt extinguishment expense			19,978			5,431			(14,547	)
Loss on investments			6,900			901			(5,999	)
Other, net			170			148			(22	)
		$	37,485		$	1,435		$	(36,050	)

        Foreign currency gains of $5.0 million forbased on period-end exchange rates were recorded in the year ended December 31, 2000. The increase was2002 primarily attributable to increased indebtedness related to: (1) $19.6 million of interest expense on the 8⁵/8% senior subordinated notes due 2013, or the 8⁵/8% notes, which were issued in April and September 2001; (2) the inclusion of term debt related to our credit facility for twelve months versus five months of 2000 resulting in an increase of $6.2 million; and (3) the inclusion of Pierce Leahy's debt for twelve months of 2001 versus eleven months of 2000 resulting in an increase of $4.7 million. These increases were partially offset by reduced interest expense of $11.8 million due to the retirementstrengthening of the Canadian dollar and British pound sterling against the U.S. dollar as these currencies relate to our 11¹/8%intercompany balances with our Canadian and 10¹/8% senior subordinated notes as well as a decline in the weighted average interest rate on our variable rate debt.

        Consolidated other expense was $18.4 million forEuropean subsidiaries. During the year ended December 31, 2001, the Canadian dollar had weakened compared to $6.0 millionthe U.S. dollar and was the primary reason for the year ended December 31, 2000.foreign currency loss of $10.4 million, based on period-end exchange rates.

        The change was partially due toloss on investments is the result of a $6.9 million impairment charge taken on our investment in convertible preferred stock of a technology development company. Additionally, we recorded a non-cash foreign currency losscompany in the third quarter of $10.4 million, primarily due to the effect of further weakening of the Canadian dollar against the U.S. dollar for2001. In the year ended December 31, 2001, versus2002, we recorded $0.9 million of similar write-downs.

        During the same periodyear ended December 31, 2002, we recorded a debt extinguishment charge of 2000, as it relates$1.2 million related to Iron Mountain Canada Corporation's 8¹/8% senior notes due 2008, or the 8early retirement of debt in conjunction with the refinancing of our revolving credit facility and in the fourth quarter of 2002 we recorded a debt extinguishment charge of $4.2 related to the early retirement of a portion of our 9¹/8% notes and the intercompany balancesin conjunction with our Canadian and European subsidiaries. In 2000, this amount was $6.3 million.

        As a resultunderwritten public offering of the foregoing factors, consolidated loss before provision for income taxes and minority interests decreased $9.9 million to $8.1 million (0.7% of consolidated revenues) for the year ended December 31, 2001 from $18.0 million (1.8% of consolidated revenues) for the year ended December 31, 2000. The provision for income taxes was $26.0 million for the year ended December 31, 2001 compared to $9.1 million for the year ended December 31, 2000.7³/4% Senior Subordinated Notes due 2015 (the "7³/4% notes"). For the year ended December 31, 2001, we recorded approximately $38.9 million of nondeductible goodwill amortization expense.

        Consolidated loss before extraordinary item increased $7.3 million to $32.2 million (2.8% of consolidated revenues) for the year ended December 31, 2001 from $24.9 million (2.5% of consolidated revenues) for the year ended December 31, 2000. In 2001, we recorded an extraordinarya debt extinguishment charge of $11.8$20.0 million (net of tax benefit of $8.2 million) related to the early retirement of ourthe 11¹/8% senior subordinated notes and 10¹/8% senior subordinated notes in conjunction with our underwritten public offerings of the 8⁵/8% notes. In 2000, we recorded an extraordinary charge of $2.9 million (net of tax benefit of $1.9 million) related to the early extinguishment of debt in conjunction with the refinancing of our senior credit facility.Senior Subordinated Notes due 2013 (the "8⁵/8% notes"). The charges

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consisted primarily represented call and tender premiums andof the write-off of unamortized deferred financing costs and call and tender premiums associated with the extinguished debt.

Provision for Income Taxes

       ��The provision for income taxes was $47.3 million for the year ended December 31, 2002 compared to $17.9 million for the year ended December 31, 2001. The effective rate was 41.3% for the year ended December 31, 2002 and the primary reconciling item between the statutory rate of 35% and the effective rate is state income taxes (net of federal benefit). The effective rate was (63.6%) for the year ended December 31, 2001. During the year ended December 31, 2001, we amortized non-deductible goodwill for book purposes, however, as result of the adoption of SFAS No. 142 in 2002, goodwill amortization ceased, thereby reducing the effective rate and some of the volatility with respect to our effective rate in the future. Additionally, the 2001 effective rate was impacted by state income taxes (net of federal benefit).

Minority Interest, Discontinued Operations, and Cumulative Effect of Change in Accounting Principle

        Minority interest in earnings (losses) of subsidiaries, net resulted in a charge to income of $3.6 million (0.3% of consolidated revenues) for the year ended December 31, 2002. This represents our minority partners' share of earnings (losses) in our majority-owned international subsidiaries that are consolidated in our operating results. In the year ended December 31, 2001, our subsidiaries incurred losses and the minority interest resulted in a credit to income of $1.9 million. The improved results are primarily a result of (1) the elimination of goodwill amortization expense in accordance with

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SFAS No. 142, (2) increased profitability in our European business and (3) our European minority partners' share ($0.7 million, net of tax) of the $2.1 million gain recorded on the sale of a property held by one of our European subsidiaries during the second quarter of 2002.

        In the fourth quarter of 2002, we recorded income from discontinued operations of $1.1 million (net of tax of $0.8 million) as a result of resolving several outstanding contingencies remaining from the sale of the Arcus Staffing Resources, Inc. business unit in 1999.

        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 2001.

Net Income (Loss)

        As a result of the foregoing factors, consolidated Adjusted EBITDAnet income increased $45.2$102.3 million, or 17.6%232.3%, to $302.2 million (25.8%$58.3 (4.4% of consolidated revenues) for the year ended December 31, 20012002 from $257.0 million (26.1%a net loss of $44.1 (3.7% of consolidated revenues) for the year ended December 31, 2000. Excluding the $5.4 million of expenses (0.5% of consolidated revenues) related to the development2001.

Segment Analysis (in thousands)

        The results of our new technology-relatedvarious operating segments are discussed below. In general, our business records management segment offers records management, secure shredding, healthcare information services, vital records services, and service offerings,and courier operations in the U.S. and Canada. Our off-site data protection segment offers data backup and disaster recovery services, vital records services, service and courier operations, and intellectual property protection services in the U.S. Our international segment offers elements of all our Adjusted EBITDA marginproduct and services lines outside the U.S. and Canada. Our corporate and other segment includes our corporate overhead functions and our fulfillment, consulting and digital archiving services.

		Business Records Management			Off-Site Data Protection			International			Corporate & Other
Segment Revenue
Year Ended
December 31, 2002		$	944,845		$	239,081		$	109,381		$	25,190
December 31, 2001			861,302			209,429			89,475			25,512
Increase (Decrease) in Revenues		$	83,543		$	29,652		$	19,906		$	(322	)
Percentage Increase in Revenues			9.7	%		14.2	%		22.2	%		(1.3	%)
Segment Contribution (1)
Year Ended
December 31, 2002		$	262,541		$	61,729		$	21,988		$	16,890
December 31, 2001			227,164			50,254			16,250			7,712
Segment Contribution (1) as a Percentage of Segment Revenue
Year Ended
December 31, 2002			27.8	%		25.8	%		20.1	%		67.1	%
December 31, 2001			26.4	%		24.0	%		18.2	%		30.2	%

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(1)

See Note 12 to Notes to Consolidated Financial Statements for definition of Contribution and for the year ended December 31, 2001 was 26.3%basis on which allocations are made and a reconciliation of Contribution to net income (loss) on a consolidated revenues. There were no such costs in the same period of 2000.basis.

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Business Records Management

        Adjusted EBITDARevenue in our business records management segment increased 9.7% primarily due to increased storage revenues, strong special projects revenues and acquisitions. The increase in Contribution, which we use as our internal measurement of financial performance and as the basis for allocating resources to our segments, as a percent of segment revenue for our business records management segment decreased from 27.4% to 26.8%,is primarily due to: (1) increases in costto labor and transportation efficiencies gained by the increasing scale of sales associated with other facility costs,our business and the completion of our integration of Pierce Leahy. Lower facilities expenditures, including rent expense and utilities, and property insurance; (2) increases in selling, general and administrative expenseslower bad debt expense resulting from our improved collection efforts also contributed to the improvement of Contribution, as a resultpercentage of divisionalization; (3) higher data communications costs resulting from network deployment and migration activities; and (4) ansegment revenue. This increase in the provision for doubtful accounts. This decrease was partially offset by increaseshigher insurance premiums for property and casualty insurance and an increased investment in gross margin driven by real estate management and labor efficiencies obtainedour sales force. Reductions in spending related to telecommunication expenditures, as a resultpercentage of an increasesegment revenue, also contributed to increasing Contribution.

Off-Site Data Protection

        Revenue in scale.

        Adjusted EBITDAour off-site data protection segment increased 14.2% primarily due to internal revenue growth from both existing and new customers. Contribution as a percent of segment revenue for our off-site data protection segment increased from 25.2% to 26.1% primarily due to an increase in gross margin as a result of improved labor and transportation and real estate management, as well as the contribution from the segment's acquisition of two higher margin escrow businesses. This increase was partially offset by: (1) the decentralization of various overhead functions; (2) an increase in spending for sales and marketing; and (3) a decrease in contribution from the segment's higher margin complementary services due to the relatively slower growth in revenue for those services.

        The Adjusted EBITDA margin for our international segment increased from 20.5% to 23.7% primarily due to: (1) the inclusion of an additional month in 2001 of our more profitable Canadian business acquired as a part of the Pierce Leahy acquisition; (2) efficiency gains from the economies of scale achieved through the December 2000 acquisition of FACS Record Centre Inc., a Canadian company; and (3) improved margins from our Latin American operations.management. This increase was partially offset by higher insurance premiums for property and casualty insurance and an increase of $0.7 million in the provision for doubtful accounts at our European operations.bad debt expense.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999International

        ConsolidatedRevenue in our international segment increased primarily due to increased sales efforts and a large service project in the U.K., as well as, acquisitions completed in Europe and South America in the fourth quarter of 2002. Contribution as a percent of segment revenue for our international segment increased primarily due to improved gross margins from our European operations and reduced bad debt expense. This increase was partially offset by higher insurance premiums for property and casualty insurance and reduced margins in our South American operations due to the deteriorating local economic conditions and devaluation of the currency in Argentina. Unfavorable currency fluctuations in South America and Mexico during the year ended December 31, 2002 reduced revenues, as measured in U.S. dollars, by $5.0 million. This reduction was offset by the impact of favorable currency fluctuations during the year ended December 31, 2002 in Europe that increased $466.9revenue $2.9 million or 89.9%,when compared to $986.4the prior year rates.

Liquidity and Capital Resources

        The following is a summary of our cash balances and cash flows for the years ended 2001, 2002 and 2003 (in thousands).

		2001			2002			2003
Cash flows provided by operating activities		$	160,909		$	254,948		$	288,693
Cash flows used in investing activities			(278,136	)		(247,757	)		(586,634	)
Cash flows provided by financing activities			134,901			27,098			315,054
Cash and cash equivalents at the end of year		$	21,359		$	56,292		$	74,683

        Net cash provided by operating activities was $288.7 million for the year ended December 31, 2000 from $519.52003 compared to $254.9 million for the year ended December 31, 1999. Total internal revenue2002. The increase resulted primarily from an increase in operating income and non-cash items, such as depreciation, amortization, debt extinguishment expenses and deferred income taxes. The net change in assets and liabilities primarily associated with growth calculatedin revenues and the resulting increase in receivables and disbursements to

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vendors contributed $2.0 million to cash flows from operating activities in the year ended December 31, 2003 as if Pierce Leahy had merged with Iron Mountain on January 1, 1999,compared to $27.6 million in the year ended December 31, 2002.

        We have made significant capital expenditures, additions to customer relationship costs and other investments, primarily acquisitions. Our capital expenditures are primarily related to growth and include investments in storage systems, information systems and discretionary investments in real estate. Cash paid for our capital expenditures and additions to customer relationship and acquisition costs during the year ended December 31, 2003 amounted to $204.5 million and $12.6 million, respectively. These investments have been funded entirely through cash flows from operations, as was 12.3%.the case in the year ended December 31, 2002, and we expect this to be the case again in the year ended December 31, 2004. In addition, we received proceeds from sales of property and equipment of $11.7 million in the year ended December 31, 2003. Excluding any potential acquisitions, we expect our capital expenditures to be between approximately $210 million and approximately $240 million in the year ending December 31, 2004.

        Consolidated storage revenues increased $268.3In the year ended December 31, 2003, we paid net cash consideration of $381.2 million or 84.5%, to $585.7for acquisitions and other investments including $333.0 million for the acquisition of Hays IMS. Cash flows from operations funded all but the Hays IMS acquisition, which was funded through borrowings under our revolving credit facilities and the net proceeds from other financing transactions. In the year ended December 31, 2002, cash flows from operations funded all of our acquisitions.

        Net cash provided by financing activities was $315.1 million for the year ended December 31, 2000 from $317.4 million for2003. During the year ended December 31,1999. Consolidated storage revenues increased primarily duewe had gross borrowings under our revolving credit facilities of $744.0 million and we received net proceeds of $617.2 million from the issuance of our 7³/4% notes and our 6⁵/8% notes. We used the proceeds from these financing transactions to acquisitions, particularly the Pierce Leahy acquisition. Pierce Leahy's 1999 storage revenues were $190.1 million. Internal storage revenue growth, calculated as if Pierce Leahy had merged with Iron Mountain on January 1, 1999, was 11.7%. The internal storage revenue growth resulted primarily from net increases in recordsrepay debt and other media stored by existing customersterm loans ($698.8 million), retire senior subordinated notes ($374.3 million) and from sales to new customers.

        Consolidated service and storage material sales revenues increased $198.5 million, or 98.2%, to $400.7 million for the year ended December 31, 2000 from $202.2 million for the year ended December 31, 1999. Consolidated service and storage material sales revenues increased primarily due to acquisitions, particularly the Pierce Leahy acquisition. Pierce Leahy's 1999 service and storage material sales revenues were $152.2 million. Internal service and storage material sales revenue growth, calculated as if Pierce Leahy had merged with Iron Mountain on January 1, 1999, was 13.3%. The internal revenue growth resulted from increases in service and storage material sales to existing customers and the addition of new customer accounts.

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        Consolidated cost of sales (excluding depreciation) increased $221.9 million, or 85.0%, to $482.8 million (48.9% of consolidated revenues) for the year ended December 31, 2000 from $260.9 million (50.2% of consolidated revenues) for the year ended December 31, 1999. The dollar increase was primarily attributable topartially fund the acquisition of Pierce Leahy. The decrease as a percentage of revenues was primarily attributable to operating efficiencies, particularly related to labor and transportation, gained as a result of an increase in scale, offset by the increased facilities costs of Pierce Leahy, which are typical of a more paper storage-intensive business. Our business records management and international segments are substantially paper-based. Revenues for these segments have increased from 73% to 80% of total revenues from 1999 to 2000.Hays IMS.

        Consolidated selling, generalSince December 31, 2003, we have completed three acquisitions for total consideration of approximately $26 million. In addition, we acquired the remaining 49.9% equity interest in IME for approximately $154 million. These transactions will be reflected in our consolidated statement of cash flows in the first quarter of 2004.

        We are highly leveraged and administrative expenses increased $117.7 million, or 91.2%,expect to $246.6 million (25.0% of consolidated revenues)continue to be highly leveraged for the year endedforeseeable future. Our consolidated debt as of December 31, 2000 from $128.9 million (24.8%2003 was comprised of consolidated revenues) for the year endedfollowing (in thousands):

Revolving Credit Facility due 2005		$	142,280
Term Loan due 2008			248,750
81/8% Senior Notes due 2008			18,768
81/4% Senior Subordinated Notes due 2011(1)			149,670
85/8% Senior Subordinated Notes due 2013(1)			481,075
73/4% Senior Subordinated Notes due 2015(1)			441,331
65/8% Senior Subordinated Notes due 2016(1)			314,071
Real Estate Term Loans			202,647
Real Estate Mortgages			17,584
Seller Notes			12,607
Other			61,145
Long-term Debt			2,089,928
Less Current Portion			(115,781	)
Long-term Debt, Net of Current Portion		$	1,974,147

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(1)

These debt instruments are collectively referred to as the "Parent Notes." The Parent notes, along with our revolving credit facility and term loan, are fully and unconditionally guaranteed, on a

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senior subordinated basis, by substantially all of our direct and indirect wholly owned U.S. subsidiaries (the "Guarantors"). These guarantees are joint and several obligations of the Guarantors. The remainder of our subsidiaries do not guarantee the Parent notes or the revolving credit facility and term loan.

        Our indentures use OIBDA-based calculations as primary measures of financial performance, including leverage ratios. Our key bond leverage ratio, as calculated per our bond indentures, increased to 5.0 as of December 31, 1999. The dollar increase was primarily attributable to the Pierce Leahy acquisition. The increase2003 from 4.8 as a percentage of revenues was primarily attributable to increased spending on information technology related to: (1) the conversion of new systems for our off-site data protection business; (2) increased staffing in preparation for systems conversions related to the integration of Pierce Leahy with us; and (3) our efforts to explore complementary digital service offerings. These increases were partially offset by general management overhead efficiencies driven by an increase in scale.

        Consolidated depreciation and amortization expense increased $61.4 million, or 93.8%, to $126.8 million (12.9% of consolidated revenues) for the year ended December 31, 2000 from $65.4 million (12.6% of consolidated revenues) for the year ended December 31, 1999. The dollar increase was primarily attributable to the additional depreciation and amortization expense related to the 1999 and 2000 acquisitions, particularly the Pierce Leahy acquisition, and capital expenditures including racking systems, information systems and expansion of storage capacity in existing facilities.

        Stock option compensation expense represents a non-cash charge resulting from the acceleration of vesting and extension of exercise periods for previously granted stock options as a part of separation agreements with certain executives relating to the Pierce Leahy merger. Stock option compensation expense was $15.1 million (1.6% of consolidated revenues) for the year ended December 31, 2000.

        Merger-related expenses are certain expenses directly related to our merger with Pierce Leahy that cannot be capitalized and include severance, relocation and pay-to-stay payments, costs of exiting certain facilities, system conversion costs and other transaction-related costs. Merger-related expenses were $9.1 million (0.9% of consolidated revenues) for the year ended December 31, 2000.

        As a result of the foregoing factors, consolidated operating income increased $41.8 million, or 65.0%, to $106.0 million (10.7% of consolidated revenues) for the year ended December 31, 2000 from $64.2 million (12.4% of consolidated revenues) for the year ended December 31, 1999.

        Consolidated interest expense increased $63.6 million, or 116.8%, to $118.0 million for the year ended December 31, 2000 from $54.4 million for the year ended December 31, 1999.2002. The increase was primarily attributable to increased indebtedness related to: (1)incurred by us and lent to IME to fund IME's acquisition of the debt assumed asEuropean operations of Hays IMS. Noncompliance with this leverage ratio would have a material adverse effect on our financial condition and liquidity. Subsequent to December 31, 2003, our key bond leverage ratio decreased to 4.9. The decrease was the result of the Pierce Leahy acquisition; (2)partial repayment by IME of the financing we provided to acquire Hays IMS offset by our January 2004 offering of acquisitions150 million British pounds sterling in aggregate principal amount of our 7¹/4% Senior Subordinated Notes due 2014 (the "7¹/4% notes") and the related use of the proceeds to acquire Mentmore's 49.9% equity interest in IME and to repay existing debts. Our target for this ratio is generally in the range of 4.5 to 5.5 while the maximum ratio allowable under the bond indentures is 6.5.

        Our ability to pay interest on or to refinance our indebtedness depends on our future performance, working capital levels and capital expenditures; (3) the increasestructure, which are subject to general economic, financial, competitive, legislative, regulatory and other factors which may be beyond our control. There can be no assurance that we will generate sufficient cash flow from our operations or that future financings will be available on acceptable terms or in amounts sufficient to enable us to service or refinance our indebtedness, or to make necessary capital expenditures.

        Our indentures and other agreements governing our indebtedness contain certain restrictive financial and operating covenants including covenants that restrict our ability to complete acquisitions, pay cash dividends, incur indebtedness, make investments, sell assets and take certain other corporate actions. The covenants do not contain a rating trigger. Therefore, a change in our effectivedebt rating would not trigger a default under our indentures and other agreements governing our indebtedness. As of December 31, 2003, we were in compliance with all material debt covenants and agreements.

        As of December 31, 2003, we had $142.3 million of borrowings outstanding under our revolving credit facility, all of which was denominated in British pounds sterling in the amount of GBP 80.0 million. We also had various outstanding letters of credit totaling $34.4 million. The remaining availability under the revolving credit facility on December 31, 2003 was $223.3 million based on our current level of external debt and the leverage ratio under the Amended and Restated Credit Agreement. The interest rate from the same period in 1999; and (4) our debt refinancing on August 14, 2000, resulting in additional principal outstanding and additional commitment fees, which were only partially offset by interest earned on excess cash.effect was 5.6% as of December 31, 2003.

        Consolidated other income (expense) was an expenseIn January 2003, we redeemed the remaining $23.2 million of $6.0 million for the year ended December 31, 2000 compared to incomeoutstanding principal amount of $0.0 million for the year ended December 31, 1999. The increase in expense was primarily due to a weakening of the Canadian dollar against the U.S. dollar, as it relates to the 8our 9¹/8% notes, at a redemption price (expressed as a percentage of principal amount) of 104.563%, plus accrued and a weakeningunpaid interest, with proceeds from our underwritten public offering of the British pound sterling against the U.S. dollar on intercompany balances with our European subsidiaries.

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        As a result of the foregoing factors, consolidated income (loss) from continuing operations before provision for income taxes and minority interests decreased $27.8 million to a loss of $18.0 million (1.8% of consolidated revenues) for the year ended December 31, 2000 from income of $9.8 million (1.9% of consolidated revenues) for the year ended December 31, 1999. The provision for income taxes was $9.1 million for the year ended December 31, 2000 compared to $10.6 million for the year ended December 31, 1999. Our effective tax rate is higher than statutory rates primarily due to the amortization of the nondeductible portion of goodwill associated with certain acquisitions (the tax laws generally permit deduction of such expenses for asset purchases, but not for acquisitions of stock). For the year ended December 31, 2000, we recorded approximately $35$100.0 million in nondeductible goodwill amortization expense.

        Consolidated loss from continuingaggregate principal of our 7³/4% notes. We recorded a charge to other (income) expense, net in the accompanying consolidated statement of operations increased $23.8of $1.8 million to $24.9 million (2.5%in the first quarter of consolidated revenues) for the year ended December 31, 2000 from $1.1 million (0.2% of consolidated revenues) for the year ended December 31, 1999.

        In addition, in August 2000, we recorded an extraordinary charge of $2.9 million (net of tax benefit of $1.9 million)2003 related to the early retirement of the remaining 9¹/8% notes.

        In March 2003, we completed two debt exchanges, which resulted in the issuance of $31.3 million in face value of our 7³/4% notes and the retirement of $30.0 million of our 8³/4% notes. These non-cash debt exchanges resulted in carryover basis and, therefore, no gain (loss) on extinguishment of debt in conjunctionaccordance with EITF No. 96-19, "Debtor's Accounting for Modification or Exchange of Debt Instruments." These exchanges result in a lower interest rate and, therefore, lower interest expense in future periods, as well as extend the refinancingmaturity of our senior credit facility. The charge primarily represented the write-off of unamortized deferred financing costs associated with the extinguished debt.

        As a result of the foregoing factors, consolidated net loss increased $13.6 million, or 95.7%,debt obligations. From time to $27.8 million (2.8% of consolidated revenues) for the year ended December 31, 2000 from $14.2 million (2.7% of consolidated revenues) for the year ended December 31, 1999.

Recent Consolidated Quarterly Financial Datatime, we may enter into similar exchange transactions that we deem appropriate.

        The following table sets forth, for the quarterly periods indicated, information derived from our consolidated statements of operations. The unaudited quarterly information has been prepared on the same basis as the annual financial information and, in management's opinion, includes all adjustments (consisting of normal recurring accruals) necessary to present fairly the information for the quarters presented. The operating results for any quarter are not necessarily indicative of results for the year or for any future period.

				Three Months Ended
				2000												2001
				Mar. 31			June 30			Sept. 30			Dec. 31			Mar. 31			June 30			Sept. 30			Dec. 31
				(In thousands)
Revenues:
	Storage			$	124,939		$	148,445		$	152,959		$	159,321		$	167,865		$	171,891		$	175,012		$	179,706
	Service and Storage Material Sales				87,198			104,120			103,174			106,215			116,057			121,443			116,661			122,481
		Total Revenues			212,137			252,565			256,133			265,536			283,922			293,334			291,673			302,187
Operating Expenses:
	Cost of Sales (excluding depreciation)				104,458			121,973			125,079			131,261			139,820			139,030			139,918			143,168
	Selling, General and Administrative				53,457			64,724			63,783			64,595			70,317			78,686			76,822			81,109
	Depreciation and Amortization				26,303			31,644			34,829			34,034			35,718			37,788			38,921			41,164
	Stock Option Compensation Expense				—			14,939			171			—			—			—			—			—
	Merger-related Expenses				516			3,875			1,262			3,480			801			377			1,049			1,446
		Total Operating Expenses			184,734			237,155			225,124			233,370			246,656			255,881			256,710			266,887
Operating Income				$	27,403		$	15,410		$	31,009		$	32,166		$	37,266		$	37,453		$	34,963		$	35,300
Other Data:
EBITDA				$	53,232		$	43,491		$	63,443		$	68,811		$	64,067		$	82,956		$	60,012		$	75,096
Adjusted EBITDA				$	54,222		$	65,868		$	67,271		$	69,680		$	73,785		$	75,618		$	74,933		$	77,910

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Liquidity and Capital Resources

Recent Financings, Sources of Funds and Long-term Obligations




        In April 2001,2003, we completed an underwritten public offering of $225.0an additional $300 million in aggregate principal amount of our 7³/4% notes, which were issued at a price to investors of 104% of par, implying an effective yield to worst of 7.066%. Our net proceeds of $307.3 million, after paying the underwriters' discounts, commissions and transaction fees, were used to fund our offer to purchase and consent solicitation relating to our outstanding 8³/4% notes, redeem the 8³/4% notes not purchased in the offer, repay borrowings under our revolving credit facility, repay other indebtedness and pay for acquisitions.

        In April 2003, we received and accepted tenders for $143.3 million of the $220 million aggregate principal amount outstanding of our 8³/4% notes. In May 2003, we redeemed the remaining $76.7 million of outstanding principal amount of our 8³/4% notes, at a redemption price (expressed as a percentage of principal amount) of 104.375%, plus accrued and unpaid interest. We recorded a charge to other (income) expense, net of $13.8 million in the second quarter of 2003 related to the early retirement of the 8³/4% notes, which consists of redemption premiums and transaction costs, as well as original issue discount and unamortized deferred financing costs related to the 8³/4% notes.

        In June 2003, we completed an underwritten public offering of $150 million in aggregate principal amount of our 6⁵/8% notes. The 86⁵/8% notes were issued at a price to investors of 100% of par. Our net proceeds of $218.6$147.5 million, after paying the underwriters' discounts, and commissions and related expenses,transaction fees, were used to fundredeem $50 million in aggregate principal amount of the outstanding Subsidiary notes in the third quarter of 2003 and pay for acquisitions.

        In July 2003, using proceeds from our offer to purchase and consent solicitation relating to our outstanding 11June 2003 offering of 6¹⁵/8% notes, to repay outstanding borrowings under our revolving credit facility and for general corporate purposes, including acquisitions.

        In April 2001, we received and accepted tenders for $124.6redeemed $50 million of the outstanding principal amount of our 11¹/8% notes. We recorded an extraordinary charge of $4.8 million (net of tax benefit of $3.3 million) in the second quarter related to the early retirement of the 11¹/8% notes. Subsequently, we redeemed the remaining $5.4 million of principal amount of the 11¹/8%Subsidiary notes, at a redemption price (expressed as a percentage of principal amount) of 105.563%104.063%, plus accrued and unpaid interest, forinterest. We recorded a total costcharge to other (income) expense, net of $5.5 million in the third quarter of 2003 related to the early retirement of these Subsidiary notes, which consists of redemption premiums and transaction costs, as well as original issue discount related to these Subsidiary notes.

        In July 2003, we and IME completed the acquisition of $6.0 million.Hays IMS in two simultaneous transactions. IME acquired the European operations of Hays IMS for aggregate cash consideration (including transaction costs) of approximately 190.0 million British pounds sterling ($309.0 million), while we acquired the U.S. operations of Hays IMS for aggregate cash consideration (including transaction costs) of 14.5 million British pounds sterling ($24.0 million). Both transactions were on a cash and debt free basis.

        We provided the initial financing totaling 190.5 million British pounds sterling to IME for all of the consideration associated with the acquisition of the European operations of Hays IMS using cash on hand and borrowings under our revolving credit facility. We recorded a foreign currency gain of $27.8 million in other (income) expense, net for this intercompany balance for the year ended December 31, 2003. In order to minimize the foreign currency risk associated with providing IME with the consideration necessary for the acquisition of the European operations of Hay IMS, we borrowed 80.0 million British pounds sterling under our revolving credit facility to create a natural hedge. We recorded a foreign currency loss of $11.5 million on the translation of this revolving credit balance to U.S. dollars in other (income) expense, net for the year ended December 31, 2003. Additionally, on July 16, 2003 we entered into two cross currency swaps with a combined notional value of 100.0 million British pounds sterling. These swaps each have a term of one year and at maturity we have a right to receive $162.8 million in exchange for 100.0 million British pounds sterling. We have not designated these swaps as hedges and, therefore, all mark to market fluctuations of the swaps are recorded in other (income) expense, net in our consolidated statements of operations. We have recorded, as of December 31, 2003, a foreign currency loss of $19.0 million in other (income) expense, net.

        In September 2001,December 2003, we completed an underwritten public offering which resulted in the issuance of an additional $210.0$170 million in aggregate principal amount of our 86⁵/8% notes. The additional notes, which were issued at a price to investors of 101.50%96.5% of par.

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par, implying an effective yield to worst of 7.06%. Our net proceeds of $209.3$161.3 million, after paying the underwriters' discounts, and commissions and related expenses,transaction fees, were used to fund our offer to purchase and consent solicitation relating to ourredeem $65.0 million in aggregate principal amount of the outstanding 10¹/8%Subsidiary notes and to redeemin the remaining 10¹/8% notes, as well as tofourth quarter of 2003, repay outstanding borrowings under our revolving credit facility, repay other indebtedness and pay for general corporate purposes, including acquisitions.

        In September 2001, we received and accepted tenders for $156.7 millionDecember 2003, using proceeds from our December 2003 offering of the $165.0 million aggregate principal amount outstanding of our 106¹/8% notes. We recorded an extraordinary charge of $7.0 million (net of tax benefit of $4.9 million) in the third quarter related to the early retirement of the 10¹/8% notes. Subsequently, we received and accepted tenders for an additional $0.3 million in aggregate principal amount of our 10¹⁵/8% notes, andwe redeemed the remaining $8.0$65.0 million of outstanding principal amount of our 10¹/8%the Subsidiary notes, at a redemption price (expressed as a percentage of principal amount) of 105.06%104.313%, plus accrued and unpaid interest, forinterest. We recorded a total costcharge to other (income) expense, net of $7.0 million in the fourth quarter of 2003 related to the early retirement of these Subsidiary notes, which consists of redemption of $9.0 million.premiums and transaction costs, as well as original issue discount related to these Subsidiary notes.

        On March 15, 2002,In January 2004, we entered into a new amended and restated revolving credit agreement (the "Amended and Restated Credit Agreement"). The Amended and Restated Credit Agreement replaces our existing credit agreement. The Amended and Restated Credit Agreement hascompleted an offering of 150 million British pounds sterling in aggregate principal amount of $650.0our 7¹/4% notes, which were issued at a price of 100.0% of par. Our net proceeds of 146.9 million British pounds sterling, after paying the initial purchasers' discounts, commissions and includes a $400.0transaction fees, were used to fund our acquisition of Mentmore plc's 49.9% equity interest in IME for total consideration of 82.5 million British pounds sterling, to redeem $20.0 million in aggregate principal amount of the outstanding Subsidiary notes in the first quarter of 2004, repay borrowings under our revolving credit facility, repay other indebtedness and pay for other acquisitions.

        In February 2004, using proceeds from our January 2004 offering of 7¹/4% notes, we redeemed the remaining $20 million of outstanding principal amount of the Subsidiary notes, at a redemption price (expressed as a percentage of principal amount) of 104.063%, plus accrued and unpaid interest. We will record a charge of approximately $2 million to other (income) expense, net in the first quarter of 2004 related to the early retirement of these remaining Subsidiary notes, which consists of redemption premiums and transaction costs, as well as original issue discount related to these Subsidiary notes.

        In February 2004, we completed the acquisition of Mentmore plc's 49.9% equity interest in IME for total consideration of 82.5 million British pounds sterling ($154 million) in cash from proceeds of our 7¹/4% notes issued in January 2004. Included in this amount is the repayment of all trade and working capital funding owed to Mentmore by IME. Completion of the transaction gives us 100% ownership of IME, affording us full access to all future cash flows and greater strategic and financial flexibility. This transaction should have no impact on revenue or operating income since we already fully consolidate IME's financial results. Since we will be using the purchase method of accounting for this acquisition, 49.9% of the net assets of IME will be adjusted to reflect their fair market value if different from their current carrying value. As a result, we expect this transaction will increase depreciation and amortization expenses going forward. Additionally, we will record an increase in interest expense, net associated with the 7¹/4% notes used to fund this acquisition and will no longer record the minority interest in earnings of subsidiaries, net related to Mentmore's ownership interest in IME.

        In March 2004, IME and certain of its subsidiaries entered into a credit agreement (the "IME Credit Agreement") with a syndicate of European lenders. The IME Credit Agreement provides for maximum borrowing availability in the principal amount of 210 million British pounds sterling, including a 100 million British pounds sterling revolving credit facility,(which includes the ability to borrow in certain other foreign currencies), a 100 million British pounds sterling term loan, and a term loan facility in the amount of $250.0 million.10 million British pounds sterling overdraft protection line. The revolving credit facility matures on January 31, 2005 while theMarch 2, 2009. The term loan facility is to be paidpayable in fullthree installments; two installments of 20 million British pounds sterling on February 15, 2008; however, if our 9¹/8% senior subordinated notes dueMarch 2, 2007 orand 2008, respectively, and the 9¹/8% notes, are not redeemed or repurchased prior to April 15, 2007final payment of the term loan will matureremaining balance on April 15, 2007.March 2, 2009. The interest rate on borrowings under the IME Credit Agreement is based on LIBOR and varies depending on IME's choice of interest rate period, plus an applicable margin. The IME Credit Agreement includes various financial covenants applicable to the results of IME, which may restrict IME's ability to incur indebtedness under the IME Credit

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Agreement and with third parties. Each of IME's subsidiaries will either guarantee the obligations or pledge shares to secure the IME Credit Agreement. We have not guaranteed or otherwise provided security for the IME Credit Agreement nor have any of our U.S., Canadian, Mexican and South American subsidiaries.

        In March 2004, IME borrowed approximately 147 million British pounds sterling under the IME Credit Agreement, including the full amount of the term loan. IME used those proceeds to repay us 135 million British pounds sterling related to our initial financing of the acquisition of the European operations of Hays IMS. We expect to use those proceeds to: (1) pay down approximately $104 million of real estate term loans, (2) settle all obligations associated with terminating our two cross currency swaps used to hedge the foreign currency impact of our intercompany financing with IME, and (3) to pay down amounts outstanding under our Amended and Restated Credit Agreement. After the initial balance, IME's availability under the IME Credit Agreement, varies dependingbased on its current level of external debt and the leverage ratio under the IME Credit Agreement, was approximately 9 million British pounds sterling.

        The real estate term loans held by our choiceVariable Interest Entities have always been and continue to be treated as indebtedness for purposes of baseour financial covenants under our Amended and Restated Credit Agreement. As of the date they were consolidated into our financial statements, they were also considered indebtedness under our Indentures for our Senior Subordinated Notes and our Subsidiary notes. As of December 31, 2002 and 2003, these real estate term loans amounted to $202.6 million. No further financing is currently available to our Variable Interest Entities to fund further property acquisitions. See Notes 3, 4 and 5 to Notes to Consolidated Financial Statements and "—Critical Accounting Policies." The details of each real estate term loan is a follows:

•

A $47.5 million real estate term loan made in October 1998 bearing interest at various variable interest rates and currency options,based on LIBOR (London Inter-Bank Offered Rate) plus an applicable margin. This marginreal estate term note has a principal payment due on March 31, 2004 of $28.8 million with the remaining $18.7 million maturing on March 31, 2005. This real estate term loan is expected to be repaid in March 2004.



•

A $56.4 million real estate term loan made in July 1999 bearing interest at various variable interest rates based on LIBOR plus an applicable margin. This real estate term note matures on December 31, 2005. This real estate term loan is expected to be repaid in March 2004.



•

A $98.7 million real estate term loan made in May 2001 bearing interest at various variable interest rates based on LIBOR plus an applicable margin. This real estate term note matures on November 22, 2007.

        The following table summarizes our contractual obligations as of December 31, 2003 and the term loans under the Amended and Restated Credit Agreement is lower than the margin applicable to such loans under our existing credit agreement and will result in reduced interest expenseanticipated effect of these obligations on our borrowings as compared toliquidity in future years (in thousands):

		Payments Due by Period
		Total			Less than 1 Year			1-3 Years			3-5 Years			More than 5 Years
Long-term Debt (including Capital Lease Obligations)		$	2,087,127		$	116,998		$	228,472		$	347,209		$	1,394,448
Operating Lease Obligations			902,884			135,512			222,238			158,722			386,412
Purchase Obligations			42,528			16,011			23,888			2,629			—
Total		$	3,032,539		$	268,521		$	474,598		$	508,560		$	1,780,860

        In connection with some of our acquisitions, we have potential earn-out obligations that would be payable in the previous credit agreement. Restrictive covenants under this agreementevent businesses we acquired meet certain operational objectives. These payments are similar to those under our prior credit facility. All intercompany notes are now pledged to secure the Amended and Restated Credit Agreement.

        Net cash provided by financing activities was $134.9 million for the year ended December 31, 2001, consisting primarily of net proceeds of $427.9 million from the sale of the 8⁵/8% notes and equity

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contributions from minority shareholdersbased on the future results of $24.8 million, partially offset by the early retirementthese operations and our estimate of the 11¹/8% notes and the 10¹/8% notesmaximum contingent earn-out payments we would be required to make under all such agreements as of $312.7December 31, 2003 is approximately $5 million.

        NetWe expect to meet our cash provided by continuing operations was $160.9 millionflow requirements for the year ended December 31, 2001 comparednext twelve months from cash generated from operations, existing cash, cash equivalents and marketable securities, borrowings under our revolving credit facility and other financings, which may include secured credit facilities, securitizations and mortgage or capital lease financings. See Notes 5, 10 and 13 to $157.6 million for the same period in 2000. The increase was primarily attributableNotes to an increase in operating income and trade payables, partially offset by an increase in trade accounts receivable and prepaid expenses and a decrease in accrued expenses.Consolidated Financial Statements.

Net Operating Loss Carryforwards

        At December 31, 2001,2003, we had estimated net operating loss carryforwards of approximately $173$123 million for federal income tax purposes. As a result of such loss carryforwards, cash paid for income taxes has historically been substantially lower than the provision for income taxes. The precedingThese net operating loss carryforwards do not include approximately $79$103 million of potential preacquisition net operating loss carryforwards of Arcus Group, Inc. and certain other foreign acquisitions. Any tax benefit realized related to preacquisition net operating loss carryforwards will be recorded as a reduction of goodwill when, and if, realized. The Arcus Group carryforwards begin to expire in seventwo years. As a result of these loss carryforwards, we do not expect to pay any significant international, U.S. federal and state income taxes in the next three years.

        As of December 31, 2001, the annual maturities of our indebtedness for the years ending December 31, 2002, 2003, 2004, 2005 and 2006 were $35.3 million, $10.3 million, $5.1 million, $298.1 million and $54.6 million, respectively. See Note 4 of Notes to Consolidated Financial Statements. None of our public debt is subject to scheduled mandatory redemption before 2006.

        As of December 31, 2001, the minimum future payments under our operating leases for the years ending December 31, 2002, 2003, 2004, 2005 and 2006 were $123.6 million, $111.4 million, $100.4 million, $86.3 million and $68.6 million, respectively. See Note 13 of Notes to Consolidated Financial Statements.

        As of February 28, 2002, we had approximately $1,508.9 million of total debt, of which $1,317.8 million or 87.3% of total debt, including the $195.5 million of debt subject to the interest rate swap agreements (see Note 4 of Notes to Consolidated Financial Statements), had fixed interest rates and $191.1 million had variable interest rates.

Capital Investments

        As we have sought to increase our EBITDA and Adjusted EBITDA, we have made significant capital investments, consisting primarily of: (i) the purchase and construction of real estate; (ii) other capital expenditures; (iii) acquisitions; and (iv) customer acquisition costs. These investments have been primarily funded through cash flows from operations and borrowings under our revolving credit facilities.

        During 2001, total capital expenditures were $197.0 million. A significant portion of our capital expenditures are related to growth and consist primarily of storage systems, management information systems, new buildings and expansion of storage capacity in existing facilities. Approximately 10% of total capital expenditures were expended in order to maintain our then current revenue stream. We currently estimate that our capital expenditures (other than capital expenditures related to future acquisitions, which cannot be presently estimated, and our digital services offerings, which are described separately below) for 2002 will be approximately $175 to $200 million. We expect to fund these expenditures with cash flows from operations and borrowings under the Amended and Restated Credit Agreement.

        Cash paid for acquisitions, net of cash acquired, in 2001 was $71.4 million. In addition, in 2001, we incurred costs (net of revenues received for the initial transfer of records) related to the acquisition of large volume accounts (customer acquisition costs) of $8.4 million.

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        We have been assessing various opportunities in the technology-based services business driven by e-commerce and facilitated by the Internet. Services associated with this business would expand our range of services into the use of the Internet to facilitate the backup, storage and management of customer data. We estimate that we will incur expenses associated with the continuing development of our digital service offerings in the range of $7 million to $9 million during 2002. In addition, we expect the capital expenditures associated with the continuing development of our digital service offerings in 2002 will be in the range of $5 million to $6 million. We intend to fund this effort with cash flows from operations and borrowings under the Amended and Restated Credit Agreement.

Synthetic Leasing

        Our synthetic leases contain financial and other covenants, and events of default, that are similar to those contained in our Amended and Restated Credit Agreement. Seven financial institutions have provided over 50% of the capacity under our $400.0 million revolving credit facility. These seven financial institutions also participate in our synthetic lease programs. An event of default under one of our synthetic lease facilities would result in an event of default under our Amended and Restated Credit Agreement, enabling the lenders under the Amended and Restated Credit Agreement to terminate their commitments to lend and accelerate our obligations thereunder. An event of default under one of our synthetic lease facilities would not, directly, result in an event of default under any indenture pursuant to which our publicly traded notes were issued. However, an acceleration of our obligations under our Amended and Restated Credit Agreement would result in an event of default under each indenture, thereby enabling the holders of such notes to accelerate our obligations under the applicable indenture.

        Under our synthetic lease facilities, special purpose entities are established to acquire properties and subsequently lease those properties to us. Neither we nor any of our related parties have invested, either via debt obligations or equity, in these special purpose entities. Our obligations under our synthetic lease facilities are considered indebtedness for purposes of financial covenants under the Amended and Restated Credit Agreement. As of December 31, 2001, our synthetic leasing program had a total capacity of $204.3 of which $151.9 million had been utilized for property acquisitions and $52.4 million is currently available for future property acquisitions.

        We have entered into these synthetic leases because we believe they afford meaningful benefits. Such benefits include rental payments below those available from traditional landlords and developers, and tax benefits and control provisions normally associated with direct ownership. Each of the leases under our synthetic lease facilities has a five to six and one-half year term for specified records storage warehouses; commencement dates for these leases range from 1998 to 2002. During 2001, we recorded $8.5 million in rent expense on our income statement related to these lease commitments. We had synthetic lease facilities related to properties with a lessor's original cost of $74.3 million and $151.9 million as of December 31, 2000 and December 31, 2001, respectively. If on January 1, 2001, the original cost of properties under synthetic lease facilities had equaled $151.9 million, rent expense for the year ended December 31, 2001 would have been approximately $11.4 million. See "—Critical Accounting Policies—Accounting for Synthetic Leases." At the end of each lease term, we, at our option, may: (1) negotiate a renewal of such lease (which is subject to the agreement of the relevant synthetic lease lessor and its lenders); (2) purchase the properties subject to such lease at a price equal to the lessor's original cost; or (3) allow such lease to expire and cause the properties subject to it to be sold. Our ability to cause the properties to be sold depends upon our compliance with certain terms of the applicable lease. Under certain conditions, we would receive the excess, if any, of the net sales proceeds over the properties' original cost. In the event that the net sales proceeds are less than the properties' original cost, we would make certain contingent rental payments to the lessor equal to that difference, subject to a maximum amount of approximately 85% of the properties' original cost. If any of our synthetic lease facilities are terminated following an event of default under the relevant synthetic

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lease documents, or if, at the end of the lease term, we do not either negotiate a renewal of the lease or elect to cause the relevant leased properties to be sold, or if we do elect to cause such leased properties to be sold but fail to satisfy the conditions to such election, we would generally be obligated to pay the lessor's original cost for such leased properties.

Acquisitions

        Our liquidity and capital resources may be impacted by our acquisition strategy. Our future interest expense may increase significantly as a result of the additional indebtedness we may incur to finance possible future acquisitions. To the extent that future acquisitions are financed by additional borrowings under the Amended and Restated Credit Agreement or other credit facilities, or the future issuance of debt securities, the resulting increase in debt and interest expense could have a negative effect on such measures of liquidity as the ratio of debt to equity, EBITDA and Adjusted EBITDA to debt and to interest expense.

        We have historically financed the cash portion of our acquisitions with borrowings under our revolving credit facilities in conjunction with cash flows provided by operations and with the net proceeds from the issuance of debt securities and common stock.

        In connection with our acquisition program, we have undertaken certain restructurings of the acquired businesses. We complete formalized restructuring plans for acquisitions within one year of the date of acquisition. The restructuring activities include reductions in staffing levels, elimination of duplicate facilities and other costs associated with exiting certain activities of the acquired businesses. In connection with these restructuring activities, we established reserves of $3.8 million in 2001 as part of the purchase accounting for our acquisitions. During 2001, we expended $7.8 million for restructuring costs. These expenditures consisted primarily of severance costs and costs related to exiting facilities. In addition, we made $8.2 million of adjustments, which reduced goodwill, primarily as a result of our finalization of certain restructuring plans. At December 31, 2001, we had a total of $16.2 million accrued for restructuring costs for all of our then completed acquisitions. See Note 6 of Notes to Consolidated Financial Statements.

        From January 1, 2002 through March 1, 2002, we acquired 2 confidential destruction services businesses for aggregate consideration of approximately $8 million.

Iron Mountain/Pierce Leahy Integration

        The process of integrating the operations and headquarters functions of Iron Mountain and Pierce Leahy includes the planning, development and execution of an integration plan with the goal of full integration within three years after the merger. During 2000 and 2001, we completed the integration of the sales, overhead and support functions, and combined the two field operations. We currently estimate that the merger-related expenses to integrate the two companies, the majority of which have been incurred in 2000 and 2001, will total approximately $15 million. These costs consisted primarily of severance and relocation payments to certain employees, transition bonuses, consultants' fees, and system conversion costs. We recorded merger-related expenses of $9.1 million and $3.7 million during 2000 and 2001. As a result of the integration effort, we expect to realize an estimated $15 million in annual operating cost savings within three years after the merger. These cost savings will result primarily from the elimination of redundant corporate expenses, more efficient operations, and utilization of real estate. We intend to fund the integration effort with cash flows from operations and borrowings under the Amended and Restated Credit Agreement.

Future Capital Needs

        Over the last year, our focus has shifted from growth through acquisitions to internally generated revenue growth. However, our primary financial goal has always been, and continues to be, to increase

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consolidated EBITDA and Adjusted EBITDA in relation to capital invested, even now that our focus has shifted from growth through acquisitions to internal revenue growth. EBITDA and Adjusted EBITDA are sources of funds for investment in continued growth and for servicing indebtedness.

        Our ability to generate sufficient cash to fund our needs depends generally on the results of our operations and the availability of financing. We believe that cash flows from operations in conjunction with borrowings from existing and possible future debt financings will be sufficient to meet debt service requirements for the foreseeable future and to make possible future acquisitions and capital expenditures. However, there can be no assurance in this regard or that the terms available for any future financing, if required, would be favorable to us.2004.

Seasonality

        Historically, our businesses have not been subject to seasonality in any material respect.

Inflation

        Certain of our expenses, such as wages and benefits, insurance, occupancy costs and equipment repair and replacement, are subject to normal inflationary pressures. Although to date we have been able to offset inflationary cost increases through increased operating efficiencies and the negotiation of favorable long-term real estate leases, we can give no assurance that we will be able to offset any future inflationary cost increases through similar efficiencies, leases or increased storage or service charges.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk.


Foreign Currency Exchange RatesInterest Rate Risk

        We generally viewIn December 2000, January 2001 and May 2001, we and our Variable Interest Entities, which we now consolidate, entered into a total of four derivative financial contracts, which are variable-for-fixed interest rate swaps consisting of (a) two contracts for interest payments payable on our term loan of an aggregate principal amount of $195.5 million, (b) one contract for interest payments payable (previously certain variable operating lease commitments payable) on our real estate term loans of an aggregate principal amount of $47.5 million and (c) one contract for interest payments payable on our real estate term loans of an aggregate principal amount of $97.0 million. See Note 4 to Notes to Consolidated Financial Statements and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies" in this Form 10-K.

        After consideration of the swap contracts mentioned above, as of December 31, 2003, we had $308.1 million of variable rate debt outstanding with a weighted average variable interest rate of 4.72%, and $1,781.8 million of fixed rate debt outstanding. As of December 31, 2003, 85% of our total debt outstanding was fixed. If the weighted average variable interest rate on our variable rate debt had increased by 1%, our net income for the year ended December 31, 2003 would have been reduced by $1.7 million. See Note 5 to Notes to Consolidated Financial Statements for a discussion of our

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long-term indebtedness, including the fair values of such indebtedness as of December 31, 2003 included in this Form 10-K.

Currency Risk

        Our investments in foreign businesses with a functional currencyIME, Iron Mountain Canada Corporation, Iron Mountain South America, Ltd. and other than our reporting currency as long-term. Theseinternational investments are sensitivemay be subject to risks and uncertainties related to fluctuations in foreign currency exchange rates. The functionalvaluation. Our reporting currency is the U.S. dollar. However, our international revenues are generated in the currencies of the countries in which we operate, primarily the Canadian dollar and British pound sterling. The currencies of many Latin American countries have experienced substantial volatility and depreciation in the past, including the Argentine peso. In addition, one of our Canadian subsidiaries, Iron Mountain Canada Corporation, has U.S. dollar denominated debt. Declines in the value of the local currencies in which we are paid relative to the U.S. dollar will cause revenues in U.S. dollar terms to decrease and dollar-denominated liabilities to increase in local currency. We also have several intercompany obligations between our foreign subsidiaries and Iron Mountain and our U.S.-based subsidiaries. These intercompany obligations are principally Canadian dollar,primarily denominated in the local currency of the foreign subsidiary. Our currency exposures to intercompany borrowings are generally unhedged, except as discussed below.

        We provided the initial financing to IME for all of the consideration associated with the acquisition of the European operations of Hays IMS using cash on hand and borrowings under our revolving credit facility. In order to minimize the foreign currency risk associated with providing IME with the consideration necessary for the acquisition of Hay IMS, we borrowed 80.0 million British poundpounds sterling under our revolving credit facility to create a natural hedge. Additionally, on July 16, 2003 we entered into two cross currency swaps with a combined notional value of 100.0 million British pounds sterling. These swaps each have a term of one year and at maturity we have a right to receive $162.8 million in exchange for 100.0 million British pounds sterling. We have not designated these swaps as hedges and, therefore, all mark to market fluctuations of the Euroswaps are recorded in other (income) expense, net in our consolidated statements of operations.

        The impact of devaluation or depreciating currency on an entity depends on the residual effect on the local economy and several Latin American currencies.the ability of an entity to raise prices and/or reduce expenses. Due to our constantly changing currency exposure and the potential substantial volatility of currency exchange rates, we cannot predict the effect of exchange fluctuations on our business. The effect of a change in foreign exchange rates on our net investment in foreign subsidiaries is reflected in the "Accumulated Other Comprehensive Items" component of shareholders' equity. A 10% depreciation in year-end 20012003 functional currencies, relative to the U.S. dollar, would result in a $12.2$14.5 million reduction in our shareholders' equity.

Recent Pronouncements

        In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard 142, "Goodwill and Other Intangible Assets." Under SFAS 142, goodwill and intangible assets with indefinite lives are no longer amortized, but are reviewed at least annually for impairment. At December 31, 2001, we had net goodwill of $1.5 billion. Pursuant to SFAS 142, we will test our goodwill for impairment upon adoption and, if impairment is indicated, record such impairment as a cumulative effect of accounting change. We are currently evaluating the effect the adoption may have on our consolidated results of operations and financial position. The amortization provisions of SFAS 142 apply to goodwill and intangible assets acquired after June 30, 2001. With respect to goodwill and intangible assets acquired prior to July 1, 2001, we are required to adopt SFAS 142 effective January 1, 2002. Our impairment review may result in future periodic writedowns; however, the application of the non-amortization provisions of SFAS 142 for goodwill is expected to result in an increase in operating income of approximately $59 million in 2002. We are also reviewing the estimated useful lives of intangible assets which may affect operating income in 2002.

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Item 7A.    Quantitative and Qualitative Disclosure 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 December 31, 2001, we had $180.6 million of variable rate debt outstanding with a weighted average variable interest rate of 4.4%, and $1,315.5 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 year ended December 31, 2001 of $1.2 million. See Note 4 of Notes to Consolidated Financial Statements for a discussion of our long-term indebtedness, including the fair values of such indebtedness as of December 31, 2001.

Item 8. Financial Statements and Supplementary Data.


        SeeThe information required by this item is included in Item 14(a).15 (a) of this Annual Report on Form 10-K.


Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.


        None.On June 19, 2002, our Board of Directors, upon recommendation of the Audit Committee and approval of the Executive Committee, dismissed Arthur Andersen LLP as our independent public accountants and engaged Deloitte & Touche LLP as our independent public accountants for the fiscal year ending December 31, 2002.

33        The audit reports of Arthur Andersen on our consolidated financial statements for the fiscal year ended December 31, 2001 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

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        During the fiscal year ended December 31, 2001 and the subsequent interim period through June 19, 2002, there were no disagreements with Arthur Andersen on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to Arthur Andersen's satisfaction, would have caused Arthur Andersen to make reference to the subject matter of the disagreement in connection with its reports. None of the reportable events described under Item 304(a)(1)(v) of Regulation S-K occurred within the fiscal year ended December 31, 2001 or within the interim period through June 19, 2002.

        We provided Arthur Andersen with a copy of the above disclosures. A letter dated June 19, 2002 from Arthur Andersen stating its agreement with our statements was listed under Item 7 and filed as Exhibit 16.1 and incorporated by reference into our report on Form 8-K filed June 19, 2002.

        During the fiscal year ended December 31, 2001 and the subsequent interim period through June 19, 2002, we did not consult with Deloitte & Touche with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements or regarding any other matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.


Item 9A. Controls and Procedures


Evaluation of Disclosure Controls and Procedures

        The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These rules refer to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods. As of December 31, 2003 (the "Evaluation Date"), we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, the chief executive officer and chief financial officer have concluded that, as of the Evaluation Date, such disclosure controls and procedures were effective in ensuring that required information will be disclosed on a timely basis in our reports filed under the Exchange Act.

Changes in Internal Controls

        We maintain a system of internal accounting controls that are designed to provide reasonable assurance that our transactions are properly recorded and reported and that our assets are safeguarded against unauthorized or improper use. As part of the evaluation of our disclosure controls and procedures, we evaluated our internal controls. There were no changes to our internal control over financial reporting during the quarter ended December 31, 2003 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting, including any corrective actions taken with regard to any significant deficiencies or material weaknesses.

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PART III


Item 10. Directors and Executive Officers of the Registrant.


        The Directors and executive officersinformation required by Item 10 is incorporated by reference to our definitive Proxy Statement for the Annual Meeting of the Company are as follows (all information is as of March 1, 2002):

Names of Directors and Executive Officers		Age		Position
C. Richard Reese(1)		56		Chairman of the Board of Directors, Chief Executive Officer and President
John F. Kenny, Jr.		44		Executive Vice President, Chief Financial Officer and Director
Harold E. Ebbighausen		47		Executive Vice President of the Company and President of Iron Mountain Off-Site Data Protection, a division of Iron Mountain Information Management, Inc.
Robert G. Miller		45		Executive Vice President of the Company and President of Iron Mountain Records Management, a division of Iron Mountain Information Management, Inc.
Clarke H. Bailey(1)(3)		47		Director
Constantin R. Boden(2)(3)		65		Director
Kent P. Dauten(2)		46		Director
Eugene B. Doggett		65		Director
B. Thomas Golisano		60		Director
Arthur D. Little(2)(3)		58		Director
J. Peter Pierce		56		Director
Howard D. Ross		50		Director
Vincent J. Ryan(1)(3)		66		Director

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(1)

Member of the Executive Committee; Mr. Ryan is the Chairman of the Executive Committee.



(2)

Member of the Audit Committee; Mr. Boden is the Chairman of the Audit Committee.



(3)

Member of the Compensation Committee; Mr. Little is the Chairman of the Compensation Committee.

        The Company Board currently consists of eleven Directors. There are three classes of Directors who serve for three year terms and are electedShareholders to be held on a staggered basis, one class of Directors standing for election each year. Directors of each class hold office until the third annual meeting of the shareholders of the Company following their election or until their successors are elected and qualified.

        The executive officers were elected by the Board of Directors onabout May 24, 2001. All executive officers hold office at the discretion of the Company Board until the first meeting following the next annual meeting of shareholders and until their successors are chosen and qualified.

Directors and Executive Officers

        C. Richard Reese is the Chairman of the Board, a position he has held since November 1995, and the Chief Executive Officer of the Company, a position he has held since 1981, and has been a Director of the Company since 1990. He is also the President of the Company, a position he has held since June 2000 and previously held from 1981 until November 1985. Mr. Reese is a member of the investment committee of Schooner Capital LLC ("Schooner"), a shareholder of the Company. Prior to joining Iron Mountain, Mr. Reese lectured at Harvard Business School in "Entrepreneurship" and

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provided consulting services to small-and medium-sized emerging enterprises. Mr. Reese has also served as the President and a Director of Professional Records and Information Services Management ("PRISM"), a trade group of approximately 530 members. He is also a Director of Ardais Corporation, Bird Dog Solutions, Inc. and Presidio Partners, LLC. He holds a Master of Business Administration degree from Harvard Business School.

        John F. Kenny, Jr. is an Executive Vice President and the Chief Financial Officer of the Company, positions he has held since May 1997. He has also served as a Director of the Company since March 2000. Mr. Kenny joined Iron Mountain in 1991 and held a number of operating positions before assuming the position of Vice President of Corporate Development in 1995. Prior to 1991, Mr. Kenny was a Vice President of CS First Boston Merchant Bank, New York, with responsibility for risk capital investments. Mr. Kenny has also served as a Director and the Treasurer of PRISM. He holds a Master of Business Administration degree from Harvard Business School.

        Harold E. Ebbighausen is an Executive Vice President of the Company and the President of Iron Mountain Off-Site Data Protection, a division of Iron Mountain Information Management, Inc. ("IMIM"), a subsidiary of the Company. Prior to September 10, 2001, the Iron Mountain Off-Site Data Protection was a separate subsidiary known as Arcus Data Security, Inc. Mr. Ebbighausen has been an Executive Vice President of the Company since May 1998, and had been the President of Arcus Data Security, Inc. since July 1998. Mr. Ebbighausen was a Vice President of Data Security Services of Iron Mountain from September 1996 through June 1997. Prior to joining Iron Mountain, Mr. Ebbighausen was Vice President of Data Management Services with INSCI Corporation, a software provider for computer output and data storage solutions to optical and CD technology. Previously, he held a number of field management positions with Anacomp, Inc., a service bureau provider in the micrographics industry.

        Robert G. Miller is an Executive Vice President of the Company and the President of Iron Mountain Records Management, a division of IMIM. Mr. Miller was appointed President of Iron Mountain Records Management, Inc., the predecessor of IMIM, in March 2001 and had served as the Senior Vice President and Chief Operating Officer of Iron Mountain Records Management, Inc. from July 2000 until his appointment as President. Prior to July 2000, Mr. Miller was an Executive Vice President of Iron Mountain Records Management, Inc., a position that he had held since December 1996. Mr. Miller joined Iron Mountain in 1988 and held various positions including District Manager from 1988 through 1991 and Regional Vice President from 1991 through 1996. Prior to 1988, Mr. Miller was employed as a District Manager at Bell & Howell Records Management Company.

        Clarke H. Bailey is a Director of the Company, a position he has held since January 1998. He is Co-Chairman and Director of Highgate Capital LLC, a private equity firm, and Chairman, Chief Executive Officer and a Director of ShipXact.com, Inc., a private fulfillment and distribution company. Mr. Bailey also serves as Chairman and a Director of Glenayre Technologies, Inc., a manufacturing company in the wireless communications industry. Mr. Bailey was the Chairman and Chief Executive Officer of each of Arcus Group, Inc., United Acquisition Company and Arcus Technology Services, Inc. from 1995 until their acquisition by Iron Mountain in January 1998. He is also a Director of Connectivity Technologies Inc. and Swiss Army Brands, Inc. He holds a Master of Business Administration degree from The Wharton School, University of Pennsylvania.

        Constantin R. Boden is a Director of the Company, a position he has held since December 1990. Mr. Boden is the principal of Boden Partners LLC and chairman of the advisory board of Boston Capital Ventures, a risk capital concern. For 34 years, until January 1995, Mr. Boden was employed by The First National Bank of Boston, most recently as Executive Vice President, International Banking. He holds a Master of Business Administration degree from Harvard Business School.

        Kent P. Dauten is a Director of the Company, a position he has held since November 1997. He also serves as President of Keystone Capital, Inc., a management and consulting advisory service firm, a

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position he has held since March 1994. In February 1995, Mr. Dauten founded HIMSCORP, Inc. (d/b/a Records Masters) and served as its President until its acquisition by Iron Mountain in November 1997. Mr. Dauten currently serves as a Director of Health Management Associates, Inc., a hospital management firm. Mr. Dauten holds a Master of Business Administration degree from Harvard Business School.

        Eugene B. Doggett is a Director of the Company, a position he has held since 1990. From 1987 until May 1997, Mr. Doggett was the Chief Financial Officer of Iron Mountain, and from 1990 until May 1998, Mr. Doggett was an Executive Vice President of Iron Mountain. Prior to joining Iron Mountain, he had extensive experience in commercial and investment banking, as well as financial and general management experience at senior levels. He holds a Master of Business Administration degree from Harvard Business School.

        B. Thomas Golisano is a Director of the Company, a position he has held since June 1997. Mr. Golisano was Chairman of Safesite Records Management Corporation until its acquisition by Iron Mountain in June 1997. He founded Paychex Inc., a publicly held, national payroll service company, in 1971 and serves as its Chairman, President and Chief Executive Officer. Mr. Golisano serves on the Board of Trustees of Rochester Institute of Technology and on the boards of several privately held companies. He has also served on the boards of numerous non-profit organizations and is the founder of the B. Thomas Golisano Foundation.

        Arthur D. Little is a Director of the Company, a position he has held since November 1995. Mr. Little is a principal of A & J Acquisition Company, Inc., which he founded in 1996. Prior to that, he was Managing Director of and also a partner in Narragansett Capital, Inc., a private investment firm. He holds a Bachelor of Arts degree in history from Stanford University.

        J. Peter Pierce is a Director of the Company, a position he has held since February 2000. From February 1, 2000 until his resignation in June 2000, he was also the President of the Company. Prior to the merger with Pierce Leahy, Mr. Pierce had been the President and Chief Executive Officer of Pierce Leahy since 1995, and a Director of Pierce Leahy since the early 1970s. Mr. Pierce is the Chairman and Chief Executive Officer of Telespectrum Worldwide, Inc., a publicly held teleservices company. Mr. Pierce is also the founder and principal partner in Pioneer Capital L.P., a venture capital company. Mr. Pierce attended the University of Pennsylvania and served in the United States Marine Corps.

        Howard D. Ross is a Director of the Company, a position he has held since February 2000. In 1999, Mr. Ross was involved in the formation, and is currently a partner, of LLR Equity Partners, L.P., a venture capital fund. From 1984 to October 1999, he was a partner at Arthur Andersen LLP. He is also a Director of eResearch Technology, Inc., a provider of clinical testing and software services primarily to the pharmaceutical industry, and of Verticalnet, Inc., a provider of e-commerce software. Mr. Ross holds a Bachelor of Science degree in economics from The Wharton School, University of Pennsylvania, and is a certified public accountant.

        Vincent J. Ryan is a Director of the Company, a position he has held for over ten years. Mr. Ryan is the founder of Schooner and its predecessor, Schooner Capital Corporation. Mr. Ryan has served as the Chairman and Chief Executive Officer of Schooner since 1971, and as its President from 1971 to 1985 and from 1996 to 1999. Prior to November 1995, Mr. Ryan served as Chairman of the Iron Mountain Board of Directors.

Section 16(a) Beneficial Ownership Reporting Compliance

        Section 16(a) of the Securities Exchange Act of 1934 requires that the Company's executive officers, Directors and persons who own more than ten percent of a registered class of the Company's equity securities file reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with the Commission. Such executive officers, Directors and ten percent shareholders are also required by

36

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Commission rules to furnish to the Company copies of all Section 16(a) reports that they file. Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons that they were not required to file a Form 5, the Company believes that, during the fiscal year ended December 31, 2001, the Company's executive officers, Directors and ten percent shareholders complied with all Section 16(a) filing requirements applicable to such persons, except that a Director, J. Peter Pierce, was late in filing 3 reports on Form 4 relating to a total of 15 transactions.

Item 11. Executive Compensation.

        The following table provides certain information concerning compensation earned by the Chief Executive Officer and the other three most highly compensated executive officers of the Company measured as of December 31, 2001 (the "Named Executive Officers").27, 2004.


Summary Compensation TableItem 11. Executive Compensation.


													Long-Term Compensation
		Annual Compensation
													Number of Shares Underlying Options
Name and Principal Position		Year		Salary			Bonus			Other Annual Compensation					All Other Compensation(1)
C. Richard Reese Chairman of the Board and Chief Executive Officer		2001 2000 1999		$ $ $	586,154 428,366 358,000		$ $	(2) 428,000 250,000			0 0 0		0 0 0		$ $ $	2,992 3,037 3,200
John F. Kenny, Jr. Executive Vice President and Chief Financial Officer		2001 2000 1999		$ $ $	287,308 257,019 218,300		$ $	(2) 231,000 153,000			0 0 0		75,000 0 40,148		$ $ $	2,992 3,037 3,200
Harold E. Ebbighausen President of Iron Mountain Off-Site Data Protection, a division of IMIM		2001 2000 1999		$ $ $	237,865 210,385 193,300		$ $	(2) 82,000 80,000			0 0 0		0 0 53,536		$ $ $	2,992 3,037 3,200
Robert G. Miller President and Chief Operating Officer of Iron Mountain Records Management, a division of IMIM		2001 2000 1999		$ $ $	256,885 209,423 153,500		$ $	(2) 165,000 61,400		$	0 74,897 0		0 57,995 16,726		$ $ $	2,992 3,037 2,983

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(1)

Reflects the Company's matching contribution to The Iron Mountain Companies 401(k) Plan for each individual.



(2)

The Compensation Committee has not yet met with respect to year 2001 bonuses and accordingly those amounts have not yet been determined.

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        The following table sets forth certain information concerningrequired by Item 11 is incorporated by reference to our definitive Proxy Statement for the grantAnnual Meeting of optionsShareholders to purchase Company common stock to the Named Executive Officers during the year ended December 31, 2001.be held on or about May 27, 2004.


Option Grants in 2001


											Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term(1)
				Percent of Total Options Granted to Employees in Fiscal Year 2001
Name and Principal Position		Number of Securities Underlying Options Granted				Exercise Price ($/Sh)			Expiration Date
											5%			10%
John F. Kenny, Jr. Executive Vice President and Chief Financial Officer		75,000		15.07	%	$	28.767		11/29/2011		$	3,514,350		$	5,595,975

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(1)

Potential Realizable Value is based on the assumed growth rates for an assumed ten-year option term. Five percent annual growth results in a Common Stock price per share of $46.858, and ten percent annual growth results in a Common Stock price per share of $74.613, respectively, for such term. The actual value, if any, an executive may realize will depend on the excess of the market price of the Common Stock over the exercise price on the date the option is exercised. There is no assurance that the value realized by an executive will be at or near the amounts reflected in this table.

        The following table sets forth certain information with respect to stock options during the year ended December 31, 2001 exercised by, and the unexercised options to purchase common stock held by, the Named Executive Officers.


Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option Values


							Number of Unexercised Options at December 31, 2001				Value of Unexercised In-the-Money-Options at December 31, 2001(1)
Name and Principal Position		Shares Acquired On Exercise		Value Realized
							Exercisable		Unexercisable		Exercisable			Unexercisable
John F. Kenny, Jr Executive Vice President, Chief Financial Officer		108,523		$	2,564,395		286,625		146,569		$	4,869,633		$	945,064
Harold E. Ebbighausen President of Iron Mountain Off-Site Data Protection, a division of IMIM		19,842		$	273,335		51,790		37,083		$	633,727		$	301,029
Robert G. Miller President and Chief Operating Officer of Iron Mountain Records Management, a division of IMIM		9,000		$	190,865		76,111		56,433		$	1,477,382		$	395,440

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(1)

Based on a year-end value of $29.4233 per share, less the exercise price.

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Director Compensation

        Directors who are employees of the Company do not receive additional compensation for serving as Directors. Each Director who is not an employee of the Company receives an annual retainer fee of $12,000 as compensation for his services as a member of the Company Board and $500 for attendance at committee meetings ($1,000 per meeting for the Chairman of the committee). In addition, the Company has a program by which it grants its nonemployee Directors options to purchase $200,000 of the Company's Common Stock every three years. Each option is granted under either the Iron Mountain Incorporated 1995 Stock Incentive Plan or the Iron Mountain Incorporated 1997 Stock Option Plan (the "Stock Incentive Plan" and the "Stock Option Plan," respectively), has an exercise price equal to fair market value (as defined in the Stock Incentive Plan or the Stock Option Plan, as applicable) on the date of grant, vests in equal amounts over a period of three years and has a ten year term. All Directors are reimbursed for out-of-pocket expenses incurred in attending meetings of the Company Board or committees thereof, and for other expenses incurred in their capacities as Directors.

        The Company paid a total of $131,000 in cash for Directors fees in respect of services for 2001. In addition, the Company paid $25,000 to Constantin R. Boden for advisory services to Iron Mountain Europe Limited.

Employment Contracts, Termination of Employment and Change of Control Arrangement

        The Stock Incentive Plan provides for acceleration of the vesting of options and stock appreciation rights if the Company or any wholly owned subsidiary of the Company is a party to a merger or consolidation (whether or not the Company is the surviving corporation) in any transaction or series of related transactions and there is a "Limited Change of Control" of the Company. A Limited Change of Control occurs if after the merger or consolidation (a) individuals who immediately prior to the merger or consolidation served as members of the Company Board no longer constitute a majority of the Company Board or the board of directors of the surviving corporation and (b) the voting securities of the Company outstanding immediately prior to the merger or consolidation do not represent (either by remaining outstanding or upon conversion into securities of the surviving corporation) more than 50% of the voting power of the securities of the Company or the surviving corporation immediately after the merger or consolidation.

Compensation Committee Interlocks and Insider Participation

        The Compensation Committee of the Company Board consists of Mr. Little, who is the Chairman, and Messrs. Boden, Ryan and Bailey. Mr. Ryan is the Chairman of the Board and Chief Executive Officer of Schooner and principal shareholder of Schooner Capital Trust. See "Item 13. Certain Relationships and Related Transactions—Real Estate Transactions."

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Item 12. Security Ownership of Certain Beneficial Owners and ManagementManagement.


        The following table sets forth certain information knownrequired by Item 12 is incorporated by reference to us with respect to beneficial ownershipour definitive Proxy Statement for the Annual Meeting of Common Stock by (i) each Director, (ii) the Named Executive Officers, (iii) all Directors and Named Executive Officers of the Company as a group and (iv) each shareholder known by usShareholders to be the beneficial owner of more than five percent of the Common Stock. Such information is presented as of March 1, 2002, except as otherwise indicated.

		Amount of Beneficial Ownership(1)
Name		Shares		Percent Owned
Directors and Executive Officers
C. Richard Reese(2)		2,341,436		2.8	%
John F. Kenny, Jr.(3)		342,189		*
Harold E. Ebbighausen(4)		54,310		*
Robert G. Miller(5)		83,216		*
Clarke H. Bailey(6)		93,185		*
Constantin R. Boden(7)		58,459		*
Kent P. Dauten(8)		1,525,319		1.8	%
Eugene B. Doggett(9)		30,229		*
B. Thomas Golisano(10)		1,867,790		2.2	%
J. Peter Pierce(11)		2,596,717		3.1	%
Arthur D. Little(12)		69,626		*
Howard D. Ross(13)		6,217		*
Vincent J. Ryan(14)		7,655,666		9.1	%
All Directors and executive officers as a group (13 persons)(15)		15,412,986		18.3	%
Five Percent Shareholders
Chieftain Capital Management, Inc.(16)		11,167,110		13.3	%
Thomas W. Smith(17)		5,424,064		6.4	%
Thomas N. Tryforos(18)		4,653,259		5.5	%
T. Rowe Price Associates, Inc.(19)		7,311,330		8.6	%

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*

Less than 1%



(1)

Except as otherwise indicated, the persons named in the table above have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them.



(2)

Mr. Reese is a Director, Chairman of the Board, Chief Executive Officer and President of the Company. Includes 39,066 shares of Common Stock held in trusts for the benefit of Mr. Reese's children, as to which Mr. Reese disclaims beneficial ownership. Also includes 1,311,373 shares of Common Stock as to which Mr. Reese shares beneficial ownership with Schooner as a result of a 1988 deferred compensation arrangement, as amended, between Schooner and Mr. Reese relating to Mr. Reese's former services as President of the predecessor corporation to Schooner. Pursuant to such arrangement, upon the earlier to occur of (i) Schooner's saleon or exchange of substantially all of the shares of Common Stock held by Schooner or (ii) the cessation of Mr. Reese's employment with the Company, Schooner is required to transfer such shares of Common Stock to Mr. Reese or remit to Mr. Reese cash in an amount equal to the then current fair market value of such shares of Common Stock. Schooner has agreed to vote the shares of Common Stock subject to such arrangement at the direction of Mr. Reese.

about May 27, 2004.

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(3)

Mr. Kenny is an Executive Vice President, Chief Financial Officer and a Director of the Company. Includes 286,625 shares that Mr. Kenny has the right to acquire pursuant to currently exercisable options.



(4)

Mr. Ebbighausen is an Executive Vice President of the Company and the President of Iron Mountain Off-Site Data Protection, a division of Iron Mountain Information Management, Inc. Includes 51,790 shares that Mr. Ebbighausen has the right to acquire pursuant to currently exercisable options.



(5)

Mr. Miller is an Executive Vice President of the Company and the President and Chief Operating Officer of Iron Mountain Records Management, a division of Iron Mountain Information Management, Inc. All 83,216 shares are shares that Mr. Miller has the right to acquire pursuant to currently exercisable options.



(6)

Mr. Bailey is a Director of the Company. Includes 11,479 shares that Mr. Bailey has the right to acquire pursuant to currently exercisable options.



(7)

Mr. Boden is a Director of the Company. Includes 11,479 shares that Mr. Boden has the right to acquire pursuant to currently exercisable options.



(8)

Mr. Dauten is a Director of the Company. Includes 11,479 shares that Mr. Dauten has the right to acquire pursuant to currently exercisable options.



(9)

Mr. Doggett is a Director of the Company. Includes 11,479 shares that Mr. Doggett has the right to acquire pursuant to currently exercisable options.



(10)

Mr. Golisano is a Director of the Company. Includes 19,621 shares that Mr. Golisano has the right to acquire pursuant to currently exercisable options.



(11)

The information is presented as of December 31, 2001, and is based on a Schedule 13G/A filed with the Commission on March 1, 2002. Mr. Pierce is a Director of the Company. Includes 5,019 shares that Mr. Pierce has the right to acquire pursuant to currently exercisable options. Also includes 2,591,698 shares held in a voting trust pursuant to a Voting Trust Agreement dated June 24, 1997 (as amended or restated from time to time, the "Voting Trust"). Mr. Pierce, as sole trustee of the Voting Trust, holds the power to vote the shares held in the Voting Trust. The beneficial owners of the interests in the Voting Trust have the right to dispose of the shares with respect to which they have beneficial interests. Mr. Pierce directly owns 75,000 shares that are held in the Voting Trust. Mr. Pierce's address is 209 West Lancaster Avenue, Suite 101, Paoli, Pennsylvania 19301.



(12)

Mr. Little is a Director of the Company. Includes 56,250 shares held by The Little Family Trust, as to which Mr. Little disclaims beneficial ownership, as well as 11,479 shares that Mr. Little has the right to acquire pursuant to currently exercisable options.



(13)

Mr. Ross is a Director of the Company. All 6,217 shares are shares that Mr. Ross has the right to acquire pursuant to currently exercisable options.



(14)

Mr. Ryan is a Director of the Company. Includes 11,479 shares that Mr. Ryan has the right to acquire pursuant to currently exercisable options. Also includes (i) 4,104,114 shares of Common Stock held by Schooner, as to which Mr. Ryan has sole voting power and investment power as the Chairman of the Board of Schooner and the principal stockholder of Schooner Capital Trust, the sole member of Schooner; (ii) 9,000 shares held in a trust for the benefit of Mr. Ryan's heirs, as to which Mr. Ryan disclaims beneficial ownership except to the extent of his pecuniary interest therein; and (iii) 102,000 shares held by The Schooner Foundation as to which Mr. Ryan disclaims beneficial ownership. Mr. Ryan's address is c/o Schooner Capital LLC, 745 Atlantic Avenue, Boston, Massachusetts 02111.

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(15)

Includes 521,361 shares that Directors and executive officers have the right to acquire pursuant to currently exercisable options.



(16)

This information is presented as of December 31, 2001, and is based solely on a Schedule 13G/A filed with the Commission on February 15, 2001. The share amounts reported on the 13G/A did not take into account the 3 for 2 stock split effective December 31, 2001. The numbers have been recalculated here. These securities are owned by various individual and institutional investors for which Chieftain Capital Management, Inc. ("Chieftain") serves as independent advisor with power to direct investments and/or sole power to vote the securities. Chieftain has shared voting power and shared dispositive power over all 11,167,110 shares, but disclaims beneficial ownership as to all these shares. The address of Chieftain Capital Management, Inc. is 12 East 49^th Street, New York, New York 10017.



(17)

This information is presented as of December 31, 2001, and is based solely on a Schedule 13G/A filed with the Commission on February 14, 2002. The share amounts reported on the 13G/A did not take into account the 3 for 2 stock split effective December 31, 2001. The numbers have been recalculated here. Mr. Smith has sole voting and dispositive power over 803,944 shares and has shared voting and dispositive power over 4,620,120 shares with Mr. Tryforos. The address of Mr. Smith is 323 Railroad Avenue, Greenwich, Connecticut 06830.



(18)

This information is presented as of December 31, 2001, and is based solely on a Schedule 13G/A filed with the Commission on February 14, 2002. The share amounts reported on the 13G/A did not take into account the 3 for 2 stock split effective December 31, 2001. The numbers have been recalculated here. Mr. Tryforos has sole voting and dispositive power over 33,139 shares and has shared voting and dispositive power over 4,620,120 shares with Mr. Smith. The address of Mr. Tryforos is 323 Railroad Avenue, Greenwich, Connecticut 06830.



(19)

This information is presented as of December 31, 2001, and is based solely on a Schedule 13G/A filed with the Commission on February 22, 2002. The share amounts reported on the 13G/A did not take into account the 3 for 2 stock split effective December 31, 2001. The numbers have been recalculated here. These securities are owned by various individual and institutional investors for which T. Rowe Price Associates, Inc. ("Price Associates") serves as independent advisor with power to direct investments and/or sole power to vote the securities. Price Associates has sole voting power over 1,399,800 shares and sole dispositive power over 7,311,330 shares, but disclaims beneficial ownership as to all of these shares. The address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, Maryland 21202.

Item 13. Certain Relationships and Related Transactions.


Real Estate Transactions

        Schooner leases space from the Company at the Company's corporate headquarters. Vincent J. Ryan, a Director of the Company, is the Chairman and Chief Executive Officer of Schooner. The lease is a tenancy-at-will and may be terminated by either the Company or by Schooner at any time. As consideration for the lease, Schooner pays rent to the Company based on its pro rata share of all expenses related to the use and occupancy of the premises. The rent paid by Schooner to the Company under such lease was approximately $101,000 in the year ended December 31, 2001, and Schooner currently pays annual rent of approximately $109,000. The Company believes that the terms of this lease are no less favorable to it than would have been negotiated with an unrelated third party.

        The Company leases from three separate limited partnerships certain of its facilities in Suffield, Connecticut, Orlando, Florida and Charlotte, North Carolina. J. Peter Pierce, a Director of the Company,information required by Item 13 is the general partner of the limited partnerships, and members of the Pierce family and their affiliates own substantial limited partnership interests in each of the limited partnerships. The

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leasesincorporated by reference to our definitive Proxy Statement for the SuffieldAnnual Meeting of Shareholders to be held on or about May 27, 2004.


Item 14. Principal Accounting Fees and Orlando facilities terminate on December 31, 2005 and January 3, 2006, respectively.Services.


        The leaseinformation required by Item 14 is incorporated by reference to our definitive Proxy Statement for the Charlotte facility was renewed during 2001 for a term expiringAnnual Meeting of Shareholders to be held on September 30, 2011. Each of the leases for the Suffield and Orlando facilities contain two five-year renewal options. The aggregate rental payment by the Company under these leases during 2001 was $513,000. The Company believes that the terms of these leases are no less favorable to the Company than would have been negotiated with unrelated third parties.or about May 27, 2004.

Other Transactions57

        We paid compensation of approximately $230,000 for the year ended December 31, 2001 to Mr. T. Anthony Ryan. Mr. Ryan is Vice President, Real Estate, of the Company and is the brother of Vincent J. Ryan, a Director of the Company. We believe that the terms of Mr. Ryan's employment are no less favorable to it than would be negotiable with an unrelated third party.

        We provided an annual pension in the amount of $96,000 to Leo W. Pierce, Sr. for the year ended December 31, 2001. Mr. Pierce formerly served as Chairman Emeritus of the Company and is the father of J. Peter Pierce, a Director of the Company. We will continue to provide a pension to Mr. Pierce in 2002.




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PART IV


Item 14.15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.


(a)(1) and (2) Financial Statements and Financial Statement Schedules filed as part of this report:

A. Iron Mountain Incorporated

		Page
A. Iron Mountain Incorporated
Independent Auditors' Report		59
Report of Independent Public Accountants		4561
Consolidated Balance Sheets, December 31, 20002002 and 20012003		4662
Consolidated Statements of Operations, Years endedEnded December 31, 1999, 20002001, 2002 and 20012003		4763
Consolidated Statements of Shareholders' Equity and Comprehensive Loss,Income (Loss), Years endedEnded December 31, 1999, 20002001, 2002 and 20012003		4864
Consolidated Statements of Cash Flows, Years endedEnded December 31, 1999, 20002001, 2002 and 20012003		4965
Notes to Consolidated Financial Statements		5066
B. Iron Mountain Europe Limited
Report of the Independent Auditors		84111
C. Financial Statement Schedule:
Report of Independent Public Accountants		85112
Schedule II — II—Valuation and Qualifying Accounts		86113

(a)(3)Exhibits filed as part of this report:

        As listed in the Exhibit Index following the signature page hereof.

(b)Reports on Form 8-K:

        On December 13, 2001,5, 2003, the Company filed a Current Report on Form 8-K under Item 7 to file certain exhibits related to the (1) Underwriting Agreement dated December 4, 2003 between the Company, certain of the Company's subsidiaries and certain underwriters as an exhibit, (2) announcement of a proposed public offering of an additional $160 million of the Company's 6⁵/8% Senior Subordinated Notes due 2016, (3) commencement of a tender offer and consent solicitation for any and all of the $85 million aggregate principal amount of 8¹/8% Senior Notes due 2008 of Iron Mountain Canada Corporation and (4) announcement that the Company priced an underwritten public offering of an additional $170 million in aggregate principal amount of its 6⁵/8% Senior Subordinated Notes due 2016.

        On December 10, 2003, the Company filed a Current Report on Form 8-K under Items 5 and 7 to announce that the Company's authorization and approvalCompany signed an agreement with Mentmore plc to acquire Mentmore's 49.9% equity interest in Iron Mountain Europe Limited for total consideration of a 3-for-2 stock split effected82.5 million British pounds sterling in the form of a dividend on the Company's Common Stock, par value $0.01 per share, and to file pro forma information for the nine months ended September 30, 2001 pertaining to the Company's March Debt Issuance and the September Debt Offering, as defined therein, and the related redemptions.cash.

4458

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INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders of
Iron Mountain Incorporated:

        We have audited the accompanying consolidated balance sheets of Iron Mountain Incorporated (a Pennsylvania corporation) and its subsidiaries (the "Company") as of December 31, 2003 and 2002, and the related consolidated statements of operations, shareholders' equity and comprehensive income (loss), and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Iron Mountain Europe Limited (a consolidated subsidiary) as of October 31, 2003 and 2002, which statements reflect total assets constituting 18% and 8%, respectively, of consolidated total assets as of December 31, 2003 and 2002, and total revenues constituting 12% and 7%, respectively, of the consolidated total revenues for the years then ended. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Iron Mountain Europe Limited, is based solely on the report of such other auditors. The financial statements of Iron Mountain Incorporated and its subsidiaries for the year ended December 31, 2001 were audited by other auditors who have ceased operations. Those auditors expressed an unqualified opinion on those financial statements and referred to the report of other auditors in their report dated February 22, 2002 (except with respect to Note 17, as to which the date is March 15, 2002).

        We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.

        In our opinion, based on our audits and the report of the other auditors, such consolidated financial statements present fairly, in all material respects, the financial position of Iron Mountain Incorporated and its subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

59

---

        As discussed above, the consolidated financial statements of Iron Mountain Incorporated and its subsidiaries for the year ended December 31, 2001 were audited by other auditors who have ceased operations. As described in Note 2g, these consolidated financial statements have been revised to include the transitional disclosures required by Statement of Financial Accounting Standards (Statement) No. 142, Goodwill and Other Intangible Assets, which was adopted by the Company as of January 1, 2002. Our audit procedures with respect to the disclosures in Note 2g for 2001 amounts included (a) agreeing the previously reported net income to the previously issued consolidated financial statements and the adjustments to reported net income representing amortization expense (including any related tax effects) recognized in those periods related to goodwill, intangible assets that are no longer being amortized and changes in amortization periods for intangible assets that will continue to be amortized as a result of initially applying Statement No. 142 (including any related tax effects) to the Company's underlying records obtained from management, and (b) testing the mathematical accuracy of the reconciliation of adjusted net income to reported net income, and the related earnings-per-share amounts. In our opinion, the disclosures for 2001 in Note 2g are appropriate. However, we were not engaged to audit, review, or apply any procedures to the 2001 consolidated financial statements of the Company other than with respect to such disclosures and, accordingly, we do not express an opinion or any other form of assurance on the 2001 consolidated financial statements taken as a whole.

/s/ DELOITTE & TOUCHE LLP

Boston, Massachusetts
March 8, 2004

60

---

        This is a copy of the audit report previously issued by Arthur Andersen LLP in connection with Iron Mountain Incorporated's filing of an Annual Report on Form 10-K for the year ended December 31, 2001. This audit report has not been reissued by Arthur Andersen LLP in connection with this Annual Report on Form 10-K for the year ended December 31, 2003. See Exhibit 23.3 to the December 31, 2002 Annual Report on Form 10-K filed with the SEC for further discussion. The consolidated balance sheets as of December 31, 2000 and 2001 and the consolidated statements of operations, shareholders' equity and comprehensive loss and cash flows for the years ended December 31, 1999 and 2000 referred to in this report have not been included in the accompanying consolidated financial statements.


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors of
Iron Mountain Incorporated:

        We have audited the accompanying consolidated balance sheets of Iron Mountain Incorporated (a Pennsylvania corporation) and its subsidiaries as of December 31, 2000 and 2001, and the related consolidated statements of operations, shareholders' equity and comprehensive loss and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of Iron Mountain Incorporated's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the consolidated financial statements of Iron Mountain Europe Limited as of October 31, 2000 and 2001, which statements reflect total assets and total revenues of 6 percent and 5 percent in 2000, and 8 percent and 6 percent in 2001, respectively, of the related consolidated totals. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for this entity, is based solely on the report of the other auditors.

        We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.

        In our opinion, based on our audits and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Iron Mountain Incorporated and its subsidiaries as of December 31, 2000 and 2001 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

		/s/ ARTHUR ANDERSEN LLP
Boston, Massachusetts February 22, 2002 (Except with respect to Note 17, as to which the date is March 15, 2002)

ARTHUR ANDERSEN LLP

Boston, Massachusetts
February 22, 2002
(Except with respect to Note 17,
as to which the date is March 15, 2002)

4561

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IRON MOUNTAIN INCORPORATED

CONSOLIDATED BALANCE SHEETS

(In thousands)thousands, except share and per share data)


					December 31,									December 31,
					2000			2001						2002			2003
ASSETS	ASSETS										ASSETS
Current Assets:	Current Assets:										Current Assets:
	Cash and cash equivalents				$	6,200		$	21,359		Cash and cash equivalents			$	56,292		$	74,683
	Accounts receivable (less allowances of $15,989 and $17,086 as of 2000 and 2001, respectively)					176,442			219,050		Accounts receivable (less allowances of $20,274 and $18,310, respectively)				225,416			279,800
	Deferred income taxes					30,990			31,140		Deferred income taxes				34,192			33,043
	Prepaid expenses and other					23,036			37,768		Prepaid expenses and other				51,140			84,057
			Total Current Assets			236,668			309,317			Total Current Assets			367,040			471,583
Property, Plant and Equipment:	Property, Plant and Equipment:										Property, Plant and Equipment:
	Property, plant and equipment					984,939			1,190,537		Property, plant and equipment				1,577,588			1,950,893
	Less—Accumulated depreciation					(152,545	)		(238,306	)	Less—Accumulated depreciation				(338,400	)		(458,626	)
			Net Property, Plant and Equipment			832,394			952,231			Net Property, Plant and Equipment			1,239,188			1,492,267
Other Assets, net:	Other Assets, net:										Other Assets, net:
	Goodwill					1,525,630			1,529,547		Goodwill				1,544,974			1,776,279
	Customer acquisition costs					27,692			32,884		Customer relationships and acquisition costs				48,213			116,466
	Deferred financing costs					14,534			19,928		Deferred financing costs				19,358			23,934
	Other					22,178			15,999		Other				11,882			11,570
			Total Other Assets, net			1,590,034			1,598,358			Total Other Assets, net			1,624,427			1,928,249
			Total Assets		$	2,659,096		$	2,859,906			Total Assets		$	3,230,655		$	3,892,099
LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY										LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:	Current Liabilities:										Current Liabilities:
	Current portion of long-term debt				$	40,789		$	35,256		Current portion of long-term debt			$	69,732		$	115,781
	Accounts payable					42,531			64,596		Accounts payable				76,115			87,006
	Accrued expenses					153,291			153,105		Accrued expenses				168,025			234,426
	Deferred income					53,884			85,894		Deferred revenue				95,188			107,857
	Other current liabilities					23,558			20,158		Other current liabilities				18,902			39,675
			Total Current Liabilities			314,053			359,009			Total Current Liabilities			427,962			584,745
Long-term Debt, net of current portion	Long-term Debt, net of current portion					1,314,342			1,460,843		Long-term Debt, net of current portion				1,662,365			1,974,147
Other Long-term Liabilities	Other Long-term Liabilities					7,920			23,705		Other Long-term Liabilities				35,433			24,499
Deferred Rent	Deferred Rent					16,346			17,884		Deferred Rent				19,438			20,578
Deferred Income Taxes	Deferred Income Taxes					38,948			47,213		Deferred Income Taxes				78,464			146,231
Commitments and Contingencies (see Note 13)	Commitments and Contingencies (see Note 13)										Commitments and Contingencies (see Note 13)
Minority Interest						43,029			65,293
Minority Interests											Minority Interests				62,132			75,785
Shareholders' Equity:	Shareholders' Equity:										Shareholders' Equity:
	Common stock					829			843		Preferred stock (par value $0.01; authorized 10,000,000 shares; none issued and outstanding)				—			—
	Additional paid-in capital					990,578			1,006,836		Common stock (par value $0.01; authorized 150,000,000 shares; issued and outstanding 85,049,624 shares and 85,575,254 shares, respectively)				850			856
	Accumulated deficit					(59,383	)		(103,695	)	Additional paid-in capital				1,020,452			1,034,070
	Accumulated other comprehensive items					(7,566	)		(18,025	)	(Accumulated deficit) Retained earnings				(45,403	)		39,234
											Accumulated other comprehensive items, net				(31,038	)		(8,046	)
			Total Shareholders' Equity			924,458			885,959
												Total Shareholders' Equity			944,861			1,066,114
			Total Liabilities and Shareholders' Equity		$	2,659,096		$	2,859,906
												Total Liabilities and Shareholders' Equity		$	3,230,655		$	3,892,099

The accompanying notes are an integral part of these consolidated financial statements.

4662

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IRON MOUNTAIN INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except Per Share Data)per share data)


					Year Ended December 31,
					1999			2000			2001
Revenues:
	Storage				$	317,387		$	585,664		$	694,474
	Service and storage material sales					202,162			400,707			476,642
			Total Revenues			519,549			986,371			1,171,116
Operating Expenses:
	Cost of sales (excluding depreciation)					260,930			482,771			561,936
	Selling, general and administrative					128,948			246,559			306,934
	Depreciation and amortization					65,422			126,810			153,591
	Stock option compensation expense					—			15,110			—
	Merger-related expenses					—			9,133			3,673
			Total Operating Expenses			455,300			880,383			1,026,134
Operating Income						64,249			105,988			144,982
Interest Expense, Net						54,425			117,975			134,742
Other Income (Expense), Net						17			(6,045	)		(18,371	)
	Income (Loss) from Continuing Operations Before Provision for Income Taxes and Minority Interest					9,841			(18,032	)		(8,131	)
Provision for Income Taxes						10,579			9,125			26,036
Minority Interest in Earnings (Losses) of Subsidiaries						322			(2,224	)		(1,929	)
	Loss from Continuing Operations before Extraordinary Item					(1,060	)		(24,933	)		(32,238	)
Income from Discontinued Operations						241			—			—
Loss on Sale of Discontinued Operations						(13,400	)		—			—
Extraordinary Charge from Early Extinguishment of Debt (net of tax benefit of $1,928 and $8,161)						—			(2,892	)		(11,819	)
			Net Loss		$	(14,219	)	$	(27,825	)	$	(44,057	)
Net Loss per Share—Basic and Diluted:
	Loss from Continuing Operations				$	(0.02	)	$	(0.31	)	$	(0.39	)
	Discontinued Operations					(0.26	)		—			—
	Extraordinary Charge from Early Extinguishment of Debt					—			(0.04	)		(0.14	)
			Net Loss per Share—Basic and Diluted		$	(0.28	)	$	(0.35	)	$	(0.53	)
Weighted Average Common Shares Outstanding—Basic and Diluted						50,018			79,688			83,666

				Year Ended December 31,
				2001			2002			2003
Revenues:
	Storage			$	694,474		$	759,536		$	875,035
	Service and storage material sales				491,244			558,961			626,294
		Total Revenues			1,185,718			1,318,497			1,501,329
Operating Expenses:
	Cost of sales (excluding depreciation)				576,538			622,299			680,747
	Selling, general and administrative				307,800			333,050			383,641
	Depreciation and amortization				153,271			108,992			130,918
	Merger-related expenses				3,673			796			—
	Loss on disposal/writedown of property, plant and equipment, net				320			774			1,130
		Total Operating Expenses			1,041,602			1,065,911			1,196,436
Operating Income					144,116			252,586			304,893
Interest Expense, Net					134,742			136,632			150,468
Other Expense (Income), Net					37,485			1,435			(2,564	)
	(Loss) Income from Continuing Operations Before Provision for Income Taxes and Minority Interest				(28,111	)		114,519			156,989
Provision for Income Taxes					17,875			47,318			66,730
Minority Interest in (Losses) Earnings of Subsidiaries					(1,929	)		3,629			5,622
	(Loss) Income from Continuing Operations before Discontinued Operations and Cumulative Effect of Change in Accounting Principle				(44,057	)		63,572			84,637
Income from Discontinued Operations (net of tax of $768)					—			1,116			—
Cumulative Effect of Change in Accounting Principle (net of minority interest)					—			(6,396	)		—
		Net (Loss) Income		$	(44,057	)	$	58,292		$	84,637
Net (Loss) Income per Share—Basic:
	(Loss) Income from Continuing Operations before Discontinued Operations and Cumulative Effect of Change in Accounting Principle			$	(0.53	)	$	0.75		$	0.99
	Income from Discontinued Operations (net of tax)				—			0.01			—
	Cumulative Effect of Change in Accounting Principle (net of minority interest)				—			(0.08	)		—
		Net (Loss) Income per Share—Basic		$	(0.53	)	$	0.69		$	0.99
Net (Loss) Income per Share—Diluted:
	(Loss) Income from Continuing Operations before Discontinued Operations and Cumulative Effect of Change in Accounting Principle			$	(0.53	)	$	0.74		$	0.98
	Income from Discontinued Operations (net of tax)				—			0.01			—
	Cumulative Effect of Change in Accounting Principle (net of minority interest)				—			(0.07	)		—
		Net (Loss) Income per Share—Diluted		$	(0.53	)	$	0.68		$	0.98
Weighted Average Common Shares Outstanding—Basic					83,666			84,651			85,267
Weighted Average Common Shares Outstanding—Diluted					83,666			86,071			86,718

The accompanying notes are an integral part of these consolidated financial statements.

4763

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IRON MOUNTAIN INCORPORATED

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE LOSSINCOME (LOSS)

(In thousands, except share data)


		Common Stock Voting
													Accumulated Other Comprehensive Items
							Additional Paid-in Capital			Accumulated Deficit						Treasury Stock			Total Shareholders' Equity
		Shares		Amount
Balance, December 31, 1998		44,145,308		$	442		$	355,779		$	(17,339	)	$	—		$	—		$	338,882
Shares and options issued in connection with acquisitions, net of issuance costs		2,214,865			22			45,738			—			—			—			45,760
Issuance of shares in secondary public offering, net of issuance costs		8,625,000			86			152,457			—			—			—			152,543
Issuance of shares under employee stock purchase plan and option plans, including tax benefit		430,245			4			6,178			—			—			—			6,182
Acceleration of options in connection with sale of business		—			—			283			—			—			—			283
Currency translation adjustment		—			—			—			—			(1,193	)		—			(1,193	)
Purchase of treasury shares		—			—			—			—			—			(39,484	)		(39,484	)
Net loss		—			—			—			(14,219	)		—			—			(14,219	)
Balance, December 31, 1999		55,415,418			554			560,435			(31,558	)		(1,193	)		(39,484	)		488,754
Shares and options issued in connection with acquisitions, net of issuance costs		28,175,720			282			444,707			—			—			—			444,989
Issuance of shares under employee stock purchase plan and option plans, including tax benefit		1,543,575			15			9,788			—			—			—			9,803
Stock option compensation expense		—			—			15,110			—			—			—			15,110
Currency translation adjustment		—			—			—			—			(6,373	)		—			(6,373	)
Retirement of treasury stock		(2,214,866	)		(22	)		(39,462	)		—			—			39,484			—
Net loss		—			—			—			(27,825	)		—			—			(27,825	)
Balance, December 31, 2000		82,919,847			829			990,578			(59,383	)		(7,566	)		—			924,458
Issuance of shares under employee stock purchase plan and option plans, including tax benefit		1,374,468			14			16,258			—			—			—			16,272
Currency translation adjustment		—			—			—			—			(4,388	)		—			(4,388	)
Transition adjustment charge		—			—			—			—			(214	)		—			(214	)
Unrealized loss on hedging contracts		—			—			—			—			(5,857	)		—			(5,857	)
Adjustment due to differences in consolidation year end		—			—			—			(255	)		—			—			(255	)
Net loss		—			—			—			(44,057	)		—			—			(44,057	)
Balance, December 31, 2001		84,294,315		$	843		$	1,006,836		$	(103,695	)	$	(18,025	)	$	—		$	885,959

			1999			2000			2001
COMPREHENSIVE LOSS:
Net loss			$	(14,219	)	$	(27,825	)	$	(44,057	)
Other Comprehensive Losses:
	Foreign Currency Translation Adjustment			(1,193	)		(6,373	)		(4,388	)
	Transition Adjustment Charge			—			—			(214	)
	Unrealized Loss on Hedging Contracts			—			—			(5,857	)
Comprehensive Loss			$	(15,412	)	$	(34,198	)	$	(54,516	)

		Common Stock Voting
							Additional Paid-in Capital			(Accumulated Deficit) Retained Earnings			Accumulated Other Comprehensive Items			Total Shareholders' Equity
		Shares		Amount
Balance, December 31, 2000		82,919,847		$	829		$	990,578		$	(59,383	)	$	(7,566	)	$	924,458
Issuance of shares under employee stock purchase plan and option plans, including tax benefit		1,374,468			14			16,258			—			—			16,272
Currency translation adjustment		—			—			—			—			(4,388	)		(4,388	)
Transition adjustment charge		—			—			—			—			(214	)		(214	)
Unrealized loss on hedging contracts		—			—			—			—			(5,857	)		(5,857	)
Adjustment due to differences in consolidation year end		—			—			—			(255	)		—			(255	)
Net loss		—			—			—			(44,057	)		—			(44,057	)
Balance, December 31, 2001		84,294,315			843			1,006,836			(103,695	)		(18,025	)		885,959
Issuance of shares under employee stock purchase plan and option plans, including tax benefit		755,309			7			13,373			—			—			13,380
Deferred compensation		—			—			243			—			—			243
Currency translation adjustment		—			—			—			—			3,378			3,378
Unrealized loss on hedging contracts		—			—			—			—			(16,391	)		(16,391	)
Net income		—			—			—			58,292			—			58,292
Balance, December 31, 2002		85,049,624			850			1,020,452			(45,403	)		(31,038	)		944,861
Issuance of shares under employee stock purchase plan and option plans, including tax benefit		525,630			6			18,242			—			—			18,248
Deferred compensation		—			—			(4,624	)		—			—			(4,624	)
Currency translation adjustment		—			—			—			—			16,466			16,466
Unrealized loss on hedging contracts		—			—			—			—			6,215			6,215
Unrealized gain on securities, net of tax		—			—			—			—			311			311
Net income		—			—			—			84,637			—			84,637
Balance, December 31, 2003		85,575,254		$	856		$	1,034,070		$	39,234		$	(8,046	)	$	1,066,114

			2001			2002			2003
COMPREHENSIVE (LOSS) INCOME:
Net (loss) income			$	(44,057	)	$	58,292		$	84,637
Other Comprehensive (Loss) Income, Net of Tax:
	Foreign Currency Translation Adjustments			(4,388	)		3,378			16,466
	Transition Adjustment Charge			(214	)		—			—
	Unrealized (Loss) Gain on Hedging Contracts			(5,857	)		(16,391	)		6,215
	Unrealized Gain on Securities			—			—			311
Comprehensive (Loss) Income			$	(54,516	)	$	45,279		$	107,629

The accompanying notes are an integral part of these consolidated financial statements.

4864

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IRON MOUNTAIN INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


			Year Ended December 31,											Year Ended December 31,
			1999			2000			2001					2001			2002			2003
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:											Cash Flows from Operating Activities:
	Net loss		$	(14,219	)	$	(27,825	)	$	(44,057	)	Net (loss) income		$	(44,057	)	$	58,292		$	84,637
Adjustments to reconcile net loss to loss from continuing operations before extraordinary item:
Adjustments to reconcile net (loss) income to (loss) income from continuing operations before discontinued operations and cumulative effect of change in accounting principle:												Adjustments to reconcile net (loss) income to (loss) income from continuing operations before discontinued operations and cumulative effect of change in accounting principle:
	Income from discontinued operations			(241	)		—			—		Income from discontinued operations (net of tax of $768)			—			(1,116	)		—
	Loss on sale of discontinued operations			13,400			—			—		Cumulative effect of change in accounting principle (net of minority interest)			—			6,396			—
	Extraordinary charge from early extinguishment of debt			—			2,892			11,819
(Loss) Income from continuing operations												(Loss) Income from continuing operations			(44,057	)		63,572			84,637
Adjustments to reconcile (loss) income from continuing operations to cash flows provided by operating activities:												Adjustments to reconcile (loss) income from continuing operations to cash flows provided by operating activities:
												Minority interests, net			(1,929	)		3,629			5,622
Loss from Continuing Operations before Extraordinary Item				(1,060	)		(24,933	)		(32,238	)
Adjustments to reconcile loss from continuing operations before extraordinary item to cash flows provided by operating activities of continuing operations:
	Minority interest			322			(2,224	)		(1,929	)	Depreciation			87,130			104,176			123,974
	Depreciation and amortization			65,422			126,810			153,591		Amortization (includes deferred financing costs and bond discount of $4,930, $4,921 and $3,654, respectively)			71,071			9,737			10,598
	Amortization of deferred financing costs and bond discount			1,981			2,595			4,930		Provision for deferred income taxes			15,688			44,112			61,485
	Provision for doubtful accounts			2,733			9,714			8,499		Loss on early extinguishment of debt			19,980			5,430			28,175
	Loss on impairment of investments			—			—			6,925		Loss on impairment of long-term assets			6,925			1,717			—
	Stock option compensation expense			—			15,110			—		Loss on disposal/writedown of property, plant and equipment, net			320			774			1,130
	Foreign currency loss and other, net			238			4,737			10,399		Loss (Gain) on foreign currency and other, net			10,399			(5,773	)		(28,961	)
Changes in Assets and Liabilities (exclusive of acquisitions):	Changes in Assets and Liabilities (exclusive of acquisitions):											Changes in Assets and Liabilities (exclusive of acquisitions):
	Accounts receivable			(22,996	)		(15,881	)		(24,176	)	Accounts receivable			(15,677	)		(2,547	)		(16,004	)
	Prepaid expenses and other current assets			(9,691	)		19,332			(5,083	)	Prepaid expenses and other current assets			(17,158	)		(3,792	)		6
	Deferred income taxes			8,989			8,350			11,774		Accounts payable			12,554			11,802			979
	Accounts payable			2,009			(553	)		12,554		Accrued expenses, deferred revenue and other current liabilities			10,448			20,575			18,134
	Accrued expenses and other current liabilities			6,306			8,779			4,648		Other assets and long-term liabilities			5,215			1,536			(1,082	)
	Deferred rent			1,203			5,527			1,821
	Deferred income			3,331			686			5,800		Cash Flows Provided by Operating Activities			160,909			254,948			288,693
	Other assets and long-term liabilities			(2,513	)		(445	)		3,394
Cash Flows Provided by Operating Activities of Continuing Operations				56,274			157,604			160,909
Cash Flows Used in Operating Activities of Discontinued Operations				(836	)		—			—
	Cash Flows Provided by Operating Activities			55,438			157,604			160,909
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:											Cash Flows from Investing Activities:
	Cash paid for acquisitions, net of cash acquired			(212,160	)		(140,940	)		(71,397	)	Capital expenditures			(197,039	)		(196,997	)		(204,477	)
	Capital expenditures			(98,657	)		(168,706	)		(197,039	)	Cash paid for acquisitions, net of cash acquired			(71,397	)		(49,361	)		(379,890	)
	Additions to customer acquisition costs			(8,122	)		(12,779	)		(8,420	)	Additions to customer relationship and acquisition costs			(8,420	)		(8,419	)		(12,577	)
	Investment in convertible preferred stock			—			(6,524	)		(2,000	)	Investment in convertible preferred stock			(2,000	)		—			(1,357	)
	Proceeds from sale of property and equipment			—			1,320			720		Proceeds from sales of property and equipment			720			7,020			11,667
Cash Flows Used in Investing Activities of Continuing Operations				(318,939	)		(327,629	)		(278,136	)
Cash Flows Provided by Investing Activities of Discontinued Operations				7,814			—			—
	Cash Flows Used in Investing Activities			(311,125	)		(327,629	)		(278,136	)	Cash Flows Used in Investing Activities			(278,136	)		(247,757	)		(586,634	)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:											Cash Flows from Financing Activities:
	Net proceeds from sale of senior subordinated notes.			149,460			—			427,924		Repayment of debt and tern loans			(118,278	)		(462,243	)		(698,817	)
	Repayment of debt			(249,654	)		(596,744	)		(118,278	)	Proceeds from borrowings and term loans			105,595			438,842			744,016
	Early retirement of senior subordinated notes			—			—			(312,701	)	Early retirement of senior subordinated notes			(312,701	)		(54,380	)		(374,258	)
	Proceeds from borrowings			235,141			404,993			105,595		Net proceeds from sales of senior subordinated notes			427,924			99,000			617,179
	Proceeds from term loans			—			350,000			—		Debt financing (repayment to) and equity contribution from (distribution to) minority shareholders, net			21,216			(1,241	)		20,225
	Debt financing and equity contribution from minority shareholder			11,636			11,430			21,216		Other, net			11,145			7,120			6,709
	Proceeds from secondary equity offering, net of underwriting discount			153,755			—			—
	Repurchase of common stock			(39,484	)		—			—		Cash Flows Provided by Financing Activities			134,901			27,098			315,054
	Exercise of stock options			3,589			8,180			12,079
	Financing and stock issuance costs			(6,590	)		(5,449	)		(934	)
	Cash Flows Provided by Financing Activities			257,853			172,410			134,901
Effect of exchange rates on cash and cash equivalents				(51	)		(15	)		(2,515	)
Effect of Exchange Rates on Cash and Cash Equivalents												Effect of Exchange Rates on Cash and Cash Equivalents			(2,515	)		644			1,278
Increase in Cash and Cash Equivalents	Increase in Cash and Cash Equivalents			2,115			2,370			15,159		Increase in Cash and Cash Equivalents			15,159			34,933			18,391
Cash and Cash Equivalents, Beginning of Year	Cash and Cash Equivalents, Beginning of Year			1,715			3,830			6,200		Cash and Cash Equivalents, Beginning of Year			6,200			21,359			56,292
Cash and Cash Equivalents, End of Year	Cash and Cash Equivalents, End of Year		$	3,830		$	6,200		$	21,359		Cash and Cash Equivalents, End of Year		$	21,359		$	56,292		$	74,683
Supplemental Information:	Supplemental Information:											Supplemental Information:
Cash Paid for Interest	Cash Paid for Interest		$	46,555		$	98,114		$	133,373		Cash Paid for Interest		$	133,373		$	133,873		$	126,952
Cash Paid for Income Taxes	Cash Paid for Income Taxes		$	1,916		$	2,891		$	4,925		Cash Paid for Income Taxes		$	4,925		$	3,147		$	8,316

The accompanying notes are an integral part of these consolidated financial statements.

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IRON MOUNTAIN INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 20012003

(In thousands, except share and per share data)


1. Nature of Business

        The accompanying financial statements represent the consolidated accounts of Iron Mountain Incorporated, a Pennsylvania corporation, and its subsidiaries (collectively "Iron Mountain" or the "Company"). Iron Mountain issubsidiaries. We are an international full-service provider of records and information management and related services for all media in various locations throughout the United States, Canada, Europe, Mexico and South America to Fortune 500 and FTSE 100 companies, and numerous legal, banking, health care, accounting, insurance, entertainment and government organizations.

2. Summary of Significant Accounting Policies

        a.     Principles of Consolidation

        The accompanying financial statements reflect theour financial position and results of operations of Iron Mountain on a consolidated basis. All significant intercompany account balances have been eliminated.

        b.     Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted accounting principlesin the United States of America requires the Companyus to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the financial statements and for the period then ended. On an on-going basis, the Company evaluateswe evaluate the estimates used, including those related to the allowance for doubtful accounts, impairments of tangible and intangible assets, income taxes, purchase accounting related reserves, self-insurance liabilities, incentive compensation liabilities, litigation liabilities and contingencies. The Company bases itsWe base our estimates on historical experience, actuarial estimates, current conditions and various other assumptions that are believedwe believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities and they are not readily apparent from other sources. The Company usesWe use these estimates to assist us in the identification and assessment of the accounting treatment necessary with respect to commitments and contingencies. Actual results may differ from these estimates under different assumptions or conditions.estimates.

        c.     Cash and Cash Equivalents

        The Company defines cashCash and cash equivalents to include cash on hand and cash invested in short-term securities which have originalremaining maturities at the date of purchase of less than 90 days. Cash and cash equivalents are carried at cost, which approximates fair value. Our balance of cash and cash equivalents as of December 31, 2003 includes $1,959 of restricted cash due to contractual and other arrangements.

        d.     Foreign Currency Translation

        Local currencies are considered the functional currencies for most of the Company'sour operations outside the United States. All assets and liabilities are translated at year-end exchange rates, and revenues and expenses are translated at average exchange rates for the year, in accordance with Statement of Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation." Resulting translation adjustments are reflected in the accumulated other comprehensive items component of shareholders' equity. The gain or loss on foreign currency transactions, including those

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related to U.S. dollar denominated 8¹/8% senior notes of the Company'sour Canadian subsidiary and those related to the foreign currency

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denominated intercompany obligationobligations of the Company'sour foreign subsidiaries to the Company totaled $10.4 millionus, are included in Other (Income) Expense, net, on our Consolidated Statements of Operations. The total of such net (gains) losses amounted to $10,437, $(5,043) and $(30,223) for the yearyears ended December 31, 2001, 2002 and is included in Other Income (Expense), net, on the Company's Consolidated Statements of Operations.2003, respectively.

        e.     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. 133Activities" 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 December 31,January 1, 2001.

        Periodically, the Company acquireswe acquire derivative instruments that are intended to hedge either cash flows or fair values which are subject to exchange or other market price risk, and not for trading purposes. The Company hasWe have formally documented itsour hedging relationships, including identification of the hedging instruments and the hedgehedged items, as well as itsthe 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 Tranche B debt 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 $9,857 ($5,857, net of tax) for the year ended December 31, 2001.

        For the year ended December 31, 2001, the Company recorded net losses of $2,677 resulting from interest rate swap settlements in interest, and $743 in rent expense. All interest rate swap agreements were determined to be highly effective whereby no ineffectiveness was recorded in earnings.

        f.      Property, Plant and Equipment

        Property, plant and equipment are stated at cost and depreciated using the straight-line method with the following useful lives:

Buildings		40 to 50 years
Leasehold improvements		8 to 10 years or the life of the lease, whichever is shorter
Racking		5 to 20 years
Warehouse equipment/vehicles		43 to 20 years
Furniture and fixtures		3 to 10 years
Computer hardware and software		3 to 5 years

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        Property, plant and equipment, at cost, consist of the following:

		December 31,						December 31,
		2000			2001			2002			2003
Land and buildings		$	331,921		$	393,429		$	623,717		$	745,838
Leasehold improvements			62,381			70,434			96,509			144,244
Racking			364,337			426,776			496,919			598,101
Warehouse equipment/vehicles			45,532			56,064			66,718			88,127
Furniture and fixtures			22,574			29,052			34,005			41,996
Computer hardware and software			96,408			153,546			204,444			260,190
Construction in progress			61,786			61,236			55,276			72,397
		$	984,939		$	1,190,537		$	1,577,588		$	1,950,893

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        Minor maintenance costs are expensed as incurred. Major improvements which extend the life, increase the capacity or improve the safety or the efficiency of property owned are capitalized. Major improvements to leased buildings are capitalized as leasehold improvements and depreciated.

        The Company developsWe develop various software applications for internal use. Payroll and related costs for employees who are directly associated with, and who devote time to, the development of internal-useinternal use computer software projects (to the extent of the time spent directly on the project) are capitalized and depreciated over the estimated useful life of the software. Capitalization begins when the design stage of the application has been completed and it is probable that the project will be completed and the application will be used to perform the function intended. Depreciation begins when the software is placed in service.

        Effective January 1, 1999, the Company adoptedWe apply the provisions of Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 which requires computer software costs associated with internal use software to be expensed as incurred until certain capitalization criteria are met. SOP 98-1 also defines which types of costs should be capitalized and which should be expensed. This accounting pronouncement resulted in certain costs being expensed starting in 1999 that would have been capitalized under the previous policy. The computer software costs incurred and capitalized prior to adoption of SOP 98-1 are being depreciated over their useful lives or the useful lives of the related assets, and are evaluated for impairment in accordance with SFAS No. 121,144, "Accounting for the Impairment or Disposal of Long-Lived AssetsAssets."

        During the year ended December 31, 2002 and for Long-Lived Assets2003, we replaced certain of our internal use software programs, which resulted in the write-off to be Disposed Of".loss on disposal/writedown of property, plant and equipment, net of the remaining net book value of $1,077 and $710, respectively.

        g.     Goodwill and Other Intangible Assets

        InEffective July 1, 2001 and January 1, 2002, we adopted the Financial Accounting Standards Board ("FASB") issuedprovisions of SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets.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

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useful lives. The amortization provisions ofHad SFAS No. 142 apply to goodwill and intangible assets acquired after June 30, 2001. With respect to goodwill and intangible assets acquired prior to July 1, 2001, the Company is required to adopt SFAS No. 142been effective January 1, 2002. The Company expects the adoption of SFAS No. 142 will significantly reduce amortization of goodwill and intangibles commencing January 1, 2002; however, impairment reviews may result in future periodic write-downs. The Company is currently evaluating the effect that the adoption of the provisions of SFAS No. 142 will have on its intangible assets.

        Goodwill reflects the cost in excess of fair value of the net assets of companies acquired in purchase transactions. For the 2001, acquisitions closed prior to July 1, 2001, the aggregate purchase price exceeded the underlying fair value of the net assets acquired by $53,103 which has been assigned to goodwill and was being amortized over 20 to 30 years. Amortization of this goodwill will cease on January 1, 2002. For the 2001 acquisitions closed subsequent to June 30, 2001, the aggregate purchase price exceeded the underlying fair value of the net assets acquired by $18,613 which has been assigned to goodwill and has not been amortized. The Company recorded goodwill amortization expense of $53,406 andwould have been reduced by $59,217 ($44,781 and $50,903,50,903, net of tax) for the yearsyear ended December 31, 2000 and2001.

        Through December 31, 2001, respectively. The Company assesseswe reviewed our existing goodwill for impairment, consistent with the recoverabilityguidelines of goodwill, as well as other long-lived assets, when there is an indication of possible impairment, based upon expectations of future undiscounted cash flows in accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Bebe Disposed Of." Accumulated amortizationof" and determined that no amounts of goodwill were impaired using the undiscounted future cash flow methodology of SFAS No. 121. Effective January 1, 2002, we reviewed goodwill for impairment consistent with the guidelines of SFAS No. 142 using a discounted future cash flow approach to approximate fair value. The result of testing our goodwill for impairment in accordance with SFAS No. 142, as of January 1, 2002, was $128,662a non-cash charge of $6,396 (net of minority interest of $8,487), which, consistent with SFAS No. 142, is reported in the caption "cumulative effect of change in accounting principle" in the accompanying consolidated statement of operations. Impairment adjustments recognized in the future, if any, are generally required to be recognized as

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operating expenses. The $6,396 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 $183,022the 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. We have a controlling 50.1% interest in Iron Mountain South America, Ltd ("IMSA") and the remainder is owned by an 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 ($8,487) to exceed our portion of the non-cash goodwill impairment charge ($6,396). In accordance with SFAS No. 142, we selected October 1 as our annual goodwill impairment review date. We performed our annual goodwill impairment review as of October 1, 2003 and noted no impairment of goodwill at our reporting units as of that date. As of December 31, 20002003, no factors were identified that would alter this assessment.

        The changes in the carrying value of goodwill attributable to each reportable operating segment for the years ended December 31, 2002 and 2003 is as follows:

		Business Records Management			Off-Site Data Protection			International			Corporate & Other			Total Consolidated
Balance as of December 31, 2001		$	1,139,212		$	236,850		$	149,928		$	3,557		$	1,529,547
Goodwill acquired during the year			19,726			895			15,163			—			35,784
Adjustments to purchase reserves			(5,134	)		(85	)		561			—			(4,658	)
Fair value adjustments			(4,355	)		35			—			(26	)		(4,346	)
Other adjustments and currency effects			2,311			(517	)		3,896			(2,160	)		3,530
Impairment losses			—			—			(14,883	)		—			(14,883	)
Balance as of December 31, 2002			1,151,760			237,178			154,665			1,371			1,544,974
Goodwill acquired during the year			39,330			7,675			142,065			—			189,070
Adjustments to purchase reserves			(613	)		(52	)		(285	)		—			(950	)
Fair value adjustments			3,097			(150	)		(4,385	)		—			(1,438	)
Other adjustments and currency effects			24,898			(30	)		19,755			—			44,623
Balance as of December 31, 2003		$	1,218,472		$	244,621		$	311,815		$	1,371		$	1,776,279

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        Actual results of operations for the years ended December 31, 2002 and 2003 and pro forma results of operations for the year ended December 31, 2001 respectively.had we applied the non-amortization provisions of SFAS No. 142 as of January 1, 2001 are as follows:

		Year Ended December 31,
		2001			2002			2003
		(Proforma)			(Actual)
(Loss) Income from Continuing Operations before Provision for Income Taxes and Minority Interest		$	(28,111	)	$	114,519		$	156,989
Add: Goodwill Amortization			59,217			—			—
Provision for Income Taxes			26,154			47,318			66,730
Minority Interest in Earnings of Subsidiaries, Net			1,197			3,629			5,622
Adjusted Income from Continuing Operations before Discontinued Operations, Extraordinary Charges and Cumulative Effect of Change in Accounting Principle			3,755			63,572			84,637
Income from Discontinued Operations			—			1,116			—
Cumulative Effect of Change in Accounting Principle			—			(6,396	)		—
Net Income		$	3,755		$	58,292		$	84,637
Net (Loss) Income per Share—Basic:
(Loss) Income from Continuing Operations before Discontinued Operations and Cumulative Effect of Change in Accounting Principle, as Reported		$	(0.53	)	$	0.75		$	0.99
Add: Goodwill Amortization, Net of Change in Provision for Income Taxes and Minority Interest			0.57			—			—
Adjusted Income from Continuing Operations before Discontinued Operations and Cumulative Effect of Change in Accounting Principle			0.04			0.75			0.99
Income from Discontinued Operations			—			0.01			—
Cumulative Effect of Change in Accounting Principle			—			(0.08	)		—
Net Income per Share—Basic		$	0.04		$	0.69		$	0.99
Net (Loss) Income per Share—Diluted:
(Loss) Income from Continuing Operations before Discontinued Operations and Cumulative Effect of Change in Accounting Principle, as Reported		$	(0.53	)	$	0.74		$	0.98
Add: Goodwill Amortization, Net of Change in Provision for Income Taxes and Minority Interest			0.56			—			—
Adjusted Income from Continuing Operations before Discontinued Operations and Cumulative Effect of Change in Accounting Principle			0.04			0.74			0.98
Income from Discontinued Operations			—			0.01			—
Cumulative Effect of Change in Accounting Principle			—			(0.07	)		—
Net Income per Share—Diluted		$	0.04		$	0.68		$	0.98

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        Estimated amortization expense for existing intangible assets (excluding deferred financing costs which are amortized through interest expense) for the next five succeeding fiscal years is as follows:

		Estimated Amortization Expense
2004		$	6,935
2005			6,314
2006			5,970
2007			5,891
2008			5,755

        h.     Long-Lived Assets

        In accordance with SFAS No. 121, the Company reviews144, we review long-lived assets and all amortizable intangible assets (including(excluding goodwill) for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to thetheir carrying amount. The operations are generally distinguished by the business segment and geographic region in which they operate. If the operation is determined to be unable to recover the carrying amount of its assets, then intangible assets are written down first, followed by the other long-lived assets of the operation, to fair value. Fair value is determined based on discounted cash flows or appraised values, depending upon the nature of the assets.

        i.      Customer Relationships and Acquisition Costs and Other

        In connection with adopting SFAS No. 142, we reassessed the useful lives and classification of our intangible assets. Costs related to the acquisition of large volume accounts, net of revenues received for the initial transfer of the records, are capitalized and amortized for an appropriate periodperiods ranging from five to 30 years (weighted average of 29 years at December 31, 2003). These costs had previously been amortized over periods not to exceed 12 years. If the customer terminates its relationship with the Company,us, the unamortized cost is charged to expense. However, in the event of such termination, the Company collects,we collect, and recordsrecord as income, permanent removal fees that generally equal or exceed the amount of the unamortized costs. Customer relationship intangible assets acquired through business combinations are amortized over periods ranging from five to 30 years (weighted average of 21 years at December 31, 2003). As of December 31, 20002002 and 2001,2003, the gross carrying amount of customer relationships and acquisition costs was $58,781 and $131,294, respectively, and accumulated amortization of those costs was $5,975$10,568 and $8,838,$14,828, respectively. The Company is currently evaluatingFor years ended December 31, 2001, 2002 and 2003, amortization expense was $3,053, $1,770, and $4,395, respectively.

        Other intangible assets, including noncompetition agreements and trademarks, are capitalized and amortized over a weighted average period of five years. As of December 31, 2002 and 2003, the effect thatgross carrying amount of other intangible assets was $21,088 and $22,212, respectively, and accumulated amortization of those costs was $16,857 and $20,280, respectively. For the adoption of the provisions of SFAS No. 142 will have on its customer acquisition costs.years ended December 31, 2001, 2002 and 2003, amortization expense was $3,872, $3,046 and $2,559, respectively.

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        j.      Deferred Financing Costs

        Deferred financing costs are amortized over the life of the related debt using the effective interest rate method. If debt is retired early, the related unamortized deferred financing costs are written off as an extraordinary charge in the period the debt is retired.retired to other (income) expense, net. As of December 31, 20002002 and 2001,2003, gross carrying amount of deferred financing costs was $25,883 and $29,620, respectively, and accumulated amortization of those costs was $5,592$6,525 and $4,766, respectively.$5,686, respectively, and was recorded in interest expense, net.

        k.     Investment in Preferred Stock

        In May 2000, the Companywe made a $6,500 investment in the convertible preferred stock of LiveVault Corporation, a technology development company. This investment is accounted for at the lower of cost or market. In September 2001, the Companywe recorded an impairment charge in other income (expense)(income) expense, net of $6,925,$6,900, including the original investment and certain loans related to such investment. In December 2001, in connection with a recapitalization of this technology development company, the CompanyLiveVault, we made an additional $2,000 investment in theLiveVault's convertible preferred stockstock. In December 2002, we recorded an impairment charge related to this investment in other (income) expense, net of such company.$600. In March 2003, we made an additional $1,357 investment in LiveVault's convertible preferred stock. As of December 31, 20002002 and 2001, such2003, $1,400 and $2,757, respectively, of carrying value related to this investment has beenis included in other assets in the accompanying consolidated balance sheets.

        l.      Accrued Expenses

        Accrued expenses consist of the following:

		December 31,						December 31
		2000			2001			2002			2003
Interest		$	33,657		$	29,715		$	26,647		$	48,960
Payroll and vacation			25,492			31,952			36,634			47,874
Restructuring costs (see Note 6)			28,514			16,225
Derivative Liability									13,778			30,633
Restructuring costs (see Note 7)									9,906			16,322
Incentive compensation			11,701			17,555			23,752			15,306
Other			53,927			57,658			57,308			75,331
		$	153,291		$	153,105		$	168,025		$	234,426

        m.    Revenues

        The Company'sOur revenues consist of storage revenues as well as service and storage material sales revenues. Storage revenues consist of periodic charges related to the storage of materials (either on a per unit or per cubic foot of records basis). In certain circumstances, based upon customer requirements, storage revenues include periodic charges associated with normal, recurring service activities. Service and storage material sales revenues are comprised of charges for related service activities and courier

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operations and the sale of storage materials and courier operations. In certain circumstances, storage material sales are recorded net of product costs when the Company functions as a sales representative of the product manufacturer and does not receive or take title to the products.materials. Customers are generally billed on a monthly basis on contractually agreed-upon terms.

        Storage and service revenues are recognized in the month the respective service is provided. Storage material sales are recognized when shipped to the customer. Amounts related to future storage

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for customers where storage fees are billed in advance are accounted for as deferred incomerevenue and amortized over the applicable period.

        n.     Deferred Rent

        The Company hasWe have entered into various leases for buildings used in the storage of records. Certain leases have fixed escalation clauses or other features which require normalization of the rental expense over the life of the lease resulting in deferred rent being reflected in the accompanying consolidated balance sheets. In addition, the Company haswe have assumed various above market leases in connection with certain of itsour acquisitions. The difference between discountedthe present value of these lease obligations and the market rate at the date of the acquisition was recorded as a net deferred rent liability and is being amortized over the remaining lives of the respective leases.

        o.     Stock-based Compensation

        EffectiveAs of January 1, 1996,2003, we adopted the Company adopted themeasurement provisions of SFAS No. 123, "Accounting for Stock-Based Compensation.Compensation," as amended by SFAS No. 148, "Accounting for Stock-Based Compensation—Transition and Disclosure." As a result we began using the fair value method of accounting in our financial statements beginning January 1, 2003 using the prospective method. The Company hasprospective method involves recognizing expense for the fair value for all awards granted or modified in the year of adoption and thereafter with no expense recognition for previous awards. Additionally, we recognize expense related to the discount embedded in our employee stock purchase plan. We will apply the fair value recognition provisions to all stock based awards granted, modified or settled on or after January 1, 2003 and will continue to provide the required pro forma information for all awards previously granted, modified or settled before January 1, 2003.

        Had we elected to continue to account for stock options at their intrinsicrecognize compensation cost based on the fair value with disclosure of the effects ofoptions granted at grant date as prescribed by SFAS No. 123 and No. 148, net (loss) income and net (loss) income per share would have been changed to the pro forma amounts indicated in the table below:

			Year Ended December 31,
			2001			2002			2003
Net (loss) income, as reported			$	(44,057	)	$	58,292		$	84,637
Add: Stock-based employee compensation expense included in reported net income, net of tax benefit				—			—			984
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax benefit				2,912			2,687			3,304
Net (loss) income, pro forma			$	(46,969	)	$	55,605		$	82,317
(Losses) Earnings per share:
	Basic—as reported			(0.53	)		0.69			0.99
	Basic—pro forma			(0.56	)		0.66			0.97
	Diluted—as reported			(0.53	)		0.68			0.98
	Diluted—pro forma			(0.56	)		0.65			0.95

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        The weighted average fair value accounting on net income (loss)of options granted in 2001, 2002 and earnings (loss)2003 was $8.74, $9.70 and $10.97 per share, on a pro forma basis.

        During the second and third quarters of 2000, the Company entered into separation agreements with certain executives.respectively. The separation agreements for these executives included the acceleration of vesting and extension of the exercise period of previously granted stock options, which resulted in a non-cash charge of $15,110. Therevalues were no such costs in 2001. In accordance with Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," compensation is equal to the intrinsic value atestimated on the date of measurement, and recordedgrant using the Black-Scholes option pricing model. The following table summarizes the weighted average assumptions used for grants in the statement of operations as stock option compensation expense.year ended December 31:

Assumption		2001		2002		2003
Expected volatility		27.0	%	27.5	%	27.0	%
Risk-free interest rate		4.65		4.08		2.91
Expected dividend yield		None		None		None
Expected life of the option		5.0 years		5.0 years		5.0 years

        p.     Merger-related Expenses

        Merger-related expenses as presented in the accompanying consolidated financial statements relate primarily to non-capitalizable expenses directly related to theour merger of the Company andwith Pierce Leahy Corp. and consist primarily of severance, relocation and pay-to-stay payments, costcosts of exiting certain facilities, system conversion costs and other transaction-related costs.

        q.     Income Taxes

        We account for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the tax and financial reporting basis of assets and liabilities and for loss and credit carryforwards. Valuation allowances are provided when recovery of deferred tax assets is not considered likely.

        r.     Income (Loss) Per Share—Basic and Diluted

        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, substantially attributable to stock options, included in the calculation of diluted net income per share totaled 1,420,655 and 1,451,467 shares for the years ended December 31, 2002 and 2003, respectively. Potential common shares of 1,912,069, 316,864 and 380,304 for the years ended December 31, 2001, 2002 and 2003, respectively, have been excluded from the calculation of diluted net income per share, as their effects are antidilutive.

        s.     Reclassifications

        Certain reclassifications have been made to the 19992001 and 20002002 consolidated financial consolidated statements to conform to the 20012003 presentation.

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2. Summary of Significant Accounting Policies (Continued)




        r.t.      New Accounting Pronouncements

        In July, 2001,April 2002, the FASBFinancial Accounting Standards Board ("FASB") issued SFAS No. 141145, "Rescission of FASB Statements No. 4, 44 and SFAS64, amendment of FASB Statement No. 142. See Note 2.g. "Goodwill" for discussions regarding13, and Technical Corrections," which, among other things, limits the effectclassification of the adoptiongains and losses from extinguishment of the provisions. In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which supersedes SFAS No. 121,debt as extraordinary to only those transactions that are unusual and provisions ofinfrequent in nature as defined by APB Opinion No. 30 "Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business and Extraordinary, Unusual and Infrequently Occurring Events and Transactions",Transactions." We adopted SFAS No. 145 on January 1, 2003. Gains and losses on certain future debt extinguishments, if any, will be recorded in pre-tax income. Losses on early extinguishment of debt of $19,980, $5,430 and $28,175 for the disposalyears ended December 31, 2001, 2002 and 2003, respectively, are included in other (income) expense, net in our accompanying consolidated statements of segmentsoperations to conform to the requirements under SFAS No. 145.

        In January and December 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46") and No. 46, revised ("FIN 46R"), "Consolidation of Variable Interest Entities." These statements, which address perceived weaknesses in accounting for entities commonly known as special-purpose or off-balance-sheet, require consolidation of certain interests or arrangements by virtue of holding a business.controlling financial interest in such entities. Certain provisions of FIN 46R related to interests in special purpose entities were applicable for the period ended December 31, 2003. We must apply FIN 46R to our interests in all entities subject to the interpretation as of the first interim or annual period ending after March 15, 2004. Adoption of this new method of accounting for variable interest entities did not and is not expected to have a material impact on our consolidated results of operations and financial position.

        u.     Rollforward of Allowance for Doubtful Accounts

Year Ended December 31,		Balance at Beginning of the Year			Charged to Expense			Other Additions(1)			Deductions			Balance at End of the Year
2002		$	17,086		$	11,597		$	783		$	(9,192	)	$	20,274
2003		$	20,274		$	(2,292	)	$	4,873		$	(4,545	)	$	18,310

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(1)

Includes allowance of businesses acquired during the year as described in Note 7, the impact associated with currency translation adjustments and the reclassification of certain allowances and credit memo reserves that were historically presented in other balance sheet accounts.

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        v.     Accumulated Other Comprehensive Items, Net

        Accumulated other comprehensive items, net consists of the following:

		December 31,
		2002			2003
Foreign currency translation adjustments		$	(8,576	)	$	7,890
Transition adjustment charge			(214	)		(214	)
Unrealized loss on hedging contracts			(22,248	)		(16,033	)
Unrealized gain on securities			—			311
		$	(31,038	)	$	(8,046	)

3. Variable Interest Entities

        Three variable interest entities were established to acquire properties and lease those properties to us. These leases were designed to qualify as operating leases for accounting purposes, where the monthly lease expense was recorded as rent expense in our consolidated statements of operations and where the related underlying assets and liabilities were not consolidated in our consolidated balance sheets. We changed the characterization and the related accounting for properties in one variable interest entity ("VIE III") during the third quarter of 2002 and prospectively for new property acquisitions in the fourth quarter of 2002. In addition, anticipating the requirement to consolidate, and in line with our objective of transparent reporting, we voluntarily guaranteed all of the at-risk equity in VIE III and our two other variable interest entities (together, the "Other Variable Interest Entities" and, collectively with VIE III, our "Variable Interest Entities") as of December 31, 2002. These guarantees resulted in our consolidating all of our Variable Interest Entities' assets and liabilities.

        Our Variable Interest Entities were financed with real estate term loans. These real estate term loans have always been and continue to be treated as indebtedness for purposes of our financial covenants under our Fifth Amended and Restated Credit Agreement dated March 15, 2002 (the "Amended and Restated Credit Agreement"). As of the date they were consolidated into our financial statements, they were also considered indebtedness under our indentures for certain of our senior subordinated notes. As of December 31, 2003, these real estate term loans amounted to $202,647. No further financing is currently available to our Variable Interest Entities to fund further property acquisitions. See Note 5.

        As of December 31, 2002, we voluntarily guaranteed all of the at-risk equity in VIE III. This resulted in our consolidating all of its remaining assets and liabilities. VIE III's remaining assets and liabilities relate to an interest rate swap agreement, which it entered into upon its inception. This swap agreement hedges the majority of interest rate risk associated with VIE III's real estate term loans. Specifically, VIE III has swapped $97,000 of floating rate debt to fixed rate debt. Since the time it entered into the swap agreement, interest rates have fallen. As a result, the estimated fair value of the derivative liability held by VIE III, and now consolidated on our balance sheet, related to the swap agreement was $13,658 and $10,960 at December 31, 2002 and 2003, respectively. This swap has been

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since inception and continues to be, as of December 31, 2003, an effective hedge in accordance with SFAS No. 133. During the years ended December 31, 2002 and 2003, we recorded depreciation expense of $1,675 and $1,779 associated with the properties, respectively, and interest expense of $6,193 and $8,169, respectively, associated with the real estate term loans. See Notes 4 and 5.

        In addition, as of December 31, 2002, we voluntarily guaranteed all of the at-risk equity in the Other Variable Interest Entities. This resulted in our consolidating all of their assets and liabilities. As of December 31, 2002, the total impact of consolidating the Other Variable Interest Entities was an increase of $103,932 both in property, plant and equipment and long-term debt. The underlying leases associated with the Other Variable Interest Entities were treated as operating leases from inception (as early as 1998) through consolidation on December 31, 2002. As a result, we recorded $6,733 and $5,915 in rent expense in our consolidated statements of operations related to these leases for the years ended December 31, 2001 and 2002, respectively. For the year ended December 31, 2003, we recorded depreciation expense of $2,001 associated with the properties, interest expense of $5,464 associated with the real estate term loans and no longer have rent expense related to leases associated with the Other Variable Interest Entities in our consolidated financial results.

4. Derivative Instruments and Hedging Activities

        We have entered into two 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 our term loan. For all qualifying and highly effective cash flow hedges, the changes in the fair value of the derivatives are recorded in other comprehensive income (loss) which is a component of accumulated other comprehensive items included in shareholders' equity in the accompanying consolidated balance sheets. Specifically, we chose to swap the interest rates on $195,500 of floating rate debt to fixed rate. Since entering into these two swap agreements, interest rates have fallen. As a result, the estimated cost to terminate these swaps (fair value of derivative liability) would be $18,713 and $13,370 at December 31, 2002 and 2003, respectively. We have recorded, in the accompanying consolidated balance sheets, the fair value of the derivative liability, a deferred tax asset and a corresponding charge to accumulated other comprehensive items of $13,370 ($8,709 recorded in accrued expenses and $4,661 recorded in other long-term liabilities), $4,878 and $8,492, respectively, as of December 31, 2003. Additionally, as a result of the foregoing, for the years ended December 31, 2001, 2002 and 2003, we recorded additional interest expense of $2,677, $7,534 and $8,709 resulting from interest rate swap settlements. These interest rate swap agreements were determined to be highly effective, and therefore no ineffectiveness was recorded in earnings.

        We have entered into a third interest rate swap agreement, which was designated as a cash flow hedge through December 31, 2002. This swap agreement hedged interest rate risk on certain amounts of our variable operating lease commitments. Specifically, we chose to swap the variable component of $47,500 of certain operating lease commitments to fixed operating lease commitments. Since entering into the swap agreement, interest rates have fallen. As a result, the estimated cost to terminate these swaps (fair value of derivative liability) would be $2,949 and $1,250 at December 31, 2002 and 2003, respectively. We have recorded, in the accompanying consolidated balance sheets, the estimated cost to terminate this swap, a deferred tax asset and a corresponding charge to accumulated other

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comprehensive items of $1,250 ($1,135 recorded in accrued expenses and $115 recorded in other long-term liabilities), $456 and $794, respectively, as of December 31, 2003. From inception through December 31, 2002, this interest rate swap agreement was determined to be highly effective, and therefore no ineffectiveness was recorded in earnings. As a result of the consolidation of one of the Other Variable Interest Entities ("VIE I") on December 31, 2002, we consolidated the real estate term loans of VIE I and the operating lease commitments that were hedged by this swap are now considered to be inter-company transactions. As a result, this interest rate swap agreement was deemed to be no longer effective on a prospective basis. The unrealized mark to market losses previously recorded in other comprehensive income attributable to this swap ($1,875, net of tax, as of December 31, 2002) will be amortized through other (income) expense, net in the accompanying consolidated statement creates one accounting model,of operations based on the framework establishedchanges in SFAS No. 121,the fair value of the swap each period that the remaining interest payments are made on VIE I's real estate term loans. We will prospectively account for mark to be appliedmarket changes in the derivative liability of this swap through other (income) expense, net in the accompanying consolidated statement of operations. This accounting will have a net zero impact within our consolidated statement of operations as it relates to all long-lived assets including discontinued operations. SFAS No. 144 will be effectivethe amortization of unrealized mark to market losses and the fair valuing of the derivative liability. Additionally, as a result of the foregoing, for the Company on January 1, 2002. The Company is currently evaluating the effect of implementing SFAS No. 144.

3. Common Stock Split

        On December 5, 2001, the Company's Board of Directors authorized and approved a three-for-two stock split effected in the form of a dividend on the Company's common stock. Such additional shares of common stock were issued onyears ended December 31, 2001 to all shareholdersand 2002, we recorded additional rent expense of record$743 and $1,807, respectively, resulting from the settlements associated with this interest rate swap agreement and for the year ended December 31, 2003 we recorded additional interest expense of $2,083 resulting from settlements associated with this interest rate swap agreement.

        Also, as of December 31, 2002, we consolidated VIE III which had entered into an interest rate swap agreement upon its inception which was designated as a cash flow hedge. This swap agreement hedges the closemajority of interest rate risk associated with VIE III's real estate term loans. Specifically, VIE III has swapped $97,000 of floating rate debt to fixed rate debt. Since the time it entered into the swap agreement, interest rates have fallen. As a result, the estimated cost to terminate these swaps (fair value of derivative liability) would be $13,658 and $10,960 at December 31, 2002 and 2003, respectively. We have recorded, in the accompanying consolidated balance sheets, the fair value of the derivative liability, a deferred tax asset and a corresponding charge to accumulated other comprehensive items of $10,960 ($4,806 recorded in accrued expenses and $6,154 recorded in other long-term liabilities), $3,998 and $6,962, respectively, as of December 31, 2003. Additionally, as a result of the foregoing, for the year ended December 31, 2002 and 2003, we recorded additional interest expense of $3,423 and $4,806, respectively, resulting from interest rate swap settlements. This interest rate swap agreement has been since inception and continues to be a highly effective hedge, and therefore no ineffectiveness was recorded in earnings.

        In July 2003, we provided the initial financing totaling 190,459 British pounds sterling to Iron Mountain Europe Limited ("IME"), our European joint venture, for all of the consideration associated with the acquisition of the information management services business of Hays plc ("Hays IMS") using cash on hand and borrowings under our revolving credit facility. We recorded a foreign currency gain of $27,777 in other (income) expense, net for this intercompany balance for the year ended December 17, 2001. All share and per share amounts have been restated31, 2003. In order to reflectminimize the stock split.foreign currency risk associated with providing IME with the consideration necessary for the acquisition of the European operations of Hay IMS, we borrowed

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80,000 British pounds sterling under our revolving credit facility to create a natural hedge. We recorded a foreign currency loss of $11,496 on the translation of this revolving credit balance to U.S. dollars in other (income) expense, net for the year ended December 31, 2003. In addition, on July 16, 2003, we entered into two cross currency swaps with a combined notional value of 100,000 British pounds sterling. These swaps each have a term of one year and at maturity we have a right to receive $162,800 in exchange for 100,000 British pounds sterling. We have not designated these swaps as hedges and, therefore, all mark to market fluctuations of the swaps are recorded in other (income) expense, net in our consolidated statements of operations. We have recorded, in the accompanying consolidated balance sheet, the fair value of the derivative liability and the associated swap cost of $18,978 in accrued expenses as of December 31, 2003 and for the year ended December 31, 2003, we recorded $18,978 in other (income) expense, net in the accompanying consolidated statement of operations.

4.5. Debt

        Long-term debt consists of the following:

		December 31,							December 31,
		2000			2001				2002			2003
Revolving Credit Facility due 2005		$	4,000		$	—			$	75,360		$	142,280
Tranche A Term Loan due 2005			150,000			150,000
Tranche B Term Loan due 2006			199,750			198,750
111/8% Senior Subordinated Notes due 2006 (the "111/8% notes")			131,517			—
101/8% Senior Subordinated Notes due 2006 (the "101/8% notes")			165,000			—
Term Loan due 2008										249,750			248,750
91/8% Senior Subordinated Notes due 2007 (the "91/8% notes")			114,216			115,106				22,409			—
81/8% Senior Notes due 2008 (the "Subsidiary notes")			120,850			122,758				124,666			18,768
83/4% Senior Subordinated Notes due 2009 (the "83/4% notes")			249,646			249,687				249,727			—
81/4% Senior Subordinated Notes due 2011 (the "81/4% notes")			149,535			149,580				149,625			149,670
85/8% Senior Subordinated Notes due 2013 (the "85/8% notes")			—			438,059				481,097			481,075
73/4% Senior Subordinated Notes due 2015 (the "73/4% notes")										100,000			441,331
65/8% Senior Subordinated Notes due 2016 (the "65/8% notes")										—			314,071
Real Estate Term Loans										202,647			202,647
Real Estate Mortgages			20,457			19,337				16,262			17,584
Seller Notes			13,971			12,383				12,864			12,607
Other			36,189			40,439				47,690			61,145
Long-term Debt			1,355,131			1,496,099				1,732,097			2,089,928
Less Current Portion			(40,789	)		(35,256	)			(69,732	)		(115,781	)
Long-term Debt, Net of Current Portion		$	1,314,342		$	1,460,843			$	1,662,365		$	1,974,147

        a.     Revolving Credit Facility and Term Loans

        On August 14, 2000,The Amended and Restated Credit Agreement replaced our prior credit agreement. As a result, we recorded a charge to other (income) expense, net in the Company entered into an amended and restatedaccompanying consolidated statement of operations of $1,222 related to the early retirement of debt in conjunction with the refinancing of our revolving credit agreement.facility in the year ended December 31, 2002. The credit agreement, as amended, replaced the Company's prior credit facility, increased theAmended and Restated Credit Agreement has an aggregate principal amount availableof $650,000 and includes a $400,000 revolving credit

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facility, which includes the ability to $750 millionborrow in certain foreign currencies, and included two tranches of term debt. Tranches A and B represent term loans to the Company in principal amounts of $150,000 and $200,000, respectively. The Tranche Aa $250,000 term loan and thefacility. The revolving credit component of the credit agreement maturefacility matures on January 31, 2005, while the Tranche B2005. Quarterly term loan maturespayments of $250 began in the fourth quarter of 2002 and will continue through maturity on February 28, 2006.15, 2008, at which time the remaining outstanding principal balance of the term loan facility is due. The interest rate on borrowings under the credit agreementAmended and Restated Credit Agreement varies depending on the Company'sour choice of base rates,interest rate and currency options, plus an applicable margin. Restrictive covenants under this agreementAll intercompany notes and the capital stock of all of our U.S. subsidiaries are similarpledged to those undersecure the Company's prior credit facility.Amended and Restated Credit Agreement. As of December 31, 2001,2003, we had $142,280 of borrowings outstanding under our revolving credit facility, all of which was denominated in British pound sterling in the Companyamount of GBP 80,000. We also had various outstanding borrowingsletters of $348,750credit totaling $34,447. The remaining availability under the revolving credit agreement,facility on December 31, 2003 was $223,273 based on our current level of external debt and the leverage ratio under the Amended and Restated Credit Agreement. The interest ratesrate in effect ranged from 4.15% to 4.84%.was 5.6% as of December 31, 2003.

        In December 2000, the Companywe entered into an interest rate swap contract to hedge the risk of changes in market interest rates on the Company'sour Tranche B term loan. The instrument is a variable-for-fixed swap of quarterly interest payments payable on certain amounts of the Tranche B term loan through 2006. The notional value of the swap equals $99,500 and has a fixed rate of 5.9% and a variable rate based on periodic three-month LIBOR rates.London Inter-Bank Offered Rate (LIBOR). In January 2001, the Companywe entered into a second interest rate swap contract on the Tranche B term loan. The notional value of the second swap equals $96,000 and has a fixed rate of 5.5% and a variable rate based on periodic three-month LIBOR rates.LIBOR. In conjunction with the Amended and Restated Credit Agreement on March 15, 2002, these interest rate swap contracts hedge the risk of changes in market interest rates on our term loan due 2008 rather than the previous Tranche B term loan due 2006.

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        The credit agreement specifiesAmended and Restated Credit Agreement contains certain minimum or maximum relationships between Adjusted EBITDA (as defined therein)restrictive financial and interest, totaloperating covenants including covenants that restrict our ability to complete acquisitions, pay cash dividends, incur indebtedness, make investments, sell assets and take certain other corporate actions. The covenants do not contain a rating trigger. Therefore, a change in our debt rating would not trigger a default under the Amended and fixed charges. There are restrictions on dividends declared by the Company, sales or pledging of assets, investments and changes in business and ownership. Cash dividends are effectively prohibited. The Company wasRestated Credit Agreement. We were in compliance with all material debt covenants as of December 31, 2001. Loans under the credit agreement are secured by pledges of the capital stock of all of the Company's domestic subsidiaries.2003.

        b.     Publicly Issued Notes

        As of December 31, 2001, the Company has2003, we have four series of senior subordinated notes issued to the public, that are obligations of the parent company, Iron Mountain Incorporated (the "Parent notes"):

•

$120,000 principal amount of notes maturing on July 15, 2007 and bearing interest at a rate of 9¹/8% per annum, payable semi-annually in arrears on January 15 and July 15;



•

$250,000 principal amount of notes maturing on September 30, 2009 and bearing interest at a rate of 8³/4% per annum, payable semi-annually in arrears on March 31 and September 30;



•

$150,000 principal amount of notes maturing on July 1, 2011 and bearing interest at a rate of 8¹/4% per annum, payable semi-annually in arrears on January 1 and July 1; and



•

$435,000480,874 principal amount of notes maturing on April 1, 2013 and bearing interest at a rate of 8⁵/8% per annum, payable semi-annually in arrears on April 1 and October 1;



•

$431,255 principal amount of notes maturing on January 15, 2015 and bearing interest at a rate of 7³/4% per annum, payable semi-annually in arrears on January 15 and July 15; and

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•

$320,000 principal amount of notes maturing on January 1, 2016 and bearing interest at a rate of 6⁵/8% per annum, payable semi-annually in arrears on January 1 and July 1.

        The Parent notes, along with our revolving credit facility and term loan, are fully and unconditionally guaranteed, on a senior subordinated basis, by substantially all of the Company'sour direct and indirect wholly owned domesticU.S. subsidiaries (the "Guarantors"). These guarantees are joint and several obligations of the Guarantors. In addition, the 9¹/8% notes are secured by a second lien on 65% of the stock of Iron Mountain Canada Corporation ("Canada Company"). The remainder of the Company'sour subsidiaries do not guarantee the Parent notes.notes or the revolving credit facility and the term loan.

        In addition, Canada Company, the Company'sour principal Canadian subsidiary, has publicly issued $135,000 principal amount of senior notes that mature on May 15, 2008 and bear interest at a rate of 8¹/8% per annum, payable semi-annually in arrears on May 15 and November 15. The Subsidiary notes are general unsecured obligations of Canada Company, rankingpari passu in right of payment to all of Canada Company's existing and future senior indebtedness. The Subsidiary notes are fully and unconditionally guaranteed, on a senior subordinated basis, by Iron Mountain Incorporated and the Guarantors. In addition, several of the non-guarantors that are organized under the laws of Canadian provinces fully and unconditionally guarantee the Subsidiary notes on a senior basis. As with the Parent Notes,notes, these guarantees are joint and several. In July 2003, we redeemed $50,000 of outstanding principal amount of the Subsidiary notes, at a redemption price (expressed as a percentage of principal amount) of 104.063%, plus accrued and unpaid interest. In December 2003, we redeemed $65,015 of outstanding principal amount of the Subsidiary notes, at a redemption price (expressed as a percentage of principal amount) of 104.313%, plus accrued and unpaid interest. We recorded a charge to other (income) expense, net of $12,530 in 2003 related to the early retirement of these Subsidiary notes, which consists of redemption premiums and transaction costs, as well as original issue discount related to these Subsidiary notes. In February 2004, we redeemed the remaining $19,985 of outstanding principal amount of the Subsidiary notes, at a redemption price (expressed as a percentage of principal amount) of 104.063%, plus accrued and unpaid interest. We will record a charge to other (income) expense, net of approximately $2,000 in the first quarter of 2004 related to the early retirement of these remaining Subsidiary notes, which consists of redemption premiums and transaction costs as well as original issue discount related to these Subsidiary notes.

        During 2001,In January 2003, we redeemed the Companyremaining $23,183 of outstanding principal amount of our 9¹/8% notes, at a redemption price (expressed as a percentage of principal amount) of 104.563%, plus accrued and unpaid interest, with proceeds from our underwritten public offering of $100,000 in aggregate principal of our 7³/4% notes. We recorded a charge to other (income) expense, net in the accompanying consolidated statement of operations of $1,804 in the first quarter of 2003 related to the early retirement of the remaining 9¹/8% notes.

        In March 2003, we completed two debt exchanges which resulted in the issuance of $31,255 in face value of our 7³/4% notes and the retirement of $30,000 of our 8³/4% notes. These non-cash debt exchanges resulted in carryover basis and, therefore, no gain (loss) on extinguishment of debt in accordance with EITF No. 96-19, "Debtor's Accounting for Modification or Exchange of Debt Instruments." These exchanges result in a lower interest rate and, therefore, lower interest expense in

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future periods as well as extend the maturity of our debt obligations. From time to time, we may enter into similar exchange transactions that we deem appropriate.

        In April 2003, we completed an underwritten public offering of $435,000an additional $300,000 in aggregate principal amount of our 7³/4% notes, which were issued at a price to investors of 104% of par, implying an effective yield to worst of 7.066%. Our net proceeds of $307,340, after paying the underwriters' discounts, commissions and transaction fees, were used to fund our offer to purchase and consent solicitation relating to our outstanding 8³/4% notes, redeem the 8³/4% notes not purchased in the offer, repay borrowings under our revolving credit facility, repay other indebtedness and pay for acquisitions.

        In April 2003, we received and accepted tenders for $143,317 of the $220,000 aggregate principal amount outstanding of our 8³/4% notes. In May 2003, we redeemed the remaining $76,683 of outstanding principal amount of our 8³/4% notes, at a redemption price (expressed as a percentage of principal amount) of 104.375%, plus accrued and unpaid interest. We recorded a charge to other (income) expense, net of $13,841 in the second quarter of 2003 related to the early retirement of the 8³/4% notes, which consists of redemption premiums and transaction costs, as well as original issue discount and unamortized deferred financing costs related to the 8³/4% notes.

        In June 2003, we completed an underwritten public offering of $150,000 in aggregate principal amount of our 6⁵/8% notes. The 6⁵/8% notes were issued at a price to investors of 100% of par. Our net proceeds of $147,500, after paying the underwriters' discounts, commissions and redeemedtransaction fees, were used to redeem $50,000 in aggregate principal amount of the 11outstanding Subsidiary notes in the third quarter of 2003 and pay for acquisitions.

        In December 2003, we completed an underwritten public offering of an additional $170,000 in aggregate principal amount of our 6¹⁵/8% notes, which were issued at a price to investors of $130,000 due 200696.5% of par, implying an effective yield to the worst of 7.06%. Our net proceeds of $161,339, after paying the underwriters' discounts, commissions and 10transaction fees, were used to redeem $65,015 in aggregate principal amount of our outstanding Subsidiary notes in the fourth quarter of 2003, repay borrowings under our revolving credit facility, repay other indebtedness and pay for acquisitions.

        In January 2004, we completed an offering of 150,000 British pounds sterling in aggregate principal amount of our 7¹/84% notes of $165,000Senior Subordinated Notes due 2006.

        The 92014 (the "7¹/84% notesnotes"), which were issued at a price of 100% of par. Our net proceeds of 146,900 British pounds sterling, after paying the initial purchasers' discounts, commissions and thetransaction fees, were used to fund our acquisition of Mentmore plc's 49.9% equity interest in IME for total consideration of 82,500 British pounds sterling, to redeem $19,985 in aggregate principal amount of our outstanding Subsidiary notes were assumed in the Pierce Leahy mergerfirst quarter of 2004, repay borrowings under our revolving credit facility, repay other indebtedness and were recorded at their fair market value on the date of merger. The resulting net discount is being amortized over the remaining period to maturity using the effective interest rate method.pay for other acquisitions.

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        Each of the indentures for the notes provides that the Companywe may redeem the outstanding notes, in whole or in part, upon satisfaction of certain terms and conditions. In any redemption, the Company iswe are also required to pay all accrued but unpaid interest on the outstanding notes.

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        The following table presents the various redemption dates and prices of the public notes. The redemption dates reflect the date at or after which the notes may be redeemed at the Company'sour option at a premium redemption price. After these dates, the notes may be redeemed at 100% of face value through maturity:value:

		91/8% notes		83/4% notes		81/4% notes		85/8% notes		Subsidiary notes
Redemption Date		July 15,		September 30,		July 1,		April 1,		May 15,			81/4% notes July 15,		85/8% notes April 1,		71/4% notes April 15,		73/4% notes January 15,		65/8% notes July 1,
2002		104.563	%	104.375	%	—		—		—
2003		103.042	%	102.916	%	—		—		104.063	%		—		—		—		—		—
2004		101.521	%	101.458	%	104.125	%	—		102.708	%		104.125	%	—		—		—		—
2005		—		—		102.750	%	—		101.354	%		102.750	%	—		—		—		—
2006		—		—		101.375	%	104.313	%	—			101.375	%	104.313	%	—		—		—
2007		—		—		—		102.875	%	—			—		102.875	%	—		—		—
2008		—		—		—		101.438	%	—			—		101.438	%	—		103.875	%	103.313	%
2009													—		—		103.625	%	102.583	%	102.208	%
2010													—		—		102.417	%	101.292	%	101.104	%
2011													—		—		101.208	%	—		—

        Prior to September 30, 2002, the 8³/4% notes are redeemable at the Company's option, in whole or in part, at a specified make-whole price.

        Prior to July 1, 2004, the 8¹/4% notes are redeemable at the Company'sour option, in whole or in part, at a specified make-whole price. Until July 1, 2002, the Company may under certain conditions redeem up to 35% of the 8¹/4% notes with the net proceeds of one or more public equity offerings, at a redemption price of 108.25% of the principal amount.

        The Company may under certain conditions redeem up to 35% of the Subsidiary notes with the net proceeds of one or more public equity offerings, at a redemption price of 108.125% of the principal amount.

        In addition, until April 1, 2004, the Companywe may under certain conditions redeem up to 35% of the 8⁵/8% notes with the net proceeds of one or more public equity offerings, at a redemption price of 108.625% of the principal amount.

        Prior to January 15, 2008, the 7³/4% notes are redeemable at our option, in whole or in part, at a specified make-whole price. Prior to January 15, 2006, we may under certain conditions redeem up to 35% of the 7³/4% notes with the net proceeds of one or more public equity offerings, at a redemption price of 107.750% of the principal amount.

        Prior to July 1, 2008, the 6⁵/8% notes are redeemable at our option, in whole or in part, at a specified make-whole price. Prior to July 1, 2006, we may under certain conditions redeem 6⁵/8% notes with the net proceeds of one or more public equity offerings, at a redemption price of 106.625% of the principal amount.

        Prior to April 15, 2009, the 7¹/4% notes are redeemable at our option, in whole or in part, at a specified make-whole price. Prior to April 15, 2007, we may under certain conditions redeem 7¹/4% notes with the net proceeds of one or more public equity offerings, at a redemption price of 107.25% of the principal amount.

        Each of the indentures for the notes provides that the Companywe or, in the case of the Subsidiary notes, Canada Company must repurchase, at the option of the holders, the notes at 101% of their principal amount, plus accrued and unpaid interest, upon the occurrence of a "Change of Control," which is defined in each respective indenture. Except for required repurchases upon the occurrence of a Change of Control or in the event of certain asset sales, each as described in the respective indenture, the Company iswe are not required to make sinking fund or redemption payments with respect to any of the notes.

        The indentures for the notes contain restrictive covenants similar to those contained in the Amended Credit Agreement.

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        h.Our indentures and other agreements governing our indebtedness contain certain restrictive financial and operating covenants including covenants that restrict our ability to complete acquisitions, pay cash dividends, incur indebtedness, make investments, sell assets and take certain other corporate actions. The covenants do not contain a rating trigger. Therefore, a change in our debt rating would not trigger a default under our indentures and other agreements governing our indebtedness. As of December 31, 2003, we were in compliance with all material debt covenants and agreements.

        c.     Real Estate Term Loans

        Our Variable Interest Entities were financed with real estate term loans. See Note 3. As of December 31, 2003, these real estate term loans amounted to $202,647. No further financing is currently available to our Variable Interest Entities to fund further property acquisitions. The details of each real estate term loan is a follows:

•

A $47,500 real estate term loan made in October, 1998 bearing interest at various variable interest rates based on LIBOR plus an applicable margin. This real estate term note has a principal payment due on March 31, 2004 of $28,800 with the remaining $18,700 maturing on March 31, 2005. Effective February 1, 2001, we entered into an interest rate swap to fix this floating rate debt for its full term at a fixed interest of 7.42%. This real estate term loan is expected to be repaid in March 2004.



•

A $56,432 real estate term loan made in July, 1999 bearing interest at various variable interest rates based on LIBOR plus an applicable margin. As of December 31, 2003, the weighted average interest rate on this note was 3.33%. This real estate term note matures on December 31, 2005. This real estate term loan is expected to be repaid in March 2004.



•

A $98,715 real estate term loan made in May, 2001 bearing interest at various variable interest rates based on LIBOR plus an applicable margin. This real estate term note matures on November 22, 2007. Effective May 21, 2001, we entered into an interest rate swap to fix $97,000 of this floating rate debt for its full term at a fixed interest of 8.41%.

        The real estate term loans held by our Variable Interest Entities have always been and continue to be treated as indebtedness for purposes of our financial covenants under our Amended and Restated Credit Agreement. As of the date they were consolidated into our financial statements, they were also considered indebtedness under our Indentures for our Senior Subordinated Notes and our Subsidiary notes. We were in compliance with all material debt covenants under these real estate term loans as of December 31, 2003.

        d.     Real Estate Mortgages

        In connection with the purchase of real estate and acquisitions, the Companywe assumed several mortgages on real property. The mortgages bear interest at rates ranging from 6.6%5% to 8.5% and are payable in various installments through 2025.

        i.84

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        e.     Seller Notes

        In connection with the merger with Pierce Leahy in 2000, the Companywe assumed debt related to certain existing notes as a result of certain acquisitions which Pierce Leahy completed in 1999. The notes bear interest at a rate of 4.75% per year. The outstanding balance of $12,607 on the sellerthese notes at December 31, 20012003 is due on demand through 2009 and is classified as a current portion of long-term debt. The notes are supported by a letter of credit under our revolving credit facility.

        j.f.      Other

        Other long-term debt includes various notes and obligations assumed by the Companyus as a result of certain acquisitions completed by the Company during the years 1998 through 2001. At December 31, 2001, the Company's 50.1% owned subsidiary, IM Europe, had various agreementsacquisitions. Additionally, IME has term loans and revolving credit facilities with its local banks that provide for $33,921approximately $87,791 of credit, of which $35,801 was available as of December 31, 2003. As of December 31, 2002, the amounts outstanding under IME's bank overdraft (due on demand), term loan and carried anworking capital/revolving credit facilities amounted to $11,175, $11,050 and $12,811, respectively. As of December 31, 2003, the amounts outstanding under IME's term loan and revolving credit facilities amounted to $32,503 and $19,487, respectively. Principal on the term loan and revolving credit facility are due on April 30, 2004 and interest is charged on borrowings at 1.25% over LIBOR. The average effective interest rate of 5.89%.IME's debt was 6.05%, 5.80% and 4.22% for the years ending 2001, 2002 and 2003, respectively. IME's various debt and credit facilities are secured by the assets of IME and each of its subsidiaries and includes various financial and non-financial covenants and restrictions based on net worth, net indebtedness and net finance charges. During 2003, IME breached its interest covenant following the acquisition of the European operations of Hays IMS. However, IME obtained from the bank a waiver of the breach.

        Maturities of long-term debt, excluding (premiums) discounts, net, are as follows:

Year		Amount			Amount
2002		$	35,256
2003			10,334
2004			5,130		$	116,998
2005			298,114			224,504
2006			54,630			3,968
2007						101,120
2008						246,089
Thereafter			1,092,635			1,394,448
		$	1,496,099		$	2,087,127

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        Based on the borrowing rates currently available to the Company for loans with similar terms and average maturities, the Company hasWe have estimated the following fair values for itsour long-term debt as of December 31:

		2000						2001
		Carrying Amount			Fair Value			Carrying Amount			Fair Value
Revolving Credit Facility		$	4,000		$	4,000		$	—		$	—
Tranche A Term Loan			150,000			150,000			150,000			150,000
Tranche B Term Loan			199,750			199,750			198,750			198,750
111/8% notes			131,517			136,500			—			—
101/8% notes			165,000			170,800			—			—
91/8% notes			114,216			118,800			115,106			126,000
83/4% notes			249,646			245,600			249,687			257,500
81/4% notes			149,535			141,400			149,580			151,875
85/8% notes			—			—			438,059			448,050
Subsidiary notes			120,850			128,600			122,758			136,350
Real estate mortgage			20,457			20,457			19,337			19,337
Seller Notes			13,971			13,971			12,383			12,383
Other			36,189			36,189			40,439			40,439

		2002						2003
		Carrying Amount			Fair Value			Carrying Amount			Fair Value
Revolving Credit Facility (1)		$	75,360		$	75,360		$	142,280		$	142,280
Term Loan (1)			249,750			249,750			248,750			248,750
91/8% notes (2)(3)			22,409			24,241			—			—
83/4% notes (2)(3)			249,727			257,825			—			—
81/4% notes (2)(3)			149,625			154,500			149,670			156,375
85/8% notes (2)(3)			481,097			502,513			481,075			521,748
73/4% notes (2)(3)			100,000			100,000			441,331			456,052
65/8% notes (2)(3)			—			—			314,071			311,200
Subsidiary notes (3)			124,666			138,038			18,768			20,684
Real Estate Term Loans (1)			202,647			202,647			202,647			202,647
Real Estate Mortgages (1)			16,262			16,262			17,584			17,584
Seller Notes (1)			12,864			12,864			12,607			12,607
Other (1)			47,690			47,690			61,145			61,145

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(1)

The fair value of this long-term debt either approximates the carrying value (as borrowings under these debt instruments are based on current variable market interest rates as of December 31, 2002 and 2003) or it is impracticable to estimate the fair value due to the nature of such long-term debt.



(2)

These debt instruments are collectively referred to as the "Parent notes."



(3)

The fair values of the Parent notes and the Subsidiary notes are based on quoted market prices for these notes on December 31, 2002 and 2003.

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5.6. Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors

        The following financial data summarizes the consolidating Company on the equity method of accounting as of December 31, 20012003 and 20002002 and for the years ended December 31, 20012003, 2002 and 2000.2001. The Guarantor column includes all subsidiaries that guarantee the Parent notes and the Subsidiary notes. The Canada Company column includes Canada Company and the Company'sour other Canadian subsidiaries that guarantee the Subsidiary notes, but do not guarantee the Parent notes. The Parent and the Guarantors also guarantee the Canada CompanySubsidiary notes. The subsidiaries that do not guarantee either the Parent notes or the Subsidiary notes are referred to in the table as the "non-guarantors."

				December 31, 2001																				December 31, 2003
				Parent			Guarantors			Canada Company			Non- Guarantors			Eliminations			Consolidated					Parent			Guarantors			Canada Company			Non-Guarantors			Eliminations			Consolidated
Assets	Assets																				Assets
Current Assets:	Current Assets:																				Current Assets:
	Cash and Cash Equivalents			$	—		$	11,395		$	1,696		$	8,268		$	—		$	21,359	Cash and Cash Equivalents			$	—		$	54,793		$	2,659		$	17,231		$	—		$	74,683
	Accounts Receivable				—			181,640			14,415			22,995			—			219,050	Accounts Receivable				—			202,271			16,593			60,936			—			279,800
	Intercompany Receivable (Payable)				685,601			(560,699	)		(92,555	)		(32,347	)		—			—	Intercompany Receivable				870,924			—			—			13,935			(884,859	)		—
	Other Current Assets				—			64,378			460			4,094			(24	)		68,908	Other Current Assets				3,591			84,733			1,398			27,788			(410	)		117,100
		Total Current Assets			685,601			(303,286	)		(75,984	)		3,010			(24	)		309,317		Total Current Assets			874,515			341,797			20,650			119,890			(885,269	)		471,583
Property, Plant and Equipment, Net	Property, Plant and Equipment, Net				—			778,804			72,839			100,588			—			952,231	Property, Plant and Equipment, Net				—			973,619			108,259			410,389			—			1,492,267
Other Assets:
	Long-term Intercompany Receivable				45,193			—			—			—			(45,193	)		—
Other Assets, Net:																					Other Assets, Net:
	Long-term Notes Receivable from Affiliates				1,086,823			—			—			—			(1,086,823	)		—	Long-term Notes Receivable from Affiliates and Intercompany Receivable				1,625,796			1,000			—			98,715			(1,725,511	)		—
	Investment in Subsidiaries				379,816			82,434			—			—			(462,250	)		—	Investment in Subsidiaries				402,045			91,336			—			—			(493,381	)		—
	Goodwill, Net				—			1,261,598			115,832			141,463			10,654			1,529,547	Goodwill, Net				—			1,323,340			138,720			304,478			9,741			1,776,279
	Other				31,419			40,660			11,754			1,085			(16,107	)		68,811	Other, Net				23,661			69,221			6,895			54,888			(2,695	)		151,970
		Total Other Assets			1,543,251			1,384,692			127,586			142,548			(1,599,719	)		1,598,358		Total Other Assets, Net			2,051,502			1,484,897			145,615			458,081			(2,211,846	)		1,928,249
		Total Assets		$	2,228,852		$	1,860,210		$	124,441		$	246,146		$	(1,599,743	)	$	2,859,906		Total Assets		$	2,926,017		$	2,800,313		$	274,524		$	988,360		$	(3,097,115	)	$	3,892,099
Liabilities and Shareholders' Equity	Liabilities and Shareholders' Equity																				Liabilities and Shareholders' Equity
	Total Current Liabilities			$	34,526		$	233,111		$	16,786		$	74,610		$	(24	)	$	359,009	Intercompany Payable			$	—		$	237,392		$	233,597		$	413,870		$	(884,859	)	$	—
	Long-term Debt, Net of Current Portion				1,308,367			1,289			125,075			26,112			—			1,460,843	Total Current Liabilities				74,650			257,663			41,075			211,767			(410	)		584,745
	Long-term Intercompany Payable				—			45,193			—			—			(45,193	)		—	Long-term Debt, Net of Current Portion				1,777,480			2,924			3,594			190,149			—			1,974,147
	Long-term Notes Payable to Affiliates				—			1,086,823			—			—			(1,086,823	)		—	Long-term Notes Payable to Affiliates and Intercompany Payable				1,000			1,724,511			—			—			(1,725,511	)		—
	Other Long-term Liabilities				—			98,481			887			5,541			(16,107	)		88,802	Other Long-term Liabilities				6,773			169,695			5,152			12,383			(2,695	)		191,308
	Minority Interest				—			—			—			(1,352	)		66,645			65,293	Commitments and Contingencies
	Shareholders' Equity				885,959			395,313			(18,307	)		141,235			(518,241	)		885,959	Minority Interests				—			—			—			6,105			69,680			75,785
																					Shareholders' Equity (Deficit)				1,066,114			408,128			(8,894	)		154,086			(553,320	)		1,066,114
		Total Liabilities and Shareholders' Equity		$	2,228,852		$	1,860,210		$	124,441		$	246,146		$	(1,599,743	)	$	2,859,906
																						Total Liabilities and Shareholders' Equity		$	2,926,017		$	2,800,313		$	274,524		$	988,360		$	(3,097,115	)	$	3,892,099

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				December 31, 2000																				December 31, 2002
				Parent			Guarantors			Canada Company			Non- Guarantors			Eliminations			Consolidated					Parent			Guarantors			Canada Company			Non-Guarantors			Eliminations			Consolidated
Assets	Assets																				Assets
Current Assets:	Current Assets:																				Current Assets:
	Cash and Cash Equivalents			$	191		$	3,336		$	302		$	2,371		$	—		$	6,200	Cash and Cash Equivalents			$	—		$	52,025		$	1,759		$	2,508		$	—		$	56,292
	Accounts Receivable				7,060			140,095			12,370			16,917			—			176,442	Accounts Receivable				—			183,610			13,898			27,908			—			225,416
	Intercompany Receivable (Payable)				795,522			(658,022	)		(98,386	)		(45,060	)		5,946			—	Intercompany Receivable				782,547			—			—			13,785			(796,332	)		—
	Other Current Assets				531			46,605			827			6,063			—			54,026	Other Current Assets				3,400			72,140			2,299			7,665			(172	)		85,332
		Total Current Assets			803,304			(467,986	)		(84,887	)		(19,709	)		5,946			236,668		Total Current Assets			785,947			307,775			17,956			51,866			(796,504	)		367,040
Property, Plant and Equipment, Net	Property, Plant and Equipment, Net				99,549			586,504			66,953			79,388			—			832,394	Property, Plant and Equipment, Net				—			926,147			77,003			236,038			—			1,239,188
Other Assets:
	Long-term Intercompany Receivable				344,300			—			—			—			(344,300	)		—
Other Assets, Net:																					Other Assets, Net:
	Long-term Notes Receivable from Affiliates				607,600			124,100			—			—			(731,700	)		—	Long-term Notes Receivable from Affiliates and Intercompany Receivable				1,150,627			—			—			98,715			(1,249,342	)		—
	Investment in Subsidiaries				370,830			49,626			—			—			(420,456	)		—	Investment in Subsidiaries				367,355			76,011			—			—			(443,366	)		—
	Goodwill, Net				—			1,255,302			138,663			121,096			10,569			1,525,630	Goodwill, Net				—			1,273,774			114,131			147,328			9,741			1,544,974
	Other				20,986			42,956			11,036			1,834			(12,408	)		64,404	Other, Net				21,191			52,292			9,327			4,785			(8,142	)		79,453
		Total Other Assets			1,343,716			1,471,984			149,699			122,930			(1,498,295	)		1,590,034		Total Other Assets, Net			1,539,173			1,402,077			123,458			250,828			(1,691,109	)		1,624,427
		Total Assets		$	2,246,569		$	1,590,502		$	131,765		$	182,609		$	(1,492,349	)	$	2,659,096		Total Assets		$	2,325,120		$	2,635,999		$	218,417		$	538,732		$	(2,487,613	)	$	3,230,655
Liabilities and Shareholders' Equity	Liabilities and Shareholders' Equity																				Liabilities and Shareholders' Equity
	Total Current Liabilities			$	26,921		$	189,362		$	12,429		$	79,378		$	5,963		$	314,053	Intercompany Payable			$	—		$	637,941		$	92,259		$	66,132		$	(796,332	)	$	—
	Long-term Debt, Net of Current Portion				1,170,884			3,513			124,834			15,111			—			1,314,342	Total Current Liabilities				62,025			255,016			15,249			95,844			(172	)		427,962
	Long-term Intercompany Payable				—			344,300			—			—			(344,300	)		—	Long-term Debt, Net of Current Portion				1,306,027			1,232			126,408			228,698			—			1,662,365
	Long-term Notes Payable to Affiliates				124,100			607,600			—			—			(731,700	)		—	Long-term Notes Payable to Affiliates and Intercompany Payable				—			1,249,342			—			—			(1,249,342	)		—
	Other Long-term Liabilities				206			73,693			113			1,610			(12,408	)		63,214	Other Long-term Liabilities				12,207			111,415			997			16,858			(8,142	)		133,335
	Minority Interest				—			—			—			(1,636	)		44,665			43,029	Commitments and Contingencies
	Shareholders' Equity				924,458			372,034			(5,611	)		88,146			(454,569	)		924,458	Minority Interests				—			—			—			4,182			57,950			62,132
																					Shareholders' Equity (Deficit)				944,861			381,053			(16,496	)		127,018			(491,575	)		944,861
		Total Liabilities and Shareholders' Equity		$	2,246,569		$	1,590,502		$	131,765		$	182,609		$	(1,492,349	)	$	2,659,096
																						Total Liabilities and Shareholders' Equity		$	2,325,120		$	2,635,999		$	218,417		$	538,732		$	(2,487,613	)	$	3,230,655

6388

---

				Year Ended December 31, 2001
				Parent			Guarantors			Canada Company			Non- Guarantors			Eliminations			Consolidated
Revenues:
	Storage			$	—		$	604,546		$	33,475		$	56,453		$	—		$	694,474
	Service and Storage Material Sales				—			407,133			34,549			34,960			—			476,642
		Total Revenues			—			1,011,679			68,024			91,413			—			1,171,116
Operating Expenses:
	Cost of Sales (excluding depreciation)				—			478,446			35,093			48,397			—			561,936
	Selling, General and Administrative				83			270,201			11,867			24,783			—			306,934
	Depreciation and Amortization				—			131,342			10,136			12,113			—			153,591
	Merger-related Expenses				—			3,644			—			29			—			3,673
		Total Operating Expenses			83			883,633			57,096			85,322			—			1,026,134
Operating Income (Loss)					(83	)		128,046			10,928			6,091			—			144,982
Interest Expense, Net					17,755			92,823			16,244			7,920			—			134,742
Equity in the Losses of Subsidiaries					7,489			2,117			—			—			(9,606	)		—
Other Expense, Net					(6,911	)		(2,887	)		(8,204	)		(369	)		—			(18,371	)
	Income (Loss) Before Provision (Benefit) for Income Taxes and Minority Interest				(32,238	)		30,219			(13,520	)		(2,198	)		9,606			(8,131	)
Provision (Benefit) for Income Taxes					—			24,238			(111	)		1,909			—			26,036
Minority Interest in Losses of Subsidiaries					—			—			—			(1,929	)		—			(1,929	)
	Income (Loss) before Extraordinary Item				(32,238	)		5,981			(13,409	)		(2,178	)		9,606			(32,238	)
Extraordinary Charge from Early Extinguishment of Debt (net of tax benefit of $8,161)					(11,819	)		—			—			—			—			(11,819	)
	Net Income (Loss)			$	(44,057	)	$	5,981		$	(13,409	)	$	(2,178	)	$	9,606		$	(44,057	)

				Year Ended December 31, 2003
				Parent			Guarantors			Canada Company			Non-Guarantors			Eliminations			Consolidated
Revenues:
	Storage			$	—		$	712,862		$	45,841		$	116,332		$	—		$	875,035
	Service and Storage Material Sales				—			499,992			41,751			84,551			—			626,294
		Total Revenues			—			1,212,854			87,592			200,883			—			1,501,329
Operating Expenses:
	Cost of Sales (Excluding Depreciation)				—			545,202			43,580			91,965			—			680,747
	Selling, General and Administrative				427			314,424			15,028			53,762			—			383,641
	Depreciation and Amortization				20			106,024			6,209			18,665			—			130,918
	Loss (Gain) on disposal/writedown of property, plant and equipment, net				—			1,771			238			(879	)		—			1,130
		Total Operating Expenses			447			967,421			65,055			163,513			—			1,196,436
	Operating (Loss) Income				(447	)		245,433			22,537			37,370			—			304,893
	Interest Expense, Net				23,809			91,881			13,481			21,297			—			150,468
	Equity in the Earnings of Subsidiaries				(159,933	)		(4,334	)		—			—			164,267			—
	Other Expense (Income), Net				51,040			(45,492	)		(8,612	)		500			—			(2,564	)
		Income from Continuing Operations Before Provision for Income Taxes and Minority Interest			84,637			203,378			17,668			15,573			(164,267	)		156,989
	Provision for Income Taxes				—			53,449			7,734			5,547			—			66,730
	Minority Interest in Earnings of Subsidiaries				—			—			—			5,622			—			5,622
		Net Income		$	84,637		$	149,929		$	9,934		$	4,404		$	(164,267	)	$	84,637

6489

---

				Year Ended December 31, 2000
				Parent			Guarantors			Canada Company			Non- Guarantors			Eliminations			Consolidated
Revenues:
	Storage			$	3,191		$	518,136		$	24,338		$	39,999		$	—		$	585,664
	Service and Storage Material Sales				17,570			333,228			25,240			28,724			(4,055	)		400,707
		Total Revenues			20,761			851,364			49,578			68,723			(4,055	)		986,371
Operating Expenses:
	Cost of Sales (excluding depreciation)				11,173			408,336			24,149			39,113			—			482,771
	Selling, General and Administrative				5,350			215,547			12,522			17,195			(4,055	)		246,559
	Depreciation and Amortization				3,329			107,748			6,172			9,561			—			126,810
	Stock Option Compensation Expense				—			14,940			—			170			—			15,110
	Merger-related Expenses				—			8,420			273			440			—			9,133
		Total Operating Expenses			19,852			754,991			43,116			66,479			(4,055	)		880,383
Operating Income					909			96,373			6,462			2,244			—			105,988
Interest Expense, Net					41,857			55,999			12,576			7,543			—			117,975
Equity in the (Earnings) Losses of Subsidiaries					(7,565	)		2,766			—			—			4,799			—
Other Expense, Net					—			(397	)		(5,590	)		(58	)		—			(6,045	)
	Income (Loss) Before Provision (Benefit) for Income Taxes and Minority Interest				(33,383	)		37,211			(11,704	)		(5,357	)		(4,799	)		(18,032	)
Provision (Benefit) for Income Taxes					(8,007	)		18,697			(1,860	)		295			—			9,125
Minority Interest in Losses of Subsidiaries					—			—			—			(2,224	)		—			(2,224	)
	Income (Loss) before Extraordinary Item				(25,376	)		18,514			(9,844	)		(3,428	)		(4,799	)		(24,933	)
Extraordinary Charge from Early Extinguishment of Debt (net of tax benefit of $1,928)					(2,449	)		(443	)		—			—			—			(2,892	)
	Net Income (Loss)			$	(27,825	)	$	18,071		$	(9,844	)	$	(3,428	)	$	(4,799	)	$	(27,825	)

				Year Ended December 31, 2002
				Parent			Guarantors			Canada Company			Non-Guarantors			Eliminations			Consolidated
Revenues:
	Storage			$	—		$	658,613		$	36,169		$	64,754		$	—		$	759,536
	Service and Storage Material Sales				—			473,077			38,947			46,937			—			558,961
		Total Revenues			—			1,131,690			75,116			111,691			—			1,318,497
Operating Expenses:
	Cost of Sales (Excluding Depreciation)				—			527,215			37,464			57,620			—			622,299
	Selling, General and Administrative				57			295,435			13,756			23,802			—			333,050
	Depreciation and Amortization				—			95,622			5,714			7,656			—			108,992
	Merger-related Expenses				—			796			—			—			—			796
	Loss (Gain) on disposal/writedown of property, plant and equipment, net				—			2,706			(8	)		(1,924	)		—			774
		Total Operating Expenses			57			921,774			56,926			87,154			—			1,065,911
	Operating (Loss) Income				(57	)		209,916			18,190			24,537			—			252,586
	Interest Expense, Net				7,077			101,660			14,708			13,187			—			136,632
	Equity in the (Earnings) Losses of Subsidiaries				(72,104	)		3,320			—			—			68,784			—
	Other Expense (Income), Net				6,678			(4,189	)		(1,490	)		436			—			1,435
		Income from Continuing Operations Before Provision for Income Taxes and Minority Interest			58,292			109,125			4,972			10,914			(68,784	)		114,519
	Provision for Income Taxes				—			41,132			2,064			4,122			—			47,318
	Minority Interest in Earnings of Subsidiaries				—			—			—			3,629			—			3,629
		Income from Continuing Operations before Discontinued Operations and Cumulative Effect of Change in Accounting Principle			58,292			67,993			2,908			3,163			(68,784	)		63,572
	Income from Discontinued Operations (Net of Tax of $768)				—			1,116			—			—			—			1,116
	Cumulative Effect of Change in Accounting Principle (net of Minority Interest)				—			—			—			(6,396	)		—			(6,396	)
		Net Income (Loss)		$	58,292		$	69,109		$	2,908		$	(3,233	)	$	(68,784	)	$	58,292

6590

---

				Year Ended December 31, 2001
				Parent			Guarantors			Canada Company			Non- Guarantors			Eliminations			Consolidated
Cash Flows from Operating Activities:
	Cash Flows Provided by (Used in) Operating Activities			$	(92,031	)	$	235,765		$	8,867		$	8,308		$	—		$	160,909
Cash Flows from Investing Activities:
	Cash paid for acquisitions, net of cash acquired				—			(50,467	)		(177	)		(20,753	)		—			(71,397	)
	Capital expenditures				—			(164,335	)		(10,330	)		(22,374	)		—			(197,039	)
	Investment in convertible preferred stock				—			(2,000	)		—			—			—			(2,000	)
	Intercompany loans to subsidiaries				(20,204	)		(15,836	)		—			—			36,040			—
	Investment in subsidiaries				(6,866	)		(6,866	)		—			—			13,732			—
	Additions to customer acquisition costs				—			(7,292	)		(319	)		(809	)		—			(8,420	)
	Proceeds from sales of property and equipment				—			87			21			612			—			720
		Cash Flows Used in Investing Activities			(27,070	)		(246,709	)		(10,805	)		(43,324	)		49,772			(278,136	)
Cash Flows from Financing Activities:
	Repayment of debt				(110,869	)		(1,066	)		(2,590	)		(3,753	)		—			(118,278	)
	Early Rretirement of senior subordinated notes				(312,701	)		—			—			—			—			(312,701	)
	Proceeds from borrowings				103,411			73			—			2,111			—			105,595
	Net Proceeds from sale of senior subordinated notes				427,924			—			—			—			—			427,924
	Debt financing and equity contribution from minority shareholder				—			—			—			21,216			—			21,216
	Intercompany loans from parent				—			13,130			7,016			15,894			(36,040	)		—
	Equity contribution from parent				—			6,866			—			6,866			(13,732	)		—
	Proceeds from exercise of stock options				12,079			—			—			—			—			12,079
	Debt financing and stock issuance costs				(934	)		—			—			—			—			(934	)
		Cash Flows Provided by Financing Activities			118,910			19,003			4,426			42,334			(49,772	)		134,901
Effect of exchange rates on cash and cash equivalents					—			—			(1,094	)		(1,421	)		—			(2,515	)
Increase (Decrease) in cash and cash equivalents					(191	)		8,059			1,394			5,897			—			15,159
Cash and cash equivalents, beginning of period					191			3,336			302			2,371			—			6,200
Cash and cash equivalents, end of period				$	—		$	11,395		$	1,696		$	8,268		$	—		$	21,359

				Year Ended December 31, 2001
				Parent			Guarantors			Canada Company			Non-Guarantors			Eliminations			Consolidated
Revenues:
	Storage			$	—		$	604,546		$	33,475		$	56,453		$	—		$	694,474
	Service and Storage Material Sales				—			421,735			34,549			34,960			—			491,244
		Total Revenues			—			1,026,281			68,024			91,413			—			1,185,718
Operating Expenses:
	Cost of Sales (Excluding Depreciation)				—			493,048			35,093			48,397			—			576,538
	Selling, General and Administrative				83			270,201			12,733			24,783			—			307,800
	Depreciation and Amortization				—			131,003			10,144			12,124			—			153,271
	Merger-Related Expenses				—			3,644			—			29			—			3,673
	Loss (Gain) on disposal/writedown of property, plant and equipment, net				—			339			(8	)		(11	)		—			320
		Total Operating Expenses			83			898,235			57,962			85,322			—			1,041,602
Operating (Loss) Income					(83	)		128,046			10,062			6,091			—			144,116
Interest Expense, Net					17,755			92,823			16,244			7,920			—			134,742
Equity in the Losses of Subsidiaries					(672	)		2,117			—			—			(1,445	)		—
Other Expense, Net					26,891			2,887			7,338			369			—			37,485
	(Loss) Income from Continuing Operations Before Provision for Income Taxes and Minority Interest				(44,057	)		30,219			(13,520	)		(2,198	)		1,445			(28,111	)
Provision (Benefit) for Income Taxes					—			16,077			(111	)		1,909			—			17,875
Minority Interest in Losses of Subsidiaries					—			—			—			(1,929	)		—			(1,929	)
		Net Loss		$	(44,057	)	$	14,142		$	(13,409	)	$	(2,178	)	$	1,445		$	(44,057	)

6691

---

				Year Ended December 31, 2000																					Year Ended December 31, 2003
				Parent			Guarantors			Canada Company			Non- Guarantors			Eliminations			Consolidated						Parent			Guarantors			Canada Company			Non-Guarantors			Eliminations			Consolidated
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:																					Cash Flows from Operating Activities:
Cash Flows Provided by (Used in) Operating Activities				$	(101,411	)	$	260,901		$	(3,721	)	$	1,835		$	—		$	157,604
																						Cash Flows (Used in) Provided by Operating Activities			$	(3,823	)	$	252,175		$	23,486		$	16,855		$	—		$	288,693
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:																					Cash Flows from Investing Activities:
	Cash paid for acquisitions, net of cash acquired				(4,885	)		(85,343	)		(35,558	)		(15,154	)		—			(140,940	)	Capital expenditures				—			(142,744	)		(17,829	)		(43,904	)		—			(204,477	)
	Capital expenditures				(19,629	)		(127,255	)		(6,896	)		(14,926	)		—			(168,706	)	Cash paid for acquisitions, net of cash acquired				—			(66,707	)		—			(313,183	)		—			(379,890	)
	Investment in convertible preferred stock				—			(6,524	)		—			—			—			(6,524	)	Intercompany loans to subsidiaries				(407,292	)		(324,980	)		—			—			732,272			—
	Intercompany loans to subsidiaries				(259,462	)		(14,620	)		—			—			274,082			—		Investment in subsidiaries				(1,705	)		(1,705	)		—			—			3,410			—
	Investment in subsidiaries				(3,047	)		(3,047	)		—			—			6,094			—		Additions to customer relationship and acquisition costs				—			(9,549	)		(797	)		(2,231	)		—			(12,577	)
	Additions to customer acquisition costs				—			(11,181	)		(1,509	)		(89	)		—			(12,779	)	Investment in convertible preferred stock				—			(1,357	)		—			—			—			(1,357	)
	Proceeds from sales of property and equipment				—			1,133			—			187			—			1,320		Proceeds from sales of property and equipment				—			9,423			47			2,197			—			11,667
		Cash Flows Used in Investing Activities			(287,023	)		(246,837	)		(43,963	)		(29,982	)		280,176			(327,629	)		Cash Flows Used in Investing Activities			(408,997	)		(537,619	)		(18,579	)		(357,121	)		735,682			(586,634	)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:																					Cash Flows from Financing Activities:
	Repayment of debt				(402,384	)		(174,200	)		(7,026	)		(13,134	)		—			(596,744	)	Repayment of debt and term loans				(600,445	)		(683	)		(53,955	)		(43,734	)		—			(698,817	)
	Proceeds from borrowings				397,085			971			1,149			5,788			—			404,993		Proceeds from borrowings and term loans				643,784			—			49,569			50,663			—			744,016
	Proceeds from term loans				350,000			—			—			—			—			350,000		Early retirement of senior subordinated notes				(254,407	)		—			(119,851	)		—			—			(374,258	)
	Debt financing and equity contribution from minority shareholder				—			—			—			11,430			—			11,430		Net proceeds from sales of senior subordinated notes				617,179			—			—			—			—			617,179
	Intercompany loans from parent				41,241			157,146			53,867			21,828			(274,082	)		—		Debt financing and equity contribution from minority shareholders, net				—			—			—			20,225			—			20,225
	Equity contribution from parent				—			3,047			—			3,047			(6,094	)		—		Intercompany loans from parent				—			287,190			119,829			325,253			(732,272	)		—
	Proceeds from exercise of stock options				8,180			—			—			—			—			8,180		Equity contribution from parent				—			1,705			—			1,705			(3,410	)		—
	Debt financing and stock issuance costs				(5,497	)		48			—			—			—			(5,449	)	Other, net				6,709			—			—			—			—			6,709
		Cash Flows Provided by (Used in) Financing Activities			388,625			(12,988	)		47,990			28,959			(280,176	)		172,410			Cash Flows Provided by (Used in) Financing Activities			412,820			288,212			(4,408	)		354,112			(735,682	)		315,054
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents				—			—			(4	)		(11	)		—			(15	)	Effect of exchange rates on cash and cash equivalents				—			—			401			877			—			1,278
Increase in cash and cash equivalents	Increase in cash and cash equivalents				191			1,076			302			801			—			2,370		Increase in cash and cash equivalents				—			2,768			900			14,723			—			18,391
Cash and cash equivalents, beginning of period					—			2,260			—			1,570			—			3,830
Cash and cash equivalents, beginning of year																						Cash and cash equivalents, beginning of year				—			52,025			1,759			2,508			—			56,292
Cash and cash equivalents, end of period				$	191		$	3,336		$	302		$	2,371		$	—		$	6,200
Cash and cash equivalents, end of year																						Cash and cash equivalents, end of year			$	—		$	54,793		$	2,659		$	17,231		$	—		$	74,683

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				Year Ended December 31, 2002
				Parent			Guarantors			Canada Company			Non-Guarantors			Eliminations			Consolidated
Cash Flows from Operating Activities:
	Cash Flows Provided by Operating Activities			$	2,259		$	223,446		$	11,174		$	18,069		$	—		$	254,948
Cash Flows from Investing Activities:
	Capital expenditures				—			(152,501	)		(8,125	)		(36,371	)		—			(196,997	)
	Cash paid for acquisitions, net of cash acquired				—			(28,041	)		(21	)		(21,299	)		—			(49,361	)
	Intercompany loans to subsidiaries				(19,365	)		(17,928	)		—			—			37,293			—
	Investment in subsidiaries				(1,940	)		(1,940	)		—			—			3,880			—
	Additions to customer relationship and acquisition costs				—			(7,137	)		(613	)		(669	)		—			(8,419	)
	Proceeds from sales of property and equipment				—			1,460			8			5,552			—			7,020
		Cash Flows Used in Investing Activities			(21,305	)		(206,087	)		(8,751	)		(52,787	)		41,173			(247,757	)
Cash Flows from Financing Activities:
	Repayment of debt and term loans				(458,929	)		(606	)		(535	)		(2,173	)		—			(462,243	)
	Proceeds from borrowings and term loans				426,235			—			—			12,607			—			438,842
	Early retirement of senior subordinated notes				(54,380	)		—			—			—			—			(54,380	)
	Net proceeds from sales of senior subordinated notes				99,000			—			—			—			—			99,000
	Debt repayment and equity distribution to minority shareholders, net				—			—			—			(1,241	)		—			(1,241	)
	Intercompany loans from parent				—			21,937			(2,469	)		17,825			(37,293	)		—
	Equity contribution from parent				—			1,940			—			1,940			(3,880	)		—
	Other, net				7,120			—			—			—			—			7,120
		Cash Flows Provided by (Used in) Financing Activities			19,046			23,271			(3,004	)		28,958			(41,173	)		27,098
Effect of exchange rates on cash and cash equivalents					—			—			644			—			—			644
Increase (Decrease) in cash and cash equivalents					—			40,630			63			(5,760	)		—			34,933
Cash and cash equivalents, beginning of year					—			11,395			1,696			8,268			—			21,359
Cash and cash equivalents, end of year				$	—		$	52,025		$	1,759		$	2,508		$	—		$	56,292

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				Year Ended December 31, 2001
				Parent			Guarantors			Canada Company			Non-Guarantors			Eliminations			Consolidated
Cash Flows from Operating Activities:
	Cash Flows Provided by Operating Activities			$	2,557		$	141,177		$	8,867		$	8,308		$	—		$	160,909
Cash Flows from Investing Activities:
	Capital expenditures				—			(164,335	)		(10,330	)		(22,374	)		—			(197,039	)
	Cash paid for acquisitions, net of cash acquired				—			(50,467	)		(177	)		(20,753	)		—			(71,397	)
	Intercompany loans to subsidiaries				(114,792	)		(15,836	)		—			—			130,628			—
	Investment in subsidiaries				(6,866	)		(6,866	)		—			—			13,732			—
	Additions to customer relationship and acquisition costs				—			(7,292	)		(319	)		(809	)		—			(8,420	)
	Investment in convertible preferred stock				—			(2,000	)		—			—			—			(2,000	)
	Proceeds from sales of property and equipment				—			87			21			612			—			720
		Cash Flows Used in Investing Activities			(121,658	)		(246,709	)		(10,805	)		(43,324	)		144,360			(278,136	)
Cash Flows from Financing Activities:
	Repayment of debt and term loans				(110,869	)		(1,066	)		(2,590	)		(3,753	)		—			(118,278	)
	Proceeds from borrowings				103,411			73			—			2,111			—			105,595
	Early retirement of senior subordinated notes				(312,701	)		—			—			—			—			(312,701	)
	Net Proceeds from sales of senior subordinated notes				427,924			—			—			—			—			427,924
	Debt financing and equity contribution from minority shareholders, net				—			—			—			21,216			—			21,216
	Intercompany loans from parent				—			107,718			7,016			15,894			(130,628	)		—
	Equity contribution from parent				—			6,866			—			6,866			(13,732	)		—
	Other, net				11,145			—			—			—			—			11,145
	Cash Flows Provided by Financing Activities				118,910			113,591			4,426			42,334			(144,360	)		134,901
Effect of exchange rates on cash and cash equivalents					—			—			(1,094	)		(1,421	)		—			(2,515	)
(Decrease) Increase in cash and cash equivalents					(191	)		8,059			1,394			5,897			—			15,159
Cash and cash equivalents, beginning of year					191			3,336			302			2,371			—			6,200
Cash and cash equivalents, end of year				$	—		$	11,395		$	1,696		$	8,268		$	—		$	21,359

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6.7. Acquisitions

        On February 1, 2000,In July 2003, we and IME completed the Company completed its acquisition of Pierce LeahyHays IMS in two simultaneous transactions. IME acquired the European operations of Hays IMS for aggregate cash consideration (including transaction costs) of approximately 190,000 British pounds sterling ($309,000), while we acquired the U.S. operations of Hays IMS for aggregate cash consideration (including transaction costs) of approximately 14,500 British pounds sterling ($24,000). Both transactions were on a stock-for-stock merger valued at $1.0 billion. The total consideration for this transaction was comprised of: (i) 18.8 million shares of the Company's common stock with a fair value of $421.2 million; (ii) 1.6 million options to acquire the Company's common stock with a fair value of $25.3 million; (iii) assumedcash and debt with a fair value of $584.9 million; and (iv) $4.3 million of capitalized transaction costs.free basis.

        The Company        We purchased substantially all of the assets and assumed certain liabilities of 17, 1216, 10 and 168 records management businesses during 1999, 20002001, 2002 and 2001,2003, respectively. Each of these acquisitions was accounted for using the purchase method of accounting, and accordingly, the results of operations for each acquisition have been included in theour consolidated results of the Company from their respective acquisition dates. Consideration for the various acquisitions included: (i)(1) cash, which was provided through the Company'sour credit facilities the Company's 1999 equity offering and (2) the issuance of the 10¹/8%, 8³/4%, 8¹/4% and 8⁵/8% notes; (ii) issuancescertain of the Company's common stock and options to purchase the Company's common stock; and (iii) certain net assets of businesses previously acquired.our senior subordinated notes.

        A summary of the consideration paid and the allocation of the purchase price of the acquisitions is as follows:

			1999			2000			2001
Cash Paid			$	212,160		$	146,243		$	72,222
Fair Value of Common Stock Issued				46,000			421,220			—
Fair Value of Options Issued				—			25,291			—
Fair Value of Debt Assumed/Issued				—			584,906			10,352
Fair Value of Certain Net Assets of Businesses Previously Acquired				2,489			1,063			—
	Total Consideration			260,649			1,178,723			82,574
Fair Value of Assets Acquired				110,206			436,206			19,504
Liabilities Assumed				(92,044	)		(125,650	)		(10,019	)
	Fair Value of Net Assets Acquired			18,162			310,556			9,485
Recorded Goodwill			$	242,487		$	868,167		$	73,089

			2001			2002			2003
Cash Paid (gross of cash acquired)			$	72,222	(1)	$	41,356	(2)	$	387,803	(3)
Fair Value of Debt Assumed/Issued				10,352			—			—
	Total Consideration			82,574			41,356			387,803
Fair Value of Identifiable Assets Acquired				19,504			10,440			244,950
Liabilities Assumed				(10,019	)		(4,868	)		(46,217	)
	Fair Value of Identifiable Net Assets Acquired			9,485			5,572			198,733
Recorded Goodwill			$	73,089		$	35,784		$	189,070

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(1)

Included in cash paid for acquisitions in the consolidated statement of cash flows for the year ended December 31, 2001 is a $5,524 contingent payment that was paid during 2001 related to acquisitions made before 2001.



(2)

Included in cash paid for acquisitions in the consolidated statement of cash flows for the year ended December 31, 2002 is a $7,165 contingent payment that was paid during 2002 related to an acquisition made in 2000.



(3)

Included in cash paid for acquisitions in the consolidated statement of cash flows for the year ended December 31, 2003 is a $1,077 contingent payment that was paid in 2003 related to an acquisition made in 2001.

        Allocation of the purchase price for the 20012003 acquisitions was based on estimates of the fair value of net assets acquired, and is subject to adjustment. The purchase price allocations of certain 20012003 transactions are subject to finalization of the assessment of the fair value of property, plant and equipment, intangible assets, operating leases and deferred income taxes. The Company isWe are not aware of any information that would indicate that the final purchase price allocations will differ significantlymeaningfully from preliminary estimates.

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        In connection with theeach of our acquisitions, completed in 1999, 2000 and 2001, the Company haswe have 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

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certain activities of the acquired businesses. TheseThe estimated cost of these restructuring activities were recorded as costs of the acquisitions and were provided in accordance with Emerging Issues Task Force IssueEITF No. 95-3, "Recognition of Liabilities in Connection with a Purchase Business Combination." The Company finalizes itsWe finalize restructuring plans for each business no later than one year from the date of acquisition. Unresolved matters at December 31, 20012003 primarily include completion of planned abandonments of facilities and severances for certain 2000 and 2001 acquisitions.

        The following is a summary of reserves related to such restructuring activities:

		1999			2000			2001				2002			2003
Reserves, beginning of the year		$	10,482		$	9,340		$	28,514			$	16,225		$	9,906
Reserves established			4,234			31,409			3,751				4,963			12,526
Expenditures			(4,843	)		(7,539	)		(7,805	)			(6,745	)		(5,436	)
Adjustments to goodwill, including currency effect(1)			(533	)		(4,696	)		(8,235	)			(4,537	)		(674	)
Reserves, end of the year		$	9,340		$	28,514		$	16,225			$	9,906		$	16,322

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(1)

Includes adjustments to goodwill as a result of management finalizing its restructuring plans.

        At December 31, 20002002, the restructuring reserves related to acquisitions consisted of lease losses on abandoned facilities ($18,370)5,146), severance costs for approximately 17two people ($3,151)578) and move and other exit costs ($6,993)4,182).

        At December 31, 20012003, the restructuring reserves related to acquisitions consisted of lease losses on abandoned facilities ($10,129)6,849), severance costs for approximately 31158 people ($980)3,593) and move and other exit costs ($5,116)5,880). These accruals are expected to be used within one year of the date of this balance sheetprior to December 31, 2004 except for lease losses of $5,848$4,927 and severance contracts of $547,$314, both of which are based on contracts that extend beyond one year.

        In connection with some of our acquisitions, we have potential earn-out obligations that would be payable in the event businesses we acquired meet certain operational objectives. These payments are based on the future results of these operations and our estimate of the maximum contingent earn-out payments we would be required to make under all such agreements as of December 31, 2003 is approximately $4,800.

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7.8. Capital Stock and Stock Options

        a.     Capital Stock

        The following table summarizes the number of shares authorized, issued and outstanding for each issue of the Company'sour capital stock as of December 31:

					Number of Shares											Number of Shares
					Authorized				Issued and Outstanding							Authorized				Issued and Outstanding
Equity Type		Par Value
					2000		2001		2000		2001		Par Value			2002		2003		2002		2003
Preferred stock		$	.01		10,000,000		10,000,000		—		—		$	.01		10,000,000		10,000,000		—		—
Common stock			.01		150,000,000		150,000,000		82,919,847		84,294,315			.01		150,000,000		150,000,000		85,049,624		85,575,254

        b.     Stock Options

        A total of 9,266,2718,703,771 shares of common stock have been reserved for grants of options and other rights under the Company'sour various stock incentive plans and employee stock purchase plan.

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        During 2000, the Company assumed the two existing stock option plans of Pierce Leahy, resulting in 2.5 million additional stock options outstanding. The options were accounted for as additional purchase price at their fair value.plans.

        The following is a summary of stock option transactions, including those issued to employees of acquired companies, during the applicable periods, excluding transactions under the employee stock purchase plan:

		Options		Weighted Average Exercise Price
Options outstanding, December 31, 1998		3,249,479		8.81
Granted		663,065		21.38
Exercised		(394,922	)	7.24
Canceled		(135,414	)	13.51
Options outstanding, December 31, 1999		3,382,208		11.27
Granted		840,737		22.27
Issued in Connection With Acquisitions		2,467,140		7.33
Exercised		(1,354,976	)	4.71
Canceled		(286,566	)	17.8
						Options		Weighted Average Exercise Price
Options outstanding, December 31, 2000		5,048,543		12.55		5,048,543		$	12.55
Granted		497,757		26.38		497,757			26.38
Exercised		(1,188,316	)	6.94		(1,188,316	)		6.94
Canceled		(73,592	)	19.28		(73,592	)		19.28
Options outstanding, December 31, 2001		4,284,392		15.63		4,284,392			15.63
Granted						432,560			29.96
Exercised						(594,049	)		9.26
Canceled						(226,087	)		17.01
Options outstanding, December 31, 2002						3,896,816			18.08
Granted						458,567			37.20
Exercised						(440,868	)		13.27
Canceled						(52,346	)		26.40
Options outstanding, December 31, 2003						3,862,169			20.59

        Except for the options granted in connection with acquisitions, the stockthese options were granted with exercise prices equal to the market price of the stock at the date of grant. The majority of these options become exercisable ratably over a period of five years unless the holder terminates employment.employment and generally have a contractual life of 10 years. The number of shares available for grant at December 31, 20012003 was 1,589,640.969,331.

        Effective January 1, 1996, the Company adopted the provisions of SFAS No. 123. The Company has elected to continue to account for stock options issued to employees at their intrinsic value with disclosure of fair value accounting on net loss and loss per share on a pro forma basis. Had the Company elected to recognize compensation cost based on the fair value of the options granted at

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grant date as prescribed by SFAS No. 123, net loss and net loss per share would have been increased to the pro forma amounts indicated in the table below:

		Year Ended December 31,
		1999			2000			2001
Loss from continuing operations before extraordinary items, as reported		$	(1,060	)	$	(24,933	)	$	(32,238	)
Loss from continuing operations before extraordinary items, pro forma			(2,486	)		(27,877	)		(36,175	)
Net loss, as reported			(14,219	)		(27,825	)		(44,057	)
Net loss, pro forma			(15,645	)		(30,769	)		(47,994	)
Loss from continuing operations before extraordinary items — basic and diluted, as reported			(0.02	)		(0.31	)		(0.39	)
Loss from continuing operations before extraordinary items — basic and diluted, pro forma			(0.05	)		(0.35	)		(0.43	)
Net loss per share — basic and diluted, as reported			(0.28	)		(0.35	)		(0.53	)
Net loss per share — basic and diluted, pro forma			(0.31	)		(0.39	)		(0.57	)

        The weighted average fair value of options granted in 1999, 2000 and 2001 was $8.21, $8.66 and $8.74 per share, respectively. The values were estimated on the date of grant using the Black-Scholes option pricing model. The following table summarizes the weighted average assumptions used for grants in the year ended December 31:

Assumption		1999		2000		2001
Expected volatility		31.5	%	31.5	%	27.0	%
Risk-free interest rate		5.69		5.99		4.65
Expected dividend yield		None		None		None
Expected life of the option		5.0 years		5.0 years		5.0 years

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        The following table summarizes additional information regarding options outstanding and exercisable at December 31, 2001:2003:

				Outstanding					Exercisable
Range of Exercise Prices		Number		Weighted Average Remaining Contractual Life (in Years)		Weighted Average Exercise Price			Number		Weighted Average Exercise Price
$0.50 to $0.58		33,759		5.2		$	0.58		33,759		$	0.58
$2.88 to $3.84		552,792		3.5			3.12		552,792			3.12
$4.42 to $6.07		126,476		4.7			5.54		126,476			5.54
$6.83 to $7.29		641,450		4.5			6.94		641,450			6.94
$11.44 to $16.69		824,881		5.8			14.39		553,239			14.30
$18.11 to $24.68		1,852,438		8.3			22.14		546,561			21.77
$27.41 to $28.77		252,596		9.7			28.41		—			—
		4,284,392		6.6			15.63		2,454,277			10.88

8. Income (Loss) Per Share—Basic and Diluted

        In accordance with SFAS No. 128, basic income (loss) per share is calculated by dividing income (loss) available to shareholders by the weighted average number of shares outstanding. The calculation of diluted income (loss) per share is consistent with that of basic income (loss) per share but gives effect to all dilutive potential shares (that is, securities such as options, warrants or convertible securities) that were outstanding during the period, unless the effect is antidilutive.

        Because their effect is antidilutive, 3,382,208, 5,048,543 and 4,284,392 shares of potential common stock underlying outstanding options have been excluded from the above calculation for the years ended December 31, 1999, 2000 and 2001, respectively.

				Outstanding
				Weighted Average Remaining Contractual Life (in Years)					Exercisable
Range of Exercise Prices		Number				Weighted Average Exercise Price			Number		Weighted Average Exercise Price
$0.50 to $0.58		5,239		3.2		$	0.57		5,239		$	0.57
$2.88 to $3.84		245,968		2.2			3.04		245,968			3.04
$4.42 to $6.07		84,312		4.6			5.53		84,312			5.53
$6.83 to $7.29		456,098		2.5			6.93		456,098			6.93
$11.44 to $16.22		554,808		3.9			14.40		535,998			14.36
$18.11 to $26.30		1,541,204		6.4			22.51		929,659			22.17
$27.41 to $38.40		974,540		8.6			33.31		159,793			29.21
		3,862,169		5.8			20.59		2,417,067			15.45

9. Discontinued Operations

        In June 1999, in order to focus on itsour records and information management services business, the Companywe decided to sell itsour information technology staffing business, Arcus Staffing Resources, Inc., which was acquired in January 1998 as part of the acquisition of Arcus Group, Inc..Inc. Effective November 1, 1999, the Companywe completed the sale of substantially all of the assets of Arcus Staffing. The terms of the sale included contingent payments for a period of 18 months. In accordance with the provisions of APB No. 30, the sale of Arcus Staffing was accounted for as a discontinued operation. Accordingly, the Arcus Staffing operations were segregated from the Company'sour continuing operations and reported as a separate line item on the Company'sour consolidated statement of operations. Revenue and net income from discontinued operations for the ten months ended October 31, 1999 were $35,455 and $241, respectively.

        In 1999, the Companywe recorded an estimated loss on the sale of Arcus Staffing of $13,400, comprised of a write-off of goodwill, a deferred tax benefit and estimated expenses directly related to

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the transaction partially offset by the estimated income from operations of Arcus Staffing through the date of disposition. The Company will continueIn 2002, we recorded income from discontinued operations of $1,116 (net of tax of $768) related to assess the adequacyreversal of the remaining liabilities asassociated with certain contingencies arewhich have been resolved.

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10. Income Taxes

        The Company accounts for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected tax consequences of temporary differences between the tax and financial reporting basis of assets and liabilities.

        The components of income (loss) from continuing operations before provision for income taxes and minority interest are:

		1999			2000			2001				2001			2002			2003
Domestic		$	7,606		$	(13,121	)	$	(5,176	)
U.S. and Canada												$	(25,156	)	$	103,561		$	140,638
Foreign			2,235			(4,911	)		(2,955	)			(2,955	)		10,958			16,351
		$	9,841		$	(18,032	)	$	(8,131	)		$	(28,111	)	$	114,519		$	156,989

        The Company hasWe have estimated federal net operating loss carryforwards which begin to expire in 20052018 through 2021 of $173,324$123,200 at December 31, 20012003 to reduce future federal taxable income, taxes, if any. The precedingThese net operating loss carryforwards do not include approximately $103,000 of potential preacquisition net operating loss carryforwards of Arcus Group, Inc. and certain other foreign acquisitions. Any tax benefit realized related to thesepreacquisition net operating loss carryforwards will be recorded as a reduction of goodwill ifwhen, and whenif, realized. The CompanyArcus Group carryforwards begin to expire in two years. We also hashave estimated state net operating loss carryforwards of $215,222.$73,776. The state net operating loss carryforwards are subject to a valuation allowance of approximately 56%54%. Additionally, the Company haswe have alternative minimum tax credit carryforwards of $587,$1,187, which have no expiration date and are available to reduce future income taxes, if any.

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        The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:

			December 31,								December 31,
			2000			2001					2002			2003
Deferred Tax Assets:	Deferred Tax Assets:								Deferred Tax Assets:
	Accrued liabilities		$	18,228		$	16,372		Accrued liabilities		$	11,809		$	12,854
	Deferred rent			6,907			7,306		Deferred rent			7,941			8,399
	Net operating loss carryforwards			57,546			75,838		Net operating loss carryforwards			63,445			46,611
	AMT credit			587			587		AMT credit			587			1,187
	Valuation Allowance			(4,588	)		(9,420	)	Valuation Allowance			(5,804	)		(4,829	)
	Unrealized loss on hedging contracts			—			4,000		Unrealized loss on hedging contracts			12,858			9,332
	Other			22,893			21,646		Other			31,567			16,589
				101,573			116,329					122,403			90,143
Deferred Tax Liabilities:	Deferred Tax Liabilities:								Deferred Tax Liabilities:
	Other assets, principally due to differences in amortization			(19,507	)		(31,967	)	Other assets, principally due to differences in amortization			(47,274	)		(68,956	)
	Plant and equipment, principally due to differences in depreciation			(79,291	)		(87,375	)	Plant and equipment, principally due to differences in depreciation			(103,606	)		(115,061	)
	Customer acquisition costs			(10,733	)		(13,060	)	Customer acquisition costs			(15,795	)		(19,314	)
				(109,531	)		(132,402	)				(166,675	)		(203,331	)
	Net deferred tax liability		$	(7,958	)	$	(16,073	)	Net deferred tax liability		$	(44,272	)	$	(113,188	)

        The Company receives99

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        We receive a tax deduction upon exercise of non-qualified stock options by employees for the difference between the exercise price and the market price of the underlying common stock on the date of exercise, which is included in the net operating loss carryforwards above. During the year, the Company2002 and 2003, we recognized $8,880$4,476 and $3,950 of tax benefit related to the exercise of non-qualified stock options, the value of which was included as part of the purchase price of certain businesses.

        This benefit was used to reduce goodwill of acquired companies in 2001. In addition, $5,985 of tax benefit related to the exercise of options (unrelated to acquisitions) was credited to equity during the year.equity.

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        The Company and its U.S. subsidiaries        We file a consolidated federal income tax return.return with our U.S. subsidiaries. The provision for income taxtaxes consists of the following components:

		Year Ended December 31,									Year Ended December 31,
		1999			2000			2001			2001			2002			2003
Federal—deferred		$	6,304		$	5,404		$	14,695		$	8,332		$	33,629		$	43,856
State—current			645			1,301			1,072			(726	)		1,447			2,758
State—deferred			2,041			2,018			8,359			8,359			8,121			14,871
Foreign			1,589			402			1,910
Foreign—current and deferred												1,910			4,121			5,245
		$	10,579		$	9,125		$	26,036		$	17,875		$	47,318		$	66,730

        A reconciliation of total income tax expense and the amount computed by applying the federal income tax rate of 34%, 35% and 35% to income (loss) from continuing operations before provision for income taxes and minority interests for the years ended December 31, 1999, 20002001, 2002 and 2001,2003, respectively, is as follows:

			Year Ended December 31,
			1999			2000			2001
Computed "expected" tax provision (benefit)			$	3,346		$	(6,311	)	$	(2,846	)
Increase in income taxes resulting from:
	State taxes (net of federal tax benefit)			1,726			2,157			3,601
	Nondeductible goodwill amortization			5,025			11,002			15,481
	Foreign currency loss			—			1,621			2,585
	Increase in valuation allowance			—			—			4,832
	Foreign tax rate and tax law differential			104			586			598
	Other, net			378			70			1,785
			$	10,579		$	9,125		$	26,036

			Year Ended December 31,
			2001			2002			2003
Computed "expected" tax (benefit) provision			$	(9,838	)	$	40,082		$	54,946
Changes in income taxes resulting from:
	State taxes (net of federal tax benefit)			2,432			6,220			10,650
	Impact of retroactive state law change (net of federal tax benefit)			—			—			809
	Nondeductible expenses			18,066			—			—
	Increase in valuation allowance			4,832			210			—
	Foreign tax rate and tax law differential			598			(209	)		(540	)
	Other, net			1,785			1,015			865
			$	17,875		$	47,318		$	66,730

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11. Quarterly Results of Operations (Unaudited)

Quarter Ended		March 31			June 30			Sept. 30			Dec. 31
2000
Revenues		$	212,137		$	252,565		$	256,133		$	265,536
Gross profit			107,679			130,592			131,054			134,275
Income (Loss) before extraordinary item			(5,383	)		(28,245	)		4,599			4,096
Net income (loss)			(5,383	)		(28,245	)		1,707			4,096
Income (Loss) per share before extraordinary item—basic			(0.07	)		(0.34	)		0.06			0.05
Income (Loss) per share before extraordinary item—diluted			(0.07	)		(0.34	)		0.05			0.05
Net income (loss) per share—basic and diluted			(0.07	)		(0.34	)		0.02			0.05
2001
Revenues		$	283,922		$	293,334		$	291,673		$	302,187
Gross profit			144,102			154,304			151,755			159,019
Income (Loss) before extraordinary item			3,199			(4,966	)		(15,770	)		(14,701	)
Net income (loss)			3,199			(9,746	)		(22,809	)		(14,701	)
Income (Loss) per share before extraordinary item—basic and diluted			0.04			(0.06	)		(0.19	)		(0.17	)
Net income (loss) per share—basic and diluted			0.04			(0.12	)		(0.27	)		(0.17	)

Quarter Ended		March 31			June 30			Sept. 30			Dec. 31
2002
Total revenues		$	317,198		$	327,720		$	333,113		$	340,466
Gross profit			164,752			172,313			179,255			179,878
Income from continuing operations before discontinued operations and cumulative effect of change in accounting principle			12,518			19,989			15,697			15,368
Net income			6,122			19,989			15,697			16,484
Income from continuing operations per share before discontinued operations and cumulative effect of change in accounting principle—basic			0.15			0.24			0.19			0.18
Income from continuing operations per share before discontinued operations and cumulative effect of change in accounting principle—diluted			0.15			0.23			0.18			0.18
Net income per share—basic			0.07			0.24			0.19			0.19
Net income per share—diluted			0.07			0.23			0.18			0.19
2003
Total revenues		$	351,811		$	359,270		$	381,758		$	408,490
Gross profit			191,660			197,238			210,403			221,281
Net income			21,284			20,133			14,794			28,426
Net income per share—basic			0.25			0.24			0.17			0.33
Net income per share—diluted			0.25			0.23			0.17			0.33

12. Segment Information

        During the fourth quarter of 2000, the Company began toWe operate in nineseven operating segments, based on their economic environment, geographic area, the nature of their services and the nature of their processes:

•

Business Records Management—throughout the United States and Canada, the storage of paper documents, as well as all other non-electronic media such as microfilm and microfiche, master audio and videotapes, film, X-rays and blueprints, including healthcare information services, vital records services and service, and courier operations, and the collection, handling and disposal of sensitive documents for corporate customers



•

Off-Site Data Protection—the storage and rotation of back-upbackup computer media as part of corporate disaster and business recovery plans, including service and courier operations



•

Confidential Destruction—the collection, handling and disposal of sensitive documents for corporate customers



•

Fulfillment—the storage of customer marketing literature and delivery to sales offices, trade shows and prospective customers' sites based on current and prospective customer orders; the assembly of custom marketing packages and orders; the management and detailed reporting on customer marketing literature inventories



•

Digital Archiving Services—storage and related services for electronic records conveyed via telecommunication lines and the Internet

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•

Europe—records and information management services and off-site data protection services throughout Europe



•

Canada—records and information management services throughout Canada



•

South America—records and information management services throughout South America



•

Mexico—records and information management services throughout Mexico




        The Europe, Canada, South America and Mexico operating segments do not individually meet the quantitative thresholds for a reporting segment, but have been aggregated and reported with Europe as one reporting segment, "International," given their similar economic characteristics, products, customers and processes. The Confidential Destruction, Fulfillment and Digital Archiving Services operating segments do not meet the quantitative thresholds for a reportable segment and thus are included in the "Corporate and Other" category. Adjusted EBITDA has been regularly evaluated by the chief operating decision maker in deciding resource allocation and performance assessment. Adjusted EBITDA is defined as EBITDA (earnings from continuing operations before interest, taxes, depreciation and amortization) adjusted for extraordinary items, other income (expense), merger-related expenses, stock option compensation expense and minority interest. Corporate items include non-operating overhead, corporate general and administrative expenses, non-allocated operating expenses and intersegmentinter-segment eliminations. Corporate assets are principally cash and cash equivalents, prepaid items, certain non-operating fixed assets, certain non-allocated goodwill, deferred income taxes, certain non-trade receivables, certain intersegmentinter-segment receivables, and deferred financing costs.

        An analysis of our business segment information to the respective information in the consolidated financial statements is as follows:

		Business Records Management			Off-Site Data Protection			International			Corporate & Other(1)			Total Consolidated
2001
Total Revenues		$	861,302		$	209,429		$	89,475		$	25,512		$	1,185,718
Contribution			227,164			50,254			16,250			7,712			301,380
Total Assets			2,277,836			348,181			265,968			(32,079	)		2,859,906
2002
Total Revenues			944,845			239,081			109,381			25,190			1,318,497
Contribution			262,541			61,729			21,988			16,890			363,148
Total Assets			2,358,459			359,339			317,073			195,784			3,230,655
2003
Total Revenues			1,022,335			251,141			198,068			29,785			1,501,329
Contribution			286,208			71,240			46,825			32,668			436,941
Total Assets			2,536,415			375,845			765,814			214,025			3,892,099

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(1)

Total assets include the inter-segment elimination amounts of $1,564,730, $1,277,393 and $1,813,276 as of December 31, 2001, 2002 and 2003, respectively.




        The accounting policies of the reportable segments are the same as those described in Note 2 of Notes to Consolidated Financial Statements, with the exception of: (i)except that certain costs are allocated byfrom Corporate to the other segments in 2001, 2002 and 2003, primarily domesticto our Business Records Management and Canadian segments,Off-Site Data Protection segments. These allocations, which include rent, worker's compensation, property, general liability, auto and other insurance, pension/medical costs, sick and vacation costs, incentive compensation, real estate property taxes and provision for bad debts, are based on allocation rates set at the beginning of each year;year. Contribution for each segment is defined as total revenues less cost of sales (excluding depreciation) and (ii) certain non-cash charges (such as deferred lease amortization) maintained at Corporate.selling,

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general and administrative expenses including the costs allocated to each segment as described above. Internally, we use Contribution as the basis for evaluating the performance of and allocating resources to our operating segments.

        An analysisA reconciliation of the Company's business segment informationContribution to the respective information in thenet (loss) income on a consolidated financial statementsbasis is as follows:

		Business Records Management			Off-Site Data Protection			International			Corporate & Other(1)			Total Consolidated
1999
Revenue		$	343,969		$	143,057		$	31,618		$	905		$	519,549
Adjusted EBITDA			90,018			36,975			7,348			(4,670	)		129,671
Total Assets			668,555			319,416			163,174			166,067			1,317,212
2000
Revenue			669,993			167,607			116,687			32,084			986,371
Adjusted EBITDA			183,776			42,162			23,973			7,130			257,041
Total Assets			1,645,528			329,867			469,653			214,048			2,659,096
2001
Revenue			769,970			190,532			157,499			53,115			1,171,116
Adjusted EBITDA			206,705			49,804			37,314			8,423			302,246
Total Assets			2,101,559			347,720			515,925			(105,298	)		2,859,906

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(1)

Total assets include the intersegment elimination amounts of $699,296, $1,337,712 and $1,643,835 as of December 31, 1999, 2000 and 2001, respectively.

				Years Ended December 31,
				2001			2002			2003
Contribution				$	301,380		$	363,148		$	436,941
	Less: Depreciation and Amortization				153,271			108,992			130,918
		Merger-related Expenses			3,673			796			—
		Loss on Disposal/Writedown of Property, Plant and Equipment, Net			320			774			1,130
		Interest Expense, Net			134,742			136,632			150,468
		Other Expense (Income), Net			37,485			1,435			(2,564	)
		Provision for Income Taxes			17,875			47,318			66,730
		Minority Interest in (Losses) Earnings of Subsidiaries			(1,929	)		3,629			5,622
		Income from Discontinued Operations, Net of Tax			—			(1,116	)		—
		Cumulative Effect of Change in Accounting Principle, Net of Minority Interest			—			6,396			—
Net (Loss) Income				$	(44,057	)	$	58,292		$	84,637

        The Company'sOur consulting business, previously analyzed as part of Business Records Management, is now analyzed within the Corporate & Other category. Our secure shredding business, previously analyzed as part of Corporate & Other, is now analyzed within the Business Records Management segment. Our film and sound business, previously analyzed as part of Business Records Management, is now analyzed within the Off-Site Data Protection segment. Our electronic vaulting business, previously analyzed as part of Corporate & Other, is now analyzed within the Off-Site Data Protection segment. Our Canadian business, previously analyzed as part of our International segment, is now analyzed within the Business Records Management segment. In addition, certain allocations from Corporate & Other to Business Records Management and Off-Site Data Protection have been changed. To the extent practicable, the prior period numbers shown above have been adjusted to reflect both suchall of these changes.

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        A reconciliation of EBITDA to Adjusted EBITDA and income (loss) from continuing operations before provision for income taxes and minority interest on a consolidated basis is as follows:

			1999			2000			2001
EBITDA			$	129,366		$	228,977		$	282,131
	Other Expense (Income)			(17	)		6,045			18,371
	Merger-related Expenses			—			9,133			3,673
	Stock Option Compensation Expense			—			15,110			—
	Minority Interests in Earnings (Losses) of Subsidiaries			322			(2,224	)		(1,929	)
Adjusted EBITDA				129,671			257,041			302,246
	Depreciation and Amortization			(65,422	)		(126,810	)		(153,591	)
	Stock Option Compensation Expense			—			(15,110	)		—
	Merger-related Expenses			—			(9,133	)		(3,673	)
	Interest Expense			(54,425	)		(117,975	)		(134,742	)
	Other Income (Expense), Net			17			(6,045	)		(18,371	)
Income (Loss) from Continuing Operations Before Provision for Income Taxes and Minority Interest			$	9,841		$	(18,032	)	$	(8,131	)

        Information as to the Company'sour operations in different geographical areas is as follows:

			1999			2000			2001
Revenues:
United States			$	487,931		$	869,684		$	1,013,617
International				31,618			116,687			157,499
	Total Revenues		$	519,549		$	986,371		$	1,171,116
Long-lived Assets:
United States			$	1,029,542		$	1,989,839		$	2,118,828
International				144,006			432,589			431,761
	Total Long-lived Assets		$	1,173,548		$	2,422,428		$	2,550,589

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			2001			2002			2003
Revenues:
United States			$	1,028,219		$	1,134,000		$	1,215,669
United Kingdom				59,226			79,228			145,735
Canada				68,024			75,116			87,592
Other International				30,249			30,153			52,333
	Total Revenues		$	1,185,718		$	1,318,497		$	1,501,329
Long-lived Assets:
United States			$	2,118,828		$	2,395,018		$	2,514,031
United Kingdom				165,443			216,040			551,924
Canada				200,425			200,461			253,874
Other International				65,893			52,096			100,687
	Total Long-lived Assets		$	2,550,589		$	2,863,615		$	3,420,516

13. Commitments and Contingencies

        a.     Leases

        The Company leasesWe lease most of itsour facilities under various operating leases. A majority of these leases have renewal options of five to ten years and have either fixed or Consumer Price Index escalation clauses. The CompanyWe also leaseslease equipment under operating leases, primarily computers which have an average lease life of three years. Trucks and office equipment are also leased and have remaining lease lives ranging from one to seven years. Rent expense was $59,113, $111,001$126,871, $125,866 and $126,871$134,371 for the years ended December 31, 1999, 20002001, 2002 and 2003, respectively. There was $6,733, $5,915 and $0 related to synthetic lease facilities included in rent expense for the years ended December 31, 2001, 2002 and 2003, respectively. See Note 3.

        Minimum future lease payments, net of sublease income of $2,238, $1,650, $767, $414, $267 and $560 for 2004, 2005, 2006, 2007, 2008 and thereafter, respectively, are as follows:

Year		Operating			Operating
2002		$	123,624
2003			111,354
2004			100,432		$	135,512
2005			86,262			119,441
2006			68,643			102,797
2007						88,365
2008						70,357
Thereafter			306,246			386,412
Total minimum lease payments		$	796,561		$	902,884

        The Company uses synthetic leases that involve someWe have guaranteed the residual value of the facilities that the Company occupies. Under these leases, special purpose entities are established to acquire properties and subsequently lease those properties to the Company. Seven financial institutions have provided over 50% of the capacity under our $400.0 million revolving credit facility (see Note 17). These seven financial institutions also participate in our synthetic lease programs. Neither the Company nor any of our related parties have invested, either via debt obligations or equity, in these special purpose entities. The leases are designed and qualify ascertain vehicle operating leases to which we are a party. The maximum net residual value guarantee obligation for accounting purposes, where the monthly lease expense is recorded as rent expense in the Company's consolidated statements of operations. The Company does not consolidate the assets or debt related to these facilities in the Company's consolidated balance sheets.

        Included in the lease commitments disclosed in the preceding paragraph are synthetic lease agreements signed in 1998 to 2001. Each of the leases under the Company's synthetic leases have a five to six and one-half year term for specified records storage warehouses and include 30 of 519 leased facilities the Company occupies. During 2001, the Company recorded $8.5 million in rent expense on its income statement related to these lease commitments. The Company's synthetic lease facilities included properties with a lessor's original cost of $74.3 million and $151.9 millionvehicles as of December 31, 2000 and December 31, 2001, respectively. If on January 1, 2001, the original cost of the Company's properties under synthetic lease facilities had equaled $151.9 million, rent expense for the year ended December 31, 2001 would have been approximately $11.4 million. At the end of each lease term, the Company, at its option, may: (i) negotiate a renewal of the lease (which is subject to the agreement of the relevant synthetic lease lessor and its lenders); (ii) purchase the properties subject to such lease at a price equal to the lessor's original cost; or (iii) allow the lease to expire and cause the properties to be sold. The Company's ability to cause the properties to be sold depends upon its compliance with2003 was

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certain terms of the lease. Under certain conditions, the Company$679. We believe that it is not reasonably likely that we will be required to perform under these guarantee agreements or that any performance requirement would receive the excess, if any, of the net sales proceeds over the properties' original cost. In the event that the net sales proceeds are less than the properties' original cost, the Company would make certain contingent rental payments to the lessor equal to that difference, subject tohave a maximum amount of approximately 85% of the properties' original cost. If any of the Company's synthetic lease facilities are terminated following an event of default under the relevant synthetic lease documents, or if, at the end of the lease term, the Company does not either negotiate a renewal of the lease or elect to cause the relevant leased properties to be sold, or if the Company does elect to cause such leased properties to be sold but fail to satisfy the conditions to such election, the Company would generally be obligated to pay the lessor's original cost for such leased properties.material impact on our consolidated financial statements.

        b.     Facility FireSouth Brunswick Fires Litigation

        In March 1997, the Companywe experienced three fires, all of which authorities have determined were caused by arson. TheseThe fires resulted in damage to one and destruction of the Company's otheranother records managementand information services facility in South Brunswick Township, New Jersey.

        SomeCertain of the Company'sour customers or their insurance carriers have asserted claims as a consequence of the destruction of, or damage to, their records as a result of the fires, someincluding claims with specific requests for compensation and allegations of which allege negligence or other culpability on the part of Iron Mountain. We and our insurers have denied any liability on the Company. The Company has received noticespart of claimsIron Mountain as to all of these claims.

        We are presently aware of five pending lawsuits that have been filed against Iron Mountain by certain of our customers and/or their insurers, and lawsuitsone pending lawsuit filed by the insurers of an abutter of one of the South Brunswick facilities. Five of these six lawsuits have been consolidated for pre-trial purposes in the Middlesex County, New Jersey, Superior Court. The sixth lawsuit, brought by a single customer, is pending in the Supreme Court for New York County, New York. A seventh lawsuit, also brought by a single customer, was tried before a federal judge in New Jersey in February 2000, with a defendant's verdict entered in favor of Iron Mountain. An eighth lawsuit filed by an injured firefighter is currently being settled by our insurer for a nominal amount. Several other claims that were originally filed in relation to these lawsuits have been voluntarily dismissed without prejudice by the customers, abutting business owners, and/or their insurance carriers.

        We have denied liability and abutters seeking damagesasserted affirmative defenses in all of the remaining cases arising out of the fires and, in certain of the cases, have asserted counterclaims for indemnification against the Company and to rescind their written contracts with the Company. The Company deniesplaintiffs. Discovery is ongoing. We deny any liability as a result of the destruction of, or damage to, customer records or property of abutters as a result of the fires, which were beyond its control, and intendsour control. We intend to vigorously defend itselfourselves against these and any other lawsuits that may arise. The Company is also pursuing

        Our professional liability insurer, together with our general liability and property insurance carriers, have entered into a binding agreement with us regarding reimbursement of defense costs and have agreed to ongoing discussions regarding any remaining coverage issues, further defense and/or settlement of these claims.

        c.     Sequedex, H-W Associates, Pioneer and Pierce Proceedings

        On March 28, 2002, Iron Mountain and Iron Mountain Information Management, Inc. ("IMIM"), 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, Sr., 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 alleged that defendant J. Peter Pierce, Sr., a former member of our Board of

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Directors and the former President of IMIM until his termination without cause effective June 30, 2000, violated 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. Sequedex was established in October 2000, and competed directly with us in the records management information services industry. The complaint also alleged 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, misappropriated and used our trade secrets and other confidential information. Finally, the complaint asserted claims against Sequedex and lawsuitsothers 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 IMIM, 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 a related arbitration proceeding against Mr. Pierce before the Philadelphia, Pennsylvania, Office of the American Arbitration Association (the "AAA") pursuant to an arbitration clause in the employment agreement between Iron Mountain and Mr. Pierce. In the arbitration, Mr. Pierce counterclaimed for indemnification of his expenses, including attorneys' fees. We disputed Mr. Pierce's claim. On July 19, 2002, the litigation was stayed pending the outcome of the arbitration proceeding. On February 25, 2003, in response to Iron Mountain's request, the AAA removed the arbitrator. The arbitration proceeding was transferred by agreement of the parties to ADR Options, Inc. On February 4, 2004, the arbitrator rendered a decision. The arbitrator did not find the evidence provided by us in our action against Mr. Pierce sufficient to rule in our favor on the particular claims at issue. In addition, the arbitrator ruled that, pursuant to an indemnification provision in Mr. Pierce's employment agreement, we must pay Mr. Pierce's attorneys fees and costs that are attributable to this single arbitration. The arbitrator has established a procedure to ascertain the amount of these fees and expenses, which, in any case are not expected to be material to our financial position or results of operations. We have recently filed a motion to vacate the arbitrator's decision and award in Middlesex County, New Jersey, where the pending action against Mr. Pierce and others is currently stayed.

        On December 16, 2002, Hartford Windsor Associates, L.P. ("H-W Associates"), Hartford General, LLC, J. Anthony Hayden, Mr. Pierce, Frank Seidman and John H. Greenwald, Jr. commenced an action in the Court of Common Pleas, Montgomery County, Pennsylvania, against Iron Mountain Incorporated. In the complaint, the plaintiffs allege that H-W Associates purchased a warehouse property in Connecticut to serve as a records storage facility, and entered into a lease for the facility with Sequedex, then a competitor of ours, and that the remaining plaintiffs were limited or general partners of H-W Associates. The plaintiffs also allege that we tortiously interfered with Sequedex's contractual relations with an actual or prospective customer of Sequedex and, as a result, caused Sequedex to default on its lease to H-W Associates. The complaint seeks damages in excess of $100,000. We have denied the material allegations in the complaint filed against us by H-W Associates and the other plaintiffs and have since filed counterclaims against the plaintiffs alleging tortious interference with our business relationship with one of our longstanding customers. Discovery is proceeding.

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        Also on December 16, 2002, Pioneer Capital L.P. ("Pioneer"), Pioneer Capital Genpar, Inc. ("PCG"), the general partner of Pioneer, and Mr. Pierce, the President of PCG, commenced an action in the Court of Common Pleas, Montgomery County, Pennsylvania, against Iron Mountain Incorporated, C. Richard Reese, John F. Kenny, Jr., Garry Watzke, Schooner Capital LLC ("Schooner") and Vincent J. Ryan. The named individuals are Directors and/or officers of Iron Mountain and Schooner is a shareholder of Iron Mountain. In the complaint, the plaintiffs allege that the defendants had numerous conversations and arrangements with Mr. Carr, one of Mr. Pierce's and Pioneer's business partners in a company named Logisteq LLC. The plaintiffs further allege that, as a result of such conversations and arrangements, defendants conspired to, and did intentionally, interfere with Pioneer's relationship with its partner and Logisteq. The plaintiffs also allege that defendants damaged Mr. Pierce's reputation in the community by telling Iron Mountain employees and other third parties that Mr. Pierce breached his employment agreement with Iron Mountain, misappropriated and used Iron Mountain's confidential information, breached his fiduciary duties to Iron Mountain's shareholders and assisted Sequedex, then a competitor of Iron Mountain, in unfairly competing with Iron Mountain. Finally, the complaint alleges that the business partner in Logisteq taped conversations with Mr. Pierce and others which allegedly violated privacy laws, that the defendants knew, or should have known, that the tapes were being made without the consent of the individuals and, as a result, Mr. Pierce was harmed. The complaint seeks damages in excess of $5,000,000. Iron Mountain and the other defendants have challenged the legal sufficiency of the plaintiffs' pleadings in each of these cases.

        On September 10, 2003, IMIM filed a complaint in the Court of Common Pleas, Montgomery County, Pennsylvania in a matter related to the litigation between the Company and Sequedex, Mr. Pierce and others disclosed above. The new matter names Sequedex, J. Michael Gold and Peter Hamilton as defendants, and alleges that in 2000 defendants Gold and Hamilton, both former IMIM employees, used confidential and proprietary business information that they had obtained while employed by IMIM to form their own records management company, Sequedex. The complaint also alleges unlawful interference with IMIM's contractual relationship with a certain customer and other matters. The defendants filed preliminary objections to our complaint and Iron Mountain has answered those preliminary objections.

        Prior to the litigation directly pertaining to Mr. Pierce having been filed, in approximately October 2000, three former management employees of IMIM became employed by or otherwise associated with Sequedex. IMIM commenced actions against these three former employees to enforce its rights under their confidentiality and non-competition agreements. IMIM has also asserted claims against Sequedex for tortious interference with these agreements, and against both Sequedex and the former employees for misappropriation and use of IMIM's trade secrets and confidential information.

        The defendants in all three cases have denied the material allegations in IMIM's complaints and asserted various insurers.affirmative defenses. In addition, Sequedex and the individual defendants filed counterclaims against IMIM and third party complaints against Iron Mountain. The counterclaims and third party complaints assert claims process is lengthyfor tortious interference with certain contracts and prospective business relations between Sequedex and its current and potential customers as well as a claim for trade disparagement and defamation. The defendant in one of these actions sought a declaratory judgment regarding the enforceability of the confidentiality and non-competition agreements at issue in

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that case and filed a motion for summary judgment seeking to have the non-competition agreement declared void, or to limit its scope. IMIM and Iron Mountain filed motions in all three cases to dismiss the various counterclaims and third-party complaints. All of these motions, i.e., the defendants' motion for summary judgment and IMIM's and Iron Mountain's motions to dismiss, were denied by the court following a hearing on May 7, 2002. As previously disclosed in our quarterly report on Form 10-Q for the quarter ended September 30, 2003, Sequedex furnished a preliminary statement of damages with an estimate of compensatory damages of approximately $172 million and an indication that Sequedex intended to seek punitive damages of approximately $1.5 billion. Sequedex is no longer seeking damages in this amount and in connection with its proposed amended counterclaim, Sequedex has recently furnished a litigation expert's report of damages claiming approximately $59 million plus approximately $6.6 million of pre-judgment interest. Sequedex has indicated that it also intends to seek punitive damages in an undisclosed amount. Extensive discovery has been conducted in the three cases and is ongoing; on the basis of that discovery, it is our belief that Sequedex has not produced any material evidence that we or IMIM acted wrongfully in any respect. Further, limited discovery has been conducted in respect of Sequedex's damages claim; on the basis of that discovery, we do not believe that Sequedex has any foundation, and we believe that it cannot provide any foundation, for its damages calculations. We believe that the damages calculations submitted by Sequedex are not supported by credible evidence and are subject to serious legal, methodological and factual deficiencies. A trial of the three actions in which the Sequedex counterclaims and third party complaints have been asserted is scheduled to commence in April of 2004. IMIM, Sequedex and one of the individual defendants recently filed dispositive motions, including motions for summary judgment as to certain of the claims. All of these motions were denied by the court following a hearing on February 24, 2004.

        Discovery is proceeding in each of these cases, other than the arbitration. We intend to prosecute these actions vigorously, as well as to defend ourselves vigorously against the counterclaims and the third party complaints.

        d.     Other Litigation

        In addition to the matters discussed above, we are involved in litigation from time to time in the ordinary course of business with a portion of the defense and/or settlement costs being covered by various commercial liability insurance policies purchased by us. In the opinion of management, no other material legal proceedings are pending to which we, or any of our properties, are subject.

        The outcome of the South Brunswick fires, Sequedex, H-W Associates, Pioneer and Pierce proceedings cannot be predicted with certainty.

Based on itsour present assessment of the situation, management, after consultation with legal counsel, management does not believe that the firesoutcome of these proceedings will have a material adverse effect on the Company'sour financial condition or results of operations, although there can be no assurance in this regard.

        c.    Other Litigation

        The Company is presently involved as a defendant in various litigation which has occurred in the normal course of business. Management believes it has meritorious defenses in all such actions, and in any event, the amount of damages, if such matters were decided adversely, would not have a material adverse effect on the Company's financial condition or results of operations.

14. Related Party Transactions

        The Company leasesWe lease space to an affiliated company, Schooner, Capital LLC ("Schooner"), for its corporate headquarters located in Boston, Massachusetts. For the years ended December 31, 1999, 20002001, 2002 and 2001,2003, Schooner paid the Company rent to us totaling $94, $96$101, $128 and $101,$144, respectively. The Company leasesWe lease facilities from an officer and three separate

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limited partnerships, whose general partner iswas a related party. TheOur aggregate rental payment by the Company for such facilities during 20002001, 2002 and 20012003 was

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$1,684 $1,381, $1,372 and $513,$1,309, respectively. In the opinion of management, all of these leases were entered into at market prices and terms.

        The Company hasWe have an agreement with Leo W. Pierce, Sr., our former Chairman Emeritus of the Company and the father of J. Peter Pierce, a Director of the Companyour former director, that requires pension payments of $8 per month until his death. The total benefit is recorded in accrued expenses in the accompanying consolidated balance sheets.sheets in the amount of $922 as of December 31, 2003.

        At December 31, 2001, the Company has2003, we have outstanding loans to an officer with an aggregate principal amount of $331. These notes bear interest at a variable rate. This liability was assumed in connection with the Company'sour merger with Pierce Leahy.

        Effective December 1, 2000, the Company sold its wholly owned UK subsidiary Datavault Limited (acquired in the Pierce Leahy merger) to its 50.1% owned subsidiary, Iron Mountain Europe, in exchange for approximately $18 million of Iron Mountain Europe stock and debt of approximately $14 million. In connection with this transaction, the Company's 49.9% partner in Iron Mountain Europe contributed approximately $18 million dollars to Iron Mountain Europe in exchange for additional shares. The transaction was accounted for as a transfer between entities under common control and no gain or loss was recorded on the sale.

15. Employee Benefit Plans

        a.     Iron Mountain Companies 401(k) Plan

        The Company hasWe have a defined contribution plan, which generally covers all non-union U.S. employees meeting certain service requirements. Eligible employees may elect to defer from 1% to 20%25% of compensation per pay period up to the amount allowed by the Internal Revenue Code. The Company makesIn addition, IME operates a defined contribution plan, which is similar to the U.S.'s 401(k) Plan. We make matching contributions based on the amount of an employee's contribution according to a schedule as described in accordance with the plan document. The Company hasWe have expensed $1,890, $2,646$2,466, $3,043 and $2,280$4,164 for the years ended December 31, 1999, 20002001, 2002 and 2001,2003, respectively.

        b.     Employee Stock Purchase Plan

        On March 23, 1998, the Companywe introduced an employee stock purchase plan (the "Plan"), participation in which is available to substantially all employees who meet certain service eligibility requirements. The Plan was approved by theour shareholders of the Company on May 28, 1998 and commenced operations on October 1, 1998. The Plan providesprovided a way for our eligible employees of the Company to become shareholders of the Company on favorable terms. The Plan providesprovided for the purchase of up to 562,500 shares of the Company'sour common stock by eligible employees through successive offering periods. At the start of each offering period, participating employees arewere granted options to acquire the Company'sour common stock. As there were no shares remaining in the Plan on December 31, 2002, a new employee stock purchase plan (the "2003 Plan"), which provides for the purchase of up to 750,000 shares of our common stock was approved by our shareholders in May 2003 and commenced operations on July 1, 2003. During each offering period, participating employees accumulate after-tax payroll contributions, up to a maximum of 15% of their compensation, to pay the exercise price of their options. At the end of the offering period, outstanding options are exercised, and each employee's accumulated contributions are used to purchase our common stock of the Company.stock. The price for shares purchased under the Plan was, and under the 2003 Plan is, 85% of their market price at either the beginning or the

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end of the offering period, whichever was or is lower. There were 76,360, 139,869186,152, 160,119 and 186,15288,715 shares purchased under the Plan and the 2003 Plan for the years ended December 31, 1999, 20002001, 2002 and 2001,2003, respectively. The number of shares available for grant at December 31, 2003 was 661,285.

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16. Noncash Transactions

        The Company used the following as part of the consideration paid for certain acquisitions:

		1999			2000			2001
Fair Value of Common Stock Issued		$	46,000		$	421,220		$	—
Fair Value of Options Issued			—			25,291			—
Fair Value of Debt Assumed and Issued			—			584,906			10,352
Fair Value of Certain Net Assets of Businesses Previously Acquired			2,489			1,063			—

        See Note 6 for liabilities assumed in acquisitions.

17. Subsequent EventEvents

        OnIn February 2004, we completed the acquisition of Mentmore plc's 49.9% equity interest in IME for total consideration of 82,500 British pounds sterling ($154,000) in cash from proceeds of our 7¹/4% notes issued in January 2004. Included in this amount is the repayment of all trade and working capital funding owed to Mentmore by IME. Completion of the transaction gives us 100% ownership of IME, affording us full access to all future cash flows and greater strategic and financial flexibility. This transaction should have no impact on revenue or operating income since we already fully consolidate IME's financial results. Since we will be using the purchase method of accounting for this acquisition, 49.9% of the net assets of IME will be adjusted to reflect their fair market value if different from their current carrying value.

        In March 15, 2002, the Company2004, IME and certain of its subsidiaries entered into a new amended and restated revolving credit agreement (the "Amended and Restated"IME Credit Agreement"). with a syndicate of European lenders. The Amended and RestatedIME Credit Agreement replacesprovides for maximum borrowing availability in the Company's existing credit agreement. The Amended and Restated Credit Agreement has an aggregate principal amount of $650,000 and includes210,000 British pounds sterling, including a $400,000100,000 British pounds sterling revolving credit facility(which includes the ability to borrow in certain other foreign currencies), a 100,000 British pounds sterling term loan, and a term loan facility in the amount of $250,000.10,000 British pounds sterling overdraft protection line. The revolving credit facility matures on January 31, 2005 while theMarch 2, 2009. The term loan facility is to be paidpayable in fullthree installments; two installments of 20,000 British pounds sterling on February 15, 2008; however, ifMarch 2, 2007 and 2008, respectively, and the 9¹/8% senior subordinated notes are not redeemed or repurchased prior to April 15, 2007final payment of the term loan will matureremaining balance on April 15, 2007.March 2, 2009. The interest rate on borrowings under the Amended and RestatedIME Credit Agreement is based on LIBOR and varies depending on the Company'sIME's choice of base rates and currency options,interest rate period, plus an applicable margin. RestrictiveThe IME Credit Agreement includes various financial covenants under this agreement are similarapplicable to thosethe results of IME, which may restrict IME's ability to incur indebtedness under the Company's prior credit facility. All intercompany notes are now pledgedIME Credit Agreement and with third parties. Each of IME's subsidiaries will either guarantee the obligations or pledge shares to secure the IME Credit Agreement. We have not guaranteed or otherwise provided security for the IME Credit Agreement nor have any of our U.S., Canadian, Mexican and South American subsidiaries.

        In March 2004, IME borrowed approximately 147,000 British pounds sterling under the IME Credit Agreement, including the full amount of the term loan. IME used those proceeds to repay us 135,000 British pounds sterling related to our initial financing of the acquisition of the European operations of Hays IMS. We expect to use those proceeds to: (1) pay down approximately $104,000 of real estate term loans, (2) settle all obligations associated with terminating our two cross currency swaps used to hedge the foreign currency impact of our intercompany financing with IME, and (3) to pay down amounts outstanding under our Amended and Restated Credit Agreement. After the initial balance, IME's availability under the IME Credit Agreement, based on its current level of external debt and the leverage ratio under the IME Credit Agreement, was approximately 9,000 British pounds sterling.

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REPORT OF THE INDEPENDENT AUDITORS


To the Board of Directors of
Iron Mountain Europe Limited:

        We have audited the accompanying consolidated balance sheets of Iron Mountain Europe Limited as of October 31, 20002002 and 2001,2003, and the related consolidated statements of operations, stockholders' equity and comprehensive loss(loss)/income and cash flows (not presented separately herein) for the twothree years ended October 31, 2001 and the ten months ended October 31, 1999.2003. These consolidated financial statements are the responsibility of the management of Iron Mountain Europe Limited. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with auditing standards generally accepted in the United States.States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Iron Mountain Europe Limited at October 31, 20002002 and 20012003 and the consolidated results of their operations and their consolidated cash flows (not presented separately herein) for the twothree years ended October 31, 2001 and the ten months ended October 31, 1999,2003, in conformity with generally accepted accounting principles in the United States.States of America.

RSM ROBSON RHODES
LLP

Chartered Accountants
Birmingham, England
February 22, 2002

84March 8, 2004

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        This is a copy of the audit report previously issued by Arthur Andersen LLP in connection with Iron Mountain Incorporated's filing of an Annual Report on Form 10-K for the year ended December 31, 2001. This audit report has not been reissued by Arthur Andersen LLP in connection with this Annual Report on Form 10-K for the year ended December 31, 2003. See Exhibit 23.3 to the December 31, 2002 Annual Report on Form 10-K filed with the SEC for further discussion.


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors of
Iron Mountain Incorporated:

        We have audited, in accordance with auditing standards generally accepted in the United States, the consolidated financial statements of Iron Mountain Incorporated (a Pennsylvania corporation) for each of the three years in the period ended December 31, 2001 and have issued our report thereon dated February 22, 2002 (except with respect to Note 17, as to which the date is March 15, 2002). Our audits were made for the purpose of forming an opinion on those basic financial statements taken as a whole. The supplemental schedule listed in the accompanying index is the responsibility of Iron Mountain Incorporated's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and regulations under the Securities Exchange Act of 1934 and is not a required part of the basic financial statements. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

/s/ ARTHUR ANDERSEN LLP

Boston, Massachusetts
February 22, 2002
(Except with respect to Note 17,
as to which the date is March 15, 2002)

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Schedule II



IRON MOUNTAIN INCORPORATED

Valuation and Qualifying Accounts

(In thousands)


Year Ended December 31,		Balance at Beginning of the Year		Charged to Expense		Other Additions(1)		Deductions		Balance at End of the Year
Allowance for doubtful accounts and credit memos:
1999		3,316		2,733		336		(645	)	5,740
2000		5,740		9,714		4,051		(3,516	)	15,989
2001		15,989		8,499		846		(8,248	)	17,086

Year Ended December 31,		Balance at Beginning of the Year		Additions		Deductions		Adjustments(2)		Balance at End of the Year
Reserve for restructuring activities:
1999		10,482		4,234		(4,843	)	(533	)	9,340
2000		9,340		31,409		(7,539	)	(4,696	)	28,514
2001		28,514		3,751		(7,805	)	(8,235	)	16,225

Year Ended December 31,		Balance at Beginning of the Year			Charged to Expense			Other Additions(1)			Deductions			Balance at End of the Year
Allowance for doubtful accounts:
2001		$	15,989		$	8,499		$	846		$	(8,248	)	$	17,086

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(1)

Includes allowance of businesses acquired during the year as described in Note 6 of7 to Notes to Consolidated Financial Statements.



(2)

The adjustments represent changes to goodwill as a result of management's finalizing its restructuring plan within one year of each acquisition.Statements and the impact associated with currency translation adjustments.

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SIGNATURES


        Pursuant to the requirements of Section 13 or 15(d) 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
		By:		/s/  C. RICHARD REESE       C. Richard Reese Chairman of the Board, Chief Executive Officer and President
Dated: March 11, 2004

Dated: March 20, 2002

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name		Title		Date
/s/  C. RICHARD REESE       C. Richard Reese		Chairman andof the Board of Directors, Chief Executive Officer President and DirectorPresident		March 20, 200211, 2004
/s/  JOHN F. KENNY, JR.       John F. Kenny, Jr.		Executive Vice President, Chief Financial Officer and Director		March 20, 200211, 2004
/s/  JEAN A. BUA       Jean A. Bua		Vice President and Corporate Controller (Chief Accounting Officer)		March 11, 2004
/s/  CLARKE H. BAILEY       Clarke H. Bailey		Director		March 20, 200211, 2004
/s/  CONSTANTIN R. BODEN       Constantin R. Boden		Director		March , 200211, 2004
/s/  KENT P. DAUTEN       Kent P. Dauten		Director		March 20, 200211, 2004
/s/  EUGENE B. DOGGETT       Eugene B. Doggett		Director		March 20, 200211, 2004
/s/  B. THOMAS GOLISANO       B. Thomas Golisano		Director		March 20, 200211, 2004
/s/  ARTHUR D. LITTLE       Arthur D. Little		Director		March 20, 2002
/s/  J. PETER PIERCE       J. Peter Pierce		Director		March 20, 2002
/s/  HOWARD D. ROSS       Howard D. Ross		Director		March 20, 200211, 2004
/s/  VINCENT J. RYAN       Vincent J. Ryan		Director		March 20, 200211, 2004

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INDEX TO EXHIBITS


        Certain exhibits indicated below are incorporated by reference to documents we have filed with the Securities and Exchange Commission (the "Commission").Commission. Exhibit numbers in parentheses refer to the exhibit numbers in the applicable filing (which are identified in the footnotes appearing at the end of this index). Each exhibit marked by a pound sign (#) is a management contract or compensatory plan.

Exhibit No.		Item		Exhibit
2.1		Purchase Agreement, dated November 13, 2000, by and among Iron Mountain Canada Corporation, Iron Mountain Records Management, Inc. ("IMRM"), FACS Records Storage Income Fund, FACS Records Centre Inc. and 3796281 Canada Inc.		(2.1)(20)(19)
2.2		Asset Purchase and Sale Agreement, dated February 18, 2000, by and among IMRM, Data Storage Center, Inc., DSC of Florida, Inc., DSC of Massachusetts, Inc., and Suddath Van Lines, Inc.		(2.1)(17)(16)
2.3		Amendment No. 1 to Asset Purchase and Sale Agreement, dated May 1, 2000, by and among IMRM, Data Storage Center, Inc., DSC of Florida, Inc., DSC of Massachusetts, Inc., Suddath Van Lines, Inc. and Suddath Family Trust U/A 11/8/79.		(2.1)(18)(17)
2.4		Agreement and Plan of Merger, dated as of October 20, 1999, by and between the Company and Pierce Leahy.		(2)(10)
2.5		Agreement, dated July 12, 2003, between Hays plc and Iron Mountain Europe Limited (portions of which have been omitted pursuant to a request for confidential treatment).		(2.1)(11)(27)
3.1		Amended and Restated Articles of Incorporation of the Company.		(Annex D)(15)(14)
3.2		Amended and Restated Bylaws of the Company.		(Annex E)(15)(14)
3.3		Declaration of Trust of IM Capital Trust I, dated as of December 10, 2001 among the Company, The Bank of New York, The Bank of New York (Delaware) and John P. Lawrence, as trustees.		(4.15)(23)(22)
3.4		Certificate of Trust of IM Capital Trust I.		(4.17)(23)(22)
4.1		Indenture for 81/4% Senior Subordinated Notes due 2011, dated April 26, 1999, by and among the Company, certain of its subsidiaries and The Bank of New York, as trustee.		(10.1)(9)(7)
4.2		Indenture for 83/4% Senior Subordinated Notes due 2009, dated October 24, 1997, by and among the Company, certain of its subsidiaries and The Bank of New York, as trustee.		(4.1)(2)
4.3		Indenture for 81/8% Senior Notes due 2008, dated as of April 7, 1998, by and among Iron Mountain Canada Corporation, as issuer, the Company and The Bank of New York, as trustee.		(4.1(c))(14)(13)
4.4		Indenture for 91/8% Senior Subordinated Notes due 2007, dated as of July 7, 1997, by and between the Company, as issuer, and The Bank of New York, as trustee.		(10.5)(13)
4.5		Indenture for 85/8% Senior Subordinated Notes due 2008, dated as of April 3, 2001, among the Company, the Guarantors named therein and The Bank of New York, as trustee.		(4.1)(21)(20)
4.64.5		First Supplemental Indenture, dated as of April 3, 2001, among the Company, the Guarantors named therein and The Bank of New York, as trustee.		(4.2)(21)(20)

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4.74.6		Second Supplemental Indenture, dated as of September 14, 2001, among the Company, the Guarantors named therein and The Bank of New York, as trustee.		(4.7)(23)
4.7		Senior Subordinated Indenture for 73/4 Senior Subordinated Notes due 2015, dated as of December 30, 2002, among the Company, the Guarantors named therein and The Bank of New York, as trustee.		(4.7)(26)




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4.8		First Supplemental Indenture, dated as of December 30, 2002, among the Company, the Guarantors named therein and the Trustee.		(4.8)(26)
4.9		Second Supplemental Indenture, dated as of June 20, 2003, among the Company, the Guarantors named therein and the Trustee.		Filed herewith as Exhibit 4.74.9
4.84.10		Form of stock certificate representing shares of Common Stock, $.01 par value per share, of the Company.		(4.1)(16)(15)
9.09		Amended and Restated Voting Trust Agreement, dated as of February 28, 1998, by and among the Company, certain shareholders of the Company.Company and Leo W. Pierce, Sr. and J. Peter Pierce, as trustees. (#)		(9.0)(13)(12)
10.1		Stockholders' Agreement, dated as of September 26, 1997, by and among the Company and certain stockholders of Arcus Group, Inc. (#)		(10.16)(3)
10.2		Stockholders' Agreement, dated as of September 17, 1997, by and between the Company and Kent P. Dauten. (#)		(10.13)(4)
10.3		Employment Agreement, dated as of February 1, 2000, by and between the Company and J. Peter Pierce. (#)		(10.5)(17)(16)
10.410.2		Letter Agreement, dated as of June 27, 2000, by and between the Company and J. Peter Pierce. (#)		(10.6)(20)(19)
10.510.3		Iron Mountain Incorporated Executive Deferred Compensation Plan, as amended. (#)		(10.7)(20)(19)
10.610.4		Nonqualified Stock Option Plan of Pierce Leahy Corp. (#)		(10.3)(12)(11)
10.710.5		Iron Mountain Incorporated 1997 Stock Option Plan, as amended. (#)		(10.9)(20)(19)
10.810.6		Iron Mountain/ATSI 1995 Stock Option Plan. (#)		(10.2)(5)(3)
10.910.7		Iron Mountain Incorporated 1995 Stock Incentive Plan, as amended. (#)		(10.3)(8)(6)
10.1010.8		Iron Mountain Incorporated 2002 Stock Incentive Plan. (#)		(10.8)(26)
10.9		Fifth Amended and Restated Credit Agreement dated as of March 15, 2002 among the Company, certain lenders party thereto and JPMorgan Chase Bank, as Administrative Agent.		Filed herewith as Exhibit 10.10(10.10)(23)
10.1110.10		Amended and Restated Registration Rights Agreement, dated as of June 12, 1997, by and among the Company and certain stockholdersshareholders of the Company. (#)		(10.1)(1)
10.12		Registration Rights Agreement Joinder, dated as of February 1, 2000, by and among the Company and certain shareholders of the Company. (#)		(10.21)(17)
10.1310.11		Strategic Alliance Agreement, dated as of January 4, 1999, by and among the Company, Iron Mountain (U.K.) Limited, Britannia Data Management Limited and Mentmore Abbey plc.		(10.2)(7)(5)
10.1410.12		Lease Agreement, dated as of October 1, 1998, between Iron Mountain Statutory Trust—1998 and IMRM.		(10.20)(6)(4)
10.1510.13		Amendment No. 1 and Consent to Lease Agreement, dated March 15, 2002, between Iron Mountain Statutory Trust—1998 and IMIM		(10.1)(24)
10.14		Unconditional Guaranty, dated as of October 1, 1998, from the Company to Iron Mountain Statutory Trust—1998.		(10.21)(6)(4)
10.1610.15		Amendment and Consent to Unconditional Guaranty, dated as of July 1, 1999, 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.		(10.1)(10)(8)
10.1710.16		Amendment No. 2 and Consent to Unconditional Guaranty, dated as of October 22, 1999, 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.		Filed herewith as Exhibit 10.17(10.17)(23)

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10.1810.17		Amendment No. 3 and Consent to Unconditional Guaranty, dated as of January 31, 2000, 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.		Filed herewith as Exhibit 10.18(10.18)(23)
10.19

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10.18		Amendment No. 4 and Consent to Unconditional Guaranty, dated as of August 15, 2000, 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)(19)(18)
10.19		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.		(10.2)(24)
10.20		Guaranty Letter, dated December 31, 2002, to Scotiabanc, Inc. from Iron Mountain Information Services, Inc., as Lessee and the Company as Guarantor.		(10.20)(26)
10.21		Amended and Restated Agency Agreement, dated October 1, 1998, by and between Iron Mountain Statutory Trust—1998 and IMRM.		(10.1)(10.22)(6)(4)
10.2110.22		Lease Agreement, dated as of July 1, 1999, by and between Iron Mountain Statutory Trust—1999 and IMRM.		(10.2)(11)(9)
10.2210.23		Amendment No. 1 and Consent to Lease Agreement, dated March 15, 2002, between Iron Mountain Statutory Trust—1999 and IMIM.		(10.3)(24)
10.24		Agency Agreement, dated as of July 1, 1999, by and between Iron Mountain Statutory Trust—1999 and IMRM.		(10.1)(11)(9)
10.2310.25		Unconditional Guaranty, dated as of July 1, 1999, from the Company to Iron Mountain Statutory Trust—1999.		(10.3)(11)(9)
10.2410.26		Amendment No. 1 and Consent to Unconditional Guaranty, dated as of October 22, 1999, 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.		Filed herewith as Exhibit 10.24(10.24)(23)
10.2510.27		Amendment No. 2 and Consent to Unconditional Guaranty, dated as of January 31, 2000, 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.		Filed herewith as Exhibit 10.25(10.25)(23)
10.2610.28		Amendment No. 3 and Consent to Unconditional Guaranty, dated as of August 16, 2000, 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.		(10.2)(19)(18)
10.2710.29		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.		(10.4)(24)
10.30		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.		(10.5)(24)
10.31		Guaranty Letter, dated December 31, 2002, to BTM Capital and JH Equity Realty Investors, Inc., from Iron Mountain Information Services, Inc., as Lessee and the Company as Guarantor.		(10.31)(26)
10.32		Master Lease and Security Agreement, dated as of May 22, 2001, between Iron Mountain Statutory Trust—2001, as Lessor, and IMRM, as Lessee.		(10.1)(22)(21)
10.2810.33		Amendment No. 1 to Master Lease and Security Agreement, dated as of November 1, 2001 between Iron Mountain Statutory Trust—2001, as Lessor, and IMRM, as Lessee.		Filed herewith as Exhibit 10.28(10.28)(23)
10.29




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10.34		Amendment to Master Lease and Security Agreement and Unconditional Guaranty, dated March 15, 2002, between Iron Mountain Statutory Trust—2001, IMIM and the Company.		(10.6)(24)
10.35		Unconditional Guaranty, dated as of May 22, 2001, from the Company, as Guarantor, to Iron Mountain Statutory Trust—2001, as Lessor.		(10.2)(22)(21)
10.3010.36		Subsidiary Guaranty, dated as of May 22, 2001, from certain subsidiaries of the Company as guarantors, for the benefit of Iron Mountain Statutory Trust—2001 and consented to by Bank of Nova Scotia.		(10.36)(26)
10.37		Guaranty Letter, dated December 31, 2002, to Scotiabanc, Inc. from Iron Mountain Information Services, Inc., as Lessee and the Company as Guarantor.		(10.37)(26)
10.38		Master Construction Agency Agreement, dated as of May 22, 2001, between Iron Mountain Statutory Trust—2001, as Lessor, and Iron Mountain Records Management, Inc.,IMRM, as Construction Agent.		(10.3)(22)(21)
10.39		First Amendment, dated as of July 9, 2003, to the Fifth Amended and Restated Credit Agreement, dated as of March 15, 2002, among the Company, certain lenders party thereto and J.P. Morgan Chase Bank, as Administrative Agent.		(10.1)(27)
10.40		Multi-Currency Term, Revolving Credit Facilities Agreement, dated as of March 2004, among Iron Mountain Europe Limited, certain lenders party thereto, Barclays Capital and The Governor and Company of the Bank of Scotland, as arrangers, and The Bank of Scotland as the facility agent, security trustee and letter of credit issuing bank.		Filed herewith as Exhibit 10.40
12		Statement re: Computation of Ratios.		Filed herewith as Exhibit 12
16		Letter from Arthur Andersen LLP to the Securities and Exchange Commission, dated June 19, 2002, regarding the change in the Company's certifying accountant.		(16.1)(25)
21		Subsidiaries of the Company.		Filed herewith as Exhibit 21
23.1		Consent of Arthur AndersenDeloitte & Touche LLP (Iron Mountain Incorporated, Pennsylvania).		Filed herewith as Exhibit 23.1

90

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23.2		Consent of RSM Robson Rhodes LLP (Iron Mountain Europe Limited).		Filed herewith as Exhibit 23.2
9923.3		Letter from the Company regardingNotice Regarding Consent of Arthur Andersen LLP.		(23.3)(26)
31.1		Certification required by Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934, as amended.		Filed herewith as Exhibit 9931.1
31.2		Certification required by Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934, as amended.		Filed herewith as Exhibit 31.2
32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		Furnished herewith as Exhibit 32.1
32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		Furnished herewith as Exhibit 32.2

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(1)

Filed as an Exhibit to Iron Mountain/DE's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, filed with the Commission, File No. 0-27584.



(2)

Filed as an Exhibit to Iron Mountain/DE's Current Report on Form 8-K dated October 30, 1997, filed with the Commission, File No. 0-27584.



118

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(3)

Filed as an Exhibit to Iron Mountain/DE's Registration Statement No. 333-41045, filed with the Commission on November 26, 1997.



(4)

Filed as an Exhibit to Iron Mountain/DE's Registration Statement No. 333-44185, filed with the Commission on January 13, 1998.



(5)

Filed as an Exhibit to Iron Mountain/DE's Current Report on Form 8-K dated March 9, 1998, filed with the Commission, File No. 0-27584.



(6)(4)

Filed as an Exhibit to Iron Mountain/DE's Registration Statement No. 333-67765, filed with Commission on November 23, 1998.



(7)(5)

Filed as an Exhibit to Iron Mountain/DE's Current Report on Form 8-K dated January 19, 1999, filed with the Commission, File No. 0-27584.



(8)(6)

Filed as an Exhibit to Iron Mountain/DE's Current Report on Form 8-K dated April 16, 1999, filed with the Commission, File No. 0-27584.



(9)(7)

Filed as an Exhibit to Iron Mountain/DE's Current Report of Form 8-K dated May 11, 1999, filed with the Commission, File No. 0-27584.



(10)(8)

Filed as an Exhibit to Iron Mountain/DE's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, filed with the Commission, File No. 0-27584.



(11)(9)

Filed as an Exhibit to Iron Mountain/DE's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, filed with the Commission, File No. 1-14937.



(12)(10)

Filed as an Exhibit to Pierce Leahy's Current Report on Form 8-K, dated October 20, 1999, filed with the Commission, File No.1-13045.



(11)

Filed as an Exhibit Amendment No. 1 to Pierce Leahy's Registration Statement No. 333-9963, filed with the Commission on August 12,October 4, 1996.



(13)(12)

Filed as an Exhibit to Pierce Leahy's Annual Report on Form 10-K for the year ended December 31, 1997, filed with the Commission, File No. 333-09963.



(14)(13)

Filed as an Exhibit to Pierce Leahy's Registration Statement No. 333-58569, filed with the Commission on JuneJuly 6, 1998.



(15)(14)

Filed as an Annex or Exhibit to Amendment No. 1 to Pierce Leahy's Registration Statement No. 333-91577, filed with the Commission on December 13, 1999.



(16)(15)

Filed as an Exhibit to the Company's Current Report on Form 8-K dated February 1, 2000, filed with the Commission, File No. 1-13045.



(17)(16)

Filed as an Exhibit to the Company's Annual Report on Form 10-K10-K405 for the year ended December 31, 1999, filed with the Commission, File No. 1-13045.



91

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(18)(17)

Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, filed with the Commission, File No. 1-13045.



(19)(18)

Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, filed with the Commission, File No. 1-13045.



(20)(19)

Filed as an Exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the Commission, File No. 1-13045.



(21)(20)

Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001, filed with the Commission, File No. 1-13045.



(22)(21)

Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001, filed with the Commission, File No. 1-13045.



(23)(22)

Filed as an Exhibit to the Company's Registration Statement No. 333-75068, filed with the Commission on December 13, 2001.



(23)

Filed as an Exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2001.2001, filed with the Commission, File No. 1-13045.



(24)

Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, filed with the Commission, File No. 1-13045.

119

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(25)

Filed as an Exhibit to the Company's Current Report on Form 8-K dated June 19, 2002, filed with the Commission, File No. 1-13045.



(26)

Filed as an Exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2002, filed with the Commission, File No. 1-13045.



(27)

Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, filed with the Commission, File No. 1-13045.





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FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
IRON MOUNTAIN INCORPORATED 2001 FORM 10-K ANNUAL REPORT
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
PART I
PART II
PART III
Summary Compensation Table
Option Grants in 2001
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
PART IV
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
IRON MOUNTAIN INCORPORATED CONSOLIDATED BALANCE SHEETS (In thousands)
IRON MOUNTAIN INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except Per Share Data)
IRON MOUNTAIN INCORPORATED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE LOSS (In thousands, except share data)
IRON MOUNTAIN INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
IRON MOUNTAIN INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2001 (In thousands, except share data)
REPORT OF THE INDEPENDENT AUDITORS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Schedule II IRON MOUNTAIN INCORPORATED Valuation and Qualifying Accounts (In thousands)
SIGNATURES
INDEX TO EXHIBITS