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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER 1-13045
------------------------
IRON MOUNTAIN INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
PENNSYLVANIA 23-2588479
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
745 ATLANTIC AVENUE, BOSTON, MA 02111
(Address of Principal Executive Offices, Including Zip Code)
(617) 535-4766
(Registrant's Telephone Number, Including Area Code)
------------------------
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes /X/ No / /
Number of shares of the registrant's Common Stock outstanding as of May 4,
2001: 55,579,027
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IRON MOUNTAIN INCORPORATED
INDEX
PAGE
--------
PART I--FINANCIAL INFORMATION
Item 1-- Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at March 31, 2001 and
December 31, 2000 (Unaudited)............................... 3
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 2001 and 2000 (Unaudited)...... 4
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2001 and 2000 (Unaudited)...... 5
Notes to Condensed Consolidated Financial Statements
(Unaudited)................................................. 6-17
Item 2-- Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 18-20
Item 3-- Quantitative and Qualitative Disclosures About Market
Risk........................................................ 21
PART II--OTHER INFORMATION
Item 6-- Exhibits and Reports on Form 8-K............................ 21
Signature................................................... 22
2
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
MARCH 31, DECEMBER 31,
2001 2000
---------- ------------
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 9,903 $ 6,200
Accounts receivable (less allowances of $17,786 and
$15,989 respectively)................................... 208,057 176,442
Deferred income taxes..................................... 31,128 30,990
Prepaid expenses and other................................ 27,690 23,036
---------- ----------
Total Current Assets.................................. 276,778 236,668
Property, Plant and Equipment:
Property, plant and equipment............................. 1,033,895 984,939
Less: Accumulated depreciation............................ (172,592) (152,545)
---------- ----------
Property, Plant and Equipment, net.................... 861,303 832,394
Other Assets, net:
Goodwill.................................................. 1,535,901 1,525,630
Customer acquisition costs................................ 29,167 27,692
Deferred financing costs.................................. 14,137 14,534
Other..................................................... 20,768 22,178
---------- ----------
Total Other Assets, net............................... 1,599,973 1,590,034
---------- ----------
Total Assets.......................................... $2,738,054 $2,659,096
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt......................... $ 31,629 $ 40,789
Accounts payable.......................................... 37,831 42,531
Accrued expenses.......................................... 146,488 153,291
Deferred income........................................... 76,729 53,884
Other current liabilities................................. 17,129 23,558
---------- ----------
Total Current Liabilities............................. 309,806 314,053
Long-term Debt, net of current portion...................... 1,371,442 1,314,342
Other Long-term Liabilities................................. 12,095 7,920
Deferred Rent............................................... 16,731 16,346
Deferred Income Taxes....................................... 32,773 38,948
Minority Interest........................................... 69,272 43,029
Shareholders' Equity:
Common stock.............................................. 555 553
Additional paid-in capital................................ 994,427 990,854
Accumulated deficit....................................... (56,439) (59,383)
Accumulated other comprehensive items..................... (12,608) (7,566)
---------- ----------
Total Shareholders' Equity............................ 925,935 924,458
---------- ----------
Total Liabilities and Shareholders' Equity............ $2,738,054 $2,659,096
========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
3
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------
2001 2000
-------- --------
Revenues:
Storage................................................... $167,865 $124,939
Service and storage material sales........................ 116,057 87,198
-------- --------
Total Revenues........................................ 283,922 212,137
Operating Expenses:
Cost of sales (excluding depreciation).................... 139,820 104,458
Selling, general and administrative....................... 70,317 53,457
Depreciation and amortization............................. 35,718 26,303
Merger-related expenses................................... 801 516
-------- --------
Total Operating Expenses.............................. 246,656 184,734
-------- --------
Operating Income............................................ 37,266 27,403
Interest Expense............................................ 33,987 23,783
Other Expense............................................... (9,187) (781)
-------- --------
Income (Loss) Before Provision (Benefit) for Income
Taxes and Minority Interest......................... (5,908) 2,839
Provision (Benefit) for Income Taxes........................ (8,837) 8,529
Minority Interest in Losses of Subsidiaries................. (270) (307)
-------- --------
Net Income (Loss)........................................... $ 3,199 $ (5,383)
======== ========
Net Income (Loss) per Share -- Basic and Diluted............ $ 0.06 $ (0.11)
-------- --------
Weighted Average Common Shares Outstanding--Basic........... 55,427 47,943
======== ========
Weighted Average Common Shares Outstanding--Diluted......... 56,593 47,943
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
4
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
---------------------
2001 2000
--------- ---------
Cash Flows from Operating Activities:
Net Income (Loss)......................................... $ 3,199 $ (5,383)
Adjustments to Reconcile Net Income (Loss) to Cash
Provided by Operating Activities:
Minority Interests in Losses of Subsidiaries............ (270) (307)
Depreciation and Amortization........................... 35,718 26,303
Amortization of Deferred Financing Costs and Bond
Discount.............................................. 495 656
Provision for Doubtful Accounts......................... 2,381 1,196
Foreign Currency Loss................................... 9,187 781
Other, Net.............................................. 506 747
Changes in Assets and Liabilities (Exclusive of
Acquisitions):
Accounts Receivable..................................... (9,558) 1,068
Prepaid Expenses and Other Current Assets............... (7,375) 2,025
Deferred Income Taxes................................... (6,428) 10,447
Other Assets............................................ (616) 298
Accounts Payable........................................ (4,630) (12,092)
Accrued Expenses........................................ 2,048 (10,261)
Deferred Income......................................... (739) (1,016)
Other Current Liabilities............................... 135 50
Deferred Rent........................................... 391 481
Other Long-term Liabilities............................. (545) 2,725
------- --------
Cash Flows Provided by Operating Activities........... 23,899 17,718
Cash Flows from Investing Activities:
Capital Expenditures...................................... (48,198) (27,646)
Cash Paid for Acquisitions, net of cash acquired.......... (34,773) (5,636)
Additions to Customer Acquisition Costs................... (2,307) (3,356)
Other, Net................................................ 29 (435)
------- --------
Cash Flows Used in Investing Activities............... (85,249) (37,073)
Cash Flows from Financing Activities:
Repayment of Debt......................................... (35,734) (203,267)
Proceeds from Borrowings.................................. 82,355 223,558
Debt Contribution from (Repayment to) Minority
Shareholders............................................ (6,560) 7,036
Equity Contributions from Minority Shareholders........... 24,529 --
Proceeds from Exercise of Stock Options................... 2,539 885
Financing and Stock Issuance Costs........................ (235) (2,769)
------- --------
Cash Flows Provided by Financing Activities........... 66,894 25,443
Effect of Exchange Rates on Cash and Cash Equivalents....... (1,841) 186
Increase in Cash and Cash Equivalents....................... 3,703 6,274
Cash and Cash Equivalents, Beginning of Period.............. 6,200 3,830
------- --------
Cash and Cash Equivalents, End of Period.................... $ 9,903 $ 10,104
======= ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
5
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
(1) GENERAL
The interim condensed consolidated financial statements presented herein
have been prepared by Iron Mountain Incorporated ("Iron Mountain" or the
"Company") without audit and, in the opinion of management, reflect all
adjustments of a normal recurring nature necessary for a fair presentation.
Interim results are not necessarily indicative of results for a full year.
The condensed consolidated balance sheet presented as of December 31, 2000
has been derived from the consolidated financial statements that have been
audited by the Company's independent public accountants. The unaudited condensed
consolidated financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in the annual financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to those rules and regulations, but the Company believes that
the disclosures are adequate to make the information presented not misleading.
The condensed consolidated financial statements and notes included herein should
be read in conjunction with the consolidated financial statements and notes
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2000.
Certain reclassifications have been made to the 2000 financial statements to
conform to the 2001 presentation.
(2) COMPREHENSIVE LOSS
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income," requires presentation of the components of comprehensive
income (loss), including the changes in equity from non-owner sources such as
unrealized gains (losses) on securities and foreign currency translation
adjustments. The Company's total comprehensive income (loss) is as follows:
THREE MONTHS ENDED MARCH 31,
-----------------------------
2001 2000
------------- -------------
Comprehensive Loss:
Net Income (Loss)............................. $ 3,199 $(5,383)
Other Comprehensive Loss:
Foreign Currency Translation Adjustment....... (788) 121
Transition Adjustment Charge.................. (214) --
Unrealized Loss on Hedging Contracts.......... (4,040) --
------- -------
Comprehensive Loss.............................. $(1,843) $(5,262)
======= =======
6
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
(3) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company adopted the provisions of SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, on January 1, 2001. SFAS No. 133
requires that every derivative instrument be recorded in the balance sheet as
either an asset or a liability measured at its fair value. The adoption of SFAS
No. 133 on January 1, 2001 resulted in the recognition of a derivative liability
and a corresponding transition adjustment charge to accumulated other
comprehensive items of approximately $214.
Periodically, the Company acquires derivative instruments that are intended
to hedge either cash flows or values which are subject to exchange or other
market price risk, and not for trading purposes. The Company has formally
documented its hedging relationships, including identification of the hedging
instruments and the hedge items, as well as its risk management objectives and
strategies for undertaking each hedge transaction.
The Company has entered into three interest rate swap agreements, which are
derivatives as defined by SFAS No. 133 and designated as cash flow hedges. These
swap agreements hedge interest rate risk on certain amounts of its 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 items of
approximately $4,254 at March 31, 2001.
During the period ending March 31, 2001, the Company recorded net losses of
$59 and $9 resulting from interest rate swap settlements in interest and rent
expense, respectively. All interest rate swap agreements were determined to be
highly effective whereby no ineffectiveness was recorded in earnings.
(4) ACQUISITIONS
During the three months ended March 31, 2001, the Company purchased
substantially all of the assets, and assumed certain liabilities, of six records
and information management services businesses.
Each of the 2001 acquisitions and all 12 of the records and information
management services businesses acquired during 2000 were accounted for using the
purchase method of accounting and, accordingly, the results of operations for
each acquisition have been included in the consolidated results of the Company
from their respective acquisition dates. In connection with certain 2001 and
2000 acquisitions, related real estate was also purchased. The aggregate
purchase price for the 2001 acquisitions exceeded the underlying fair value of
the net assets acquired by $29,255 which has been assigned to goodwill and is
being amortized over 25 to 30 years.
In connection with the 2001 and 2000 acquisitions, the Company has
undertaken certain restructurings of the acquired businesses. The restructuring
activities include certain reductions in staffing levels, elimination of
duplicate facilities and other costs associated with exiting certain activities
of the acquired businesses. These restructuring activities were recorded as
costs of the acquisitions and were provided in accordance with Emerging Issues
Task Force Issue No. 95-3, "Recognition of
7
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
(4) ACQUISITIONS (CONTINUED)
Liabilities in Connection with a Purchase Business Combination." The Company
finalizes its restructuring plans for each business no later than one year from
the date of acquisition. Unresolved matters primarily include completion of
planned abandonments of facilities and employee severance costs for certain 2001
and 2000 acquisitions.
The following is a summary of reserves related to such restructuring
activities:
MARCH 31, DECEMBER 31,
2001 2000
--------- ------------
Reserves, Beginning Balance........................... $28,514 $ 9,340
Reserves Established.................................. 314 31,409
Expenditures.......................................... (3,473) (7,539)
Adjustments to Goodwill............................... (631) (4,696)
------- -------
Reserves, Ending Balance.............................. $24,724 $28,514
======= =======
At March 31, 2001, the restructuring reserves related to acquisitions
consisted of lease losses on abandoned facilities ($15,783), severance costs for
approximately 16 people ($1,376) and other exit costs ($7,565). These accruals
are expected to be used within one year of the finalization of the restructuring
plans except for lease losses of $10,302 and severance contracts of
approximately $674, all of which are based on contracts that extend beyond one
year.
8
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
(5) LONG-TERM DEBT
Long-term debt consists of the following:
MARCH 31, 2001 DECEMBER 31, 2000
--------------------- ---------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- -------- ---------- --------
Revolving Credit Facility due 2005............... $ 51,000 $ 51,000 $ 4,000 $ 4,000
Tranche A Term Loan due 2005..................... 150,000 150,000 150,000 150,000
Tranche B Term Loan due 2006..................... 199,500 199,500 199,750 199,750
11 1/8% Senior Subordinated Notes due 2006 (the
"11 1/8% notes")............................... 131,366 138,800 131,517 136,500
10 1/8% Senior Subordinated Notes due 2006 (the
"10 1/8% notes")............................... 165,000 173,700 165,000 170,800
9 1/8% Senior Subordinated Notes due 2007 (the
"9 1/8% notes")................................ 114,438 121,800 114,216 118,800
8 3/4% Senior Subordinated Notes due 2009 (the
"8 3/4% notes")................................ 249,656 254,400 249,646 245,600
8 1/4% Senior Subordinated Notes due 2011 (the
"8 1/4% notes")................................ 149,546 148,900 149,535 141,400
8 1/8% Senior Subordinated Notes due 2008 (the
"Subsidiary notes")............................ 121,327 131,000 120,850 128,600
Real Estate Mortgages............................ 22,408 22,408 20,457 20,457
Seller Notes..................................... 12,817 12,817 13,971 13,971
Other............................................ 36,013 36,013 36,189 36,189
---------- ----------
Long-term debt................................... 1,403,071 1,355,131
Less current portion............................. (31,629) (40,789)
---------- ----------
Long-term debt, net of current portion........... $1,371,442 $1,314,342
========== ==========
The estimated fair values for the long-term debt are based on the borrowing
rates available to the Company at March 31, 2001 and December 31, 2000 for loans
with similar terms and average maturities. The fair values of the 11 1/8% notes,
10 1/8% notes, 9 1/8% notes, 8 3/4% notes, 8 1/4% notes (collectively, the
"Parent Notes") and the Subsidiary notes are based on the quoted market prices
for those notes on March 31, 2001 and December 31, 2000.
(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 March 31, 2001 and December 31, 2000 and for
the first quarter of 2001 and 2000. The Guarantor column includes all
subsidiaries that guarantee the Parent notes and the Subsidiary notes. The
Canada Company column includes Iron Mountain Canada Corporation ("Canada
Company"), the issuer of the Subsidiary notes, and the Company's other Canadian
subsidiaries that guarantee the Subsidiary notes, but do not guarantee the
Parent notes. The Parent and the Guarantors
9
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
(6) SELECTED CONSOLIDATED FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND
NON-GUARANTORS (CONTINUED)
also guarantee the Subsidiary 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."
MARCH 31, 2001
-----------------------------------------------------------------------------
CANADA NON-
PARENT GUARANTORS COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ---------- -------- ---------- ------------ ------------
ASSETS
Current Assets:
Cash and Cash Equivalents.... $ -- $ 2,863 $ 1,321 $ 5,719 $ -- $ 9,903
Accounts Receivable.......... -- 172,679 14,184 21,194 -- 208,057
Intercompany Receivable
(Payable).................. 824,947 (712,933) (86,024) (25,990) -- --
Other Current Assets......... -- 52,707 734 5,377 -- 58,818
---------- ---------- -------- -------- ----------- ----------
Total Current Assets..... 824,947 (484,684) (69,785) 6,300 -- 276,778
Property, Plant and Equipment,
net.......................... -- 707,771 68,413 85,119 -- 861,303
Other Assets:
Long-term Intercompany
Receivable................. 331,006 -- -- -- (331,006) --
Long-term Notes Receivable
from Affiliates............ 623,900 -- -- -- (623,900) --
Investment in Subsidiaries... 375,879 75,590 -- -- (451,469) --
Goodwill, net................ -- 1,268,922 120,304 136,513 10,162 1,535,901
Other........................ 15,946 43,536 9,704 579 (5,693) 64,072
---------- ---------- -------- -------- ----------- ----------
Total Other Assets....... 1,346,731 1,388,048 130,008 137,092 (1,401,906) 1,599,973
---------- ---------- -------- -------- ----------- ----------
Total Assets............. $2,171,678 $1,611,135 $128,636 $228,511 $(1,401,906) $2,738,054
========== ========== ======== ======== =========== ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Total Current Liabilities.... $ 28,174 $ 200,716 $ 15,679 $ 65,237 $ -- $ 309,806
Long-term Debt, Net of
Current Portion............ 1,217,569 3,791 126,119 23,963 -- 1,371,442
Long-term Intercompany
Payable.................... -- 331,006 -- -- (331,006) --
Long-term Notes Payable to
Affiliates................. -- 623,900 -- -- (623,900) --
Other Long-term
Liabilities................ -- 64,858 108 2,326 (5,693) 61,599
Minority Interest............ -- -- -- 727 68,545 69,272
Shareholders' Equity......... 925,935 386,864 (13,270) 136,258 (509,852) 925,935
---------- ---------- -------- -------- ----------- ----------
Total Liabilities and
Shareholders' Equity... $2,171,678 $1,611,135 $128,636 $228,511 $(1,401,906) $2,738,054
========== ========== ======== ======== =========== ==========
10
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
(6) SELECTED CONSOLIDATED FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND
NON-GUARANTORS (CONTINUED)
DECEMBER 31, 2000
-----------------------------------------------------------------------------
CANADA NON-
PARENT GUARANTORS COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ---------- -------- ---------- ------------ ------------
ASSETS
Current Assets:
Cash and Cash Equivalents.... $ 191 $ 3,336 $ 302 $ 2,371 $ -- $ 6,200
Accounts Receivable.......... 7,060 140,095 12,370 16,917 -- 176,442
Intercompany Receivable
(Payable).................. 795,522 (658,022) (98,386) (45,060) 5,946 --
Other Current Assets......... 531 46,605 827 6,063 -- 54,026
---------- ---------- -------- -------- ----------- ----------
Total Current Assets..... 803,304 (467,986) (84,887) (19,709) 5,946 236,668
Property, Plant and Equipment,
net.......................... 99,549 586,504 66,953 79,388 -- 832,394
Other Assets:
Long-term Intercompany
Receivable................. 344,300 -- -- -- (344,300) --
Long-term Notes Receivable
from Affiliates............ 607,600 124,100 -- -- (731,700) --
Investment in Subsidiaries... 370,830 49,626 -- -- (420,456) --
Goodwill, net................ -- 1,255,302 138,663 121,096 10,569 1,525,630
Other........................ 20,986 42,956 11,036 1,834 (12,408) 64,404
---------- ---------- -------- -------- ----------- ----------
Total Other Assets....... 1,343,716 1,471,984 149,699 122,930 (1,498,295) 1,590,034
---------- ---------- -------- -------- ----------- ----------
Total Assets............. $2,246,569 $1,590,502 $131,765 $182,609 $(1,492,349) $2,659,096
========== ========== ======== ======== =========== ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Total Current Liabilities.... $ 26,921 $ 189,362 $ 12,429 $ 79,378 $ 5,963 $ 314,053
Long-term Debt, Net of
Current Portion............ 1,170,884 3,513 124,834 15,111 -- 1,314,342
Long-term Intercompany
Payable.................... -- 344,300 -- -- (344,300) --
Long-term Notes Payable to
Affiliates................. 124,100 607,600 -- -- (731,700) --
Other Long-term
Liabilities................ 206 73,693 113 1,610 (12,408) 63,214
Minority Interest............ -- -- -- (1,636) 44,665 43,029
Shareholders' Equity......... 924,458 372,034 (5,611) 88,146 (454,569) 924,458
---------- ---------- -------- -------- ----------- ----------
Total Liabilities and
Shareholders' Equity... $2,246,569 $1,590,502 $131,765 $182,609 $(1,492,349) $2,659,096
========== ========== ======== ======== =========== ==========
11
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
(6) SELECTED CONSOLIDATED FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND
NON-GUARANTORS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2001
---------------------------------------------------------------------------
CANADA NON-
PARENT GUARANTORS COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED
-------- ---------- -------- ---------- ------------ ------------
Revenues:
Storage........................ $ -- $146,575 $ 8,402 $12,888 $ -- $167,865
Service and Storage Material
Sales........................ -- 99,988 8,267 7,802 -- 116,057
-------- -------- ------- ------- -------- --------
Total Revenues............. -- 246,563 16,669 20,690 -- 283,922
Operating Expenses:
Cost of Sales (Excluding
Depreciation)................ -- 119,490 8,737 11,593 -- 139,820
Selling, General and
Administrative............... 75 62,273 2,751 5,218 -- 70,317
Depreciation and
Amortization................. -- 30,488 2,484 2,746 -- 35,718
Merger-Related Expenses........ -- 772 -- 29 -- 801
-------- -------- ------- ------- -------- --------
Total Operating Expenses... 75 213,023 13,972 19,586 -- 246,656
-------- -------- ------- ------- -------- --------
Operating Income (Loss).......... (75) 33,540 2,697 1,104 -- 37,266
Interest Expense, net............ 13,170 14,881 4,050 1,886 -- 33,987
Equity in the (Earnings) Losses
of Subsidiaries................ (16,444) 85 -- -- 16,359 --
Other Expense, net............... -- (2,892) (6,294) (1) -- (9,187)
-------- -------- ------- ------- -------- --------
Income (Loss) Before
Provision (Benefit) for
Income Taxes and Minority
Interest Expense......... 3,199 15,682 (7,647) (783) (16,359) (5,908)
Provision (Benefit) for Income
Taxes.......................... -- (9,100) 617 (354) -- (8,837)
Minority Interests in Losses of
Subsidiaries................... -- -- -- (270) -- (270)
-------- -------- ------- ------- -------- --------
Net Income (Loss).......... $ 3,199 $ 24,782 $(8,264) $ (159) $(16,359) $ 3,199
======== ======== ======= ======= ======== ========
12
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
(6) SELECTED CONSOLIDATED FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND
NON-GUARANTORS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2000
---------------------------------------------------------------------------
CANADA NON-
PARENT GUARANTORS COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED
-------- ---------- -------- ---------- ------------ ------------
Revenues:
Storage......................... $ 574 $111,076 $ 4,360 $ 8,929 $ -- $124,939
Service and Storage Material
Sales......................... 3,249 72,504 5,356 6,592 (503) 87,198
------- -------- ------- ------- ------- --------
Total Revenues.............. 3,823 183,580 9,716 15,521 (503) 212,137
Operating Expenses:
Cost of Sales (Excluding
Depreciation)................. 2,236 89,884 5,136 9,070 (1,868) 104,458
Selling, General and
Administrative................ 660 45,922 1,931 3,579 1,365 53,457
Depreciation and Amortization... 341 22,801 1,062 2,099 -- 26,303
Merger-Related Expenses......... -- 516 -- -- -- 516
------- -------- ------- ------- ------- --------
Total Operating Expenses.... 3,237 159,123 8,129 14,748 (503) 184,734
------- -------- ------- ------- ------- --------
Operating Income.................. 586 24,457 1,587 773 -- 27,403
Interest Expense, net............. 6,818 13,510 2,304 1,151 -- 23,783
Equity in the (Earnings) Losses of
Subsidiaries.................... 352 (102) -- -- (250) --
Other Income (Expense), net....... -- 66 (846) (1) -- (781)
------- -------- ------- ------- ------- --------
Income (Loss) Before
Provision (Benefit) for
Income Taxes and Minority
Interest Expense.......... (6,584) 11,115 (1,563) (379) 250 2,839
Provision (Benefit) for Income
Taxes........................... (1,201) 9,970 (199) (41) -- 8,529
Minority Interests in Losses of
Subsidiaries.................... -- -- -- (307) -- (307)
------- -------- ------- ------- ------- --------
Net Income (Loss)........... $(5,383) $ 1,145 $(1,364) $ (31) $ 250 $ (5,383)
======= ======== ======= ======= ======= ========
13
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
(6) SELECTED CONSOLIDATED FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND
NON-GUARANTORS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2001
---------------------------------------------------------------------------
CANADA NON-
PARENT GUARANTORS COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED
-------- ---------- -------- ---------- ------------ ------------
Cash Flows from Operating
Activities:
Cash Flows Provided by (Used
in) Operating Activities..... $(21,070) $ 45,009 $ 1,642 $ (1,682) $ -- $ 23,899
Cash Flows from Investing
Activities:
Capital Expenditures........... -- (42,528) (1,592) (4,078) -- (48,198)
Cash Paid for Acquisitions, net
of cash acquired............. -- (19,813) 206 (15,166) -- (34,773)
Intercompany Loans to
Subsidiaries................. (20,204) 2,537 -- -- 17,667 --
Investment in Subsidiaries..... (6,523) (6,523) -- -- 13,046 --
Additions to Customer
Acquisition Costs............ -- (2,051) (75) (181) -- (2,307)
Proceeds from Sales of Property
and Equipment................ -- 8 5 16 -- 29
-------- -------- ------- -------- -------- --------
Cash Flows Used in
Investing Activities..... (26,727) (68,370) (1,456) (19,409) 30,713 (85,249)
Cash Flows from Financing
Activities:
Repayment of Debt.............. (883) (34,043) (60) (748) -- (35,734)
Proceeds from Borrowings....... 46,116 35,686 -- 553 -- 82,355
Debt Repayment to Minority
Shareholders................. -- -- -- (6,560) -- (6,560)
Equity Contributions from
Minority Shareholders........ -- -- -- 24,529 -- 24,529
Intercompany Loans from
Parent....................... -- 14,791 4,937 (2,061) (17,667) --
Equity Contribution from
Parent....................... -- 6,523 -- 6,523 (13,046) --
Proceeds from Exercise of Stock
Options...................... 2,539 -- -- -- -- 2,539
Debt Financing and Stock
Issuance Costs............... (166) (69) -- -- -- (235)
-------- -------- ------- -------- -------- --------
Cash Flows Provided by
Financing Activities..... 47,606 22,888 4,877 22,236 (30,713) 66,894
Effect of Exchange Rates on Cash
and Cash Equivalents........... -- -- (4,044) 2,203 -- (1,841)
Increase (Decrease) in Cash and
Cash Equivalents............... (191) (473) 1,019 3,348 -- 3,703
Cash and Cash Equivalents,
Beginning of Period............ 191 3,336 302 2,371 -- 6,200
-------- -------- ------- -------- -------- --------
Cash and Cash Equivalents, End of
Period......................... $ -- $ 2,863 $ 1,321 $ 5,719 $ -- $ 9,903
======== ======== ======= ======== ======== ========
14
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
(6) SELECTED CONSOLIDATED FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND
NON-GUARANTORS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2000
----------------------------------------------------------------------------
CANADA NON-
PARENT GUARANTORS COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ---------- -------- ---------- ------------ ------------
Cash Flows from Operating
Activities:
Cash Flows Provided by (Used
in) Operating Activities.... $ (7,077) $ 27,535 $(1,347) $(1,393) $ -- $ 17,718
Cash Flows from Investing
Activities:
Capital Expenditures.......... (2,471) (19,909) (1,999) (3,267) -- (27,646)
Cash Paid for Acquisitions,
net of Cash Acquired........ (3,895) (565) 55 (1,231) -- (5,636)
Intercompany Loans to
Subsidiaries................ (185,715) (10,527) -- -- 196,242 --
Investment in Subsidiaries.... -- (1,591) -- -- 1,591 --
Additions to Customer
Acquisition Costs........... -- (2,696) (183) (477) -- (3,356)
Other, Net.................... -- 91 (45) (481) -- (435)
--------- --------- ------- ------- --------- ---------
Cash Flows Used in
Investing Activities.... (192,081) (35,197) (2,172) (5,456) 197,833 (37,073)
Cash Flows from Financing
Activities:
Repayment of Debt............. (28,550) (172,192) (176) (2,349) -- (203,267)
Proceeds from Borrowings...... 220,500 1,885 1,173 -- -- 223,558
Debt Financing and Equity
Contribution from Minority
Shareholders................ -- -- -- 7,036 -- 7,036
Intercompany Loans from
Parent...................... 9,519 179,320 1,165 6,238 (196,242) --
Equity Contribution from
Parent...................... -- -- 1,591 -- (1,591) --
Proceeds from Exercise of
Stock Options............... 885 -- -- -- -- 885
Debt Financing and Stock
Issuance Costs.............. (2,769) -- -- -- -- (2,769)
--------- --------- ------- ------- --------- ---------
Cash Flows Provided by
Financing Activities.... 199,585 9,013 3,753 10,925 (197,833) 25,443
Effect of Exchange Rates on Cash
and Cash Equivalents.......... -- -- (50) 236 -- 186
Increase in Cash and Cash
Equivalents................... 427 1,351 184 4,312 -- 6,274
Cash and Cash Equivalents,
Beginning of Period........... -- 2,260 -- 1,570 -- 3,830
--------- --------- ------- ------- --------- ---------
Cash and Cash Equivalents, End
of Period..................... $ 427 $ 3,611 $ 184 $ 5,882 $ -- $ 10,104
========= ========= ======= ======= ========= =========
15
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
(7) EARNINGS PER SHARE
In accordance with SFAS No. 128, "Earnings per Share," basic net income
(loss) per common share is calculated by dividing net income (loss) by the
weighted average number of common shares outstanding. The calculation of diluted
net income (loss) per share is consistent with that of basic net income (loss)
per share but gives effect to all potential common shares (that is, securities
such as options, warrants or convertible securities) that were outstanding
during the period, unless the effect is antidilutive.
(8) SEGMENT INFORMATION
An analysis of the Company's business segment information to the respective
information in the consolidated financial statements is as follows:
BUSINESS OFF SITE
RECORDS DATA CORPORATE TOTAL
MANAGEMENT PROTECTION INTERNATIONAL & OTHER CONSOLIDATED
---------- ---------- ------------- ---------- ------------
THREE MONTHS ENDED MARCH 31, 2001
Revenue............................. $189,922 $44,916 $36,879 $ 12,205 $ 283,922
EBITDA.............................. 50,214 10,438 8,679 4,454 73,785
Total Assets........................ 914,515 73,114 345,960 1,404,465 2,738,054
THREE MONTHS ENDED MARCH 31, 2000
Revenue............................. 144,210 38,615 24,874 4,438 212,137
EBITDA.............................. 38,482 8,559 4,958 2,223 54,222
A reconciliation from the segment information to the consolidated balances
for income (loss) before provision (benefit) for income taxes and minority
interest is as follows:
THREE MONTHS ENDED MARCH 31,
-----------------------------
2001 2000
------------- -------------
EBITDA.......................................... $ 73,785 $ 54,222
Depreciation and Amortization................... (35,718) (26,303)
Merger-related Expenses......................... (801) (516)
Interest Expense................................ (33,987) (23,783)
Other Expense, net.............................. (9,187) (781)
-------- --------
Income (Loss) Before Provision (Benefit) for
Income Taxes and Minority Interest........ $ (5,908) $ 2,839
======== ========
16
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
(8) SEGMENT INFORMATION (CONTINUED)
Information as to the Company's operations in different geographical areas
is as follows:
THREE MONTHS ENDED MARCH 31,
-----------------------------
2001 2000
------------- -------------
Revenues:
United States................................... $ 247,043 $ 187,263
International................................... 36,879 24,874
---------- ----------
Total Revenues................................ $ 283,922 $ 212,137
========== ==========
MARCH 31, 2001 MARCH 31, 2000
-------------- --------------
Long-lived Assets:
United States................................... $2,054,517 $1,924,769
International................................... 406,759 330,018
---------- ----------
Total Long-lived Assets....................... $2,461,276 $2,254,787
========== ==========
(9) SUBSEQUENT EVENTS
In April 2001, Iron Mountain completed an underwritten public offering of
$225,000 in aggregate principal amount of 8 5/8% Senior Subordinated Notes due
2013. The 8 5/8% notes were issued at a price to investors of 100% of par. The
net proceeds to the Company, approximately $219,000 after paying the
underwriters' discounts and commissions and estimated expenses, were used to
fund the Company's offer to purchase and consent solicitation relating to its
outstanding 11 1/8% Senior Subordinated Notes due 2006, to repay outstanding
borrowings under the Company's revolving credit facility and for general
corporate purposes, including acquisitions.
In April 2001, the Company received and accepted tenders for $124,588 of the
outstanding principal amount of its 11 1/8% notes. The Company expects to record
an extraordinary charge of approximately $5,000 (net of tax benefit) in the
second quarter related to the early retirement of the 11 1/8% notes. The Company
intends to redeem the remaining $5,412 of outstanding principal amount of the
11 1/8% notes in July 2001, the first redemption date, at a redemption price
(expressed as a percentage of principal amount) of 105.563%, plus accrued and
unpaid interest to, but not including, the date of redemption.
17
IRON MOUNTAIN INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of the Company's financial condition
and results of operations for the three months ended March 31, 2001 and 2000
should be read in conjunction with the condensed consolidated financial
statements and footnotes for the three months ended March 31, 2001 included
herein, and the year ended December 31, 2000, included in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission on
March 23, 2001.
OVERVIEW
The Company's consolidated revenues increased $71.8 million, or 33.8%, to
$283.9 million for the first quarter of 2001 from $212.1 million for the first
quarter of 2000. Internal revenue growth, calculated in local currency for our
international operations and as if Pierce Leahy Corp. had merged with Iron
Mountain on January 1, 2000, was 11.2%.
During the first quarter of 2001, the Company acquired six records and
information management services businesses for total consideration of
$41.0 million. These six acquisitions reported approximately $15 million in
revenues for the fiscal year 2000.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000
Consolidated storage revenues increased $42.9 million, or 34.4%, to
$167.9 million for the first three months of 2001, from $124.9 million for the
first three months of 2000. The increase was attributable to: (i) acquisitions,
particularly the Pierce Leahy acquisition; and (ii) internal revenue growth of
12.7% resulting primarily from net increases in records and other media stored
by existing customers, price increases and sales to new customers. The total
increase in storage revenues was partially offset by the unfavorable effects of
currency translation as a result of the strengthening of the U.S. dollar against
certain foreign currencies, primarily the Canadian dollar and the British pound
sterling, in which the Company's international segment does business.
Consolidated service and storage material sales revenues increased
$28.9 million, or 33.1%, to $116.1 million for the first three months of 2001,
from $87.2 million for the first three months of 2000. The increase was
attributable to: (i) acquisitions, particularly the Pierce Leahy acquisition;
and (ii) internal revenue growth of 9.0% resulting primarily from net increases
in service and storage material sales to existing customers, price increases and
sales to new customers. The total increase in service and storage material sales
revenues was partially offset by the unfavorable effects of currency translation
as a result of the strengthening of the U.S. dollar against certain foreign
currencies, primarily the Canadian dollar and the British pound sterling, in
which the Company's international segment does business.
For the reasons discussed above, total consolidated revenues increased
$71.8 million, or 33.8%, to $283.9 million for the first three months of 2001
from $212.1 million for the first three months of 2000.
Consolidated cost of sales (excluding depreciation) increased
$35.4 million, or 33.9%, to $139.8 million (49.2% of consolidated revenues) for
the first three months of 2001 from $104.5 million (49.2% of consolidated
revenues) for the first three months of 2000. The dollar increase was consistent
with the revenue growth of the Company.
Consolidated selling, general and administrative expenses increased
$16.9 million, or 31.5%, to $70.3 million (24.8% of consolidated revenues) for
the first three months of 2001 from $53.5 million (25.2% of consolidated
revenues) for the first three months of 2000. The dollar increase was primarily
18
IRON MOUNTAIN INCORPORATED
attributable to revenue growth of the Company. The percentage decrease was
primarily attributable to general management overhead efficiencies due to an
increase in scale partially offset by: (i) increased spending in Europe and
Latin America as a percentage of revenues and (ii) spending in the first quarter
of 2001 for the Company's marketing and information technology initiatives
related to the development of complementary technology-based service offerings.
As a result of the foregoing factors, consolidated EBITDA increased
$19.6 million, or 36.1%, to $73.8 million (26.0% of consolidated revenues) for
the first three months of 2001 from $54.2 million (25.6% of consolidated
revenues) for the first three months of 2000. Excluding the $0.9 million of
expenses related to the Company's technology-related service offerings, the
Company's EBITDA margin for the first three months of 2001 was 26.3% of
consolidated revenues. There were no such costs in the first three months of
2000.
Consolidated depreciation and amortization expense increased $9.4 million,
or 35.8%, to $35.7 million (12.6% of consolidated revenues) for the first three
months of 2001 from $26.3 million (12.4% of consolidated revenues) for the first
three months of 2000. The dollar increase was primarily attributable to the
additional depreciation and amortization expense related to the 2000 and 2001
acquisitions, particularly the Pierce Leahy acquisition, and capital
expenditures including racking systems, information systems and expansion of
storage capacity in existing facilities.
Merger-related expenses are certain expenses directly related to the
Company's merger with Pierce Leahy that cannot be capitalized and include system
conversion costs, costs of exiting certain facilities, severance, relocation and
pay-to-stay payments and other transaction-related costs. Merger-related
expenses were $0.8 million for the first three months of 2001 compared to
$0.5 million for the first three months of 2000.
As a result of the foregoing factors, consolidated operating income
increased $9.9 million, or 36.0%, to $37.3 million (13.1% of consolidated
revenues) for the first three months of 2001 from $27.4 million (12.9% of
consolidated revenues) for the first three months of 2000.
Consolidated interest expense increased $10.2 million, or 42.9%, to
$34.0 million for the first three months of 2001 from $23.8 million for the
first three months of 2000. The increase was primarily attributable to increased
indebtedness related to: (i) the inclusion of Pierce Leahy's debt for three
months of 2001 versus two months of 2000 and (ii) the financing of acquisitions
and capital expenditures.
Consolidated other expense was $9.2 million for the first three months of
2001 compared to $0.8 million for the first three months of 2000. The increase
was primarily due to a weakening of the Canadian dollar against the U.S. dollar,
as it relates to Canada Company's 8 1/8% Senior Subordinated Notes due 2008 and
on intercompany balances with the Company's Canadian subsidiaries and a
weakening of the British pound sterling against the U.S. dollar on intercompany
balances with the Company's European subsidiaries.
As a result of the foregoing factors, consolidated income (loss) before
provision (benefit) for income taxes and minority interest decreased
$8.7 million to a loss of $5.9 million (2.1% of consolidated revenues) for the
first three months of 2001 from income of $2.8 million (1.3% of consolidated
revenues) for the first three months of 2000. The benefit for income taxes was
$8.8 million for the first three months of 2001 compared to a provision of
$8.5 million for the first three months of 2000. The benefit was calculated by
applying the Company's effective tax rate to the pre-tax loss. The Company's
effective tax rate is based on an estimate of annual pre-tax income and is
higher than statutory rates primarily due to the amortization of the
nondeductible portion of goodwill associated
19
IRON MOUNTAIN INCORPORATED
with particular acquisitions. For the three months ended March 31, 2001, the
Company recorded $9.6 million in nondeductible goodwill amortization expense.
Consolidated net income increased $8.6 million to $3.2 million (1.1% of
consolidated revenues) for the first three months of 2001 from a net loss of
$5.4 million (2.5% of consolidated revenues) for the first three months of 2000.
LIQUIDITY AND CAPITAL RESOURCES
As the Company has sought to increase its EBITDA, it has made significant
capital investments, consisting primarily of: (i) capital expenditures,
primarily related to growth (including investments in real estate, racking
systems, information systems and expansion of storage capacity in existing
facilities); (ii) acquisitions; and (iii) customer acquisition costs. Cash paid
for these investments during the first three months of 2001 amounted to
$48.2 million, $34.8 million and $2.3 million, respectively. These investments
have been primarily funded through cash flows from operations and borrowings
under the Company's credit agreements. Included in capital expenditures is
$1.5 million related to the Company's technology-based service offerings.
Net cash provided by operations was $23.9 million for the first three months
of 2001 compared to $17.7 million for the same period in 2000. The increase
primarily resulted from an increase in EBITDA and an increase in accrued
expenses, which was partially offset by an increase in trade accounts receivable
and a decrease in the net deferred tax liability.
Net cash provided by financing activities was $66.9 million for the first
three months of 2001, consisting primarily of the proceeds from borrowings under
the Company's revolving credit facility of $81.8 million and equity
contributions from minority shareholders of $24.5 million, which were partially
offset by repayments of debt of $35.7 million.
In April 2001, Iron Mountain completed an underwritten public offering of
$225.0 million in aggregate principal amount of 8 5/8% Senior Subordinated Notes
due 2013. The 8 5/8% notes were issued at a price to investors of 100% of par.
The net proceeds to the Company, approximately $219 million after paying the
underwriters' discounts and commissions and estimated expenses, were used to
fund the Company's offer to purchase and consent solicitation relating to its
outstanding 11 1/8% Senior Subordinated Notes due 2006, to repay outstanding
borrowings under the Company's revolving credit facility and for general
corporate purposes, including acquisitions.
In April 2001, the Company received and accepted tenders for $124.6 million
of the outstanding principal amount of its 11 1/8% notes. The Company expects to
record an extraordinary charge of approximately $5 million (net of tax benefit)
in the second quarter related to the early retirement of the 11 1/8% notes. The
Company intends to redeem the remaining $5.4 million of outstanding principal
amount of the 11 1/8% notes in July 2001, the first redemption date, at a
redemption price (expressed as a percentage of principal amount) of 105.563%,
plus accrued and unpaid interest to, but not including, the date of redemption.
20
IRON MOUNTAIN INCORPORATED
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In December 2000 and January 2001, the Company entered into certain
derivative financial contracts, which were variable-for-fixed swaps of interest
payments payable on the Company's Tranche B term loan and certain variable
operating lease commitments.
Iron Mountain's 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 the
Company's Canadian subsidiaries, Canada Company, has U.S. dollar denominated
debt. Gains and losses due to exchange rate fluctuations related to this debt
are recognized in the Company's consolidated statements of operations.
As of March 31, 2001, the Company had $230.3 million of variable rate debt
outstanding with a weighted average interest rate of 7.72% and $1,172.8 million
of fixed rate debt outstanding. If the weighted average variable interest rate
had increased by 1%, such increase would have had a negative impact on the
Company's net income for the quarter ended March 31, 2001 of $0.3 million. See
Note 4 of Notes to Consolidated Financial Statements for a discussion of the
Company's long-term indebtedness, including the fair values of such indebtedness
as of March 31, 2001.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
4.1 Subordinated Indenture, dated as of April 3, 2001, among the
Company, the Guarantors named therein and The Bank of New
York, as trustee.
4.2 First Supplemental Indenture, dated as of April 3, 2001,
among the Company, the Guarantors named therein and The Bank
of New York, as trustee
(b) REPORTS ON FORM 8-K
On March 23, 2001, the Company filed a Current Report on Form 8-K under
Items 5 and 7 to announce the Company's proposed underwritten public offering of
Senior Subordinated Notes and related tender offer and consent solicitation. The
Current Report on Form 8-K also provided unaudited pro forma financial
information with respect to acquisitions by the Company of businesses in 2000
and certain other financing transactions described therein.
On April 3, 2001, the Company filed a Current Report on Form 8-K under Items
5 and 7 to file certain documents in connection with a prospectus supplement,
dated March 27, 2001, filed by the Company on March 28, 2001.
21
IRON MOUNTAIN INCORPORATED
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IRON MOUNTAIN INCORPORATED
May 15, 2001 By: /s/ JEAN A. BUA
(date) -----------------------------------------
Jean A. Bua
VICE PRESIDENT AND CORPORATE CONTROLLER
(PRINCIPAL ACCOUNTING OFFICER)
22