How did the company's revenue and profitability change in 1996?

Total revenues rose 36.0% to $129.7 million, but net income fell to $0.5 million from $2.1 million in 1995. The decline reflects higher interest expense of $17.2 million, a $2.0 million extraordinary charge for debt refinancing, and $3.3 million of non-recurring charges related to leasehold assumptions and a pension for L.W. Pierce, Sr. Operating income excluding those non-recurring charges rose to $23.0 million from $15.0 million.

How was the company's growth financed, and how did its debt position change?

In July 1996 the company issued $200.0 million of 11-1/8% Senior Subordinated Notes due 2006 and used the proceeds to retire its previous credit facility, buy certain properties from related parties, redeem stock from a shareholder, fund an acquisition, and for general purposes. In August 1996 it entered into a credit facility providing $100.0 million in U.S. dollar borrowings and Cdn $35.0 million in Canadian dollar borrowings. As of December 31, 1996, $5.3 million was outstanding under that facility, with an additional $28.9 million available under debt incurrence limitations.

What are the company's plans for 1997?

The company expects aggregate capital expenditures of approximately $30 million in 1997, of which about $10 million is related to the purchase of facilities and the remaining $20 million largely for shelving for new records. It has also signed a definitive agreement to purchase a regional records management company for approximately $62.0 million, subject to due diligence and customary conditions, to be financed through its credit facility. Management believes operating cash flow, credit facility borrowings and other possible financing will be sufficient for the foreseeable future.

What are the main risks or pressures noted in the filing?

The filing notes that revenue per annual average cubic foot has declined from 1994 to 1996 due to discounted long-term contracts, contract renegotiations at lower rates, and competition. It also cites the substantial indebtedness and resulting interest expense, the integration of acquisitions, and competition from alternative technologies that require less space than paper. Interest expense rose to 13.3% of revenues in 1996 from 10.1% in 1995.

Who controls the company and how is its stock held?

The company's Class A common stock is the only class of voting stock, with 900 shares outstanding, and Class B common stock totals 9,000 shares. As of March 1, 1997, the aggregate market value of voting stock held by non-affiliates was $0, and there was no established trading market for the Class B stock. Directors and executive officers as a group held 73.3% of Class A shares and 44.9% of Class B shares, with Leo W. Pierce, Sr. holding 42.9% of Class A shares.

IRM 10-K FY1996 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 11, 1997. Cited figures are marked; the original filing is the authoritative source.

Pierce Leahy Corp. (now Iron Mountain Incorporated) reported in its 10-K for the fiscal year ended December 31, 1996 that it is the largest archive records management company in North America, with 42.3 million cubic feet of records under management across 136 facilities (123 in the United States and 13 in Canada).

Total revenues rose from $95.4 million in 1995 to $129.7 million^a in 1996, an increase of 36.0%, with $25.7 million of the growth attributed to acquisitions. Storage revenues were 58.5% of total revenues in 1996. Net income fell to $0.5 million from $2.1 million in 1995, weighed down by interest expense that rose to $17.2 million, a $2.0 million extraordinary charge from debt refinancing, and $3.3 million of non-recurring charges.

The company's balance sheet became considerably more leveraged during 1996. Following the July 1996 issuance of $200.0 million^b of 11-1/8% Senior Subordinated Notes due 2006, total debt including redeemable warrants rose to $217.4 million from $120.1 million, and shareholders' deficit widened to $25.4 million. Net cash from operating activities increased to $26.4 million, while $108.8 million was used in investing activities, primarily for acquisitions and capital expenditures.

The company completed 12 acquisitions in 1996 and four more in early 1997, and has signed a definitive agreement to buy a regional records management company for approximately $62.0 million^c, to be financed under its credit facility. The filing shows that EBITDA grew to $35.9 million in 1996 (27.7% of revenues) from $23.6 million in 1995, and that the company expects 1997 capital expenditures of approximately $30 million. The company's Class A common stock was held by a small group of Pierce family members and related holders, with no non-affiliate market value reported as of March 1, 1997.

02—Key points

Key Highlights

Revenues grew 36.0% to $129.7 million in 1996 from $95.4 million in 1995, with acquisitions accounting for $25.7 million of the increase.
Net income declined to $0.5 million in 1996 from $2.1 million in 1995, as interest expense rose to $17.2 million from $9.6 million.
EBITDA increased to $35.9 million (27.7% of revenues) in 1996 from $23.6 million (24.8%) in 1995.
Total debt including redeemable warrants increased to $217.4 million at year-end 1996 from $120.1 million, driven by the $200.0 million 11-1/8% Senior Subordinated Notes issued in July 1996.
Shareholders' deficit widened to $25.4 million at December 31, 1996, from $18.2 million a year earlier.
The company completed 12 acquisitions in 1996 for an aggregate cash purchase price of $62.2 million and signed a definitive agreement for a regional records management company for about $62.0 million.
Operates 136 records management facilities with 42.3 million cubic feet of records under management and over 19,000 customer accounts; no customer exceeded 3% of 1996 revenues.

03—Questions

Frequently Asked Questions

How did the company's revenue and profitability change in 1996?
Total revenues rose 36.0% to $129.7 million, but net income fell to $0.5 million from $2.1 million in 1995. The decline reflects higher interest expense of $17.2 million, a $2.0 million extraordinary charge for debt refinancing, and $3.3 million of non-recurring charges related to leasehold assumptions and a pension for L.W. Pierce, Sr. Operating income excluding those non-recurring charges rose to $23.0 million from $15.0 million.
How was the company's growth financed, and how did its debt position change?
In July 1996 the company issued $200.0 million of 11-1/8% Senior Subordinated Notes due 2006 and used the proceeds to retire its previous credit facility, buy certain properties from related parties, redeem stock from a shareholder, fund an acquisition, and for general purposes. In August 1996 it entered into a credit facility providing $100.0 million in U.S. dollar borrowings and Cdn $35.0 million in Canadian dollar borrowings. As of December 31, 1996, $5.3 million was outstanding under that facility, with an additional $28.9 million available under debt incurrence limitations.
What are the company's plans for 1997?
The company expects aggregate capital expenditures of approximately $30 million in 1997, of which about $10 million is related to the purchase of facilities and the remaining $20 million largely for shelving for new records. It has also signed a definitive agreement to purchase a regional records management company for approximately $62.0 million, subject to due diligence and customary conditions, to be financed through its credit facility. Management believes operating cash flow, credit facility borrowings and other possible financing will be sufficient for the foreseeable future.
What are the main risks or pressures noted in the filing?
The filing notes that revenue per annual average cubic foot has declined from 1994 to 1996 due to discounted long-term contracts, contract renegotiations at lower rates, and competition. It also cites the substantial indebtedness and resulting interest expense, the integration of acquisitions, and competition from alternative technologies that require less space than paper. Interest expense rose to 13.3% of revenues in 1996 from 10.1% in 1995.
Who controls the company and how is its stock held?
The company's Class A common stock is the only class of voting stock, with 900 shares outstanding, and Class B common stock totals 9,000 shares. As of March 1, 1997, the aggregate market value of voting stock held by non-affiliates was $0, and there was no established trading market for the Class B stock. Directors and executive officers as a group held 73.3% of Class A shares and 44.9% of Class B shares, with Leo W. Pierce, Sr. holding 42.9% of Class A shares.

04—Continue

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