PROSPECTUS 
September 26, 1996 
    

   
                                 $165,000,000 
[logo]                    IRON MOUNTAIN INCORPORATED 
                  10-1/8% Senior Subordinated Notes due 2006 
    

   
   The 10-1/8% Senior Subordinated Notes due 2006 (the "Notes") are being 
offered (the "Offering") by Iron Mountain Incorporated (the "Company" or 
"Iron Mountain"). The net proceeds of the Offering will be used to repay 
outstanding bank debt and certain other indebtedness, to fund the purchase 
price of the Pending Acquisition and for general corporate purposes. 
    

   
   Interest on the Notes is payable on April 1 and October 1, commencing 
April 1, 1997. Except as described below, the Notes are not redeemable by the 
Company prior to October 1, 2001. Thereafter, the Notes are redeemable at the 
option of the Company, in whole or in part, at any time and from time to 
time, at the redemption prices set forth herein plus accrued and unpaid 
interest to, but excluding, the date of redemption. In addition, during the 
first 36 months after the date of issuance of the Notes, the Company, at its 
option, may redeem up to 35% of the initial principal amount of the Notes 
with the net proceeds of one or more Qualified Equity Offerings at a 
redemption price equal to 109.125%, plus accrued and unpaid interest to, but 
excluding, the date of redemption; provided that at least 65% of the initial 
principal amount of the Notes remains outstanding after each such redemption. 
Except as set forth herein, the Company is not required to make sinking fund 
or redemption payments with respect to the Notes at any time prior to 
maturity. Upon the occurrence of a Change of Control, each Holder of Notes 
may require the Company to repurchase such Notes at 101% of the principal 
amount thereof, plus accrued and unpaid interest to, but excluding, the date 
of repurchase. 
    

   
   The Notes will be general unsecured senior subordinated obligations of the 
Company ranking junior to all existing and future Senior Debt of the Company. 
The Notes will be fully and unconditionally guaranteed on an unsecured senior 
subordinated and joint and several basis (the "Subsidiary Guarantees") by 
substantially all of the Company's present and future Restricted Subsidiaries 
(collectively, the "Guarantors"). The Subsidiary Guarantees will rank junior 
to all existing and future Senior Debt of the Guarantors. As of June 30, 
1996, on a pro forma basis after giving effect to the Transactions, the 
aggregate outstanding principal amount of Senior Debt of the Company and the 
Guarantors would have been $10.8 million. 
    

   The Notes will not be listed on any securities exchange or included in the 
National Association of Securities Dealers Automated Quotation System, and 
there can be no assurance that there will be a secondary market therefor. 

   SEE "RISK FACTORS" COMMENCING ON PAGE 10 FOR A DISCUSSION OF CERTAIN 
MATERIAL FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT 
IN THE NOTES OFFERED HEREBY. 

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND 
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE 
   SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION 
    PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY 
     REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 

   


                 Price to         Discounts and      Proceeds to the 
              the Public (1)     Commissions (2)     Company (1) (3) 
- ----------    --------------    ----------------    ---------------- 
                                              
Per Note           100%                 3%                  97% 
Total          $165,000,000        $4,950,000          $160,050,000 

    

(1) Plus accrued interest, if any, on the Notes from the date of issuance. 

(2) The Company and the Guarantors have agreed to indemnify the Underwriters 
    against certain liabilities, including liabilities under the Securities 
    Act of 1933, as amended. See "Underwriting." 

(3) Before deduction of expenses payable by the Company estimated to be 
    $800,000. 

   
   The Notes are offered by Donaldson, Lufkin & Jenrette Securities 
Corporation, Bear, Stearns & Co. Inc. and Prudential Securities Incorporated 
(collectively, the "Underwriters") subject to prior sale, when, as and if 
delivered to and accepted by the Underwriters, and subject to certain prior 
conditions, including the right of the Underwriters to reject any order in 
whole or in part. It is expected that delivery of the Notes will be made in 
New York, New York through the facilities of the Depository Trust Company on 
or about October 1, 1996, against payment therefor in immediately available 
funds. 
    

Donaldson, Lufkin & Jenrette 
Securities Corporation 

                           Bear, Stearns & Co. Inc. 
                                            Prudential Securities Incorporated 


          [Color Coded Map of Company Systems, Logos, Graphics, etc.]

 
   IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR 
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES 
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE 
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. 

                                      2 


 
                               PROSPECTUS SUMMARY

   The following summary is qualified in its entirety by, and should be read 
in conjunction with, the more detailed information and financial statements 
appearing elsewhere in this Prospectus. References to "Iron Mountain" and the 
"Company" include Iron Mountain Incorporated (including predecessor entities) 
and its consolidated subsidiaries, unless the context otherwise requires. 

                                 The Company 

   Iron Mountain is the largest records management company in the United 
States, as measured by revenues. The Company is a full-service provider of 
records management and related services, enabling customers to outsource 
records management functions. Pro forma for the Acquisitions (as defined 
herein), as of June 30, 1996, the Company managed approximately 29.6 million 
Cartons* in 103 records centers in 33 markets nationwide. The Company has a 
diversified base of over 19,000 customer accounts, which includes more than 
half of the Fortune 500 and numerous legal, banking, healthcare, accounting, 
insurance, entertainment and government organizations. The Company provides 
storage and related services for all major media, including paper (which is 
the dominant form of records retention and which has accounted for 
approximately 85% of the Company's revenues since 1992), computer disks and 
tapes, microfilm and microfiche, master audio and video tapes, film and 
optical disks, X-rays and blueprints. The Company's principal services 
include filing, retrieval and destruction of records, courier pick-up and 
delivery, database management and customized reporting. The Company also 
sells storage materials and provides consulting and other records-related 
services. 

   The Company continues to capitalize on its leading position in the records 
management industry and the industry trends of increased records retention, 
outsourcing of records management and vendor consolidation. As a result, the 
Company has achieved significant increases in revenues and EBITDA (as defined 
herein). From 1991 to 1995, Iron Mountain's total revenues increased from 
$62.8 million to $104.4 million primarily from internal growth, representing 
a compound annual growth rate ("CAGR") of 13.5%. During the same period, 
storage revenues grew at a 12.9% CAGR while service and storage material 
sales revenues grew at a 14.6% CAGR. From 1991 to 1995, the Company's EBITDA 
grew from $15.0 million to $26.1 million, representing a 14.9% CAGR. Revenues 
and EBITDA for the six months ended June 30, 1996 increased 27.3% (10.2% from 
internal growth and 17.1% from acquisitions) and 24.8%, respectively, over 
the same period in 1995. For a discussion of the significance of EBITDA and 
other measures of the Company's performance determined in accordance with 
generally accepted accounting principles ("GAAP") and the Company's sources 
and applications of cash flow, see "Management's Discussion and Analysis of 
Financial Condition and Results of Operations--Overview" and "--Liquidity and 
Capital Resources." 

Industry Overview 

   According to industry sources, organizations in the United States generate 
an estimated four trillion documents each year, many of which must be 
retained and remain available for reference for many years. These records may 
be generally divided into two categories: active and inactive. Inactive 
records, which are the principal focus of the records management industry, 
consist of records that are not needed for immediate access but which must be 
retained for legal or regulatory reasons or for occasional reference to 
support ongoing business operations. Based on industry studies, the Company 
believes that inactive records make up approximately 80% of all records. The 
Company believes that the volume of inactive records is increasing for a 
number of reasons, including: (i) the rapid growth of inexpensive document 
producing technologies such as facsimile, desktop printing and computer 
networking; (ii) increased regulatory requirements; (iii) concerns over 
possible future litigation and the resulting increases in volume and holding 
periods of documentation; (iv) the high cost of reviewing records and 
deciding whether to retain or destroy them; and (v) the failure of many 
entities to adopt or follow policies on records destruction. Despite the 
growth of new "paperless" technologies, such as the Internet and e-mail, 
management believes that stored information remains predominantly paper-based 
and that such technologies have promoted the creation of hard copies of such 
electronic information. 

- ------------- 

* 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 the Company's vital records 
services and data protection services, which are described under "Business." 

                                      3 

 
   The Company believes that it benefits from several industry fundamentals, 
including: (i) the historically non- cyclical nature of the records 
management industry; (ii) the continued trend towards corporate outsourcing 
of records management functions; (iii) the ability of larger records 
management companies to achieve economies of scale with respect to labor, 
real estate costs and the utilization of management information systems; and 
(iv) the ongoing consolidation of the records management industry. 

   The Company believes that it is one of only four records management 
providers with a national operating presence, the balance being regional or, 
in most instances, single-city operators. According to the Association of 
Commercial Records Centers (the "ACRC"), a trade group of approximately 500 
members, as of January 1994 (the latest date for which such information is 
available), approximately 2,600 firms offered records storage and management 
services in the United States. The Company believes that there is a trend 
toward consolidation in the records management industry and that such trend 
will continue to accelerate primarily because of: (i) the opportunities to 
achieve economies of scale; (ii) the industry's capital requirements for 
growth; (iii) customer demands for more sophisticated technology-based 
solutions; and (iv) the preference of certain large, national customers to 
outsource a significant portion of their records management functions to one 
vendor with a national presence, such as Iron Mountain. 

Financial Characteristics of Iron Mountain's Business 

   Iron Mountain's records management business has the following financial 
characteristics: 

   (bullet) Recurring Revenues. Iron Mountain derives a majority of its 
            revenues from fixed periodic (usually monthly) fees charged to 
            customers for storage of records. Storage revenues have grown for 
            30 consecutive quarters and have represented approximately 60% of 
            the Company's total revenues in each of the last five years. Once 
            a customer places a record in storage with the Company and until 
            that record is destroyed or permanently removed (for which the 
            Company typically receives a service fee), the Company receives 
            recurring payments of fixed periodic fees without incurring 
            additional labor or marketing expenses or significant capital 
            costs. The stable and growing storage base also provides the 
            foundation for increases in revenues and EBITDA from service 
            activities and sales of storage materials. 

   (bullet) Historically Non-Cyclical Business. Iron Mountain has not 
            experienced a reduction of its business as a result of past 
            general economic downturns, although there can be no assurance 
            that this would be the case in the future. Management believes 
            that the outsourcing of records management may accelerate during 
            economic downturns as companies focus on reducing costs through 
            outsourcing non-core operating functions. In addition, management 
            believes that companies that have outsourced records management 
            are less likely during economic downturns to incur the move-out 
            costs and other expenses associated with switching vendors or 
            moving records management in-house. 

   (bullet) Inherent Growth from Existing Customers. The Company's customers 
            have on average generated additional Cartons at a faster rate 
            than stored Cartons have been destroyed or permanently removed. 
            From 1992 to 1995, net Cartons from existing customers grew at an 
            average annual rate of 6.7%. The Company believes the consistent 
            growth of its storage revenues is the result of a number of 
            additional factors, including: (i) the trend toward increased 
            records retention; (ii) customer satisfaction with the Company's 
            services; and (iii) the costs and inconvenience of moving storage 
            operations in-house or to another provider of records management 
            services. 

   (bullet) Diversified and Stable Customer Base. The Company has over 19,000 
            customer accounts in a variety of industries. The Company 
            currently provides services to more than half of the Fortune 500 
            and numerous legal, banking, healthcare, accounting, insurance, 
            entertainment and government organizations. Only one of the 
            Company's customers accounted for more than 3% of revenues in 
            1993, 1994 or 1995. From 1992 to 1995, average annual permanent 
            removals of Cartons represented only approximately 4% of total 
            Cartons stored. 

   (bullet) Capital Expenditures Related Primarily to Growth. The Company's 
            business requires limited annual maintenance capital 
            expenditures. Maintenance capital expenditures were $1.8 million, 
            $1.2 million and $0.9 million in 1993, 1994 and 1995, 
            respectively. From 1992 to 1995, over 90% of the Company's 
            aggregate capital expenditures were growth-related investments, 
            primarily in racking systems, new 

                                      4 

 
           buildings and leasehold improvements, equipment for new 
           facilities, management information systems and facilities 
           restructuring. These growth-related capital expenditures are 
           primarily discretionary and create additional capacity for 
           increases in revenues and EBITDA. 

Business Strategy 

   Iron Mountain's business strategy is to increase revenues and EBITDA while 
maintaining a low-cost operating structure and providing premium service. The 
Company intends to generate growth by increasing its storage and service 
revenues from existing customers, adding new customers and making 
acquisitions. The Company's strategy is based on the following elements: 

   (bullet) Provide Superior Customer Service. The Company believes it has a 
            reputation for providing reliable, quality service based on its 
            more than 45 years of operations, its commitment to providing 
            premium customer service and the continuity and depth of its 
            management team. The Company has successfully implemented a 
            decentralized management structure that enables the Company to 
            respond quickly and flexibly to local customer needs. Iron 
            Mountain's proprietary Safekeeper(R) system enables it to quickly 
            provide customized records management solutions to its customers, 
            enhancing the quality of its services. In addition, Iron 
            Mountain's national operating presence allows it to better 
            service large organizations that require records management 
            functions at multiple, geographically diverse facilities. 

   (bullet) Capitalize on Operating Efficiencies. Iron Mountain pursues a 
            low-cost operating strategy based primarily on achieving 
            economies of scale in the areas of storage, labor and 
            transportation, general and administrative functions and 
            management information systems. Because occupancy costs are a 
            major component of the Company's cost of sales, its real estate 
            management staff aggressively seeks to minimize per Carton 
            storage costs by designing racking systems and operating space to 
            maximize facility storage efficiency, negotiating favorable 
            facility leases, contracting for facilities to be built to its 
            custom specifications, and leasing larger facilities in order to 
            reduce operating costs per Carton. The Company seeks to increase 
            labor efficiency by offering incentive compensation to all 
            full-time employees based upon achieving specific operating 
            targets. Certain operating costs, such as the maintenance of 
            local delivery fleets, general and administrative costs and 
            management information systems, offer economies of scale, 
            providing the Company with operating leverage and the ability to 
            increase its efficiency through further growth. 

   (bullet) Pursue Acquisition Opportunities. The Company believes that it is 
            well positioned to participate in the further consolidation of 
            the records management industry. Iron Mountain's management team 
            has successfully completed 18 acquisitions since the Company 
            embarked on a proactive acquisition strategy in mid-1994, and one 
            additional acquisition is currently pending. The Company intends 
            to continue to make fold-in acquisitions to augment its 
            operations in existing markets and to make strategic acquisitions 
            in new geographic markets, with an emphasis on the 50 largest 
            markets in the United States and potentially in certain markets 
            outside the United States. Following an acquisition in a new 
            market, the Company seeks to increase its business with the 
            acquired customer base and to supplement that growth both with 
            new customers and through appropriate fold-in acquisitions. In 
            addition, the Company has successfully reduced the cost structure 
            of its acquired operations by implementing its efficient 
            operating strategies and leveraging its centralized 
            administrative resources and management information systems. 

   (bullet) Leverage Proprietary Safekeeper System. The Company pioneered the 
            application of advanced information technology to the records 
            management industry. Iron Mountain's proprietary Safekeeper 
            system provides advanced inventory control and information 
            access, enabling the Company to provide faster, higher quality 
            and more flexible solutions to its customers and to lower the 
            costs of its operations. Safekeeper has been designed to easily 
            and effectively integrate newly acquired records management 
            companies and offer improved levels of customer service and 
            records management capabilities to customers acquired through 
            acquisitions. Iron Mountain's Safekeeper system exploits bar-code 
            technology to provide a comprehensive, standardized approach to 
            tracking, accessing and retrieving records. Safekeeper offers 
            state-of-the-art records management capabilities and ease of 
            access to customers while featuring security functions to protect 
            customer information from unauthorized access. Since 1992, the 
            Company has invested $12.5 million to develop and refine its 
            management information systems, including Safekeeper. 

                                      5 

 
                                  The Offering

   


                            
Securities Offered             $165,000,000 principal amount of 10-1/8% Senior Subordinated Notes due 2006 
                               (the "Notes"). 

Maturity Date                  October 1, 2006 

Interest Payment Dates         April 1 and October 1 of each year, commencing April 1, 1997. 

Guarantees                     The Notes will be fully and unconditionally guaranteed on an unsecured senior 
                               subordinated and joint and several basis (the "Subsidiary Guarantees") by 
                               substantially all of the Company's present and future Restricted Subsidiaries 
                               (collectively, the "Guarantors"). Each of the Guarantors has also guaranteed 
                               unconditionally the indebtedness outstanding under the Company's existing 
                               bank credit facility (the "Credit Agreement") and will guarantee 
                               unconditionally the indebtedness outstanding under the new bank credit 
                               facility the Company intends to enter into with its lenders (the "New Credit 
                               Facility"). See "Description of the Notes--Subsidiary Guarantees." 

Subordination                  The Notes will be general unsecured senior subordinated obligations of the 
                               Company ranking junior to all existing and future Senior Debt of the Company, 
                               including any indebtedness that may be incurred under the Credit Agreement or 
                               the New Credit Facility. The Subsidiary Guarantees will rank junior to all 
                               existing and future Senior Debt of the Guarantors. As of June 30, 1996, on a 
                               pro forma basis after giving effect to the Transactions, the aggregate 
                               outstanding principal amount of Senior Debt of the Company and the Guarantors 
                               would have been $10.8 million. See "Description of the Notes--Subordination." 

Optional Redemption            Except as described below, the Notes are not redeemable by the Company prior 
                               to October 1, 2001. Thereafter, the Notes are redeemable at the option of the 
                               Company, in whole or in part, at any time and from time to time, at the 
                               redemption prices set forth herein plus accrued and unpaid interest to, but 
                               excluding, the date of redemption. In addition, during the first 36 months 
                               after the date of issuance of the Notes, the Company, at its option, may 
                               redeem up to 35% of the initial principal amount of the Notes with the net 
                               proceeds of one or more Qualified Equity Offerings at a redemption price 
                               equal to 109.125%, plus accrued and unpaid interest to, but excluding, the 
                               date of redemption; provided that at least 65% of the initial principal 
                               amount of the Notes remains outstanding after each such redemption. See 
                               "Description of the Notes--Optional Redemption." 

Mandatory Redemption           Except with respect to required repurchases upon the occurrence of a Change 
                               of Control or in the event of certain Asset Sales, the Company is not 
                               required to make sinking fund or redemption payments with respect to the 
                               Notes at any time prior to maturity. See "Description of the Notes-- 
                               Mandatory Redemption." 

                                      6 

 
Change of Control              Upon the occurrence of a Change of Control, each Holder of Notes may require 
                               the Company to repurchase such Notes at 101% of the principal amount thereof, 
                               plus accrued and unpaid interest to, but excluding, the date of repurchase. 
                               See "Description of the Notes--Repurchase at the Option of Holders--Change of 
                               Control." 

Certain Covenants              The Indenture governing the Notes (the "Indenture") will contain covenants 
                               restricting or limiting the ability of the Company and its Restricted 
                               Subsidiaries to, among other things: (i) incur additional indebtedness, 
                               including indebtedness ranking senior to the Notes and junior to any Senior 
                               Debt; (ii) pay dividends or make other restricted payments; (iii) make asset 
                               dispositions; (iv) permit liens; (v) enter into sale and leaseback 
                               transactions; (vi) enter into certain mergers; (vii) make certain 
                               investments; and (viii) enter into transactions with related persons. See 
                               "Description of the Notes--Certain Covenants." 

Use of Proceeds                The net proceeds of the Offering will be used to repay outstanding bank debt 
                               and certain other indebtedness, to fund the purchase price of the Pending 
                               Acquisition and for general corporate purposes. 

    

                                 Risk Factors 

For a discussion of certain material factors that should be considered in 
connection with an investment in the Notes offered hereby, see "Risk Factors" 
on pages 10 to 14. 

                                      7 

 
                  Summary Historical and Pro Forma Information
                            (Dollars in thousands) 

   The following summary historical consolidated statements of operations and 
balance sheet data of the Company as of and for each of the years ended 
December 31, 1991, 1992, 1993, 1994 and 1995 have been derived from the 
Company's audited consolidated financial statements. The summary historical 
consolidated statements of operations and balance sheet data of the Company 
for the six months ended June 30, 1995 and 1996 have been derived from the 
Company's unaudited condensed consolidated financial statements. The 
Company's unaudited condensed consolidated financial statements include all 
adjustments, consisting of normal recurring accruals, that the Company 
considers necessary for a fair presentation of the financial position and the 
results of operations for those periods. Operating results for the six months 
ended June 30, 1996 are not necessarily indicative of the results for the 
entire year ending December 31, 1996. The summary historical and pro forma 
financial data set forth below should be read in conjunction with "Pro Forma 
Condensed Consolidated Financial Information" and the Notes thereto, with 
"Selected Financial and Operating Information" and the Notes thereto, with 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations" and with Iron Mountain's Consolidated Financial Statements and 
the Notes thereto included elsewhere in this Prospectus. 



                                                               Year Ended December 31, 
                                             ------------------------------------------------------------- 
                                                                 Historical                      Pro Forma
                                             ------------------------------------------------- 
                                             1991      1992      1993        1994       1995       1995 (1) 
                                             ----      ----      ----        ----       ----     -------- 
                                                                                 
Consolidated Statements of Operations Data: 
Revenues: 
 Storage ................................... $39,510   $44,077   $48,892     $54,098    $ 64,165   $ 86,469 
 Service and Storage Material Sales ........  23,330    26,596    32,781      33,520      40,271     54,431 
                                             -------   -------   -------     -------    --------   -------- 
   Total Revenues ..........................  62,840    70,673    81,673      87,618     104,436    140,900 
Operating Expenses: 
 Cost of Sales (Excluding Depreciation) ....  31,375    35,169    43,054      45,880      52,277     69,804 
 Selling, General and Administrative  ......  16,471    17,630    19,971      20,853      26,035     35,087 
 Depreciation and Amortization .............   7,674     5,780     6,789       8,690      12,341     18,182 
                                             -------    -------  -------     -------    --------   -------- 
   Total Operating Expenses ................  55,520    58,579    69,814      75,423      90,653    123,073 
                                             -------   -------   -------    --------    --------   -------- 
Operating Income  .......................... $ 7,320   $12,094   $11,859     $12,195    $ 13,783   $ 17,827 
                                             =======   =======   =======     =======    ========   ======== 
Other Data: 
EBITDA (2) ................................. $14,994   $17,874   $18,648     $20,885    $ 26,124   $ 36,009 
EBITDA as a Percentage of Total Revenues ...    23.9%     25.3%     22.8%       23.8%       25.0%      25.6% 
Capital Expenditures: 
 Growth (3)  ...............................     --    $11,226   $13,605     $15,829(4) $ 14,395         -- 
 Maintenance ...............................     --        818     1,846       1,151         858         -- 
                                             -------   -------   -------     -------    -------- 
Total Capital Expenditures  ................ $ 8,163   $12,044   $15,451     $16,980(4) $ 15,253         -- 
Approximate Cartons in Storage at End of
  Period (in millions) (5) .................    10.8      12.6      15.5        17.7        23.3          --




                                               Six Months Ended June 30, 
                                             -------------------------------- 
                                                Historical       Pro Forma 
                                             ------------------ 
                                             1995      1996       1996 (1) 
                                             ----      ----      --------- 
                                                         
Consolidated Statements of Operations Data: 
Revenues: 
 Storage .................................. $30,748   $39,363     $46,224 
 Service and Storage Material Sales .......  19,476    24,587      29,127 
                                            -------   -------     ------- 
   Total Revenues .........................  50,224    63,950      75,351 
Operating Expenses: 
 Cost of Sales (Excluding Depreciation) ...  25,112    32,383      37,572 
 Selling, General and Administrative  .....  12,697    16,067      19,339 
 Depreciation and Amortization ............   5,428     7,530       9,099 
                                            -------   -------     ------- 
   Total Operating Expenses ...............  43,237    55,980      66,010 
                                            -------   -------     ------- 
Operating Income  ......................... $ 6,987   $ 7,970     $ 9,341 
                                            =======   =======     ======= 
Other Data: 
EBITDA (2) ................................ $12,415   $15,500     $18,440 
EBITDA as a Percentage of Total Revenues ..    24.7%     24.2%       24.5% 
Capital Expenditures: 
 Growth (3)  .............................. $ 6,730   $10,702          -- 
 Maintenance ..............................     592       460          -- 
                                            -------   ------- 
Total Capital Expenditures  ............... $ 7,322   $11,162          -- 
Approximate Cartons in Storage at End of 
  Period (in millions) (5) ................    20.3      26.4         29.6 


   


Adjusted EBITDA and Credit Ratios:                                       As of 
                                                                       June 30, 1996 
                                                                       ------------- 
                                                                      
Adjusted EBITDA (6) ..............................                       $39,018 
Cash Interest Expense (7) ........................                         18,206 
Ratio of Adjusted EBITDA to Cash Interest 
  Expense ........................................                         2.1x 
Ratio of Net Debt to Adjusted EBITDA (8) .........                         4.4x 





                                                                       As of June 30, 1996 
                                                                   -------------------------- 
                                                                   Historical   Pro Forma (9) 
                                                                   ----------   ------------- 
Balance Sheet Data: 
                                                                             
Cash and Cash Equivalents ....                                      $  2,232       $  3,051 
Total Assets .................                                       212,630        269,974 
Total Debt ...................                                       118,894        175,787 
Stockholders' Equity .........                                        54,729         52,501 

    

                                             (Footnotes on the following page) 

                                      8 

 
- ------------- 

(Footnotes from the preceding page) 

(1) Gives effect to: (i) the Completed Acquisitions (as defined herein); (ii) 
    the Pending Acquisition (as defined herein); (iii) the consummation of 
    the Company's initial public offering of its Common Stock, par value 
    $0.01 per share (the "Common Stock"), which closed on February 6, 1996 
    (the "Initial Public Offering") and the application of the net proceeds 
    therefrom; (iv) the closing under the New Credit Facility; and (v) the 
    application of the estimated net proceeds from the Offering, as if each 
    had occurred as of January 1, 1995. The Company will record, in the 
    quarter in which the Offering is consummated, an extraordinary loss on 
    retirement of debt, net of related tax benefit. As of June 30, 1996, the 
    amount of such loss would have been approximately $2.2 million. The pro 
    forma statements of operations data do not give effect to such loss. See 
    "The Transactions," "Use of Proceeds" and "Pro Forma Condensed 
    Consolidated Financial Information." 

(2) Earnings before interest, taxes, depreciation, amortization and 
    extraordinary charges ("EBITDA"). Based on its experience in the records 
    management industry, the Company believes that EBITDA is an important 
    tool for measuring the performance of records management companies 
    (including potential acquisition targets) in several areas, such as 
    liquidity, operating performance and leverage. In addition, lenders use 
    EBITDA as a criterion in evaluating records management companies, and 
    substantially all of the Company's financing agreements contain covenants 
    in which EBITDA is used as a measure of financial performance. However, 
    EBITDA should not be considered an alternative to operating or net income 
    (as determined in accordance with GAAP) as an indicator of the Company's 
    performance or to cash flow from operations (as determined in accordance 
    with GAAP) as a measure of liquidity. See "Management's Discussion and 
    Analysis of Financial Condition and Results of Operations--Overview" and 
    "--Liquidity and Capital Resources" for discussions of other measures of 
    performance determined in accordance with GAAP and the Company's sources 
    and applications of cash flow. 

(3) Growth capital expenditures include investments in racking systems, new 
    buildings and leasehold improvements, equipment for new facilities, 
    management information systems and facilities restructuring. See 
    "Management's Discussion and Analysis of Financial Condition and Results 
    of Operations--Liquidity and Capital Resources--Capital Investments." 

(4) Includes $2,901 related to the cost of constructing a records management 
    facility which was sold in a sale and leaseback transaction in the fourth 
    quarter of 1994. 

(5) The term "Carton" is defined as a measurement of the volume equal to a 
    single standard storage carton, approximately 1.2 cubic feet. The number 
    of Cartons stored does not include storage volumes in the Company's vital 
    records services and data protection services which are described under 
    "Business." Pro forma Carton information for 1995 is not available. 

(6) Gives effect to (i) the Completed Acquisitions completed after June 30, 
    1996 and (ii) the Pending Acquisition. Adjusted EBITDA, as defined in the 
    Indenture, equals the sum of (i) EBITDA of the Company and the Restricted 
    Subsidiaries for the most recent fiscal quarter for which internal 
    financial statements are available, multiplied by four, plus (ii) 
    Acquisition EBITDA of each business that has been acquired by the Company 
    since the beginning of such quarter (including any such acquisition which 
    is occurring on the date of the calculation), multiplied by a fraction, 
    (a) the numerator of which is three minus the number of months (and/or 
    any portion thereof) in such quarter for which the financial results of 
    such acquired business are included in the EBITDA of the Company and its 
    Restricted Subsidiaries under clause (i) above, and (b) the denominator 
    of which is three. In addition, the effects of unusual or non-recurring 
    items occurring in any relevant period shall be excluded in the 
    calculation of Adjusted EBITDA. With respect to any such acquired 
    business, Acquisition EBITDA equals the sum of (i) EBITDA of such 
    acquired business for its last fiscal quarter for which financial 
    statements are available, multiplied by four (or if such quarterly 
    statements are not available, EBITDA for the last fiscal year for which 
    financial statements are available), plus (ii) projected quantifiable 
    improvements in operating results (on an annualized basis) due to cost 
    reductions calculated in good faith by the Company or one of its 
    Restricted Subsidiaries, as certified by an Officers' Certificate filed 
    with the Trustee, without giving effect to any operating losses of the 
    acquired business. Such projected quantifiable savings may differ from 
    the cost savings used to calculate the Pro Forma Condensed Consolidated 
    Statement of Operations. Adjusted EBITDA is merely a calculation utilized 
    for purposes of debt incurrence under the Indenture and should not be 
    viewed as indicative of actual or future results. 

   
(7) Cash interest expense represents total interest expense less amortization 
    of deferred financing costs and other non-cash interest charges for the 
    twelve months ended June 30, 1996 on a pro forma basis giving effect to 
    the Transactions (as defined herein) as if each had occurred on July 1, 
    1995. 
    
   
(8) Net debt represents total debt less cash and cash equivalents and was 
    calculated based on the pro forma net debt as of June 30, 1996 of $172.7 
    million. 
    

(9) Gives effect to: (i) the Completed Acquisitions consummated after June 
    30, 1996; (ii) the Pending Acquisition; (iii) the closing under the New 
    Credit Facility; and (iv) the application of the net proceeds from the 
    Offering, as if each had occurred as of June 30, 1996. See "The 
    Transactions," "Use of Proceeds" and "Pro Forma Condensed Consolidated 
    Financial Information." 

                                      9 

 
                                  RISK FACTORS

   Prospective investors should carefully consider the following risk 
factors, in addition to the other information contained in this Prospectus, 
in connection with an investment in the Notes offered hereby. Certain 
statements contained under "Management's Discussion and Analysis of Financial 
Condition and Results of Operations," such as those regarding the goals, 
beliefs or current expectations of the Company and its management with 
respect to, among other things, revenue growth and future capital needs, and 
other statements contained in this Prospectus regarding matters that are not 
historical facts are forward-looking statements (as such term is defined in 
the rules promulgated pursuant to the Securities Act of 1933, as amended). 
Because such forward-looking statements include risks and uncertainties, 
actual results may differ materially from those expressed in or implied by 
such forward-looking statements. Factors that could cause actual results to 
differ materially include, but are not limited to, those discussed herein 
under "Risk Factors." The Company undertakes no obligation to release 
publicly the result of any revisions to these forward-looking statements that 
may be made to reflect events or circumstances after the date hereof or to 
reflect the occurrence of unanticipated events. 

   
   Financial Leverage; Debt Service Requirements. The Company is highly 
leveraged due to the substantial indebtedness it has incurred primarily to 
finance acquisitions and expand its operations. As of June 30, 1996, on a pro 
forma basis, after giving effect to the Transactions, the Company would have 
had $175.8 million in total indebtedness and $52.5 million in stockholders' 
equity. The Company expects to continue to borrow under the New Credit 
Facility and possible future credit arrangements in order to finance possible 
future acquisitions and for general corporate purposes. 
    

   The ability of the Company to repay the Notes and its other indebtedness 
will depend upon future operating performance, which is subject to the 
success of the Company's business strategy, prevailing economic conditions, 
levels of interest rates and financial, business and other factors, many of 
which are beyond the Company's control. The debt service obligations of the 
Company could have important consequences, including the following: (i) the 
ability of the Company to obtain additional financing for future working 
capital needs or for possible future acquisitions or other purposes may be 
limited; (ii) a substantial portion of the Company's cash flow from 
operations will be dedicated to the payment of principal and interest on its 
indebtedness, thereby reducing funds available for other purposes; (iii) the 
Company may be more vulnerable to adverse economic conditions than some of 
its competitors and thus may be limited in its ability to withstand 
competitive pressures; and (iv) the Company may be more highly leveraged than 
certain of its competitors, which may place it at a competitive disadvantage. 

   A substantial portion of the Company's cash flow from operations is 
required for debt service. Management believes that cash flow from operations 
in conjunction with borrowings from existing and possible future credit 
facilities will be sufficient for the foreseeable future to meet debt service 
requirements and to make possible future acquisitions and capital 
expenditures. However, there can be no assurance in this regard, and the 
Company's leverage could make it vulnerable to a downturn in the operating 
performance of its subsidiaries, a downturn in economic conditions or, 
because borrowings under the New Credit Facility will bear interest at rates 
which fluctuate, increases in interest rates on borrowings under the New 
Credit Facility. If such cash flow were not sufficient to meet such debt 
service requirements or payments of principal, the Company could be required 
to sell additional equity securities, refinance its obligations or dispose of 
assets in order to make such scheduled payments. There can be no assurance 
that the Company would be able to effect any of such transactions or do so on 
favorable terms. 

   
   Subordination; Guarantees. The Notes will be unsecured senior subordinated 
obligations of the Company and will be subordinated in right of payment to 
the prior payment in full of all existing and future Senior Debt of the 
Company. At June 30, 1996, the Company had $103.6 million of indebtedness 
outstanding that would have constituted Senior Debt. On a pro forma basis, 
after giving effect to the Transactions, the Company would have had $10.8 
million of Senior Debt outstanding. The Company intends to actively pursue 
additional acquisitions which would likely be financed through the incurrence 
of additional indebtedness. Such additional indebtedness may constitute 
Senior Debt. The Indenture allows the Company to incur Senior Debt from time 
to time under the New Credit Facility or otherwise, subject to certain 
limitations. Upon any acceleration of the maturity of the Notes or upon any 
payment or distribution of assets of the Company to creditors upon any 
liquidation, dissolution, winding- up, reorganization, assignment for the 
benefit of creditors, marshaling of assets or any bankruptcy, insolvency or 
similar proceedings of the Company, the holders of all Senior Debt will be 
first entitled to receive payment in full of all amounts due or to become due 
thereon before the Holders of Notes will be entitled to receive any payment 
in respect of the principal of or premium, if any, or interest on the Notes. 
In addition, upon the occurrence of a 
    


                                      10 

 
payment default or certain other defaults in respect of outstanding Senior 
Debt, Holders of Notes may be prevented from receiving payments with respect 
to the Notes for an extended period. See "Description of the Notes-- 
Subordination." 

   Iron Mountain's subsidiaries have guaranteed on a senior subordinated 
basis its obligations under the Credit Agreement and will guarantee its 
obligations under the New Credit Facility. Iron Mountain's obligations under 
the Credit Agreement are secured by a first priority security interest in 
substantially all of its assets (including the stock of its subsidiaries). 
Iron Mountain's obligations under the New Credit Facility will be secured by 
a pledge of the stock of its subsidiaries. If Iron Mountain becomes insolvent 
or is liquidated or if the indebtedness under the Credit Agreement or the New 
Credit Facility is accelerated, the lenders under the Credit Agreement or the 
New Credit Facility would be entitled to exercise the remedies available to a 
secured lender. Accordingly, such lenders will have a prior claim on such 
assets of Iron Mountain and its subsidiaries. In such event, it is possible 
that there would be no assets remaining from which claims of the Holders of 
Notes could be satisfied or, if any assets remained, such assets might be 
insufficient to fully satisfy such claims. The Company may incur additional 
secured indebtedness in the future. See "Description of the Notes--Certain 
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock" and 
"--Liens." 

   Iron Mountain is a holding company, substantially all of the assets of 
which are the stock of its subsidiaries. Substantially all of the operations 
of the Company are currently conducted by Iron Mountain's direct and indirect 
wholly owned subsidiaries, all of which will be Guarantors, subject to the 
terms of the Indenture. Management of the Company believes that separate 
financial statements of such subsidiaries are not meaningful or material to 
investors and therefore such statements have not been included in this 
Prospectus. The Company does not currently expect that it will be required to 
prepare separate financial statements for any of its subsidiaries in the 
foreseeable future and does not expect to do so. 

   Unenforceability and Release of Guarantees. Iron Mountain's obligations 
under the Notes will be guaranteed, jointly and severally, on a senior 
subordinated basis by the Guarantors. To the extent that a court were to find 
that (i) a Subsidiary Guarantee was incurred by a Guarantor with intent to 
hinder, delay or defraud any present or future creditor or the Guarantor 
contemplated insolvency with a design to prefer one or more creditors to the 
exclusion in whole or in part of others, or (ii) such Guarantor did not 
receive fair consideration or reasonably equivalent value for issuing its 
Subsidiary Guarantee and such Guarantor (a) was insolvent; (b) was rendered 
insolvent by reason of the issuance of such Subsidiary Guarantee; (c) was 
engaged or about to engage in a business or transaction for which the 
remaining assets of such Guarantor constituted unreasonably small capital to 
carry on its business; (d) intended to incur, or believed that it would 
incur, debts beyond its ability to pay such debts as they mature; or (e) was 
a defendant in an action for money damages or had a judgment for money 
damages docketed against it (if, in either case, after final judgment, the 
judgment is unsatisfied), then in each such case, a court could avoid or 
subordinate such Subsidiary Guarantee in favor of the Guarantor's other 
creditors. The measure of insolvency for purposes of the foregoing will vary 
depending upon the law of the jurisdiction which is being applied. Generally, 
however, a company will be considered insolvent for purposes of the foregoing 
if, at the time it incurs any given obligation, the sum of the company's 
debts (including unliquidated or contingent debt) is greater than all the 
company's property at a fair valuation, or if the present fair salable value 
of the company's assets is less than the amount that will be required to pay 
its probable liability on its existing debts (including unliquidated or 
contingent debt) as they become absolute and matured. 

   To the extent any Subsidiary Guarantee were to be avoided as a fraudulent 
conveyance or held unenforceable for any other reason, Holders of Notes would 
cease to have any claim in respect of such Guarantor and would be creditors 
solely of the Company and any Guarantor whose Subsidiary Guarantee was not 
avoided or held unenforceable. In such event, the claims of the Holders of 
Notes against the issuer of an invalid Subsidiary Guarantee would be subject 
to the prior payment of all liabilities of such Guarantor, including without 
limitation, to the extent valid and enforceable, such Guarantor's guarantee 
of indebtedness of Iron Mountain under the Credit Agreement or the New Credit 
Facility, as the case may be, and any other Senior Debt of Iron Mountain 
guaranteed by such Guarantor. There can be no assurance that, after providing 
for all prior claims, there would be sufficient assets to satisfy the claims 
of the Holders of Notes relating to any voided Subsidiary Guarantee. See 
"Description of the Notes--Subordination." 

   Based upon financial and other information currently available to it, the 
Company believes that the Notes and the Subsidiary Guarantees are being 
incurred for proper purposes and in good faith, and that the Company and each 
Guarantor 

                                      11 

 
are solvent and will continue to be solvent after issuing the Notes or the 
Subsidiary Guarantees, as the case may be, will have sufficient capital for 
carrying on their businesses after such issuance and will be able to pay 
their debts as they mature. There can be no assurance, however, that a court 
would reach the same conclusion. 

   Any Guarantor may be released from its Subsidiary Guarantee at any time 
upon any sale, exchange or transfer in compliance with the provisions of the 
Indenture by the Company of the capital stock of such Guarantor or 
substantially all of the assets of such Guarantor and, in certain other 
circumstances, a Guarantor may be released from its Subsidiary Guarantee in 
connection with the Company's designation of such Guarantor as an 
Unrestricted Subsidiary. See "Description of the Notes--Certain 
Covenants--Additional Subsidiary Guarantees." 

   Restrictions Imposed by Terms of Indebtedness. The Indenture will contain 
covenants restricting or limiting the ability of the Company and its 
Restricted Subsidiaries to, among other things: (i) incur additional 
indebtedness, including indebtedness ranking senior to the Notes and junior 
to any Senior Debt; (ii) pay dividends or make other restricted payments; 
(iii) make asset dispositions; (iv) permit liens; (v) enter into sale and 
leaseback transactions; (vi) enter into certain mergers; (vii) make certain 
investments; and (viii) enter into transactions with related persons. In 
addition, the Credit Agreement contains, and the New Credit Facility will 
contain, certain other and more restrictive covenants than those contained in 
the Indenture. See "Description of New Credit Facility." This may adversely 
affect the Company's ability to pursue its acquisition strategy. The Credit 
Agreement also requires, and the New Credit Facility will require, the 
Company to maintain specific financial ratios and to satisfy certain 
financial condition tests. The Company's ability to meet those financial 
ratios and financial condition tests can be affected by events beyond its 
control, and there can be no assurance that the Company will meet those 
tests. The breach of any of those covenants could result in a default under 
the New Credit Facility, the Indenture or both. In the event of a default 
under the New Credit Facility or the Indenture, the lenders could seek to 
declare all amounts outstanding under the New Credit Facility, together with 
accrued and unpaid interest, if any, to be immediately due and payable. If 
the Company were unable to repay those amounts, the lenders under the New 
Credit Facility could proceed against the collateral granted to them to 
secure that indebtedness. If the indebtedness under the New Credit Facility 
or the Notes were to be accelerated, there can be no assurance that the 
assets of the Company would be sufficient to repay in full that indebtedness 
and the other indebtedness of the Company. The Notes are subordinated to all 
existing and future Senior Debt of the Company, including indebtedness under 
the Credit Agreement or the New Credit Facility, as the case may be, and the 
Guarantees are subordinated to all existing and future Senior Debt of the 
Guarantors, including guarantees by the Guarantors of the indebtedness 
outstanding under the Credit Agreement or the New Credit Facility, as the 
case may be. See "Management's Discussion and Analysis of Financial Condition 
and Results of Operations--Liquidity and Capital Resources." 

   Holding Company Structure; Dependence Upon Operations of 
Subsidiaries. Substantially all of the tangible assets of the Company are 
held by, and substantially all of the Company's operating revenues are 
derived from operations of, the Company's subsidiaries. Therefore, the 
Company's ability to pay interest and principal when due to Holders of Notes 
will be dependent upon the receipt of sufficient funds from such 
subsidiaries. However, the Company's obligations under the Notes will be 
guaranteed, jointly and severally, on a senior subordinated basis, by 
substantially all of the Company's present and future Restricted 
Subsidiaries. 

   Risk of Inability to Finance Change of Control Offer. In the event of a 
Change of Control, the Company will be required to offer to purchase all 
Notes then outstanding at a purchase price, in cash, equal to 101% of the 
principal amount thereof plus accrued and unpaid interest, if any, to the 
date of purchase. There can be no assurance that the Company would be able to 
obtain such funds through a refinancing of the Notes to be purchased or 
otherwise, or that the purchase would be permitted under the Credit 
Agreement, the New Credit Facility or the terms of other financing 
instruments, as the case may be. Also, the requirement that the Company offer 
to purchase all Notes then outstanding in the event of a Change of Control 
may have the effect of deterring a third party from effecting a transaction 
that would constitute a Change of Control. See "Description of the 
Notes--Repurchase at the Option of Holders--Change of Control." 

   Absence of Public Market for the Notes. There is no public market for the 
Notes. The Notes will not be listed on any securities exchange or included in 
the National Association of Securities Dealers Automated Quotation System. 
The Company has been advised by the Underwriters that, following the 
completion of the Offering, the Underwriters presently intend to make a 
market in the Notes; however, they are under no obligation to do so and may 
discontinue any market-making activities at any time without notice. No 
assurance can be given as to the liquidity of the trading market for the 
Notes or that an active public market will develop or, if developed, will 

                                      12 

 
continue. If an active public market does not develop or is not maintained, 
the market price and liquidity of the Notes may be adversely affected. See 
"Underwriting." 

   Risks Associated with Acquisition Strategy. The Company has pursued and 
intends to continue to pursue acquisitions of records management businesses 
as a key component of its growth strategy. Since mid-1994, the Company has 
acquired or entered into agreements to acquire 19 companies (of which 18 have 
been completed and one is pending) engaged in the records management and 
related businesses for estimated cash purchase prices aggregating $103.2 
million (not including contingent payments of up to $4.6 million based upon 
the achievement of certain revenue targets from 1996 through 1998). See "The 
Transactions" and "Recent and Pending Acquisitions." Possible future 
acquisitions may be for purchase prices significantly larger than those paid 
for acquisitions consummated since mid-1994. Certain risks are inherent in an 
acquisition strategy, such as increasing leverage and debt service 
requirements and combining disparate company cultures and facilities, which 
could adversely affect the Company's operating results. The success of any 
completed acquisition will depend in part on Iron Mountain's ability to 
integrate effectively the acquired records management business into the 
Company. The process of integrating such acquired businesses may involve 
unforeseen difficulties and may require a disproportionate amount of 
management's attention and the Company's financial and other resources. No 
assurance can be given that the Pending Acquisition will be completed, that 
additional suitable acquisition candidates will be identified, financed and 
purchased on acceptable terms, or that recent acquisitions or future 
acquisitions, if completed, will be successful. See "Business--Growth 
Strategy--Growth through Acquisitions." 

   Acquisitions by the Company in excess of $25 million individually and $50 
million in the aggregate per year will require the approval of the majority 
lenders under the Credit Agreement, and the New Credit Facility will contain 
similar or other restrictions on acquisitions. No assurance can be given that 
the lenders will consent to any acquisitions that the Company proposes to 
make in excess of such limits. 

   The size, timing and integration of possible future acquisitions may cause 
substantial fluctuations in operating results from quarter to quarter. As a 
result, operating results for any quarter may not be indicative of the 
results that may be achieved for any subsequent fiscal quarter or for a full 
fiscal year. 

   Competition; Alternative Technologies. The Company faces competition from 
one or more competitors in all geographic areas where it operates. The 
Company believes that competition for customers is based on price, reputation 
for reliability, quality of service and scope and scale of technology, and 
believes that it generally competes effectively based on these factors. As a 
result of this competition, the records management industry has for the past 
several years experienced downward pricing pressures. While Iron Mountain 
believes that this pricing climate is stabilizing, there can be no assurance 
that prices will not decline further, as competitors seek to gain or preserve 
market share. Should a further downward trend in pricing occur or continue 
for an extended period of time, it could have a material adverse effect on 
the Company's results of operations. The Company also competes for 
acquisition candidates. Some of the Company's competitors may possess greater 
financial and other resources than the Company. If any such competitor were 
to devote additional resources to the records management business and such 
acquisition candidates or to focus its strategy on the Company's markets, the 
Company's results of operations could be adversely affected. In addition, the 
Company faces competition from the internal document handling capability of 
its current and potential customers. There can be no assurance that these 
organizations will outsource more of their document management needs or that 
they will not bring in-house some or all of the functions they currently 
outsource. See "Business--The Records Management Industry" and 
"Business--Competition." 

   The substantial majority of the Company's revenues have been derived from 
the storage of paper documents and from related services. Such storage 
requires significant physical space. Alternative technologies for generating, 
capturing, managing, transmitting and storing information have been 
developed, many of which require significantly less space than paper. Such 
technologies include computer media, microforms, audio/video tape, film, 
CD-ROM and optical disk. None of these technologies has replaced paper as the 
principal means for storing information. However, there can be no assurance 
that one or more non-paper-based technologies (whether now existing or 
developed in the future) may not in the future reduce or supplant the use of 
paper as a preferred medium, which could in turn adversely affect the 
Company's business. 

   Casualty. The Company currently maintains and intends to continue to 
maintain, to the extent such insurance is available on commercially 
reasonable terms, comprehensive liability, fire, flood and earthquake (where 
appropriate) and extended coverage insurance with respect to the properties 
that it now owns or leases or that it 

                                      13 

 
may in the future own or lease, with customary limits and deductibles. 
Certain types of loss, however, may not be fully insurable on a 
cost-effective basis, such as losses from earthquakes, or may be altogether 
uninsurable, such as losses from riots. In addition, as of June 30, 1996, 24 
of the Company's 89 records management facilities were located in California 
and the Company derived approximately 30% of its revenues for the six months 
ended June 30, 1996 from its operations in California. The Company has in the 
past suffered damages and losses from an earthquake and a riot in California, 
which damages and losses were substantially covered by insurance. In the 
future, should uninsured losses or damages occur, the Company could lose both 
its investment in and anticipated profits and cash flow from the affected 
property and may continue to be obligated on any leasehold obligations, 
mortgage indebtedness or other obligations related to such property. As a 
result, any such loss could materially adversely affect the Company. See 
"Business--Insurance." 

   Environmental Matters. As of June 30, 1996, the Company owned or leased 
approximately 6.3 million square feet of facilities. Under various federal, 
state and local environmental laws, ordinances and regulations 
("environmental laws"), an owner of real estate or a lessee conducting 
operations thereon may become liable for the costs of investigation, removal 
or remediation of soil and groundwater contaminated by certain hazardous 
substances or wastes or petroleum products. Certain such laws impose cleanup 
responsibility and liability without regard to whether the owner or operator 
of the real estate or operations thereon knew of or was responsible for the 
contamination, and whether or not operations at the property have been 
discontinued or title to the property has been transferred. In addition, the 
presence of such substances, or the failure to properly remediate such 
property, may adversely affect the current property owner's or operator's 
ability to sell or rent such property or to borrow using such property as 
collateral. The owner or operator of contaminated real estate also may be 
subject to common law claims by third parties based on damages and costs 
resulting from off-site migration of the contamination. 

   Certain environmental laws govern the removal, encapsulation or 
disturbance of asbestos-containing materials ("ACMs"). Such laws may impose 
liability for release of ACMs and may enable third parties to seek recovery 
from owners or operators of real estate for personal injury associated with 
exposure to such substances. Certain facilities operated by the Company 
contain or may contain ACMs. In addition, certain of the properties formerly 
or currently owned or operated by the Company were previously used for 
industrial or other purposes that involved the use or storage of hazardous 
substances or petroleum products or the generation and disposal of hazardous 
wastes, and in some instances, included the operation of underground storage 
tanks ("USTs"). 

   In connection with its former and current ownership or operation of 
certain properties, the Company may be potentially liable for environmental 
costs such as those discussed above and as more specifically described under 
"Business--Environmental Matters." The Company has from time to time 
conducted certain environmental investigations and remedial activities at 
certain of its former and current facilities, but an in-depth environmental 
review of the properties has not been conducted by or on behalf of the 
Company. 

   The Company believes it is in substantial compliance with all applicable 
material environmental laws. The Company has not received any written notice 
from any governmental authority or third party asserting, and is not 
otherwise aware of, any material environmental noncompliance, liability or 
claim relating to hazardous substances or wastes, petroleum products or 
material environmental laws applicable to Company operations in connection 
with any of its present or former properties other than as described under 
"Business--Environmental Matters." However, no assurance can be given that 
there are, or as a result of possible future acquisitions there will be, no 
environmental conditions for which the Company might be liable in the future 
or that future regulatory action, as well as compliance with future 
environmental laws, will not require the Company to incur costs for or at its 
properties that could have a material adverse effect on the Company's 
financial condition and results of operations. 

   Reliance on Executive Officers. The Company's success is partially 
dependent upon the performance and continued availability of its current 
executive officers. The Company does not have employment contracts with any 
of its current executive officers. There can be no assurance that the Company 
will be able to retain such officers, the loss of whom could have a material 
adverse effect upon the Company. See "Management." 

   Recent Publicity. On September 3, 1996, The Boston Globe, a regional daily 
newspaper, published a business news article regarding the Company. The 
article contained numerous statements about the Company and quotations from 
the Company's Chief Executive Officer. The article did not set forth material 
information or cautionary statements relevant to an evaluation of the 
statements and quotations regarding the Company in the article. Prospective 
investors in the Notes should not rely on such article and should only rely 
upon the information and cautionary statements contained in this Prospectus, 
including "Risk Factors" and "Management's Discussion and Analysis of 
Financial Condition and Results of Operations." 

                                      14 

 
                                  THE COMPANY

   Iron Mountain is the largest records management company in the United 
States, as measured by revenues. The Company is a full-service provider of 
records management and related services, enabling customers to outsource data 
and records management functions. Pro forma for the Acquisitions, as of June 
30, 1996, the Company managed approximately 29.6 million Cartons in 103 
records centers in 33 markets nationwide. The Company has a diversified base 
of over 19,000 customer accounts, which includes more than half of the 
Fortune 500 and numerous legal, banking, healthcare, accounting, insurance, 
entertainment and government organizations. The Company provides storage and 
related services for all major media, including paper (which is the dominant 
form of records retention and which has accounted for approximately 85% of 
the Company's revenues since 1992), computer disks and tapes, microfilm and 
microfiche, master audio and video tapes, film and optical disks, X-rays and 
blueprints. The Company's principal services include filing, retrieval and 
destruction of records, courier pick-up and delivery, database management and 
customized reporting. The Company also sells storage materials and provides 
consulting and other records-related services. 

   Iron Mountain's operations date to 1951, when a corporate predecessor 
commenced storage operations in a network of underground vaults in a former 
iron ore mine, focusing on the maximum-security storage of corporate vital 
records in the Northeast. That company was acquired by Schooner Capital 
Corporation ("Schooner") in 1975, after which its focus shifted to more 
general records management. In 1988, a corporate affiliate of Schooner 
acquired the Bell & Howell Records Management Company and its subsidiaries 
("BHRM") for approximately $75 million. At that time, BHRM conducted storage 
operations in various states, with significant operations in California. The 
current Iron Mountain was incorporated in 1990 as part of a recapitalization 
that consolidated the former BHRM operations with the predecessor's Northeast 
operations. 

   The principal executive offices of the Company are located at 745 Atlantic 
Avenue, Boston, Massachusetts 02111. Its telephone number is (617) 357-4455. 

                               THE TRANSACTIONS 

   In connection with the Offering, the Company intends to: (i) repay all 
indebtedness outstanding under the Credit Agreement; (ii) repay its 13.42% 
Senior Subordinated Notes due December 14, 2000 (the "Chrysler Notes"); (iii) 
repay certain indebtedness incurred by the Company in connection with a 1990 
acquisition and represented by two junior subordinated notes (collectively, 
the "FDS Notes"), one of which is held by Schooner; (iv) fund the purchase 
price of the Pending Acquisition described below under "Recent and Pending 
Acquisitions;" and (v) enter into the New Credit Facility (the foregoing, 
together with the Offering and the application of the net proceeds therefrom 
and the Completed Acquisitions consummated after June 30, 1996, are referred 
to collectively as the "Transactions"). 

Sources and Uses of Funds 

   The estimated sources and uses of funds in connection with the 
Transactions are set forth below (in millions): 

   


                                                     
Sources of Funds: 
New Credit Facility                                     $   -- 
Senior Subordinated Notes due 2006                       165.0 
                                                        ------- 
   Total Sources                                        $165.0 
                                                        ======= 
Uses of Funds: 
Repay Credit Agreement (1)                              $ 92.9 
Repay Chrysler Notes (1)                                  14.8 
Repay FDS Notes (1)                                        0.4 
Purchase Price of Pending Acquisition and 
  Acquisitions 
  Completed after June 30, 1996 (2)                       47.5 
Estimated Fees and Expenses (3)                            8.6 
General Corporate Purposes                                 0.8 
                                                        ------- 
   Total Uses                                           $165.0 
                                                        ======= 

    
                                             (Footnotes on the following page) 

                                      15 

 
- ------------- 

(Footnotes from the preceding page) 
(1) Balances are as of June 30, 1996. 

(2) Acquisitions completed after June 30, 1996 were initially financed by 
    borrowings under the Credit Agreement and a portion of the net proceeds 
    of the Offering will be used to repay such indebtedness. 

(3) Consists of estimated fees and expenses related to the Offering, the 
    repayment of the Credit Agreement, the Chryster Notes and the FDS Notes 
    and the closing of the New Credit Facility. 

   Repayment of Credit Agreement Indebtedness. The Company is party to the 
Amended and Restated Credit Agreement dated as of January 31, 1995, as 
amended (as so amended, the "Credit Agreement") among the Company, the 
lenders party thereto and The Chase Manhattan Bank (National Association), as 
agent for such lenders. Borrowings by the Company under the Credit Agreement 
during the most recent twelve months were used to finance acquisitions and 
for working capital. The Credit Agreement has a final maturity date of July 
31, 2002. The weighted average interest rate on September 3, 1996 on the 
indebtedness outstanding under the Credit Agreement was 8.5%. 

   Repayment of Chrysler Notes. Pursuant to a Note Purchase Agreement dated 
as of December 14, 1990, as amended, the Company issued the Chrysler Notes in 
an aggregate principal amount of $15.0 million to Chrysler Capital 
Corporation. The Company will repay the Chrysler Notes in full with a portion 
of the net proceeds of the Offering; the amount shown under "Uses of Funds" 
above does not include related fees and expenses. 

   Repayment of FDS Notes. In connection with a 1990 acquisition, the Company 
issued to First Document Storage Corporation of America $450,000 in principal 
amount of the FDS Notes, which mature in March 2000 and bear interest at the 
rate of 8% per annum. In 1991, Schooner acquired $382,500 in principal amount 
of the FDS Notes as an investment. The Company intends to use a portion of 
the net proceeds from the Offering to repay the FDS Notes in their entirety. 

   
   Pending Acquisition. A portion of the net proceeds from the Offering will 
be used to fund the Pending Acquisition described under "Recent and Pending 
Acquisitions" below. 
    

   
   New Credit Facility. The Company intends to replace the Credit Agreement 
with the New Credit Facility. The New Credit Facility will provide the 
Company with revolving credit availability of up to $100 million for the 
Pending Acquisition and possible future acquisitions, working capital and 
other corporate purposes, and will terminate on September 25, 2001. As was 
the case with the Credit Agreement, the Company's obligations under the New 
Credit Facility will be guaranteed by substantially all of the Company's 
subsidiaries; however, unlike the Credit Agreement, the New Credit Facility 
will be secured only by the pledge of the stock of such subsidiaries. See 
"Description of New Credit Facility" for a description of the anticipated 
terms of the New Credit Facility. No assurance can be given that the Company 
will enter into the New Credit Facility on these or any other terms. The 
Offering is not conditioned on the closing of the New Credit Facility. 
    


                                      16 

 
                        RECENT AND PENDING ACQUISITIONS

   As part of its growth strategy, since mid-1994 the Company has acquired or 
entered into agreements to acquire 19 records management businesses. Since 
January 1, 1995, the Company has purchased for cash 15 such businesses (the 
"Completed Acquisitions") and has entered into a definitive agreement to 
acquire one additional records management business (the "Pending Acquisition" 
and, together with the Completed Acquisitions, the "Acquisitions"). 

   The total purchase price of the Completed Acquisitions was approximately 
$80.1 million (not including contingent payments of up to $0.6 million based 
upon the achievement of certain revenue targets during 1996 and 1997), and 
the purchase price of the Pending Acquisition is approximately $20.2 million 
(not including contingent payments of up to $4.0 million based upon the 
achievement of certain revenue targets during 1997 and 1998). The Completed 
Acquisitions represent in the aggregate total annual revenues of 
approximately $32.0 million, and the Pending Acquisition represents total 
annual revenues of approximately $8.8 million (calculated in each case by 
reference to the revenues of each such acquired business during the twelve 
months ended December 31, 1995, which calculation includes an estimate of 
total revenues for the portion of 1995, if any, during which any such 
acquired business was included in the Company's results of operations). See 
"Pro Forma Condensed Consolidated Financial Information." 

   The following table presents certain information for each acquisition 
completed since 1994 and for the Pending Acquisition. 



                                                                            Principal 
                                                                            State(s) of 
Acquisition                                                                 Operation         Completion Date 
- -----------                                                                 ---------         --------------- 
                                                                                        
1994 Acquisitions 
Data protection service business of Media Management Group, Inc.            Connecticut       June 1994 
Data protection service business of Digital Equipment Corporation           Massachusetts     July 1994 
Storage and Retrieval Concepts, Inc.                                        Ohio              October 1994 
1995 Acquisitions 
National Business Archives, Inc.                                            Maryland          March 1995 
DataFile Services, Inc.                                                     Texas             October 1995 
Brooks Records Center, Inc.                                                 Delaware          December 1995 
Data Management Business Records Storage, Inc.                              Georgia           December 1995 
1996 Acquisitions 
Nashville Vault Company, Ltd.                                               Tennessee         January 1996 
Florida Data Bank, Inc.                                                     Florida           January 1996 
DataVault Corporation                                                       Massachusetts     February 1996 
Data Storage Systems, Inc.                                                  California        March 1996 
Brambles CRC, Inc.                                                          Ohio and 
                                                                             Kentucky         April 1996 
Records management business of Output Technologies Central Region, 
  Inc.                                                                      Missouri          May 1996 
Records management business of The Fortress Corporation                     Massachusetts 
                                                                             and Florida      July 1996 
Data Archive Services, Inc. and Data Archive Services of Miami, Inc.        Florida           August 1996 
DKA Industries, Inc. (d/b/a Systems Record Storage)                         Florida           August 1996 
International Record Storage and Retrieval Service, Inc.                    New Jersey        September 1996 
Security Archives Corporation                                               California        September 1996 

Pending Acquisition                                                                           Status 
                                                                                              ------ 
Mohawk Business Record Storage, Inc.                                                          Definitive 
                                                                            Minnesota         Agreement 


   The closing of the Pending Acquisition is subject to various conditions 
and no assurance can be given that the Pending Acquisition will be completed. 
See "Risk Factors--Risks Associated with Acquisition Strategy." The Offering 
is not conditioned upon the completion of the Pending Acquisition, and the 
Pending Acquisition is not conditioned upon completion of the Offering. 

                                      17 

 
                                USE OF PROCEEDS

   
   The gross proceeds from the Offering will be used: (i) to repay 
indebtedness under the Credit Agreement, the Chrysler Notes and the FDS 
Notes; (ii) to fund a portion of the purchase price of the Pending 
Acquisition; (iii) to pay certain fees and expenses related to the Offering; 
and (iv) for general corporate purposes. See "The Transactions" and "Recent 
and Pending Acquisitions." The net proceeds to the Company from the Offering 
are estimated to be approximately $159.2 million, after deducting 
underwriting discounts and commissions and estimated Offering expenses. Prior 
to funding the Pending Acquisition or their application for general corporate 
purposes, the net proceeds from the Offering will be invested in short-term, 
dividend-paying or interest-bearing investment grade securities. 
    


                                CAPITALIZATION 
                (Dollars in thousands, except per share data) 

   The following table sets forth the capitalization of the Company at June 
30, 1996 and pro forma to give effect to the Transactions as if they had 
occurred on June 30, 1996. 

   


                                                                As of June 30, 1996 
                                                               --------------------- 
                                                               Actual      Pro Forma 
                                                               ------      --------- 
                                                                     
Cash and Cash Equivalents                                     $  2,232     $  3,051 
                                                              ========     ======== 
Long-term Debt (Including Current Maturities): 
 Credit Agreement                                             $ 92,850     $     -- 
 New Credit Facility                                                --           -- 
 Real Estate Mortgages                                          10,761       10,761 
 Senior Subordinated Notes due 2006                                 --      165,000 
 Chrysler Notes                                                 14,807           -- 
 FDS Notes and Other                                               476           26 
                                                              --------     -------- 
Total Long-term Debt                                           118,894      175,787 
Stockholders' Equity: 
Common Stock, $0.01 par value; 13,000,000 Shares 
  Authorized, 9,627,141 Issued and Outstanding                      96           96 
Non-voting Common Stock, $0.01 par value; 
  1,000,000 Shares Authorized, 500,000 Issued and 
  Outstanding                                                        5            5 
Additional Paid-in Capital                                      62,014       62,014 
Accumulated Deficit                                             (7,386)      (9,614) 
                                                              --------     -------- 
 Total Stockholders' Equity                                     54,729       52,501 
                                                              --------     -------- 
   Total Capitalization                                       $173,623     $228,288 
                                                              ========     ======== 

    

                                      18 

 
             PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

   The following unaudited Pro Forma Condensed Consolidated Balance Sheet has 
been prepared based upon the unaudited historical condensed consolidated 
balance sheet of Iron Mountain as of June 30, 1996 and the balance sheets as 
of June 30, 1996 of the Completed Acquisitions consummated after June 30, 
1996 and the Pending Acquisition, and gives effect to: (i) such Completed 
Acquisitions and the Pending Acquisition; (ii) the closing under the New 
Credit Facility; and (iii) the application of the estimated net proceeds from 
the Offering (after deducting underwriting discounts and commissions and 
estimated expenses of the Offering), as if each had occurred as of June 30, 
1996. The following unaudited Pro Forma Condensed Consolidated Statements of 
Operations for the six months ended June 30, 1996 and for the year ended 
December 31, 1995 give effect to each of the above transactions and to (i) 
the Completed Acquisitions which occurred before June 30, 1996 and (ii) the 
Initial Public Offering and the application of the net proceeds therefrom, as 
if each had occurred as of January 1, 1995. Pro forma adjustments are 
described in the accompanying notes. 

   The following unaudited Pro Forma Condensed Consolidated Statements of 
Operations are not necessarily indicative of the actual results of operations 
that would have been reported if the events described above had occurred as 
of January 1, 1995, nor do they purport to indicate the results of the 
Company's future operations. Furthermore, the pro forma results do not give 
effect to all cost savings or incremental costs that may occur as a result of 
the integration and consolidation of the Acquisitions. In the opinion of 
management, all adjustments necessary to present fairly such pro forma 
financial statements have been made. 

   The pro forma condensed consolidated financial information should be read 
in conjunction with "Capitalization" and "Management's Discussion and 
Analysis of Financial Condition and Results of Operations" and with the 
Financial Statements and the Notes thereto included elsewhere in this 
Prospectus. 

                                      19 

 
                           IRON MOUNTAIN INCORPORATED

           UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET 
                             AS OF JUNE 30, 1996 

                                (In thousands) 

   


                                                          Pending and                         Pro Forma 
                                                Iron       Completed                            Iron 
                                              Mountain   Acquisitions (1)      Adjustments     Mountain 
                                              --------   ----------------      -----------    --------- 
                                                                                           
Assets                                                                                         
Current Assets                                $ 25,865      $ 3,302            $ 1,760(A)      $ 30,927 
Property, Plant and Equipment, net             103,004        6,940              4,324(A)       114,268 
Goodwill, net                                   72,213           20             36,037(A)       108,270 
Other Long-term Assets                          11,548          480              4,481(A)        16,509 
                                              --------      -------            -------         -------- 
 Total Assets                                 $212,630      $10,742            $46,602         $269,974 
                                              ========      =======            =======         ======== 
Liabilities and Stockholders' Equity                                                           
Current Liabilities                           $ 23,129      $ 7,337            $(8,182)(B)     $  22,284 
Long-term Debt, net of current portion         115,700          388             59,505 (B)       175,593 
Other Long-term Liabilities                      6,769        1,281             (1,219)(B)         6,831 
Deferred Rent                                    7,897          242                220 (B)         8,359 
Deferred Income Taxes                            4,406         --                   --             4,406 
Stockholders' Equity                            54,729        1,494             (3,722)(B)        52,501 
                                              --------      -------            -------         --------- 
 Total Liabilities and Stockholders' Equity   $212,630      $10,742            $46,602          $269,974 
                                              ========      =======            =======         ========= 
                                                                      
    

- ------------- 

(1) See Schedule A for detail of the Pending and Completed Acquisitions. 

The accompanying Notes are an integral part of these pro forma financial 
                                 statements. 

                                      20 

 
                           IRON MOUNTAIN INCORPORATED

      UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS 
                    FOR THE SIX MONTHS ENDED JUNE 30, 1996 
                    (In thousands, except per share data) 

   


                                                          Pending and                         Pro Forma 
                                                Iron       Completed                            Iron 
                                              Mountain   Acquisitions (1)      Adjustments     Mountain 
                                              --------   ----------------      -----------    --------- 
                                                                                  
Revenues:                                                                                    
 Storage                                     $39,363     $ 6,861               $    --        $46,224 
 Service and Storage Material Sales           24,587       4,540                    --         29,127 
                                             -------     -------               -------        ------- 
   Total Revenues                             63,950      11,401                    --         75,351 
Operating Expenses:                                                                          
 Cost of Sales (Excluding Depreciation)       32,383       5,518                  (329)(D)     37,572 
 Selling, General and Administrative          16,067       4,454                (1,182)(E)     19,339 
 Depreciation and Amortization                 7,530         750                   819 (F)      9,099 
                                             -------     -------               -------        ------- 
   Total Operating Expenses                   55,980      10,722                  (692)        66,010 
                                             -------     -------               -------        ------- 
Operating Income                               7,970         679                   692          9,341 
Interest Expense                               6,385         334                 2,949 (G)      9,668 
                                             -------     -------               -------        ------- 
Income (Loss) before Provision                                                               
  (Benefit) for Income Taxes                   1,585         345                (2,257)          (327) 
Provision (Benefit) for Income Taxes             888         (30)                 (692)(H)        166 
                                             -------     -------               -------        ------- 
Net Income (Loss)                                697         375                (1,565)          (493) 
Accretion of Redeemable Put Warrant              280          --                  (280)(I)         -- 
                                             -------     -------               -------        ------- 
Net Income (Loss) Applicable to Common                                                       
  Stockholders                               $   417     $   375               $(1,285)       $  (493) 
                                             =======     =======               =======        ======== 
Net Income (Loss) per Common and Common                                                      
  Equivalent Share                           $  0.04                                          $ (0.05) 
Weighted Average Common and Common                                                           
  Equivalent Shares Outstanding                9,899                             400(J)        10,299 
Other Data:                                                                                  
 EBITDA                                      $15,500      $ 1,429              $ 1,511        $18,440 
                                     
    

- ------------- 

(1) See Schedule B for detail of the Pending and Completed Acquisitions. 

The accompanying Notes are an integral part of these pro forma financial 
                                 statements. 

                                      21 

 
                           IRON MOUNTAIN INCORPORATED

      UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS 
                     FOR THE YEAR ENDED DECEMBER 31, 1995 
                    (In thousands, except per share data) 

   


                                                          Pending and                       Pro Forma 
                                                Iron       Completed                          Iron 
                                              Mountain   Acquisitions (1)    Adjustments    Mountain 
                                              --------   ----------------    -----------    --------- 
                                                                                
Revenues:                                      
 Storage                                     $ 64,165      $22,304           $   --         $ 86,469 
 Service and Storage Material Sales            40,271       14,897              (737)(C)      54,431 
                                             --------      -------           -------        -------- 
   Total Revenues                             104,436       37,201              (737)        140,900 
Operating Expenses:
 Cost of Sales (Excluding Depreciation)        52,277       18,581            (1,054)(D)      69,804 
 Selling, General and Administrative           26,035       11,604            (2,552)(E)      35,087 
 Depreciation and Amortization                 12,341        2,962             2,879 (F)      18,182 
                                             --------    -----------         -------        -------- 
   Total Operating Expenses                    90,653       33,147              (727)        123,073 
                                             --------    -----------         -------        -------- 
Operating Income                               13,783        4,054               (10)         17,827 
Interest Expense                               11,838        1,814             5,689 (G)      19,341 
                                             --------    -----------         -------        -------- 
Income (Loss) before Provision for
  Income Taxes                                  1,945        2,240            (5,699)         (1,514)
Provision for Income Taxes                      1,697          102            (1,402)(H)         397 
                                             --------    -----------         -------        -------- 
Net Income (Loss)                                 248        2,138            (4,297)         (1,911)
Accretion of Redeemable Put Warrant             2,107         --              (2,107)(I)          -- 
                                             --------    -----------         -------        -------- 
Net Income (Loss) Applicable to Common
  Stockholders                               $ (1,859)     $ 2,138           $(2,190)       $ (1,911) 
                                             ========    ===========         =======        ======== 
Net (Loss) per Common and Common
  Equivalent Share                           $  (0.24)                                      $  (0.19) 
Weighted Average Common and Common
  Equivalent Shares Outstanding                 7,784                          2,350 (J)      10,134 
Other Data:
 EBITDA                                      $ 26,124      $ 7,016           $ 2,869        $ 36,009 

    

- -------------

(1) See Schedule C for detail of the Pending and Completed Acquisitions.

The accompanying Notes are an integral part of these pro forma financial
                                 statements.

                                      22
 

                                                                      SCHEDULE A
                          IRON MOUNTAIN INCORPORATED

                SCHEDULE OF PENDING AND COMPLETED ACQUISITIONS
                             AS OF JUNE 30, 1996

                                (In thousands)

                                 (Unaudited)


 
                                              Acquisitions 
                                                Completed                     Pending 
                                                  after       Pending           and 
                                                June 30,    Acquisition      Completed 
                                                  1996        (Mohawk)      Acquisitions 
                                                ----------    ---------     ------------ 
                                                                     
Assets
Current Assets                                   $1,814        $1,488         $ 3,302 
Property, Plant and Equipment, net                3,135         3,805           6,940 
Goodwill, net                                        20            --              20 
Other Long-term Assets                              249           231             480 
                                                 ------        ------         ------- 
 Total Assets                                    $5,218        $5,524         $10,742 
                                                 ======        ======         ======= 
Liabilities and Stockholders' Equity (Deficit) 
Current Liabilities                              $3,367        $3,970         $ 7,337 
Long-term Debt, net of current portion              388            --             388 
Other Long-term Liabilities                       1,281            --           1,281 
Deferred Rent                                       242            --             242 
Stockholders' Equity (Deficit)                      (60)        1,554           1,494 
                                                 ------        ------         ------- 
 Total Liabilities and Stockholders' Equity      $5,218        $5,524         $10,742 
                                                 ======        ======         ======= 


The accompanying Notes are an integral part of these pro forma financial 
                                 statements. 

                                      23 

 
SCHEDULE B 
                          IRON MOUNTAIN INCORPORATED 

                SCHEDULE OF PENDING AND COMPLETED ACQUISITIONS 
                    FOR THE SIX MONTHS ENDED JUNE 30, 1996 

                                (In thousands) 

                                 (Unaudited) 

   


                                                                                  Pending 
                                                                 Pending            and 
                                             Completed         Acquisition       Completed 
                                             Acquisitions (1)    (Mohawk)       Acquisitions 
                                             ------------      -----------      ------------ 
                                                                       
Revenues:
 Storage                                       $4,210          $2,651           $ 6,861 
 Service and Storage Material Sales             2,454           2,086             4,540 
                                               ------          ------           ------- 
   Total Revenues                               6,664           4,737            11,401 
Operating Expenses:
 Cost of Sales (Excluding Depreciation)         3,161           2,357             5,518 
 Selling, General and Administrative            2,840           1,614             4,454 
 Depreciation and Amortization                    391             359               750 
                                               ------          ------           ------- 
   Total Operating Expenses                     6,392           4,330            10,722 
                                               ------          ------           ------- 
Operating Income                                  272             407               679 
Interest Expense                                  209             125               334 
                                               ------          ------           ------- 
Income before (Benefit) for Income Taxes           63             282               345 
(Benefit) for Income Taxes                        (30)             --               (30)
                                               ------          ------           ------- 
Net Income                                     $   93          $  282           $   375 
                                               ======          ======           ======= 
Other Data:                                                                   
 EBITDA                                        $  663          $  766           $ 1,429 

    

- -------------

(1) Represents historical results of operations for each Completed
    Acquisition consummated in 1996 for the period in 1996 prior to
    acquisition by the Company. See "Overview" in the accompanying Notes.

The accompanying Notes are an integral part of these pro forma financial
                                 statements.

                                       24


                                                                      SCHEDULE C
                          IRON MOUNTAIN INCORPORATED

                SCHEDULE OF PENDING AND COMPLETED ACQUISITIONS
                     FOR THE YEAR ENDED DECEMBER 31, 1995

                                (In thousands)

                                 (Unaudited)



                                         Completed Acquisitions (1) 
                           -------------------------------------------------------- 
                                                                                                      Pending 
                         National                                        Total         Pending          and 
                         Business     Data       Nashville             Completed     Acquisition    Completed 
                         Archives   Management     Vault     Other    Acquisitions     (Mohawk)    Acquisitions 
                         --------   ----------   ---------   -----    ------------   -----------   ------------ 
                                                                                 
Revenues: 
 Storage                   $  758      $2,912      $  636   $13,293      $17,599        $4,705        $22,304 
 Service and Storage 
   Material Sales             471       2,308         739     7,284       10,802         4,095         14,897 
                           ------      ------      ------   -------      -------        ------        ------- 
   Total Revenues           1,229       5,220       1,375    20,577       28,401         8,800         37,201 
Operating Expenses: 
 Cost of Sales 
  (Excluding 
   Depreciation)              712       2,543         499    10,183       13,937         4,644         18,581 
 Selling, General and 
   Administrative              89       1,418         327     6,936        8,770         2,834         11,604 
 Depreciation and 
  Amortization                 55         506         122     1,621        2,304           658          2,962 
                           ------      ------      ------   -------      -------        ------        ------- 
   Total Operating 
     Expenses                 856       4,467         948    18,740       25,011         8,136         33,147 
                           ------      ------      ------   -------      -------        ------        ------- 
Operating Income              373         753         427     1,837        3,390           664          4,054 
Interest Expense               14         494          61       976        1,545           269          1,814 
                           ------      ------      ------   -------      -------        ------        ------- 
Income before 
  Provision for Income 
  Taxes                       359         259         366       861        1,845           395          2,240 
Provision for Income 
  Taxes                        --          87          --        15          102            --            102 
                           ------      ------      ------   -------      -------        ------        ------- 
Net Income                 $  359      $  172      $  366   $   846      $ 1,743        $  395        $ 2,138 
                           ======      ======      ======   =======      =======        ======        ======= 
Other Data: 
 EBITDA                    $  428      $1,259      $  549   $ 3,458      $ 5,694        $1,322        $ 7,016 


- ------------- 

(1) Represents historical results of operations for each Completed 
    Acquisition for the period in 1995 prior to acquisition by the Company. 
    See "Overview" in the accompanying Notes. 

The accompanying Notes are an integral part of these pro forma financial 
                                 statements. 

                                      25 

 
                           IRON MOUNTAIN INCORPORATED

             NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED 
                             FINANCIAL STATEMENTS 

Overview 

   In March 1995, the Company acquired National Business Archives, Inc. 
("NBA") for $15.7 million. In October 1995, the Company acquired DataFile 
Services, Inc. In December 1995, the Company acquired Data Management 
Business Records Storage, Inc. ("Data Management") for $14.5 million. In 
December 1995, the Company also acquired Brooks Records Center, Inc. In 
January 1996, the Company acquired Nashville Vault Company, Ltd. ("Nashville 
Vault") for $3.5 million. In January 1996, the Company also acquired Florida 
Data Bank, Inc. ("FDB"). In February 1996, the Company acquired DataVault 
Corporation. In March 1996, the Company acquired Data Storage Systems, Inc. 
In April 1996, the Company acquired Brambles CRC, Inc. ("CRC"). In May 1996, 
the Company acquired the records management business of Output Technologies 
Central Region, Inc. In July 1996, the Company acquired the records 
management business of The Fortress Corporation. In August 1996, the Company 
acquired Data Archive Services, Inc. and Data Archive Services of Miami, Inc. 
(collectively, "DAS") and DKA Industries, Inc. In September 1996, the Company 
acquired International Record Storage and Retrieval Service, Inc. and 
Security Archives Corporation. The results of operations of the Acquisitions 
which were consummated prior to June 30, 1996 are included in the results of 
operations of the Company from their respective dates of acquisition. The 
historical balance sheet of the Company at June 30, 1996 includes the 
acquisitions consummated prior to June 30, 1996. The aggregate purchase price 
of the foregoing acquisitions, excluding NBA, Data Management and Nashville 
Vault, was $46.4 million (not including contingent payments of up to $0.6 
million based upon the achievement of certain revenue targets during 1996 and 
1997). 

   During September 1996, the Company entered into a definitive agreement to 
purchase Mohawk Business Record Storage, Inc. ("Mohawk") for $20.2 million 
(not including contingent payments of up to $4.0 million based upon the 
achievement of certain revenue targets during 1997 and 1998). The closing of 
the Pending Acquisition is subject to various conditions, and no assurance 
can be given that such acquisition will be completed. All of the Completed 
Acquisitions have been, and the Pending Acquisition, if consummated, will be, 
accounted for as purchases. 

   The accompanying unaudited pro forma condensed consolidated financial 
statements reflect the following as though each had occurred on January 1, 
1995: (i) the Initial Public Offering and the application of the net proceeds 
therefrom; (ii) the Offering and the application of the net proceeds 
therefrom; (iii) the closing of the New Credit Facility; and (iv) the 
Acquisitions. The Company will record, in the quarter in which the Offering 
is consummated, an extraordinary loss on retirement of debt, net of related 
tax benefit. As of June 30, 1996, the amount of such loss would have been 
approximately $2.2 million. While the extraordinary charge has been reflected 
in the accompanying pro forma balance sheet, the pro forma statements of 
operations do not give effect to such loss. Such loss consists of the 
write-off of deferred financing costs, original issue discount, prepayment 
penalty and loss on termination of interest rate protection agreements. 

Balance Sheet 

   The aggregate consideration paid or to be paid for the Acquisitions is 
approximately $100.3 million in cash (not including up to $4.6 million of 
contingent payments based upon the achievement of certain revenue targets 
from 1996 through 1998). The excess of the purchase price over the book value 
of the net assets acquired for each of the Acquisitions has been allocated to 
tangible and intangible assets, based on the Company's estimate of the fair 
value of the net assets acquired. The allocations of the purchase price as 
illustrated below may change upon final appraisal of the fair value of the 
net assets acquired. 

                                      26 

 


                                                                         (In millions) 
                                                                           
Acquisitions Completed Prior to June 30, 1996: 
 Book value of net assets acquired                                      $11.6 
 Allocation of purchase price in excess of acquired assets: 
  Property, Plant and Equipment (Fair Value Adjustment)                   5.4 
  Other Long-term Assets (Covenants not to Compete)                       2.8 
  Current Liabilities (Relocation and Other Reserves)                    (1.8)
  Deferred Rent (Unfavorable Lease Liability)                            (5.3)
  Goodwill                                                               40.1 
                                                                         ---- 
 Purchase Price of Acquisitions Completed Prior to June 30, 1996                 $ 52.8 
Acquisitions Completed after June 30, 1996 and the Pending 
  Acquisition: 
 Book value of net assets acquired                                      $ 9.2 
 Allocation of purchase price in excess of acquired assets: 
  Property, Plant and Equipment (Fair Value Adjustment)                   4.8 
  Other Long-term Assets (Covenants not to Compete)                       0.2 
  Current Liabilities (Relocation and Other Reserves)                    (2.3) 
  Deferred Rent (Unfavorable Lease Liability)                            (0.4) 
  Goodwill                                                               36.0 
                                                                         ---- 
 Purchase Price of Acquisitions Pending as of June 30, 1996                        47.5 
                                                                                 ------ 
 Total Purchase Price of Acquisitions                                            $100.3 
                                                                                 ====== 


   
   The Acquisitions completed prior to June 30, 1996 were financed with 
long-term debt and proceeds from the Initial Public Offering. The 
Acquisitions completed after June 30, 1996 and the Pending Acquisition are 
assumed to be financed with long-term debt. The Company will fund the 
purchase price of the Pending Acquisition with a portion of the net proceeds 
from the Offering. See "Recent and Pending Acquisitions," "The Transactions" 
and "Management's Discussion and Analysis of Financial Condition and Results 
of Operations." 
    

   The accompanying pro forma condensed consolidated balance sheet as of June 
30, 1996 has been prepared as if the Transactions had all been completed as 
of June 30, 1996 and reflects the following adjustments: 

   (A) The pro forma adjustments to Assets consist of the following: 

   


                                                                      Property,
                                                                        Plant                   Other
                                                            Current       and                 Long-term
                                                            Assets    Equipment    Goodwill     Assets
                                                            -------------------------------------------
                                                                           (In millions) 
                                                                                   
Acquisition Entries: 
Reverse assets of acquired companies not purchased           $(0.6)     $(0.2)     $   --      $ (0.5) 
Record estimated fair value of assets of acquired 
  companies                                                    --         4.5          --          -- 
Record increase in intangible assets equal to the excess 
  of purchase price over fair value of net assets 
  acquired                                                     --          --        36.0         0.2 
                                                             -----      -----      ------      ------
  Total Acquisition Entries                                   (0.6)       4.3        36.0        (0.3) 
                                                             -----      -----      ------      ------ 

Use of Proceeds Entries: 
Record excess cash proceeds from the Offering                  0.8         --          --          -- 
Record deferred financing fees associated with the Notes 
  and the New Credit Facility                                   --         --          --         6.8 
Write-off of pre-existing deferred financing costs              --         --          --        (2.0) 
Tax benefit associated with extraordinary charge related 
  to early retirement of pre-existing debt                     1.6         --          --          -- 
                                                             -----      -----      ------      ------ 
  Total Use of Proceeds Entries                                2.4         --          --         4.3 
                                                             -----      -----      ------      ------ 
  Total Adjustments                                          $ 1.8      $ 4.3      $ 36.0      $  4.5 
                                                             =====      =====      ======      ====== 

    

                                      27 

 
(B) The pro forma adjustments to Liabilities and Stockholders' Equity 
consist of the following: 

   


                                                                               Other 
                                                    Current    Long-term     Long-term   Deferred  Stockholders' 
                                                  Liabilities    Debt       Liabilities    Rent       Equity 
                                                  -------------------------------------------------------------- 
                                                                         (In millions) 
                                                                                        
Acquisition Entries: 
Reverse liabilities and equity not assumed in 
  connection with Acquisitions closing after 
  June 30, 1996                                     $(5.2)     $  (0.4)      $(1.2)      $(0.2)        $(1.5) 
Record unfavorable lease obligation                    --           --          --         0.4            -- 
Record additional debt to finance 
  Acquisitions closing after June 30, 1996                        47.5 
                                                    -----      -------       -----       -----         ----- 
  Total Acquisition Entries                          (5.2)        47.1        (1.2)        0.2          (1.5) 
                                                    -----      -------       -----       -----         -----

Use of Proceeds Entries: 
Issuance of the Notes                                  --        165.0          --          --            -- 
Borrowings under New Credit Facility                   --           --          --          --            -- 
Prepayment of Credit Agreement, Chrysler 
  Notes and FDS Notes                                (3.0)      (105.1)         --          --            -- 
Use of proceeds to repay debt issued to 
  finance Acquisitions closing after June 30, 
  1996                                                 --        (47.5)         --          --            -- 
Extraordinary charge, net of tax benefit, 
  related to early retirement of pre-existing 
  debt                                                 --           --          --          --          (2.2) 
                                                    -----      -------       -----       -----         -----
  Total Use of Proceeds Entries                      (3.0)        12.4          --          --          (2.2) 
                                                    -----      -------       -----       -----         ----- 
  Total Adjustments                                 $(8.2)     $  59.5       $(1.2)      $ 0.2         $(3.7) 
                                                    =====      =======       =====       =====         ===== 

    

Statements of Operations 

   All of the Acquisitions, except Data Management, FDB, CRC and DAS, have a 
December 31 fiscal year end. Data Management's and CRC's fiscal year end is 
June 30, DAS's fiscal year end is May 31 and FDB's fiscal year end is August 
31. Accordingly, Data Management's, CRC's, DAS's and FDB's results of 
operations were calendarized to the twelve months ended December 31, 1995 and 
the six months ended June 30, 1996. 

   The accompanying pro forma condensed consolidated statements of operations 
for the year ended December 31, 1995 and for the six months ended June 30, 
1996 have been prepared as if the Transactions and the Initial Public 
Offering had occurred on January 1, 1995 and reflect the following 
adjustments: 

   (C) A pro forma adjustment has been made to eliminate a $0.7 million 
non-recurring gain on the sale of property and equipment by Data Management 
in the year ended December 31, 1995. 

   (D) Pro forma adjustments for the six months ended June 30, 1996 and for 
the year ended December 31, 1995 have been made to reduce cost of sales by 
$0.3 million and $1.1 million, respectively, to eliminate specific expenses 
that would not have been incurred had the Acquisitions occurred at the 
beginning of 1995. Such cost savings relate to (i) the termination of certain 
employees due to the integration and consolidation of certain Acquisitions 
and (ii) a reduction in warehouse rent expense related to facilities the 
Company will vacate upon completion of certain Acquisitions. 

   (E) Pro forma adjustments for the six months ended June 30, 1996 and for 
the year ended December 31, 1995 have been made to reduce selling, general 
and administrative expenses by $1.2 million and $2.6 million, respectively, 
to eliminate specific expenses that would not have been incurred had the 
Acquisitions occurred as of January 1, 1995. Such cost savings relate to (i) 
the termination of certain employees due to the integration and consolidation 
of certain Acquisitions and (ii) the elimination of related party expenses 
and management fees in excess of amounts that would have been incurred by the 
Company for the services rendered. Additional cost savings 

                                      28 

 
that the Company expects to realize through integration of the Acquisitions 
into the Company's operations have not been reflected herein. 

   (F) A pro forma adjustment has been made to reflect additional 
depreciation and amortization expense on the fair value of the assets 
acquired and goodwill. Property and equipment are depreciated over three to 
50 years, goodwill is amortized over 25 years and covenants not-to-compete 
are amortized over two to five years on a straight- line basis. Such 
depreciation and amortization may change upon final appraisal of the fair 
market value of the net assets acquired. 

   (G) The pro forma adjustments to interest expense consist of the 
following: 

   


                                                                               June 30,      December 31, 
                                                                                 1996            1995 
                                                                                -------      ------------ 
                                                                                     (In millions) 
                                                                                        
Acquisition Entries: 

Reverse interest expense on debt not assumed in connection with 
  Acquisitions                                                                  $(0.3)        $ (1.8) 
Record interest expense due to assumption of unfavorable lease liabilities 
  in connection with the NBA and Mohawk acquisitions                              0.1            0.1 

Use of Proceeds Entries: 

Reverse interest expense on pre-existing debt of the Company retired with 
  proceeds of the Offering                                                       (5.7)         (10.5) 
Record interest expense from issuance of the Notes at an interest rate of 
  10-1/8%, plus amortization of deferred financing costs                          8.6           17.3 
Record commitment fee of 3/8%, plus amortization of deferred financing fees 
  associated with the New Credit Facility                                         0.3            0.6 
                                                                                -----         ------ 
   Total Adjustments                                                            $ 3.0         $  5.7 
                                                                                =====         ====== 

    

   
   (H) A pro forma adjustment has been made to adjust the provision for 
income taxes to a 40% rate on pro forma income before nondeductible goodwill 
amortization and other nondeductible expenses. 
    

   (I) Pro forma adjustments of $0.3 million and $2.1 million for the periods 
ended June 30, 1996 and December 31, 1995, respectively, have been made to 
eliminate the accretion of a redeemable put warrant. 

   (J) A pro forma adjustment has been made to adjust the pro forma weighted 
average common and common equivalent shares outstanding as if the Initial 
Public Offering had occurred on January 1, 1995. 

                                      29 

 
           SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION
           (In thousands, except per share amounts and Carton data) 

   The following selected consolidated statements of operations and balance 
sheet data of the Company as of and for each of the years ended December 31, 
1991, 1992, 1993, 1994 and 1995 have been derived from the Company's audited 
consolidated financial statements. The selected consolidated statements of 
operations and balance sheet data of the Company for the six months ended 
June 30, 1995 and 1996 have been derived from the Company's unaudited 
condensed consolidated financial statements. The Company's unaudited 
condensed consolidated financial statements include all adjustments, 
consisting of normal recurring accruals, that the Company considers necessary 
for a fair presentation of the financial position and the results of 
operations for those periods. Operating results for the six months ended June 
30, 1996 are not necessarily indicative of the results for the entire year 
ending December 31, 1996. The selected consolidated financial and operating 
information set forth below should be read in conjunction with "Management's 
Discussion and Analysis of Financial Condition and Results of Operations" and 
with Iron Mountain's Consolidated Financial Statements and the Notes thereto 
included elsewhere in this Prospectus. 



                                                                                             Six Months Ended 
                                                    Year Ended December 31,                      June 30, 
                                      -----------------------------------------------------  ---------------- 
                                       1991     1992      1993         1994        1995      1995        1996 
                                      -----     ----      ----         ----        ----      ----        ---- 
                                                                                    
Consolidated Statements of Operations Data: 
Revenues: 
 Storage                              $39,510   $44,077   $48,892      $54,098     $ 64,165   $30,748    $39,363 
 Service and Storage Material Sales    23,330    26,596    32,781       33,520       40,271    19,476     24,587 
                                      -------   -------   -------      -------     --------   -------    ------- 
   Total Revenues                      62,840    70,673    81,673       87,618      104,436    50,224     63,950 
Operating Expenses: 
 Cost of Sales (Excluding 
  Depreciation)                        31,375    35,169    43,054       45,880       52,277    25,112     32,383 
 Selling, General and Administrative   16,471    17,630    19,971       20,853       26,035    12,697     16,067 
 Depreciation and Amortization          7,674     5,780     6,789        8,690       12,341     5,428      7,530 
                                      -------   -------   -------      -------     --------   -------    ------- 
   Total Operating Expenses            55,520    58,579    69,814       75,423       90,653    43,237     55,980 
                                      -------   -------   -------      -------     --------   -------    ------- 
Operating Income                        7,320    12,094    11,859       12,195       13,783     6,987      7,970 
Interest Expense                        8,612     8,412     8,203        8,954       11,838     5,936      6,385 
Income (Loss) before Provision for 
  Income Taxes                         (1,292)    3,682     3,656        3,241        1,945     1,051      1,585 
Provision for Income Taxes                105     2,095     2,088        1,957        1,697       631        888 
                                      -------   -------   -------      -------     --------   -------    ------- 
Net Income (Loss)                      (1,397)    1,587     1,568        1,284         248        420        697 
Accretion of Redeemable Put Warrant       417       626       940        1,412        2,107       953        280 
                                      -------   -------   -------      -------     --------   -------    ------- 
Net Income (Loss) Applicable to 
  Common Stockholders                 $(1,814)  $   961   $   628      $  (128)    $ (1,859)  $  (533)   $   417 
                                      =======   =======   =======      =======     ========   =======    ======= 
Net Income (Loss) per Common and 
  Common Equivalent Share             $ (0.23)  $  0.12   $  0.08      $ (0.02)    $  (0.24)  $ (0.07)   $  0.04 
Weighted Average Common and Common 
  Equivalent Shares Outstanding         8,038     8,052     8,067        7,984        7,784     7,790      9,899 
Other Data: 
EBITDA (1)                            $14,994   $17,874   $18,648      $20,885     $ 26,124   $12,415    $15,500 
EBITDA as a Percentage of Total 
  Revenues                               23.9%     25.3%     22.8%        23.8%        25.0%     24.7%      24.2% 
Capital Expenditures: 
 Growth (2)                                --   $11,226   $13,605      $15,829 (3) $ 14,395   $ 6,730    $10,702 
 Maintenance                               --       818     1,846        1,151         858        592        460 
                                      -------   -------   -------      -------     --------   -------    ------- 
Total Capital Expenditures            $ 8,163   $12,044   $15,451      $16,980 (3) $ 15,253   $ 7,322    $11,162 
Additions to Customer Acquisition 
  Costs                               $    --   $ 1,268   $   922      $ 1,366     $  1,379   $   418    $   717 
Approximate Cartons in Storage at End 
  of Period (in millions) (4)            10.8      12.6      15.5         17.7         23.3      20.3       26.4 
Ratio of Earnings to Fixed Charges 
  (5)                                     0.9x      1.3x      1.3x         1.2x        1.1x       1.1x       1.2x 


                                               (Footnotes on the following page)

                                      30 

 


                                          As of December 31, 
                             ------------------------------------------
                                                                               As of 
                                                                              June 30, 
                           1991      1992      1993      1994      1995         1996 
                           ----      ----      ----      ----      ----       -------- 
                                                            
Balance Sheet Data: 
Cash and Cash Equivalents  $    407  $    498  $    591  $  1,303  $  1,585   $  2,232 
Total Assets                107,874   115,429   125,288   136,859   186,881    212,630 
Total Debt                   68,229    73,304    78,460    86,258   121,874    118,894 
Stockholders' Equity         22,291    23,419    24,047    22,869    21,011     54,729 


- ------------- 

(Footnotes from the preceding page) 

(1) Earnings before interest, taxes, depreciation, amortization and 
    extraordinary charges ("EBITDA"). Based on its experience in the records 
    management industry, the Company believes that EBITDA is an important 
    tool for measuring the performance of records management companies 
    (including potential acquisition targets) in several areas, such as 
    liquidity, operating performance and leverage. In addition, lenders use 
    EBITDA as a criterion in evaluating records management companies, and 
    substantially all of the Company's financing agreements contain covenants 
    in which EBITDA is used as a measure of financial performance. However, 
    EBITDA should not be considered an alternative to operating or net income 
    (as determined in accordance with GAAP) as an indicator of the Company's 
    performance or to cash flow from operations (as determined in accordance 
    with GAAP) as a measure of liquidity. See "Management's Discussion and 
    Analysis of Financial Condition and Results of Operations--Overview" and 
    "--Liquidity and Capital Resources" for discussions of other measures of 
    performance determined in accordance with GAAP and the Company's sources 
    and applications of cash flow. 

(2) Growth capital expenditures include investment in racking systems, new 
    buildings and leasehold improvements, equipment for new facilities, 
    management information systems and facilities restructuring. See 
    "Management's Discussion and Analysis of Financial Condition and Results 
    of Operations--Liquidity and Capital Resources--Capital Investments." 

(3) Includes $2,901 related to the cost of constructing a records management 
    facility which was sold in a sale and leaseback transaction in the fourth 
    quarter of 1994. 

(4) The term "Carton" is defined as a measurement of the volume equal to a 
    single standard storage carton, approximately 1.2 cubic feet. The number 
    of Cartons stored does not include storage volumes in the Company's vital 
    records services and data protection services which are described under 
    "Business." 

   
(5) The pro forma ratio of earnings to fixed charges, giving effect to the 
    Transactions as if each had occurred as of January 1, 1995, would have 
    been 0.9x for the year ended December 31, 1995 and 0.9x for the six 
    months ended June 30, 1996. For the year ended December 31, 1995 and the 
    six months ended June 30, 1996, the Company would have needed to generate 
    additional income from continuing operations, before provision for income 
    taxes, of $1,514 and $327 to cover its pro forma fixed charges of $26,100 
    and $13,241, respectively. The ratio of earnings to fixed charges was 
    0.9x for the fiscal year ended December 31, 1991. For such period, the 
    Company would have needed to generate additional income from continuing 
    operations, before provision for income taxes, of $1,292 to cover its 
    fixed charges of $11,689. 
    


                                      31 

 
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

   The following discussion should be read in conjunction with the Selected 
Consolidated Financial and Operating Information and Iron Mountain's 
Consolidated Financial Statements and the Notes thereto and the other 
financial and operating information included elsewhere in this Prospectus. 
This Prospectus contains, in addition to historical information, 
forward-looking statements that include risks and uncertainties. The 
Company's actual results may differ materially from the results discussed in 
the forward-looking statements. Factors that might cause such a difference 
include those discussed below, as well as those discussed elsewhere in this 
Prospectus. The Company undertakes no obligation to release publicly the 
result of any revisions to these forward-looking statements that may be made 
to reflect events or circumstances after the date hereof or to reflect the 
occurrence of unanticipated events. 

Overview 

   The Company's primary financial objective is to increase its EBITDA, which 
is a source of funds to service indebtedness and for investment in continued 
internal growth and growth through acquisitions. The Company has benefited 
from growth in EBITDA, which has increased from $17.9 million in 1992 to 
$26.1 million in 1995 (a CAGR of 13.5%), but other measures of the Company's 
financial performance, such as net income and net income applicable to common 
stockholders, have been negatively affected by this objective. In 1994 and 
1995, the Company experienced net losses applicable to common stockholders. 
Such net losses are attributable in part to significant increases in non-cash 
charges associated with the Company's pursuit of its growth strategy, namely, 
(i) increases in depreciation and amortization expenses associated with 
expansion of the Company's storage capacity and the acquisition of certain 
large volume accounts and (ii) increases in goodwill amortization associated 
with acquisitions accounted for under the purchase method. In addition, net 
income available to common stockholders has been negatively affected by a 
non-cash charge for accretion of a redeemable put warrant, which was redeemed 
upon completion of the Company's Initial Public Offering. See Note 5 of Notes 
to the Company's Audited Consolidated Financial Statements. 

   Iron Mountain's revenues consist of storage revenues and service and 
storage material sales revenues. Storage revenues are derived from charges 
for storing records (either on a per unit or a per cubic foot of records 
basis), and have accounted for approximately 60% of total revenues in each of 
the last three years and for the six months ended June 30, 1996. Service and 
storage material sales revenues are derived primarily from the Company's 
courier operations (consisting primarily of the pickup and delivery of 
records upon customer request), additions of new Cartons, temporary removal 
of records from storage, refiling of removed records, destructions of 
records, permanent withdrawals from storage and sales of specially designed 
storage containers and related supplies. Customers are generally billed on a 
monthly basis on contractually agreed-upon terms. 

   While the Company's total revenues have increased from $70.7 million in 
1992 to $104.4 million in 1995, average revenue on a per Carton basis has 
declined over this period. The year-over-year declines in average revenue per 
Carton for 1993, 1994 and 1995 were approximately 8%, 7% and 2%, 
respectively. Such declines were attributable to: (i) increases in sales to 
large volume accounts, which typically generate lower revenue per Carton (in 
particular the Resolution Trust Corporation (the "RTC") account, which 
incorporated substantial volume discounts, although such discounts were 
offset by revenues from special service projects during 1993 and 1994); (ii) 
a facilities management arrangement with a large volume account under which, 
prior to July 1996, the Company managed the customer's records management 
facility and, therefore, the charges to the customer prior to July 1996 did 
not include a rent component; and (iii) industry-wide pricing pressures. 
Despite this decline, the Company has been able to maintain its EBITDA 
margins through increased overall operating efficiencies and economies of 
scale as well as specific efficiencies realized in the servicing of large 
volume accounts. For 1992, 1993, 1994, 1995 and the six months ended June 30, 
1996, EBITDA margins were 25.3%, 22.8%, 23.8%, 25.0% and 24.2%, respectively. 

   Pursuant to its 1992 contract with the RTC, the Company participated in 
the consolidation and centralization of a large number of records on behalf 
of the RTC. This activity, which entailed extensive services and the 
Company's start-up of operations in two new markets, resulted in a 
significant increase in service and storage material sales revenues in 1993. 
After the labor-intensive process of assembling and inventorying the records 
was substantially completed in 1994, the revenue from RTC service and storage 
material sales began to decrease, which decrease was partially offset by 
increases in storage revenues due to an increase in Cartons stored. The 
contract 

                                      32 

 
has been renewed effective July 27, 1996 for a one-year term by the Federal 
Deposit Insurance Corporation (the "FDIC"), as successor in interest to the 
RTC, and may be renewed at the option of the FDIC for three further terms of 
one year each. Although the substantial costs of removing its records from 
the Company's facilities may act as a disincentive to the FDIC to select 
another vendor, there can be no assurance that this contract will be further 
renewed or that the terms of any such renewal will be as favorable to Iron 
Mountain as the terms of the current contract. 

   Cost of sales consists primarily of wages and benefits, facility occupancy 
costs, vehicle and other equipment costs and supplies. Of these, the most 
significant are wages and benefits and facility occupancy costs. Over the 
past several years, Iron Mountain has been able to reduce per Carton storage 
costs by: (i) designing racking systems and operating space to maximize 
facility storage efficiency; (ii) negotiating favorable facility leases and 
having facilities built to its custom specifications; and (iii) leasing 
larger facilities, which, when filled, are less expensive per Carton to 
operate. 

   Selling, general and administrative expenses consist primarily of 
management, administrative, sales and marketing wages and benefits, and also 
include travel, communications, professional fees, bad debts, training, 
office equipment and supplies expenses. 

   The Company's depreciation and amortization charges result primarily from 
the capital-intensive nature of the records management industry and the 
acquisitions the Company has completed. The principal components of 
depreciation relate to racking systems and related equipment, new buildings 
and leasehold improvements, equipment for new facilities and computer system 
software and hardware. Amortization primarily relates to goodwill and 
noncompetition agreements arising from acquisitions and customer acquisition 
costs. The Company has accounted for all of its acquisitions under the 
purchase method. Since the purchase price for records management companies is 
usually substantially in excess of the book values of their assets, these 
purchases have given rise to significant goodwill and, accordingly, 
significant levels of amortization. Although amortization is a non-cash 
charge, it does decrease reported net income. Accordingly, the faster the 
Company expands by making such acquisitions, the more likely it will be to 
incur amortization charges, reducing net income. 

   In February 1996, the Company received net proceeds of $33.3 million from 
its Initial Public Offering. The Company used $6.6 million of such net 
proceeds to repurchase a warrant to acquire 444,385 shares of Common Stock 
(the "Warrant"). For financial reporting purposes, the Company was required 
to record a non-cash charge (based on the estimated redemption value 
calculated using the effective interest rate method), resulting in 
substantial charges to net income applicable to common stockholders over the 
period the Warrant was outstanding. See Note 5 of Notes to the Company's 
Audited Consolidated Financial Statements. The remaining net proceeds were 
used by the Company to fund acquisitions (including Completed Acquisitions 
consummated after the closing of the Initial Public Offering), to repay 
indebtedness used to fund acquisitions and for working capital. 

   In December 1995, the Company decided to consolidate its corporate 
accounting activities by transferring to Boston, Massachusetts those 
accounting activities previously performed in Los Angeles, California. As a 
result of such transfer, the Company recorded charges of $0.5 million and 
$0.3 million in the fourth quarter of 1995 and the first six months of 1996, 
respectively. 

Forward-Looking Statements Regarding Revenues 

   One of the Company's goals is to achieve revenue growth of five to 10 
percent per year from its existing business through the end of 1997. In 
addition, over the same period, the Company's goal is to achieve revenue 
growth of between 10 to 15 percent per year as a result of acquisitions. 
There can be no assurance that the Company will be able to meet these goals. 
See "Risk Factors." 

                                      33 

 
Results of Operations 

   The following table sets forth, for the periods indicated, information 
derived from the Company's consolidated statements of operations, expressed 
as a percentage of revenue. There can be no assurance that the trends in 
revenue growth or operating results shown below will continue in the future. 



                                                                           Six Months 
                                             Year Ended December 31,     Ended June 30, 
                                            --------------------------   -------------- 
                                            1993      1994      1995     1995     1996 
                                            ----      ----      ----     ----     ---- 
                                                                   
Revenues: 
 Storage                                     59.9%     61.7%     61.4%    61.2%    61.6% 
 Service and Storage Material Sales          40.1      38.3      38.6     38.8     38.4 
                                            -----     -----     -----    -----    -----
    Total Revenues                          100.0     100.0     100.0    100.0    100.0 
                                            -----     -----     -----    -----    -----
Operating Expenses: 
 Cost of Sales (Excluding Depreciation)      52.7      52.4      50.1     50.0     50.6 
 Selling, General and Administrative         24.5      23.8      24.9     25.3     25.1 
 Depreciation and Amortization                8.3       9.9      11.8     10.8     11.8 
                                            -----     -----     -----    -----    -----
    Total Operating Expenses                 85.5      86.1      86.8     86.1     87.5 
                                            -----     -----     -----    -----    -----
Operating Income                             14.5      13.9      13.2     13.9     12.5 
Interest Expense                             10.0      10.2      11.3     11.8     10.0 
                                            -----     -----     -----    -----    -----
Income before Provision for Income Taxes      4.5       3.7       1.9      2.1      2.5 
Provision for Income Taxes                    2.6       2.2       1.7      1.3      1.4 
                                            -----     -----     -----    -----    -----
Net Income                                    1.9%      1.5%      0.2%     0.8%     1.1% 
                                            =====     =====     =====    =====    ===== 
EBITDA                                       22.8%     23.8%     25.0%    24.7%    24.2% 


Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995 

   Storage revenues increased from $30.7 million for the first six months of 
1995 to $39.4 million for the first six months of 1996, an increase of $8.7 
million or 28.0%. Ten acquisitions completed by the Company in 1995 and the 
first six months of 1996 accounted for $5.5 million or 63.7% of such 
increase. The balance of the storage revenues growth resulted primarily from 
net increases in Cartons stored by existing customers and from sales to new 
customers. 

   Service and storage material sales revenues increased from $19.5 million 
for the first six months of 1995 to $24.6 million for the first six months of 
1996, an increase of $5.1 million or 26.2%. Acquisitions accounted for $3.4 
million or 66.2% of such increase. The balance of such increase resulted from 
increases in service and storage material sales to existing customers and the 
addition of new customer accounts. 

   For the reasons discussed above, total revenues increased from $50.2 
million for the first six months of 1995 to $64.0 million for the first six 
months of 1996, an increase of $13.8 million or 27.3%. Of such increase, $8.9 
million or 64.6% was attributable to acquisitions completed by the Company in 
1995 and the first six months of 1996. 

   Cost of sales (excluding depreciation) increased from $25.1 million for 
the first six months of 1995 to $32.4 million for the first six months of 
1996, an increase of $7.3 million or 29.0%, and increased as a percentage of 
revenues from 50.0% for the first six months of 1995 to 50.6% for the first 
six months of 1996. The increase was primarily attributable to the increase 
in Cartons stored, increased expenses related to the severe winter weather on 
the Atlantic coast during the first quarter of 1996 and expenses related to 
certain facility relocations. 

   Selling, general and administrative expenses increased from $12.7 million 
for the first six months of 1995 to $16.1 million for the first six months of 
1996, an increase of $3.4 million or 26.5%, and decreased as a percentage of 
revenues from 25.3% for the first six months of 1995 to 25.1% for the first 
six months of 1996. The $3.4 million increase was primarily attributable to 
the costs associated with becoming a public company, with accelerated 
acquisition activity, including certain redundant transitional expenses as 
new acquisitions were integrated into the Company, and the addition of 
personnel needed to support the Company's growth. Additionally, the selling, 
general 

                                      34 

 
and administrative expenses of acquired companies tend to be higher than Iron 
Mountain's, and cost reductions and other possible synergies are not realized 
immediately. 

   Depreciation and amortization expense increased from $5.4 million for the 
first six months of 1995 to $7.5 million for the first six months of 1996, an 
increase of $2.1 million or 38.7%, and increased as a percentage of revenues 
from 10.8% for the first six months of 1995 to 11.8% for the first six months 
of 1996. The increase was primarily attributable to the additional 
depreciation and amortization expense related to the aforementioned 
acquisitions, capital expenditures, including racking systems, information 
systems and improvements to existing facilities, and additions to customer 
acquisition costs. 

   As a result of the foregoing factors, operating income increased from $7.0 
million for the first six months of 1995 to $8.0 million for the first six 
months of 1996, an increase of $1.0 million or 14.1%. As a percentage of 
revenues, operating income decreased from 13.9% for the first six months of 
1995 to 12.5% for the first six months of 1996. 

   Interest expense increased from $5.9 million for the first six months of 
1995 to $6.4 million for the first six months of 1996, an increase of $0.5 
million or 7.6%. The increase was primarily attributable to increased 
indebtedness to finance acquisitions and capital expenditures. The decrease 
in interest expense as a percentage of revenues was primarily attributable to 
a net decrease in interest rates. 

   As a result of the foregoing factors, income before provision for income 
taxes increased from $1.1 million (2.1% of revenues) for the first six months 
of 1995 to $1.6 million (2.5% of revenues) in the first six months of 1996, 
an increase of $0.5 million or 50.8%. Provision for income taxes increased 
from $0.6 million (1.3% of revenues) for the first six months of 1995 to $0.9 
million (1.4% of revenues) for the first six months of 1996. The Company's 
effective tax rate is higher than statutory rates primarily due to the 
amortization of the nondeductible portion of goodwill associated with 
acquisitions made prior to the change in tax laws which now generally permit 
deduction of such expenses. 

   Net income increased from $0.4 million (0.8% of revenues) for the first 
six months of 1995 to $0.7 million (1.1% of revenues) for the first six 
months of 1996, an increase of $0.3 million, or 66.0%. Net income (loss) 
applicable to common stockholders was a $0.5 million net loss (1.1% of 
revenues), after accretion of $0.9 million related to the Warrant, for the 
first six months of 1995 compared to net income of $0.4 million (0.7% of 
revenues), after accretion of $0.3 million related to the Warrant, for the 
first six months of 1996. The Warrant was redeemed in full in February 1996, 
with a portion of the proceeds from the Initial Public Offering. As a result 
of such redemption, there will be no future charges for such accretion. 

   As a result of the foregoing factors, EBITDA increased from $12.4 million 
for the first six months of 1995 to $15.5 million for the first six months of 
1996, an increase of $3.1 million, or 24.8%. As a percentage of revenues, 
EBITDA decreased from 24.7% for the first six months of 1995 to 24.2% for the 
first six months of 1996. 

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994 

   Storage revenues increased from $54.1 million in 1994 to $64.2 million in 
1995, an increase of $10.1 million or 18.6%. Seven acquisitions completed 
between June 1994 and December 1995 accounted for $5.7 million or 56.7% of 
such increase. The balance of the storage revenues growth resulted primarily 
from net increases in Cartons stored by existing customers and from sales to 
new customers. 

   Service and storage material sales revenues increased from $33.5 million 
in 1994 to $40.3 million in 1995, an increase of $6.8 million or 20.1%. This 
increase was accomplished despite a decrease of approximately $0.8 million in 
such revenues received from the RTC, which decrease was primarily due to a 
reduction in revenues from special service projects. Acquisitions accounted 
for $4.3 million or approximately 63.5% of such increase. The balance of such 
increase resulted from increases in service and storage material sales to 
existing customers and the addition of new customer accounts. 

   For the reasons discussed above, total revenues increased from $87.6 
million in 1994 to $104.4 million in 1995, an increase of $16.8 million or 
19.2%. Of such increase, $10.0 million or 59.4% was attributable to 
acquisitions made by the Company between June 1994 and December 1995. The 
monthly average Cartons stored increased approximately 22% in 1995 as 
compared to 1994, from approximately 16.7 million Cartons to approximately 
20.4 million Cartons. The percentage increase was greater than that of total 
revenues primarily for the reason described in the third paragraph under 
"Overview" above. 

                                      35 

 
   Cost of sales (excluding depreciation) increased from $45.9 million in 
1994 to $52.3 million in 1995, an increase of $6.4 million or 13.9%, and 
decreased as a percentage of revenues from 52.4% in 1994 to 50.1% in 1995. 
The $6.4 million increase resulted primarily from an increase in Cartons 
stored. The decrease as a percentage of revenues was due primarily to 
increased storage efficiencies resulting from relocations to, or additions 
of, newer, higher density facilities as well as increased utilization of 
storage capacity. 

   Selling, general and administrative expenses increased from $20.9 million 
in 1994 to $26.0 million in 1995, an increase of $5.1 million or 24.9%, and 
increased as a percentage of revenues from 23.8% in 1994 to 24.9% in 1995. 
The $5.1 million increase was due primarily to increases in field management 
and administrative staffing, including increases due to acquisitions. Of the 
1.1% increase as a percentage of revenues, $0.6 million (0.6% of revenues) 
resulted from a provision for a judgment in a lawsuit relating to a 1992 
incident and a $0.5 million (0.5% of revenues) charge for the relocation of 
the corporate accounting function from Los Angeles to Boston. 

   Depreciation and amortization expenses increased from $8.7 million in 1994 
to $12.3 million in 1995, an increase of $3.6 million or 42.0%, and increased 
as a percentage of revenues from 9.9% in 1994 to 11.8% in 1995. Depreciation 
and amortization expenses, both in absolute dollars and as a percentage of 
revenues, continued to increase, primarily as a result of the Company's 
acquisitions and growth-related capital investments for racking systems, 
improvements to records management facilities, information systems and 
customer acquisition costs. Amortization during 1995 included a one-time 
charge of $0.9 million (0.9% of revenues) in connection with the write-down 
of the goodwill of a subsidiary due to the Company's decision to sell such 
subsidiary at an estimated price which is $0.9 million less than such 
subsidiary's book value and related goodwill. The Company subsequently 
decided not to sell such subsidiary. 

   As a result of the foregoing factors, operating income increased from 
$12.2 million in 1994 to $13.8 million in 1995, an increase of $1.6 million 
or 13.0%, and decreased as a percentage of revenues from 13.9% to 13.2%. 

   Interest expense increased from $9.0 million in 1994 to $11.8 million in 
1995. This increase was due primarily to increased levels of indebtedness 
primarily to finance acquisitions, as well as higher interest rates and 
higher deferred financing charges. 

   As a result of the foregoing factors, income before provision for income 
taxes decreased from $3.2 million (3.7% of revenues) in 1994 to $1.9 million 
(1.9% of revenues) in 1995, a decrease of $1.3 million or 40.0%. Provision 
for income taxes decreased from $2.0 million (2.2% of revenues) to $1.7 
million (1.7% of revenues). The Company's effective tax rates for 1994 and 
1995 were higher than statutory rates primarily due to $1.5 million and $2.5 
million, respectively, of amortization of nondeductible goodwill. 

   Net income decreased $1.1 million from $1.3 million (1.5% of revenues) in 
1994 to $0.2 million (0.2% of revenues) in 1995 as a result of the factors 
outlined above. 

   As a result of the foregoing factors, EBITDA increased from $20.9 million 
in 1994 to $26.1 million in 1995, an increase of $5.2 million or 25.1%, and 
increased as a percentage of revenues from 23.8% to 25.0%. These increases 
reflect continuing economies of scale and increased operating efficiencies, 
which were partially offset by the $0.6 million (0.6% of revenues) reserve 
relating to the judgment in the lawsuit referred to above and by the $0.5 
million (0.5% of revenues) charge for the relocation of the corporate 
accounting function from Los Angeles to Boston. 

Year Ended December 31, 1994 Compared to Year Ended December 31, 1993 

   Storage revenues increased from $48.9 million in 1993 to $54.1 million in 
1994, an increase of $5.2 million or 10.6%. The substantial majority of the 
storage revenues growth resulted from sales to new customers and increases in 
Cartons stored from existing customers. Three acquisitions completed between 
June and October 1994 accounted for only $0.8 million of the increase. 

   Service and storage material sales revenues increased from $32.8 million 
in 1993 to $33.5 million in 1994, an increase of $0.7 million or 2.3%. This 
increase was due primarily to an increase in services provided to existing 
and new customers, which was partially offset by a $0.9 million decrease in 
such revenues received from the RTC primarily due to a reduction in revenues 
from special service projects. 

   For the reasons discussed above, total revenues increased from $81.7 
million in 1993 to $87.6 million in 1994, an increase of $5.9 million or 
7.3%. The monthly average Cartons stored increased from approximately 14.5 
million 

                                      36 

 
in 1993 to approximately 16.7 million in 1994, an increase of approximately 
15%. The percentage increase in Cartons stored was greater than that of total 
revenues for the reasons discussed in the third paragraph under "Overview" 
above. 

   Cost of sales (excluding depreciation) increased from $43.1 million in 
1993 to $45.9 million in 1994, an increase of $2.8 million or 6.6%, and 
decreased as a percentage of revenues from 52.7% in 1993 to 52.4% in 1994. 
The $2.8 million increase was due primarily to increases in storage capacity. 
The decrease as a percentage of revenues was due primarily to increased 
storage efficiencies. 

   Selling, general and administrative expenses increased from $20.0 million 
in 1993 to $20.9 million in 1994, an increase of $0.9 million or 4.4%, and 
decreased as a percentage of revenues from 24.5% in 1993 to 23.8% in 1994. 
The increase in such expenses was due primarily to inflationary increases in 
wages and benefits, partially offset by a $0.2 million decrease in bad debt 
expense. The decrease as a percentage of revenues was due to operating 
efficiencies and the decrease of 0.3% in bad debt expense. 

   Depreciation and amortization expenses increased from $6.8 million in 1993 
to $8.7 million in 1994, an increase of $1.9 million or 28.0%, and increased 
as a percentage of revenues from 8.3% in 1993 to 9.9% in 1994. This increase, 
both in dollars and as a percentage of revenues, was due primarily to an 
increase in depreciation charges resulting from capital expenditures for 
racking systems and improvements to records management facilities and 
information systems. 

   As a result of the foregoing factors, operating income increased from 
$11.9 million in 1993 to $12.2 million in 1994, an increase of $0.3 million 
or 2.8%, and decreased from 14.5% of revenues to 13.9% of revenues. 

   Interest expense increased from $8.2 million in 1993 to $9.0 million in 
1994, an increase of $0.8 million or 9.2%, due primarily to increased levels 
of indebtedness. 

   As a result of the foregoing factors, income before provision for income 
taxes decreased from $3.7 million in 1993 (4.5% of revenues) to $3.2 million 
in 1994 (3.7% of revenues), a decrease of $0.5 million or 11.4%. Provision 
for income taxes decreased from $2.1 million in 1993 (2.6% of revenues) to 
$2.0 million in 1994 (2.2% of revenues). The Company's effective tax rates 
for financial reporting purposes for 1994 and 1993 exceeded statutory tax 
rates primarily because of $1.5 million of amortization of nondeductible 
goodwill in each year. 

   Net income decreased from $1.6 million (1.9% of revenues) to $1.3 million 
(1.5% of revenues) as a result of the factors outlined above. 

   As a result of the foregoing factors, EBITDA increased from $18.6 million 
in 1993 to $20.9 million in 1994, an increase of $2.3 million or 12.0%, and 
increased as a percentage of revenues from 22.8% to 23.8%. The increase as a 
percentage of revenues reflected economies of scale and increased operating 
efficiencies. 

                                      37 

 
Recent Quarterly Financial Data 

   The following table sets forth certain consolidated statements of 
operations data of the Company for the quarterly periods shown. 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 
                 --------------------------------------------------------------------------------------------------- 
                               1994                                  1995                            1996 
                 ----------------------------------  ----------------------------------------    ------------------- 
                 
                 Mar. 31 June 30  Sept. 30  Dec. 31  Mar. 31    June 30    Sept. 30   Dec. 31    Mar. 31     June 30 
                 ------- -------  --------  -------  -------    -------    --------   -------    -------     ------- 
                                                          (In thousands) 
                                                                               
Revenues: 
 Storage         $12,863 $13,220  $13,855   $14,160  $14,882    $15,866    $16,246    $17,171    $19,154     $20,209 
 Service and 
  Storage 
 Material 
  Sales            8,452   8,489    8,171     8,408    9,456     10,020     10,324     10,471     11,874      12,713 
                 ------- -------   ------   -------  -------    -------    -------    -------    -------     ------- 
Total Revenues    21,315  21,709   22,026    22,568   24,338     25,886     26,570     27,642     31,028      32,922 
Operating 
  Expenses: 
 Cost of Sales 
  (Excluding 
   Depreciation)  11,429  11,325   11,509    11,617   12,224     12,888     12,888     14,277     15,668      16,715 
 Selling, 
  General and 
  Administrative   5,146   5,113    5,329     5,265    5,849      6,848(2)   6,358      6,980(4)   7,807       8,260(5) 
 Depreciation 
  and   
  Amortization     1,845   1,936    2,526(1)  2,383    2,752      2,676      3,775(3)   3,138      3,608       3,922 
                 ------- -------   ------   -------  -------    -------    -------    -------    -------     ------- 
Total Operating 
  Expenses        18,420  18,374   19,364    19,265   20,825     22,412     23,021     24,395     27,083      28,897 
                 ------- -------   ------   -------  -------    -------    -------    -------    -------     ------- 
Operating Income $ 2,895 $ 3,335  $ 2,662   $ 3,303  $ 3,513    $ 3,474    $ 3,549    $ 3,247    $ 3,945     $ 4,025 
                 ======= =======  =======   =======  =======    =======    =======    ========   =======     ======= 
EBITDA           $ 4,740 $ 5,271  $ 5,188   $ 5,686  $ 6,265    $ 6,150(2) $ 7,324    $ 6,385(4) $ 7,553     $ 7,947(5) 


- ------------- 

(1) Includes a $277 write-down relating to the closing of two facilities. 
(2) Includes a $600 reserve for litigation. 
(3) Includes a $900 write-down of the goodwill of a subsidiary as described 
    in "Results of Operations." 
(4) Includes a charge of $500 relating to the relocation of the Company's 
    corporate accounting function. 
(5) Includes a charge of $321 relating to the relocation of the Company's 
    corporate accounting function. 

Liquidity and Capital Resources 

   In February 1996, the Company raised $33.3 million, net of underwriters' 
discounts and commissions and associated costs, in the Initial Public 
Offering. The net proceeds from the Initial Public Offering were used to 
retire the Warrant, to fund acquisitions, to repay debt that had been 
incurred to make acquisitions and for working capital. 

   As the Company has sought to increase its EBITDA, it has made significant 
capital investments, consisting primarily of acquisitions; growth-related 
capital expenditures, including racking systems, information systems and 
improvements to existing facilities; and customer acquisition costs. Cash 
paid for these investments during the first six months of 1996 amounted to 
$19.2 million, $11.2 million and $0.7 million, respectively. These 
investments have been primarily funded through a portion of the net proceeds 
of the Initial Public Offering, cash flows from operations and borrowings 
under the Credit Agreement. 

   Stockholders' equity has been negatively affected primarily by the 
accretion of the Warrant, interest expense, depreciation and amortization 
expenses associated with expansion of the Company's storage capacity and the 
acquisition of certain large volume accounts, and amortization of goodwill. 
In part as a result of the Initial Public Offering, the Company's ratio of 
total debt to stockholders' equity decreased from 3.1-to-1 at December 31, 
1992 to 2.2-to-1 at June 30, 1996. On a pro forma basis (after giving effect 
to the Transactions), the ratio of total debt to stockholders' equity at June 
30, 1996 would have been 3.3-to-1. 

   The Company currently intends to apply a portion of the net proceeds from 
the Offering to the prepayment of the Credit Agreement, the Chrysler Notes 
and the FDS Notes. The Company will record, in the quarter in which 

                                      38 

 
the Offering is consummated, an extraordinary loss on retirement of debt, net 
of related tax benefit. Assuming the Transactions were to be consummated on 
September 30, 1996, the amount of such loss would be approximately $2.0 
million. Such loss will consist of the write-down of deferred financing 
costs, original issue discount, prepayment penalty and loss on possible 
termination of certain interest rate protection agreements. 

Capital Investments 

   For 1994, 1995 and the six months ended June 30, 1996, the Company's 
growth-related capital expenditures were $15.8 million, $14.4 million and 
$10.7 million, respectively. Included in capital expenditures for 1994 is 
$2.9 million for the construction of a records management facility which was 
sold in a sale and leaseback transaction. Growth-related capital expenditures 
consist primarily of investment in racking systems, new building and 
leasehold improvements, equipment for new facilities, management information 
systems and facilities restructuring. For 1994, 1995 and the six months ended 
June 30, 1996, the Company's maintenance capital expenditures were $1.2 
million, $0.9 million and $0.5 million, respectively. 

   In addition, the Company incurs costs (net of revenues received for the 
initial transfer of records) related to the acquisition of large volume 
accounts (typically over 10,000 Cartons). For 1994, 1995 and the six months 
ended June 30, 1996, the Company's additions to customer acquisition costs 
were $1.4 million, $1.4 million and $0.7 million, respectively. 

   The Company currently expects that its capital expenditures (other than 
capital expenditures related to future acquisitions, which cannot be 
presently estimated) for the second half of 1996 will be between $9 million 
and $10 million, and for 1997 will be between $18 million and $21 million. 
The Company expects to fund these expenditures and costs from cash flows from 
operations and by borrowings under the New Credit Facility. 

Recent and Pending Acquisitions 

   
   The Company's liquidity and capital resources have been significantly 
impacted by acquisitions and, given the Company's acquisition strategy, may 
be significantly impacted for the foreseeable future. In order to capitalize 
on industry consolidation, the Company in mid-1994 adopted a more active 
acquisition strategy. Since mid-1994, the Company has acquired or entered 
into agreements to acquire 19 records management businesses, 18 of which have 
been completed and one of which is pending, for a total purchase price of 
$103.2 million (not including contingent payments of up to $4.6 million based 
upon the achievement of certain revenue targets during 1996 through 1998). 
The Company has historically financed its acquisitions with borrowings under 
the Credit Agreement in conjunction with cash flows provided by operations 
and, more recently, from a portion of the proceeds of the Initial Public 
Offering. Net borrowings for acquisitions during 1994, 1995 and the first six 
months of 1996 totaled $2.1 million, $32.3 million and $19.0 million, 
respectively. In addition, subsequent to June 30, 1996, the Company has 
incurred an additional $28.3 million under the Credit Agreement to fund the 
Completed Acquisitions consummated after such date. The Company intends to 
use a portion of the net proceeds from the Offering to fund the Pending 
Acquisition. The Company's future interest expense may increase significantly 
as a result of the additional indebtedness the Company may incur to finance 
possible future acquisitions. To the extent that future acquisitions are 
financed by additional borrowings under the New Credit Facility or other 
credit facilities, the resulting increase in debt and interest expense could 
have a negative effect on such measures of liquidity as debt to equity, 
EBITDA to debt and EBITDA to interest expense. 
    

Sources of Funds 

   During the six months ended June 30, 1996, the Company generated $8.1 
million in cash flows from operations as compared to $8.2 million for the 
same period of the prior year. Such change in cash flows from operations 
resulted from a $3.1 million increase in EBITDA and an increase in accounts 
payable, which were partially offset by an increase in accounts receivable 
and other changes in working capital accounts. During the years ended 
December 31, 1994 and 1995, the Company generated cash flows from operations 
of $11.6 million and $15.7 million, respectively. 

   At December 31, 1995, the Company had estimated net operating loss 
carryforwards of approximately $7.3 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. 

                                      39 

 
   Net cash flows provided by financing activities were $6.7 million and 
$34.1 million in 1994 and 1995, respectively, substantially all of which was 
provided under the Credit Agreement, and $23.7 million for the six months 
ended June 30, 1996, substantially all of which was provided by the net 
proceeds of the Initial Public Offering and under the Credit Agreement. 

Credit Arrangements of the Company 

   The Credit Agreement provides for total borrowings not to exceed $130 
million and consists of the following facilities: (i) a $15 million revolving 
working capital facility; (ii) a $10 million term loan; (iii) a $55 million 
revolving acquisition credit facility; and (iv) a $50 million term loan. At 
June 30, 1996, all borrowings under the Credit Agreement bore interest at a 
weighted average annual rate of 8.5%. The obligations under the Credit 
Agreement are secured by substantially all of the Company's assets, including 
the stock of its operating subsidiaries. The Company also has the Chrysler 
Notes outstanding. These facilities require the Company to meet certain 
financial covenants and ratios. See Note 3 of Notes to the Company's Audited 
Consolidated Financial Statements. 

   The Company intends to apply a portion of the net proceeds from the 
Offering to prepay in its entirety all indebtedness outstanding under the 
Credit Agreement and the Chrysler Notes. See "The Transactions" and "Use of 
Proceeds." In addition, the Company intends to terminate the Credit Agreement 
and to enter into the New Credit Facility as a replacement bank credit 
facility. The New Credit Facility will provide the Company with revolving 
credit availability of $100 million for acquisitions, working capital and 
other corporate purposes. See "Description of the New Credit Facility" for a 
more detailed description of the anticipated terms of the New Credit 
Facility. No assurance can be given that the Company will enter into the New 
Credit Facility on these or any other terms. The Offering is not conditioned 
on the closing of the New Credit Facility. 

   The annual maturities of Iron Mountain's indebtedness for the second half 
of 1996 and for 1997, 1998, 1999 and 2000 are $1.6 million, $3.4 million, 
$8.3 million, $8.4 million and $32.5 million, respectively. Giving pro forma 
effect to the Transactions, the annual maturities of Iron Mountain's 
indebtedness for the second half of 1996 and for 1997, 1998, 1999 and 2000 
would be $0.1 million, $0.4 million, $0.4 million, $0.4 million and $7.8 
million, respectively. 

   
   As of June 30, 1996, the Company had available under the Credit Agreement 
$6.2 million under the working capital facility and $24.7 million under the 
acquisition credit facility. Subsequent to June 30, 1996, the Company 
borrowed $28.3 million under the acquisition credit facility to finance 
acquisitions, and amended the Credit Agreement to increase the acquisition 
credit facility by $5.0 million. As of June 30, 1996, on a pro forma basis, 
after giving effect to the Transactions (see "The Transactions" and "Use of 
Proceeds"), the Company would have had $175.8 million in total indebtedness 
and $100.0 million available under the New Credit Facility. 
    

   Under the Credit Agreement, Iron Mountain is required to use, and may in 
the future use, interest rate protection products to reduce its exposure to 
increases in interest rates. Under the New Credit Facility, Iron Mountain 
will also be required to use such interest rate protection products. As of 
June 30, 1996, the Company had $118.9 million of total debt, of which $26.0 
million had fixed interest rates and $92.9 million had variable interest 
rates, $30.0 million of which was covered by interest rate protection 
products, certain of which may be terminated in connection with the repayment 
of the Credit Agreement. See Note 3 of Notes to the Company's Audited 
Consolidated Financial Statements. 

Future Capital Needs 

   Iron Mountain's ability to generate cash adequate to fund its needs 
depends generally on the results of its operations and the availability of 
financing. Management believes that cash flow from operations in conjunction 
with borrowings from existing and possible future credit facilities will be 
sufficient for the foreseeable future to meet debt service requirements and 
to make possible future acquisitions and capital expenditures. Depending on 
the pace of the Company's acquisitions, the Company may elect to seek 
additional financing during the next two years. The Company anticipates that 
any such financing will be debt financing, including the issuance of debt 
securities. However, depending on market conditions and the preferences of 
acquisition candidates, the Company would consider issuing equity securities. 
However, there can be no assurance in this regard or that the terms available 
for any future financing, if required, would be favorable to Iron Mountain. 

                                      40 

 
Seasonality 

   Historically, the Company's business has not been subject to seasonality 
in any material respect. 

Inflation 

   Certain of the Company's expenses, such as wages and benefits, occupancy 
costs and equipment repair and replacement, are subject to normal 
inflationary pressures. Although the Company to date has been able to offset 
inflationary cost increases through increased operating efficiencies, there 
can be no assurance that the Company will be able to offset any future 
inflationary cost increases through similar efficiencies or increased storage 
or service charges. 

                                      41 

 
                                    BUSINESS

Introduction 

   Iron Mountain is the largest records management company in the United 
States, as measured by revenues. The Company is a full-service provider of 
records management and related services, enabling customers to outsource data 
and records management functions. Pro forma for the Transactions, as of June 
30, 1996, the Company managed approximately 29.6 million Cartons in 103 
records centers in 33 markets nationwide. The Company has a diversified base 
of over 19,000 customer accounts, which includes more than half of the 
Fortune 500 and numerous legal, banking, healthcare, accounting, insurance, 
entertainment and government organizations. The Company provides storage and 
related services for all major media, including paper (which is the dominant 
form of records retention and which has accounted for approximately 85% of 
the Company's revenues since 1992), computer disks and tapes, microfilm and 
microfiche, master audio and video tapes, film and optical disks, X-rays and 
blueprints. The Company's principal services include filing, retrieval and 
destruction of records, courier pick-up and delivery, database management and 
customized reporting. The Company also sells storage materials and provides 
consulting and other records-related services. 

The Records Management Industry 

Overview 

   Based on publicly available information, organizations in the United 
States generate an estimated four trillion documents each year. Many of these 
documents must be retained and available for reference for many years. These 
records may be generally 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 which originated them to ensure ready 
availability. 

   Inactive records are the principal focus of the records management 
industry. Inactive records consist of those records which are not needed for 
immediate access but which must be retained for legal reasons or regulatory 
compliance or for occasional reference in support of ongoing business 
operations. Based on industry studies, the Company believes that inactive 
records make up approximately 80% of all records. 

   [triangle graphic showing ACTIVE = 20% and INACTIVE = 80%] 

Growth of Market; Outsourcing 

   The Company believes that the volume of inactive records is increasing for 
a number of reasons, including: (i) the rapid growth of inexpensive 
document-producing technologies such as facsimile, desktop printing and 
computer networking; (ii) increased regulatory requirements; (iii) concerns 
over possible future litigation and the resulting increases in volume and 
holding periods of documentation; (iv) the high cost of reviewing records and 
deciding whether to retain or destroy them; and (v) the failure of many 
entities to adopt or follow policies on records destruction. Despite the 
growth of new "paperless" technologies, such as the Internet and e-mail, 
management believes that stored information remains predominantly paper-based 
and that such technologies have promoted the creation of hard copies of such 
electronic information. 

   The Company believes that the records management industry will gain a 
growing share of this increased volume as more large organizations make the 
strategic decision to outsource their records management as part of 

                                      42 

 
a growing trend to outsource a wide variety of functions that can be 
performed more cost-effectively by third parties, though there can be no 
assurance in this regard. Records management companies can offer occupancy 
and labor cost reductions while at the same time providing greater levels of 
service than are typically available in-house. 

Highly Fragmented Industry 

   Most records management companies serve a single local market, and are 
often either owner-operated or ancillary to another business, such as a 
moving company. According to the ACRC, as of January 1994 (the latest date 
for which such information is available), approximately 2,600 firms offered 
records storage and management services in the United States. The Company 
believes that there are only four national providers in the industry 
(including the Company) and that the rest are regional or, in most instances, 
single-city operators. 

Increasing Industry Consolidation 

   The Company believes that there is a trend towards consolidation in the 
records management industry and that it will continue and accelerate because 
of the industry's capital requirements for growth, customer demands for more 
sophisticated technology solutions, a trend for certain large customers to 
contract with one vendor in multiple cities and opportunities to achieve 
economies of scale. 

   The records management business requires significant up-front capital 
investment for real estate, racking systems and management information 
technology. Economies of scale available in these areas can reward larger 
initial capital investments by reducing per unit storage costs. However, such 
economies of scale are only realized once a facility begins storage 
operations and fills available capacity. Thus, larger companies with both 
access to capital and the ability to quickly fill a new facility enjoy a 
competitive cost advantage, thereby putting pressures on smaller competitors. 

Financial Characteristics of Iron Mountain's Business 

   Iron Mountain's records management business has the following financial 
characteristics: 

   (bullet) Recurring Revenues. Iron Mountain derives a majority of its 
            revenues from fixed periodic (usually monthly) fees charged to 
            customers for storage of records. Storage revenues have grown for 
            30 consecutive quarters and have represented approximately 60% of 
            the Company's total revenues in each of the last five years. Once 
            a customer places a record in storage with the Company and until 
            that record is destroyed or permanently removed (for which the 
            Company typically receives a service fee), the Company receives 
            recurring payments of fixed periodic fees without incurring 
            additional labor or marketing expenses or significant capital 
            costs. The stable and growing storage base also provides the 
            foundation for increases in revenues and EBITDA from service 
            activities and sales of storage materials. 

   (bullet) Historically Non-Cyclical Business. Iron Mountain has not 
            experienced a reduction of its business as a result of past 
            general economic downturns, although there can be no assurances 
            that this would be the case in the future. Management believes 
            that the outsourcing of records management may accelerate during 
            economic downturns as companies focus on reducing costs through 
            outsourcing non-core operating functions. In addition, management 
            believes that companies that have outsourced records management 
            are less likely during economic downturns to incur the move-out 
            costs and other expenses associated with switching vendors or 
            moving records management in-house. 

   (bullet) Inherent Growth from Existing Customers. The Company's customers 
            have on average generated additional Cartons at a faster rate 
            than stored Cartons have been destroyed or permanently removed. 
            From 1992 to 1995, net Cartons from existing customers grew at an 
            average annual rate of 6.7%. The Company believes the consistent 
            growth of its storage revenues is the result of a number of 
            additional factors, including: (i) the trend toward increased 
            records retention; (ii) customer satisfaction with the Company's 
            services; and (iii) the costs and inconvenience of moving storage 
            operations in-house or to another provider of records management 
            services. 

   (bullet) Diversified and Stable Customer Base. The Company has over 19,000 
            customer accounts in a variety of industries. The Company 
            currently provides services to more than half of the Fortune 500 
            and numerous legal, banking, healthcare, accounting, insurance, 
            entertainment and government organizations. Only one 

                                      43 

 
            of the Company's customers accounted for more than 3% of revenues 
            in 1993, 1994 or 1995. From 1992 to 1995, average annual 
            permanent removals of Cartons represented only approximately 4% 
            of total Cartons stored. 

   (bullet) Capital Expenditures Related Primarily to Growth. The Company's 
            business requires limited annual maintenance capital 
            expenditures. Maintenance capital expenditures were $1.8 million, 
            $1.2 million and $0.9 million in 1993, 1994 and 1995, 
            respectively. From 1992 to 1995, over 90% of the Company's 
            aggregate capital expenditures were growth-related investments, 
            primarily in racking systems, new buildings and leasehold 
            improvements, equipment for new facilities, management 
            information systems and facilities restructuring. These 
            growth-related capital expenditures are primarily discretionary 
            and create additional capacity for increases in revenues and 
            EBITDA. 

Growth Strategy 

   Iron Mountain's growth strategy is to expand aggressively in existing and 
new markets through increased business from existing customers, additions of 
new customers and acquisitions. The Company's goal is to be one of the 
largest records management companies in each of its markets. In addition, 
through its growth strategy, the Company seeks to attain increasing economies 
of scale in order to provide high-quality service at competitive prices. 

   The following table sets forth the Company's approximate growth in Cartons 
stored by existing customers, new customers and as a result of acquisitions 
for the three years ended December 31, 1993, 1994 and 1995 and the twelve 
months ended June 30, 1996. The figures for the twelve months ended June 30, 
1996 are not necessarily indicative of the results that will be achieved for 
the twelve months ended December 31, 1996. 

                         Cartons Added to Storage(1) 
                                (In millions) 



                                             Year Ended December 31,    Twelve Months 
                                             -----------------------    Ended June 30, 
                                             1993     1994     1995          1996 
                                             ----     ----     ----     -------------- 
                                                                 
Cartons at Beginning of Period               12.6     15.5     17.7          20.3 
                                             ====     ====     ====          ====
 Gross Cartons Added (2)                      1.9      2.6      2.5           3.1 
 Cartons Deleted: 
  Destructions                               (0.6)    (0.9)    (1.0)         (1.1) 
  Permanent Removals                         (0.6)    (0.6)    (0.6)         (0.8) 
                                             ----     ----     ----          ---- 
Net Carton Growth from Existing Customers     0.7      1.1      0.9           1.2 
Additions from New Customers (2)              2.2      1.0      1.4           1.8 
Additions from Acquisitions                   0.0      0.1      3.3           3.1 
                                             ----     ----     ----          ---- 
Total Carton Additions                        2.9      2.2      5.6           6.1 
                                             ====     ====     ====          ==== 
Percentage Increase                            23%      14%      32%           30% 
  

- ------------- 

(1) Excludes storage volumes attributable to the Company's vital records 
    services and data protection services. 
(2) Gross Cartons added by the RTC or its successor the FDIC were 
    approximately 0.9 million, 0.3 million, 0.3 million and 0.3 million for 
    1993, 1994, 1995 and the twelve months ended June 30, 1996, respectively. 
    RTC additions in 1993 are included in Additions from New Customers 
    because the initial transfer of Cartons from the RTC commenced in the 
    fourth quarter of 1992 and continued into 1993. Additions in 1994, 1995 
    and the twelve months ended June 30, 1996 are included in Additions from 
    Existing Customers. 

Growth from Existing Customers 

   Existing Iron Mountain customers have contributed to storage and services 
revenue growth because they have on average generated additional Cartons at a 
faster rate than old Cartons are destroyed or permanently removed. In order 
to maximize growth opportunities from existing customers, the Company seeks 
to maintain high levels of customer retention by providing premium customer 
service through its decentralized customer support staff. 

                                      44 

 
   The local customer support staff, working in conjunction with the 
corporate staff, is also responsible for marketing additional services to 
existing customers, including records tracking, indexing, customized 
reporting, vital records management and records management consulting 
services. 

Additions of New Customers 

   The Company's direct sales force is dedicated solely to establishing new 
account relationships and draws on the Company's national marketing 
organization and senior management. New customer sales efforts have resulted 
in the addition of more than 900 new customer accounts in each of the last 
three years. 

   Iron Mountain segments its market into large volume accounts (typically 
over 10,000 Cartons) and standard accounts. As of June 30, 1996, large volume 
accounts represented more than half of the total Cartons stored. The two 
segments differ in complexity of service and technology needs, purchasing 
behavior and purchasing leverage. The Company employs different database 
marketing techniques, program design features and pricing structures to meet 
the needs of each segment. In recent years the Company's large volume account 
segment has grown rapidly, driven by strategic outsourcing initiatives and 
the Company's marketing efforts. In 1993, 1994, 1995 and the six months ended 
June 30, 1996, large volume accounts represented 88%, 70%, 76% and 63% 
respectively, of the additions of Cartons from new customers. 

Growth through Acquisitions 

   Iron Mountain has had a successful record of acquiring and integrating 
smaller records management companies. From 1990 through 1994, Iron Mountain 
completed five acquisitions. In order to capitalize on industry 
consolidation, the Company in mid-1994 adopted a more active acquisition 
strategy and implemented changes in its management, systems and financial 
infrastructure, including the consummation of the Initial Public Offering, to 
execute such strategy. Since June 1994, the Company has acquired or entered 
into agreements to acquire 19 companies, 18 of which have been completed and 
one of which is pending. The Company operates in 32 markets nationwide and 
intends to continue to make fold-in acquisitions in existing markets and to 
make strategic acquisitions in new geographic markets, with an emphasis on 
the 50 largest markets in the United States. The Company's corporate 
development staff is engaged in an ongoing review of acquisition candidates. 
As of the date hereof, the Company is in contact with approximately 40 
companies, and expects that it will continue to meet several new candidates 
each month, although the actual number may vary from month to month and there 
can be no assurance that any such review will result in an acquisition. 
Management believes that Iron Mountain is well positioned to participate in 
the further consolidation of the records management industry. See "Risk 
Factors--Risks Associated with Acquisition Strategy" and "Recent and Pending 
Acquisitions." 

   The Company seeks to expand its national presence, size and customer base 
through new-market acquisitions. Management believes that the high start-up 
costs of commencing operations make acquisitions an attractive means of 
entering new markets. The Company seeks to acquire records management 
companies in markets where management believes there is the potential for 
growth. Within such markets, the Company uses a variety of criteria to 
evaluate acquisition candidates, including the capacity and condition of 
existing storage facilities, past and current operating performance and 
revenues and the experience and depth of existing management. The Company is 
also considering investments in records management businesses outside of the 
United States. See "Potential International Investments." 

   The Company believes that it can use its expertise and central 
administrative organization to leverage the acquisition candidate's local 
market presence, promoting the development of underperforming facilities and 
enhancing the value of the local assets. The Company believes that its 
new-market acquisition strategy could have a number of benefits, including: 
(i) continued growth in revenues and EBITDA and diversification across a 
greater number of markets; (ii) introduction of the Company's efficient 
storage, labor, transportation and other operating efficiencies into new 
markets; (iii) the increased utilization of efficiencies available through 
the Company's central administrative and management information functions; 
(iv) increased market awareness of Iron Mountain's national scope and 
presence; and (v) increased overall scale, which should broaden the range of 
and facilitate the Company's capital-raising activities. See "Risk 
Factors--Risks Associated with Acquisition Strategy." 

   The Company also intends to continue to make fold-in acquisitions to 
augment its operations in existing markets. The Company's goal in its 
existing markets is to exploit economies of scale while maintaining high 
quality 

                                      45 

 
service. Following a new-market acquisition, the Company seeks to increase 
its business with the acquired customer base and to supplement that growth 
with new customers and, potentially, with appropriate fold-in acquisitions so 
that the Company may benefit from economies of scale. 

Premium Service Strategy 

   Organizations selecting a provider of records management services consider 
a number of factors in addition to price. Management believes that Iron 
Mountain is a "premium" brand in the marketplace based upon its reputation 
for reliability, customer-oriented organization, investment in technology and 
national operating presence. The Company seeks to exploit its strengths in 
each of these areas to maintain customer relationships and to attract new 
customers. 

   Reputation for Reliability. The Company believes it has a reputation for 
reliability based on its more than 40 years of operations, the continuity and 
depth of its management, its successful historical growth, the quality and 
diversity of its customer base which includes more than half the Fortune 500, 
its technological capabilities and its size and financial resources. 

   Customer-Oriented Organization and Locally Responsive Management. Iron 
Mountain has developed a decentralized, local management structure that 
brings significant management experience and stability to local markets and 
allows the Company to respond directly, effectively and flexibly to 
customers. Broad operating authority is delegated to regional Vice Presidents 
and to local managers. In pursuing its acquisition strategy, Iron Mountain 
seeks to capitalize upon the experience and strengths of existing management. 
In addition, all full-time union and non-union employees participate in 
incentive-based compensation programs that provide payments based on profits 
or attainment of specified objectives for the unit in which they work. Iron 
Mountain believes that the experience, stability and commitment of its 
regional and local management is integral to its ability to provide superior 
customer service and maximize growth potential. 

   Investment in Technology. The Company has invested $12.5 million in 
technology since 1992 in order to provide faster and more flexible solutions 
for its customers and to enhance the quality and lower the costs of its own 
operations. The Company believes that its technological capabilities, 
especially its Safekeeper system, are a significant tool in attracting new 
customers. The Company plans to continue to invest in its proprietary 
technologies in the future. See "Technology and Development; Management 
Information Systems." 

   National Operating Presence. The Company believes it is one of only four 
records management companies with a national operating presence. 
Traditionally, the purchase decision for large multi-site customers has been 
made at the local level. Recently, however, the Company has found that 
certain large organizations have sought to obtain operating and economic 
efficiencies by outsourcing a significant portion of their records management 
functions with a single records management company. The Company seeks to use 
its national operating presence to compete for such large multi-site customer 
accounts. 

Low-Cost Operating Strategy 

   Iron Mountain pursues a low-cost operating strategy based primarily on 
achieving economies of scale in the areas of storage, labor and 
transportation, general and administrative functions and management 
information systems. The Company believes that it is one of the few records 
management companies with the size and resources to realize significant 
economies of scale in these areas. 

Storage Costs 

   Because occupancy costs are a major component of the Company's cost of 
sales, reducing per Carton storage costs is a primary strategic goal of the 
Company and its real estate management staff. The Company seeks to minimize 
per Carton storage costs by: (i) designing racking systems and operating 
space to maximize facility storage efficiency; (ii) negotiating favorable 
facility leases and having facilities built to its custom specifications; and 
(iii) leasing larger facilities, which, when filled, are less expensive per 
Carton to operate. Since 1991, the Company has acquired or leased 11 
custom-designed records management facilities. The average Carton density 
(the ratio of standard Carton storage capacity to total square feet of floor 
space) of these facilities is approximately twice 

                                      46 

 
that of the Company's overall average Carton density. As a result of these 
practices and after giving effect to the consummation of the Acquisitions, 
average Carton density in the Company's facilities increased 32% from 
December 31, 1992 to June 30, 1996. 

Labor and Transportation Efficiency 

   The Company has made significant investments in computer technologies for 
its service operations, resulting in greater efficiencies. In addition, by 
increasing its operations and customer base in a local market area, the 
Company seeks to maximize its courier delivery fleet usage and to increase 
delivery and routing efficiencies. 

   The Company's incentive structure has also contributed to labor 
efficiency. Each of the Company's full-time employees participates in 
incentive compensation programs based upon achievement of specific operating 
targets designed to integrate the objectives and performance of records 
management facility employees and managers. For the six months ended June 30, 
1996, the Company's employees earned incentive compensation in an amount 
equal to approximately 10.8% of the base wages paid by the Company. 

   In part as a result of the foregoing factors, while the number of Cartons 
stored at the Company's facilities between January 1, 1992 and June 30, 1996 
increased by approximately 15.6 million (or approximately 144%), the 
Company's staff increased during the same period by approximately 520 
employees (or approximately 65%). 

G&A and MIS Efficiencies 

   The Company's corporate staff provides support to local management in the 
areas of acquisitions, marketing, facility acquisition and leasing, racking 
system purchasing, finance and accounting and human resource management. In 
addition, the Company's corporate staff is responsible for the design and 
support of all records management technology. The Company believes that 
central support in these areas provides local managers with competitive 
advantages over smaller, local competitors and results in significant 
economies of scale. 

Technology and Development; Management Information Systems 

   The Company pioneered the application of advanced information technology 
to the records management industry. Iron Mountain's proprietary Safekeeper 
system provides advanced inventory control and information access, enabling 
the Company to provide faster, higher quality and more flexible solutions to 
its customers and to lower the costs of its operations. Iron Mountain's 
Safekeeper system exploits bar-code technology to provide inventory integrity 
and a comprehensive, standardized approach to tracking, accessing and 
retrieving records. Safekeeper offers state-of-the-art records management 
capabilities and ease of access to customers while featuring security 
functions to protect customer information from unauthorized access. The 
system coordinates inventory control, order entry, billing, material sales, 
service activity, accounts receivable and management reporting, and features 
system-driven quality assurance and error-prevention. Since 1992, the Company 
has invested $12.5 million to develop and refine its management information 
systems, including Safekeeper. 

   Safekeeper is built on an open systems architecture which is fully 
portable and can be implemented in small processing environments with several 
users and in large processing environments with hundreds of users. This 
allows the Company a substantial measure of flexibility and vendor 
independence, and reduces the risk of technological obsolescence. 

   Safekeeper has improved the Company's customer support and operating 
efficiency in the following ways: 

   (bullet) Acquisition System Integration. Safekeeper has been designed to 
            easily and effectively integrate newly acquired records 
            management companies and offer improved levels of customer 
            service and records management capabilities to customers acquired 
            through acquisitions. The critical components of integrating 
            acquisition systems are the abilities to match the acquired 
            company's carton identifiers, location identifiers, records 
            descriptive data, and billing data. Safekeeper is designed with 
            flexible, comprehensive capabilities in each of these areas. 
            Consequently, an acquired company's inventory can be converted to 
            Safekeeper without having to relabel cartons or reset and relabel 
            inventory locations. The customers of the acquired company retain 
            their records data and receive similar billing rate structures. 
            In addition, acquisition customers experience minimal disruption 
            during integration and, after conversion, gain access to advanced 
            records management and information access capabilities. 
            Safekeeper utilizes a suite of 

                                      47 

 
            conversion routines to automate the conversion process and 
            effectively translate customer and inventory information. 

   (bullet) Storage Efficiency. Safekeeper enables the Company to maximize 
            the efficient use of storage space at its facilities. When 
            cartons are added or returned to storage, Safekeeper identifies 
            available space and the location of the customer's other records 
            at the facility. Because there is a continual flow of cartons 
            into and out of the Company's facilities, Safekeeper also permits 
            facility operators to utilize space that becomes available as 
            soon as cartons are removed. Safekeeper can pinpoint the location 
            of any carton, enabling facility operators to quickly determine 
            the optimal location for new or returning cartons. 

   (bullet) Inventory Integrity. Bar-coding and scanning are used to track a 
            carton or a record throughout its life cycle at Iron Mountain. 
            Safekeeper identifies inventory discrepancies during the order 
            processing cycle and forces their resolution before they affect 
            the customer. This forced discrepancy resolution means that 
            errors must be resolved before an order can be closed; until the 
            order is closed, billing cannot be processed. Management believes 
            that this system-driven quality assurance is a significant 
            advantage over the "best efforts" approach used by most of its 
            competitors. 

   (bullet) Customer Information Access. Customers can access their records 
            management data through a variety of formats, including direct 
            access via Safekeeper Online, access on their own PCs via 
            Safekeeper Desktop, integration of their internal system with 
            Safekeeper via automated file transfers and paper reports. 
            Safekeeper Online enables a customer to place orders directly via 
            online access, resulting in efficiencies for Iron Mountain order 
            processing. It features robust querying and searching tools to 
            enable customers to identify records with only partial 
            information. Safekeeper Desktop is a PC application, run from 
            customers' desktop or network PCs; it provides customers with an 
            entire set of records management data along with user-friendly 
            tools for querying, reporting, and editing. Safekeeper's suite of 
            file transfers enable customers to automatically transfer records 
            data and service requests from their internal system to 
            Safekeeper. The paper reports include inventory detail and 
            summary, service activity analysis, quality assurance, and 
            management review. 

   (bullet) Records Management Flexibility. Safekeeper offers full life-cycle 
            records management, from file creation to destruction, enabling 
            each customer to establish schedules for records retention and 
            destruction as dictated by the customer's specific needs. 
            Safekeeper can flexibly accommodate large or small amounts of 
            records management data in accordance with customer requirements. 
            A series of customer-specific features and options allows Iron 
            Mountain to tailor the records management functionality and 
            reporting to the customer's needs. 

   (bullet) Security. Safekeeper incorporates strict security protocols and 
            procedures for all customers to prevent unauthorized access to a 
            client's records information. Advanced security features that can 
            automatically restrict access by departmental identification 
            and/or type of service request are available to customers that 
            are internally set up to provide this information. 

   In addition to Safekeeper, the Company's data protection services 
facilities utilize the Company's Media Link(tm) software, a state-of-the-art 
media management system which provides integrated bar-code tracking and 
electronic data interface between customer and Iron Mountain facilities, as 
well as audit trail and remote inventory query functionality. The Company 
plans to continue to invest in its proprietary technologies in the future in 
order to enhance its customer service as well as to increase its own 
operating efficiency. 

Description of Iron Mountain Records Management Services 

   Iron Mountain's records management services consist primarily of the 
storage operations for the management of hard copy documents. These and 
related services and products sold have, since 1992, accounted for 
approximately 85% of the Company's revenues. The balance of the Company's 
revenues come from the storage and service of vital records and data 
protection, consulting and other services. 

                                      48 

 
Storage Operations 

   Storage revenues accounted for approximately 60% of revenues in each of 
the Company's last five fiscal years. Storage charges are generally billed 
monthly on a per storage unit basis (usually either per unit or per cubic 
foot of records) and include the provision of space, racking, computerized 
inventory and activity tracking, physical security, environmental and climate 
control and fire protection. 

   The storage of a carton begins by issuing Safekeeper bar-coded labels to 
the customer. The customer packs records in cartons and affixes the bar-coded 
label to each carton. Customer personnel and the Iron Mountain driver conduct 
a physical count of the cartons and the driver signs for the cartons, which 
are then transported to the records management facility. Upon delivery to the 
facility, the cartons are subjected to a second physical count. The cartons 
are delivered to available space identified by Safekeeper and the bar-coded 
information is scanned into the computer together with a bar-coded location 
identifier. At the same time, a computer operator enters the customer's data 
describing the stored material into the computer and the system confirms that 
the cartons sent match the data entered in the computer. Under the Company's 
computer control system, the order can only be closed out when all requisite 
steps and checks have been completed and counts and locations have been 
reconciled. 

Service and Courier Operations 

   Principal services include adding cartons to storage, temporary removal of 
files or cartons 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. The Safekeeper 
system controls the service processes from order entry through transportation 
and invoicing. 

   Courier operations consist primarily of the pickup and delivery of records 
upon customer request. Courier delivery schedules can be tailored to fit 
customers' needs, but generally customer orders received by 4:00 p.m. on a 
business day are delivered the following business day. The Company also 
provides same-day and immediate delivery during business hours and emergency 
delivery at night and on weekends and holidays. Charges for courier services 
are based on urgency of delivery, volume and location and are billed monthly 
as incurred. The Company currently utilizes a fleet of approximately 250 
owned or leased delivery vehicles. 

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. The 
Company's charges for providing enhanced security and special 
climate-controlled environments for vital records are higher than for typical 
storage functions. The Company provides the same ancillary services for vital 
records as it provides for its other storage operations. 

Data Protection Services 

   Data protection services consist of the storage, backup and archiving of 
computer media as part of corporate disaster and business recovery plans. 
Computer tapes, cartridges and disk packs are transported off-site by the 
Company's 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. This process is managed by Iron Mountain's Media Link software, a 
state-of-the-art media management system which provides integrated bar-code 
tracking, electronic data interface between customer and Iron Mountain's 
facilities as well as audit trail and remote inventory query functionality. 
Iron Mountain also manages tape library relocation and supports disaster 
recovery testing and execution. 

Additional Services and Products 

   Iron Mountain offers a variety of additional services, which customers may 
request or contract for on an individual basis. These services include 
performing records inventories, packing records into cartons or other 
containers, computerized indexing of files and individual documents, 
developing schedules for the retention and destruction of records and records 
management consulting services. The Company also sells a full line of 
specially designed corrugated cardboard, metal and plastic storage 
containers. 

                                      49 

 
   The Company's subsidiary, Iron Mountain Information Partners, Inc., 
provides professional consulting services to large customers, enabling them 
to develop and implement comprehensive records management programs. The 
Company's consulting business draws on the Company's 45 years of experience 
to analyze the practices of such companies and assist them in creating more 
effective programs of records management. The Company's consultants work with 
such customers to develop policies for document review, analysis and 
evaluation and for scheduling of document retention and destruction. 

   In addition to its historical focus on the management of inactive records, 
the Company has recently begun to provide services for the management of 
active records. The Company can provide these services, which generally 
include document and file processing and storage, both off-site at its own 
facilities and by supplying its own personnel to perform management functions 
on-site at the customer's premises. The Company sees active records 
management as a potential source of future revenue growth for the Company, 
although there can be no assurance in this regard. 

Potential International Investments 

   Iron Mountain is considering capitalizing upon its expertise in the 
records management industry by making investments in records management 
businesses outside the United States. From time to time, the Company has had 
discussions concerning such investments. Such investments, if consummated, 
would be subject to risks and uncertainties relating to the indigenous 
political, social, regulatory, tax and economic structures of countries in 
those areas, 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 such 
investment will be made or, if made, will be successful in achieving its 
objectives. 

Customers 

   The Company's customer base is diversified in terms of revenue and 
industry concentration. The Company has over 19,000 customer accounts. Iron 
Mountain considers each invoice it delivers to its customers a separate 
customer account and, accordingly, an organization which receives more than 
one invoice represents multiple customer accounts. The chart below shows, as 
of June 1994, the relative amounts of revenue attributable to certain 
business sectors. 

[Pie chart showing the following percentages: Entertainment - 2%; Retail - 
4%; Manufacturing - 4%; Government - 6%; Professional Services - 7%; Health 
Care - 10%; Other Financial Institutions - 10%; Insurance Companies - 5%; 
Depository Institutions - 14%; Legal Services - 16%] 

   The Company services accounts of all sizes, from small businesses and 
professional groups to over half of the Fortune 500. Other than the RTC or 
its successor, the FDIC, which accounted for 7.4%, 6.3%, 4.8% and 3.6% of 
Iron Mountain's revenues for the years ended December 31, 1993, 1994 and 1995 
and the six months ended June 30, 1996, respectively, no account or related 
set of accounts generated more than 3% of Iron Mountain's revenues during any 
such period. 

   The Company's contract with the FDIC, as successor under the contract to 
the RTC, was renewed effective July 27, 1996 for a one-year term, with three 
further annual renewal options at the election of the FDIC. Although the 
substantial costs of removing its records from the Company's facilities may 
act as a disincentive to the FDIC 

                                      50 

 
to select another vendor, there can be no assurance that the contract will be 
further renewed or that the terms of such renewal will be as favorable to 
Iron Mountain as the terms of the current contract. See "Management's 
Discussion and Analysis of Financial Condition and Results of 
Operations--Overview." 

Marketing and Sales 

   The Company uses database marketing and a dedicated sales force to focus 
exclusively on new business development. A corporate marketing organization 
provides sales support, training, marketing communications and product 
management as support functions. The program has successfully produced over 
900 new customer accounts per year since 1991. The selling effort is 
bolstered by regional and senior managers focused on key account selling. 

Properties 

   As of June 30, 1996, Iron Mountain conducted operations through 77 leased 
and 12 owned facilities containing a total of approximately 6.3 million 
square feet of space. The leased facilities typically have initial lease 
terms of 10 years with options to renew for an additional 10 years. The 
weighted average remaining term of the leases on these facilities is 
approximately 7.0 years. In addition, many of the leases contain either a 
purchase option or a right of first refusal upon the sale of the property. 
The leases include one property leased from affiliates of the Company. See 
"Management--Executive Compensation--Compensation Committee Interlocks and 
Insider Participation" and Note 8 of Notes to the Company's Audited 
Consolidated Financial Statements. 

   As of June 30, 1996, the Company owned or leased (directly or through its 
subsidiaries) the following records management facilities in the geographic 
locations indicated below. 



                       Records 
                     Management 
State                Facilities 
- ----------------    ------------- 
                      
Arizona                   2 
California               24 
Colorado                  3 
Connecticut               2 
Delaware                  1 
Florida                   4 
Georgia                   8 
Illinois                  3 
Kansas                    1 
Kentucky                  1 
Massachusetts             7 
Maryland                  3 
Missouri                  2 
New Hampshire             1 
New Jersey                4 
New York                  4 
Ohio                      4 
Pennsylvania              2 
Rhode Island              1 
Tennessee                 1 
Texas                     8 
Virginia                  3 
                         -- 
    Total                89 
                         == 


   The Company or its principal subsidiary is a guarantor of a substantial 
portion of the leases to which other subsidiaries are party. Substantially 
all of the property and assets currently owned and leased by the Company or 
its subsidiaries are pledged as security for the lenders under the Credit 
Agreement. It is expected that, in connection with the New Credit Facility, 
such liens (other than the pledge of the stock of the Company's subsidiaries) 
will be released. See Notes 3 and 7 of Notes to the Company's Audited 
Consolidated Financial Statements for additional information regarding the 
Credit Agreement and the minimum annual rental commitments of the Company, 
respectively. 

                                      51 

 
Employees 

   A key feature of Iron Mountain's operating strategy is its decentralized 
management structure and reliance on local management operating in local 
business environments. The Company's operations are divided into three areas 
comprising seven local management regions to maximize marketing and operating 
effectiveness and to minimize supervisory costs. The management regions, each 
of which is managed by a Vice President, are further divided into a total of 
27 districts, each managed by a General Manager. The management regions are 
overseen by offices in Boston and Los Angeles, but regional Vice Presidents 
and General Managers have broad operating authority. The Company's 
headquarters staff performs a variety of central administrative and support 
functions in order to maximize the time and resources that local personnel 
can devote to customer service and client development. 

   Iron Mountain had approximately 1,200 full-time employees as of June 30, 
1996, of whom approximately 89% are employed at the district level, 8% at the 
corporate level and the balance at the area and regional levels. 

   Approximately 11% of the Company's employees are represented by various 
Teamsters Union locals under five different agreements. Two of these 
agreements, representing 42 employees, have expired and are currently under 
negotiation. Based on its prior experience with the two union locals involved 
in these negotiations, the Company expects that it will enter into new 
agreements on satisfactory terms. The remaining three contracts expire in 
December 1996, March 1997 and March 1999. In addition, at two of Iron 
Mountain's facilities an election, subject to National Labor Relations Board 
regulations, was held on June 20, 1996. A majority of the approximately 40 
employees voted for representation by a Teamsters Union local. The election 
results have not been certified as of the date hereof. 

   All non-union employees are eligible to participate in the Company's 
benefit programs, which include medical, dental, life, short and long-term 
disability 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 union and non-union 
employees participate in some form of incentive-based compensation program 
that provides payments based on profits, collections, or attainment of 
specified objectives for the unit in which they work. Management believes 
that the Company has good relationships with its employees and unions. 

Competition 

   Iron Mountain competes with three other national companies as well as a 
large number of local and regional concerns. The Company believes that 
competition for customers is based on price, reputation for reliability, 
quality of service and scope and scale of technology, and believes that it 
generally competes effectively based on these factors. Management believes 
that, except for Pierce Leahy Corp., all of these competitors have records 
management revenues significantly lower than those of the Company. To 
accommodate growth, a records management vendor must invest in incremental 
storage capacity, which requires added warehouses, racking systems, and 
related equipment including computer systems capable of tracking increasingly 
large inventories. The amount of such investment is significant relative to 
the immediate return that can be realized, and the faster a vendor grows, the 
more capital is required. As a result, the industry trend toward 
consolidation will, in management's opinion, continue and accelerate. In 
addition, the Company faces competition from the internal document handling 
capability of its current and potential customers. There can be no assurance 
that these organizations will outsource more of their document management 
needs or that they will not bring in-house some or all of the functions they 
currently outsource. The Company also faces competition for acquisition 
candidates. 

   The substantial majority of the Company's revenues have been derived from 
the storage of paper documents and from related services. Such storage 
requires significant physical space. Alternative technologies for generating, 
capturing, managing, transmitting and storing information have been 
developed, many of which require significantly less space than paper. Such 
technologies include computer media, microforms, audio/video tape, film, 
CD-ROM and optical disk. None of these technologies has replaced paper as the 
principal means for storing information. However, there can be no assurance 
that one or more non-paper-based technologies (whether now existing or 
developed in the future) may not in the future significantly reduce or 
supplant the use of paper as a preferred medium, which could in turn 
adversely affect the Company's business. 

                                      52 

 
Insurance 

   Iron Mountain carries a comprehensive property insurance policy with 
insurers that it believes to be reputable and in amounts that it believes to 
be appropriate, covering replacement cost of real and personal property, 
including improvements. Subject to sub-limits, the policy also covers 
extraordinary expenses associated with business interruption and damage or 
loss from flood or earthquake, subject to certain deductibles. Separate 
policies for California earthquake insurance carry other deductibles that may 
be significant. Iron Mountain also maintains general liability and excess 
liability insurance covering bodily injury, property damage and personal 
injury. See "Risk Factors--Casualty." 

   The Company's standard form of contract sets forth an agreed maximum value 
for each carton or other storage unit held by the Company as a limitation on 
liability for loss or damage, as permitted under the Uniform Commercial Code. 
In contracts containing such limits, such values are nominal, and the Company 
believes that in typical circumstances its liability would be so limited in 
the event of loss or damage relating to the value of information stored on 
media held by the Company. However, certain of the Company's agreements with 
certain large volume accounts contain no such limits or contain higher limits 
or supplemental insurance arrangements. 

Environmental Matters 

   Under various environmental laws, an owner of real estate or a lessee 
conducting operations thereon may become liable for the costs of 
investigation, removal or remediation of soil and groundwater contaminated by 
certain hazardous substances or wastes or petroleum products. Certain such 
laws impose cleanup responsibility and liability without regard to whether 
the owner or operator of the real estate or operations thereon knew of or was 
responsible for the contamination, and whether or not operations at the 
property have been discontinued or title to the property has been 
transferred. In addition, the presence of such substances, or the failure to 
properly remediate such property may adversely affect the current property 
owner's or operator's ability to sell or rent such property or to borrow 
using such property as collateral. The owner or operator of contaminated real 
estate also may be subject to common law claims by third parties based on 
damages and costs resulting from off-site migration of the contamination. 

   Certain environmental laws govern the removal, encapsulation or 
disturbance of ACMs. Such laws may impose liability for the release of ACMs 
and may enable third parties to seek recovery from owners or operators of 
real estate for personal injury associated with exposure to such substances. 
The Company is aware of the presence of ACMs at some of the Company's 
facilities, but believes that such materials are in acceptable condition at 
this time. The Company believes that future costs related to any remediation 
of ACMs at these facilities will not be material, either on an annual basis 
or in the aggregate, although there can be no assurance with respect thereto. 

   In addition, certain of the properties formerly or currently owned or 
operated by the Company were previously used for industrial or other purposes 
that involved the use or storage of hazardous substances or petroleum 
products or the generation and disposal of hazardous wastes and, in some 
instances, included the operation of USTs. In connection with its former and 
current ownership or operation of certain properties, the Company may be 
potentially liable for environmental costs such as those discussed above, and 
as more specifically described below. 

   At the Company's Hollywood, California facilities, certain USTs and 
contaminated soils have been removed. Some additional contamination of soils 
and groundwater remains and may be migrating. In 1990 and 1991, the Company 
filed certain reports documenting its efforts and site conditions with the 
appropriate environmental agencies pursuant to various environmental laws. 
Investigations conducted on behalf of the Company in connection with its 
on-site remedial activities disclosed that regional groundwater 
contamination, unrelated to the Company's property, exists. At this time, the 
Company has not received any notice from any regulatory agency or third party 
seeking further remediation of soil or groundwater by the Company; however, 
there can be no assurance that such further action will not be sought in the 
future. The Company has accrued estimated costs of $0.8 million that it 
believes it may reasonably be expected to incur in connection with this site 
if such additional remediation were to become necessary; however, there can 
be no assurance as to the adequacy of such accrual. The Company believes the 
ultimate outcome of the foregoing will not have a material adverse effect on 
the Company's financial condition or results of operations. See Note 7 of 
Notes to the Company's Audited Consolidated Financial Statements. 

   The Company has also from time to time conducted certain environmental 
investigations and remedial activities at certain of its other former and 
current facilities, but an in-depth environmental review of the properties 
has not been conducted by or on behalf of the Company. The Company believes 
that it is in substantial compliance 

                                      53 

 
with all applicable material environmental laws. The Company has not received 
any written notice from any governmental authority or third party asserting, 
and is not otherwise aware of, any material noncompliance, liability or claim 
relating to hazardous substances or wastes, petroleum products or material 
environmental laws applicable to Company operations in connection with any of 
its present or former properties other than as described above. However, no 
assurance can be given that there are no environmental conditions for which 
the Company might be liable in the future or that future regulatory action, 
as well as compliance with future environmental laws, will not require the 
Company to incur costs for or at its properties that could have a material 
adverse effect on the Company's financial condition and results of 
operations. 

Legal Proceedings 

   The Company is involved in litigation from time to time in the ordinary 
course of business. In the opinion of management, no material legal 
proceedings are pending to which the Company, or any of its properties, is 
subject. 

                                      54 

 
                                   MANAGEMENT

Directors, Executive Officers and Certain Other Officers 

   The Directors, executive officers and certain other officers of the 
Company are as follows: 



 Names of Directors and Executive Officers      Age                         Position 
- ------------------------------------------      ---     -------------------------------------------------- 
                                                  
C. Richard Reese (1)                             50     Chairman of the Board of Directors and Chief 
                                                        Executive Officer 
David S. Wendell                                 42     President and Chief Operating Officer, Director 
Eugene B. Doggett (1)                            60     Executive Vice President and Chief Financial 
                                                        Officer, Director 
Robert P. Swift                                  55     Executive Vice President 
Kenneth F. Radtke, Jr.                           51     Executive Vice President 
Constantin R. Boden (2) (3)                      60     Director 
Arthur D. Little (2) (3)                         52     Director 
Vincent J. Ryan (1) (3)                          60     Director 

Names of Certain Other Officers                 Age     Position 
- ------------------------------------------      ---     -------------------------------------------------- 
Jean A. Bua                                      38     Vice President and Corporate Controller 
James R. Jandl                                   42     Vice President of Human Resources 
John F. Kenny                                    39     Vice President of Corporate Development 
Joseph J. Larizza                                54     Vice President and Chief Information Officer 
John P. Lawrence                                 45     Vice President and Treasurer 
Kenneth A. Rubin                                 34     Vice President of Marketing 
T. Anthony Ryan                                  56     Vice President of Real Estate 


- ------------- 

(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 Board of Directors currently consists of six directors. There are 
three classes of directors who serve for three-year terms and are elected on 
a staggered basis, one class of two directors standing for election each 
year. The term of the Class B Directors, C. Richard Reese and Arthur D. 
Little, will expire at the 1997 Annual Meeting of Stockholders, the term of 
the Class C Directors, Eugene B. Doggett and Constantin R. Boden, will expire 
at the 1998 Annual Meeting of Stockholders and the term of the Class A 
Directors, David S. Wendell and Vincent J. Ryan, will expire at the 1999 
Annual Meeting. Directors of each class will thereafter hold office until the 
third annual meeting of the stockholders of the Company following their 
election or until their successors are elected and qualified. 

   The executive officers and other officers were elected by the Board of 
Directors on June 14, 1996. All executive officers and other officers hold 
office at the discretion of the Board until the first meeting of the Iron 
Mountain Board following the next annual meeting of stockholders and until 
their successors are chosen and qualified. 

Directors and Executive Officers 

   C. Richard Reese is the Chairman of the Board of Directors of Iron 
Mountain, a position he has held since November 1995, and the Chief Executive 
Officer, a position he has held since December 1981. Prior to November 1995, 
Mr. Reese was the President of Iron Mountain, a position he had held since 
1981. Mr. Reese is also a Director of Schooner. Prior to joining Iron 
Mountain, he lectured at Harvard Business School in "Entrepreneurship" and 
provided consulting services to small and medium-sized emerging enterprises. 
Mr. Reese has also served as president and a Director of the ACRC. He holds a 
Master of Business Administration degree from Harvard Business School. 

   David S. Wendell is the President and Chief Operating Officer of Iron 
Mountain, a position he has held since November 1995. After practicing law 
with Brown & Wood, Mr. Wendell joined Iron Mountain in 1984, where he has 
served in a variety of positions. Prior to November 1995, he was Executive 
Vice President, Atlantic Area and 

                                      55 

 
prior to 1991, he was Vice President, New England Region. He holds a Master 
of Business Administration degree from Harvard Business School and a Juris 
Doctor degree from the University of Virginia. 

   Eugene B. Doggett is the Executive Vice President and Chief Financial 
Officer of Iron Mountain, a position he has held since 1987. Mr. Doggett is 
also a Director of Schooner. Prior to joining the Company, 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. 

   Robert P. Swift is an Executive Vice President of Iron Mountain, a 
position he has held since November 1995. Prior to November 1995, Mr. Swift 
was the Executive Vice President, Western Area of Iron Mountain and prior to 
1988, Mr. Swift was employed in various positions at Bell & Howell Records 
Management Company. 

   Kenneth F. Radtke, Jr. is an Executive Vice President of Iron Mountain, a 
position that he has held since June 1996. Prior to June 1996, Mr. Radtke was 
Northeast Regional Vice President and prior to 1995 was Sales Manager, New 
York Region. Mr. Radtke has worked in the records and information industry 
since 1988 as President and Chief Executive Officer, Dataport Company, Inc. 
and Senior Vice President, Arcus, Inc. He holds a graduate degree from the 
University of Wisconsin, Graduate School of Banking. 

   Constantin R. Boden is a Director of Iron Mountain, a position he has held 
since December 1990. Mr. Boden is on the advisory board of Boston Capital 
Ventures, a risk capital concern. For 33 years, until January 1995, Mr. Boden 
was employed by Bank of Boston, most recently as Executive Vice President, 
International Banking. He holds a Master of Business Administration degree 
from Harvard Business School. 

   Arthur D. Little is a Director of Iron Mountain, a position he has held 
since November 1995. Mr. Little is a principal of The Little Investment 
Company, which he founded in 1992. 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. 

   Vincent J. Ryan is a Director of Iron Mountain. Mr. Ryan is the founder of 
Schooner and has served as Chairman and Chief Executive Officer of Schooner 
since 1971. Prior to November 1995, Mr. Ryan served as Chairman of the Board 
of Directors of Iron Mountain. Mr. Ryan also serves as a Director and member 
of the Executive Committee of Continental Cablevision, Inc. He holds a 
Bachelors of Arts degree in English from Boston University. 

Certain Other Officers 

   Jean A. Bua is Vice President and Corporate Controller. Ms. Bua joined 
Iron Mountain in such capacity in March 1996. From 1993 to 1996, Ms. Bua was 
the Corporate Controller for Duracraft Corp., a consumer products 
manufacturer. Prior to that, Ms. Bua was the accounting manager for a 
high-tech manufacturer and was a management consultant for Ernst & Young. She 
holds a Master of Business Administration degree from the University of Rhode 
Island. Ms. Bua is a certified public accountant. 

   James R. Jandl is Vice President of Human Resources. Mr. Jandl joined Iron 
Mountain in 1989. For the preceding nine years he was involved in human 
resources management in the hospitality industry with focus on operational 
start-up and turn-around situations. He holds a masters degree in psychology 
from West Georgia College. 

   John F. Kenny is Vice President of Corporate Development, with primary 
responsibility for implementing the Company's acquisition strategy. Mr. Kenny 
joined Iron Mountain in 1991. Prior to 1991, he was a Vice President of CS 
First Boston Merchant Bank, New York, with responsibility for risk capital, 
portfolio and transaction management. He holds a Master of Business 
Administration degree from Harvard Business School. 

   Joseph J. Larizza is Vice President and Chief Information Officer, with 
responsibility for management information systems, including oversight of the 
development of Iron Mountain's Safekeeper system. Prior to joining Iron 
Mountain in 1996, Mr. Larizza was the chief information officer at Service 
America, a large food service corporation and, prior to that, chief 
information officer at the Advertising Checking Bureau, with responsibility 
for information systems and development of client-server products. He holds a 
Bachelors degree in management from Post College. 

   John P. Lawrence is Vice President and Treasurer, with responsibility for 
acquisition integration, internal audit, risk management and purchasing and 
contracting. Mr. Lawrence has been associated with Iron Mountain since 1988. 

                                      56 

 
Prior to 1988, he worked for Hewlett Packard for nine years in various 
management positions in finance, control, marketing and manufacturing. He 
holds a Master of Business Administration degree from Harvard Business 
School. 

   Kenneth A. Rubin is Vice President of Marketing. Mr. Rubin joined Iron 
Mountain in 1989. Prior to 1989, he was Director of both Sales and Marketing 
for Leahy/Instar, a records management company. He was also a founding 
director of Software Escrow Security. He holds a Bachelors degree in 
political science from Drew University. 

   T. Anthony Ryan is Vice President of Real Estate. Mr. Ryan manages the 
real estate department of Iron Mountain and is responsible for identifying 
and evaluating new facility opportunities and negotiating long-term leases. 
He has been involved in real estate development for 22 years. His work 
experience includes positions as Director of Development for Gilbane 
Property, Vice President of CRJ Investments and, more recently, Vice 
President and Partner at the Linpro Company. He holds a Bachelors degree in 
history from The George Washington University. 

   Biographical information of the Directors, executive officers and other 
officers is as of September 24, 1996. 

Executive Compensation 

   The following table provides certain information concerning compensation 
earned by the Chief Executive Officer and each other executive officer 
serving in such capacity at December 31, 1995 who received compensation in 
excess of $100,000 (the "Named Executive Officers") for the years ended 
December 31, 1994 and December 31, 1995. 

                          Summary Compensation Table 




                                             Annual Compensation         Long-Term Compensation 
                                             -------------------   ----------------------------------- 
                                                                   Number of Shares
                                                                      Underlying          All Other 
Name and Principal Position      Year (1)    Salary     Bonus          Options        Compensation (2) 
- ---------------------------      --------    ------     -----          -------        ---------------- 
                                                                            
C. Richard Reese                   1995     $261,765   $200,000              0             $1,790 
 Chairman of the Board and 
   Chief Executive Officer         1994     $255,400   $125,000              0             $1,623 
David S. Wendell                   1995     $136,627   $ 62,731         35,469             $1,573 
 President and Chief 
  Operating  Officer               1994     $129,800   $ 50,000              0             $1,352 
Eugene B. Doggett                  1995     $192,274   $165,000              0             $1,790 
 Executive Vice President 
   and Chief Financial 
   Officer                         1994     $187,500   $ 93,750              0             $1,623 
Robert P. Swift                    1995     $131,119   $ 24,397          8,096             $1,243 
 Executive Vice President          1994     $126,600   $ 16,740              0             $  865 


- ------------- 

(1) In accordance with the requirements of Item 402(b) of Regulation S-K, 
    information is presented for the Company's two most recent years. 
(2) Reflects the Company's matching contribution to the Iron Mountain Profit 
    Sharing Retirement Plan for each individual. 

                                      57 

 
Compensation Committee Interlocks and Insider Participation 

   Prior to November 1995, Iron Mountain's Compensation Committee of the 
Board of Directors consisted of Constantin R. Boden and Vincent J. Ryan, who 
was until November 17, 1995 the Chairman of the Board. The present 
Compensation Committee consists of Mr. Little, who is the Chairman of the 
Committee, and Messrs. Boden and Ryan. 

   Messrs. Reese and Doggett are executive officers of Iron Mountain and are 
directors of Schooner. Prior to November 1995, they were also executive 
officers of Schooner. Mr. Ryan is the Chairman of the Board and principal 
stockholder of Schooner. 

   In 1993, the Company paid fees of $95,927 to Vincent J. Ryan for 
consulting services. In each of 1994 and 1995, the Company paid fees of 
$111,048 to Schooner for consulting services rendered by Mr. Ryan. These 
services and fees terminated as of December 31, 1995. 

   Iron Mountain Records Management, Inc. ("IMRM"), a subsidiary of the 
Company, is the tenant under a lease dated January 1, 1991 for a 31,500 
square-foot building in Houston, Texas. The owner of the building is IM 
Houston (CR) Limited Partnership, a Texas limited partnership, of which 
Mountain Realty, Inc., a Massachusetts corporation whose sole stockholder is 
Vincent J. Ryan, is the sole general partner, and the limited partners of 
which are C. Richard Reese and Eugene B. Doggett. The term of the lease 
expires December 31, 2000, with two five-year extension options exercisable 
by IMRM. IMRM currently pays annual rent in the amount of approximately 
$94,000, subject to adjustment in 1997 and 1999 (and in the option periods if 
the term is extended) based upon percentage changes in the consumer price 
index, with a floor of 3% and a ceiling of 5%, compounded annually. As 
tenant, IMRM is responsible for taxes, insurance and maintenance. The space 
is used by IMRM as a records management facility. During 1993, 1994, 1995 and 
the six months ended June 30, 1996, IMRM paid rent in the annual amount of 
$88,000, $88,000, $93,000 and $47,000, respectively, under the lease. The 
lease is, in the opinion of management, on commercially reasonable terms, no 
less favorable to IMRM than could have been obtained from an unaffiliated 
party at the time of the transaction. 

   The Company paid compensation of $120,000, $144,000, $154,000 and $62,000 
for 1993, 1994, 1995 and the six months ended June 30, 1996, respectively, to 
Mr. T. Anthony Ryan. Mr. Ryan is Vice President, Real Estate, of the Company 
and is the brother of Mr. Vincent J. Ryan, a Director and the former Chairman 
of the Board of the Company. The Company believes that the terms of Mr. 
Ryan's employment are no less favorable to it than would be negotiable with 
an unrelated third party. 

   Iron Mountain is indebted to Schooner in the principal amount of $382,500 
under a junior subordinated note, which was incurred by Iron Mountain in 1990 
in connection with an acquisition. Schooner subsequently acquired the note 
from the holder as an investment. The Company intends to use a portion of the 
net proceeds from the Offering to prepay such indebtedness in its entirety. 
See "The Transactions--Repayment of FDS Notes." 

   Schooner leases space from Iron Mountain at Iron Mountain's corporate 
headquarters. Such lease is a tenancy- at-will and may be terminated by 
either Iron Mountain or Schooner at any time. As consideration for such 
lease, Schooner pays rent to Iron Mountain based on its pro rata share of all 
expenses related to the use and occupancy of the premises. The rent paid by 
Schooner to Iron Mountain under such lease was approximately $48,000, 
$58,000, $49,000 and $33,000 in 1993, 1994, 1995 and the six months ended 
June 30, 1996, respectively. 

   Employees of Schooner were eligible to participate in the Iron Mountain 
Profit Sharing Retirement Plan, a Section 401(k) plan, as well as the 
Company's group medical, dental, life, disability and accidental death and 
dismemberment arrangements (the "Company Benefit Plans"). Schooner reimbursed 
the Company for costs incurred as a result of the participation of Schooner 
employees in Company Benefit Plans. Participation by Schooner employees in 
the Company Benefit Plans terminated shortly after the consummation of the 
Initial Public Offering. 

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 (each an "Eligible Director") receives an annual retainer fee 
of $10,000 as compensation for his or her services as a member of the Board 
of Directors and is also paid $2,500 per quarter (to a maximum of $10,000 per 
year) for attendance at meetings (the "Director's Compensation"). All 
directors of the Company are reimbursed for out-of-pocket expenses incurred 
in attending meetings of the Board of Directors or committees thereof, and 
for other expenses incurred in their capacities as directors of the Company. 

                                      58 

 
Pursuant to the Iron Mountain Incorporated 1995 Stock Plan for Non-Employee 
Directors (the "Directors Plan"), Eligible Directors may elect to receive all 
or a portion of their Director Compensation in the form of Common Stock. An 
Eligible Director electing to receive Common Stock under the Directors Plan 
will, as an incentive, receive in lieu of cash an amount of Common Stock 
equivalent to 110% of the Director Compensation otherwise due to be paid in 
cash. The Company has reserved 15,000 shares of Common Stock for issuance 
under the Directors Plan. 

Stock Option Information 

   Effective November 30, 1995, Iron Mountain instituted the Iron Mountain 
Incorporated 1995 Stock Incentive Plan (the "Stock Option Plan"), which is 
administered by the Compensation Committee, as a restatement of Iron 
Mountain's then-existing stock option plan. The purpose of the Stock Option 
Plan is to encourage key employees, directors, and consultants of the Company 
and its subsidiaries who render services of special importance to, and who 
have contributed or may be expected to contribute materially to the success 
of, the Company or a subsidiary to continue their association with the 
Company and its subsidiaries by providing favorable opportunities for them to 
participate in the ownership of the Company and in its future growth through 
the granting of restricted shares ("Restricted Stock"), options to acquire 
Common Stock ("Options"), stock appreciation rights ("SARs") and other rights 
to compensation in amounts determined by the value of the Common Stock. 
Restricted Stock, SARs and other rights are referred to collectively as 
"Other Rights." 

   The total number of shares of Common Stock that may be subject to Options 
and Other Rights under the Stock Option Plan may not exceed 1,000,000. As of 
June 30, 1996, options for 757,827 shares of Common Stock were outstanding 
under the Stock Option Plan and 213,258 shares of Common Stock were available 
for grants of Options and/or Other Rights under the Stock Option Plan. The 
duration of the Options granted under the Stock Option Plan may be specified 
pursuant to each respective stock option agreement, but in no event can any 
Option intended to qualify as an incentive stock option (an "ISO") within the 
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the 
"Code"), be exercisable after the expiration of 10 years after the date of 
grant. In the case of any employee who owns (or is considered under Section 
424(d) of the Code as owning) stock possessing more than 10% of the total 
combined voting power of all classes of stock of the Company or any of its 
Subsidiaries, no ISO shall be exercisable after the expiration of five years 
from its date of grant. 

   The following table sets forth certain information concerning the grant of 
Options to Messrs. Wendell and Swift. Neither of the other Named Executive 
Officers was granted Options in 1995. 

                      Option Grants in Last Fiscal Year 



                                                                                      Potential Realizable 
                                                                                             Value At 
                                                                                      Assumed Annual Rates 
                                Number of     % of Total                                        of 
                                Securities      Options                              Stock Appreciation for 
                                Underlying    Granted to    Exercise                     Option Terms (2) 
                                 Options     Employees in   Price Per    Expiration  ---------------------- 
Name                             Granted      Fiscal Year     Share         Date       5%($)       10%($) 
 ---------------------------     -------      -----------     -----         ----       -----       ------ 
                                                                                 
David S. Wendell                  35,469         21.9%      $16.125          (1)       $359,688    $911,521 
 President and Chief 
  Operating Officer 
Robert P. Swift                    8,096          5.0%      $16.125       2/5/2006     $ 82,101    $208,066 
 Executive Vice President 



- ------------- 

(1) Options granted to Mr. Wendell with respect to 29,410 shares of Common 
    Stock expire February 5, 2006, and options with respect to the remaining 
    6,059 shares expire 60 days after termination of Mr. Wendell's employment 
    with the Company. 
(2) Potential Realizable Value is based on the assumed growth rates for an 
    assumed ten-year option term. 5% annual growth results in a Common Stock 
    price per share of $26.27, and 10% results in a Common Stock price per 
    share of $41.82, 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, so that there is no assurance the value realized by an 
    executive will be at or near the amounts reflected in this table. 

                                      59 

 
   The following table sets forth certain information with respect to the 
unexercised Options granted to Messrs. Wendell and Swift. Neither of such 
individuals exercised any stock options during the year ended December 31, 
1995. Neither of the other Named Executive Officers has any unexercised 
Options. 

                        Fiscal Year End Option Values 



                                                                           Value of Unexercised 
                                          Number of Unexercised          In-the-Money-Options at 
                                      Options at December 31, 1995        December 31, 1995 (1) 
                                     -----------------------------     ---------------------------- 
Name                                 Exercisable     Unexercisable     Exercisable     Unexercisable 
 ---------------------------------   -----------     -------------     -----------     ------------- 
                                                                            
David S. Wendell                        71,077           53,266         $676,653        $169,427 
 President and Chief Operating 
  Officer 
Robert P. Swift                         11,566           15,806         $110,108        $ 73,399 
 Executive Vice President 



- ------------- 

(1) Based on the initial public offering price of $16.00 per share, less the 
    exercise price. 

                             CERTAIN TRANSACTIONS 

   In 1993, in connection with the employment of David S. Wendell, the 
Company made demand loans to Mr. Wendell in an aggregate principal amount of 
$70,000 in connection with Mr. Wendell's purchase of a home. The loans bear 
interest at a rate equal to the Company's cost to borrow such funds and are 
secured by a second mortgage on the home. As of September 3, 1996, the 
principal balance of the loans was $25,000. 

   See "Management--Executive Compensation--Compensation Committee Interlocks 
and Insider Participation" for a discussion of: (i) certain payments to 
Vincent J. Ryan and Schooner for consulting services; (ii) a lease between a 
partnership affiliated with Messrs. Doggett, Reese and Ryan and a subsidiary 
of the Company; (iii) the familial relationship between Vincent J. Ryan, an 
Iron Mountain Director, and T. Anthony Ryan, an Iron Mountain officer; (iv) a 
lease between Schooner and the Company; (v) certain indebtedness of Iron 
Mountain to Schooner to be repaid with a portion of the net proceeds of the 
Offering; and (vi) Schooner's prior participation in Iron Mountain's 401(k) 
plan and certain other employee benefit plans. 

                                      60 

 
                             PRINCIPAL STOCKHOLDERS

   The following table sets forth certain information known to the Company 
with respect to beneficial ownership of Common Stock by: (i) each stockholder 
known by the Company to be the beneficial owner of more than five percent of 
the Common Stock; (ii) each director; (iii) each Named Executive Officer; and 
(iv) all executive officers and directors of the Company as a group. Such 
information is presented as of September 3, 1996. 



                                                  Amount of 
                                                  Beneficial 
                                                Ownership (1) 
                                             ------------------- 
                                                         Percent 
Name                                          Shares      Owned 
- ----                                          ------     ------- 
                                                     
Directors and Executive Officers: 
C. Richard Reese (2)                         1,127,503     11.7% 
David S. Wendell (3)                            83,815        * 
Eugene B. Doggett (4)                          219,745      2.3% 
Robert P. Swift (5)                             15,421        * 
Constantin R. Boden (6)                         19,746        * 
Arthur D. Little (7)                            98,730      1.0% 
Vincent J. Ryan (8)                          3,503,250     36.4% 
All Directors and executive 
  officers as a group (8 persons) (9)        4,371,289     45.0% 
Five Percent Stockholder: 
Schooner Capital Corporation (10)            1,909,384     19.8% 


- ------------- 

   * 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 and Chairman of the Board and Chief Executive 
     Officer of the Company. Includes 12,160 shares of Common Stock held by 
     trusts for the benefit of Mr. Reese's children, as to which Mr. Reese 
     disclaims beneficial ownership. Also includes 668,166 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 Schooner. Pursuant to such arrangement, upon the earlier 
     to occur of (i) Schooner's sale or exchange of substantially all of the 
     shares of Common Stock held by Schooner or (ii) the cessation of Mr. 
     Reese's employment with Iron Mountain, 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. Mr. Reese's 
     address is c/o Iron Mountain Incorporated, 745 Atlantic Avenue, Boston, 
     Massachusetts 02111. 

 (3) Mr. Wendell is a director and President and Chief Operating Officer of 
     the Company. Includes 79,960 shares that Mr. Wendell has the right to 
     acquire pursuant to currently exercisable options. See "Executive 
     Compensation." Mr. Wendell's address is c/o Iron Mountain Incorporated, 
     745 Atlantic Avenue, Boston, Massachusetts 02111. 

 (4) Mr. Doggett is a director and Executive Vice President and Chief 
     Financial Officer of the Company. Includes 29,550 shares of Common Stock 
     as to which Mr. Doggett shares beneficial ownership with Schooner as a 
     result of a 1988 deferred compensation arrangement, as amended, between 
     Schooner and Mr. Doggett relating to Mr. Doggett's former services as 
     Chief Financial Officer of Schooner. Pursuant to such arrangement, upon 
     the earlier to occur of (i) Schooner's sale or exchange of substantially 
     all of the shares of Common Stock held by Schooner or (ii) the cessation 
     of Mr. Doggett's employment with Iron Mountain, Schooner is required to 
     transfer such shares of Common Stock to Mr. Doggett or remit to Mr. 
     Doggett 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. 
     Doggett. Mr. Doggett's address is c/o Iron Mountain Incorporated, 745 
     Atlantic Avenue, Boston, Massachusetts 02111. 

                                      61 

 
 (5) Mr. Swift is a director and Executive Vice President of the Company. 
     Consists of shares that Mr. Swift has the right to acquire pursuant to 
     currently exercisable options. See "Executive Compensation." Mr. Swift's 
     address is c/o Iron Mountain Incorporated, 1340 East 6th Street, Los 
     Angeles, California 90021. 

 (6) Mr. Boden is a director of the Company. Mr. Boden's address is c/o 
     Boston Capital Ventures, 45 School Street, Boston, Massachusetts 02110. 

 (7) Mr. Little is a director of the Company. Consists of 49,365 shares held 
     by The Little Family Trust and 49,365 shares held by The Little Family 
     Foundation, as to which Mr. Little disclaims beneficial ownership. Mr. 
     Little's address is c/o The Little Investment Company, 33 Broad Street, 
     Boston, Massachusetts 02109. 

 (8) Mr. Ryan is a director of the Company. Mr. Ryan holds 1,593,866 shares 
     of Common Stock. The remaining shares of Common Stock listed as being 
     beneficially owned by Mr. Ryan are held by Schooner, as to which Mr. 
     Ryan has sole voting power and investment power as the Chairman of the 
     Board and principal stockholder of Schooner. Mr. Ryan's address is c/o 
     Schooner Capital Corporation, 745 Atlantic Avenue, Boston, Massachusetts 
     02111. See footnote (10) regarding shares held by Schooner. 

 (9) Includes 96,156 shares that directors and executive officers have the 
     right to acquire pursuant to currently exercisable options. 

(10) Mr. Ryan is the Chairman of the Board and the principal stockholder of 
     Schooner and, accordingly has sole voting and investment power with 
     respect to the shares of Common Stock held by Schooner. Includes 668,166 
     shares of Common Stock as to which Schooner shares beneficial ownership 
     with Mr. Reese as described in footnote (2). Also includes 29,550 shares 
     of Common Stock as to which Schooner shares beneficial ownership with 
     Mr. Doggett as described in footnote (4). Schooner has agreed to vote 
     the shares of Common Stock subject to such arrangements at the direction 
     of Mr. Reese or Mr. Doggett, as the case may be. 

                                      62 

 
                            DESCRIPTION OF THE NOTES

General 

   The Notes will be issued pursuant to an Indenture (the "Indenture") among 
the Company, the Subsidiary Guarantors (as defined below) and First Bank 
National Association, as trustee (the "Trustee"). The terms of the Notes 
include those stated in the Indenture and those made part of the Indenture by 
reference to the Trust Indenture Act of 1939 (the "Trust Indenture Act"). The 
Notes are subject to all such terms, and Holders of Notes are referred to the 
Indenture and the Trust Indenture Act for a statement thereof. The following 
summary of certain provisions of the Indenture does not purport to be 
complete and is qualified in its entirety by reference to the Indenture, 
including the definitions therein of certain terms used below. A copy of the 
proposed form of Indenture has been filed as an exhibit to the Registration 
Statement of which this Prospectus is a part. The definitions of certain 
terms used in the following summary are set forth below under "Certain 
Definitions." 

Principal, Maturity and Interest 

   
   The Notes will be general unsecured obligations of the Company, will be 
limited in aggregate principal amount to $165 million and will mature on 
October 1, 2006. Interest on the Notes will accrue at the rate of 10-1/8% per 
annum and will be payable semi-annually in arrears on April 1 and October 1, 
commencing on April 1, 1997, to Holders of record on the immediately 
preceding March 15 and September 15. Interest on the Notes will accrue from 
the most recent date to which interest has been paid or, if no interest has 
been paid, from the date of original issuance. Interest will be computed on 
the basis of a 360-day year comprised of twelve 30-day months. The Notes will 
be payable both as to principal and interest at the office or agency of the 
Company maintained for such purpose within the City and State of New York or, 
at the option of the Company, payment of interest may be made by check mailed 
to the Holders of Notes at their addresses set forth in the register of 
Holders of Notes. Until otherwise designated by the Company, the Company's 
office or agency in New York will be the office of the Trustee maintained for 
such purpose. The Notes will be issued in registered form, without coupons, 
and in denominations of $1,000 and integral multiples thereof. 
    

Subsidiary Guarantees 

   
   The Company's payment obligations under the Notes will be jointly and 
severally guaranteed (the "Subsidiary Guarantees") on an unsecured senior 
subordinated basis by all of the Company's existing and future Restricted 
Subsidiaries other than the Excluded Restricted Subsidiaries (each, a 
"Subsidiary Guarantor"). See "Certain Covenants--Additional Subsidiary 
Guarantees." Each Subsidiary Guarantee will be subordinated to the prior 
payment in full of all Senior Debt of each such Subsidiary Guarantor, which 
on a pro forma basis would have been $10.8 million at June 30, 1996 for all 
Subsidiary Guarantors. Notwithstanding the subordination provisions contained 
in the Indenture, the obligations of a Subsidiary Guarantor under its 
Subsidiary Guarantee will be unconditional. See "Risk 
Factors--Unenforceability and Release of Guarantees." 
    

Subordination 

   The payment of principal of, premium, if any, and interest on the Notes 
will be subordinated in right of payment, as set forth in the Indenture, to 
the prior payment in full in cash of all Obligations with respect to Senior 
Debt, whether outstanding on the date of the Indenture or thereafter 
incurred. 

   Upon any payment or distribution to creditors of the Company or any 
Subsidiary Guarantor in a liquidation or dissolution of the Company or such 
Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency, 
receivership or similar proceeding relating to the Company or any Subsidiary 
Guarantor or its property, an assignment for the benefit of creditors or any 
marshaling of the assets and liabilities of the Company or any Subsidiary 
Guarantor, (a) the holders of Senior Debt will be entitled to receive payment 
in full in cash of all Obligations due in respect of such Senior Debt 
(including interest after the commencement of any such proceeding at the rate 
specified in the applicable Senior Debt, whether or not allowed as a claim in 
such proceeding) before the Holders of Notes will be entitled to receive any 
payment or distribution with respect to the Notes, and (b) until all 
Obligations with respect to Senior Debt are paid in full in cash, any payment 
or distribution to which the Holders of Notes would be entitled shall be made 
to the holders of Senior Debt. 

                                      63 

 
   Neither the Company nor any Subsidiary Guarantor may make any payment or 
distribution upon or in respect of the Notes, including, without limitation, 
by way of set-off or otherwise, or redeem (or make a deposit in redemption 
of), defease or acquire any of the Notes for cash, properties or securities 
if (a) a default in the payment of any Obligation in respect of any Senior 
Debt occurs and is continuing or (b) any other default (or any event that, 
after notice or passage of time would become a default) (a "Non-Monetary 
Default") occurs and is continuing with respect to Senior Debt and, in the 
case of clause (b), the Trustee receives a notice of such default (a "Payment 
Blockage Notice") from the holders (or the agent or representative of such 
holders) of any Designated Senior Debt. Payments on the Notes may and shall 
be resumed (i) in the case of a payment default, on the date on which such 
default is cured or waived and (ii) in the case of a Non-Monetary Default, on 
the earlier of the date on which such Non-Monetary Default is cured or waived 
or 179 days after the date on which the applicable Payment Blockage Notice is 
received, unless the maturity of any Senior Debt has been accelerated. Any 
number of Payment Blockage Notices may be given, provided, however, that (A) 
not more than one Payment Blockage Notice may be commenced during any period 
of 360 consecutive days and (B) any Non-Monetary Default that existed or was 
continuing on the date of delivery of any Payment Blockage Notice to the 
Trustee (to the extent the holder of Designated Senior Debt, or such trustee 
or agent, giving such Payment Blockage Notice had knowledge of the same) 
shall not be the basis for a subsequent Payment Blockage Notice, unless such 
default has been cured or waived for a period of not less than 90 consecutive 
days. 

   The Indenture will further require that the Company promptly notify 
holders of Senior Debt if payment of the Notes is accelerated because of an 
Event of Default. 

   
   As a result of the subordination provisions described above, in the event 
of a liquidation or insolvency, Holders of Notes may recover less ratably 
than creditors of the Company who are holders of Senior Debt. On a pro forma 
basis, after giving effect to the Transactions, the principal amount of 
Senior Debt of the Company and the Restricted Subsidiaries outstanding at 
June 30, 1996 would have been $10.8 million. The Indenture will not limit the 
amount of additional Indebtedness, including Senior Debt, that the Company 
and its Subsidiaries can incur if certain financial tests are met. See 
"Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred 
Stock." 
    

Optional Redemption 

   
   The Notes will not be redeemable at the Company's option prior to October 
1, 2001. Thereafter, the Notes will be subject to redemption at the option of 
the Company, in whole or in part, upon not less than 30 nor more than 60 
days' notice, at the redemption prices (expressed as percentages of principal 
amount) set forth below plus accrued and unpaid interest thereon to but 
excluding the applicable redemption date, if redeemed during the twelve- 
month period beginning on October 1 of the years indicated below: 




Year                    Percentage 
- ----                    ----------- 
                     
2001                    105.06% 
2002                    103.38% 
2003                    101.69% 
2004 and thereafter     100.00% 


   Notwithstanding the foregoing, at any time during the first 36 months 
after the date of issuance of the Notes, the Company may redeem up to 35% of 
the initial principal amount of the Notes originally issued with the net 
proceeds of one or more Qualified Equity Offerings at a redemption price 
equal to 109.125% of the principal amount of such Notes, plus accrued and 
unpaid interest, if any, to but excluding the date of redemption; provided, 
that at least 65% of the principal amount of Notes originally issued remains 
outstanding immediately after the occurrence of any such redemption and that 
such redemption occurs within 60 days following the closing of any such 
Qualified Equity Offering. 
    


                                      64 

 
Mandatory Redemption 

   Except with respect to required repurchases upon the occurrence of a 
Change of Control or in the event of certain Asset Sales, each as described 
below under "Repurchase at the Option of Holders," the Company is not 
required to make sinking fund or redemption payments with respect to the 
Notes. 

Repurchase at the Option of Holders 

   Change of Control 

   Upon the occurrence of a Change of Control, each Holder of Notes will have 
the right to require the Company to repurchase all or any part (equal to 
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to 
the offer described below (the "Change of Control Offer") at an offer price 
in cash equal to 101% of the aggregate principal amount thereof plus accrued 
and unpaid interest, if any, to but excluding the date of purchase (the 
"Change of Control Payment"). Within 30 calendar days following any Change of 
Control, the Company will mail a notice to each Holder stating: (a) that the 
Change of Control Offer is being made pursuant to the covenant entitled 
"Change of Control" and that all Notes tendered will be accepted for payment; 
(b) the purchase price and the purchase date, which will be no earlier than 
30 calendar days nor later than 60 calendar days from the date such notice is 
mailed (the "Change of Control Payment Date"); (c) that any Note not tendered 
will continue to accrue interest; (d) that, unless the Company defaults in 
the payment of the Change of Control Payment, all Notes accepted for payment 
pursuant to the Change of Control Offer will cease to accrue interest on and 
after the Change of Control Payment Date; (e) that Holders electing to have 
any Notes purchased pursuant to a Change of Control Offer will be required to 
surrender the Notes, with the form entitled "Option of Holder to Elect 
Purchase" on the reverse of the Notes completed, to the Paying Agent at the 
address specified in such notice prior to the close of business on the fifth 
Business Day preceding the Change of Control Payment Date; (f) that Holders 
will be entitled to withdraw their election if the Paying Agent receives, not 
later than the close of business on the second Business Day preceding the 
Change of Control Payment Date, a telegram, telex, facsimile transmission or 
letter setting forth the name of the Holder, the principal amount of Notes 
delivered for purchase, and a statement that such Holder is withdrawing his 
election to have such Notes purchased; and (g) that Holders whose Notes are 
being purchased only in part will be issued new Notes equal in principal 
amount to the unpurchased portion of the Notes surrendered, which unpurchased 
portion must be equal to $1,000 in principal amount or an integral multiple 
thereof. The Company will comply with the requirements of Rule 14e-1 under 
the Exchange Act and any other securities laws and regulations thereunder to 
the extent such laws and regulations are applicable to the repurchase of the 
Notes in connection with a Change of Control. 

   On the Change of Control Payment Date, the Company will, to the extent 
lawful, (a) accept for payment Notes or portions thereof tendered pursuant to 
the Change of Control Offer, (b) deposit with the Paying Agent an amount 
equal to the Change of Control Payment in respect of all Notes or portions 
thereof so tendered and (c) deliver or cause to be delivered to the Trustee 
the Notes so accepted together with an Officers' Certificate stating the 
Notes or portions thereof tendered to the Company. The Paying Agent will 
promptly mail to each Holder of Notes so accepted the Change of Control 
Payment for such Notes, and the Trustee will promptly authenticate and mail 
to each Holder a new Note equal in principal amount to any unpurchased 
portion of the Notes surrendered, if any; provided that each such new Note 
will be in a principal amount of $1,000 or an integral multiple thereof. 

   Except as described above with respect to a Change of Control, the 
Indenture does not contain provisions that permit the Holders of the Notes to 
require that the Company repurchase or redeem the Notes in the event of a 
takeover, recapitalization or similar restructuring, nor does it contain any 
other "event risk" protections for Holders of the Notes. 

   Although the Change of Control provision may not be waived by the Company, 
and may be waived by the Trustee only in accordance with the provisions of 
the Indenture, there can be no assurance that any particular transaction 
(including a highly leveraged transaction) cannot be structured or effected 
in a manner not constituting a Change of Control. 

   The Credit Agreement currently prohibits the Company from purchasing any 
Notes prior to the expiration of the Credit Agreement and also provides that 
certain change of control events with respect to the Company would constitute 
a default thereunder. The New Credit Facility will contain, and any future 
credit agreements or other 

                                      65 

 
agreements relating to Senior Debt to which the Company becomes a party may 
contain, similar restrictions and provisions. In the event a Change of 
Control occurs at a time when the Company is prohibited from purchasing 
Notes, the Company could seek the consent of its lenders to the purchase of 
Notes or could attempt to refinance the borrowings that contain such 
prohibition. If the Company does not obtain such a consent or repay such 
borrowings, the Company will remain prohibited from purchasing Notes. In such 
case, the Company's failure to purchase tendered Notes would constitute an 
Event of Default under the Indenture which would, in turn, constitute a 
default under the Credit Agreement and is expected to constitute an event of 
default under the New Credit Facility. In such circumstances, the 
subordination provisions in the Indenture would likely restrict payments to 
the Holders of Notes. 

   "Change of Control" means the occurrence of any of the following events: 

     (a) any "person" or "group" (as such terms are used in Sections 13(d) 
   and 14(d) of the Exchange Act), other than the Principal Stockholders (or 
   any of them), is or becomes the "beneficial owner" (as defined in Rules 
   13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more 
   than a majority of the voting power of all classes of Voting Stock of the 
   Company; 

     (b) the Company consolidates with, or merges with or into, another 
   Person or conveys, transfers, leases or otherwise disposes of all or 
   substantially all of its assets to any Person, or any Person consolidates 
   with, or merges with or into, the Company, in any such event pursuant to a 
   transaction in which the outstanding Voting Stock of the Company is 
   converted into or exchanged for cash, securities or other property, other 
   than any such transaction where (i) the outstanding Voting Stock of the 
   Company is not converted or exchanged at all (except to the extent 
   necessary to reflect a change in the jurisdiction of incorporation) or is 
   converted into or exchanged for (A) Voting Stock (other than Disqualified 
   Stock) of the surviving or transferee Person or (B) cash, securities and 
   other property (other than Capital Stock described in the foregoing clause 
   (A)) of the surviving or transferee Person in an amount that could be paid 
   as a Restricted Payment as described under the "Restricted Payments" 
   covenant and (ii) immediately after such transaction, no "person" or 
   "group" (as such terms are used in Sections 13(d) and 14(d) of the 
   Exchange Act), other than the Principal Stockholders (or any of them), is 
   the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the 
   Exchange Act), directly or indirectly, of more than a majority of the 
   total outstanding Voting Stock of the surviving or transferee Person; 

     (c) during any consecutive two-year period, individuals who at the 
   beginning of such period constituted the Board of Directors (together with 
   any new directors whose election to such Board of Directors, or whose 
   nomination for election by the stockholders of the Company, was approved 
   by a vote of 66-2/3% of the directors then still in office who were either 
   directors at the beginning of such period or whose election or nomination 
   for election was previously so approved) cease for any reason to 
   constitute a majority of the Board of Directors then in office; or 

     (d) the Company is liquidated or dissolved or adopts a plan of 
   liquidation or dissolution other than in a transaction which complies with 
   the provisions described under "Consolidation, Merger and Sale of Assets." 

   Asset Sales 

   The Indenture will provide that the Company will not, and will not permit 
any of its Restricted Subsidiaries to, (a) sell, lease, convey or otherwise 
dispose of any assets (including by way of a Sale and Leaseback Transaction, 
but excluding a Qualifying Sale and Leaseback Transaction) other than sales 
of inventory in the ordinary course of business (provided that the sale, 
lease, conveyance or other disposition of all or substantially all of the 
assets of the Company will be governed by the provisions of the Indenture 
described above under the caption "Change of Control" and/or the provisions 
described below under the caption "Merger, Consolidation or Sale of Assets" 
and not by the provisions of this covenant), or (b) issue or sell Equity 
Interests of any of its Restricted Subsidiaries, that, in the case of either 
clause (a) or (b) above, whether in a single transaction or a series of 
related transactions, (i) have a fair market value in excess of $1.0 million, 
or (ii) result in Net Proceeds in excess of $1.0 million (each of the 
foregoing, an "Asset Sale"), unless (x) the Company (or the Restricted 
Subsidiary, as the case may be) receives consideration at the time of such 
Asset Sale at least equal to the fair market value (evidenced by an Officers' 
Certificate delivered to the Trustee, and for Asset Sales having a fair 
market value or resulting in net proceeds in excess of $5.0 million, 
evidenced by a resolution of the Board of Directors set forth in an Officers' 
Certificate 

                                      66 

 
delivered to the Trustee) of the assets sold or otherwise disposed of and (y) 
at least 75% of the consideration therefor received by the Company or such 
Restricted Subsidiary is in the form of cash or like-kind assets (in each 
case as determined in good faith by the Company, evidenced by a resolution of 
the Board of Directors and certified by an Officers' Certificate filed with 
the Trustee); provided, however, that the amount of (A) any liabilities (as 
shown on the Company's or such Restricted Subsidiary's most recent balance 
sheet or in the notes thereto) of the Company or such Restricted Subsidiary 
(other than liabilities that are by their terms subordinated to the Notes or 
any Subsidiary Guarantee) that are assumed by the transferee of any such 
assets and (B) any notes or other obligations received by the Company or such 
Restricted Subsidiary from such transferee that are immediately converted by 
the Company or such Restricted Subsidiary into cash (to the extent of the 
cash received) or Cash Equivalents, shall be deemed to be cash for purposes 
of this provision; and provided, further, that the 75% limitation referred to 
in the foregoing clause (y) shall not apply to any Asset Sale in which the 
cash portion of the consideration received therefrom is equal to or greater 
than what the after-tax proceeds would have been had such Asset Sale complied 
with the aforementioned 75% limitation. A transfer of assets or issuance of 
Equity Interests by the Company to a Wholly Owned Restricted Subsidiary or by 
a Wholly Owned Restricted Subsidiary to the Company or to another Wholly 
Owned Restricted Subsidiary will not be deemed to be an Asset Sale. 

   Within 360 days of any Asset Sale, the Company may, at its option, apply 
an amount equal to the Net Proceeds from such Asset Sale either (a) to 
permanently reduce Senior Debt, or (b) to an investment in a Restricted 
Subsidiary or in another business or capital expenditure or other 
long-term/tangible assets, in each case, in the same line of business as the 
Company or any of its Restricted Subsidiaries was engaged in on the date of 
the Indenture or in businesses similar or reasonably related thereto. Pending 
the final application of any such Net Proceeds, the Company may temporarily 
reduce Senior Bank Debt or otherwise invest such Net Proceeds in any manner 
that is not prohibited by the Indenture. Any Net Proceeds from such Asset 
Sale that are not applied or invested as provided in the first sentence of 
this paragraph will be deemed to constitute "Excess Proceeds." When the 
aggregate amount of Excess Proceeds exceeds $5.0 million, the Company shall 
make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the 
maximum principal amount of Notes that may be purchased out of the Excess 
Proceeds, at an offer price in cash in an amount equal to 100% of the 
principal amount thereof plus accrued and unpaid interest, if any, to the 
date of purchase, in accordance with the procedures set forth in the 
Indenture. To the extent that the aggregate amount of Notes tendered pursuant 
to an Asset Sale Offer is less than the Excess Proceeds, the Company may use 
any remaining Excess Proceeds for general corporate purposes. If the 
aggregate principal amount of Notes surrendered by Holders thereof exceeds 
the amount of Excess Proceeds, the Trustee shall select the Notes to be 
purchased on a pro rata basis. Upon completion of such offer to purchase, the 
amount of Excess Proceeds shall be reset at zero. 

Selection and Notice 

   If less than all of the Notes are to be redeemed at any time, selection of 
Notes for redemption will be made by the Trustee in compliance with the 
requirements of the principal national securities exchange, if any, on which 
the Notes are listed, or, if the Notes are not so listed, on a pro rata 
basis, by lot or by such method as the Trustee shall deem fair and 
appropriate, provided that no Notes of $1,000 or less shall be redeemed in 
part. Notices of redemption shall be mailed by first class mail at least 30 
but not more than 60 days before the redemption date to each Holder of Notes 
to be redeemed at its registered address. If any Note is to be redeemed in 
part only, the notice of redemption that relates to such Note shall state the 
portion of the principal amount thereof to be redeemed. A new Note in 
principal amount equal to the unredeemed portion thereof will be issued in 
the name of the Holder thereof upon cancellation of the original Note. On and 
after the redemption date, interest will cease to accrue on Notes or portions 
of them called for redemption. 

Certain Covenants 

   Restricted Payments 

   The Indenture will provide that the Company will not, and will not permit 
any of its Restricted Subsidiaries to, directly or indirectly: (a) declare or 
pay any dividend or make any distribution on account of the Company's or any 
of its Restricted Subsidiaries' Equity Interests (other than dividends or 
distributions payable in Equity Interests (other than Disqualified Stock) of 
the Company or such Restricted Subsidiary or dividends or distributions 
payable to the Company or any Restricted Subsidiary); (b) purchase, redeem or 
otherwise acquire or retire for value 

                                      67 

 
any Equity Interests of the Company or any Restricted Subsidiary or other 
Affiliate of the Company (other than any such Equity Interests owned by the 
Company or any Restricted Subsidiary); (c) purchase, redeem or otherwise 
acquire or retire prior to scheduled maturity for value any Indebtedness that 
is subordinated in right of payment to the Notes or (d) make any Investment 
other than a Permitted Investment (all such payments and other actions set 
forth in clauses (a) through (d) above being collectively referred to as 
"Restricted Payments"), unless, at the time of such Restricted Payment: 

       (i) no Default or Event of Default shall have occurred and be 
   continuing or would occur as a consequence thereof; and 

      (ii) the Company would, at the time of such Restricted Payment and 
   after giving pro forma effect thereto, have been permitted to incur at 
   least $1.00 of additional Indebtedness pursuant to the test set forth in 
   the first paragraph of the covenant entitled "Incurrence of Indebtedness 
   and Issuance of Preferred Stock;" and 

     (iii) such Restricted Payment, together with the aggregate of all other 
   Restricted Payments made by the Company and its Restricted Subsidiaries 
   after the date of the Indenture is less than (x) the cumulative EBITDA of 
   the Company, minus 1.75 times the cumulative Consolidated Interest Expense 
   of the Company, in each case for the period (taken as one accounting 
   period) from June 30, 1996, to the end of the Company's most recently 
   ended fiscal quarter for which internal financial statements are available 
   at the time of such Restricted Payment, plus (y) the aggregate net Equity 
   Proceeds received by the Company from the issuance or sale since the date 
   of the Indenture of Equity Interests of the Company or of debt securities 
   of the Company that have been converted into such Equity Interests (other 
   than Equity Interests or convertible debt securities sold to a Restricted 
   Subsidiary of the Company and other than Disqualified Stock or debt 
   securities that have been converted into Disqualified Stock), plus (z) 
   $2.0 million. 

   The foregoing provisions will not prohibit (A) the payment of any dividend 
within 60 days after the date of declaration thereof, if at said date of 
declaration such payment would have complied with the provisions of the 
Indenture; (B) the redemption, repurchase, retirement or other acquisition or 
retirement for value of any Equity Interests of the Company in exchange for, 
or with the net cash proceeds of, the substantially concurrent sale (other 
than to a Restricted Subsidiary of the Company) of other Equity Interests of 
the Company (other than any Disqualified Stock); (C) the defeasance, 
redemption, repurchase, retirement or other acquisition or retirement for 
value of Indebtedness that is subordinated or pari passu in right of payment 
to the Notes in exchange for, or with the net cash proceeds of, a 
substantially concurrent issuance and sale (other than to a Restricted 
Subsidiary of the Company) of Equity Interests of the Company (other than 
Disqualified Stock); (D) the defeasance, redemption, repurchase, retirement 
or other acquisition or retirement for value of Indebtedness that is 
subordinated or pari passu in right of payment to the Notes in exchange for, 
or with the net cash proceeds of, a substantially concurrent issue and sale 
(other than to the Company or any of its Restricted Subsidiaries) of 
Refinancing Indebtedness; (E) the repurchase of any Indebtedness subordinated 
or pari passu in right of payment to the Notes at a purchase price not 
greater than 101% of the principal amount of such Indebtedness in the event 
of a Change of Control in accordance with provisions similar to the "Change 
of Control" covenant, provided that prior to or contemporaneously with such 
repurchase the Company has made the Change of Control Offer as provided in 
such covenant with respect to the Notes and has repurchased all Notes validly 
tendered for payment in connection with such Change of Control Offer; (F) the 
prepayment of the Chrysler Notes, together with premium and interest thereon; 
(G) the prepayment of $450,000 of junior subordinated notes issued by the 
Company in connection with a 1990 acquisition, together with interest 
thereon; and (H) additional payments to current or former employees or 
directors of the Company for repurchases of stock, stock options or other 
equity interests, provided that the aggregate amount of all such payments 
under this clause (H) does not exceed $500,000 in any year and $2.0 million 
in the aggregate. 

   The Restricted Payments described in clauses (B), (C), (E) and (H) of the 
immediately preceding paragraph will be Restricted Payments that will be 
permitted to be taken in accordance with such paragraph but will reduce the 
amount that would otherwise be available for Restricted Payments under clause 
(iii) of the first paragraph of this section, and the Restricted Payments 
described in clauses (A), (D), (F) and (G) of the immediately preceding 
paragraph will be Restricted Payments that will be permitted to be taken in 
accordance with such paragraph and will not reduce the amount that would 
otherwise be available for Restricted Payments under clause (iii) of the 
first paragraph of this section. 

   If an Investment results in the making of a Restricted Payment, the 
aggregate amount of all Restricted Payments deemed to have been made as 
calculated under the foregoing provision will be reduced by the amount of any 
net 

                                      68 

 
reduction in such Investment (resulting from the payment of interest or 
dividends, loan repayment, transfer of assets or otherwise) to the extent 
such net reduction is not included in the Company's EBITDA; provided, 
however, that the total amount by which the aggregate amount of all 
Restricted Payments may be reduced may not exceed the lesser of (a) the cash 
proceeds received by the Company and its Restricted Subsidiaries in 
connection with such net reduction and (b) the initial amount of such 
Investment. 

   If the aggregate amount of all Restricted Payments calculated under the 
foregoing provision includes an Investment in an Unrestricted Subsidiary or 
other Person that thereafter becomes a Restricted Subsidiary, such Investment 
will no longer be counted as a Restricted Payment for purposes of calculating 
the aggregate amount of Restricted Payments. For the purpose of making any 
calculations under the Indenture, (a) an Investment will include the fair 
market value of the net assets of any Restricted Subsidiary at the time that 
such Restricted Subsidiary is designated an Unrestricted Subsidiary and will 
exclude the fair market value of the net assets of any Unrestricted 
Subsidiary that is designated as a Restricted Subsidiary, (b) any property 
transferred to or from an Unrestricted Subsidiary will be valued at fair 
market value at the time of such transfer, provided that, in each case, the 
fair market value of an asset or property is as determined by the Board of 
Directors in good faith, and (c) subject to the foregoing, the amount of any 
Restricted Payment, if other than cash, will be determined by the Board of 
Directors, whose good faith determination will be conclusive. 

   The Board of Directors may designate a Restricted Subsidiary to be an 
Unrestricted Subsidiary in compliance with the covenant entitled 
"Unrestricted Subsidiaries." Upon such designation, all outstanding 
Investments by the Company and its Restricted Subsidiaries (except to the 
extent repaid in cash) in the Subsidiary so designated will be deemed to be 
Restricted Payments made at the time of such designation and will reduce the 
amount available for Restricted Payments under the first paragraph of this 
covenant. Such designation will only be permitted if such Restricted Payment 
would be permitted at such time and if such Restricted Subsidiary otherwise 
meets the definition of an Unrestricted Subsidiary. 

   Incurrence of Indebtedness and Issuance of Preferred Stock 

   The Indenture will provide that the Company will not, and will not permit 
any of its Restricted Subsidiaries to, directly or indirectly, create, incur, 
issue, assume, guaranty or otherwise become directly or indirectly liable 
with respect to (collectively, "incur") any Indebtedness (including Acquired 
Debt) and that the Company will not permit any of its Restricted Subsidiaries 
to issue any shares of preferred stock; provided, however, that the Company 
may incur Indebtedness and may permit a Restricted Subsidiary to incur 
Indebtedness if at the time of such incurrence and after giving effect 
thereto the Leverage Ratio would be less than 6.0 to 1.0. 

   The foregoing limitations will not apply to (a) the incurrence by the 
Company or any Restricted Subsidiary of Senior Bank Debt in an aggregate 
amount not to exceed $25.0 million at any one time outstanding, (b) the 
issuance by the Restricted Subsidiaries of Subsidiary Guarantees, (c) the 
incurrence by the Company and its Restricted Subsidiaries of the Existing 
Indebtedness, (d) the issuance by the Company of the Notes, (e) the 
incurrence by the Company and its Restricted Subsidiaries of Capital Lease 
Obligations and/or additional Indebtedness constituting purchase money 
obligations up to an aggregate of $2.5 million at any one time outstanding, 
provided that the Liens securing such Indebtedness constitute Permitted 
Liens, (f) the incurrence of Indebtedness between (i) the Company and its 
Restricted Subsidiaries and (ii) the Restricted Subsidiaries, (g) Hedging 
Obligations that are incurred for the purpose of fixing or hedging interest 
rate risk with respect to any floating rate Indebtedness that is permitted by 
the terms of the Indenture to be outstanding, (h) the incurrence by the 
Company and its Restricted Subsidiaries of Indebtedness arising out of 
letters of credit, performance bonds, surety bonds and bankers' acceptances 
incurred in the ordinary course of business up to an aggregate of $2.0 
million at any one time outstanding, (i) the incurrence by the Company and 
its Restricted Subsidiaries of Indebtedness consisting of guarantees, 
indemnities or obligations in respect of purchase price adjustments in 
connection with the acquisition or disposition of assets, including, without 
limitation, shares of Capital Stock, and (j) the incurrence by the Company 
and its Restricted Subsidiaries of Refinancing Indebtedness issued in 
exchange for, or the proceeds of which are used to repay, redeem, defease, 
extend, refinance, renew, replace or refund, Indebtedness referred to in 
clauses (b) through (e) above, and this clause (j). 

   Liens 

   The Indenture will provide that neither the Company nor any of its 
Restricted Subsidiaries may directly or indirectly create, incur, assume or 
suffer to exist any Lien (other than a Permitted Lien) upon any property or 
assets 

                                      69 

 
now owned or hereafter acquired, or any income, profits or proceeds 
therefrom, or assign or otherwise convey any right to receive income 
therefrom, unless (a) in the case of any Lien securing any Indebtedness that 
is subordinate to the Notes, the Notes are secured by a Lien on such 
property, assets or proceeds that is senior in priority to such Lien and (b) 
in the case of any other Lien, the Notes are equally and ratably secured with 
the obligation or liability secured by such Lien. 

   Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries 

   The Indenture will provide that the Company will not, and will not permit 
any of its Restricted Subsidiaries to, directly or indirectly, create or 
otherwise cause or suffer to exist or become effective any encumbrance or 
restriction on the ability of any Restricted Subsidiary to (a) (i) pay 
dividends or make any other distributions to the Company or any of its 
Restricted Subsidiaries (A) on its Capital Stock or (B) with respect to any 
other interest or participation in, or measured by, its profits, or (ii) pay 
any Indebtedness owed to the Company or any of its Restricted Subsidiaries, 
(b) make loans or advances to the Company or any of its Restricted 
Subsidiaries or (c) transfer any of its properties or assets to the Company 
or any of its Restricted Subsidiaries, except for such encumbrances or 
restrictions existing under or by reason of (1) Existing Indebtedness, (2) 
the Credit Agreement as in effect as of the date of the Indenture, and any 
amendments, modifications, restatements, renewals, increases, supplements, 
refundings, replacements or refinancing thereof, provided that such 
amendments, modifications, restatements, renewals, increases, supplements, 
refundings, replacements or refinancings are no more restrictive in the 
aggregate with respect to such dividend and other payment restrictions than 
those contained in the Credit Agreement as in effect on the date of the 
Indenture, (3) the Indenture and the Notes, (4) applicable law, (5) any 
instrument governing Indebtedness or Capital Stock of a Person acquired by 
the Company or any of its Restricted Subsidiaries as in effect at the time of 
such acquisition (except to the extent such Indebtedness was incurred in 
connection with or in contemplation of such acquisition), which encumbrance 
or restriction is not applicable to any Person, or the properties or assets 
of any Person, other than the Person, or the property or assets of the 
Person, so acquired, provided that the EBITDA of such Person is not taken 
into account in determining whether such acquisition was permitted by the 
terms of the Indenture, (6) customary non-assignment provisions in leases 
entered into in the ordinary course of business and consistent with past 
practices, (7) restrictions on the transfer of property subject to purchase 
money or Capital Lease Obligations otherwise permitted by clause (e) of the 
covenant entitled "Incurrence of Indebtedness and Issuance of Preferred 
Stock," or (8) permitted Refinancing Indebtedness, provided that the 
restrictions contained in the agreements governing such Refinancing 
Indebtedness are no more restrictive in the aggregate than those contained in 
the agreements governing the Indebtedness being refinanced. 

   Merger, Consolidation, or Sale of Assets 

   The Indenture will provide that the Company may not consolidate or merge 
with or into (whether or not the Company is the surviving corporation), or 
sell, assign, transfer, lease, convey or otherwise dispose of all or 
substantially all of its properties or assets in one or more related 
transactions, to another Person unless: (a) the Company is the surviving 
corporation or the Person formed by or surviving any such consolidation or 
merger (if other than the Company) or to which such sale, assignment, 
transfer, lease, conveyance or other disposition shall have been made is a 
corporation organized or existing under the laws of the United States, any 
state thereof or the District of Columbia; (b) the Person formed by or 
surviving any such consolidation or merger (if other than the Company) or the 
Person to which such sale, assignment, transfer, lease, conveyance or other 
disposition shall have been made assumes all the obligations of the Company 
under the Notes and the Indenture pursuant to a supplemental indenture in a 
form reasonably satisfactory to the Trustee; (c) immediately after such 
transaction no Default or Event of Default exists; and (d) the Company or any 
Person formed by or surviving any such consolidation or merger, or to which 
such sale, assignment, transfer, lease, conveyance or other disposition shall 
have been made, will, at the time of such transaction and after giving pro 
forma effect thereto, be permitted to incur at least $1.00 of additional 
Indebtedness pursuant to the test set forth in the first paragraph of the 
covenant entitled "Incurrence of Indebtedness and Issuance of Preferred 
Stock." 

   Transactions with Affiliates 

   The Indenture will provide that the Company will not, and will not permit 
any of its Restricted Subsidiaries to, sell, lease, transfer or otherwise 
dispose of any of its properties or assets to, or purchase any property or 
assets from, or enter into any contract, agreement, understanding, loan, 
advance or guarantee with, or for the benefit of, 

                                      70 

 
any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (a) 
such Affiliate Transaction is on terms that are no less favorable to the 
Company or the relevant Restricted Subsidiary than those that would have been 
obtained in a comparable transaction by the Company or such Restricted 
Subsidiary with a non-Affiliated Person and (b) the Company delivers to the 
Trustee (i) with respect to any Affiliate Transaction involving aggregate 
payments in excess of $1.0 million, a resolution of the Board of Directors 
set forth in an Officers' Certificate certifying that such Affiliate 
Transaction complies with clause (a) above and such Affiliate Transaction is 
approved by a majority of the disinterested members of the Board of Directors 
and (ii) with respect to any Affiliate Transaction involving aggregate 
payments in excess of $5.0 million, an opinion as to the fairness to the 
Company or such Restricted Subsidiary from a financial point of view issued 
by an investment banking firm of national standing; provided, however, that 
(A) any employment agreement entered into by the Company or any of its 
Restricted Subsidiaries in the ordinary course of business and consistent 
with the past practice of the Company or such Restricted Subsidiary, (B) 
transactions between or among the Company and/or its Restricted Subsidiaries, 
(C) transactions permitted by the provisions of the Indenture described above 
under the covenant entitled "Restricted Payments" and (D) the grant of stock, 
stock options or other equity interests to employees and directors of the 
Company in accordance with duly adopted Company stock grant, stock option and 
similar plans, in each case, shall not be deemed Affiliate Transactions; and 
further provided that (1) the provisions of clause (b) shall not apply to 
sales of inventory by the Company or any Restricted Subsidiary to any 
Affiliate in the ordinary course of business and (2) the provisions of clause 
(b) (ii) shall not apply to loans or advances to the Company or any 
Restricted Subsidiary from, or equity investments in the Company or any 
Restricted Subsidiary by, any Affiliate to the extent permitted by the 
provisions of the Indenture described above under the covenant entitled 
"Incurrence of Indebtedness and Issuance of Preferred Stock." 

   Certain Senior Subordinated Debt 

   The Indenture will provide that (a) the Company will not incur any 
Indebtedness that is subordinated or junior in right of payment to any Senior 
Debt of the Company and senior in any respect in right of payment to the 
Notes, and (b) the Company will not permit any Restricted Subsidiary to incur 
any Indebtedness that is subordinated or junior in right of payment to its 
Senior Debt and senior in any respect in right of payment to its Subsidiary 
Guarantee. 

   Additional Subsidiary Guarantees 

   The Indenture will provide that if any entity (other than an Excluded 
Restricted Subsidiary) shall become a Restricted Subsidiary after the date of 
the Indenture, then such Restricted Subsidiary shall execute a Subsidiary 
Guarantee and deliver an opinion of counsel with respect thereto, in 
accordance with the terms of the Indenture. 

   The Indenture will provide that no Restricted Subsidiary may consolidate 
with or merge with or into (whether or not such Restricted Subsidiary is the 
surviving Person), another Person (other than the Company) whether or not 
affiliated with such Restricted Subsidiary unless (a) subject to the 
provisions of the following paragraph, the Person formed by or surviving any 
such consolidation or merger (if other than such Restricted Subsidiary) 
assumes all the obligations of such Restricted Subsidiary under its 
Subsidiary Guaranty, if any, pursuant to a supplemental indenture in form and 
substance reasonably satisfactory to the Trustee; (b) immediately after 
giving effect to such transaction, no Default or Event of Default exists; and 
(c) such Restricted Subsidiary, or any Person formed by or surviving any such 
consolidation or merger, would be permitted to incur, immediately after 
giving effect to such transaction, at least $1.00 of additional Indebtedness 
pursuant to the test set forth in the first paragraph of the covenant 
entitled "Incurrence of Indebtedness and Issuance of Preferred Stock." 

   The Indenture will provide that in the event of (a) a sale or other 
disposition of all of the assets of any Restricted Subsidiary, by way of 
merger, consolidation or otherwise, (b) a sale or other disposition of all of 
the capital stock of any Restricted Subsidiary, or (c) the designation of a 
Restricted Subsidiary as an Unrestricted Subsidiary in accordance with the 
terms of the covenant entitled "Unrestricted Subsidiaries," then such 
Subsidiary (in the event of a sale or other disposition, by way of such a 
merger, consolidation or otherwise, of all of the capital stock of such 
Restricted Subsidiary or in the event of the designation of such Restricted 
Subsidiary as an Unrestricted Subsidiary) or the corporation acquiring the 
property (in the event of a sale or other disposition of all of the assets of 
such Restricted Subsidiary) will be released and relieved of any obligations 
under its Subsidiary Guarantee; provided that the Net Proceeds of such sale 
or other disposition are applied in accordance with the applicable provisions 
of the Indenture. See "Redemption or Repurchase at Option of Holders--Asset 
Sales." 

                                      71 

 
Unrestricted Subsidiaries 

   The Board of Directors may designate any Subsidiary (including any 
Restricted Subsidiary or any newly acquired or newly formed Subsidiary) to be 
an Unrestricted Subsidiary so long as: (i) neither the Company nor any 
Restricted Subsidiary is directly or indirectly liable for any Indebtedness 
of such Subsidiary; (ii) no default with respect to any Indebtedness of such 
Subsidiary would permit (upon notice, lapse of time or otherwise) any holder 
of any other Indebtedness of the Company or any Restricted Subsidiary to 
declare a default on such other Indebtedness or cause the payment thereof to 
be accelerated or payable prior to its stated maturity; (iii) any Investment 
in such Subsidiary deemed to be made as a result of designating such 
Subsidiary an Unrestricted Subsidiary will not violate the provisions of the 
covenant entitled "Restricted Payments;" (iv) neither the Company nor any 
Restricted Subsidiary has a contract, agreement, arrangement, understanding 
or obligation of any kind, whether written or oral, with such Subsidiary 
other than (A) those that might be obtained at the time from Persons who are 
not Affiliates of the Company or (B) administrative, tax sharing and other 
ordinary course contracts, agreements, arrangements and understandings or 
obligations entered into in the ordinary course of business; and (v) neither 
the Company nor any Restricted Subsidiary has any obligation to subscribe for 
additional shares of Capital Stock or other Equity Interests in such 
Subsidiary, or to maintain or preserve such Subsidiary's financial condition 
or to cause such Subsidiary to achieve certain levels of operating results 
other than as permitted under the covenant entitled "Restricted Payments." 
Notwithstanding the foregoing, the Company may not designate as an 
Unrestricted Subsidiary any Subsidiary which, on the date of the Indenture, 
is a Significant Subsidiary, and may not sell, transfer or otherwise dispose 
of any properties or assets of any such Significant Subsidiary to an 
Unrestricted Subsidiary, other than in the ordinary course of business. 

   The Board of Directors may designate any Unrestricted Subsidiary as a 
Restricted Subsidiary; provided that such designation will be deemed to be an 
incurrence of Indebtedness by a Restricted Subsidiary of any outstanding 
Indebtedness of such Unrestricted Subsidiary and such designation will only 
be permitted if (i) such Indebtedness is permitted under the "Incurrence of 
Indebtedness and Issuance of Preferred Stock" covenant and (ii) no Default or 
Event of Default would occur as a result of such designation. 

   Limitation on Sale and Leaseback Transactions 

   
   The Company will not, and will not permit any Restricted Subsidiary to, 
enter into any Sale and Leaseback Transaction unless (a) the consideration 
received in such Sale and Leaseback Transaction is at least equal to the fair 
market value of the property sold, as determined by a resolution of the Board 
of Directors of the Company, and (b) the Company or such Restricted 
Subsidiary could incur the Attributable Indebtedness in respect of such Sale 
and Leaseback Transaction in compliance with the covenant entitled 
"Incurrence of Indebtedness and Issuance of Preferred Stock." 
    

   Reports 

   Whether or not required by the rules and regulations of the Securities and 
Exchange Commission (the "Commission"), so long as any Notes are outstanding, 
the Company will furnish to the Holders of Notes (a) all quarterly and annual 
financial information that would be required to be contained in a filing with 
the Commission on Forms 10-Q and 10-K if the Company were required to file 
such Forms, including a "Management's Discussion and Analysis of Financial 
Condition and Results of Operations" and, with respect to the annual 
information only, a report thereon by the Company's certified independent 
accountants and (b) all financial information that would be required to be 
included in a Form 8-K filed with the Commission if the Company were required 
to file such reports. In addition, whether or not required by the rules and 
regulations of the Commission, the Company will file a copy of all such 
information and reports with the Commission for public availability (unless 
the Commission will not accept such a filing) and make such information 
available to investors who request it in writing. 

Events of Default and Remedies 

   The Indenture will provide that each of the following constitutes an Event 
of Default: (a) default for 30 days in the payment when due of interest on 
the Notes (whether or not prohibited by the subordination provisions of the 
Indenture); (b) default in payment when due of the principal of or premium, 
if any, on the Notes (whether or not prohibited by the subordination 
provisions of the Indenture); (c) failure by the Company to comply with the 
provisions described under "Change of Control;" (d) failure by the Company or 
any Subsidiary Guarantor for 60 

                                      72 

 
days after written notice from the Trustee or Holders of not less than 25% of 
the aggregate principal amount of the Notes outstanding to comply with any of 
its other agreements in the Indenture, Notes or the Subsidiary Guarantees; 
(e) default under any mortgage, indenture or instrument under which there may 
be issued or by which there may be secured or evidenced any Indebtedness for 
money borrowed by the Company or any of its Restricted Subsidiaries (or the 
payment of which is guaranteed by the Company or any of its Restricted 
Subsidiaries) whether such Indebtedness or guarantee exists on the date of 
the Indenture or is created thereafter, if (i) such default results in the 
acceleration of such Indebtedness prior to its express maturity or shall 
constitute a default in the payment of such Indebtedness at final maturity of 
such Indebtedness, and (ii) the principal amount of any such Indebtedness 
that has been accelerated or not paid at maturity, when added to the 
aggregate principal amount of all other such Indebtedness that has been 
accelerated or not paid at maturity, exceeds $5.0 million; (f) failure by the 
Company or any of its Restricted Subsidiaries to pay final judgments 
aggregating in excess of $5.0 million, which judgments remain unpaid, 
undischarged or unstayed for a period of 60 days; (g) certain events of 
bankruptcy or insolvency with respect to the Company or any of its Restricted 
Subsidiaries that are Significant Subsidiaries; and (h) except as permitted 
by the Indenture or the Subsidiary Guarantees, any Subsidiary Guarantee 
issued by a Restricted Subsidiary shall be held in any judicial proceeding to 
be unenforceable or invalid or shall cease for any reason to be in full force 
and effect, or any Restricted Subsidiary or any Person acting on behalf of 
any Restricted Subsidiary shall deny or disaffirm in writing its obligations 
under its Subsidiary Guarantee. 

   If any Event of Default occurs and is continuing, the Trustee or the 
Holders of at least 25% in principal amount of the then outstanding Notes may 
declare all the Notes to be due and payable immediately; provided, however, 
that if any Obligation with respect to Senior Bank Debt is outstanding 
pursuant to the Credit Agreement upon a declaration of acceleration of the 
Notes, the principal, premium, if any, and interest on the Notes will not be 
payable until the earlier of (i) the day which is five business days after 
written notice of acceleration is received by the Company and the Credit 
Agent, or (ii) the date of acceleration of the Indebtedness under the Credit 
Agreement. Notwithstanding the foregoing, in the case of an Event of Default 
arising from certain events of bankruptcy or insolvency with respect to the 
Company or any Restricted Subsidiary that is a Significant Subsidiary, the 
principal of, and premium, if any, and any accrued and unpaid interest on all 
outstanding Notes will become due and payable without further action or 
notice. Holders of the Notes may not enforce the Indenture or the Notes 
except as provided in the Indenture. In the event of a declaration of 
acceleration of the Notes because an Event of Default has occurred and is 
continuing as a result of the acceleration of any Indebtedness described in 
clause (e) of the preceding paragraph, the declaration of acceleration of the 
Notes shall be automatically annulled if the holders of any Indebtedness 
described in clause (e) have rescinded the declaration of acceleration in 
respect of such Indebtedness within 30 days of the date of such declaration 
and if (i) the annulment of the acceleration of the Notes would not conflict 
with any judgment or decree of a competent jurisdiction, and (ii) all 
existing Events of Default, except non-payment of principal or interest on 
the Notes that became due solely because of the acceleration of the Notes, 
have been cured or waived. 

   
   In the case of any Event of Default occurring by reason of any willful 
action (or inaction) taken (or not taken) by or on behalf of the Company with 
the intention of avoiding payment of the premium that the Company would have 
had to pay if the Company then had elected to redeem the Notes pursuant to 
the optional redemption provisions of the Indenture, an equivalent premium 
shall also become and be immediately due and payable to the extent permitted 
by law upon the acceleration of the Notes. If an Event of Default occurs 
prior to October 1, 2004 by reason of any willful action (or inaction) taken 
(or not taken) by or on behalf of the Company with the intention of avoiding 
the prohibition on redemption of the Notes prior to October 1, 2004, then the 
premium specified in the Indenture shall also become immediately due and 
payable to the extent permitted by law upon the acceleration of the Notes. 
    

   The Holders of a majority in aggregate principal amount of the Notes then 
outstanding by notice to the Trustee may on behalf of the Holders of all of 
the Notes waive any existing Default or Event of Default and its consequences 
under the Indenture except a continuing Default or Event of Default in the 
payment of interest on, or the principal of, the Notes. Subject to certain 
limitations, Holders of a majority in principal amount of the then 
outstanding Notes may direct the Trustee in its exercise of any trust or 
power. The Trustee may withhold from Holders of the Notes notice of any 
continuing Default or Event of Default (except a Default or Event of Default 
relating to the payment of principal or interest) if it determines that 
withholding notice is in their interest. 

                                      73 

 
   The Company is required to deliver to the Trustee annually a statement 
regarding compliance with the Indenture, and the Company is required upon 
becoming aware of any Default or Event of Default, to deliver to the Trustee 
a statement specifying such Default or Event of Default. 

No Personal Liability of Directors, Officers, Employees and Stockholders 

   No director, officer, employee, incorporator or stockholder of the Company 
or any Restricted Subsidiary, as such, shall have any liability for any 
obligations of the Company or any Restricted Subsidiary under the Notes, the 
Subsidiary Guarantees or the Indenture or for any claim based on, in respect 
of, or by reason of, such obligations or their creation. Each Holder of Notes 
by accepting a Note and the Subsidiary Guarantees waives and releases all 
such liability. The waiver and release are part of the consideration for 
issuance of the Notes and the Subsidiary Guarantees. Such waiver may not be 
effective to waive liabilities under the federal securities laws and it is 
the view of the Commission that such a waiver is against public policy. 

Legal Defeasance and Covenant Defeasance 

   The Company may, at its option and at any time, elect to have all of its 
obligations discharged with respect to the outstanding Notes ("Legal 
Defeasance") except for (a) the rights of Holders of outstanding Notes to 
receive payments in respect of the principal of, premium, if any, and 
interest on such Notes when such payments are due, (b) the Company's 
obligations with respect to the Notes concerning issuing temporary Notes, 
registration of Notes, mutilated, destroyed, lost or stolen Notes and the 
maintenance of an office or agency for payment and money for security 
payments held in trust, (c) the rights, powers, trusts, duties and immunities 
of the Trustee, and the Company's obligations in connection therewith and (d) 
the Legal Defeasance provisions of the Indenture. In addition, the Company 
may, at its option and at any time, elect to have the obligations of the 
Company released with respect to certain covenants that are described in the 
Indenture ("Covenant Defeasance"), and thereafter any omission to comply with 
such obligations shall not constitute a Default or Event of Default with 
respect to the Notes. In the event Covenant Defeasance occurs, certain events 
(not including non-payment, bankruptcy, receivership and insolvency events) 
described under "Events of Default" will no longer constitute an Event of 
Default with respect to the Notes. 

   In order to exercise either Legal Defeasance or Covenant Defeasance, (a) 
the Company must irrevocably deposit with the Trustee, in trust, for the 
benefit of the Holders of the Notes, cash in Dollars, non-callable Government 
Securities, or a combination thereof, in such amounts as will be sufficient, 
in the opinion of a nationally recognized firm of independent public 
accountants, to pay the principal of, premium, if any, and interest on the 
outstanding Notes on the stated maturity or on the applicable redemption 
date, as the case may be, of such principal or installment of principal of, 
premium, if any, or interest on the outstanding Notes; (b) in the case of 
Legal Defeasance, the Company shall have delivered to the Trustee an opinion 
of counsel in the United States reasonably acceptable to the Trustee 
confirming that (i) the Company has received from, or there has been 
published by, the Internal Revenue Service a ruling or (ii) since the date of 
the Indenture, there has been a change in the applicable federal income tax 
law, in either case to the effect that, and based thereon such opinion of 
counsel shall confirm that, the Holders of the outstanding Notes will not 
recognize income, gain or loss for federal income tax purposes as a result of 
such Legal Defeasance and will be subject to federal income tax on the same 
amounts, in the same manner and at the same times as would have been the case 
if such Legal Defeasance had not occurred; (c) in the case of Covenant 
Defeasance, the Company shall have delivered to the Trustee an opinion of 
counsel in the United States reasonably acceptable to the Trustee confirming 
that the Holders of the outstanding Notes will not recognize income, gain or 
loss for federal income tax purposes as a result of such Covenant Defeasance 
and will be subject to federal income tax on the same amounts, in the same 
manner and at the same times as would have been the case if such Covenant 
Defeasance had not occurred; (d) no Default or Event of Default shall have 
occurred and be continuing on the date of such deposit or insofar as Events 
of Default from bankruptcy or insolvency events are concerned, at any time in 
the period ending on the 91st day after the date of deposit; (e) such Legal 
Defeasance or Covenant Defeasance shall not result in a breach or violation 
of, or constitute a default under, any material agreement or instrument to 
which the Company or any of its Subsidiaries is a party or by which the 
Company or any of its Subsidiaries is bound; (f) the Company shall have 
delivered to the Trustee an opinion of counsel to the effect that after the 
91st day following the deposit, the trust funds will not be subject to the 
effect of any applicable bankruptcy, insolvency, reorganization or similar 
laws affecting creditors' rights generally; (g) the Company shall have 
delivered to the Trustee an Officers' Certificate stating that the deposit 
was not made by the Company with the intent of preferring the Holders of 
Notes over the other creditors of the Company with the intent of defeating, 

                                      74 

 
hindering, delaying or defrauding creditors of the Company or others; and (h) 
the Company shall have delivered to the Trustee an Officers' Certificate and 
an opinion of counsel, each stating that all conditions precedent provided 
for relating to the Legal Defeasance or the Covenant Defeasance have been 
complied with. 

Transfer and Exchange 

   A Holder may transfer or exchange Notes in accordance with the Indenture. 
The Registrar and the Trustee may require a Holder, among other things, to 
furnish appropriate endorsements and transfer documents and the Company may 
require a Holder to pay any taxes and fees required by law or permitted by 
the Indenture. The Company is not required to transfer or exchange any Note 
selected for redemption. Also, the Company is not required to transfer or 
exchange any Note for a period of 15 days before a selection of Notes to be 
redeemed. 

   The registered Holder of a Note will be treated as the owner of it for all 
purposes. 

Book-Entry, Delivery and Form 

   The Notes will be represented by one or more fully registered global notes 
(collectively, the "Global Note"). The Global Note will be deposited upon 
issuance with, or on behalf of, The Depository Trust Company, as Depositary 
(the "Depositary"), and registered in the name of the Depositary or a nominee 
of the Depositary (the "Global Note Registered Owner"). Except as set forth 
below, the Global Note may be transferred, in whole and not in part, only to 
another nominee of the Depositary or to a successor of the Depositary or its 
nominee. 

   The Depositary has advised the Company that the Depositary is a 
limited-purpose trust company created to hold securities for its 
participating organizations (collectively, the "Participants") and to 
facilitate the clearance and settlement of transactions in those securities 
between the Participants through electronic book-entry changes in accounts of 
its Participants. The Participants include securities brokers and dealers 
(including the Underwriters), banks, trust companies, clearing corporations 
and certain other organizations. Access to the Depositary's systems is also 
available to other entities such as banks, brokers, dealers and trust 
companies that clear through or maintain a custodial relationship with a 
Participant, either directly or indirectly (collectively, the "Indirect 
Participants"). Persons who are not Participants may beneficially own 
securities held by or on behalf of the Depositary only through the 
Participants or the Indirect Participants. The ownership interest and 
transfer of ownership interest of each actual purchaser of each security held 
by or on behalf of the Depositary are recorded on the records of the 
Participants and Indirect Participants. 

   The Depositary has also advised the Company that, pursuant to procedures 
established by it, (i) upon deposit of the Global Note, the Depositary will 
credit the accounts of Participants designated by the Underwriters with 
portions of the principal amount of the Global Note and (ii) ownership of 
such interests in the Global Note will be shown on, and the transfer of 
ownership thereof will be effected only through, records maintained by the 
Depositary (with respect to the Participants) or by the Participants and the 
Indirect Participants (with respect to other owners of beneficial interests 
in the Global Note). The laws of some states require that certain persons 
take physical delivery in definitive form of securities that they own. 
Consequently, the ability to transfer the Notes will be limited to that 
extent. 

   Except as provided below, owners of interests in the Global Note will not 
have Notes registered in their names, will not receive physical delivery of 
the Notes in definitive form and will not be considered the registered owners 
or holders thereof under the Indenture for any purpose. 

   Payments in respect of the principal of and premium, if any, and interest 
on any Notes registered in the name of the Global Note Registered Owner will 
be payable by the Trustee to the Global Note Registered Owner in its capacity 
as the registered holder under the Indenture. Under the terms of the 
Indenture, the Company and the Trustee will treat the persons in whose names 
the Notes, including the Global Note, are registered as the owners thereof 
for the purpose of receiving such payments and for any and all other purposes 
whatsoever. Consequently, neither the Company, the Trustee nor any agent of 
the Company or the Trustee has or will have any responsibility or liability 
for (i) any aspect of the Depositary's records or any Participant's records 
relating to or payments made on account of beneficial ownership interests in 
the Global Note, or for maintaining, supervising or reviewing any of the 
Depositary's records or any Participant's records relating to the beneficial 
ownership interests in the Global Note or (ii) any other matter relating to 
the actions and practices of the Depositary or any of its Participants. The 
Depositary has advised the Company that its current practice, upon receipt of 
any payment in respect of securities 

                                      75 

 
such as the Notes (including principal and interest), is to credit the 
accounts of the relevant Participants with the payment on the payment date, 
in amounts proportionate to their respective holdings in principal amount of 
beneficial interests in the relevant security as shown on the records of the 
Depositary. Payments by the Participants and the Indirect Participants to the 
beneficial owners of the Notes will be governed by standing instructions and 
customary practices and will be the responsibility of the Participants or the 
Indirect Participants and will not be the responsibility of the Depositary, 
the Trustee or the Company. Neither the Company nor the Trustee will be 
liable for any delay by the Depositary or any of its Participants in 
identifying the beneficial owners of the Notes, and the Company and Trustee 
may conclusively rely on and will be protected in relying on instructions 
from the Global Note Registered Owner for all purposes. 

   The Global Note is exchangeable for definitive Notes: (i) if the 
Depositary notifies the Company that it is unwilling or unable to continue as 
Depositary of the Global Note and the Company thereupon fails to appoint a 
successor Depositary; (ii) if the Company, at its option, notifies the 
Trustee in writing that it elects to cause the issuance of the Notes in 
definitive registered form; or (iii) if there shall have occurred and be 
continuing an Event of Default or any event which after notice or lapse of 
time or both would be an Event of Default with respect to the Notes. Such 
definitive Notes shall be registered in the names of the owners of the 
beneficial interests in the Global Note as provided by the Participants. Upon 
issuance of the Notes in definitive form, the Trustee is required to register 
the Notes in the name of, and cause the Notes to be delivered to, the person 
or persons (or the nominee thereof) identified as the beneficial owners as 
the Depositary shall direct. 

   Settlement for purchases of beneficial interests in the Global Note upon 
the original issuance thereof will be required to be made by wire transfer in 
immediately available funds. Payments in respect of the Notes represented by 
the Global Note (including principal, premium, if any, and interest) will be 
made by wire transfer in immediately available funds to the accounts 
specified by the Global Note Registered Owner. With respect to the definitive 
Notes, the Company will make all payments of principal, premium, if any, and 
interest by wire transfer in immediately available funds to the accounts 
specified by the Holders thereof or, if no such account is specified, by 
mailing a check to such Holder's registered address. Secondary trading in 
long-term notes of corporate issuers is generally settled in clearing-house 
or next-day funds. In contrast, the beneficial interests in the Global Note 
are expected to trade in the Depositary's Same-Day Funds Settlement System, 
in which secondary market trading activity in those beneficial interests 
would be required by the Depositary to settle in immediately available funds. 
There is no assurance as to the effect, if any, that settlement in 
immediately available funds would have on trading activity in such beneficial 
interests. 

Amendment, Supplement and Waiver 

   Except as provided in the next two succeeding paragraphs, the Indenture or 
the Notes may be amended or supplemented with the consent of the Holders of 
at least a majority in principal amount of the Notes then outstanding 
(including consents obtained in connection with a tender offer or exchange 
offer for Notes), and any existing default or compliance with any provision 
of the Indenture or the Notes may be waived with the consent of the Holders 
of a majority in principal amount of the then outstanding Notes (including 
consents obtained in connection with a tender offer or exchange offer for 
Notes). 

   Without the consent of each Holder affected, an amendment or waiver may 
not (with respect to any Notes held by a non-consenting Holder of Notes): (a) 
reduce the principal amount of Notes whose Holders must consent to an 
amendment, supplement or waiver; (b) reduce the principal of or change the 
fixed maturity of any Note or alter the provisions with respect to the 
redemption of the Notes in a manner adverse to the Holders of the Notes; (c) 
reduce the rate of or change the time for payment of interest on any Note; 
(d) waive a Default or Event of Default in the payment of principal of or 
premium, if any, or interest on the Notes (except a rescission of 
acceleration of the Notes by the Holders of at least a majority in aggregate 
principal amount of the then outstanding Notes and a waiver of the payment 
default that resulted from such acceleration); (e) make any Note payable in 
money other than that stated in the Notes; (f) make any change in the 
provisions of the Indenture relating to waivers of past Defaults or the 
rights of Holders of Notes to receive payments of principal of or premium, if 
any, or interest on the Notes; (g) waive a redemption payment with respect to 
any Note (other than a payment required by one of the covenants described 
above under the caption "Repurchase at the Option of Holders"); (h) except 
pursuant to the Indenture, release any Restricted Subsidiary from its 
obligations under its Subsidiary Guarantee, or change any 

                                      76 

 
Subsidiary Guarantee in any manner that would materially adversely affect the 
Holders; or (i) make any change in the foregoing amendment and waiver 
provisions. 

   Notwithstanding the foregoing, without the consent of any Holder of Notes, 
the Company and the Trustee may amend or supplement the Indenture or the 
Notes to cure any ambiguity, defect or inconsistency, to provide for 
uncertificated Notes in addition to or in place of certificated Notes, to 
provide for the assumption of the Company's obligations to Holders of the 
Notes in the case of a merger or consolidation, to make any change that would 
provide any additional rights or benefits to the Holders of the Notes or that 
does not adversely affect the legal rights under the Indenture of any such 
Holder, or to comply with requirements of the Commission in order to effect 
or maintain the qualification of the Indenture under the Trust Indenture Act. 

Concerning the Trustee 

   The Indenture contains certain limitations on the rights of the Trustee, 
should it become a creditor of the Company, to obtain payment of claims in 
certain cases or to realize on certain property received in respect of any 
such claim as security or otherwise. The Trustee will be permitted to engage 
in other transactions; however, if it acquires any conflicting interest it 
must eliminate such conflict within 90 days, apply to the Commission for 
permission to continue or resign. 

   The Holders of a majority in principal amount of the then outstanding 
Notes will have the right to direct the time, method and place of conducting 
any proceeding for exercising any remedy available to the Trustee, subject to 
certain exceptions. The Indenture provides that in case an Event of Default 
shall occur (which shall not be cured), the Trustee will be required, in the 
exercise of its power, to use the degree of care of a prudent man in the 
conduct of his own affairs. Subject to such provisions, the Trustee will be 
under no obligation to exercise any of its rights or powers under the 
Indenture at the request of any Holder of Notes, unless such Holder shall 
have offered to the Trustee security and indemnity satisfactory to it against 
any loss, liability or expense. 

Additional Information 

   Anyone who receives this Prospectus may obtain a copy of the Indenture 
without charge by writing to Iron Mountain Incorporated, 745 Atlantic Avenue, 
Boston, MA 02111, Attention: Executive Vice President/Chief Financial 
Officer. 

Certain Definitions 

   Set forth below are certain defined terms used in the Indenture. Reference 
is made to the Indenture for a full disclosure of all such terms, as well as 
any other capitalized terms used herein for which no definition is provided. 

   "Acquired Debt" means, with respect to any specified Person, (a) 
Indebtedness of any other Person, existing at the time such other Person 
merged with or into or became a Subsidiary of such specified Person, 
including Indebtedness incurred in connection with, or in contemplation of, 
such other Person merging with or into or becoming a Subsidiary of such 
specified Person and (b) Indebtedness encumbering any asset acquired by such 
specified Person. 

   "Acquisition EBITDA" means, as of any date of determination, with respect 
to an Acquisition EBITDA Entity, the sum of (a) EBITDA of such Acquisition 
EBITDA Entity for its last fiscal quarter for which financial statements are 
available at such date of determination, multiplied by four (or if such 
quarterly statements are not available, EBITDA for the most recent fiscal 
year for which financial statements are available), plus (b) projected 
quantifiable improvements in operating results (on an annualized basis) due 
to cost reductions calculated in good faith by the Company or one of its 
Restricted Subsidiaries, as certified by an Officers' Certificate filed with 
the Trustee, without giving effect to any operating losses of the acquired 
Person. 

   "Acquisition EBITDA Entity" means, as of any date of determination, a 
business or Person (a) which has been acquired by the Company or one of its 
Restricted Subsidiaries and with respect to which financial results on a 
consolidated basis with the Company have not been made available for an 
entire fiscal quarter or (b) which is to be acquired in whole or in part with 
Indebtedness, the incurrence of which will require the calculation on such 
date of the Acquisition EBITDA of such Acquisition EBITDA Entity for purposes 
of the covenant entitled "Incurrence of Indebtedness and Issuance of 
Preferred Stock." 

                                      77 

 
    "Adjusted EBITDA" means, as of any date of determination and without 
duplication, the sum of (a) EBITDA of the Company and its Restricted 
Subsidiaries for the most recent fiscal quarter for which internal financial 
statements are available at such date of determination, multiplied by four, 
and (b) Acquisition EBITDA of each business or Person that is an Acquisition 
EBITDA Entity as of such date of determination, multiplied by a fraction, the 
numerator of which is three minus the number of months (and/or any portion 
thereof) in such most recent fiscal quarter for which the financial results 
of such Acquisition EBITDA Entity are included in the EBITDA of the Company 
and its Restricted Subsidiaries under clause (a) above, and (ii) the 
denominator of which is three. The effects of unusual or non-recurring items 
in respect of the Company, a Restricted Subsidiary or an Acquisition EBITDA 
Entity occurring in any period shall be excluded in the calculation of 
Adjusted EBITDA. 

   "Affiliate" of any specified Person means any other Person directly or 
indirectly controlling or controlled by or under direct or indirect common 
control with such specified Person. For purposes of this definition, 
"control" (including, with correlative meanings, the terms "controlling," 
"controlled by" and "under common control with"), as used with respect to any 
Person, shall mean the possession, directly or indirectly, of the power to 
direct or cause the direction of the management or policies of such Person, 
whether through the ownership of voting securities, by agreement or 
otherwise; provided, however, that beneficial ownership of 10% or more of the 
voting securities of a Person shall be deemed to be control. 

   "Attributable Indebtedness" in respect of a Sale and Leaseback Transaction 
means, as of the time of determination, the greater of (a) the fair market 
value of the property subject to such arrangement (as determined by the Board 
of Directors of the Company) and (b) the present value (discounted at the 
rate of interest implicit in such transaction) of the total obligations of 
the lessee for rental payments during the remaining terms of the lease 
included in such Sale and Leaseback Transaction (including any period for 
which such lease has been extended). 

   "Capital Lease Obligation" means, at the time any determination thereof is 
to be made, the amount of the liability in respect of a capital lease that 
would at such time be so required to be capitalized on the balance sheet in 
accordance with GAAP. 

   "Capital Stock" means any and all shares, interests, participations, 
rights or other equivalents (however designated) of corporate stock, 
including, without limitation, with respect to partnerships, partnership 
interests (whether general or limited) and any other interest or 
participation that confers on a Person the right to receive a share of the 
profits and losses of, or distributions of assets of, such partnership. 

   "Cash Equivalents" means (a) securities with maturities of one year or 
less from the date of acquisition, issued, fully guaranteed or insured by the 
United States Government or any agency thereof, (b) certificates of deposit, 
time deposits, overnight bank deposits, bankers acceptances and repurchase 
agreements issued by a Qualified Issuer having maturities of 270 days or less 
from the date of acquisition, (c) commercial paper of an issuer rated at 
least A-2 by Standard & Poor's Rating Group, a division of McGraw Hill, Inc., 
or P-2 by Moody's Investors Service, or carrying an equivalent rating by a 
nationally recognized rating agency if both of the two named rating agencies 
cease publishing ratings of investments and having maturities of 270 days or 
less from the date of acquisition, (d) money market accounts or funds with or 
issued by Qualified Issuers and (e) Investments in money market funds 
substantially all of the assets of which are comprised of securities and 
other obligations of the types described in clauses (a) through (c) above. 

   "Consolidated Adjusted Net Income" means, for any period, the net income 
(or net loss) of the Company and its Restricted Subsidiaries for such period 
as determined on a consolidated basis in accordance with GAAP, adjusted to 
the extent included in calculating such net income or loss by excluding (a) 
any net after-tax extraordinary gains or losses (less all fees and expenses 
relating thereto), (b) any net after-tax gains or losses (less all fees and 
expenses relating thereto) attributable to Asset Sales, (c) the portion of 
net income (or loss) of any Person (other than the Company or a Restricted 
Subsidiary), including Unrestricted Subsidiaries, in which the Company or any 
Restricted Subsidiary has an ownership interest, except to the extent of the 
amount of dividends or other distributions actually paid to the Company or 
any Restricted Subsidiary in cash dividends or distributions by such Person 
during such period, and (d) the net income (or loss) of any Person combined 
with the Company or any Restricted Subsidiary on a "pooling of interests" 
basis attributable to any period prior to the date of combination. 

   "Consolidated Income Tax Expense" means, for any period, the provision for 
federal, state, local and foreign income taxes of the Company and its 
Restricted Subsidiaries for such period as determined on a consolidated basis 
in accordance with GAAP. 

                                      78 

 
    "Consolidated Interest Expense" means, for any period, without 
duplication, the sum of (a) the amount which, in conformity with GAAP, would 
be set forth opposite the caption "interest expense" (or any like caption) on 
a consolidated statement of operations of the Company and its Restricted 
Subsidiaries for such period, including, without limitation, (i) amortization 
of debt discount, (ii) the net cost of interest rate contracts (including 
amortization of discounts), (iii) the interest portion of any deferred 
payment obligation, (iv) amortization of debt issuance costs, and (v) the 
interest component of Capital Lease Obligations of the Company and its 
Restricted Subsidiaries, plus (b) all interest on any Indebtedness of any 
other Person guaranteed and paid by the Company or any of its Restricted 
Subsidiaries; provided, however, that Consolidated Interest Expense will not 
include any gain or loss from extinguishment of debt, including write-off of 
debt issuance costs. 

   "Consolidated Non-Cash Charges" means, for any period, the aggregate 
depreciation, amortization and other non-cash expenses of the Company and its 
Restricted Subsidiaries reducing Consolidated Adjusted Net Income for such 
period, determined on a consolidated basis in accordance with GAAP (excluding 
any such non-cash charge that requires an accrual of or reserve for cash 
charges for any future period). 

   "Credit Agent" means The Chase Manhattan Bank, in its capacity as 
administrative agent for the lenders party to the Credit Agreement, or any 
successor or successors party thereto. 

   "Credit Agreement" means that certain Credit Agreement, dated as of 
December 10, 1990, as amended and restated as of April 15, 1993, and as 
further amended and restated as of January 31, 1995, among the Company, the 
lenders party thereto and the Credit Agent, as the same may be refunded, 
replaced or refinanced by the New Credit Facility, and in each case as 
amended, restated, supplemented, modified, renewed, refunded, increased, 
extended, replaced or refinanced from time to time. 

   "Default" means any event that is or with the passage of time or the 
giving of notice or both would be an Event of Default. 

   "Designated Senior Debt" means (a) Senior Bank Debt and (b) other Senior 
Debt the principal amount of which is $50.0 million or more at the date of 
designation by the Company in a written instrument delivered to the Trustee; 
provided that Senior Debt designated as Designated Senior Debt pursuant to 
clause (b) shall cease to be Designated Senior Debt at any time that the 
aggregate principal amount thereof outstanding is $10.0 million or less. 

   "Disqualified Stock" means any Capital Stock which, by its terms (or by 
the terms of any security into which it is convertible or for which it is 
exchangeable), or upon the happening of any event, matures or is mandatorily 
redeemable, for cash or other property (other than Capital Stock that is not 
Disqualified Stock) pursuant to a sinking fund obligation or otherwise, or is 
redeemable at the option of the Holder thereof, in whole or in part, in each 
case on or prior to the stated maturity of the Notes. 

   "Dollars" and "$" mean lawful money of the United States of America. 

   "EBITDA" means for any period Consolidated Adjusted Net Income for such 
period increased by (a) Consolidated Interest Expense for such period, plus 
(b) Consolidated Income Tax Expense for such period, plus (c) Consolidated 
Non-Cash Charges for such period. 

   "Equity Interests" means Capital Stock and all warrants, options or other 
rights to acquire Capital Stock (but excluding any debt security that is 
convertible into, or exchangeable for, Capital Stock). 

   "Equity Proceeds" means (a) with respect to Equity Interests (or debt 
securities converted into Equity Interests) issued or sold for cash Dollars, 
the aggregate amount of such cash Dollars and (b) with respect to Equity 
Interests (or debt securities converted into Equity Interests) issued or sold 
for any consideration other than cash Dollars, the aggregate Market Price 
thereof computed on the date of the issuance or sale thereof. 

   "Excluded Restricted Subsidiary" means any Wholly Owned Restricted 
Subsidiary principally engaged in the records management business domiciled 
outside the United States of America if the issuance of a Subsidiary 
Guarantee by such Subsidiary would, as determined in a resolution of the 
Board of Directors set forth in an Officers' Certificate delivered to the 
Trustee, create a tax disadvantage that is material in relation to the 
aggregate amount of the Company's and any Restricted Subsidiary's Investment 
or proposed Investment therein. 

   "Existing Indebtedness" means Indebtedness of the Company and its 
Subsidiaries (other than under the Credit Agreement) in existence on the date 
of the Indenture, until such amounts are repaid. 

                                      79 

 
    "Government Securities" means direct obligations of, or obligations 
guaranteed by, the United States of America for the payment of which 
guarantee or obligations the full faith and credit of the United States of 
America is pledged. 

   "Guarantee" means, as applied to any obligation, (a) a guarantee (other 
than by endorsement of negotiable instruments for collection in the ordinary 
course of business), direct or indirect, in any manner, of any part or all of 
such obligation and (b) an agreement, direct or indirect, contingent or 
otherwise, the practical effect of which is to assure in any way the payment 
or performance (or payment of damages in the event of non-performance) of all 
or any part of such obligation, including, without limiting the foregoing, 
the obligation to reimburse amounts drawn down under letters of credit 
securing such obligations. 

   "Hedging Obligations" means, with respect to any Person, the obligations 
of such Person under (a) interest rate swap agreements, interest rate cap 
agreements and interest rate collar agreements and (b) other agreements or 
arrangements designed to protect such Person against fluctuations in interest 
rates. 

   "Indebtedness" means (without duplication), with respect to any Person, 
whether recourse is to all or a portion of the assets of such Person, and 
whether or not contingent, (a) every obligation of such Person for money 
borrowed, (b) every obligation of such Person evidenced by bonds, debentures, 
notes or other similar instruments, (c) every reimbursement obligation of 
such Person with respect to letters of credit, bankers' acceptances or 
similar facilities issued for the account of such Person, (d) every 
obligation of such Person issued or assumed as the deferred purchase price of 
property or services, (e) every Capital Lease Obligation and every obligation 
of such Person in respect of Sale and Leaseback Transactions that would be 
required to be capitalized on the balance sheet in accordance with GAAP, (f) 
all Disqualified Stock of such Person valued at the greater of its voluntary 
or involuntary maximum fixed repurchase price, plus accrued and unpaid 
dividends (unless included in such maximum repurchase price), (g) all 
obligations of such Person under or with respect to Hedging Obligations which 
would be required to be reflected on the balance sheet as a liability of such 
Person in accordance with GAAP and (h) every obligation of the type referred 
to in clauses (a) through (g) of another Person and dividends of another 
Person the payment of which, in either case, such Person has guaranteed. For 
purposes of this definition, the "maximum fixed repurchase price" of any 
Disqualified Stock that does not have a fixed repurchase price will be 
calculated in accordance with the terms of such Disqualified Stock as if such 
Disqualified Stock were repurchased on any date on which Indebtedness is 
required to be determined pursuant to the Indenture, and if such price is 
based upon, or measured by, the fair market value of such Disqualified Stock, 
such fair market value will be determined in good faith by the board of 
directors of the issuer of such Disqualified Stock. Notwithstanding the 
foregoing, trade accounts payable and accrued liabilities arising in the 
ordinary course of business and any liability for federal, state or local 
taxes or other taxes owed by such Person shall not be considered Indebtedness 
for purposes of this definition. The amount outstanding at any time of any 
Indebtedness issued with original issue discount is the aggregate principal 
amount at maturity of such Indebtedness, less the remaining unamortized 
portion of the original issue discount of such Indebtedness at such time, as 
determined in accordance with GAAP. 

   "Investments" means, with respect to any Person, all investments by such 
Person in other Persons (including Affiliates) in the forms of loans 
(including Guarantees), advances or capital contributions (excluding 
commission, travel and similar advances to officers and employees made in the 
ordinary course of business), purchases or other acquisitions for 
consideration of Indebtedness, Equity Interests or other securities and all 
other items that are or would be classified as investments on a balance sheet 
prepared in accordance with GAAP. 

   "Leverage Ratio" means, at any date, the ratio of (a) the aggregate 
principal amount of Indebtedness of the Company and its Restricted 
Subsidiaries outstanding as of the most recent available quarterly or annual 
balance sheet to (b) Adjusted EBITDA, after giving pro forma effect, without 
duplication, to (i) the incurrence, repayment or retirement of any 
Indebtedness by the Company or its Restricted Subsidiaries since the last day 
of the most recent full fiscal quarter of the Company, (ii) if the Leverage 
Ratio is being determined in connection with the incurrence of Indebtedness 
by the Company or a Restricted Subsidiary, such Indebtedness, and (iii) the 
Indebtedness to be incurred in connection with the acquisition of any 
Acquisition EBITDA Entity. 

   "Lien" means, with respect to any asset, any mortgage, lien, pledge, 
charge, security interest or encumbrance of any kind in respect of such 
asset, whether or not filed, recorded or otherwise perfected under applicable 
law (including any conditional sale or other title retention agreement, any 
lease in the nature thereof, any option or other 

                                      80 

 
agreement to sell or give a security interest in and any filing of or 
agreement to give any financing statement under the Uniform Commercial Code, 
or equivalent statutes, of any jurisdiction). 

   "Market Price" means, (a) with respect to the calculation of Equity 
Proceeds from the issuance or sale of debt securities which have been 
converted into Equity Interests, the value received upon the original 
issuance or sale of such converted debt securities, as determined reasonably 
and in good faith by the Board of Directors, and (b) with respect to the 
calculation of Equity Proceeds from the issuance or sale of Equity Interests, 
the average of the daily closing prices for such Equity Interests for the 20 
consecutive trading days preceding the date of such computation. The closing 
price for each day shall be (a) if such Equity Interests are then listed or 
admitted to trading on the New York Stock Exchange, the closing price on the 
NYSE Consolidated Tape (or any successor consolidated tape reporting 
transactions on the New York Stock Exchange) or, if such composite tape shall 
not be in use or shall not report transactions in such Equity Interests, or 
if such Equity Interests shall be listed on a stock exchange other than the 
New York Stock Exchange (including for this purpose the Nasdaq National 
Market), the last reported sale price regular way for such day, or in case no 
such reported sale takes place on such day, the average of the closing bid 
and asked prices regular way for such day, in each case on the principal 
national securities exchange on which such Equity Interests are listed or 
admitted to trading (which shall be the national securities exchange on which 
the greatest number of such Equity Interests have been traded during such 20 
consecutive trading days), or (b) if such Equity Interests are not listed or 
admitted to trading on any such exchange, the average of the closing bid and 
asked prices thereof in the over-the-counter market as reported by the 
National Association of Securities Dealers Automated Quotation System or any 
successor system, or if not included therein, the average of the closing bid 
and asked prices thereof furnished by two members of the National Association 
of Securities Dealers selected reasonably and in good faith by the Board of 
Directors for that purpose. In the absence of one or more such quotations, 
the Market Price for such Equity Interests shall be determined reasonably and 
in good faith by the Board of Directors. 

   "Net Proceeds" means the aggregate cash proceeds received by the Company 
or any of its Restricted Subsidiaries in respect of any Asset Sale, which 
amount is equal to the excess, if any, of (a) the cash received by the 
Company or such Restricted Subsidiary (including any cash payments received 
by way of deferred payment pursuant to, or monetization of, a note or 
installment receivable or otherwise, but only as and when received) in 
connection with such disposition over (b) the sum of (i) the amount of any 
Indebtedness which is secured by such asset and which is required to be 
repaid in connection with the disposition thereof, plus (ii) the reasonable 
out- of-pocket expenses incurred by the Company or such Restricted 
Subsidiary, as the case may be, in connection with such disposition or in 
connection with the transfer of such amount from such Restricted Subsidiary 
to the Company, plus (iii) provisions for taxes, including income taxes, 
attributable to the disposition of such asset or attributable to required 
prepayments or repayments of Indebtedness with the proceeds thereof, plus 
(iv) if the Company does not first receive a transfer of such amount from the 
relevant Restricted Subsidiary with respect to the disposition of an asset by 
such Restricted Subsidiary and such Restricted Subsidiary intends to make 
such transfer as soon as practicable, the out-of-pocket expenses and taxes 
that the Company reasonably estimates will be incurred by the Company or such 
Restricted Subsidiary in connection with such transfer at the time such 
transfer is expected to be received by the Company (including, without 
limitation, withholding taxes on the remittance of such amount). 

   "Obligations" means any principal, interest (including post-petition 
interest, whether or not allowed as a claim in any proceeding), penalties, 
fees, costs, expenses, indemnifications, reimbursements, damages and other 
liabilities payable under or in connection with any Indebtedness. 

   "Officers' Certificate" means a certificate signed, unless otherwise 
specified, by any two of the Chairman of the Board, a Vice Chairman of the 
Board, the President, the Chief Financial Officer, the Controller, or an 
Executive Vice President of the Company, and delivered to the Trustee. 

   "Permitted Investments" means (a) any Investments in the Company or in a 
Restricted Subsidiary (other than an Excluded Restricted Subsidiary) of the 
Company, including without limitation the Guarantee of Indebtedness permitted 
under the covenant entitled "Incurrence of Indebtedness and Issuance of 
Preferred Stock;" (b) any Investments in Cash Equivalents; (c) Investments by 
the Company or any Restricted Subsidiary of the Company in a Person, if as a 
result of such Investment (i) such Person becomes a Restricted Subsidiary 
(other than an Excluded Restricted Subsidiary) of the Company or (ii) such 
Person is merged, consolidated or amalgamated with or into, or transfers or 
conveys substantially all of its assets to, or is liquidated into, the 
Company or a Restricted Subsidiary (other than an Excluded Restricted 
Subsidiary) of the Company; (d) Investments in assets (including accounts and 

                                      81 

 
notes receivable) owned or used in the ordinary course of business; (e) 
Investments for any purpose related to the Company's records management 
business in an aggregate outstanding amount not to exceed $10.0 million; and 
(f) Investments by the Company or a Restricted Subsidiary (other than an 
Excluded Restricted Subsidiary) in one or more Excluded Restricted 
Subsidiaries, the aggregate outstanding amount of which does not exceed 10% 
of the consolidated assets of the Company and its Restricted Subsidiaries. 

   "Permitted Liens" means: 

     (a) Liens existing as of the date of issuance of the Notes; 

     (b) Liens on property or assets of the Company or any Restricted 
   Subsidiary securing Senior Debt; 

     (c) Liens on any property or assets of a Restricted Subsidiary granted 
   in favor of the Company or any Wholly Owned Restricted Subsidiary; 

     (d) Liens securing the Notes or the Guarantees; 

     (e) any interest or title of a lessor under any Capital Lease Obligation 
   or Sale and Leaseback Transaction so long as the Indebtedness, if any, 
   secured by such Lien does not exceed the principal amount of Indebtedness 
   permitted under the covenant entitled "Incurrence of Indebtedness and 
   Issuance of Preferred Stock;" 

     (f) Liens securing Acquired Debt created prior to (and not in connection 
   with or in contemplation of) the incurrence of such Indebtedness by the 
   Company or any Restricted Subsidiary; provided that such Lien does not 
   extend to any property or assets of the Company or any Restricted 
   Subsidiary other than the assets acquired in connection with the 
   incurrence of such Acquired Debt; 

     (g) Liens securing Hedging Obligations permitted to be incurred pursuant 
   to clause (g) of the covenant entitled "Incurrence of Indebtedness and 
   Issuance of Preferred Stock;" 

     (h) Liens arising from purchase money mortgages and purchase money 
   security interests, or in respect of the construction of property or 
   assets, incurred in the ordinary course of the business of the Company or 
   a Restricted Subsidiary; provided that (i) the related Indebtedness is not 
   secured by any property or assets of the Company or any Restricted 
   Subsidiary other than the property and assets so acquired or constructed 
   and (ii) the Lien securing such Indebtedness is created within 60 days of 
   such acquisition or construction; 

     (i) statutory Liens or landlords' and carriers', warehousemen's, 
   mechanics', suppliers', materialmen's, repairmen's or other like Liens 
   arising in the ordinary course of business and with respect to amounts not 
   yet delinquent or being contested in good faith by appropriate 
   proceedings, if a reserve or other appropriate provision, if any, as shall 
   be required in conformity with GAAP shall have been made therefor; 

     (j) Liens for taxes, assessments, government charges or claims with 
   respect to amounts not yet delinquent or that are being contested in good 
   faith by appropriate proceedings diligently conducted, if a reserve or 
   other appropriate provision, if any, as is required in conformity with 
   GAAP has been made therefor; 

     (k) Liens incurred or deposits made to secure the performance of 
   tenders, bids, leases, statutory obligations, surety and appeal bonds, 
   government contracts, performance bonds and other obligations of a like 
   nature incurred in the ordinary course of business (other than contracts 
   for the payment of money); 

     (l) easements, rights-of-way, restrictions and other similar charges or 
   encumbrances not interfering in any material respect with the business of 
   the Company or any Restricted Subsidiary incurred in the ordinary course 
   of business; 

     (m) Liens arising by reason of any judgment, decree or order of any 
   court so long as such Lien is adequately bonded and any appropriate legal 
   proceedings that may have been duly initiated for the review of such 
   judgment, decree or order shall not have been finally terminated or the 
   period within which such proceedings may be initiated shall not have 
   expired; 

     (n) Liens arising under options or agreements to sell assets; 

     (o) other Liens securing obligations incurred in the ordinary course of 
   business, which obligations do not exceed $1.0 million in the aggregate at 
   any one time outstanding; and 

                                      82 

 
     (p) any extension, renewal or replacement, in whole or in part, of any 
   Lien described in the foregoing clauses (a) through (o); provided that any 
   such extension, renewal or replacement shall not extend to any additional 
   property or assets. 

   "Person" means any individual, corporation, limited liability company, 
partnership, joint venture, association, joint-stock company, trust, 
unincorporated organization or government or any agency or political 
subdivision thereof. 

   "Principal Stockholders" means each of Vincent J. Ryan, Schooner Capital 
Corporation, C. Richard Reese, Eugene B. Doggett, and their respective 
Affiliates. 

   "Qualified Equity Offering" means an offering of Capital Stock, other than 
Disqualified Stock, of the Company for Dollars, whether registered or exempt 
from registration under the Securities Act. 

   "Qualified Issuer" means (a) any lender party to the Credit Agreement or 
(b) any commercial bank (i) which has capital and surplus in excess of 
$500,000,000 and (ii) the outstanding short- term debt securities of which 
are rated at least A-2 by Standard & Poor's Rating Group, a division of 
McGraw-Hill, Inc. or at least P-2 by Moody's Investors Service, or carry an 
equivalent rating by a nationally recognized rating agency if both of the two 
named rating agencies cease publishing ratings of investments. 

   "Qualifying Sale and Leaseback Transaction" means any Sale and Leaseback 
Transaction between the Company or any of its Restricted Subsidiaries and any 
bank, insurance company or other lender or investor providing for the leasing 
to the Company or such Restricted Subsidiary of any property (real or 
personal) which has been or is to be sold or transferred by the Company or 
such Restricted Subsidiary to such lender or investor or to any Person to 
whom funds have been or are to be advanced by such lender or investor and 
where the property in question has been constructed or acquired after the 
date of the Indenture. 

   
   "Refinancing Indebtedness" means new Indebtedness incurred or given in 
exchange for, or the proceeds of which are used to repay, redeem, defease, 
extend, refinance, renew, replace or refund, other Indebtedness; provided, 
however, that (a) the principal amount of such new Indebtedness shall not 
exceed the principal amount of Indebtedness so repaid, redeemed, defeased, 
extended, refinanced, renewed, replaced or refunded (plus the amount of fees, 
premiums, consent fees, prepayment penalties and expenses incurred in 
connection therewith); (b) such Refinancing Indebtedness shall have a 
Weighted Average Life to Maturity equal to or greater than the Weighted 
Average Life to Maturity of the Indebtedness so repaid, redeemed, defeased, 
extended, refinanced, renewed, replaced or refunded or shall mature after 
October 1, 2006; (c) to the extent such Refinancing Indebtedness refinances 
Indebtedness that has a final maturity date occurring after October 1, 2006, 
such new Indebtedness shall have a final scheduled maturity not earlier than 
the final scheduled maturity of the Indebtedness so repaid, redeemed, 
defeased, extended, refinanced, renewed, replaced or refunded and shall not 
permit redemption at the option of the holder earlier than the earliest date 
of redemption at the option of the holder of the Indebtedness so repaid, 
redeemed, defeased, extended, refinanced, renewed, replaced or refunded; (d) 
to the extent such Refinancing Indebtedness refinances Indebtedness 
subordinate to the Notes, such Refinancing Indebtedness shall be subordinated 
in right of payment to the Notes and to the extent such Refinancing 
Indebtedness refinances Notes or Indebtedness pari passu with the Notes, such 
Refinancing Indebtedness shall be pari passu with or subordinated in right of 
payment to the Notes, in each case on terms at least as favorable to the 
holders of Notes as those contained in the documentation governing the 
Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed, 
replaced or refunded; and (e) with respect to Refinancing Indebtedness 
incurred by a Restricted Subsidiary, such Refinancing Indebtedness shall rank 
no more senior, and shall be at least as subordinated, in right of payment to 
the Subsidiary Guarantee of such Restricted Subsidiary as the Indebtedness 
being extended, refinanced, renewed, replaced or refunded. 
    

   "Restricted Subsidiary" means (a) each direct or indirect Subsidiary of 
the Company existing on the date of the Indenture and (b) any other direct or 
indirect Subsidiary of the Company formed, acquired or existing after the 
date of the Indenture, in each case which is not designated by the Board of 
Directors as a "Unrestricted Subsidiary." 

   "Sale and Leaseback Transaction" means any transaction or series of 
related transactions pursuant to which a Person sells or transfers any 
property or asset in connection with the leasing, or the resale against 
installment payments, of such property or asset to the seller or transferor. 

                                      83 

 
   "Senior Bank Debt" means all Obligations outstanding under or in 
connection with the Credit Agreement (including Guarantees of such 
Obligations by Subsidiaries of the Company). 

   "Senior Debt" means (a) the Senior Bank Debt and (b) any other 
Indebtedness permitted to be incurred by the Company or any Restricted 
Subsidiary, as the case may be, under the terms of the Indenture, unless the 
instrument under which such Indebtedness is incurred expressly provides that 
it is (i) on a parity with or subordinated in right of payment to the Notes 
or (ii) subordinated to Senior Debt on terms substantially similar to those 
of the Notes. Notwithstanding anything to the contrary in the foregoing, 
Senior Debt shall not include (i) any liability for federal, state, local or 
other taxes owed or owing by the Company, (ii) any Indebtedness of the 
Company to any of its Subsidiaries or other Affiliates, (iii) any trade 
payables or (iv) any Indebtedness that is incurred in violation of the 
Indenture, provided that such Indebtedness shall be deemed not to have been 
incurred in violation of the Indenture for purposes of this clause (iv) if, 
in the case of any obligations under the Credit Agreement, the holders of 
such obligations or their agent or representative shall have received a 
representation from the Company to the effect that the incurrence of such 
Indebtedness does not violate the provisions of the Indenture. 

   "Significant Subsidiary" means any Subsidiary that would be a "significant 
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated 
pursuant to the Act, as such Regulation is in effect on the date hereof. 

   "Subsidiary" means, with respect to any Person, any corporation, 
association or other business entity of which more than 50% of the total 
voting power of shares of Capital Stock entitled (without regard to the 
occurrence of any contingency) to vote in the election of directors, managers 
or trustees thereof is at the time owned or controlled, directly or 
indirectly, by such Person or one or more of the other Subsidiaries of such 
Person or a combination thereof. 

   "Unrestricted Subsidiary" means (a) any Subsidiary that is designated by 
the Board of Directors as an Unrestricted Subsidiary in accordance with the 
"Unrestricted Subsidiaries" covenant and (b) any Subsidiary of an 
Unrestricted Subsidiary. 

   "Voting Stock" means any class or classes of Capital Stock pursuant to 
which the holders thereof have the general voting power under ordinary 
circumstances to elect at least a majority of the board of directors, 
managers or trustees of any Person (irrespective of whether or not, at the 
time, stock of any other class or classes has, or might have, voting power by 
reason of the happening of any contingency). 

   "Weighted Average Life to Maturity" means, when applied to any 
Indebtedness at any date, the number of years obtained by dividing (a) the 
sum of the products obtained by multiplying (x) the amount of each then 
remaining installment, sinking fund, serial maturity or other required 
payment of principal, including payment at final maturity, in respect 
thereof, by (y) the number of years (calculated to the nearest one-twelfth) 
that will elapse between such date and the making of such payment, by (b) the 
then outstanding principal amount of such Indebtedness. 

   "Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary of 
the Company all of the outstanding Capital Stock or other ownership interests 
of which (other than directors' qualifying shares) shall at the time be owned 
by the Company or by one or more Wholly Owned Restricted Subsidiaries of the 
Company. 

                      DESCRIPTION OF NEW CREDIT FACILITY 

   The Company intends to replace the Credit Agreement with the New Credit 
Facility. The following description is based upon the current draft credit 
agreement relating to the New Credit Facility. No assurances can be given 
that the Company will enter into the New Credit Facility on these or any 
other terms. The Offering is not conditioned on the closing of the New Credit 
Facility. 

   
   The New Credit Facility will be a $100 million revolving credit facility 
with up to $2 million of availability for letters of credit. The New Credit 
Facility will terminate on September 25, 2001, at which time all outstanding 
revolving credit loans and other amounts payable thereunder will become due. 
Borrowings under the New Credit Facility may be used to finance possible 
future acquisitions, as well as for working capital and general corporate 
purposes. As with the Credit Agreement, the Company's obligations under the 
New Credit Facility will be guaranteed by substantially all of the Company's 
subsidiaries; however, unlike the Credit Agreement, the New Credit Facility 
will be secured only by the pledge of the stock of such subsidiaries. 
Prepayments of outstanding borrowings under the New Credit Facility will be 
required in certain circumstances out of the proceeds of certain insurance 
payments, condemnations, issuances of indebtedness and asset dispositions. 
    


                                      84 

 
   The New Credit Facility will permit the Company to elect from time to 
time, as to all or any portion of the borrowings thereunder, an interest rate 
based upon (i) a fluctuating rate equal to the highest of (x) the prime rate 
of The Chase Manhattan Bank, (y) the secondary market rate for three-month 
certificates of deposit (adjusted for statutory reserves and FDIC 
assessments), plus 1%, or (z) the overnight federal funds rate plus 1/2 of 1% 
(the "Adjusted Base Rate") or (ii) the interest rates prevailing on the date 
of determination in the London interbank market (the "Eurodollar Rate") for 
the interest period selected by the Company, plus, in the case of either (i) 
or (ii), a margin (the "Applicable Margin") over the Adjusted Base Rate or 
the Eurodollar Rate. The Applicable Margins for loans bearing interest at a 
rate based upon the Adjusted Base Rate or the Eurodollar Rate ("Eurodollar 
Loans"), and commitment fees on the undrawn portion of the New Credit 
Facility, will vary based on the Company's achieving and maintaining 
specified ratios of funded indebtedness (net of cash and cash equivalents on 
hand) to EBITDA. 

   The New Credit Facility will provide for payment by the Company in respect 
of letters of credit of: (i) a per annum fee equal to the Applicable Margin 
for Eurodollar Loans from time to time in effect; (ii) a fronting fee of 1/4 
of 1%; plus (iii) customary issuing fees and expenses. 

   The New Credit Facility will contain covenants restricting the ability of 
the Company and its subsidiaries to, among other things: (i) declare 
dividends or redeem or repurchase capital stock; (ii) make optional payments 
and modifications of subordinated and other debt instruments; (iii) incur 
liens and engage in sale and leaseback transactions; (iv) make loans and 
investments; (v) incur indebtedness and contingent obligations; (vi) make 
capital expenditures; (vii) engage in mergers, acquisitions and asset sales; 
(viii) enter into transactions with affiliates; and (ix) make changes in 
their lines of business. The Company will also be required to comply with 
financial covenants with respect to: (i) a maximum leverage ratio; (ii) a 
minimum interest coverage ratio; and (iii) a minimum fixed charge coverage 
ratio. The Company will also be required to make certain customary 
affirmative covenants. 

   
   Events of default under the New Credit Facility will include: (i) the 
Company's failure to pay principal or interest when due; (ii) the Company's 
material breach of any covenant, representation or warranty contained in the 
loan documents; (iii) customary cross-default provisions; (iv) events of 
bankruptcy, insolvency or dissolution of the Company or its subsidiaries; (v) 
the levy of certain judgments against the Company, its subsidiaries or their 
assets; (vi) certain adverse events under ERISA plans of the Company or its 
subsidiaries; (vii) the actual or asserted invalidity of security documents 
or guarantees of the Company or its subsidiaries; (viii) a change of control 
of the Company; and (ix) the creation of certain environmental liabilities. 
    


                         DESCRIPTION OF CAPITAL STOCK 

   The Company's authorized capital stock consists of 13,000,000 shares of 
Common Stock, 1,000,000 shares of Nonvoting Common Stock, $.01 par value per 
share (the "Nonvoting Common Stock"), and 2,000,000 shares of Preferred 
Stock, $.01 par value per share. On September 3, 1996, 9,627,141 shares of 
Common Stock were outstanding and 500,000 shares of Nonvoting Common Stock 
were outstanding. 

   Holders of shares of Common Stock are entitled to one vote per share for 
each matter submitted to the stockholders of the Company without cumulative 
voting rights in the election of Directors. Holders of Nonvoting Common Stock 
have no right to vote on any matter voted on by the stockholders of the 
Company, except as may otherwise be provided by law. In all other respects 
(other than as to convertibility), the rights of holders of the Common Stock 
and the Nonvoting Common Stock are identical. Shares of Nonvoting Common 
Stock are convertible, at any time at the option of the holder, on a 
share-for-share basis into shares of Common Stock without the payment of any 
additional consideration; provided that the conversion of any shares of 
Nonvoting Common Stock by a "bank holding company" under the Bank Holding 
Company Act of 1956, as amended, or an affiliate thereof is prohibited if the 
conversion of the total number of shares of Nonvoting Common Stock held by 
such holder would cause it to be in violation of such Act. 

   The 2,000,000 authorized and unissued shares of Preferred Stock may be 
issued with such designations, preferences, limitations and relative rights 
as the Board of Directors may authorize including, but not limited to: (i) 
the distinctive designation of each series and the number of shares that will 
constitute such series; (ii) the voting rights, if any, of shares of such 
series; (iii) the dividend rate on the shares of such series, any 
restriction, limitation or condition upon the payment of such dividends, 
whether dividends shall be cumulative, and the dates on which dividends are 
payable; (iv) the prices at which, and the terms and conditions on which, the 
shares of such series 

                                      85 

 
   
may be redeemed, if such shares are redeemable; (v) the purchase or sinking 
fund provisions, if any, for the purchase or redemption of shares of such 
series; (vi) any preferential amount payable upon shares of such series in 
the event of the liquidation, dissolution or winding-up of the Company or the 
distribution of its assets; and (vii) the price or rates of conversion at 
which, and the terms and conditions on which the shares of such series may be 
converted into other securities, if such shares are convertible. Although the 
Company has no present intention to issue shares of Preferred Stock, the 
issuance of Preferred Stock, or the issuance of rights to purchase such 
shares, could discourage an unsolicited acquisition proposal and the rights 
of holders of Common Stock will be subject to, and may be adversely affected 
by, the rights of holders of any Preferred Stock that may be issued in the 
future. 
    


                                 UNDERWRITING 

   Subject to the terms and conditions set forth in the Underwriting 
Agreement (the "Underwriting Agreement") between the Company and Donaldson, 
Lufkin & Jenrette Securities Corporation ("DLJ"), Bear, Stearns & Co. Inc. 
("Bear Stearns") and Prudential Securities Incorporated (together with DLJ 
and Bear Stearns, the "Underwriters"), each of the several Underwriters has 
severally agreed to purchase from the Company, and the Company has agreed to 
sell to each of the Underwriters, the respective principal amounts of Notes 
set forth opposite its name below, at the public offering price set forth on 
the cover page of this Prospectus, less the underwriting discount: 

   


                                                          Principal Amount 
   Underwriters                                                of Notes 
   ------------                                           -------------- 
                                                       
   Donaldson, Lufkin & Jenrette Securities Corporation    $ 82,500,000 
   Bear, Stearns & Co. Inc.                                 41,250,000 
   Prudential Securities Incorporated                       41,250,000 
                                                          ------------ 
                                                          $165,000,000 
                                                          ============ 

    

   The Underwriting Agreement provides that the obligations of the several 
Underwriters are subject to certain conditions precedent, including the 
approval of certain legal matters by counsel. The Company and the Guarantors 
have agreed to indemnify the Underwriters against certain liabilities and 
expenses, including liabilities under the Securities Act or to contribute to 
payments that the Underwriters may be required to make in respect thereof. 
The nature of the Underwriters' obligations is such that the Underwriters are 
committed to purchase all of the Notes if any of the Notes are purchased. 

   
   The Underwriters have advised the Company that they propose to offer the 
Notes directly to the public initially at the public offering price set forth 
on the cover page of this Prospectus and to certain dealers at such offering 
price less a concession not to exceed 0.4% of the principal amount of the 
Notes. The Underwriters may allow, and such dealers may reallow, discounts 
not in excess of 0.25% of the principal amount of the Notes to certain other 
dealers. After the initial public offering of the Notes, the offering price 
and other selling terms may be changed by the Underwriters. 
    

   The Notes are a new issue of securities, have no established trading 
market, will not be listed on any securities exchange or included in the 
National Association of Securities Dealers Automated Quotation System and may 
not be widely distributed. The Company has been advised by the Underwriters 
that, following the completion of this Offering, the Underwriters presently 
intend to make a market in the Notes as permitted by applicable laws and 
regulations. The Underwriters, however, are under no obligation to do so and 
may discontinue any market-making activities at any time at the sole 
discretion of the Underwriters. No assurances can be given as to the 
liquidity of any trading market for the Notes. 

                            VALIDITY OF SECURITIES 

   The validity of the securities offered hereby will be passed upon for the 
Company by Sullivan & Worcester LLP, Boston, Massachusetts, and for the 
Underwriters by Jones, Day, Reavis & Pogue, New York, New York. Jas. Murray 
Howe, Secretary of the Company, is of counsel to Sullivan & Worcester LLP and 
beneficially owns 3,855 shares of Common Stock. 

                                   EXPERTS 

   The consolidated financial statements and schedule of Iron Mountain 
Incorporated and its subsidiaries for each of the three years ended December 
31, 1995 included in this Prospectus and elsewhere in the Registration 
Statement have been audited by Arthur Andersen LLP, independent public 
accountants, as indicated in their reports with respect thereto, and are 
included herein in reliance upon the authority of said firm as experts in 
giving said reports. 

                                      86 

 
   The financial statements of National Business Archives, Inc. for the two 
years ended December 31, 1993 and 1994, included in this Prospectus and 
elsewhere in the Registration Statement have been audited by Wolpoff & 
Company, LLP, independent public accountants, as indicated in their report 
with respect thereto, and are included herein in reliance upon the authority 
of said firm as experts in giving said report. 

   The financial statements of Data Management Business Records Storage, Inc. 
for the year ended June 30, 1995, included in this Prospectus and elsewhere 
in the Registration Statement have been audited by Morrison and Smith, 
independent public accountants, as indicated in their report with respect 
thereto, and are included herein in reliance upon the authority of said firm 
as experts in giving said report. 

   The financial statements of Nashville Vault Company, Ltd., for the year 
ended December 31, 1995, included in this Prospectus and elsewhere in the 
Registration Statement have been audited by Geo. S. Olive & Co. LLC, 
independent public accountants, as indicated in their report with respect 
thereto, and are included herein in reliance upon the authority of said firm 
as experts in giving said report. 

   The combined financial statements of Data Archive Services, Inc. and Data 
Archive Services of Miami, Inc. for the year ended May 31, 1996, included in 
this Prospectus and elsewhere in the Registration Statement have been audited 
by Perless, Roth, Jonas & Hartney, CPAs, PA, independent public accountants, 
as indicated in their report with respect thereto, and are included herein in 
reliance upon the authority of said firm as experts in giving said report. 

   The financial statements of Data Storage Systems, Inc. for the year ended 
December 31, 1995, included in this Prospectus and elsewhere in the 
Registration Statement have been audited by Arthur Andersen LLP, independent 
public accountants, as indicated in their report with respect thereto, and 
are included herein in reliance upon the authority of said firm as experts in 
giving said report. 

   The financial statements of DataVault Corporation, for the year ended 
December 31, 1995, included in this Prospectus and elsewhere in the 
Registration Statement have been audited by Robert F. Gayton, CPA, 
independent public accountant, as indicated in his report with respect 
thereto, and are included herein in reliance upon the authority of said firm 
as an expert in giving said report. 

   The financial statements of International Record Storage and Retrieval 
Service, Inc. for the year ended December 31, 1995, included in this 
Prospectus and elsewhere in the Registration Statement have been audited by 
Rothstein, Kass & Company, P.C., independent public accountants, as indicated 
in their report with respect thereto, and are included herein in reliance 
upon the authority of said firm as experts in giving said report. 

   The financial statements of DKA Industries, Inc., for the year ended 
December 31, 1995, included in this Prospectus and elsewhere in the 
Registration Statement have been audited by Arthur Andersen LLP, independent 
public accountants, as indicated in their report with respect thereto, and 
are included herein in reliance upon the authority of said firm as experts in 
giving said report. 

   The financial statements of Security Archives Corporation, for the year 
ended December 31, 1995, included in this Prospectus and elsewhere in the 
Registration Statement have been audited by Arthur Andersen LLP, independent 
public accountants, as indicated in their report with respect thereto, and 
are included herein in reliance upon the authority of said firm as experts in 
giving said report. 

   The financial statements of Mohawk Business Record Storage, Inc., for the 
year ended December 31, 1995, included in this Prospectus and elsewhere in 
the Registration Statement have been audited by Arthur Andersen LLP, 
independent public accountants, as indicated in their report with respect 
thereto, and are included herein in reliance upon the authority of said firm 
as experts in giving said report. 

                            ADDITIONAL INFORMATION 

   The Company has filed with the Commission, Washington, D.C. 20549, a 
Registration Statement on Form S-1 under the Securities Act with respect to 
the Notes offered hereby. This Prospectus does not contain all of the 
information set forth in the Registration Statement and the exhibits and 
schedules thereto. For further information with respect to the Company and 
the Notes offered hereby, reference is made to the Registration Statement and 
the exhibits and schedules filed therewith. Statements contained in this 
Prospectus as to the contents of any contract or any other document to which 
reference is made are not necessarily complete, and in each instance 
reference 

                                      87 

 
is made to the copy of such contract or other document filed as an exhibit to 
the Registration Statement. Each such statement is qualified in all respects 
by such reference. A copy of the Registration Statement may be inspected 
without charge at the offices of the Commission in Washington D.C. 20549, and 
copies of all or any part of the Registration Statement may be obtained from 
the Public Reference Section of the Commission at 450 Fifth Street, N.W., 
Washington, D.C. 20549 upon the payment of the fees prescribed by the 
Commission. 

   The Company is subject to the informational requirements of the Exchange 
Act and in accordance therewith files reports, proxy statements and other 
information with the Commission. Such reports, proxy statements and other 
information filed by the Company can be inspected and copied at the public 
reference facilities maintained by the Commission at 450 Fifth Street, N.W., 
Room 1024, Judiciary Plaza, Washington, D.C. 20549, and at the Commission's 
Regional Offices at Citicorp Center, 500 West Madison, Suite 1400, Chicago, 
Illinois 60661 and 7 World Trade Center, Suite 1300, New York 10048. Copies 
of such material can be obtained from the Public Reference Section of the 
Commission at 450 Fifth Street, N.W., Room 1024, Judiciary Plaza, Washington, 
D.C. 20549, at prescribed rates. In addition, the Common Stock is listed on 
the Nasdaq National Market, and such reports, proxy statements and certain 
other information can also be inspected at the offices of Nasdaq Operations, 
1735 K Street, N.W., Washington, D.C. 20006. The Commission maintains a Web 
site that contains reports, proxy statements and other information filed with 
the Commission; the address of such site is http://www.sec.gov. Certain such 
reports, proxy statements and other information filed with the Commission by 
the Company on or after August 14, 1996 may be found at such Web site. 

                                      88 



                         INDEX TO FINANCIAL STATEMENTS


                                                                          Page
                                                                         -------
Financial Statements of Iron Mountain Incorporated:
  Unaudited Condensed Consolidated Interim Financial Statements .........  F-2
  Audited Consolidated Financial Statements .............................  F-8

Financial Statements of Completed Acquisitions:
  National Business Archives, Inc. ...................................... F-24
  Data Management Business Records Storage, Inc. ........................ F-33
  Nashville Vault Company, Ltd. ......................................... F-44
  Data Archive Services, Inc. and Data Archive Services of Miami, Inc. .. F-50
  Data Storage Systems, Inc. ............................................ F-59
  DataVault Corporation ................................................. F-66
  International Record Storage and Retrieval Service, Inc. .............. F-72
  DKA Industries, Inc. d/b/a Systems Record Storage ..................... F-80
  Security Archives Corporation ......................................... F-88
Financial Statements of Pending Acquisition:
  Mohawk Business Record Storage, Inc. .................................. F-96


                                     F-1


                           IRON MOUNTAIN INCORPORATED
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
                                   (Unaudited)

                                     ASSETS



                                                                       December 31,    June 30,
                                                                           1995          1996
                                                                        ------------   ---------
                                                                                 
Current Assets:
 Cash and Cash Equivalents ........................................      $  1,585      $  2,232
 Accounts Receivable (Less allowance for doubtful accounts of $651
   and of $790, respectively)  ....................................        16,936        19,756
 Inventories ......................................................           682           523
 Deferred Income Taxes ............................................         1,943         2,036
 Prepaid Expenses and Other .......................................         1,862         1,318
                                                                        ------------   ---------
   Total Current Assets ...........................................        23,008        25,865
Property, Plant and Equipment:
 Property, Plant and Equipment ....................................       125,240       141,601
 Less: Accumulated Depreciation ...................................       (32,564)      (38,597)
                                                                        ------------   ---------
   Net Property, Plant and Equipment ..............................        92,676       103,004
Other Assets:
 Goodwill .........................................................        59,253        72,213
 Customer Acquisition Costs .......................................         5,210         5,671
 Deferred Financing Costs .........................................         2,638         2,268
 Other ............................................................         4,096         3,609
                                                                        ------------   ---------
   Total Other Assets .............................................        71,197        83,761
                                                                        ------------   ---------
   Total Assets ...................................................      $186,881      $212,630
                                                                        ============   =========
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
 Current Portion of Long-term Debt ................................      $  2,578      $  3,194
 Accounts Payable .................................................         4,797         6,342
 Accrued Expenses .................................................        10,917        10,638
 Deferred Income ..................................................         3,108         2,454
 Other Liabilities ................................................           469           501
                                                                        ------------   ---------
   Total Current Liabilities ......................................        21,869        23,129
Long-term Debt, Net of Current Portion ............................       119,296       115,700
Deferred Rent .....................................................         7,983         7,897
Deferred Income Taxes .............................................         3,621         4,406
Other Long-term Liabilities .......................................         6,769         6,769
Commitments and Contingencies
Redeemable Put Warrant ............................................         6,332            --
Stockholders' Equity:
 Preferred Stock ..................................................             5            --
 Common Stock--Voting .............................................             0            96
 Common Stock--Non-voting .........................................            --             5
 Additional Paid-In Capital .......................................        28,809        62,014
 Accumulated Deficit ..............................................        (7,803)       (7,386)
                                                                        ------------   ---------
   Total Stockholders' Equity .....................................        21,011        54,729
                                                                        ------------   ---------
   Total Liabilities and Stockholders' Equity .....................      $186,881      $212,630
                                                                        ============   =========


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

                                     F-2


                           IRON MOUNTAIN INCORPORATED
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands except per share data)
                                 (Unaudited)



                                                                         Three Months Ended June 30,
                                                                        -----------------------------
                                                                           1995             1996
                                                                       ------------    --------------
                                                                                     
Revenues:
 Storage  ..........................................................      $15,866          $20,209
 Service and Storage Material Sales  ...............................       10,020           12,713
                                                                       ------------    --------------
   Total Revenues  .................................................       25,886           32,922
Operating Expenses:
 Cost of Sales (Excluding Depreciation)  ...........................       12,888           16,715
 Selling, General and Administrative  ..............................        6,848            8,260
 Depreciation and Amortization  ....................................        2,676            3,922
                                                                       ------------    --------------
   Total Operating Expenses  .......................................       22,412           28,897
                                                                       ------------    --------------

Operating Income  ..................................................        3,474            4,025
Interest Expense  ..................................................        2,868            3,091
                                                                       ------------    --------------
Income Before Provision for Income Taxes  ..........................          606              934
Provision for Income Taxes  ........................................          364              523
                                                                       ------------    --------------
Net Income  ........................................................          242              411
Accretion of Redeemable Put Warrant  ...............................          501               --
                                                                       ------------    --------------
Net Income (Loss) Applicable to Common Stockholders  ...............      $  (259)         $   411
                                                                       ============    ==============
Net Income (Loss) Per Common and Common Equivalent Share  ..........      $ (0.03)         $  0.04
                                                                       ============    ==============
Weighted Average Common and Common Equivalent Shares Outstanding  ..        7,779           10,336
                                                                       ============    ==============



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

                                     F-3


                           IRON MOUNTAIN INCORPORATED
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands except per share data)
                                 (Unaudited)



                                                                        Six Months Ended June 30,
                                                                       --------------------------
                                                                          1995           1996
                                                                        ----------   ------------
                                                                                  
Revenues:
 Storage  ..........................................................     $30,748        $39,363
 Service and Storage Material Sales  ...............................      19,476         24,587
                                                                        ----------   ------------
   Total Revenues  .................................................      50,224         63,950
Operating Expenses:
 Cost of Sales (Excluding Depreciation)  ...........................      25,112         32,383
 Selling, General and Administrative  ..............................      12,697         16,067
 Depreciation and Amortization  ....................................       5,428          7,530
                                                                        ----------   ------------
   Total Operating Expenses  .......................................      43,237         55,980
                                                                        ----------   ------------

Operating Income  ..................................................       6,987          7,970
Interest Expense  ..................................................       5,936          6,385
                                                                        ----------   ------------
Income Before Provision for Income Taxes  ..........................       1,051          1,585
Provision for Income Taxes  ........................................         631            888
                                                                        ----------   ------------
Net Income  ........................................................         420            697
Accretion of Redeemable Put Warrant  ...............................         953            280
                                                                        ----------   ------------
Net Income (Loss) Applicable to Common Stockholders  ...............     $  (533)       $   417
                                                                        ==========   ============
Net Income (Loss) Per Common and Common Equivalent Share  ..........     $ (0.07)       $  0.04
                                                                        ==========   ============
Weighted Average Common and Common Equivalent Shares Outstanding  ..       7,790          9,899
                                                                        ==========   ============


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

                                     F-4


                           IRON MOUNTAIN INCORPORATED
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)
                                 (Unaudited)



                                                                      Six Months Ended June 30,
                                                                     --------------------------
                                                                         1995          1996
                                                                      ----------   ------------
                                                                               
Cash Flows from Operating Activities:
 Net Income ......................................................     $    420      $    697
 Adjustments to Reconcile Net Income to Net Cash
  Provided by Operations:
  Depreciation and Amortization ..................................        5,428         7,530
  Amortization of Financing Costs ................................          756           429
  Provision for Deferred Income Taxes ............................          540           492
 Changes in Assets and Liabilities (Exclusive of Acquisitions):
  Accounts Receivable ............................................         (910)       (2,194)
  Inventories ....................................................          (29)          174
  Prepaid Expenses and Other Current Assets ......................         (195)          444
  Other Assets ...................................................          180           674
  Accounts Payable ...............................................          645         1,545
  Accrued Expenses ...............................................        1,324          (279)
  Deferred Income ................................................          127          (865)
  Other Current Liabilities ......................................          (27)         (474)
  Deferred Rent ..................................................          (86)          (86)
  Other Long-term Liabilities ....................................            1            --
                                                                      ----------   ------------
   Cash Flows Provided by Operations .............................        8,174         8,087
Cash Flows from Investing Activities:
 Capital Expenditures ............................................       (7,322)      (11,162)
 Additions to Customer Acquisition Costs .........................         (418)         (717)
 Cash Paid for Acquisitions ......................................      (15,484)      (19,187)
 Other ...........................................................           --           (25)
                                                                      ----------   ------------
   Cash Flows Used in Investing Activities .......................      (23,224)      (31,091)
Cash Flows Provided by Financing Activities:
 Repayment of Debt ...............................................       (8,369)      (29,515)
 Net Proceeds from Borrowings ....................................       25,186        26,500
 Financing Costs .................................................       (1,402)          (24)
 Proceeds from Exercise of Stock Options .........................          200            --
 Repurchase of Stock .............................................         (199)           --
 Proceeds from Initial Public Offering, Net of Costs and Expenses            --        33,302
 Retirement of Put Warrant .......................................           --        (6,612)
                                                                      ----------   ------------
   Cash Flows Provided by Financing Activities ...................       15,416        23,651
                                                                      ----------   ------------
Increase in Cash and Cash Equivalents ............................          366           647
Cash and Cash Equivalents, Beginning of Period ...................        1,303         1,585
                                                                      ----------   ------------
Cash and Cash Equivalents, End of Period .........................     $  1,669      $  2,232
                                                                      ==========   ============


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

                                     F-5


                           IRON MOUNTAIN INCORPORATED
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                     (In thousands except per share data)
                                 (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,
1995, 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, 1995.

2. Initial Public Offering of Common Stock

   On February 6, 1996, the Company completed the sale of 2,350 shares of its
common stock in an initial public offering at a price of $16.00 per share.
The proceeds from the public offering were $34,968 after underwriting
discounts and commissions, and $33,302 after other expenses of the offering
totaling $1,666. Such net proceeds were used to retire the redeemable put
warrant for $6,612, to fund acquisitions, to repay debt that had been
incurred to make acquisitions and for working capital.

3. Acquisitions and Dispositions

   During 1995, the Company purchased four records management businesses.
During the six months ended June 30, 1996, the Company purchased six
additional records management businesses. 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 the
consolidated results of the Company from the respective acquisition dates.
The purchase price for the 1996 acquisitions exceeded the underlying fair
value of the net assets acquired by $14,554, which has been assigned to
goodwill and is being amortized over the estimated benefit period of 25
years. Funds used to make the various acquisitions were provided through the
Company's acquisition credit facility and, indirectly, a portion of the net
proceeds of the Company's initial public offering. A summary of the cash
consideration and allocation of the purchase price as of the acquisition
dates are as follows:


                                                               1996
                                                             --------
   Fair Value of Assets Acquired in 1996  ...............    $20,104
   Liabilities Assumed  .................................       (917)
                                                             --------
   Cash Paid  ...........................................    $19,187
                                                             ========


                                     F-6


                           IRON MOUNTAIN INCORPORATED
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                      (In thousands except per share data)
                                   (Unaudited)

   The following unaudited pro forma information shows the results of the
Company's operations for the year ended December 31, 1995 and the six months
ended June 30, 1996, as though each of the completed acquisitions had
occurred as of January 1, 1995.

                                                        1995       1996
                                                       -------   ---------
   Revenues ......................................   $123,438     $65,678
   Net Income (Loss) .............................       (348)        728
   Accretion of Redeemable Put Warrant ...........      2,107         280
                                                       -------   ---------
   Net Income (Loss) Applicable to Stockholders ..   $ (2,455)    $   448
                                                       =======   =========
   Net Income (Loss) Per Share ...................   $  (0.32)    $  0.05
                                                       =======   =========

   The pro forma results have been prepared for comparative purposes only and
are not necessarily indicative of the actual results of operations had the
acquisitions taken place as of January 1, 1995 or the results that may occur
in the future. Furthermore, the pro forma results do not give effect to all
cost savings or incremental costs which may occur as a result of the
integration and consolidation of the companies.

4. Long-term Debt

   Long-term debt as of December 31, 1995 and June 30, 1996, is as follows:

                                                     1995       1996
                                                    -------   --------
   Term Loans A and B .........................   $ 59,625    $ 58,750
   $50,000 Acquisition Credit Facility ........     34,400      25,300
   $15,000 Working Capital Facility ...........      1,700       8,800
   Chrysler Notes .............................     14,772      14,807
   Real Estate Mortgages ......................     10,797      10,761
   Other ......................................        580         476
                                                    -------   --------
      Total Long-term Debt ....................    121,874     118,894
   Less: Current Portion ......................     (2,578)     (3,194)
                                                    -------   --------
      Long-term Debt, Net of Current Portion ..   $119,296    $115,700
                                                    =======   ========

5. Commitments and Contingencies

Litigation

   During the second quarter of 1996, the Company paid $600 to cover the
uninsured portion of a judgment previously entered by the California Workers
Compensation Board against the Company relating to injuries sustained by a
driver employed by a courier company used at the time by the Company. This
amount had been fully reserved in the second quarter of 1995 and therefore
had no impact on the results of operations for the three and six month
periods ended June 30, 1996.

   Iron Mountain 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 Iron Mountain's financial condition or results of
operations.

6. Subsequent Events


   Subsequent to June 30, 1996, the Company acquired four records management
businesses for $23,523 in transactions that were accounted for as purchases.

   On August 29, 1996 the Company amended its Credit Agreement to increase its
Acquisition Credit Facility from $50,000 to $55,000.


                                     F-7


                    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 Delaware corporation) and its subsidiaries, as of December
31, 1994 and 1995 and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. 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 conducted our audits in accordance with generally accepted auditing
standards. 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 provide a
reasonable basis for our opinion.

In our opinion, 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, 1994 and 1995 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting
principles.

                                            ARTHUR ANDERSEN LLP

Los Angeles, California
February 26, 1996

                                     F-8


                           IRON MOUNTAIN INCORPORATED
           CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1994 AND 1995
                                (In thousands)

                                    ASSETS



                                                                           December 31,
                                                                       --------------------
                                                                         1994       1995
                                                                        -------   ---------
                                                                            
Current Assets:
 Cash and Cash Equivalents ........................................   $  1,303    $  1,585
 Accounts Receivable (Less allowance for doubtful accounts of $531
  and $651 as of 1994 and 1995, respectively)  .....................    13,270      16,936
 Inventories ......................................................        503         682
 Deferred Income Taxes ............................................        778       1,943
 Prepaid Expenses and Other .......................................      1,223       1,862
                                                                        -------   ---------
   Total Current Assets ...........................................     17,077      23,008
Property, Plant and Equipment:
 Property, Plant and Equipment ....................................     99,753     125,240
 Less--Accumulated Depreciation ...................................    (24,735)    (32,564)
                                                                        -------   ---------
   Net Property, Plant and Equipment ..............................     75,018      92,676
Other Assets:
 Goodwill .........................................................     36,720      59,253
 Customer Acquisition Costs .......................................      4,273       5,210
 Deferred Financing Costs .........................................      2,247       2,638
 Other ............................................................      1,524       4,096
                                                                        -------   ---------
   Total Other Assets .............................................     44,764      71,197
                                                                        -------   ---------
Total Assets ......................................................   $136,859    $186,881
                                                                        =======   =========
                            LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
 Current Portion of Long-term Debt ................................   $    628    $  2,578
 Accounts Payable .................................................      3,756       4,797
 Accrued Expenses .................................................      4,710      10,917
 Deferred Income ..................................................      2,096       3,108
 Other Liabilities ................................................        344         469
                                                                        -------   ---------
   Total Current Liabilities ......................................     11,534      21,869
Long-term Debt, Net of Current Portion ............................     85,630     119,296
Other Long Term Liabilities .......................................      7,296       6,769
Deferred Rent .....................................................      2,837       7,983
Deferred Income Taxes .............................................      2,468       3,621
Commitments and Contingencies
Redeemable Put Warrant ............................................      4,225       6,332
Stockholders' Equity:
 Preferred Stock ..................................................          5           5
 Common Stock .....................................................          0           0
 Additional Paid-In Capital .......................................     28,808      28,809
 Accumulated Deficit ..............................................     (5,944)     (7,803)
                                                                        -------   ---------
   Total Stockholders' Equity .....................................     22,869      21,011
                                                                        -------   ---------
Total Liabilities and Stockholders' Equity ........................   $136,859    $186,881
                                                                        =======   =========


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

                                     F-9


                           IRON MOUNTAIN INCORPORATED
                    CONSOLIDATED STATEMENTS OF OPERATIONS
             FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
                     (In thousands except per share data)



                                                                1993        1994         1995
                                                               --------    --------   ----------
                                                                             
Revenues:
Storage  ..................................................    $48,892     $54,098     $ 64,165
Service and Storage Material Sales  .......................     32,781      33,520       40,271
                                                               --------    --------   ----------
   Total Revenues  ........................................     81,673      87,618      104,436
Operating Expenses:
Cost of Sales (Excluding Depreciation)  ...................     43,054      45,880       52,277
Selling, General and Administrative  ......................     19,971      20,853       26,035
Depreciation and Amortization  ............................      6,789       8,690       12,341
                                                               --------    --------   ----------
   Total Operating Expenses  ..............................     69,814      75,423       90,653
                                                               --------    --------   ----------
Operating Income  .........................................     11,859      12,195       13,783
Interest Expense  .........................................      8,203       8,954       11,838
                                                               --------    --------   ----------
Income Before Provision for Income Taxes  .................      3,656       3,241        1,945
Provision for Income Taxes  ...............................      2,088       1,957        1,697
                                                               --------    --------   ----------
Net Income  ...............................................      1,568       1,284          248
Accretion of Redeemable Put Warrant  ......................        940       1,412        2,107
                                                               --------    --------   ----------
Net Income (Loss) Applicable to Common Stockholders  ......    $   628     $  (128)    $ (1,859)
                                                               ========    ========   ==========
Net Income (Loss) Per Common and Common Equivalent Share  .    $  0.08     $ (0.02)    $  (0.24)
Weighted Average Common and Common Equivalent Shares
  Outstanding .............................................      8,067       7,984        7,784


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

                                     F-10


                           IRON MOUNTAIN INCORPORATED
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                     AS OF DECEMBER 31, 1993, 1994 AND 1995
                             (Dollars in thousands)



                                                                               December 31,
                                                                    ----------------------------------
                                                                      1993        1994         1995
                                                                     --------    --------   ----------
                                                                                      
Series A1 Preferred Stock:
 Balance, Beginning of Period ..................................       $ 2         $ 2         $ 1
 Conversion of 100,000 Shares of Series A1 Preferred Stock to
  Series A2 Preferred Stock  ....................................       --          (1)         --
 Conversion of 43,500 Shares of Series A1 Preferred Stock to
  Series A3 Preferred Stock  ....................................       --          --          (1)
                                                                     --------    --------   ----------
 Balance, End of Period; (150,000, 50,000 and 6,500 Shares
  Outstanding as of December 31, 1993, 1994 and 1995,
  Respectively)  ................................................        2           1           0
Series A2 Preferred Stock:
 Balance, Beginning of Period ..................................        --          --           1
 Conversion of 100,000 Shares of Series A1 Preferred Stock to
  Series A2 Preferred Stock  ....................................       --           1          --
 Repurchase of 2,000 Shares of Series A2 Preferred Stock .......        --          --           0
                                                                     --------    --------   ----------
 Balance, End of Period; (None Outstanding as of December 31,
  1993; 100,000 and 98,000 Shares Outstanding as of December 31,
  1994 and 1995, Respectively)  .................................       --           1           1
Series A3 Preferred Stock:
 Balance, Beginning of Period ..................................        --          --          --
 Conversion of 43,500 Shares of Series A1 Preferred Stock to
  Series A3 Preferred Stock  ....................................       --          --           1
                                                                     --------    --------   ----------
 Balance, End of Period (None outstanding December 31, 1993 and
  1994; 43,500 Shares Outstanding December 31, 1995)  ...........       --          --           1
Series C Preferred Stock:
 Balance, End of Period; (351,395 Shares Outstanding as of
  December 31, 1993, 1994 and 1995, Respectively)  ..............        3           3           3
                                                                     --------    --------   ----------
  Total Preferred Stock ........................................         5           5           5
                                                                     --------    --------   ----------
Class A Common Stock:
 Balance, Beginning of Period ..................................         0           0           0
 Stock Options Exercised for 15,976 Shares of Class A Common
  Stock in 1995  ................................................       --          --           0
                                                                     --------    --------   ----------
 Balance, End of Period; 28,912, 28,912 and 44,888 Shares
  Outstanding as of December 31, 1993, 1994 and 1995,
  Respectively)  ................................................        0           0           0
Class C Common Stock:
 Balance, Beginning of Period ..................................         0           0          --
 Repurchase of 17,289 Shares of Class C Common Stock ...........        --          (0)         --
                                                                     --------    --------   ----------
 Balance, End of Period; (17,289 Shares Outstanding as of
  December 31, 1993; None Outstanding as of December 31, 1994
  and 1995)  ....................................................        0          --          --
                                                                     --------    --------   ----------
  Total Common Stock ...........................................         0           0           0
                                                                     --------    --------   ----------


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

                                     F-11


                           IRON MOUNTAIN INCORPORATED

        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY -- (Continued)



                                                                  December 31,
                                                          ----------------------------
                                                           1993      1994       1995
                                                           ------    ------   --------
                                                                     
Additional Paid in Capital:
 Balance, Beginning of Period ........................   $29,858   $29,858    $28,808
 Class C Common Stock Repurchased, 17,289 Shares .....        --    (1,050)        --
 Series A2 Preferred Stock Repurchased, 2,000 Shares .        --        --       (199)
 Class A Common Stock, Options Exercised, 15,976
  Shares  .............................................       --        --        200
                                                           ------    ------   --------
 Balance, End of Period ..............................    29,858    28,808     28,809
                                                           ------    ------   --------
Accumulated Deficit:
 Balance, Beginning of Period ........................    (6,444)   (5,816)    (5,944)
 Net Income ..........................................     1,568     1,284        248
 Accretion of Redeemable Put Warrant .................      (940)   (1,412)    (2,107)
                                                           ------    ------   --------
 Balance, End of Period ..............................    (5,816)   (5,944)    (7,803)
                                                           ------    ------   --------
Total Stockholders' Equity ...........................   $24,047   $22,869    $21,011
                                                           ======    ======   ========


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

                                     F-12


                           IRON MOUNTAIN INCORPORATED
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
                                 (In thousands)



                                                      1993       1994       1995
                                                     -------    -------   ---------
                                                                 
Cash Flows from Operating Activities:
 Net Income ....................................   $  1,568   $  1,284    $    248
 Adjustments to Reconcile Net Income to Cash
  Flows Provided by Operations:
   Depreciation and Amortization ...............      6,789      8,690      12,341
   Amortization of Financing Costs .............        954      1,046       1,135
   Loss on Sale of Fixed Assets ................        145        278         400
   Provision for Deferred Income Taxes .........      1,766      1,714       1,179
   Changes in Deferred Rent ....................        605        441        (110)
   Changes in Other Long-term Liabilities ......      1,051       (394)       (527)
 Changes in Assets and Liabilities
  (Exclusive of Acquisitions):
   Accounts Receivable .........................     (1,005)    (1,807)     (2,541)
   Inventory ...................................        (33)       (39)       (100)
   Prepaid Expenses ............................       (304)      (517)       (639)
   Accounts Payable ............................        304         83         265
   Accrued Expenses ............................        (70)     1,191       4,252
   Deferred Income .............................        971        (26)       (301)
   Other Liabilities ...........................         80       (369)        125
                                                     -------    -------   ---------
   Cash Flows Provided by Operations ...........     12,821     11,575      15,727
                                                     -------    -------   ---------
 Cash Flows from Investing Activities:
  Capital Expenditures .........................    (15,451)   (16,980)    (15,253)
  Additions to Customer Acquisition Costs ......       (922)    (1,366)     (1,379)
  Cash Paid for Acquisitions ...................         --     (2,846)    (33,048)
  Proceeds from Sale of Assets .................         14      2,973          73
  Other, Net ...................................       (209)       705          71
                                                     -------    -------   ---------
   Cash Flows Used in Investing Activities .....    (16,568)   (17,514)    (49,536)
                                                     -------    -------   ---------
Cash Flows Provided by Financing Activities:
Repayment of Debt ..............................     (4,659)   (13,642)       (812)
Net Proceeds from Borrowings ...................      9,100     21,350      36,350
Cash From Exercise of Stock Options ............         --         --         200
Repurchase of Stock ............................         --     (1,050)       (199)
Financing Costs ................................       (601)        (7)     (1,448)
                                                     -------    -------   ---------
 Cash Flows Provided by Financing Activities ...      3,840      6,651      34,091
                                                     -------    -------   ---------
Increase in Cash ...............................         93        712         282
Cash and Cash Equivalents, Beginning of Year ...        498        591       1,303
                                                     -------    -------   ---------
Cash and Cash Equivalents, End of Year .........   $    591   $  1,303    $  1,585
                                                     =======    =======   =========
Supplemental Information:
Cash Paid for Interest .........................   $  7,239   $  7,741    $  9,111
                                                     =======    =======   =========
Cash Paid for Income Taxes .....................   $    859   $    339    $  1,177
                                                     =======    =======   =========


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

                                     F-13


                           IRON MOUNTAIN INCORPORATED
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1995
                    (Amounts in thousands except share data)

1. Nature of Business

   The accompanying financial statements represent the consolidated accounts
of Iron Mountain Incorporated (formerly Iron Mountain Information Services,
Inc.) and its subsidiaries (collectively Iron Mountain or the Company). Iron
Mountain is a full service records management company providing storage and
related services for all media in various locations throughout the United
States to Fortune 500 Companies and numerous legal, banking, health care,
accounting, insurance, entertainment, and government organizations.

2. Summary of Significant Accounting Policies

   a. Principles of Consolidation

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

   b. 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 ..........................    10 to 20 years

   Warehouse equipment/vehicles .....    5 to 10 years

   Office equipment .................    3 to 5 years

   Computer hardware and software ...    3 to 5 years

   Property, plant and equipment consist of the following:

                                          December 31,
                                       ------------------
                                        1994       1995
                                        ------   --------
Real property .....................   $33,118    $ 34,162
Leasehold improvements ............     8,958      11,206
Racking ...........................    35,977      53,348
Warehouse equipment/vehicles ......     5,238       5,810
Furniture and fixtures ............     2,411       2,754
Computer hardware and software ....     9,771      13,729
Construction in progress ..........     4,280       4,231
                                        ------   --------
                                      $99,753    $125,240
                                        ======   ========

   Minor maintenance costs are expensed as incurred. Major improvements to
the leased buildings are capitalized as leasehold improvements and
depreciated as described above.

   c. Revenue Recognition

   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 for customers where storage
fees are billed in advance are accounted for as deferred income and amortized
over the applicable period. These amounts are included in deferred income in
the accompanying financial statements.

                                     F-14


                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    (Amounts in thousands except share data)

   d. Goodwill

   Goodwill reflects the cost in excess of fair value of the net assets of
companies acquired in purchase transactions. Goodwill is amortized using the
straight-line method from the date of acquisition over the expected period to
be benefited, currently estimated at 25 years. The Company assesses the
recoverability of goodwill, as well as other long lived assets based upon
expectations of future undiscounted cash flows in accordance with Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long Lived Assets and for Long Lived Assets to be Disposed of." Accumulated
amortization of goodwill was $11,205 and $15,071 as of December 31, 1994 and
1995, respectively.

   e. Deferred Financing Costs

   Deferred financing costs are amortized over the life of the related debt
using the effective interest rate method. As of December 31, 1994 and 1995,
deferred financing costs were $6,271, and $4,688, respectively, and
accumulated amortization of those costs were $4,024, and $2,050,
respectively.

   f. Customer Acquisition Costs

   Costs, net of revenues received for the initial transfer of the records,
related to the acquisition of large volume accounts (accounts consisting of
10,000 or more cartons) are capitalized and amortized for an appropriate
period not exceeding 12 years, unless the customer terminates its
relationship with the Company, at which time the unamortized cost is charged
to expense. However, in the event of such termination, the Company collects
and records as income permanent removal fees that generally equal or exceed
the amount of unamortized customer acquisition costs. As of December 31, 1994
and 1995 those costs were $5,114 and $6,492, respectively, and accumulated
amortization of those costs were $841 and $1,282, respectively.

   g. Deferred Rent

   The Company has 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
balance sheets. In addition, the Company has assumed various unfavorable
leases in connection with certain of its acquisitions. The discounted present
value of these lease obligations in excess of market rate at the date of the
acquisition was recorded as a deferred rent liability and is being amortized
over the remaining lives of the respective leases.

   h. Inventories

   Inventories are carried at the lower of cost using the first-in, first-out
basis or market and are comprised primarily of cartons.

   i. Accrued expenses

   Accrued expenses consist of the following:

                                                     December 31,
                                                   ----------------
                                                    1994      1995
                                                    -----   -------
   Accrued incentive compensation  .............   $1,202   $ 1,701
   Accrued vacation  ...........................      809     1,014
   Accrued interest  ...........................      145     1,737
   Accrued workers' compensation  ..............      499     2,415
   Other  ......................................    2,055     4,050
                                                    -----   -------
   Accrued expenses  ...........................   $4,710   $10,917
                                                    =====   =======

                                     F-15


                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    (Amounts in thousands except share data)

   j. Net Income (Loss) Per Common Share

   Net income (loss) per common share is computed based on the weighted
average number of common and common stock equivalent shares outstanding
during each period. Common stock equivalents consist of preferred stock that
is convertible into common stock and employee options to purchase common
stock. Pursuant to certain SEC regulations, the calculation of weighted
average shares outstanding assumes the conversion of preferred stock for all
periods presented. The stock options have not been included in the
calculation of common stock equivalents because their dilutive effect was
immaterial.

   k. Use of Estimates

   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

   l. Cash and Cash Equivalents

   The Company defines cash and cash equivalents to include cash on hand and
cash invested in short-term securities which have original maturities of less
than 90 days.

3. Debt

   Debt consists of the following:



                                                                         December 31,
                                                                     ------------------
                                                                       1994       1995
                                                                      ------   --------
                                                                          
   Working Capital Line and $36,000 Term Loan Refinanced in 1995     $59,934    $     --
   Term Loans A and B  ...........................................        --      59,625
   $50,000 Acquisition Credit Facility  ..........................        --      34,400
   $15,000 Working Capital Facility  .............................        --       1,700
   Chrysler Notes  ...............................................    14,693      14,772
   Real Estate Mortgages  ........................................    10,855      10,797
   Other  ........................................................       776         580
                                                                      ------    --------
   Long-term Debt  ...............................................    86,258     121,874
   Less -- current portion  ......................................      (628)     (2,578)
                                                                      ------    --------
   Long-term Debt, Net of Current Portion  .......................   $85,630    $119,296
                                                                      ======    ========


   During 1994, the Company had a revolving credit facility of $44,625. This
facility along with a $36,000 senior term loan was refinanced on January 31,
1995 under an amended and restated credit agreement (the Credit Agreement).
Interest on the $36,000 senior debt term loan and the $44,625 revolving
credit facility was based, at the Company's option, on a choice of base rates
plus a margin. The margin varied depending upon the base rate selected.

                                     F-16


                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    (Amounts in thousands except share data)

   The Credit Agreement is with a syndicate of lenders and provides for four
separate credit facilities representing an aggregate commitment of $125,000
as follows:

                                                              Maturity
                                                     Amount     Date
                                                     ------   --------
        Term Loan A  ............................   $10,000     2000
        Term Loan B  ............................    50,000     2002
        Working Capital Facility  ...............    15,000     2000
        Acquisition Credit Facility  ............    50,000     2002

   Commencing in 1996, Term Loans A and B are payable in quarterly
installments of $625 and $125, respectively. Term Loan B has a balloon
payment due upon maturity of $46,375. The Working Capital Facility is due in
full upon maturity and the Acquisition Credit Facility is payable in eight
quarterly installments equal to one-eighth of the outstanding balance
commencing in 2000.

   Interest rates on all four facilities under the Credit Agreement are
based, at the Company's option, on a choice of base rates plus a margin. The
margin varies for each facility depending upon the base rate selected. The
margins are subject to adjustment after January 1996 based on the Company's
ability to meet certain financial covenant targets. At December 31, 1995, the
effective interest rates for Term Loans A and B were 8.22% and 8.72%,
respectively, and for the Working Capital Facility and Acquisition Credit
Facility were 9.75% and 8.72%, respectively. There is a commitment fee of
1/2% per year on the unused portion of the Working Capital Facility and
Acquisition Credit Facility.

   The $15,000 Chrysler Notes were issued in 1990 and mature in 2000. Annual
principal payments of $5,000 commence in 1998. A warrant was issued in
connection with the Chrysler Notes to which management assigned an initial
value of $750 for financial reporting purposes (see Note 5). The value of the
warrant is being accounted for as an original issue discount of the Chrysler
Notes and is being amortized as interest expense over the life of the loan
using the effective interest rate method. The note is junior only to the
Credit Agreement and has an effective interest rate of 13.7%.

   The Credit Agreement and Chrysler Notes specify certain minimum or maximum
relationships between operating cash flows (earnings before interest, taxes,
depreciation and amortization) and interest, total debt and fixed charges.
There are restrictions on dividends, sales or pledging of assets, capital
expenditures and change in business and ownership; cash dividends are
effectively prohibited. The Company was in compliance with the applicable
provisions of these agreements at December 31, 1995. Loans under the Credit
Agreement are secured by substantially all of the stock and assets of the
Company's subsidiaries, with the exception of a secondary position on two
owned properties encumbered by first mortgages.

   The real estate mortgages consist of an $8,037, 10 year, 11% mortgage
based on 30 year amortization with a balloon payment due October, 2000 and a
$3,000, 8% note that is payable in various installments commencing in 1996
and maturing in November, 2006.

   The Company is required to maintain interest rate protection under the
Credit Agreement. In 1988, the Company entered into an interest rate swap
(which expired in October 1995) whereby the Company paid a fixed interest
rate of 9.28% and received a rate equal to the 3-month LIBOR rate. The
interest was based on the outstanding notional principal amount which was
$2,338 at December 31, 1994. The Company has also purchased two interest rate
caps under which it will receive payments in the event that the three month
LIBOR rate exceeds those specified in the caps. Each cap covers $10,000 of
notional principal amount. One had a rate cap of 6.5% and expired on August
11, 1995 and the other has a rate cap of 7.5% and expires August 12, 1997.

   On March 24, 1995, the Company entered into two three-year interest rate
collar swap transactions. Under these agreements, interest costs for the debt
covered by the notional amount of these contracts will essentially float when
the three-month LIBOR is between 6% and 7.5% but the Company will receive a
payment from the bank in the event that the three month LIBOR interest rate
exceeds 7.5%, or make a payment to the bank if such rate

                                     F-17


                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    (Amounts in thousands except share data)

is below 6%. Each transaction covers $10,000 of notional principal amount
which will result in a maximum interest cost (including margin and
transaction costs) of approximately 10.54% and 10.67%, respectively, for the
covered amounts. In the event of non-performance by the counterparty, the
Company would be exposed to additional interest rate risk if the variable
interest rate were to exceed the ceiling (7.5%) under the terms of the swap
agreement.

   Maturities of long-term debt are as follows:

 Year                                            Amount
 ----                                           --------
1996  .......................................   $  2,578
1997  .......................................      3,386
1998  .......................................      8,320
1999  .......................................      8,366
2000  .......................................     28,824
Thereafter  .................................     70,400
                                                   ------
                                                $121,874
                                                   ======

   Based on the borrowing rates currently available to the Company for loans
with similar terms and average maturities, the Company has estimated the
following fair values for its long-term debt and swap agreements as of
December 31, 1995 as follows:

                                  Carrying       Fair
                                   Amount        Value
                                   --------   ----------
Credit Agreement  .............   $(95,725)    $(95,725)
Chrysler Notes  ...............    (14,772)     (15,737)
Real Estate Mortgages  ........    (10,797)     (11,849)
Other  ........................       (580)        (580)
Swap Agreements  ..............         25         (638)

   The fair value of the various swap agreements is based on the estimated
amount a bank would charge to terminate the various swap agreements.

4. Acquisitions and Dispositions

   During 1994, the Company purchased substantially all of the assets, and
assumed certain liabilities, of three separate records management businesses.
During 1995, the Company purchased substantially all of the assets, subject
to certain liabilities, of four records management businesses. 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 the consolidated results of the Company from the respective
acquisition dates. The excess of the purchase price over the underlying fair
value of the assets and liabilities of each acquisition has been assigned to
goodwill ($2,484 and $26,054 in 1994 and 1995, respectively) and is being
amortized over the estimated benefit period of 25 years. Funds used to make
the various acquisitions were provided through the Company's acquisition
credit facilities. A summary of the cash consideration and allocation of the
purchase price as of the acquisition dates are as follows:

                                        1994      1995
                                        -----   --------
Fair value of assets acquired .....   $3,223    $41,286
Liabilities assumed ...............     (377)    (8,238)
                                         ---      ------
Cash paid .........................   $2,846    $33,048
                                         ===      ======

                                     F-18


                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    (Amounts in thousands except share data)

The following unaudited pro forma combined information shows the results of
the Company's operations for the years ended December 31, 1994 and 1995 as
though each of the completed acquisitions had occurred as of January 1, 1994.

                                                           1994       1995
                                                          -------    -------
Revenues  ............................................   $103,644   $112,675
Net income (loss)  ...................................        574       (577)
Accretion of redeemable Put Warrant  .................      1,412      2,107
                                                            -----      -----
Net loss applicable to Common Stockholders  ..........   $   (838)  $ (2,684)
                                                            =====      =====
Net loss per common share  ...........................    $(0.10)    $(0.34)

The pro forma results have been prepared for comparative purposes only and
are not necessarily indicative of the actual results of operations had the
acquisitions taken place as of January 1, 1994 or the results that may occur
in the future. Furthermore, the pro forma results do not give effect to all
cost savings or incremental costs which may occur as a result of the
integration and consolidation of the companies.

In 1995, the Company made a decision to sell one of its subsidiaries and has
estimated that the purchase price will be $900 less than the book value of
the assets and related goodwill. Consequently, the Company has recorded an
impairment of the related goodwill in the accompanying statement of
operations for 1995.

5. Common and Preferred Stock and Redeemable Put Warrant

   During 1995, the Company declared a 15.4215-for-1 stock split of the Class
A and Class B Common Stock in the form of a stock dividend payable on
November 29, 1995 to stockholders of record on November 28, 1995. All
weighted average common share and stock related data in the consolidated
financial statements have been retroactively restated to reflect the stock
split.

   The Company has authorized the following eight classes of capital stock as
of December 31, 1995:

                                                       Number of Shares
                                                   -------------------------
                                          Par                    Issued and
Equity Type                              Value    Authorized    Outstanding
- -----------------------------------     --------    ---------   ------------
Class A Common (voting) ...........      $0.01    13,000,000       44,888
Class B Common (non-voting) .......      $0.01    10,300,000           --
Class C Common (non-voting) .......      $0.01             1           --
Series A1 Preferred (non-voting) ..      $0.01         6,500        6,500
Series A2 Preferred (non-voting) ..      $0.01        98,000       98,000
Series A3 Preferred (voting) ......      $0.01        43,500       43,500
Series B Preferred (voting) .......      $0.01       148,000           --
Series C Preferred (voting) .......      $0.01       351,395      351,395

   Upon consummation of the underwritten public offering of common stock (See
Note 10), all shares of preferred stock were automatically converted into
shares of common stock. The number of common shares received upon conversion
were as follows:

                                      Preferred      Common
                                        --------   ----------
Series A1 and Series A3 ...........      50,000      987,314
Series A2 .........................      98,000    1,935,146
Series C ..........................     351,395    4,809,793

   The preferred stock is entitled to weighted average anti-dilution
protection and receives dividends on a common stock equivalent basis.

                                     F-19


                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    (Amounts in thousands except share data)

In anticipation of the public offering, the Board of Directors approved and
the shareholders ratified a recapitalization plan as follows:

The designation of three new classes of stock:

                                                          Authorized
Class                                                       Shares
- -----                                                     -----------
Preferred Stock, $0.01 par value  ....................     2,000,000
Common Stock, $0.01 par value  .......................    13,000,000
Nonvoting Common Stock, $0.01 par value  .............     1,000,000

In connection with the issuance of the Chrysler Notes, the Company also
issued a warrant, dated December 14, 1990 (the Warrant), exercisable for
444,385 shares of common stock for nominal consideration upon the occurrence
of certain specified events, including the effectiveness of an underwritten
public offering of the Company's capital stock, and at any time after
December 14, 1995. Chrysler Capital had the right to put (the Put) all or any
part of the Warrant to the Company at any time after December 14, 1995, at
the higher of a formula price based on a specified multiple of the Company's
operating cash flow for the preceding 12 months, subject to certain
adjustments, or fair market value of the Company (the Put Price). The Put was
to terminate upon the consummation of an underwritten public offering which
yielded net proceeds of not less than $10 million to the Company. Chrysler
Capital and the Company reached an agreement pursuant to which Chrysler
Capital would not exercise the Warrant or the Put until April 30, 1996 and
the Company would redeem the Warrant upon completion of the closing of the
public offering (See Note 10). On February 7, 1996, the Warrant was redeemed
for $6,612. This Warrant has been accreted each year using the effective
interest rate method based on the Warrant's estimated redemption value at its
estimated redemption date of February 15, 1996 and is reflected as a
redeemable put warrant in the accompanying balance sheets.

In September, 1991 the Company created a non-qualified stock option plan
pursuant to which up to 444,385 shares of Class A common stock of the Company
can be issued at the discretion of the stock option committee to key
employees, consultants and directors.

The following is a summary of stock option transactions during the applicable
periods:


                                                              Option Price
                                                Options         Per Share
                                                 -------    ------------------
Options outstanding, December 31, 1992  .....   302,040       $6.48 - $12.58
 Expired  ...................................   (18,506)           6.48
                                                   -----
Options outstanding, December 31, 1993  .....   283,534        6.48 - 12.58
 Expired  ...................................   (23,903)           6.48
                                                   -----
Options outstanding, December 31, 1994  .....   259,631        6.48 - 12.58
 Granted  ...................................   162,184        12.58 - 16.00
 Exercised  .................................   (15,976)           12.58
 Expired  ...................................    (6,370)           12.58
                                                   -----
Options outstanding, December 31, 1995  .....   399,469       $6.48 - $16.00
                                                   =====

The stock options were granted at an amount equal to or greater than the fair
market value at the date of grant as determined by the Board of Directors.
There are no shares available for grant under the 1991 plan as of December
31, 1995. The majority of options become exercisable ratably over a period of
five years unless the holder terminates employment. As of December 31, 1995,
175,380 of the options outstanding were exercisable.

Effective November 30, 1995, the Board of Directors approved the adoption of
the 1995 Stock Incentive Plan (the Stock Option Plan), which replaced the
previous stock option plan. A total of 1,000,000 shares of Class A Common
Stock are available for grant as options and other rights under the Stock
Option Plan, including the options issued under the 1991 plan. The number of
options available for grant at December 31, 1995 was 555,615.

                                     F-20


                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    (Amounts in thousands except share data)

6. Income Taxes

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

   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,
                                                         --------------------
                                                           1994        1995
                                                          -------   ---------
Current deferred tax assets:
 Accrued liabilities  ................................    $   527    $  1,585
 Other  ..............................................        251         358
                                                            -----      -------
Current deferred tax assets  .........................    $   778    $  1,943
                                                            =====      =======
Non-current deferred tax assets (liabilities):
 Accrued liabilities  ................................    $ 1,147    $  3,462
 Net operating loss carryforwards  ...................      3,280       2,522
 AMT credit  .........................................        206         628
 Deferred income  ....................................        791         360
 Other  ..............................................        511         792
                                                            -----      -------
Non-current deferred tax assets  .....................      5,935       7,764
                                                            -----      -------
 Other assets principally due to differences in
  amortization .......................................     (1,165)     (2,051)
 Plant and equipment, principally due to differences
  in  depreciation ...................................     (5,383)     (7,201)
 Customer acquisition costs  .........................     (1,335)     (1,716)
 Other  ..............................................       (520)       (417)
                                                            -----      -------
Non-current deferred tax liabilities  ................     (8,403)    (11,385)
                                                            -----      -------
Net non-current deferred tax liability  ..............    $(2,468)   $ (3,621)
                                                            =====      =======

   The Company and its subsidiaries file a consolidated Federal income tax
return. The provision for income taxes consists of the following components:

                                                Years ended December 31,
                                                ------------------------
                                                 1993     1994     1995
                                                 -----    -----   ------
Federal -- current  .........................   $  131   $   68   $  422
Federal -- deferred  ........................    1,645    1,416      837
State -- current  ...........................      191      175       96
State -- deferred  ..........................      121      298      342
                                                   ---      ---      ----
                                                $2,088   $1,957   $1,697
                                                   ===      ===      ====

   A reconciliation of total income tax expense and the amount computed by
applying the U.S. Federal income tax rate of 34% to income before income
taxes is as follows:

                                                   1993     1994     1995
                                                   -----    -----   ------
Computed "expected" tax provision ............    $1,243   $1,102   $  661
Increase in income taxes resulting from:
 State taxes .................................       206      312      289
 Non-deductible Goodwill amortization ........       521      521      843
 Other .......................................       118       22      (96)
                                                     ---      ---      ----
                                                  $2,088   $1,957   $1,697
                                                     ===      ===      ====

                                     F-21


                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    (Amounts in thousands except share data)

   The Company has estimated Federal net operating loss carryforwards of
$7,296 at December 31, 1995 to reduce future Federal income taxes, if any,
which begin to expire in 2005.

   The Company has estimated state net operating loss carryforwards of
approximately $441 to reduce future state income taxes, if any.

   The Company has alternative minimum tax credit carryforwards of $628 which
have no expiration date and are available to reduce future income taxes, if
any.

7. Commitments and Contingencies

   a. Leases

   Iron Mountain leases most of its facilities under various operating
leases. A majority of these leases have renewal options of five to ten years
and have either fixed escalation clauses or Consumer Price Index escalation.
The Company also leases equipment under operating and capital 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 five years. Rent expense was $12,680, $13,555, and $15,661 for
the years ended December 31, 1993, 1994 and 1995, respectively.

   Minimum future lease payments are as follows:

 Year                                                     Operating
 -----------------------------------------------------   ----------
1996  ................................................    $ 18,278
1997  ................................................      15,571
1998  ................................................      13,585
1999  ................................................      13,332
2000  ................................................      13,537
Thereafter  ..........................................      53,465
                                                            --------
Total minimum lease payments  ........................    $127,768
                                                            ========

   b. Litigation

   In 1992, the Company was named co-defendant in a suit alleging personal
injuries sustained in an automobile collision with a driver employed by a
courier company used at the time by Iron Mountain. The courier company
subsequently filed for bankruptcy. In March, 1995, a judgment was entered
against the Company in the Superior Court of the State of California for
County of Los Angeles. The Company has accrued $600 in the accompanying
financial statements which approximates the uninsured portion of the
judgment.

   Iron Mountain 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 Iron Mountain's financial condition or results of
operations.

   c. Other

   The Company may be responsible for environmental clean-up costs at certain
of its facilities. Estimated costs of $800 to perform the necessary
remediation work are included in other liabilities in the accompanying
balance sheets. In 1994, the Company incurred losses at one of its facilities
in California, resulting from the Northridge earthquake. The Company has
filed a claim for reimbursement with its insurance carrier and has received
partial reimbursement to date, with the balance of $1,400 expected to be
received upon the insurance company's completion of its review of the pending
claim. Management believes the ultimate outcome of the above issues will not
have a material adverse effect on Iron Mountain's financial condition or
results of operations.

                                     F-22


                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    (Amounts in thousands except share data)

8. Related Party Transactions

   a. Rental Arrangements

   Iron Mountain leases space to an affiliated company, Schooner Capital
Corporation (Schooner) for its corporate headquarters located in Boston,
Massachusetts. Accordingly, for the years ended December 31, 1993, 1994 and
1995, Schooner paid Iron Mountain rent totaling $48, $58, and $49,
respectively. Iron Mountain leases one facility from a landlord which is a
related party. Total rental payments for the years ended December 31, 1993,
1994 and 1995 for this facility totaled $88, $88, and $93, respectively. In
the opinion of management, both of these leases were entered into at market
prices and terms.

   b. Long Term Debt

   Iron Mountain is obligated in the amount of $383 on a junior subordinated
note bearing interest at 8%, payable in March, 2000. This note, originally
issued in connection with an acquisition, was purchased by and is now held by
Schooner.

9. Profit Sharing Retirement Plan

   The Company has a defined contribution plan which covers all non-union
employees meeting certain service requirements. Eligible employees may elect
to defer from 1 to 15% of compensation per pay period up to the amount
allowed by the Internal Revenue Code. The Company makes matching
contributions based on the amount of the employee contribution and years of
credited service, according to a schedule as described in the Plan documents.
The Company has expensed $131, $146, and $294, for the years ended
December 31, 1993, 1994 and 1995, respectively.

10. Subsequent Events

   In January and February 1996, the Company acquired three records services
businesses for $10,047 in transactions that will be accounted for as
purchases.

   On February 6, 1996, the Company completed an initial public offering of
its stock. The net proceeds from the public offering of $34,968 were used to
repay $28,313 of indebtedness and interest under the acquisition credit
facility, to retire a warrant of $6,612, and for working capital.

                                     F-23


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
 National Business Archives, Inc.:
 Towson, Maryland.

We have audited the accompanying balance sheet of National Business Archives,
Inc. as of December 31, 1993 and 1994, and the related statements of income,
stockholder's equity (deficit) 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 conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of National Business Archives,
Inc. as of December 31, 1993 and 1994, and the results of its operations and
its cash flows for the years then ended, in conformity with generally
accepted accounting principles.

                                                          Wolpoff & Company, LLP

Baltimore, Maryland
November 3, 1995

                                     F-24


                        NATIONAL BUSINESS ARCHIVES, INC.
                                 BALANCE SHEETS
                                     ASSETS

                                                    December 31,
                                               -----------------------
                                                  1993         1994
                                                ---------   ----------
Current Assets:
Cash--Note 1 ..............................   $       --    $    1,000
Note Receivable, Related Party--Note 2 ....           --     1,416,148
Accounts Receivable--Note 1 ...............      714,974       687,645
Inventory--Note 1 .........................       75,620        69,149
Prepaid Expenses ..........................      149,724        44,362
                                                 -------      --------
   Total Current Assets ...................      940,318     2,218,304
                                                 -------      --------
Property, Plant and Equipment--Notes 1 and
  4:
Shelving ..................................    2,702,645     3,153,726
Motor Vehicles ............................      479,961       498,011
Computers and Software ....................      195,033       212,830
Furniture, Fixtures and Equipment .........      148,638       195,544
Leasehold Improvements ....................       76,820       318,258
                                                 -------      --------
                                               3,603,097     4,378,369
Less Accumulated Depreciation .............    1,083,347     1,255,781
                                                 -------      --------
   Property, net ..........................    2,519,750     3,122,588
                                                 -------      --------
Other Assets ..............................        7,498        56,001
                                                 -------      --------
   Total Assets ...........................   $3,467,566    $5,396,893
                                                 =======      ========

The notes to financial statements are an integral part of this statement.

                                     F-25


                        NATIONAL BUSINESS ARCHIVES, INC.
                                 BALANCE SHEETS
                 LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)



                                                                December 31,
                                                          ------------------------
                                                             1993          1994
                                                           ----------   ----------
                                                                  
Current Liabilities:
Accounts Payable .....................................   $   171,566    $  302,222
Accrued Expenses .....................................       176,355       238,354
Deferred Revenue--Note 1 .............................       977,212     1,201,314
Long-term Liabilities, Current Portion--Notes 2 and 4        652,584        63,092
Note Payable, Related Party--Note 2 ..................       150,000            --
Dividends Payable--Note 3 ............................        11,064            --
                                                            --------      --------
   Total Current Liabilities. ........................     2,138,781     1,804,982
                                                            --------      --------
Long-term Liabilities:
Note Payable, Bank--Note 3 ...........................            --     2,333,901
Notes Payable, Stockholder--Note 2 ...................     1,913,333       355,000
Motor Vehicle Loans Payable--Note 4 ..................       171,636       100,582
                                                            --------      --------
                                                           2,084,969     2,789,483
Less Current Portion .................................       652,584        63,092
                                                            --------      --------
   Total Long-term Liabilities .......................     1,432,385     2,726,391
                                                            --------      --------
Deferred Rent--Note 5 ................................     1,068,904     1,007,488
                                                            --------      --------
Total Liabilities ....................................     4,640,070     5,538,861
                                                            --------      --------
Commitments--Notes 2 and 5
Stockholder's Equity (Deficit):
Common Stock .........................................           100           100
Accumulated Deficit ..................................    (1,172,604)     (142,068)
                                                            --------      --------
   Total Stockholder's Equity (Deficit) ..............    (1,172,504)     (141,968)
                                                            --------      --------
   Total Liabilities and Stockholder's
    Equity (Deficit)  .................................  $ 3,467,566    $5,396,893
                                                            ========      ========


  The notes to financial statements are an integral part of this statement.

                                     F-26


                        NATIONAL BUSINESS ARCHIVES, INC.
                             STATEMENTS OF INCOME

                                          Year Ended December 31,
                                          ------------------------
                                             1993         1994
                                           ---------   -----------
Revenue:
Storage ..............................   $3,406,317    $3,872,529
Service and Storage Material Sales ...    2,586,223     2,825,546
                                            -------      ---------
   Total Revenue .....................    5,992,540     6,698,075
                                            -------      ---------
Operating Expenses:
Cost of Sales (Excluding Depreciation)    3,273,478     3,866,897
Selling, General and Administrative ..    1,040,057     1,093,935
Depreciation and Amortization ........      286,843       344,800
                                            -------      ---------
   Total Operating Expenses ..........    4,600,378     5,305,632
                                            -------      ---------
Operating Income .....................    1,392,162     1,392,443
Interest Expense .....................      187,115       101,490
                                            -------      ---------
Net Income--Note 1 ...................   $1,205,047    $1,290,953
                                            =======      =========

  The notes to financial statements are an integral part of this statement.

                                     F-27


                        NATIONAL BUSINESS ARCHIVES, INC.
                  STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)



                                                               Year Ended December 31,
                                                             ---------------------------
                                                                 1993           1994
                                                              -----------   ------------
                                                                      
Common Stock:
5,000 Shares Authorized, 100 Shares Issued and
  Outstanding,
  No Par Value  ..........................................   $       100    $       100
                                                               ---------      ----------
Retained Earnings (Deficit):
Beginning Balance .......................................     (2,283,254)    (1,172,604)
Net Income ..............................................      1,205,047      1,290,953
Dividends ...............................................        (94,397)      (260,417)
                                                               ---------      ----------
Ending Balance ..........................................     (1,172,604)      (142,068)
                                                               ---------      ----------
Total Stockholder's Equity (Deficit) ....................    $(1,172,504)   $  (141,968)
                                                               =========      ==========


  The notes to financial statements are an integral part of this statement.

                                     F-28


                        NATIONAL BUSINESS ARCHIVES, INC.
                           STATEMENTS OF CASH FLOWS



                                                              Year Ended December 31,
                                                             --------------------------
                                                                1993           1994
                                                              ----------   ------------
                                                                     
Cash Flows From Operating Activities:
Net Income ..............................................   $ 1,205,047    $ 1,290,953
                                                               --------      ----------
Adjustments to Reconcile Net Income to Net Cash Provided
  by Operating Activities
 Depreciation and Amortization ..........................       286,843        344,800
 (Gain) Loss on Disposal of Assets ......................        (1,115)         3,818
 Increase in Accounts Payable ...........................        26,685        130,656
 Increase in Accrued Expenses ...........................       145,939         61,991
 Change in Accounts Receivable ..........................      (121,414)        27,329
 Change in Inventory ....................................       (19,161)         6,471
 Change in Prepaid Expenses .............................       (27,949)       105,362
 Decrease in Deferred Rent Payable ......................       (62,830)       (61,416)
 Increase in Deferred Revenue ...........................       154,985        224,102
                                                               --------      ----------
   Total Adjustments ....................................       381,983        843,113
                                                               --------      ----------
    Net Cash Provided by Operating Activities ...........     1,587,030      2,134,066
                                                               --------      ----------
Cash Flows From Investing Activities:
Property and Equipment Expenditures .....................      (534,070)      (955,924)
Proceeds from Disposal of Assets ........................         7,783         12,973
Other Assets ............................................            --        (57,000)
Loan to Related Party ...................................            --     (1,416,148)
                                                               --------      ----------
   Net Cash Used by Investing Activities ................      (526,287)    (2,416,099)
                                                               --------      ----------
Cash Flows From Financing Activities:
Stockholder Loan Proceeds ...............................       672,222             --
Stockholder Note Principal Payments .....................      (580,558)    (1,558,333)
Net Bank Loan Proceeds ..................................            --      2,333,901
Bank Loan Principal Payments ............................    (1,218,662)            --
Motor Vehicle Loan Proceeds .............................       106,226         21,419
Repayment of Motor Vehicle Loans ........................      (106,638)       (92,473)
Net Proceeds to Related Party ...........................       150,000       (150,000)
Dividends Paid ..........................................       (83,333)      (271,481)
                                                               --------      ----------
   Net Cash Used by Financing Activities ................    (1,060,743)       283,033
                                                               --------      ----------
Net Change in Cash ......................................            --          1,000
Cash at Beginning of Year ...............................            --             --
                                                               --------      ----------
Cash at End of Year .....................................   $        --    $     1,000
                                                               ========      ==========
Supplemental Disclosures of Cash Flow Information:
 Cash Paid During the Year for Interest .................   $   166,875    $   106,965
                                                               ========      ==========


  The notes to financial statements are an integral part of this statement.

                                     F-29


                        NATIONAL BUSINESS ARCHIVES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1994

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Activity

   National Business Archives, Inc. was incorporated under the laws of
Maryland pursuant to Articles of Incorporation dated June 18, 1987. The
Company provides record storage and management services in the
Baltimore-Washington area.

Cash

   Cash in excess of the minimum balance required is swept daily to and
offset against the revolving loan (see Note 3).

Allowance for Doubtful Accounts

   The Company established an allowance for doubtful accounts of $120,000 in
the current year.

Inventory

   Inventory is stated at the lower of cost or market and is comprised of
computer tape cases and records and storage boxes used in the business.

Property, Plant and Equipment

   Property is recorded at cost. Depreciation is computed using either the
straight-line method or accelerated methods with useful lives ranging from 5
to 7 years for equipment, 20 years for shelving and 31.5 to 39 years for
leasehold improvements.

Revenue Recognition

   Revenue is recognized when earned. Storage revenue is billed either
monthly, quarterly or annually, depending on the terms of the lease. The
estimated amount of storage revenue collected in advance as of December 31,
1993 and 1994, is shown as deferred revenue.

Income and Taxes

   The shareholder has elected under Subchapter S of the Internal Revenue
Code to report the Company's income at the shareholder level. Accordingly, no
provision for income taxes is included herein.

NOTE 2--RELATED PARTY TRANSACTIONS

Note Receivable, Related Party

   In December 1994, the Company advanced $1,416,148 to James F. Knott
Development Corp., an entity related to the shareholder. The unsecured loan
is due on demand and bears interest at 9.5%. The note was repaid in January
1995.

   On May 19, 1994, the loan remaining from the sole shareholder was repaid
when the revolving loan was modified. The interest expense in 1993 and 1994
was $108,652 and $39,037.

                                     F-30


                        NATIONAL BUSINESS ARCHIVES, INC.

                 NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 2--RELATED PARTY TRANSACTIONS -- (Continued)

   The sole shareholder loaned an additional $355,000 to the Company. This
unsecured loan is subordinated to the bank loans. The terms are as follows:



                           Balance
                     --------------------
     Lender          12/31/93    12/31/94   Interest Rate       Terms        Maturity Date
 ----------------    ---------    -------   -------------     ----------    ----------------
                                                              
Stockholder  ....   $1,558,333   $    -0-    Prime + 2%           *          October 1, 1996
Stockholder  ....      355,000    355,000         --         Non-interest    October 1, 1996
                                                                bearing     
                       -------      -----
                    $1,913,333   $355,000
                       =======      =====


* Principal was payable in consecutive monthly installments of $45,833
  commencing on November 1, 1993 (36 X $45,833 = $1,650,000).

   The remaining stockholder note balance of $355,000 matures in 1996.

Note Payable, Related Party

   James F. Knott Development Corp., an entity related to the shareholder,
advanced the Company various amounts in 1993 and 1994. The loans were due on
demand and bear interest at 6.5%. The balance at December 31, 1993 and 1994,
was $150,000 and $-0-, respectively. Interest on the unsecured loans for 1993
and 1994 was $7,228 and $23,807, respectively.

Office and Warehouse Leases

   See Note 5.

NOTE 3--NOTE PAYABLE, BANK

   On December 19, 1994, the revolving loan was modified for the second time
and the amount available was increased to $3,000,000. The balance at December
31, 1993 and 1994, was $-0- and $2,333,901, respectively. The terms of the
loan are interest only at prime + 1/2% (prime at December 31, 1994, was 8.5%)
until maturity on December 31, 1996. The loan is secured by all property and
assets of the Company. The maximum unpaid outstanding principal available
under the revolving loan is $2,500,000 and $1,500,000 as of December 31, 1995
and 1996, respectively. Interest on this loan was $51,408 and $25,049 in 1993
and 1994, respectively.

   Under the loan agreement, the Company is permitted to pay dividends to its
sole shareholder in an aggregate amount equal to the amount of federal and
state income taxes due on the taxable income of the Company, as if such
taxable income was the sole taxable income of the shareholder.

NOTE 4--MOTOR VEHICLE LOANS PAYABLE

   Pertinent information on the motor vehicle loans payable is as follows:



                                Balance
                           ------------------
                                                            Total
                                               Interest    Monthly
        Lender           12/31/93   12/31/94      Rate    Payments    Maturity       Collateral
- ----------------------     -------    -------    -------    -------    --------    ----------------
                                                                   
Ford Motor Credit ....                                                               Automobiles/
                         $171,636   $100,582    6.42-12%    $9,442   3/95-8/97          Trucks
Less Current Portion .    103,077     63,092
                            -----      -----
                         $ 68,559   $ 37,490
                            =====      =====


                                     F-31


                        NATIONAL BUSINESS ARCHIVES, INC.
                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 4--MOTOR VEHICLE LOANS PAYABLE -- (Continued)

   Interest on these loans was $15,077 and $11,825 in 1993 and 1994,
respectively.

   The remaining principal payments on these loans are as follows:

1995 ..............................    $ 63,092
1996 ..............................      33,596
1997 ..............................       3,894
                                         ------
                                       $100,582
                                         ======

NOTE 5--COMMITMENTS

Deferred Rent

   Office and warehouse leases:


                                     Square  Effective          Lease            Free       Expiration
             Lessor*                  Feet       Date           Term             Rent          Date
- ---------------------------------     ------    -------    ----------------    ----------   ----------
                                                                               
B.W.I.P. Associates Limited                                  11 Yrs. 7.5
   Partnership  ..................   68,200   12/01/87         Mths.**          8 Mths.       7/15/99
Dorsey Run Industrial Park                                    10 Yrs. 9
  Limited Partnership (DRIP)  ....  142,885   11/01/89          Mths.           14 Mths.      7/31/00
DRIP ............................    42,413    9/01/94         5 Years             --         8/31/99
DRIP ............................    97,587    3/01/95      4 Yrs. 6 Mths.         --         8/31/99


 * Lessors are related to sole shareholder.

** Lease term was extended 1 year and 7.5 months in the current year.

   Annual rental expense recognized on the straight-line basis on the above
leases for 1993 and 1994 was $1,092,132 and $1,146,564, respectively.

   Future minimum annual rental payments are as follows:

   1995 ......................................      $1,764,714
   1996 ......................................       1,825,706
   1997 ......................................       1,834,600
   1998 ......................................       1,826,606
   1999 ......................................       1,427,525
   2000 ......................................         510,099
                                                    ----------
Total minimum future rental payments .........      $9,189,250
                                                    ==========

NOTE 6--SUBSEQUENT EVENT

   On March 1, 1995, the Company sold all of its assets to Iron Mountain
Records Management, Inc. and all debt was repaid from the proceeds of the
sale. In addition, the Company's assets were released from security interests
held by the bank with the full payment of the note payable (see Note 3).

                                     F-32


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
Data Management Business Records Storage, Inc.:

We have audited the accompanying balance sheet of Data Management Business
Records Storage, Inc. as of June 30, 1995 and the related statement of
operations and retained earnings (deficit), and cash flows for the year 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 audit.

We conducted our audit in accordance with generally accepted auditing
standards. 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 audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Data Management Business
Records Storage, Inc. as of June 30, 1995 and the results of their operations
and their cash flows for the year then ended in conformity with generally
accepted accounting principles.

                                                              MORRISON AND SMITH

Tuscaloosa, Alabama
September 18, 1995
(except for Note 14, as
to which the date is
December 1, 1995)

                                     F-33


DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.

                                BALANCE SHEETS



                                                             June 30,     September 30,
                                                               1995           1995
                                                             ----------   -------------
                                                                           (unaudited)
                                                                     
                         ASSETS
Cash ...................................................   $   125,982     $   626,578
Accounts receivables, net ..............................       576,979         517,903
Materials inventory ....................................         7,909           7,909
Prepaid expenses .......................................        11,744          12,867
Other ..................................................       115,154             374
                                                              --------      -----------
   Total current assets ................................       837,768       1,165,631
                                                              --------      -----------
Plant, property and equipment, net .....................     3,334,017       2,435,362
                                                              --------      -----------
Intangible assets ......................................       572,558         533,228
Notes receivable, intercompany .........................       316,551         373,082
Deferred income tax ....................................       810,431         554,752
Other ..................................................        11,748          11,748
                                                              --------      -----------
                                                             1,711,288       1,472,810
                                                              --------      -----------
     Total assets ......................................   $ 5,883,073     $ 5,073,803
                                                              ========      ===========

                     LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Accounts payable--trade ................................   $    92,193     $    61,592
Accrued expenses .......................................       136,505         137,043
Unearned income ........................................       309,735         309,735
Current portion--leases ................................        68,242          63,240
Current portion--notes .................................     5,353,941       4,428,159
                                                              --------      -----------
   Total current liabilities ...........................     5,960,616       4,999,769
                                                              --------      -----------
Leases payable, long-term ..............................       114,216          96,885
Notes payable, long-term ...............................     1,328,764       1,292,495
Notes payable, intercompany ............................        50,000          38,760
Deferred compensation payable ..........................        12,115              --
Earnest money deposit ..................................       154,988              --
                                                              --------      -----------
   Total long-term liabilities .........................     1,660,083       1,428,140
                                                              --------      -----------
     Total liabilities .................................     7,620,699       6,427,909
Stockholders' equity (deficit)
Common stock ...........................................           500             500
Paid-in capital ........................................     1,321,809       1,321,809
Retained earnings (deficit) ............................    (3,059,935)     (2,676,415)
                                                              --------      -----------
                                                            (1,737,626)     (1,354,106)
                                                              ========      ===========
     Total liabilities and stockholders'
        equity (deficit)  ...............................  $ 5,883,073     $ 5,073,803
                                                              ========      ===========


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

                                     F-34


                 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
            STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)

                                                                    Three
                                                  Year Ended    Months Ended
                                                   June 30,     September 30,
                                                     1995           1995
                                                  -----------   -------------
                                                                 (Unaudited)
Revenues:
 Storage ....................................    $ 3,143,737     $   797,715
 Services and storage material sales ........      1,683,035         414,650
 Net gain (loss) on sale of assets ..........         (4,045)        738,049
                                                   ---------      -----------
  Total Revenues ............................      4,822,727       1,950,414
                                                   ---------      -----------
Operating expenses:
 Cost of sales (excluding depreciation) .....        891,293         310,610
 Selling, administrative and general expenses      2,730,013         767,702
 Depreciation and amortization ..............        510,831         115,653
                                                   ---------      -----------
  Total operating expenses ..................      4,132,137       1,193,965
                                                   ---------      -----------
Operating income ............................        690,590         756,449
Interest expense ............................       (551,569)       (121,915)
Other income (expense), net .................            611           4,664
                                                   ---------      -----------
Income before provision for income taxes ....        139,632         639,198
Provision for income taxes ..................         55,589         255,678
                                                   ---------      -----------
Net income ..................................         84,043         383,520
Retained earnings (deficit)--beginning ......     (3,143,978)     (3,059,935)
                                                   ---------      -----------
Retained earnings (deficit)--ending .........    $(3,059,935)    $(2,676,415)
                                                   =========      ===========

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

                                     F-35


                 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
                            STATEMENTS OF CASH FLOWS



                                                                                              Three
                                                                            Year Ended    Months Ended
                                                                             June 30,     September 30,
                                                                               1995           1995
                                                                             ----------   -------------
                                                                                           (Unaudited)
                                                                                    
Cash Flow from Operating Activities:
 Cash received from customers and affiliates ...........................   $ 4,769,087     $1,271,441
 Cash paid for cost of sales ...........................................      (873,587)      (218,510)
 Cash paid for operating expenses ......................................    (2,693,965)      (805,400)
 Interest expense ......................................................      (550,807)      (113,677)
 Income taxes paid .....................................................            --           (457)
 Interest and dividends received .......................................         1,082          3,691
 Other income (expense) ................................................          (471)           973
                                                                              --------      -----------
   Net Cash from Operating Activities ..................................       651,339        138,061
                                                                              --------      -----------
Cash Flow from Investing Activities:
 Proceeds from escrow money deposit ....................................       154,988             --
 Proceeds from sale of assets and equipment ............................        12,117      1,686,742
 Payments for purchase of property and equipment .......................      (554,247)      (280,623)
 Payments (to) from employees for advances .............................        (9,635)         9,670
 Payments (to) from affiliates for advances ............................      (151,360)       (67,771)
 Payments for investments and intangibles ..............................        (3,494)          (726)
 Payments for deposits .................................................            --           (374)
                                                                              --------      -----------
   Net Cash from Investing Activities ..................................      (551,631)     1,346,918
                                                                              --------      -----------
Cash Flows from Financing Activities:
 Proceeds from borrowings ..............................................       272,330             --
 Repayment of debt .....................................................      (276,748)      (984,383)
                                                                              --------      -----------
   Net Cash from Financing Activities ..................................        (4,418)      (984,383)
                                                                              --------      -----------
Net change in cash and cash equivalents ................................        95,290        500,596
Cash and cash equivalents at beginning of period .......................        30,692        125,982
                                                                              --------      -----------
Cash and cash equivalents at end of period .............................   $   125,982     $  626,578
                                                                              ========      ===========
Reconciliation of net income to net cash provided by operating
  activities:
 Net income ............................................................   $    84,043     $  383,520
 Depreciation and amortization .........................................       510,831        115,653
 Deferred compensation .................................................         6,304             --
 (Gain) loss on sale of assets .........................................         4,045       (738,049)
 (Increase) decrease in accounts receivable ............................       (72,453)        59,076
 (Increase) in inventory ...............................................        (1,581)            --
 (Increase) decrease in prepayments and escrow .........................       (49,272)       104,361
 Increase (decrease) in accounts payable, accrued expenses and
    unearned income  ....................................................      114,290        (42,178)
 Decrease in deferred tax benefit ......................................        55,132        255,678
                                                                              --------      -----------
Net cash provided by operating activities ..............................   $   651,339     $  138,061
                                                                              ========      ===========


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

                                     F-36


                 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 1995

NOTE 1--ORGANIZATIONAL HISTORY OF THE COMPANY

   Data Management Business Records Storage, Inc. ("the Company"), organized
in 1985, provides data management and storage ("DMS") services in the
Atlanta, Georgia market. The Company currently has 1,447,024 cubic feet of
warehouse capacity.

   The Company is a wholly owned subsidiary of Outdoor West, Inc., a
management and holding company. Outdoor West, Inc. also owns two subsidiaries
which operate in the outdoor advertising business, Outdoor West, Inc. of
Georgia and Outdoor West, Inc. of Tennessee.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Method of Accounting

   The Company's financial statements are presented on the accrual basis.

Cash Equivalents

   For purposes of reporting cash flows, cash and cash equivalents include
money market accounts and highly liquid debt instruments purchased with a
maturity of three months or less.

   The Company maintains cash balances at several financial institutions.
Accounts at each institution are insured by the Federal Deposit Insurance
Corporation up to $100,000. Uninsured balances held in accounts at the
Company's primary lender aggregate $25,982 at June 30, 1995.

Allowance for Doubtful Trade Receivables

   Bad debts are accounted for on the reserve method. The allowance for
doubtful accounts at June 30, 1995 was $837.

Materials Inventory

   Materials inventory is valued at cost using the first-in, first-out
method.

Property and Depreciation

   Property and equipment are recorded at cost. Depreciation is provided on
the straight-line method over the estimated useful lives of the respective
assets. Maintenance and repairs are charged to expense as incurred; major
renewals and betterments are capitalized. When items of property and
equipment are sold or retired, the related cost and accumulated depreciation
are removed from the accounts and any gain or loss is recognized.

   Major classifications of property and equipment and their respective
depreciable lives are summarized below:

                                                          Years
                                                         ------
Buildings  ...........................................    15-40
Leasehold improvements  ..............................     5-40
Autos and trucks  ....................................      3-6
Equipment, construction  .............................     5-12
Shelving  ............................................       12
Computer equipment  ..................................        5
Office furniture and fixtures  .......................     5-10
Leased assets  .......................................     7-25

                                     F-37


                 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (Continued)

Intangible Assets

   In acquisitions of record storage businesses, agreements not to compete
and goodwill were part of the purchase price. Non-compete agreements are
amortized over the lives of the agreements ranging from ten to twenty years;
goodwill is amortized over forty years. Loan costs are amortized over the
lives of the loans.

Income Taxes

   The Company is included in a consolidated federal income tax return of an
affiliated group. Income tax expense in the Company's statement of operations
has been allocated based on the ratio that each member's separate taxable
income bears to the sum of the separate taxable incomes of all members having
taxable income for the year. Unused net operating losses and tax credits
available for carryforward to future years are detailed in Note 4.

NOTE 3--INTANGIBLE ASSETS

   Intangible assets as of June 30, 1995 consist of:

                                                    Accumulated
                                          Cost     Amortization       Net
                                        ---------    -----------   ---------
Non-compete agreements ............   $  698,000      $418,282     $279,718
Loan costs ........................      257,197       166,422       90,775
Goodwill ..........................      253,781        51,716      202,065
                                         -------      ---------      -------
   Total ..........................   $1,208,978      $636,420     $572,558
                                         =======      =========      =======

NOTE 4--FEDERAL INCOME TAXES

   The Company accounts for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards Number 109, "Accounting for
Income Taxes". Under the provisions of Statement No. 109, a current tax
liability or asset is recognized for the estimated taxes currently payable or
refundable for the current year and a deferred tax liability or asset is
recognized for the estimated future tax effects attributable to temporary
differences and carryforwards. Temporary differences represent the difference
between the book and tax bases of assets or liabilities that will result in
taxable or deductible amounts in future years when the asset or liability is
recovered or settled.

   Summary of the provision for income tax expense (benefit) for the year
ended June 30, 1995 is as follows:

Currently payable  ...................................    $   457
Deferred  ............................................     (4,595)
Utilization of operating loss carryforward  ..........     59,727
                                                            ------
Provision for income tax expense  ....................    $55,589
                                                            ======

   A reconciliation of income tax at the statutory rate to the Company's
effective rate is as follows:

Computed at the expected statutory rate  .............    38.0%
Officer's life insurance  ............................      .9
Amortization of goodwill  ............................     1.7
Deferred compensation  ...............................     1.7
Other differences  ...................................    (2.5)
                                                            ----
Effective rate  ......................................    39.8%
                                                            ====

                                     F-38


                 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 4--FEDERAL INCOME TAXES -- (Continued)

   For the year ended June 30, 1995, the Company was included in a
consolidated federal income tax return. The Company had carryovers as
follows:

   Carryover                        Amount      Expiration
    ---------------------------    ---------   -----------
   Net operating loss  ........   $2,109,000    2004-2009
   Contributions  .............        5,510    1996-1999

   The deferred tax benefit consisted of the following at June 30, 1995:

 Deferred tax benefit:
  Net operating loss carryforward  ..........    $801,420
  Other temporary differences  ..............       9,011
                                                   -------
                                                  810,431
  Valuation allowance  ......................       -0-
                                                   -------
  Net deferred tax benefit  .................    $810,431
                                                   =======

   Even though the Company has net operating loss carryforwards from fiscal
years ended June 30, 1985 through June 30, 1994, management believes that it
is more likely than not that it will generate taxable income sufficient to
realize the tax benefit associated with net operating loss and tax credit
carryforwards. This belief is based upon, among other factors, expectations
of continued growth in sales and changes in operations, as well as
consideration of available tax planning strategies. Specifically, the Company
has plans to consolidate operations in the DMS business by selling a
warehouse and moving files to an existing leased facility. The sale of the
warehouse facility is expected to result in a significant gain as the
facility's best use, due to its location and structure, is other than
warehouse space. Additionally, the Company has plans to sell the operating
assets of the DMS business at a significant gain. Management believes that no
valuation allowance is appropriate given the current estimates of future
taxable income. If the Company is unable to generate sufficient taxable
income in the future through operating results, or through the sales
discussed in Note 14, increases in the valuation allowance will be required
through a charge to income tax expense.

NOTE 5--CAPITAL STOCK

   Common stock of the Company has a par value of $0.10 per share; 5,000
shares were authorized, issued and outstanding.

NOTE 6--PROPERTIES AND FACILITIES

                                                             1995
                                                         ------------

Land  ................................................    $   364,657
Buildings  ...........................................      1,831,905
Leasehold improvements  ..............................        126,501
Autos and trucks  ....................................        355,032
Equipment  ...........................................        110,916
Shelving  ............................................      2,586,900
Computer equipment  ..................................        334,018
Office furniture and fixtures  .......................        128,503
Leased assets  .......................................        313,667
                                                            ----------
                                                            6,152,099
Less accumulated depreciation  .......................     (2,818,082)
                                                            ----------
                                                          $ 3,334,017
                                                            ==========

                                     F-39


                 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 7--NOTES PAYABLE



                                                                       Interest         Balance
 Maturity                Collateral and Repayment Terms                  Rate        June 30, 1995
- ----------     ---------------------------------------------------    ------------   --------------

                                                                              
6/96           Substantially all of assets of the Company except
               those subject to prior liens and the outstanding
               stock of the Company pari passu with other major
               lender. Interest due monthly and principal
               payments of approximately $60,000 due 9/30/95;              7.62%-
               12/31/95 and 3/31/96. Remaining principal balance           LIBOR+
               due 6/30/96.                                                 3.25%      $5,124,242

2/01-3/01      Certain assets of DMS on purchase money
               contracts, non-competes; due $16,667 monthly                10.00%       1,071,038

9/99           Real estate of DMS due $4,152 monthly                        9.00%         384,892

9/94-4/96      Rolling stock and equipment, principal and
               interest of approximately $9,000 due monthly               Various         102,533
                                                                                       ------------
                                                                                       $6,682,705
                                                                                       ============


   Principal maturities of notes payable for the five years ending after
June 30, 1995 are:

   6/30/96  .............................................    $ 5,353,941
   6/30/97  .............................................        195,314
   6/30/98  .............................................        196,611
   6/30/99  .............................................        522,343
   6/30/00  .............................................        272,365
   Maturities after 5 years  ............................        142,131
                                                               ----------
      Total maturities  .................................      6,682,705
   Less current maturities  .............................     (5,353,941)
                                                               ----------
      Long term maturities  .............................    $ 1,328,764
                                                               ==========

   At June 30, 1995, a substantial portion of the Company's notes payable
were due within one year. However, as discussed in Note 14, substantially all
of the operating assets of the Company were sold effective November 30, 1995.
The proceeds of this sale were sufficient to pay all of the Company's notes
payable.

Additional Restrictions Required by Long-Term Debt

   The Company, its parent and affiliates entered into loan agreements with
Massachusetts Mutual Life Insurance Company and National Westminster Bank
USA. The affiliated group is required to comply with certain restrictive
covenants which require, among other things, limitations on capital
expenditures and corporate overhead and a deadline for providing audited
financial statements. While the affiliated group was in violation of these
agreements, the two lenders have issued waivers for the covenant violations
as of June 30, 1995.

NOTE 8--TRANSACTIONS WITH RELATED PARTIES

   The Company has various lease and management agreements with affiliates.
The Company's parent, Outdoor West, Inc., charges the Company a management
fee which covers executive management supervision in addition to general
management services which include leasing, accounting, finance, personnel and
general supervision

                                     F-40


                 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.

                 NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 8--TRANSACTIONS WITH RELATED PARTIES -- (Continued)

responsibilities. Amounts included in the statement of operations with
respect to transactions with affiliates for June 30, 1995 are:

                                          Outdoor
                                           West,      The Eagle
                                            Inc.        Group
                                          ---------   ----------
Income
 Land Lease .........................    $      --    $   4,900
Expenses
Management fees .....................      398,000           --
Interest ............................           --       13,932
Building rental .....................           --      103,875
                                           -------      --------
Net transactions with related parties    $(398,000)   $(112,907)
                                           =======      ========

Receivables from and payables to affiliates as of June 30, 1995 are:

   Accounts receivable from:
     Outdoor West, Inc.  .........................   $316,551
                                                       =======
   Notes payable to:
     Outdoor West, Inc. of Georgia  ..............   $ 50,000
                                                       =======

   Charles H. Renfroe is Chairman of the Board of Directors of the Company.
The Eagle Group is a sole proprietorship, owned by Mr. Renfroe, which
operates a mini-warehouse project and leases office and warehouse space to
Outdoor West, Inc. of Georgia and to the Company. In addition, the Eagle
Group owns 19 parcels of land leased to Outdoor West, Inc. of Georgia and
Tennessee.

   In the opinion of management, all of the transactions with related parties
are at rates and terms equivalent to those that prevail in arm's-length
transactions.

NOTE 9--UNEARNED INCOME

   Unearned income represents primarily income billed one month in advance
for record storage. Most of this was recognized as income in July, 1995.

NOTE 10--OBLIGATIONS UNDER CAPITAL LEASE

   The Company is the lessee of property under capital leases with
expirations as disclosed in the following table. Assets and liabilities under
capital leases are recorded at the lower of the present value of the minimum
lease payments or the fair value of the asset. The assets are depreciated
over the lower of their related lease terms or their estimated productive
lives. Depreciation of assets under capital leases is included in
depreciation expense for 1995.

   Interest rates on capitalized leases vary and are imputed based on the
lower of the Company's incremental borrowing rate at the inception of each
lease or the lessor's implicit rate of return.

General Description of Capital Leases

                                            June 30,
                                              1995         Termination
   Leased Property                          Balance           Dates
   ---------------                          -----------   ----------------
   Equipment .........................      $182,457    10/05/96-12/19/99
                                            =========


                                     F-41


                 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 10--OBLIGATIONS UNDER CAPITAL LEASE -- (Continued)

Net Obligations Under Capital Leases at June 30, 1995:

                                      Capital     Less:      Balance
                                       Lease     Imputed      Sheet
                                      Balance    Interest    Values
                                       -------    -------   --------
   Current liabilities  ...........   $ 84,078   $15,836    $ 68,242
                                         =====      =====      ======
   Long-term liabilities  .........   $129,366   $15,150    $114,216
                                         =====      =====      ======

   Gross Assets and Accumulated Depreciation

                                          June 30, 1995
                                          --------------
   Equipment and automobiles .........       $313,667
   Less accumulated depreciation .....        (68,721)
                                            ------------
                                             $244,946
                                            ============

Minimum Future Lease Payments

   Years Ended June 30
   -------------------
     1996  ..............................................   $ 84,078
     1997  ..............................................     73,109
     1998  ..............................................     30,229
     1999  ..............................................     17,352
     2000  ..............................................      8,676
                                                               ------
       Total minimum lease payments  ....................    213,444
   Less imputed interest  ...............................     30,986
                                                               ------
   Present value of net minimum lease payments  .........   $182,458
                                                               ======

NOTE 11--OBLIGATIONS UNDER OPERATING LEASES

   The Company leases real estate under operating leases expiring in various
years through January 31, 2008.

   Minimum future rental payments under non-cancellable operating leases
having remaining terms in excess of one year as of June 30, 1995 for each of
the next five years in the aggregate are:

   Years Ended June 30                                        Amount
    ------------------                                       ----------
     1996  ..............................................   $  745,918
     1997  ..............................................      528,299
     1998  ..............................................      425,770
     1999  ..............................................      428,208
     2000  ..............................................      418,197
     Subsequent to 2000  ................................    3,373,556
                                                               --------
                                                            $5,919,948
                                                               ========

   Rental expense under all operating leases for the fiscal year ended
June 30, 1995:

   Rental Expense  ......................................   $491,139
                                                               ======

   The Company leases real estate from affiliates. The leases are classified
as operating leases and provide for minimum annual rentals of $103,875 with
expirations ranging from February 28, 1996 to January 6, 2000. See Note 8.

                                     F-42


                 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 12--COMMITMENTS AND CONTINGENCIES

   The Company began a self-insured program for its group health plan
January 1, 1990. The Company is liable for claims up to $20,000 per employee
annually and aggregate claims up to $154,861 annually. Self-insurance costs
are accrued based upon the aggregate of the liability for reported claims and
an actuarially determined estimated liability for claims incurred but not
reported.

NOTE 13--PROFIT SHARING PLAN

   Effective January 1, 1994, the Company implemented a profit sharing plan
described in Internal Revenue Code Section 401(k). All employees of the
Company are eligible to participate once they meet the eligibility and
participation requirements of the plan. Employees become eligible for
participation in the plan after attaining age 21 and completing 12 months of
service.

   Under the terms of the plan, participants may contribute a portion of
their compensation to the plan on a tax deferred basis. Employee
contributions may not exceed the annual limitations established by the
Treasury. The Company matches 10% of the first 6% of compensation contributed
by each participant. During the year ended June 30, 1995 the cost of the plan
to the Company totaled $7,128.

NOTE 14--SUBSEQUENT EVENTS

   On July 31, 1995 the Company sold a warehouse and distribution facility.
Proceeds from the sale were $1,850,000. The transaction resulted in a gain of
approximately $740,000 which will be included in net income from operations
for the fiscal year ending June 30, 1996.

   On December 1, 1995, the Company sold, effective November 30, 1995,
substantially all of its operating assets.

                                     F-43


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners Nashville Vault Company, Ltd.:

We have audited the accompanying balance sheet of Nashville Vault Company,
Ltd. (a Tennessee limited partnership) as of December 31, 1995, and the
related statements of income, partners' capital and cash flows for the year
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. 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 audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nashville Vault Company,
Ltd. at December 31, 1995, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted
accounting principles.

                                                       Geo. S. Olive & Co. LLC

Indianapolis, Indiana
January 16, 1996

                                     F-44


                         NASHVILLE VAULT COMPANY, LTD.
                      (A TENNESSEE LIMITED PARTNERSHIP)
                                BALANCE SHEET

                                             December 31,
                                                 1995
                                             ------------
                  ASSETS
Current assets:
Cash and cash equivalents ...............     $  275,806
Accounts receivable--trade ..............        180,609
Prepaid expenses ........................             60
                                               ----------
  Total current assets ..................        456,475
Property and equipment:
Building and improvements ...............      1,148,652
Furniture and equipment .................        269,798
Vehicles ................................         88,386
                                               ----------
                                               1,506,836
Accumulated depreciation and amortization       (833,520)
                                               ----------
                                              $  673,316
                                               ----------
                                              $1,129,791
                                               ==========
               LIABILITIES
Current liabilities:
Accounts payable and accrued expenses ...     $  104,662
Deferred revenue ........................         43,253
Convertible notes payable ...............        325,000
                                               ----------
  Total current liabilities .............        472,915
PARTNERS' CAPITAL .......................        656,876
                                               ----------
                                              $1,129,791
                                               ==========

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

                                     F-45


                         NASHVILLE VAULT COMPANY, LTD.
                        (A TENNESSEE LIMITED PARTNERSHIP)
                               STATEMENT OF INCOME

                                                            Year Ended
                                                           December 31,
                                                               1995
                                                         ----------------
Revenue:
  Storage  ...........................................      $  636,302
  Service and storage material sales  ................         738,338
                                                            --------------
     Total revenue  ..................................      $1,374,640
Operating expenses:
  Cost of sales (excluding depreciation)  ............         499,389
  Selling, general and administrative expenses  ......         326,674
  Depreciation and amortization  .....................         122,021
                                                            --------------
     Total operating expenses  .......................         948,084
                                                            --------------
Operating income  ....................................         426,556
Other income (expense):
  Interest income  ...................................          18,994
  Interest expense  ..................................         (80,022)
                                                            --------------
                                                               (61,028)
                                                            --------------
Net income  ..........................................      $  365,528
                                                            ==============
            STATEMENT OF PARTNERS' CAPITAL

Balance, Beginning of Year  ..........................      $  306,499
  Net income  ........................................         365,528
  Cash distributions  ................................         (15,151)
                                                            --------------
Balance, End of Year  ................................      $  656,876
                                                            ==============

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

                                     F-46


                         NASHVILLE VAULT COMPANY, LTD.

                      (A TENNESSEE LIMITED PARTNERSHIP)

                           STATEMENT OF CASH FLOWS

                                                                   Year Ended
                                                                  December 31,
                                                                      1995
                                                                ----------------
Operating Activities:
  Net income ...............................................       $ 365,528
  Items not affecting net cash provided by operating
    activities:
     Depreciation and amortization .........................         122,021
     Gain on disposal of property and equipment ............            (141)
     Changes in other items:
        Accounts receivable--trade .........................            (333)
        Prepaid expenses ...................................          16,761
        Accounts payable and accrued expenses ..............          41,230
        Deferred revenue ...................................          (2,012)
                                                                  --------------
        Net cash provided by operating activities ..........       $ 543,054
Investing Activities:
  Purchase of property and equipment .......................         (30,908)
  Proceeds from sale of property and equipment .............           2,300
  Proceeds from sale of investments ........................         310,000
  Purchase of investments ..................................        (210,000)
                                                                  --------------
        Net cash provided by investing activities ..........          71,392
Financing Activities:
  Payments on debt .........................................        (489,969)
  Cash distribution to partners ............................         (15,151)
                                                                  --------------
        Net cash used by financing activities ..............        (505,120)
                                                                  --------------
Net increase in Cash and Cash Equivalents ..................         109,326
Cash and Cash Equivalents, Beginning of Year ...............         166,480
                                                                  --------------
Cash and Cash Equivalents, End of Year .....................       $ 275,806
                                                                  ==============
Supplemental Cash Flows Information:
  Cash paid during the year for interest ...................       $  80,022
  Equipment acquired with installment note .................          48,854

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

                                     F-47


                         NASHVILLE VAULT COMPANY, LTD.
                        (A TENNESSEE LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS

1. Nature of Operations

   Nashville Vault Company, Ltd. (the "Partnership") is a limited partnership
formed pursuant to the Uniform Limited Partnership Act of Tennessee on
February 21, 1985 to renovate, own and operate a maximum security facility
containing safe deposit boxes and secured storage vaults in Nashville.

   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statement and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

2. Summary of Significant Accounting Policies

Cash Equivalents

   The Partnership considers all liquid investments with original maturities
of three months or less to be cash equivalents. At December 31, 1995, cash
equivalents consisted of savings accounts. From time to time during the year,
the Partnership's cash accounts exceeded federally insured limits.

Property and Equipment

   Property and equipment are carried at cost, and such cost is being
recovered using straight-line and accelerated methods of depreciation, with
useful lives of 15 to 31.5 years for building and improvements, 5 to 7 years
for furniture and equipment, and 5 years for vehicles.

Revenue Recognition

   Revenue is recognized when earned. Revenue billed in advance is shown as
deferred revenue.

Advertising Costs

   The Partnership expenses advertising costs as incurred. Advertising costs
were $6,787 in 1995.

Income Tax Status

   Since the entity is a partnership, it is not subject to federal and state
income taxes and, accordingly, no provision for federal and state taxes on
income is required. The partners include their allocable share of the net
income or loss in their respective income tax returns.

3. Convertible Notes Payable

   The 12% convertible notes, payable to certain limited partners, are
convertible into limited partnership units at a conversion price of $12,500
for one limited partnership unit. On January 1, 1996, all convertible notes
were converted into 26 limited partnership units.

4. Employee Benefits

   On January 1, 1994, the Partnership established a 401(k) defined
contribution plan for the benefit of substantially all of its employees,
which allows for both employee and Partnership contributions. The Partnership
contribution consists of a matching contribution of 25 percent of employee
contributions, up to 3.75 percent of eligible employee compensation. The
Partnership contribution to the plan was $3,924 for 1995. This plan was
terminated on December 31, 1995.

                                     F-48


                         NASHVILLE VAULT COMPANY, LTD.
                (A TENNESSEE LIMITED PARTNERSHIP) -- (Continued)

5. Partnership Agreement

   The Agreement of Limited Partnership (as amended) specifies the allocation
of profits, losses, and distributions to be allocated 1% to the General
Partner and 99% to the Investor Limited Partners.

   Under the agreement, the limited partners are not liable for any debts of
the Partnership nor are they required to make any additional capital
contributions.

6. Related Party Transactions

   The Partnership leases the ground on which its building is located from
family members of stockholders of the General Partner and pays real estate
taxes and other related expenses under the lease which expires November 30,
2000. On January 1, 1996, the Partnership exercised an option to purchase the
land for $250,000. Rent expense in 1995 was $29,000.

   The General Partner, USA Vault Corporation, is guaranteed a monthly
management fee for the operation of the Partnership. The fee begins at $1,000
per month increasing to $2,000 and $3,000 monthly when annual gross revenue
exceeds $200,000 and $300,000, respectively. The Partnership incurred
management fees to the General Partner of $32,000 in 1995.

   The Partnership pays fees to a company owned by the president of USA Vault
Corporation for accounting and bookkeeping services. Fees paid totaled
$12,000 for 1995.

7. Major Customer

   Sales from a major customer approximated 10% of sales and 19% of accounts
receivable at December 31, 1995.

8. Subsequent Event

   On January 4, 1996, the Partnership sold, effective January 1, 1996,
substantially all of its operating assets for approximately $3,450,000 to
Iron Mountain Record Management, Inc.

                                     F-49


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Directors and Stockholders
 Data Archive Services, Inc. and Data Archive Services of Miami, Inc.:



We have audited the accompanying combined balance sheet of Data Archive
Services, Inc. and Data Archive Services of Miami, Inc. (Florida
Corporations) as of May 31, 1996, and the related combined statements of
operations and retained earnings, and cash flows for the year then ended.
These combined financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these combined
financial statements based on our audits.


We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the combined financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the combined
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 combined financial statements referred to above present
fairly, in all material respects, the financial position of Data Archive
Services, Inc. and Data Archive Services of Miami, Inc. as of May 31, 1996,
and the results of their operations and their cash flows for the year then
ended, in conformity with generally accepted accounting principles.



The combined financial statements include the financial statements of Data
Archive Services, Inc. and Data Archive Services of Miami, Inc., which are
related through controlled ownership and management.


                                      Perless, Roth, Jonas & Hartney, CPAs, PA

Miami, Florida
July 30, 1996
(except for Note 11,
for which the date
is August 9, 1996)

                                     F-50


                          DATA ARCHIVE SERVICES, INC.
                             COMBINED BALANCE SHEET
                                  MAY 31, 1996

                    ASSETS
Current Assets:
Cash ........................................   $  155,435
Accounts Receivable .........................      291,711
Due from Related Party ......................       19,379
Inventories .................................        4,061
Prepaid Expenses ............................       45,673
Income Taxes Receivable .....................       34,485
                                                   -------
   Total Current Assets .....................      550,774
Property, Plant and Equipment:
Shelving ....................................      565,513
Office Furniture and Equipment ..............      217,686
Vaults ......................................      110,139
Leasehold Improvements ......................       61,914
Vehicle .....................................       18,237
                                                   -------
                                                   973,489
Less: Accumulated Depreciation ..............     (490,025)
                                                   -------
   Property, Plant and Equipment, Net .......      483,464
Other Assets ................................       46,730
                                                   -------
   Total Assets .............................   $1,080,938
                                                   =======
     LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current Portion of Long-Term Liabilities ....   $  129,407
Accounts Payable ............................      251,207
Accrued Expenses ............................      126,909
Loan Payable to Stockholder .................      165,154
Deferred Revenue ............................      170,140
Income Taxes Payable ........................        8,365
                                                   -------
   Total Current Liabilities ................      851,182
Long-Term Liabilities:
Lease Obligation Payable ....................        7,117
Installment Obligations Payable .............      145,298
Line of Credit Payable to Bank ..............      100,000
Less: Current Portion of Long-Term
  Liabilities  ...............................    (129,407)
                                                   -------
   Total Long-Term Liabilities ..............      123,008
Stockholders' Equity:
Capital Stock ...............................       11,000
Additional Paid-in Capital ..................       50,050
Retained Earnings ...........................       45,698
                                                   -------
   Total Stockholders' Equity ...............      106,748
                                                   -------
   Total Liabilities and Stockholders' Equity   $1,080,938
                                                   =======

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

                                     F-51


                          DATA ARCHIVE SERVICES, INC.
             COMBINED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
                         FOR THE YEAR ENDED MAY 31, 1996

Revenues:
Storage  .............................................    $1,106,051
Service and Storage Material Sales  ..................       609,955
                                                            ---------
  Total Revenues  ....................................     1,716,006
Operating Expenses:
Cost of Sales (Excluding Depreciation)  ..............       962,801
Selling, General and Administrative  .................       919,022
Depreciation and Amortization  .......................        38,285
                                                            ---------
  Total Operating Expenses  ..........................     1,920,108
                                                            ---------
Operating Loss  ......................................      (204,102)
Interest Expense, Net  ...............................        (3,177)
Loss Before Income Tax Benefit  ......................      (207,279)
Income Tax Benefit  ..................................         1,190
                                                            ---------
Net Loss  ............................................      (206,089)
Retained Earnings--Beginning of Year  ................       251,787
                                                            ---------
Retained Earnings--End of Year  ......................    $   45,698
                                                            =========

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

                                     F-52



                          DATA ARCHIVE SERVICES, INC.

                       COMBINED STATEMENT OF CASH FLOWS

                       FOR THE YEAR ENDED MAY 31, 1996

Cash Flows From Operating Activities:
Net Loss  ............................................    $(206,089)
Adjustments to Reconcile Net Loss to Net  
 Cash Provided by Operating Activities:
 Depreciation and Amortization  ......................       38,285
 Loss on Abandonment of Assets  ......................       26,725
 Increase in Accounts Receivable  ....................      (82,260)
 Increase in Inventories  ............................       (1,146)
 Increase in Prepaid Expenses  .......................       (6,538)
 Increase in Income Taxes Receivable  ................      (34,485)
 Decrease in Due from Related Party  .................       49,793
 Decrease in Other Assets  ...........................       29,875
 Increase in Accounts Payable  .......................      166,391
 Increase in Accrued Expenses  .......................       72,577
 Increase in Deferred Revenue  .......................       52,710
 Increase in Income Taxes Payable  ...................        6,624
                                                            ---------
   Total Adjustments  ................................      318,551
                                                            ---------
   Net Cash Provided by Operating Activities  ........      112,462
                                                            ---------
Cash Flows From Investing Activities:
Property, Plant and Equipment Expenditures  ..........     (369,522)
Cash Flows From Financing Activities:
Advances from Stockholder  ...........................      288,050
Repayments to Stockholder  ...........................     (122,896)
Proceeds from Line of Credit  ........................      100,000
Proceeds from Lease and Installment Obligations  .....      150,337
Repayments on Lease and Installment Obligations  .....      (48,190)
                                                            ---------
   Net Cash Provided by Financing Activities  ........      367,301
                                                            ---------
Net Increase in Cash  ................................      110,241
Cash at Beginning of Year  ...........................       45,194
                                                            ---------
Cash at End of Year  .................................    $ 155,435
                                                            =========
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year for Interest  ..............    $   7,485
                                                            =========
Cash Paid During the Year for Income Taxes  ..........    $  13,443
                                                            =========

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


                                     F-53


                          DATA ARCHIVE SERVICES, INC.
                     NOTES TO COMBINED FINANCIAL STATEMENTS
                                  MAY 31, 1996

NOTE 1--NATURE OF BUSINESS


   The accompanying financial statements represent the combined accounts of
Data Archive Services, Inc. and Data Archive Services of Miami, Inc.
(Affiliate). Data Archive Services, Inc. and Affiliate (the Companies) are
records management companies providing storage and related services primarily
in Dade, Broward and Palm Beach Counties.


NOTE 2--SIGNIFICANT ACCOUNTING POLICIES

   a. Principles of Combination


   The financial statements reflect the financial position and results of
operations of the Companies on a combined basis. All significant intercompany
balances and transactions have been eliminated.


   b. Property and Equipment

   Property and equipment are recorded at cost and depreciated using the
straight-line and declining balance methods with the following useful lives:

                                      Years
                                       ------
Leasehold Improvements                14-20
Shelving                               8-33
Vaults and Security Systems            8-10
Office Furniture and Equipment          5-7
Vehicle                                   6

   Expenditures for repairs and maintenance are charged to expense as
incurred. Expenditures for major renewals and betterments, which
significantly extend the useful lives of existing property and equipment, are
capitalized and depreciated. Upon retirement or disposition of property and
equipment, the cost and related accumulated depreciation are removed from the
accounts and any resulting gain or loss is recognized in income.

   c. Allowance for Doubtful Trade Receivables

   Bad debts are accounted for on the reserve method. As at May 31, 1996, no
reserve for doubtful accounts was required.

   d. Revenue Recognition

   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 for customers when storage
fees are billed in advance are accounted for as deferred revenue and
amortized over the applicable period. These amounts are included in deferred
revenue in the accompanying financial statements.

   e. Inventories

   Inventories are carried at the lower of cost using the first-in, first-out
basis, or market and are comprised primarily of boxes.

   f. Cash and Cash Equivalents


   The Companies define cash and cash equivalents to include cash on hand and
cash invested in short-term securities which have original maturities of less
than 90 days.



                                     F-54


                          DATA ARCHIVE SERVICES, INC.
              NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)

g. Financial Statements Estimates

   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions which affect the reporting of assets and liabilities as of the
dates of the financial statements and revenues and expenses during the
reporting period. Actual results may differ from these estimates.

h. Income Taxes

   The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS No. 109), "Accounting For Income
Taxes". Under SFAS No. 109, an asset and liability approach is required. Such
approach results in the recognition of deferred tax assets and liabilities
for the expected future tax consequences of temporary differences between the
book carrying amounts and the tax basis of assets and liabilities.

NOTE 3--LONG-TERM LIABILITIES



                                                                              
   Long-Term Liabilities consist of the following:
   Line of Credit with Bank--$100,000
     Line of Credit Secured by Substantially all of the Assets. Interest,
     Paid Monthly, Calculated at 1% above Published Prime. Principal
     Balance is due and Payable March 22, 1997  ............................     $100,000
   Financing, Primarily for Shelving
     Principal and Interest Calculated at 12.27%, Paid in Monthly                 
     Installments of $3,184  ...............................................      140,552(A)
   Other Financing for Shelving, Equipment, and a Vehicle. Principal and
     Interest Ranging from 9.82% to 13.19%, Paid in Monthly Installments of
     $734  .................................................................       11,863
                                                                                 ----------
   Long-Term Liabilities ..................................................       252,415
   Less: Current Portion ..................................................       129,407
                                                                                 ----------
   Long-Term Liabilities, Net of Current Portion ..........................      $123,008
                                                                                 ==========


   The scheduled repayment of long-term liabilities is as follows:



   Year                                                                      Amount
   -----                                                                    ---------
                                                                         
   1997  ...............................................................    $129,407
   1998  ...............................................................      27,891
   1999  ...............................................................      30,144
   2000  ...............................................................      32,000
   2001  ...............................................................      32,973
                                                                              -------
                                                                            $252,415
                                                                              =======


   (A) This obligation is non-cancelable with no offset. Therefore the payoff
       amount, if Data Archive Services, Inc. cancels this agreement, is
       based upon the remaining payments. The cancellation amounts versus the
       outstanding indebtedness for the 12 months ended May 31 are as
       follows:

                        Number
                          of
                      Remaining   Outstanding     Cancellation
   Year                Payments   Indebtedness    Indebtedness
    ----------------    -------    -----------   -------------
   1996                   59        $140,552        $187,856
   1997                   47         118,363         149,648
   1998                   35          93,294         111,440
   1999                   23          64,971          73,232
   2000                   11          32,971          35,024

                                     F-55


                          DATA ARCHIVE SERVICES, INC.
              NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)

NOTE 4--CONTINGENCIES AND COMMITMENTS

Obligations Under Operating Leases


   The Companies presently lease all their facilities under various operating
leases. Several of these leases have renewal options of three (3) years and
have consumer price index escalation clauses. The Companies also lease
computer equipment and warehouse equipment under operating leases expiring at
various dates within a two (2) year period. Rent expense for the year ended
May 31, 1996 is as follows:


 Rent--Premises  ......................................   $432,742
                                                            =======
 Rent--Computer and Warehouse Equipment  ..............   $ 91,537
                                                            =======

   Minimum future lease payments for the 12 months ended May 31, are as
follows:

                                                         Lease
                                                        Computer
                                                          and
                                            Lease      Warehouse
   Year                                    Premises    Equipment
   -----------------------------------     ---------   ----------
   1997 ..............................   $  358,263     $ 79,658
   1998 ..............................      356,291       32,840
   1999 ..............................      356,291           --
   2000 ..............................      356,291           --
   2001 ..............................      356,291           --
   Thereafter ........................    3,767,123           --
                                            -------      --------
                                         $5,550,550     $112,498
                                            =======      ========


   Certain of the operating leases contracted for by the companies are
contracted with the controlling shareholder of the Companies. This is
discussed more fully in Note 7 "Transactions With Related Parties".


Concentration of Credit Risk


   The Companies maintain their bank accounts with FDIC financial
institutions. As at May 31, 1996, the cash balance in one (1) of the accounts
exceeded the insured limits by approximately $42,000.


NOTE 5--PROFIT SHARING PLAN


   Effective January 1, 1995, the Companies implemented a profit sharing plan
described in Internal Revenue Code Section 401(k). All employees of the
Companies are eligible to participate once they meet the eligibility and
participation requirements of the plan. Employees become eligible for
participation in the plan after attaining age 21 and completing 12 months of
service.


   Under the terms of the plan, participants may contribute a portion of
their compensation to the plan on a tax deferred basis. Employee
contributions may be made with a maximum deferral up to 15 percent of
compensation, not to exceed the annual limitations established by the
Treasury.


   The Companies are required to make contributions to the plan, but the
amount of the contribution is determined by the Companies. During the year
ended May 31, 1996, the Companies contributed $12,013 to the plan.


NOTE 6--CAPITAL STOCK

   Common stock of Data Archive Services, Inc. has a par value of $1.00 per
share; 1,000 shares are authorized, issued and outstanding. Common stock of
Data Archive Services of Miami, Inc. (Affiliate) has a par value of $0.01 per
share; 1,000,000 shares are authorized, issued and outstanding. There have
been no changes in the capital stock of both companies during the fiscal year
ended May 31, 1996.

                                     F-56


                          DATA ARCHIVE SERVICES, INC.

            NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)

NOTE 7--TRANSACTIONS WITH RELATED PARTIES


   P. Douglas McCraw, chief operating officer and controlling shareholder of
the Companies has entered into certain lease and loan arrangements with the
Companies. The Companies have entered into various lease and loan
arrangements either through Mr. McCraw or other companies controlled by Mr.
McCraw.


   These lease and loan arrangements are as follows:



                                                                 Number
                                                                   of
                                                    Lease        Months
                                                   Expense     Remaining      Total
                                                   May 31,         on         Lease
   Lessor and Description                            1996        Lease      Obligation
    ------------------------------------------    -----------    -------   -----------
                                                                  
   DAS Imaging Systems, Inc.
      Computer Equipment .....................     $73,140         17       $  103,615
   P. Douglas McCraw
      Ft. Lauderdale Storage Facility ........      22,366        238        4,478,446
   Galt Ocean Mile Partnership
      Ft. Lauderdale Storage Facility ........      27,943         87          120,147
   P. Douglas McCraw                                              Month
      Lower Matecumbe Facility ...............                      to
                                                    10,845        Month             --
   P. Douglas McCraw
     Miami Storage Facility ..................      84,241         84          628,766
   P. Douglas McCraw
      Miami Storage Facility .................      28,603        160          321,221
   Receivables from and Payables to Related
     Parties:
     Loan Receivable from:
      DAS Imaging Systems, Inc.  .............                              $   19,379
                                                                              =========
     Loan Payble to:
      P. Douglas McCraw--Non-Interest
       Bearing Loan  .........................                              $  165,154
                                                                              =========
     Amounts Included in Accounts Payable:
      P. Douglas McCraw--Lease--Miami
       Storage Facilities  ...................                              $   27,559
      Galt Ocean Mile Partnership--Lease
       Ft. Lauderdale Storage Facility  ......                                   7,308
      P. Douglas McCraw--Lease--Other
       Facilities  ...........................                                   4,518
                                                                              ---------
                                                                            $   39,385
                                                                              =========


NOTE 8--INCOME TAXES

   The income tax benefit (provision) consisted of the following:

   Current Federal Credit  ..............................    $ 24,615
   Current Federal Provision  ...........................     (18,532)
   Current State Provision  .............................      (4,893)
                                                               -------
      Total Current Credit  .............................    $  1,190
                                                               =======

   At May 31, 1996, there are no temporary differences which would give rise
to deferred tax assets and liabilities except as follows. Data Archive
Services, Inc. has a federal operating loss carryforward of $167,621, and a
state

                                     F-57


                          DATA ARCHIVE SERVICES, INC.
              NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)


operating loss carryforward of $318,682, which will expire in 2011.
Realization of the deferred tax asset of $75,000 associated with the loss
carryforwards is dependent upon the future earnings of this company. Because
of the uncertainty of realization of this asset, a valuation allowance has
been recognized for the entire deferred tax asset.


NOTE 9--FAIR VALUE OF FINANCIAL INSTRUMENTS


   The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosures About Fair Value of Financial Instruments." These estimates have
been determined by the Companies using available market information and
appropriate valuation techniques based on information as of May 31, 1996. As
considerable judgment is inherent in the development of these estimates, they
are not necessarily indicative of the amounts that the companies could
realize in the current market exchange.


   The recorded amounts and fair values are as follows:

                                                         May 31, 1996
                                                     --------------------
                                                    Recorded      Fair
                                                      Amount      Value
                                                      -------   ---------
   Assets:
    Cash ........................................   $155,435    $155,435
    Due from Related Party ......................     19,379      19,379
   Liabilities:
    Current Portion of Long-Term Liabilities ....    129,407     129,407
    Long-Term Liabilities .......................    123,008     123,008

NOTE 10--SIGNIFICANT COMPONENTS OF COMBINED FINANCIAL STATEMENTS

   The significant components of the entities, before elimination, comprising
the combined financial statements are as follows:

                                                       Data
                                                     Archive      Data Archive
                                                    Services,      Services of
                                                       Inc.        Miami, Inc.
                                                    -----------   ------------
   Total Assets  ...............................    $  953,885      $255,729
                                                      =========      ==========
   Total Liabilities  ..........................    $1,000,747      $102,119
                                                      =========      ==========
   Total Stockholders'
      Equity (Deficit)  ........................    $  (46,862)     $153,610
                                                      =========      ==========
   Net Income (Loss)  ..........................    $ (276,619)     $ 70,530
                                                      =========      ==========

NOTE 11--SUBSEQUENT EVENTS


   Effective August 1, 1996, all of the outstanding capital stock of the
Companies was sold to Iron Mountain Records Management, Inc. All debt of the
Companies will be repaid from the proceeds of the sale.



                                     F-58


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of Iron Mountain Incorporated:

   We have audited the accompanying balance sheet of Data Storage Systems,
Inc. (a California corporation) as of December 31, 1995, and the related
statements of operations, shareholders' deficit and cash flows for the year
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 audit.

   We conducted our audit in accordance with generally accepted auditing
standards. 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 audit provides a
reasonable basis for our opinion.

   In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Data Storage Systems,
Inc. as of December 31, 1995 and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted
accounting principles.

                                                           Arthur Andersen LLP

San Jose, California
May 17, 1996

                                     F-59


                           DATA STORAGE SYSTEMS, INC.
                                BALANCE SHEET
                              DECEMBER 31, 1995

                                     Assets
Current Assets:
Cash .........................................    $   185,278
Accounts receivable ..........................        243,923
Prepaid expenses and other ...................         23,624
                                                    ----------
    Total current assets .....................        452,825
Property and Equipment:
Equipment and improvements ...................      1,020,762
Less--Accumulated depreciation ...............        828,074
                                                    ----------
Net property and equipment ...................        192,688
Other Assets .................................         12,297
                                                    ----------
    Total assets .............................    $   657,810
                                                    ==========
                      Liabilities and Shareholders' Deficit
Current Liabilities:
Accounts payable .............................    $    27,822
Accrued liabilities ..........................         70,876
Deferred revenue .............................         65,504
Notes payable ................................        993,402
Accrued interest .............................        313,875
                                                    ----------
    Total current liabilities ................      1,471,479
                                                    ----------
Shareholders' Deficit:
Series A preferred stock, no par value-
  Authorized--1,000,000 shares
  Outstanding--1,000,000 shares  ..............     1,000,000
Series B preferred stock, no par value-
  Authorized--500,000 shares
  Outstanding--266,666 shares  ................       365,333
Series C preferred stock, no par value-
  Authorized--2,000,000 shares
  Outstanding--1,083,334 shares  ..............       650,000
Common stock, no par value-
  Authorized--137,000,000 shares
  Outstanding--110,756,630 shares  ............     1,178,967
Accumulated deficit ..........................     (4,007,969)
                                                    ----------
    Total shareholders' deficit ..............       (813,669)
                                                    ----------
    Total liabilities and shareholders'
  deficit  ....................................   $   657,810
                                                    ==========

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

                                     F-60


                           DATA STORAGE SYSTEMS, INC.
                             STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1995

Revenues:
Storage  .............................................   $  739,177
Service and storage material sales  ..................      586,673
                                                            --------
                                                          1,325,850
                                                            --------
Operating Expenses:
Cost of sales (excluding depreciation)  ..............      556,092
Selling, general, and administrative  ................      316,905
Depreciation and amortization  .......................      131,314
                                                            --------
    Total operating expenses  ........................    1,004,311
                                                            --------
Operating Income  ....................................      321,539
Interest Expense  ....................................      127,477
                                                            --------
Net income  ..........................................   $  194,062
                                                            ========

                        STATEMENT OF SHAREHOLDERS' EQUITY
                      FOR THE YEAR ENDED DECEMBER 31, 1995



                                              Series     Series
                                 Series A       B          C                                       Total
                                Preferred  Preferred  Preferred      Common     Accumulated    Shareholders'
                                  Stock       Stock      Stock       Stock        Deficit         Deficit
                                 ---------    -------    -------    ---------    -----------   -------------
                                                                             
Balance at December 31, 1994   $1,000,000   $365,333   $650,000   $   79,333    $(4,202,031)    $(2,107,365)
  Issuance of common stock
    on conversion of notes
    payable  ................          --         --         --    1,099,634             --       1,099,634
  Net income ...............           --         --         --           --        194,062         194,062
                                  -------      -----      -----      -------      ---------      -----------
Balance at December 31, 1995   $1,000,000   $365,333   $650,000   $1,178,967    $(4,007,969)    $  (813,669)
                                  =======      =====      =====      =======      =========      ===========


                                     F-61


                           DATA STORAGE SYSTEMS, INC.
                             STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1995

 Cash Flows from Operating Activities:
  Net income ....................................................    $ 194,062
  Adjustments to reconcile net income to net cash
      used in operating activities--
      Depreciation and amortization  .............................      69,575
      Net changes in assets and liabilities-
        Accounts receivable  .....................................       2,361
       Inventory  ...............................................       (3,300)
       Prepaids and other  ......................................       12,337
       Accounts payable  ........................................     (142,056)
       Accrued liabilities  .....................................     (179,529)
                                                                       --------
         Net cash used in operating activities ..................      (46,550)
                                                                       --------
Cash Flows from Financing Activities:
  Proceeds from notes payable ...................................      206,258
                                                                       --------
Net Increase in Cash ............................................      159,708
Cash at Beginning of Period .....................................       25,570
                                                                       --------
Cash at End of Period ...........................................    $ 185,278
                                                                      ========
Supplemental Disclosure of Noncash Financing Activities:
  The Company issued 109,963,296 shares of common stock on conversion
    of notes payable amounting to $1,099,634


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

                                     F-62


                           DATA STORAGE SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1995

1. ORGANIZATION OF THE COMPANY:

Data Storage Systems, Inc. (a California corporation) operates a
records-storage warehouse in San Jose, California.


The Company entered into a merger agreement with Iron Mountain Records
Management, Inc. in November 1995. The merger was effective as of February 29,
1996. Iron Mountain is the surviving entity and the Company became a wholly
owned subsidiary of Iron Mountain.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Cash

   For purposes of the statements of cash flows, the Company considers all
highly liquid investments with an original maturity of 90 days or less to be
cash equivalents.

Equipment and Improvements

   Equipment and improvements are stated at cost and depreciated using the
straight-line method over the estimated useful lives (ranging from three to
seven years) or over the shorter of the estimated useful life of the asset or
its lease term for leasehold improvements. Equipment and improvements consist
of the following:

       Warehouse equipment  .................................   $  931,814
       Office equipment  ....................................       68,006
       Improvements  ........................................       20,942
                                                                   --------
                                                                $1,020,762
                                                                   ========

Revenue Recognition

   Revenue is recognized ratably over the time that the Customer's records
are in storage. Customers are billed one month in advance for storage and in
arrears for service. Advance billings for storage are recorded as deferred
revenue.

Income Taxes

   The Company accounts for income taxes pursuant to the provisions of
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" (SFAS 109). SFAS 109 requires recognition of deferred tax liabilities
and assets for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method,
deferred tax liabilities and assets are determined using the current
applicable enacted tax rate and provisions of the enacted tax law.

Use of Estimates

   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

3. NOTES PAYABLE AND RELATED PARTIES:


   At December 31, 1995, the Company had several notes payable totaling
$993,402 to shareholders with varying interest rates ranging from 10.0% to
18.8%. These notes are payable upon demand. The fair value of the notes

                                     F-63


                           DATA STORAGE SYSTEMS, INC.
                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

payable does not materially differ from the carrying value. On February 29,
1996, these notes and the related accrued interest were converted to shares
of common stock in connection with the acquisition of the Company by Iron
Mountain Records Management, Inc.


4. PREFERRED STOCK:

Series A, Series B, and Series C Convertible Preferred Stock

   The Convertible Preferred Stock outstanding consists of 1,000,000,
266,666, and 1,083,334 shares of Series A Convertible Preferred Stock
("Series A"), Series B Convertible Preferred Stock ("Series B"), and Series C
Convertible Preferred Stock ("Series C"), respectively.

   The rights and preferences of the Series A, Series B and Series C
Convertible Preferred Stock are as follows:

Dividends

   The holders of the Series C shall be entitled when and if declared by the
Board of Directors, to dividends at a rate of $0.05 per share, per annum,
payable in preference and priority to payment of any dividend to the holders
of Series A, Series B or Common Stock. The holders of the Series A shall be
entitled when and if declared by the Board of Directors, to dividends at a
rate of $0.09 per share, per annum, payable in preference and priority to
payment of any dividend to the holders of Series B or Common Stock. The
holders of the Series B shall be entitled when and if declared by the Board
of Directors, to dividends at a rate of $0.12 per share, per annum, payable
in preference and priority to payment of any dividend to the holders of
Common Stock. After an equal amount per share has been paid on all Common and
Preferred Stock, the holders of Series B shall be entitled to dividends in an
amount per share equal to any further dividend on Common Stock. Dividends are
not cumulative.

Liquidation Preference

   In the event of any liquidation, dissolution, or winding up of the
Company, either voluntary or involuntary, distributions to the shareholders
of the Company shall be made in the following manner:

   The holders of the Series C shall be entitled to receive, prior and in
preference to any distribution of any assets or surplus funds of the Company
to the holders of the Series A, Series B or Common Stock, an amount equal to
$0.60 per share for each share of Series C held by them. If the assets and
funds are insufficient to permit the payment of the entire preferential
amount, then the entire assets and funds legally available for distribution
shall be distributed ratably among the holders of Series C.

   The holders of the Series A shall be entitled to receive, prior and in
preference to any distribution of any assets or surplus funds of the Company
to the holders of the Series B or Common Stock, an amount equal to $1.00 per
share for each share of Series A held by them. If the remaining assets and
funds are insufficient to permit the payment of the entire preferential
amount, then the entire assets and funds legally available for distribution
shall be distributed ratably among the holders of Series A.

   The holders of the Series B shall be entitled to receive, prior and in
preference to any distribution of any assets or surplus funds of the Company
to the holders of Common Stock, an amount equal to $1.37 per share for each
share of Series B held by them. If the remaining assets and funds are
insufficient to permit the payment of the entire preferential amount, then
the entire assets and funds legally available for distribution shall be
distributed ratably among the holders of Series B.

   After the distribution of the preferential amounts to the preferred
shareholders, the holders of Common Stock shall be entitled to receive an
amount equal to $0.40 per share for each share of Common Stock held by them.
After the aforementioned distributions to the holders of Preferred and Common
Stock, all remaining assets and funds of the Company legally available for
distribution shall be distributed ratably among the holders of Common and

                                     F-64


                           DATA STORAGE SYSTEMS, INC.
                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

Preferred Stock based on the number of shares of Common, Series A, B and C
(on an as converted basis) then issued and outstanding.

Conversion

   Each share of Series A, B and C shall be convertible into the number of
shares of Common Stock which results from dividing $1.00 in the case of
Series A and B, and $0.60 in the case of Series C by the conversion price per
share applicable to such series of Preferred Stock at the time of conversion.
The conversion rate is subject to adjustment for anti-dilution as defined in
the Certificate of Incorporation.

   Each share of Series A, B and C shall automatically be converted into
shares of Common Stock immediately upon the closing of the issuance of shares
following the effectiveness of a registration statement under the Securities
Act of 1933 when the net proceeds equal or exceed $5,000,000 and the price
per share of Common Stock is not less than $4.00.

   Additionally, Series B shall automatically be converted into shares of
Common Stock: (1) immediately upon the closing of any sale or sales of its
Preferred Stock when the aggregate gross proceeds equal or exceeds $1,000,000
and the price per share of Preferred Stock is not less than $1.00, (2) the
last day of any fiscal year in which the Company realizes gross revenues of
at least $1,000,000 and (3) the last day of any fiscal year in which the
Company realizes after-tax operating income of at least $200,000. Because of
the pending merger of the Company, no conversion of the Series B took place.

5. COMMITMENTS:

   The Company leases its facility under an operating lease which expires in
December 1997. Future minimum rental payments as of December 31, 1995 under
this lease are $432,000, ($216,000 for 1996 and $216,000 for 1997). Facility
rent expense for the year ended December 31, 1995 was $218,420.

6. INCOME TAXES:

   As of December 31, 1995, the Company had Federal net operating loss
("NOL") carryforwards for tax purposes of approximately $2,538,548 which
expire in fiscal years 2004 and 2008. The Company had a net deferred tax
asset at December 31, 1995 of approximately $1,057,000. Realization of the
deferred tax asset is dependent upon the Company achieving adequate levels of
taxable income. A valuation allowance has been recognized against the entire
net deferred tax asset because of uncertainty of realization of the asset.
The use of the NOL is limited to maximum amounts each year as a result of the
change in control to Iron Mountain.

                                     F-65


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of Iron Mountain Incorporated:

I have audited the accompanying balance sheet of DataVault Corporation as of
December 31, 1995 and the related statements of income and accumulated
deficit, and cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. My responsibility is to
express an opinion on these financial statements based on my audit.

I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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. I believe that my audit provides a
reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of DataVault Corporation as of
December 31, 1995 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting
principles.

                                                         Robert F. Gayton, CPA

Natick, Massachusetts
August 7, 1996

                                     F-66


                             DATAVAULT CORPORATION
                                  BALANCE SHEET
                                DECEMBER 31, 1995

                            ASSETS

Current Assets:
Cash .........................................    $  115,492
Accounts receivable ..........................       315,555
Prepaid expenses and supplies ................        45,828
                                                    ---------
   Total current assets ......................       476,875
Property, Plant and Equipment (Note 2):
Land .........................................       130,000
Building and improvements ....................     1,224,857
Furniture and equipment ......................     1,125,925
                                                    ---------
                                                   2,480,782
Less--Accumulated depreciation ...............     1,228,376
                                                    ---------
   Property, plant and equipment, net ........     1,252,406
Other Assets:
Customer acquisition costs ...................        45,600
Deferred financing costs .....................        49,014
                                                    ---------
   Total other assets ........................        94,614
                                                    ---------
Total Assets .................................    $1,823,895
                                                    =========
             LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Current portion of long-term debt ............    $   44,450
Accounts payable .............................        17,890
Deferred income ..............................        47,438
                                                    ---------
   Total current liabilities .................       109,778
Long-Term Debt (Note 2):
Mortgage note payable--bank ..................       665,076
Mortgage note payable--bank ..................        70,001
Mortgage note payable--SBA ...................       609,003
Equipment notes payable ......................         7,558
                                                    ---------
                                                   1,351,638
Less--Current portion ........................        44,450
                                                    ---------
   Total long-term debt, net of current
  portion  ....................................    1,307,188
Notes Payable to Stockholder (Note 3) ........       379,499
                                                    ---------
   Total Liabilities .........................     1,796,465
                                                    ---------
Commitments and Contingencies (Note 4)
Stockholders' Equity:
Common stock, no par value --
  Authorized--30,000 shares
  Issued and outstanding--15,000 shares ......         7,500
Additional paid-in capital ...................        50,000
Accumulated deficit ..........................       (30,070)
                                                    ---------
   Total Stockholders' Equity ................        27,430
                                                    ---------
Total Liabilities and Stockholders' Equity ...    $1,823,895
                                                    =========

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

                                     F-67


                             DATAVAULT CORPORATION
                   STATEMENT OF INCOME AND ACCUMULATED DEFICIT
                      FOR THE YEAR ENDED DECEMBER 31, 1995

Revenue:
Storage  .............................................    $1,637,995
Service  .............................................       519,479
                                                            ---------
   Total revenue  ....................................     2,157,474
Operating Expenses:
Cost of sales (excluding depreciation)  ..............       410,860
Selling, general and administrative  .................     1,333,609
Depreciation and amortization  .......................       198,901
                                                            ---------
   Total operating expenses  .........................     1,943,370
                                                            ---------
   Operating Income  .................................       214,104
Interest Expense  ....................................       124,270
                                                            ---------
   Income before income tax  .........................        89,834
Provision for State Income Tax  ......................           456
                                                            ---------
   Net income  .......................................        89,378
Cash distribution of Subchapter S Earnings  ..........       (24,309)
Accumulated Deficit--Beginning  ......................       (95,139)
                                                            ---------
Accumulated Deficit--Ending  .........................    $  (30,070)
                                                            =========

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

                                     F-68


                             DATAVAULT CORPORATION
                             STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1995

Cash Flows From Operating Activities:
Net income ....................................................    $  89,378
Adjustments to reconcile net income to cash provided by
  operating activities--
 Depreciation and amortization ................................      198,901
 Changes in:
  Accounts receivable .........................................       28,467
  Prepaid expenses and supplies ...............................       27,626
  Accounts payable ............................................      (23,081)
  Deferred income .............................................       (1,356)
                                                                     --------
   Cash provided by operating activities ......................      319,935
Cash Flows From Investing Activities:
Acquisition of fixed assets ...................................      (43,970)
Cash Flows from Financing Activities:
Repayment of notes ............................................     (184,915)
Repayment of shareholder loan .................................      (67,598)
Distribution of Subchapter S earnings .........................      (24,309)
                                                                     --------
   Cash used by financing activities ..........................     (276,822)
                                                                     --------
   Net decrease in cash .......................................         (857)
   Cash--beginning of year ....................................      116,349
                                                                     --------
   Cash--end of year ..........................................    $ 115,492
                                                                     ========
Supplemental disclosure of cash flow information:
Cash paid for interest ........................................    $ 124,270
Cash paid for taxes ...........................................          456

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

                                     F-69


                             DATAVAULT CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1995

NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

   Organization--DataVault Corporation (the Company) is a Massachusetts
corporation. The Company provides record storage and management services in
the New England area.

   Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the
dates of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

   Revenue Recognition--Revenue is recognized when the services are provided.
Amounts related to future storage that have been billed in advance are
recorded as deferred revenue and recognized over the applicable period.

   Plant and Equipment--Plant and equipment are recorded at cost. Maintenance
and repairs are charged to expense and major improvements are capitalized.
Depreciation is computed on the straight line and declining balance methods
over estimated useful lives as follows:

   Building and improvements  ..................      15-31 years
   Furniture and fixtures  .....................          5 years
   Equipment  ..................................          5 years

   Deferred Costs--Deferred financing costs are amortized over the life of
the related debt. Customer acquisition costs related to the initial transfer
of records are amortized over the term of the initial storage agreement.

   Income Taxes--The Company has elected to be taxed as a Small Business
Corporation. Accordingly, net income and other items of Federal and state tax
significance are reported on the income tax returns of the individual
shareholders.

NOTE 2--LONG-TERM DEBT

   During 1993, the Company constructed an addition to the records storage
facility. The Company refinanced the existing mortgage loan in conjunction
with supplemental financing for the addition. The refinanced mortgage will be
paid in monthly installments over a 20 year period. The interest rate will be
9% adjustable every three years with initial monthly payments of $6,361.

   The additional bank mortgage note of $70,001 is due in monthly
installments of $640 over 20 years at an interest rate of 8.75%, adjustable
every three years.

   Additional financing for the records storage facility has been obtained
from Bay Colony Development Corp., a Certified Development Company. This
financing has been funded by debentures issued by the development company and
guaranteed by the Small Business Administration. Monthly payments of $5,290
will be made over 20 years and include interest at 6.359% and a service fee.

   The mortgage notes are secured by land, buildings and business assets of
the Corporation and the personal guaranty of the sole shareholder.

   The equipment notes are payable in monthly installments of approximately
$2,100 over various periods up to five years at interest rates from 8% to
14%. The notes are secured by certain furniture and equipment.

                                     F-70


                             DATAVAULT CORPORATION
                  NOTES TO FINANCIAL STATEMENTS -- (Continued)
                                DECEMBER 31, 1995

   Maturities of long-term debt are as follows:

   Year                                                       Amount
    -----------------------------------------------------   ----------
   1996                                                     $   44,450
   1997                                                         38,660
   1998                                                         40,570
   1999                                                         42,610
   2000                                                         44,800
   Thereafter                                                1,140,548
                                                               --------
                                                            $1,351,638
                                                               ========

   The fair value of the Company's assets and liabilities which qualify as
financial instruments under Statement of Financial Accounting Standards No.
107, "Disclosures about Fair Value of Financial Instruments", approximates
the carrying value of amounts presented in the balance sheet.

NOTE 3--NOTES PAYABLE TO STOCKHOLDER

   Stockholder notes are due on demand, bear interest at rates varying from
7.5% to 12% and are subordinated to mortgage and term notes payable.

NOTE 4--COMMITMENTS AND CONTINGENCIES

   In addition to the storage facility referred to in Note 2, the Company
operates an additional data storage facility and maintains its corporate
headquarters in premises leased through the year 2000 at an annual rental of
approximately $84,000.

NOTE 5--RENTALS UNDER STORAGE AGREEMENTS

   The following is a schedule by years of approximate minimum future rentals
under non-cancellable storage agreements as of December 31, 1995:

   Year                                                        Amount
   ----                                                      ---------
   1996  ................................................    $1,345,000
   1997  ................................................     1,183,000
                                                               ---------
                                                             $2,528,000
                                                               =========

NOTE 6--SUBSEQUENT EVENT

   Effective February 1, 1996, the Company sold all of its assets to Iron
Mountain Records Management, Inc. All debt was repaid from the proceeds of
the sale.

                                     F-71


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Directors
 Iron Mountain Incorporated:


We have audited the accompanying balance sheet of International Record
Storage and Retrieval Service, Inc. as of December 31, 1995 and the related
statements of operations, stockholders' deficit, and cash flows for the year
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 audit.

We conducted our audit in accordance with generally accepted auditing
standards. 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 audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of International Record Storage
and Retrieval Service, Inc. as of December 31, 1995, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

                                               Rothstein, Kass & Company, P.C.

Roseland, New Jersey
July 19, 1996

                                     F-72


            INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC.
                                 BALANCE SHEETS




                                                               December
                                                                  31,         June 30,
                                                                 1995           1996
                                                               ----------   ------------
                                                                            (Unaudited)
                                                                      
                                     ASSETS
Current assets:
  Cash ...................................................   $   134,340    $    66,151
  Accounts receivable, less allowance for doubtful
  accounts   of $16,000 in 1995 and 1996  .................      255,276        264,020
  Inventories ............................................        13,505         12,997
  Prepaid expenses and other .............................        24,690         33,576
                                                                --------      ----------
    Total current assets .................................       427,811        376,744
Equipment and improvements, less accumulated depreciation
  of $244,831 in 1995 and $277,428 in 1996  ...............      437,522        452,340
Deferred income taxes ....................................       171,000        160,000
Other assets .............................................        21,667         21,667
                                                                --------      ----------
                                                             $ 1,058,000    $ 1,010,751
                                                                ========      ==========
                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
  Current portion of long-term debt ......................   $    13,474    $    14,459
  Accounts payable .......................................         5,449         31,757
  Accrued expenses .......................................        62,558         69,714
  Due affiliates .........................................       617,173        513,261
  Deferred income ........................................        86,096         89,529
  Deferred compensation, current portion .................        40,401         41,940
                                                                --------      ----------
    Total current liabilities ............................       825,151        760,660
                                                                --------      ----------
Notes payable, net of current portion ....................         7,572             --
Deferred compensation, net of current portion ............       772,518        751,156
Deferred rent ............................................       236,035        233,254
Commitments and contingency
Stockholders' deficiency:
  Common stock, no par value, authorized, issued and
    outstanding 100 shares  ...............................          100            100
  Additional paid-in capital .............................       970,792        970,792
  Accumulated deficit ....................................    (1,754,168)    (1,705,211)
                                                                --------      ----------
    Total stockholders' deficiency .......................      (783,276)      (734,319)
                                                                --------      ----------
                                                             $ 1,058,000    $ 1,010,751
                                                                ========      ==========


See independent public accountants' report and notes to financial statements.


                                     F-73


            INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC.
                STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT


                                                                Six Months Ended
                                                                    June 30,
                                                           ---------------------------
                                                Year
                                               Ended
                                              December
                                                31,
                                                1995           1995           1996
                                             -----------    -----------   ------------
                                                           (Unaudited)    (Unaudited)
                                                                 
Revenues:
 Storage ...............................    $   962,463    $   462,275    $   528,604
 Service and storage material sales ....        620,428        322,215        312,739
                                              ---------      ---------      ----------
   Total revenues ......................      1,582,891        784,490        841,343
                                              ---------      ---------      ----------
Operating expenses:
 Costs of sales (excluding depreciation)        790,127        380,347        430,969
 Selling, general and administrative ...        427,748        212,704        247,085
 Depreciation and amortization .........         72,723         36,065         34,741
                                              ---------      ---------      ----------
   Total operating expenses ............      1,290,598        629,116        712,795
                                              ---------      ---------      ----------
Operating income .......................        292,293        155,374        128,548
Interest expense .......................         66,681         34,536         32,591
                                              ---------      ---------      ----------
Income before provision for income taxes        225,612        120,838         95,957
Provision for income taxes .............         21,000         13,000         11,000
                                              ---------      ---------      ----------
Net income .............................        204,612        107,838         84,957
Accumulated deficit:
Beginning of period ....................     (1,908,780)    (1,908,780)    (1,754,168)
Dividends ..............................        (50,000)            --        (36,000)
                                              ---------      ---------      ----------
End of period ..........................    $(1,754,168)   $(1,800,942)   $(1,705,211)
                                              =========      =========      ==========


See independent public accountants' report and notes to financial statements.

                                     F-74


            INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC.
                            STATEMENTS OF CASH FLOWS


                                                                           Six Months Ended
                                                                               June 30,
                                                                        ----------------------
                                                             Year
                                                             Ended
                                                           December
                                                              31,
                                                             1995         1995         1996
                                                           ----------    --------   ----------
                                                                     (Unaudited)   (Unaudited)
                                                                           
Cash Flows from Operating Activities:
 Net income ..........................................     $ 204,612    $107,838    $  84,957
 Adjustments to reconcile net income to net cash
   provided by operating activities:
  Provision for doubtful accounts ....................         8,000       8,000           --
  Depreciation .......................................        72,723      36,065       34,741
  Provision for deferred income taxes ................        21,000      13,000       11,000
  Gain on disposal of property and equipment .........        (7,468)     (7,468)          --
  Increase (decrease) in cash attributable to changes
  in assets and liabilities:
   Accounts receivable ...............................      (102,421)    (82,045)      (8,744)
   Inventories .......................................         1,825      (4,824)         508
   Prepaid expenses and other ........................       (22,921)    (33,881)      (8,886)
   Accounts payable ..................................        (8,110)     40,228       26,308
   Accrued expenses ..................................        42,810      27,031        7,156
   Deferred income ...................................        13,016       8,074        3,433
   Deferred compensation and other liabilities .......       (50,195)    (31,099)     (19,823)
   Deferred rent .....................................        20,452       5,281       (2,781)
                                                            --------      ------      --------
Net Cash Provided by Operating Activities ............       193,323      86,200      127,869
                                                            --------      ------      --------
Cash Flows from Investing Activities:
 Proceeds from the sale of property and equipment ....        17,565      17,565           --
 Acquisitions of property and equipment ..............       (67,810)    (67,027)     (49,559)
                                                            --------      ------      --------
Net Cash used in Investing Activities ................       (50,245)    (49,462)     (49,559)
                                                            --------      ------      --------
Cash Flow from Financing Activities:
 Repayment of notes payable ..........................       (59,089)    (42,814)      (6,587)
 Advances from (repayments to) affiliates ............        81,310      61,673     (103,912)
 Dividends paid ......................................       (50,000)         --      (36,000)
                                                            --------      ------      --------
Net Cash Provided by (used in) Financing Activities ..       (27,779)     18,859     (146,499)
                                                            --------      ------      --------
Increase (Decrease) in Cash ..........................       115,299      55,597      (68,189)
Cash, beginning of period ............................        19,041      19,041      134,340
                                                            --------      ------      --------
Cash, end of period ..................................     $ 134,340    $ 74,638    $  66,151
                                                            ========      ======      ========
Supplemental Disclosure of Cash Flow Information, cash                  $
  paid during the period for interest ................     $  66,681      34,536    $  32,591
                                                            ========      ======      ========


See independent public accountants' report and notes to financial statements.

                                     F-75


            INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1--NATURE OF BUSINESS:

   The Company is engaged principally in the storage of records for customers
in the New Jersey-New York area and providing ancillary services in
conjunction with such records.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Use of Estimates

   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

   Revenue Recognition

   Storage and service revenues are recognized in the month the respective
service is provided. Storage material sales are recognized when shipped to
the customer. The Company invoices storage charges to its customers in
advance and these advanced billings are recorded as accounts receivable and
the related revenues are included as deferred income in the accompanying
financial statements.

   Inventories


   Inventories are carried at the lower of cost or market using the first-in
first-out basis and are comprised primarily of cartons.


   Income Taxes

   The Company has elected to be treated as an "S" Corporation under the
applicable sections of the Internal Revenue Code. Under these sections,
corporate income or loss is allocated to the stockholders for inclusion in
their personal income tax returns. Accordingly, there is no provision for
federal income tax in the accompanying financial statements. State income
taxes are recorded in accordance with Statement of Financial Accounting
Standards
No. 109.

   Equipment and Improvements

   Equipment and improvements are stated at cost and depreciated using the
straight-line method with the following useful lives:

   Office Equipment  ....................................     5 years
   Transportation equipment  ............................     5 to 10 years
   Shelving and warehouse improvements  .................     10 to 15 years

   Impairment of Long-Lived Assets

   The Company periodically assesses the recoverability of the carrying
amounts of long-lived assets, including intangible assets. A loss is
recognized when expected undiscounted future cash flows are less than the
carrying amount of the asset. The impairment loss is the difference by which
the carrying amount of the asset exceeds its fair value.

   Deferred Rent

   The Company's lease for its building used in the storage of records has
fixed escalation clauses which require the normalization of rental expense
over the life of the lease, resulting in deferred rent being reflected in the
accompanying balance sheets.

                                     F-76


            INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC.
                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

   Fair Value of Financial Instruments

   The fair value of the Company's assets and liabilities which qualify as
financial instruments under Statement of Financial Accounting Standards (SFAS)
No. 107, "Disclosures about Fair Value of Financial Instruments", approximates
the carrying amounts presented in the balance sheets.

   Unaudited Financial Statements

   The unaudited financial statements included herein have been prepared in
accordance with generally accepted accounting principles. In the opinion of
management, the unaudited financial statements include all adjustments of a
normal and recurring nature which are necessary for a fair presentation. The
results of operations for the six months ended June 30, 1995 and 1996 are not
necessarily indicative of the results expected for the full year.

NOTE 3--EQUIPMENT AND IMPROVEMENTS:

   Equipment and improvements consist of the following:

                                                    December
                                                       31,        June 30,
                                                      1995          1996
                                                    ----------   ----------
                                                                (Unaudited)
   Office equipment  ...........................    $  97,919     $ 106,427
   Transportation equipment  ...................      108,217       108,217
   Shelving and warehouse improvements  ........      476,217       515,124
                                                      --------      --------
                                                      682,353       729,768
   Less accumulated depreciation  ..............     (244,831)     (277,428)
                                                      --------      --------
                                                    $ 437,522     $ 452,340
                                                      ========      ========

NOTE 4--NOTES PAYABLE:

   Long-term debt consists of various loans payable in monthly installments
of approximately $1,200 including interest at rates ranging between 8.4% and
10.2% with the final payment June 1997. The loans are collateralized by
certain equipment.

   Aggregate principal payment requirements in each of the years subsequent
to December 31, 1995 are as follows:

   1996  ................................................    $13,474
   1997  ................................................      7,572

NOTE 5--RELATED PARTY TRANSACTIONS:

   The Company is affiliated, through common ownership, with a real estate
management company, International Management Services, Inc. (IMS). IMS
provides certain administrative services to the Company under agreements
designed to reimburse IMS for the approximate cost of providing such
services. Amounts due affiliates are non-interest bearing and have no
specific repayment terms.

   The Company incurred charges for management fees to IMS of approximately
$90,000 for the year ended December 31, 1995 and $44,000 and $50,000 for the
six months ended June 30, 1995 (unaudited) and 1996 (unaudited),
respectively.

                                     F-77


            INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC.

                 NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 6--DEFERRED COMPENSATION:

   The Company is obligated under an Income Continuation agreement dated
October 1, 1994 with a former employee providing for a payment of $100,000
annually for the life of the employee. In 1994, the Company recorded an
expense of $864,297 representing the present value of the benefits for the
employee's life expectancy discounted at the rate of 7.5% per annum. Payments
commenced in September 1994 and amounted to $100,000 for the year ended
December 31, 1995 and $50,000 for each of the six month periods ended June
30, 1995 (unaudited) and 1996 (unaudited).

NOTE 7--INCOME TAXES:

   The provision for income taxes in the accompanying statements of
operations consists of the following:

                                         Year
                                         Ended          Six Months Ended
                                       December             June 30,
                                          31,        ----------------------
                                         1995         1995         1996
                                       ----------    --------   ----------
                                                  (Unaudited)  (Unaudited)
    State income taxes deferred  ...     $21,000      $13,000      $11,000
                                         ========      ======      ========

   A reconciliation of total income tax expense and the amount computed by
applying the state income tax rate of 9% to income before income taxes is as
follows:

                                       Year
                                       Ended         Six Months Ended
                                     December            June 30,
                                        31,       ----------------------
                                       1995         1995         1996
                                     ----------    --------   ----------
                                                (Unaudited)  (Unaudited)
   Computed "expected" tax
     provision ..................     $20,000      $11,000      $ 9,000
   Other  .......................       1,000        2,000        2,000
                                       --------      ------      --------
                                      $21,000      $13,000      $11,000
                                       ========      ======      ========

   The Company has approximately $1,000,000 of net operating loss
carryforwards for state income tax purposes at December 31, 1995. These
carryforwards, which management expects will be fully utilized, expire
through the year 2000.

   The components of the Company's deferred tax assets and liabilities are as
follows:

                                                      Year           Six
                                                      Ended        Months
                                                    December        Ended
                                                       31,        June 30,
                                                      1995          1996
                                                    ----------   ----------
                                                                (Unaudited)
   Deferred Tax Assets:
    Tax benefit attributable to:
     Net operating loss carryforwards  .........    $ 89,000      $ 80,000
     Deferred rent  ............................      21,000        21,000
     Deferred compensation  ....................      73,000        71,000
     Other  ....................................       2,000         2,000
    Deferred tax liability, tax depreciation in
     excess of book depreciation  ..............     (14,000)      (14,000)
                                                      --------      --------
    Net Deferred Tax Asset  ....................    $171,000      $160,000
                                                      ========      ========

                                     F-78


            INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC.
                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

NOTE 8--RETIREMENT PLANS:

   The Company maintains a 401(k) plan for the benefit of its employees. The
Company contributes to the plan annually, at their discretion, up to 4% of
each participant's compensation. The expense amounted to $4,311 for the year
ended December 31, 1995 and $1,960 and $1,839 for the six months ended June
30, 1995 (unaudited) and 1996 (unaudited), respectively.

NOTE 9--LEASE COMMITMENTS:

   The Company occupies general office and warehouse facilities under an
operating lease expiring December 31, 2002, providing for minimum annual
rentals as follows:

 Year ending
 December 31,
   1996  ................................................   $  318,000
   1997  ................................................      318,000
   1998  ................................................      318,000
   1999  ................................................      318,000
   2000  ................................................      350,000
   Thereafter  ..........................................      700,000
                                                               --------
                                                            $2,322,000
                                                               ========

   Rent expense for facilities charged to operations was $273,791 for the
year ended December 31, 1995 and $113,556 and $158,506 for the six months
ended June 30, 1995 (unaudited) and 1996 (unaudited), respectively.


NOTE 10--CONTINGENCY:

   The Company is a defendant in a legal proceeding with the lessor of its
office and warehouse facilities relating to alleged damages suffered in
connection with the cancellation of a proposed sale of the property to a
third party. The claim does not specify an amount of damages and the Company
has responded to the complaint and made a counter claim. It is management's
opinion that the outcome of this litigation will not have a material effect
on the Company's financial position or results of operations.


                                     F-79






              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 



To the Board of Directors of 
 Iron Mountain Incorporated: 



We have audited the accompanying balance sheet of DKA Industries, Inc. d/b/a 
Systems Record Storage (a Florida corporation) as of December 31, 1995, and 
the related statements of operations and accumulated deficit and cash flows 
for the year 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 audit. 


We conducted our audit in accordance with generally accepted auditing 
standards. 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 audit provides a 
reasonable basis for our opinion. 


In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of DKA Industries, Inc. d/b/a 
Systems Record Storage as of December 31, 1995, and the results of its 
operations and its cash flows for the year then ended in conformity with 
generally accepted accounting principles. 



Arthur Andersen LLP 


Orlando, Florida 
August 30, 1996 


                                     F-80 

 


                             DKA INDUSTRIES, INC. 



                         d/b/a SYSTEMS RECORD STORAGE 



             BALANCE SHEETS--DECEMBER 31, 1995, AND JUNE 30, 1996 



                                    ASSETS 




                                                                  December 31,      June 30, 
                                                                      1995            1996 
                                                                 --------------   ---------- 
                                                                                  (Unaudited) 
                                                                            
Current Assets: 
Cash                                                               $  24,665       $  22,083 
Accounts receivable                                                  121,064         170,858 
Inventories                                                            3,049           5,286 
Prepaid expenses and other                                            11,695          11,320 
                                                                   ---------       --------- 
   Total current assets                                              160,473         209,547 
Property and Equipment, net                                          150,729         141,362 
Goodwill, net                                                         20,625          20,312 
                                                                   ---------       --------- 
   Total assets                                                    $ 331,827       $ 371,221 
                                                                   =========       ========= 
                            LIABILITIES AND STOCKHOLDERS' DEFICIT 
Current Liabilities: 
Current maturities of notes payable                                $  89,013       $  47,411 
Note payable to related party                                        285,000         285,000 
Accounts payable and accrued expenses                                 10,807          21,959 
Deferred income                                                       58,617          69,074 
                                                                   ---------       --------- 
   Total current liabilities                                         443,437         423,444 
Notes payable, less current maturities                               218,781         215,310 
Deferred income                                                       63,401          55,167 
Deferred rent                                                         10,318           8,598 
                                                                   ---------       --------- 
   Total liabilities                                                 735,937         702,519 
                                                                   ---------       --------- 
Commitments and Contingencies 
Stockholders' Deficit: 
Common stock, $1 par value, 1,000 shares authorized, issued 
  and outstanding                                                      1,000           1,000 
Accumulated deficit                                                 (405,110)       (332,298) 
                                                                   ---------       --------- 
   Total stockholders' deficit                                      (404,110)       (331,298) 
                                                                   ---------       --------- 
   Total liabilities and stockholders' deficit                     $ 331,827       $ 371,221 
                                                                   =========       ========= 



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



                                     F-81 

 


                             DKA INDUSTRIES, INC. 



                         d/b/a SYSTEMS RECORD STORAGE 



               STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT 



                    FOR THE YEAR ENDED DECEMBER 31, 1995, 
                 AND THE SIX-MONTH PERIOD ENDED JUNE 30, 1996 





                                                                Year         Six Months 
                                                               Ended           Ended 
                                                            December 31,      June 30, 
                                                                1995            1996 
                                                           --------------   ---------- 
                                                                            (Unaudited) 
                                                                      
Revenues: 
Storage                                                      $  638,442      $ 358,150 
Service and storage material sales                              386,637        219,328 
                                                             ----------      --------- 
   Total revenues                                             1,025,079        577,478 
                                                             ----------      --------- 
Operating Expenses: 
Costs of sales (excluding depreciation and 
  amortization)                                                 462,387        224,599 
Selling, general and administrative                             400,310        200,031 
Depreciation and amortization                                    72,625         36,313 
                                                             ----------      --------- 
   Total operating expenses                                     935,322        460,943 
                                                             ----------      --------- 
Operating Income                                                 89,757        116,535 
Interest Expense                                                 56,387         30,023 
                                                             ----------      --------- 
   Net income                                                    33,370         86,512 
Accumulated Deficit, beginning of period                       (425,768)      (405,110) 
Distributions                                                   (12,712)       (13,700) 
                                                             ----------      --------- 
Accumulated Deficit, end of period                           $ (405,110)     $(332,298) 
                                                             ==========      ========= 



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



                                     F-82 

 


                             DKA INDUSTRIES, INC. 



                         d/b/a SYSTEMS RECORD STORAGE 



                           STATEMENTS OF CASH FLOWS 



                    FOR THE YEAR ENDED DECEMBER 31, 1995, 
                 AND THE SIX-MONTH PERIOD ENDED JUNE 30, 1996 





                                                             Year         Six Months 
                                                            Ended           Ended 
                                                         December 31,      June 30, 
                                                             1995            1996 
                                                        --------------   ---------- 
                                                                         (Unaudited) 
                                                                   
Cash Flows From Operating Activities: 
Net income                                                $  33,370        $ 86,512 
Adjustments to reconcile net income to net cash 
   provided by operating activities-- 
  Depreciation and amortization                              72,625          36,313 
Changes in assets and liabilities-- 
  Accounts receivable                                         8,819         (49,794) 
  Inventories                                                (1,430)         (2,237) 
  Prepaid expenses and other                                  --                375 
  Accounts payable and accrued expenses                     (12,079)         11,152 
  Deferred income                                               128           2,223 
  Deferred rent                                              (3,440)         (1,720) 
                                                          ---------       --------- 
   Net cash provided by operating activities                 97,993          82,824 
                                                          ---------       --------- 
Cash Flows used in Investing Activities: 
Acquisitions of property and equipment                      (75,528)        (26,633) 
                                                          ---------       --------- 
Cash Flow From Financing Activities: 
Repayment on notes payable                                 (253,660)        (45,073) 
Additional borrowing on notes payable                       268,522           -- 
Distributions to shareholders                               (12,712)        (13,700) 
                                                          ---------       --------- 
   Net cash provided by (used in) financing 
  activities                                                  2,150         (58,773) 
                                                          ---------       --------- 
Net increase (decrease) in cash                              24,615          (2,582) 
Cash, beginning of period                                        50          24,665 
                                                          ---------       --------- 
Cash, end of period                                       $  24,665        $ 22,083 
                                                          =========       ========= 
Supplemental Disclosure of Cash Flow Information: 
Cash paid during the period for interest                  $  56,387        $ 30,023 



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



                                     F-83 

 


                                DKA INDUSTRIES 
                         d/b/a SYSTEMS RECORD STORAGE 
                        NOTES TO FINANCIAL STATEMENTS 
                              DECEMBER 31, 1995 
1. Nature of Business 


   DKA Industries, Inc. d/b/a Systems Record Storage (the Company) provides 
record storage and management services in the Orlando, Florida, area. 


2. Summary of Significant Accounting Policies 


   Use of Estimates 

   The preparation of financial statements in conformity with generally 
accepted accounting principles requires management to make estimates and 
assumptions that affect the reported amounts of assets and liabilities and 
disclosure of contingent assets and liabilities at the date of the financial 
statements and the reported amounts of revenues and expenses during the 
reporting period. Actual results could differ from those estimates. 

   Revenue Recognition 

   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 for customers where storage 
fees are billed in advance are accounted for as deferred income and 
recognized in the applicable period. 

   Inventories 


   Inventories are carried at the lower of cost or market using the first-in, 
first-out basis, and are comprised primarily of cartons. 


   Goodwill 


   Goodwill is amortized over 40 years. For 1995, amortization was $625. As 
of December 31, 1995, there was $4,375 of accumulated amortization. 


   Income Taxes 


   The Company has elected to be treated as an S corporation under the 
applicable sections of the Internal Revenue Code. Under these sections, 
corporate income or loss is allocated to the stockholders for inclusion in 
their personal income tax returns. Accordingly, there is no provision for 
federal income taxes in the accompanying financial statements. 


   Property and Equipment 


   Equipment and improvements are stated at cost and depreciated or amortized 
using accelerated methods with the following useful lives: 





                                       Years 
                                       ------ 
                                    
Office and computer equipment            5-7 
Transportation equipment                   5 
Warehouse equipment and 
  improvements                          7-10 


   Deferred Rent 


   The Company's lease for its building used in the storage of records has 
uneven rental payments which requires the normalization of rental expense 
over the life of the lease, resulting in deferred rent being reflected in the 
accompanying balance sheet. 



                                     F-84 

 
                                 DKA INDUSTRIES
                         d/b/a SYSTEMS RECORD STORAGE 
                 NOTES TO FINANCIAL STATEMENTS -- (Continued) 


   Fair Value of Financial Instruments 

   The fair value of the Company's assets and liabilities which qualify as 
financial instruments under Statement of Financial Accounting Standards No. 
107, "Disclosures about Fair Value of Financial Instruments," approximates 
the carrying amounts presented in the balance sheet. 


   Unaudited Financial Statements 


   The unaudited financial statements included herein have been prepared 
pursuant to the rules and regulations of the Securities and Exchange 
Commission. In the opinion of management, the unaudited financial statements 
include all adjustments of a normal and recurring nature which are necessary 
for a fair presentation. The results of operations for the six months ended 
June 30, 1996, are not necessarily indicative of the results expected for the 
full year. 



3. Significant Customer 



   One major customer accounted for approximately 38 percent of revenue 
during 1995 and 27 percent of accounts receivable at December 31, 1995. 



4. Property and Equipment 



   Property and equipment consisted of the following: 





                                                   December 31, 
                                                       1995 
                                                   ------------ 

                                                
Office and computer equipment                       $  68,250 
Transportation equipment                               60,976 
Warehouse equipment and improvements                  388,636 
                                                    --------- 
                                                      517,862 
Less -- Accumulated depreciation and 
  amortization                                       (367,133) 
                                                    --------- 
                                                    $ 150,729 
                                                    ========= 



5. Notes Payable 



   Notes payable consisted of the following at December 31, 1995: 




                                                                                          Amount 
                                                                                         --------- 
                                                                                      
Line of credit agreement with maximum borrowing of $50,000, bearing interest at prime 
  plus 1% (9.5% at December 31, 1995), collateralized by accounts receivable, 
  inventory, equipment and improvements. The line of credit is payable upon demand 
  and expires September 23, 1996. As of December 31, 1995, the Company had $35,000 
  available on the line of credit.                                                        $15,000 

                                     F-85 


 
                                 DKA INDUSTRIES
                         d/b/a SYSTEMS RECORD STORAGE 
                 NOTES TO FINANCIAL STATEMENTS -- (Continued) 

                                                                                          Amount 
Note payable, collateralized by accounts receivable, inventory, equipment and 
  improvements, due in monthly installments through November 29, 2000, of $3,357, plus 
  interest at prime plus 1% (9.5% at December 31, 1995).                                $ 201,387 
Note payable, collateralized by the purchased assets of the Company, due in monthly 
  principal and interest payments of $2,500 through October 1998, interest at 11%.         71,686 
Other notes payable, collateralized by certain transportation equipment of the 
  Company, principal due in monthly installments of $887 through August 1998, 
  interest at prime plus 1% (9.5% at December 31, 1995).                                   19,721 
                                                                                         -------- 
                                                                                          307,794 
Less -- Current maturities                                                                (89,013) 
                                                                                         -------- 
                                                                                         $218,781 
                                                                                         ======== 


   Aggregate principal payment requirements in each of the years subsequent 
to December 31, 1995, are as follows: 





Year Ending 
December 31,     Amount 
- -------------    -------- 
              
1996             $ 89,013 
1997               71,751 
1998               66,495 
1999               40,284 
2000               40,251 
                 -------- 
                 $307,794 
                 ======== 



   All the notes payable were paid in full subsequent to December 31, 1995, 
in connection with the acquisition described in Note 9. 



6. Related Party Transactions 



   As of December 31, 1995, the Company had a $285,000 note payable to a 
former owner of the Company. The note payable is due on demand. The interest 
on the note payable is 10 percent and payable monthly. The note payable was 
paid in full subsequent to December 31, 1995, in connection with the 
acquisition described in Note 9. 



7. Retirement Plans 



   The Company maintains a 401(k) plan for the benefit of its employees. All 
employees who have completed 12 months of service, 1,000 hours and attained 
the age of 21 are eligible to enroll in the plan. Employees may contribute up 
to 15 percent of their pay. Employees are always 100 percent vested in their 
contributions. The Company matches 25 percent of employee salary deferral 
contribution, up to a maximum of 4 percent. Employees are 20 percent vested 
in employer contributions after three years of service and become an 
additional 20 percent vested for each subsequent year of service. The 
employer matching contribution expense amounted to $1,941 for the year ended 
December 31, 1995. Subsequent to December 31, 1995, the plan was terminated 
(see Note 9). 



                                     F-86 

 


                                DKA INDUSTRIES 
                         d/b/a SYSTEMS RECORD STORAGE 
                 NOTES TO FINANCIAL STATEMENTS -- (Continued) 



8. Lease Commitments 



   The Company occupies office and warehouse facilities and rents a vehicle 
under operating leases that expire during December 1998, providing for 
minimum annual rentals as follows: 





Year Ending 
December 31,          Amount 
- ------------- 
                  
1996                 $238,438 
1997                  238,438 
1998                  237,940 
                     -------- 
                     $714,816 
                     ======== 



   Rent expense for facilities charged to operations was $232,960 for the 
year ended December 31, 1995. 



9. Subsequent Event 



   Effective August 1, 1996, substantially all of the Company's assets and 
certain liabilities were acquired by Iron Mountain Records Management, Inc. 
Proceeds from the sale were used to repay all the outstanding notes payable, 
and the remainder was distributed to the owners. 



                                     F-87 

 


                     REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 



To the Board of Directors of 
 Iron Mountain Incorporated: 



We have audited the accompanying balance sheet of Security Archives 
Corporation (a Minnesota corporation) as of December 31, 1995, and the 
related statements of operations and accumulated deficit and cash flows for 
the year 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 audit. 


We conducted our audit in accordance with generally accepted auditing 
standards. 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 audit provides a 
reasonable basis for our opinion. 

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of Security Archives 
Corporation as of December 31, 1995, and the results of its operations and 
its cash flows for the year then ended in conformity with generally accepted 
accounting principles. 


Arthur Andersen LLP 



Minneapolis, Minnesota 
August 23, 1996 
(except for Note 6, as 
to which the date is 
September 6, 1996) 



                                     F-88 

 


                        SECURITY ARCHIVES CORPORATION 



                                BALANCE SHEETS 



                                    ASSETS 




                                                                   December 31,      June 30, 
                                                                       1995            1996 
                                                                  --------------   ---------- 
                                                                                   (Unaudited) 
                                                                             
Current Assets: 
  Cash and cash equivalents                                         $  32,819      $    49,044 
  Accounts receivable, net of allowance for doubtful accounts 
  of   $49,382 and $4,408                                             140,950          165,006 
  Inventories                                                           9,905           23,229 
  Prepaid expenses                                                     33,192           31,710 
                                                                    ---------      ----------- 
     Total current assets                                             216,866          268,989 
                                                                    ---------      ----------- 
Property and Equipment                                                997,992        1,067,355 
  Less -- Accumulated depreciation                                   (358,283)        (418,255) 
                                                                    ---------      ----------- 
     Net property and equipment                                       639,709          649,100 
                                                                    ---------      ----------- 
Other Assets:                                                          37,818           27,410 
                                                                    ---------      ----------- 
                                                                    $ 894,393      $   945,499 
                                                                    =========      =========== 
                             LIABILITIES AND STOCKHOLDER'S EQUITY 
Current Liabilities: 
  Accounts payable                                                  $  10,992      $    36,554 
  Current portion of long-term debt -- 
   Capital leases and other debt                                       21,747          206,313 
   Related parties                                                     59,437          611,600 
  Accrued expenses                                                     44,875           31,499 
                                                                    ---------      ----------- 
     Total current liabilities                                        137,051          885,966 
                                                                    ---------      ----------- 
Long-term Notes Payable                                               257,891              -- 
Long-term Notes Payable -- related parties                            768,926           34,346 
Commitments and Contingencies 
Stockholder's Equity: 
  Capital stock 25,000 shares, $1 par 1,200 shares issued and 
    outstanding                                                         1,200            1,200 
  Paid-in capital                                                     646,229          646,229 
  Accumulated deficit                                                (916,904)        (622,242) 
                                                                    ---------      ----------- 
     Total stockholder's equity (deficit)                            (269,475)          25,187 
                                                                    ---------      ----------- 
                                                                    $ 894,393      $   945,499 
                                                                    =========      =========== 



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



                                     F-89 

 


                        SECURITY ARCHIVES CORPORATION 



               STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT 





                                             Year Ended        Six Months Ended June 
                                            December 31,                30 
                                                             ----------------------- 
                                                1995            1995          1996 
                                           ---------------    ---------   ---------- 
                                                                    (Unaudited) 
                                                                 
Revenues: 
 Storage                                     $   917,637     $ 459,566    $ 497,501 
 Service and storage materials sales             500,989       222,107      489,278 
                                             -----------     ---------    --------- 
    Total revenues                             1,418,626       681,673      986,779 
                                             -----------     ---------    --------- 
Operating Expenses: 
 Cost of sales (excluding depreciation)         669,017        328,210      388,016 
 Selling, general and administrative            525,518        234,249      197,393 
 Depreciation and amortization                   99,159         46,080       59,972 
                                             -----------     ---------    --------- 
    Total operating expenses                  1,293,694        608,539      645,381 
                                             -----------     ---------    --------- 
    Income from operations                      124,932         73,134      341,398 
                                             -----------     ---------    --------- 
 Interest expense                                92,988         46,815       46,736 
Net Income                                       31,944         26,319      294,662 
Accumulated Deficit, beginning of 
  period                                       (948,848)      (948,848)    (916,904) 
                                            -----------      ---------    --------- 
Accumulated Deficit, end of period          $  (916,904)     $(922,529)   $(622,242) 
                                            ===========      =========    ========= 



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



                                     F-90 

 


                        SECURITY ARCHIVES CORPORATION 



                           STATEMENTS OF CASH FLOWS 





                                                     Year Ended          Six Months Ended 
                                                    December 31,             June 30 
                                                                     ---------------------- 
                                                        1995            1995         1996 
                                                   ---------------    --------   ---------- 
                                                                           (Unaudited) 
                                                                        
Operating Activities: 
 Net income                                                           
                                                      $   31,944     $  26,319    $ 294,662 
 Adjustments to reconcile net income to net 
  cash  provided by operating activities -- 
   Depreciation and amortization                         99,159         46,080       59,972 
 Changes in assets and liabilities: 
  Accounts receivable                                    (2,424)       (31,408)     (24,056) 
  Inventories                                             1,538         (2,292)     (13,324) 
  Prepaid expenses                                       (4,962)        (4,558)       1,482 
  Accounts payable and accrued expenses                   1,565          6,884       12,186 
  Other                                                  10,068          6,958       10,408 
                                                      ---------       --------    --------- 
   Net cash provided by operating activities            136,888         47,983      341,330 
                                                      ---------       --------    --------- 
Investing Activities: 
 Purchase of property and equipment                    (193,797)      (103,791)     (69,363) 
                                                      ---------       --------    --------- 
Financing Activities: 
 Proceeds from notes payable                            227,000        112,284       49,983 
 Principal payments on notes payable                   (161,606)       (56,122)    (305,725) 
                                                      ---------       --------    --------- 
   Net cash provided by (used for) financing 
     activities                                          65,394         56,162     (255,742) 
                                                      ---------       --------    --------- 
Net increase in Cash                                      8,485            354       16,225 
Cash and cash equivalents, at beginning of 
  period                                                 24,334         24,334       32,819 
                                                      ---------       --------    --------- 
Cash and cash equivalents, at end of period           $  32,819      $  24,688    $  49,044 
                                                      =========      =========    ========= 
Supplemental Disclosure: 
 Interest paid                                        $  92,989       $ 46,815    $  41,815 
                                                      =========       ========    ========= 



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



                                     F-91 

 


                        SECURITY ARCHIVES CORPORATION 
                        NOTES TO FINANCIAL STATEMENTS 
                              DECEMBER 31, 1995 



1. Organization of Business and Significant Accounting Policies 



   Security Archives Corporation (the Company), a Minnesota corporation, is a 
full service records management company providing storage and related 
services for all media. The Company serves numerous legal, banking, 
healthcare, accounting, insurance, entertainment and retail organizations in 
the Los Angeles, California metropolitan area. 



Inventories 



   Inventories are carried at the lower of cost (using the first-in, 
first-out basis) or market and are comprised primarily of cartons. 



Property and Equipment 



   Depreciation and amortization of property and equipment are recorded using 
the straight-line and accelerated methods. Property and equipment consist of 
the following: 





                                                Useful         December 31, 
                                                Lives              1995 
                                          ------------------   ------------ 
                                                         
Warehouse and disintegration equipment     9 years               $645,326 
Leasehold improvements                     10 years               103,928 
Transportation equipment                   5 years                112,946 
Office equipment                           5 to 10 years          135,792 
                                                                 -------- 
                                                                 $997,992 
                                                                 ======== 



   Minor maintenance costs are expensed as incurred. Major improvements are 
capitalized and depreciated as described above. 



Revenue Recognition 



   Storage and service revenues are recognized in the month the respective 
service is provided. Storage material sales are recognized when shipped to 
the customer. The Company has two customers which accounted for 25% of 
revenues for the year ended December 31, 1995. 



Cash and Cash Equivalents 



   The Company considers all highly liquid investments purchased with a 
maturity of three months or less to be cash equivalents. 



Other Assets 



   Other assets consist of customer acquisition costs. Costs, net of revenues 
received for the initial transfer of records, related to the acquisition of 
accounts are capitalized and amortized for an appropriate period not 
exceeding three years, unless the customer terminates its relationship with 
the Company, at which time the unamortized cost is charged to expense. 
However, in the event of such termination, the Company collects and records 
as income permanent removal fees that generally equal or exceed the amount of 
unamortized customer acquisition costs. 



Financial Instruments 



   Unless otherwise noted, financial instruments are stated at cost, which 
approximates fair value. 



                                    F-92 

 


                        SECURITY ARCHIVES CORPORATION 
                 NOTES TO FINANCIAL STATEMENTS -- (Continued) 



Use of Estimates 



   The preparation of financial statements in conformity with generally 
accepted accounting principles requires management to make estimates and 
assumptions that affect the reported amounts of assets and liabilities and 
disclosure of contingent assets and liabilities at the date of the financial 
statements and the reported amounts of revenues and expenses during the 
reporting period. These estimates relate primarily to the realizability of 
accounts receivable and the adequacy of certain accrued expenses. Actual 
results could differ from those estimates. 



Unaudited Financial Information 



   The financial information as of June 30, 1996 and for the six-month 
periods ended June 30, 1996 and 1995 is unaudited and has been prepared 
pursuant to the rules and regulations of the Securities and Exchange 
Commission. In the opinion of management, such information reflects all 
normal recurring adjustments necessary for a fair presentation. Operating 
results for the six months ended June 30, 1996 are not necessarily indicative 
of the results that may be expected for the year ending December 31, 1996. 
Included in service and storage materials sales for the six months ended June 
30, 1996 is $250,000 of fees paid to the Company for removal of cartons for a 
large customer that transferred its business to Iron Mountain Incorporated. 



2. Notes Payable 



   Notes payable consisted of the following: 




                                                                      December 31, 
                                                                          1995 
                                                                      ------------ 
                                                                   
Long-term revolving note payable, providing for borrowings of up 
  to $600,000, interest payable monthly at 8.25%, principal due 
  May 31, 1997                                                         $  234,554 
Obligations under capital leases, payable in various installments 
  through 1999, 8.75-9.25% imputed interest                                45,084 
Long-term revolving note payable, providing for borrowings of up 
  to $50,000, interest payable monthly at the prime rate plus 1% 
  (9.5% at December 31, 1995), principal due May 31, 1997                  -- 
Unsecured notes payable to stockholder, principal due in various 
  installments through 2000, interest payable monthly at rates 
  varying from 9.75-10%                                                   826,695 
Other related party obligations                                             1,668 
                                                                       ---------- 
Total notes payable                                                     1,108,001 
Less -- Current maturities                                                (81,184) 
                                                                       ---------- 
Notes payable, net of current maturities                               $1,026,817 
                                                                       ========== 



                                    F-93 

 


                        SECURITY ARCHIVES CORPORATION 
                 NOTES TO FINANCIAL STATEMENTS -- (Continued) 



   Maturities of long-term debt are as follows: 





    Year     Amount 
         
1996        $   81,184 
1997           904,709 
1998            76,989 
1999            41,778 
2000             3,341 
            $1,108,001 
            ========== 


3. Operating Leases 


   Future minimum payments, by year and in the aggregate, under noncancelable 
operating leases with initial or remaining terms of one year or more consist 
of the following at December 31, 1995: 





                Minimum 
   Year         Payment 
 --------      ---------- 
           
 1996         $  367,452 
 1997            367,452 
 1998            367,452 
 1999            367,452 
 2000            367,452 
Thereafter       926,022 
 Total        $2,763,282 
              ==========



The Company's rent expense for operating leases was $380,832 for the year 
ended December 31, 1995, and $204,210 for the six month period ended June 30, 
1996. 



4. Income Taxes 


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


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





                                
 Deferred income tax assets        $ 312 
Deferred income tax liabilities      (42) 
Valuation allowance                 (270) 
                                   ----- 
                                   $  -- 
                                   ===== 



   As of December 31, 1995, the Company has NOL carryforwards of $745,106 
which expire in varying amounts through 2009. The primary deferred tax 
liabilities consist of tax over book depreciation. The valuation allowance 
relates to uncertainties surrounding the realization of the NOL 
carryforwards. 



                                    F-94 

 


                        SECURITY ARCHIVES CORPORATION 
                 NOTES TO FINANCIAL STATEMENTS -- (Continued) 


5. Related Party Transactions 



   The Company provides management services to affiliated entities in 
exchange for a management fee. Management fee revenue was $92,040 for the 
year ended December 31, 1995 and $28,020 for the six months ended June 30, 
1996. 


   In addition, the Company has notes payable to a related party. Interest 
expense on related party notes payable was $58,302 for the year ended 
December 31, 1995 and $31,907 for the six months ended June 30, 1996. 


6. Sale of Operating Assets 



   On September 6, 1996 the Company entered into an agreement to sell 
substantially all of its operating assets to Iron Mountain Records 
Management, Inc. All debt of the Company will be repaid from the proceeds of 
the sale. 

                                    F-95 



 


                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 



To the Board of Directors of 
 Iron Mountain Incorporated: 



We have audited the accompanying balance sheet of Mohawk Business Record 
Storage, Inc. (a Minnesota corporation) as of December 31, 1995, and the 
related statements of operations and retained earnings and cash flows for the 
year 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 audit. 


We conducted our audit in accordance with generally accepted auditing 
standards. 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 audit provides a 
reasonable basis for our opinion. 

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of Mohawk Business Record 
Storage, Inc. as of December 31, 1995, and the results of its operations and 
its cash flows for the year then ended in conformity with generally accepted 
accounting principles. 


Arthur Andersen LLP 



Minneapolis, Minnesota 
September 6, 1996 



                                     F-96 

 


                     MOHAWK BUSINESS RECORD STORAGE, INC. 



                                BALANCE SHEETS 



                                    ASSETS 





                                                                     December 31,       June 30, 
                                                                         1995             1996 
                                                                    --------------   ------------ 
                                                                                      (Unaudited) 
                                                                               
Current Assets: 
Cash and cash equivalents                                            $   223,478      $   112,547 
Accounts receivable (less allowance for doubtful accounts of 
  $5,000 and $9,000 in 1995 and 1996, respectively)                    1,186,858        1,228,167 
Notes receivable, stockholder                                            100,000           -- 
Inventories                                                               31,548           49,009 
Prepaid expenses and other                                                51,110           81,718 
Current portion of note receivable, related company                       15,996           15,996 
                                                                     -----------      ----------- 
   Total current assets                                                1,608,990        1,487,437 
                                                                     -----------      ----------- 
Property and Equipment                                                 9,049,148        9,160,561 
Less -- Accumulated depreciation                                      (5,013,510)      (5,355,137) 
                                                                     -----------      ----------- 
   Net property and equipment                                          4,035,638        3,805,424 
                                                                     -----------      ----------- 
Other Assets: 
Other                                                                     15,000           15,000 
Long-term note receivable, related company                               222,004          216,004 
                                                                     -----------      ----------- 
                                                                         237,004          231,004 
                                                                     -----------      ----------- 
                                                                     $ 5,881,632      $ 5,523,865 
                                                                     ===========      =========== 
                               LIABILITIES AND STOCKHOLDERS' EQUITY 
Current Liabilities: 
Accounts payable                                                     $    47,887      $    64,378 
Notes payable-- 
  Bank                                                                 1,625,000        1,000,000 
  Related parties                                                        333,200        2,024,100 
Accrued expenses                                                         507,450          442,461 
Deferred revenue                                                         551,947          439,255 
                                                                      ----------      ----------- 
   Total current liabilities                                           3,065,484        3,970,194 
                                                                      ----------      ----------- 
Long-term Notes Payable, stockholders                                  1,400,000               -- 
Commitments and Contingencies (Note 4)                                    --                   -- 
Stockholders' Equity: 
Common stock, 25,000 shares, $1 par, 4,000 shares issued and 
  outstanding                                                              4,000            4,000 
Paid-in capital                                                           46,000           46,000 
Retained earnings                                                      1,366,148        1,503,671 
                                                                     -----------       ---------- 
   Total stockholders' equity                                          1,416,148        1,553,671 
                                                                     -----------       ---------- 
                                                                     $ 5,881,632       $5,523,865 
                                                                     ===========       ========== 



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



                                     F-97 

 


                     MOHAWK BUSINESS RECORD STORAGE, INC. 



                STATEMENTS OF OPERATIONS AND RETAINED EARNINGS 





                                           Year Ended 
                                          December 31,      Six Months Ended June 30 
                                              1995            1995          1996 
                                         ---------------    ---------   ----------- 
                                                                  (Unaudited) 
                                                               
Revenues: 
Storage                                    $4,705,253     $2,310,469     $ 2,651,026 
Service and storage material sales          4,094,977      2,053,952       2,085,531 
                                           ----------     ----------     ----------- 
   Total revenues                           8,800,230      4,364,421       4,736,557 
                                           ----------     ----------     ----------- 
Operating Expenses: 
Cost of sales (excluding 
  depreciation)                             4,644,836      2,387,642       2,356,940 
Selling, general and administrative         2,833,687      1,535,504       1,613,978 
Depreciation and amortization                 657,586        218,298         358,670 
                                           ----------     ----------     ----------- 
   Total operating expenses                 8,136,109      4,141,444       4,329,588 
                                           ----------     ----------     ----------- 
Operating Income                              664,121        222,977         406,969 
Interest Expense                              297,868        141,785         134,918 
Interest Income                                28,382         16,448           9,968 
                                           ----------     ----------     ----------- 
Net Income                                    394,635         97,640         282,019 
Retained Earnings, beginning of 
period                                      1,262,433      1,262,433       1,366,148 
Dividend Distributions                       (290,920)            --        (144,496) 
                                           ----------     ----------     ----------- 
Retained Earnings, end of period           $1,366,148     $1,360,073     $ 1,503,671 
                                           ==========     ==========     =========== 



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



                                     F-98 

 


                     MOHAWK BUSINESS RECORD STORAGE, INC. 



                           STATEMENTS OF CASH FLOWS 





                                                   Year Ended 
                                                  December 31,      Six Months Ended June 30 
                                                      1995            1995           1996 
                                                 ---------------    ----------   ---------- 
                                                                          (Unaudited) 
                                                                        
Operating Activities: 
Net income                                          $  394,635      $   97,640     $ 282,019 
Adjustments to reconcile net income to 
   net cash provided by operating 
  activities-- 
  Depreciation and amortization                        657,586         218,298       358,670 
  Gain (Loss) on sale of assets                         (6,662)         31,138       (11,955) 
Changes in assets and liabilities: 
  Accounts receivable                                  (38,848)        168,318       (41,309) 
  Inventories                                           (2,299)         (8,245)      (17,461) 
  Prepaid expenses and other                           (29,817)       (101,092)      (30,608) 
  Deferred revenue                                      69,238        (115,562)     (112,692) 
  Accounts payable and accrued expenses                233,202          97,613       (48,498) 
                                                   -----------      ----------     --------- 
   Net cash provided by operating activities         1,277,035         388,108       378,166 
                                                   -----------      ----------     --------- 
Investing Activities: 
Purchase of property and equipment                  (1,869,325)     (1,251,924)     (128,456) 
Notes receivable                                        12,000         (52,500)      106,000 
Proceeds from sale of assets                            31,143          20,500        11,955 
Other                                                  (15,000)        (15,000)          -- 
                                                   -----------      ----------     --------- 
   Net cash used for investing activities           (1,841,182)     (1,298,924)      (10,501) 
                                                   -----------      ----------     --------- 
Financing Activities: 
Proceeds from notes payable                          1,659,482       1,292,745       343,880 
Principal payments on notes payable                   (744,582)       (204,100)     (677,980) 
Dividend distributions                                (290,920)            --       (144,496) 
                                                   -----------      ----------     --------- 
   Net cash provided by (used for) financing 
     activities                                        623,980       1,088,645      (478,596) 
                                                   -----------      ----------     --------- 
Net Increase (Decrease) in Cash                         59,833         177,829      (110,931) 
Cash and Cash Equivalents, beginning of 
period                                                 163,645         163,645       223,478 
                                                   -----------     -----------    ---------- 
Cash and Cash Equivalents, end of period           $   223,478     $   341,474    $  112,547 
                                                   ==========      ===========    ========== 
Supplemental Disclosure: 
Interest paid                                      $   301,018     $   144,935    $  134,918 
                                                   ===========     ===========    ========== 



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



                                     F-99 

 


                     MOHAWK BUSINESS RECORD STORAGE, INC. 
                        NOTES TO FINANCIAL STATEMENTS 
                              DECEMBER 31, 1995 



1. Organization of Business and Significant Accounting Policies 



   Mohawk Business Record Storage, Inc. (the Company), a Minnesota 
corporation, is a full-service records management company providing storage 
and related services for all media. The Company serves numerous legal, 
banking, healthcare, accounting, insurance, entertainment and retail 
organizations in the Minneapolis and Saint Paul, Minnesota metropolitan 
areas. 



Property and Equipment 



   Depreciation and amortization of property and equipment are recorded using 
the straight-line and accelerated methods. Property and equipment consist of 
the following: 




                                                             December 31, 
                                           Useful Lives          1995 
                                         -----------------   ------------ 
                                                       
Warehouse and disintegration 
  equipment                               7 to 10 years      $ 5,585,597 
Leasehold improvements                    10 to 39 years       1,441,291 
Transportation equipment                  5 to 10 years          723,603 
Office equipment                          5 to 10 years        1,298,657 
                                                              ---------- 
                                                              $9,049,148 
                                                              ========== 



   Minor maintenance costs are expensed as incurred. Major improvements to 
the leased buildings are capitalized as leasehold improvements and 
depreciated as described above. 



Revenue Recognition 



   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 for customers where storage 
fees are billed in advance are accounted for as deferred revenue and 
amortized over the applicable period. These amounts are included in deferred 
revenue in the accompanying balance sheet. The Company has one customer which 
accounted for 13% of revenues for the year ended December 31, 1995. 



Cash and Cash Equivalents 



   The Company considers all highly liquid debt instruments purchased with a 
maturity of three months or less to be cash equivalents. 



Inventories 



   Inventories are carried at the lower of cost (first-in, first-out basis) 
or market and are comprised primarily of cartons. 



Accrued Expenses 



   Accrued expenses consisted of the following: 




                                   December 31, 
                                       1995 
                                 ---------------- 
                              
Accrued incentive 
  compensation                      $ 307,621 
Accrued profit sharing                160,000 
Other                                  39,829 
                                  -------------- 
  Accrued expenses                   $507,450 
                                  ============== 



                                     F-100 

 


                     MOHAWK BUSINESS RECORD STORAGE, INC. 
                 NOTES TO FINANCIAL STATEMENTS -- (Continued) 



Income Taxes 



   The Company has elected to be taxed as an S corporation under the 
applicable Internal Revenue Code sections. The net income of the Company is 
included in the individual income tax returns of the stockholders. 
Accordingly, there is no provision for federal income taxes in the 
accompanying financial statements. 



Financial Instruments 



   Unless otherwise noted, financial instruments are stated at cost, which 
approximates fair value. 



Use of Estimates 



   The preparation of financial statements in conformity with generally 
accepted accounting principles requires management to make estimates and 
assumptions that affect the reported amounts of assets and liabilities and 
disclosure of contingent assets and liabilities at the date of the financial 
statements and the reported amounts of revenues and expenses during the 
reporting period. These estimates relate primarily to the realizability of 
accounts receivable and the adequacy of certain accrued expenses. Actual 
results could differ from those estimates. 



Concentrations of Credit Risk 



   Credit risk with respect to accounts receivable is generally spread across 
a large number of customers with dispersion across different businesses. As 
of December 31, 1995, one customer accounted for 17% of outstanding accounts 
receivable. 



Unaudited Financial Information 



   The financial information as of June 30, 1996 and for the six-month 
periods ended June 30, 1995 and 1996 is unaudited and has been prepared 
pursuant to the rules and regulations of the Securities and Exchange 
Commission. In the opinion of management, such information reflects all 
normal recurring adjustments necessary for a fair presentation. Operating 
results for the six months ended June 30, 1996 are not necessarily indicative 
of the results that may be expected for the year ending December 31, 1996. 



2. Debt 



Notes Payable 
Notes payable consisted of the following: 





                                                                                            December 31, 
                                                                                                1995 
                                                                                            ------------ 
                                                                                         
Unsecured notes payable to stockholders, principal due February 1997, interest payable 
  monthly at the prime rate (8.5% at December 31, 1995)                                      $1,400,000 
Unsecured notes payable to related parties, due on demand, interest payable monthly at 
  the prime rate (8.5% at December 31, 1995)                                                    333,200 
                                                                                             ---------- 
  Total notes payable                                                                         1,733,200 
Less -- Current maturities                                                                     (333,200) 
                                                                                             ---------- 
Notes payable, net of current maturities                                                     $1,400,000 
                                                                                             ========== 



                                     F-101 

 


                     MOHAWK BUSINESS RECORD STORAGE, INC. 
                 NOTES TO FINANCIAL STATEMENTS -- (Continued) 



Line of Credit 


   The Company has a $2,000,000 revolving credit agreement with a bank which 
is payable on demand. Borrowings bear interest at the prime rate and are 
collateralized by property and equipment, certain intangible assets and the 
personal guarantees of the Company's stockholders. 


   The line-of-credit agreement contains various covenants which require the 
Company to maintain certain specified financial ratios. The Company was in 
compliance with these covenants as of December 31, 1995. 



   Additional information relating to the line of credit is as follows: 





                                                   1995 
                                                ----------- 
                                             
Borrowings outstanding at year-end              $1,625,000 
Available borrowings at year-end                   375,000 
Average borrowings outstanding during the 
  year                                           1,436,000 
Range of interest rates during the year          8.5%-9.0% 



3. Notes Receivable 



Stockholder 



   The Company loaned $452,300 to one of its stockholders on May 12, 1992. 
Interest is being paid monthly to the Company at the prime rate. Principal is 
payable upon demand. The balance due to the Company under this agreement as 
of December 31, 1995 was $100,000 and was repaid during the six-month period 
ended June 30, 1996. 



Related Company 



   The Company loaned $400,000 to a related partnership certain of whose 
partners are also stockholders of the Company. The proceeds of this loan were 
used to purchase a building that the Company is renting from this partnership 
(see Note 4). Interest is payable monthly by the partnership at the prime 
rate. Monthly principal payments are $1,333. Principal outstanding at 
December 31, 1995 was $238,000. 



4. Commitments and Contingencies 



Operating Leases -- Related Parties 



   The Company has lease agreements for warehouse and office space with a 
partnership whose partners are also stockholders of the Company. The leases 
are operating leases with varying terms expiring between May 1998 and November 
2009. The Company pays all maintenance, insurance and utilities. Rent expense 
under these leases was $509,000 for 1995. 



   The Company has another lease agreement for additional warehouse space 
with a partnership, certain of whose partners are also stockholders of the 
Company. The lease is an operating lease with a term of 10 years through July 
2000. The Company pays all taxes, maintenance, insurance and utilities. Rent 
expense under this lease was $472,000 for 1995. 




                                     F-102 

 


                     MOHAWK BUSINESS RECORD STORAGE, INC. 
                 NOTES TO FINANCIAL STATEMENTS -- (Continued) 


   Future minimum lease payments on these operating leases for each of the 
next five years and thereafter are as follows: 





                         
1996                        $  980,000 
1997                           980,000 
1998                           857,000 
1999                           769,000 
2000 and thereafter          3,226,000 
                            $6,812,000 
                            ========== 



Purchase Order Commitment 


   In June 1996, the Company committed to purchase approximately $450,000 in 
additional warehouse storage racking. 


5. Employee Benefits 



Profit-Sharing Plan 



   The Company has a profit-sharing plan covering substantially all of its 
full-time employees. Contributions are determined annually by the board of 
directors. Benefits are provided upon retirement, disability or death on the 
basis of funds added to the trust accounts and earnings during periods of 
participation. The total contribution to this plan was $160,000 for the year 
ended December 31, 1995. 



Employee Benefit Plan 



   The Company has adopted a salary deduction benefit plan which provides 
child care, medical and dental premiums, and other unreimbursed medical 
expenses. All regular employees who complete more than 25 hours per week of 
service are eligible to participate on a voluntary basis. The Company does 
not match employee contributions. 



Bonus Plans 



   The Company has agreed to pay bonuses to each of two of its stockholders 
equal to 20% of the net profits of the Company, as defined. Two other 
stockholders and a member of senior management each are entitled to receive 
bonuses equal to 5% of the net profits of the Company. In addition, the vice 
president of one of the Company's divisions receives a bonus equal to 10% of 
that division's net profits, as defined. Bonus expense for the year ended 
December 31, 1995 was $703,000. 



6. Sale of Operating Assets 



   On September 6, 1996, the Company entered into an agreement to sell 
substantially all of its operating assets to Iron Mountain Records 
Management, Inc. 



                                     F-103 


 
   No dealer, salesperson or other person has been authorized to give any 
information or to make any representations not contained in this Prospectus 
in connection with the offer made in this Prospectus, and, if given or made, 
such information or representations must not be relied upon as having been 
authorized by the Company or any of the Underwriters. This Prospectus does 
not constitute an offer to sell or solicitation of an offer to buy any 
security other than the Notes offered hereby, nor does it constitute an offer 
to sell, or a solicitation of an offer to buy, to any person in any 
jurisdiction where such an offer or solicitation would be unlawful. Neither 
the delivery of this Prospectus nor any sale made hereunder shall, under any 
circumstances, create any implication that the information contained herein 
is correct as of any time subsequent to the date hereof. 
                ------------- 

   
              TABLE OF CONTENTS 

                                             Page 
Prospectus Summary                              3 
Summary Historical and Pro Forma 
  Information                                   8 
Risk Factors                                   10 
The Company                                    15 
The Transactions                               15 
Recent and Pending Acquisitions                17 
Use of Proceeds                                18 
Capitalization                                 18 
Pro Forma Condensed Consolidated 
  Financial Information                        19 
Selected Consolidated Financial and 
  Operating Information                        30 
Management's Discussion and Analysis of 
  Financial Condition and Results of 
  Operations                                   32 
Business                                       42 
Management                                     55 
Certain Transactions                           60 
Principal Stockholders                         61 
Description of the Notes                       63 
Description of New Credit Facility             84 
Description of Capital Stock                   85 
Underwriting                                   86 
Validity of Securities                         86 
Experts                                        86 
Additional Information                         87 
Index to Financial Statements                 F-1 
    

   

                                 $165,000,000 
                                    [logo] 
                                Iron Mountain 
                                 Incorporated 
    

   
                      10-1/8% Senior Subordinated Notes 
                                   due 2006 
    

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                             P R O S P E C T U S 

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                         Donaldson, Lufkin & Jenrette 
                            Securities Corporation 
                           Bear, Stearns & Co. Inc. 
                      Prudential Securities Incorporated 

   
                              September 26, 1996