IRM » Topics » Acquisitions

This excerpt taken from the IRM 8-K filed Oct 29, 2009.

Acquisitions

The Company has not completed any acquisitions in 2009. Iron Mountain’s acquisition strategy focuses on acquiring attractive businesses that provide a strong platform for future growth by expanding the Company’s geographic footprint and service offerings while enhancing its existing operations.

This excerpt taken from the IRM 10-Q filed May 8, 2009.

(4) Acquisitions

        We account for acquisitions using the purchase method of accounting, and accordingly, the results of operations for each acquisition have been included in our consolidated results from their respective acquisition dates. We completed no acquisitions during the first quarter of 2009. Included in cash paid for acquisitions in the consolidated statement of cash flows for the three months ended March 31, 2009 is contingent and other payments of $1,432 related to acquisitions made in prior years.

        In connection with acquisitions prior to December 31, 2008, we have undertaken certain restructurings of the acquired businesses to realize efficiencies and potential cost savings. The restructuring activities include certain reductions in staffing levels, elimination of duplicate facilities and other costs associated with exiting certain activities of the acquired businesses. The estimated cost of these restructuring activities were recorded as costs of the acquisitions and were provided in accordance with EITF No. 95-3, "Recognition of Liabilities in Connection with a Purchase Business Combination." We finalize restructuring plans for each business no later than one year from the date of acquisition. Unresolved matters at March 31, 2009 primarily include completion of planned abandonments of facilities and severance contracts in connection with certain acquisitions.

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Table of Contents


IRON MOUNTAIN INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(4) Acquisitions (Continued)

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

 
  Year Ended
December 31, 2008
  Three Months
Ended
March 31, 2009
 

Reserves, Beginning Balance

  $ 3,602   $ 8,555  

Reserves Established

    8,694      

Expenditures

    (2,698 )   (560 )

Adjustments to Goodwill, including Currency Effect(1)

    (1,043 )   (140 )
           

Reserves, Ending Balance

  $ 8,555   $ 7,855  
           

      (1)
      Includes adjustments to goodwill as a result of management finalizing its restructuring plans.

        At March 31, 2009, the restructuring reserves related to acquisitions consisted of lease losses on abandoned facilities ($7,078), severance costs ($86), and other exit costs ($691). These accruals are expected to be used prior to March 31, 2010, except for lease losses of $5,477, severance costs of $53, and other exit costs of $72, all of which are based on contracts that extend beyond one year.

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Table of Contents


IRON MOUNTAIN INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

This excerpt taken from the IRM 10-Q filed Aug 8, 2008.

(5) Acquisitions

        We account for acquisitions using the purchase method of accounting, and accordingly, the results of operations for each acquisition have been included in our consolidated results from their respective acquisition dates. Cash consideration for the various 2008 acquisitions was primarily provided through borrowings under our credit facilities, issuance of senior subordinated notes and cash equivalents on-hand. The unaudited pro forma results of operations for the period ended June 30, 2008 are not presented due to the insignificant impact of the 2008 acquisitions on our consolidated results of operations.

        A summary of the consideration paid for acquisitions in 2008 and the allocation of the purchase price is as follows:

Cash Paid (gross of cash acquired)(1)

  $ 45,308  

Fair Value of Identifiable Net Assets Acquired:

       
 

Cash, Accounts Receivable, Prepaid Expenses and Other

    1,444  
 

Property, Plant and Equipment

    3,394  
 

Customer Relationship Assets(2)

    23,910  
 

Core Technology

     
 

Other Assets

    504  
 

Liabilities Assumed(3)

    (1,153 )
 

Minority Interest(4)

    4,489  
       
 

Total Fair Value of Identifiable Net Assets Acquired

    32,588  
       

Recorded Goodwill

  $ 12,720  
       

(1)
Included in cash paid for acquisitions in the consolidated statements of cash flows for the six months ended June 30, 2008 is additional purchase price consideration of $1,010 for acquisitions completed in prior years.

(2)
The weighted average lives of customer relationship assets associated with acquisitions in 2008 were 28 years.

(3)
Consisted primarily of accounts payable, accrued expenses and notes payable.

(4)
Consisted primarily of the carrying value of minority interests in Brazil at the date of acquisition.

        Allocation of the purchase price for the 2008 acquisitions was based on estimates of the fair value of net assets acquired, and is subject to adjustment. The purchase price allocations of certain 2007 and 2008 transactions are subject to finalization of the assessment of the fair value of property, plant and equipment, intangible assets (primarily customer relationship assets), operating leases, restructuring purchase reserves, deferred revenue and deferred income taxes. We are not aware of any information

19


IRON MOUNTAIN INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(5) Acquisitions (Continued)


that would indicate that the final purchase price allocations will differ meaningfully from preliminary estimates.

        In connection with each of our acquisitions, we have undertaken certain restructurings of the acquired businesses. The restructuring activities include certain reductions in staffing levels, elimination of duplicate facilities and other costs associated with exiting certain activities of the acquired businesses. The estimated cost of these restructuring activities were recorded as costs of the acquisitions and were provided in accordance with EITF No. 95-3, "Recognition of Liabilities in Connection with a Purchase Business Combination." We finalize restructuring plans for each business no later than one year from the date of acquisition. Unresolved matters at June 30, 2008 primarily include completion of planned abandonments of facilities and severance contracts in connection with certain acquisitions.

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

 
  Year Ended
December 31, 2007
  Six Months
Ended
June 30, 2008
 

Reserves, Beginning Balance

  $ 5,553   $ 3,602  

Reserves Established

    2,246     7,979  

Expenditures

    (3,991 )   (1,292 )

Adjustments to Goodwill, including currency effect(1)

    (206 )   (580 )
           

Reserves, Ending Balance

  $ 3,602   $ 9,709  
           

(1)
Includes adjustments to goodwill as a result of management finalizing its restructuring plans.

        At June 30, 2008, the restructuring reserves related to acquisitions consisted of lease losses on abandoned facilities ($7,992), severance costs ($110), and other exit costs ($1,607). These accruals are expected to be used prior to June 30, 2009, except for lease losses of $7,172, severance costs of $77, and other exit costs of $99, all of which are based on contracts that extend beyond one year.

20


IRON MOUNTAIN INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

This excerpt taken from the IRM 10-Q filed May 9, 2008.

(5) Acquisitions

        We account for acquisitions using the purchase method of accounting, and accordingly, the results of operations for each acquisition have been included in our consolidated results from their respective acquisition dates. Cash consideration for the various 2008 acquisitions was primarily provided through borrowings under our credit facilities and cash equivalents on-hand. The unaudited pro forma results of operations for the period ended March 31, 2008 are not presented due to the insignificant impact of the 2008 acquisitions on our consolidated results of operations.

        A summary of the consideration paid for acquisitions in 2008 and the allocation of the purchase price is as follows:

Cash Paid (gross of cash acquired)(1)   $ 3,250  
Fair Value of Identifiable Assets Acquired:        
  Cash, Accounts Receivable, Prepaid Expenses and Other     149  
  Property, Plant and Equipment     42  
  Customer Relationship Assets(2)     1,925  
  Core Technology      
  Other Assets      
Liabilities Assumed(3)     (350 )
   
 
  Total Fair Value of Identifiable Net Assets Acquired     1,766  
   
 
Recorded Goodwill   $ 1,484  
   
 

(1)
Included in cash paid for acquisitions in the consolidated statements of cash flows for the three months ended March 31, 2008 is additional purchase price consideration of $529 for acquisitions completed in prior years.

(2)
The weighted average lives of customer relationship assets associated with acquisitions in 2008 were 30 years.

(3)
Consisted primarily of accounts payable, accrued expenses and notes payable.

18


IRON MOUNTAIN INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(5) Acquisitions (Continued)

        Allocation of the purchase price for the 2008 acquisitions was based on estimates of the fair value of net assets acquired, and is subject to adjustment. The purchase price allocations of certain 2007 and 2008 transactions are subject to finalization of the assessment of the fair value of property, plant and equipment, intangible assets (primarily customer relationship assets), operating leases, restructuring purchase reserves, deferred revenue and deferred income taxes. We are not aware of any information that would indicate that the final purchase price allocations will differ meaningfully from preliminary estimates.

        In connection with each of our acquisitions, we have undertaken certain restructurings of the acquired businesses. The restructuring activities include certain reductions in staffing levels, elimination of duplicate facilities and other costs associated with exiting certain activities of the acquired businesses. The estimated cost of these restructuring activities were recorded as costs of the acquisitions and were provided in accordance with EITF No. 95-3, "Recognition of Liabilities in Connection with a Purchase Business Combination." We finalize restructuring plans for each business no later than one year from the date of acquisition. Unresolved matters at March 31, 2008 primarily include completion of planned abandonments of facilities and severance contracts in connection with certain acquisitions.

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

 
  Year Ended
December 31, 2007

  Three Months
Ended
March 31, 2008

 
Reserves, Beginning Balance   $ 5,553   $ 3,602  
Reserves Established     2,246     1,376  
Expenditures     (3,991 )   (480 )
Adjustments to Goodwill, including currency effect(1)     (206 )   (75 )
   
 
 
Reserves, Ending Balance   $ 3,602   $ 4,423  
   
 
 

(1)
Includes adjustments to goodwill as a result of management finalizing its restructuring plans.

        At March 31, 2008, the restructuring reserves related to acquisitions consisted of lease losses on abandoned facilities ($2,751), severance costs ($128), and other exit costs ($1,544). These accruals are expected to be used prior to March 31, 2009, except for lease losses of $1,840, severance costs of $86, and other exit costs of $100, all of which are based on contracts that extend beyond one year.

19


IRON MOUNTAIN INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

This excerpt taken from the IRM 10-Q filed Nov 9, 2007.

(5)    Acquisitions

        We account for acquisitions using the purchase method of accounting, and accordingly, the results of operations for each acquisition have been included in our consolidated results from their respective acquisition dates. Cash consideration for the various 2007 acquisitions was provided primarily through borrowings under our credit facilities, the proceeds from the sale of senior subordinated notes, and cash equivalents on-hand. The unaudited pro forma results of operations for the period ended September 30, 2007 are not presented due to the insignificant impact of the 2007 acquisitions on our consolidated results of operations.

        In the second quarter of 2007, we completed the acquisition of ArchivesOne, Inc. ("ArchivesOne"), a leading provider of records and information management services in the United States. ArchivesOne has 31 facilities located in 17 major metropolitan markets in 10 states and the District of Columbia. The purchase price was approximately $202,000 for ArchivesOne. In the third quarter of 2007, we acquired RMS Services—USA, Inc. ("RMS") for approximately $45,000 in cash. RMS, a leading provider of outsourced file-room services, offers hospitals comprehensive, next generation file-room and film-library management solutions. We funded both these acquisitions with cash and cash equivalents on-hand and borrowings under our new credit agreement (see Note 6).

        A summary of the consideration paid and the allocation of the purchase price of all 2007 acquisitions is as follows:

Cash Paid (gross of cash acquired)   $ 342,522  
Fair Value of Identifiable Net Assets Acquired:        
  Tangible Assets Acquired(1)     82,963  
  Customer Relationships Acquired     174,212  
  Liabilities Assumed(2)     (81,815 )
   
 
  Total Fair Value of Identifiable Net Assets Acquired     175,360  
   
 
Recorded Goodwill   $ 167,162  
   
 

(1)
Consisted primarily of accounts receivable, prepaid expenses and other, land, buildings, racking and leasehold improvements.

(2)
Consisted primarily of accounts payable, accrued expenses and notes payable.

        Allocation of the purchase price for the 2007 acquisitions was based on estimates of the fair value of net assets acquired, and is subject to transactions are subject to finalization of the assessment of the fair value of property, plant and equipment, intangible assets (primarily customer relationship assets), operating leases, restructuring purchase reserves, deferred revenue and deferred income taxes. We are not aware of any information that would indicate that the final purchase price allocations will differ meaningfully from preliminary estimates.

        In connection with each of our acquisitions, we have undertaken certain restructurings of the acquired businesses. The restructuring activities include certain reductions in staffing levels, elimination of duplicate facilities and other costs associated with exiting certain activities of the acquired businesses. The estimated costs of these restructuring activities were recorded as costs of the acquisitions and were

19



provided in accordance with Emerging Issues Task Force No. 95-3, "Recognition of Liabilities in Connection with a Purchase Business Combination." We finalize restructuring plans for each business no later than one year from the date of acquisition. Unresolved matters at September 30, 2007 primarily include completion of planned abandonments of facilities and severance contracts in connection with certain acquisitions.

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

 
  Year Ended December 31, 2006
  Nine Months Ended September 30, 2007
 
Reserves, Beginning Balance   $ 12,698   $ 5,553  
Reserves Established     3,642     2,139  
Expenditures     (5,181 )   (3,233 )
Adjustments to Goodwill, including currency effect(1)     (5,606 )   (249 )
   
 
 
Reserves, Ending Balance   $ 5,553   $ 4,210  
   
 
 

(1)
Includes adjustments to goodwill as a result of management finalizing its restructuring plans.

        At September 30, 2007, the restructuring reserves related to acquisitions consisted of lease losses on abandoned facilities ($2,168), severance costs ($419), and other exit costs ($1,623). These accruals are expected to be used prior to September 30, 2008, except for lease losses of $1,597, severance contracts of $102 and other exit costs of $125, all of which are based on contracts that extend beyond one year.

20



This excerpt taken from the IRM 10-Q filed Aug 9, 2007.

(5)   Acquisitions

We account for acquisitions using the purchase method of accounting, and accordingly, the results of operations for each acquisition have been included in our consolidated results from their respective acquisition dates. Cash consideration for the various 2007 acquisitions was provided primarily through borrowings under our credit facilities, the proceeds from the sale of senior subordinated notes, and cash equivalents on-hand.

In the second quarter of 2007, we completed the acquisition of ArchivesOne, Inc. (“ArchivesOne”), a leading provider of records and information management services in the United States. ArchivesOne has 31 facilities located in 17 major metropolitan markets in 10 states and the District of Columbia. The purchase price was approximately $202,165. We funded this acquisition with cash and cash equivalents on-hand and borrowings under our new credit agreement (see Note 6).

A summary of the consideration paid and the allocation of the purchase price of all 2007 acquisitions is as follows:

Cash Paid (gross of cash acquired)

 

$

266,954

 

Fair Value of Identifiable Net Assets Acquired:

 

 

 

Fair Value of Identifiable Assets Acquired(1)

 

191,197

 

Liabilities Assumed(2)

 

(71,004

)

Total Fair Value of Identifiable Net Assets Acquired

 

120,193

 

Recorded Goodwill

 

$

146,761

 


(1)          Consisted primarily of accounts receivable, prepaid expenses and other, land, buildings, racking and leasehold improvements. Additionally, includes customer relationship assets of $139,284 for the six months ended June 30, 2007.

(2)          Consisted primarily of accounts payable, accrued expenses and notes payable.

Allocation of the purchase price for the 2007 acquisitions was based on estimates of the fair value of net assets acquired, and is subject to adjustment. The purchase price allocations of certain 2006 and 2007

18




IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)

These excerpts taken from the IRM 10-Q filed Aug 9, 2006.
(5) Acquisitions (Continued)

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

 

 

Year Ended
December 31, 2005

 

Six Months
Ended
June 30, 2006

 

Reserves, Beginning Balance

 

 

$

21,414

 

 

 

$

12,698

 

 

Reserves Established

 

 

1,142

 

 

 

1,465

 

 

Expenditures

 

 

(7,360

)

 

 

(2,694

)

 

Adjustments to Goodwill, including currency effect(1)

 

 

(2,498

)

 

 

197

 

 

Reserves, Ending Balance

 

 

$

12,698

 

 

 

$

11,666

 

 


       (1) Includes adjustments to goodwill as a result of finalizing our restructuring plans.

At June 30, 2006, the restructuring reserves related to acquisitions consisted of lease losses on abandoned facilities ($8,656), severance costs ($418), and move and other exit costs ($2,592). These accruals are expected to be used prior to June 30, 2007 except for lease losses ($6,670) and severance contracts ($144), both of which are based on contracts that extend beyond one year.

25.8                     Acquisitions

(a)                                      No Obligor shall (and the Parent shall ensure that no other member of the Group (other than a Joint Venture Group Company) will) incorporate or acquire a company or acquire (or acquire an interest in) shares or securities or a business or undertaking.

(b)                                     Paragraph (a) above shall not apply to:

(i)                        the proposed share acquisition by the Parent of a European company codenamed “Project Mont Blanc”;

(ii)                     an acquisition of (A) all of the issued share capital of a limited liability company or (B) any shares in a Joint Venture Group Company or (C) a business or undertaking, but only if:

74




(1)                    the consideration for the acquisition does not exceed £10,000,000 and when aggregated with the consideration for all other acquisitions which are not otherwise permitted by paragraph (i) above does not exceed £20,000,000 in any financial year; or

(2)                    the consideration for the acquisition when aggregated with the consideration for all other acquisitions which are not otherwise permitted by the preceding paragraphs does not exceed £30,000,000 in any financial year but only to the extent that all such acquisitions are fully funded by a specific issue of equity shares or by Approved Subordinated Debt provided that

(i) nothing contained in this Clause 25.8 shall prevent the Parent from (a) completing the Architel acquisition, and if it is necessary that Iron Mountain Incorporated finance the acquisition prior to this amendment, the Parent may repay Iron Mountain Incorporated up to £7,000,000, upon approval of the amendment, without regard to any other provision of this Agreement, and (b) completing the Docu Guard acquisition; and

(ii) for the financial year ending in January 2007 in calculating whether or not the £20,000,000 and £30,000,000 limits have been exceeded, the consideration of all acquisitions made prior to the date of this Amendment Agreement shall be ignored.

(iii)                  an acquisition by a member of the Group permitted pursuant to paragraphs 25.11(b)(viii) and 25.11(b)(ix) of Clause 25.11 (Disposals);

(iv)                 any acquisition with the prior written consent of the Majority Lenders.

This excerpt taken from the IRM 10-Q filed May 9, 2005.

(5) Acquisitions

        We account for acquisitions using the purchase method of accounting, and accordingly, the results of operations for each acquisition has been included in our consolidated results from their respective acquisition dates. Cash consideration for the various acquisitions was provided through our credit facilities.

        A summary of the consideration paid and the allocation of the purchase price of all 2005 acquisitions is as follows:

Cash Paid (net of cash acquired)   $ 33,171  
Fair Value of Identifiable Net Assets Acquired:        
  Fair Value of Identifiable Assets Acquired(1)     (8,569 )
  Liabilities Assumed(2)     942  
  Minority Interest(3)     (8,818 )
   
 
  Total Fair Value of Identifiable Net Assets Acquired     (16,445 )
   
 
Recorded Goodwill   $ 16,726  
   
 

(1)
Comprised primarily of accounts receivable, prepaid expenses and other, land, buildings, racking, leasehold improvements, and customer relationship assets.

(2)
Comprised primarily of accounts payable, accrued expenses and notes payable.

(3)
Comprised primarily of the carrying value of minority interests of Latin American partners at the date of acquisition.

        Allocation of the purchase price for the 2005 acquisitions was based on estimates of the fair value of net assets acquired, and is subject to adjustment. The purchase price allocations of certain 2004 and 2005 transactions are subject to finalization of the assessment of the fair value of property, plant and equipment, intangible assets (primarily customer relationship assets), operating leases, restructuring purchase reserves and deferred income taxes. We are not aware of any information that would indicate that the final purchase price allocations will differ meaningfully from preliminary estimates.

13



        In connection with certain of our acquisitions, we have undertaken certain restructurings of the acquired businesses. The restructuring activities include certain reductions in staffing levels, elimination of duplicate facilities and other costs associated with exiting certain activities of the acquired businesses. The estimated cost of these restructuring activities were recorded as costs of the acquisitions and were provided for in accordance with Emerging Issues Task Force Issue No. 95-3, "Recognition of Liabilities in Connection with a Purchase Business Combination." We finalize restructuring plans for each business no later than one year from the date of acquisition. Unresolved matters at March 31, 2005 primarily include completion of planned abandonments of facilities and severance contracts in connection with certain acquisitions.

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

 
  Year Ended
December 31, 2004

  Three Months Ended
March 31, 2005

 
Reserves, Beginning Balance   $ 16,322   $ 21,414  
Reserves Established     15,282     279  
Expenditures     (10,200 )   (1,909 )
Adjustments to Goodwill, including currency effect(1)     10     137  
   
 
 
Reserves, Ending Balance   $ 21,414   $ 19,921  
   
 
 

(1)
Includes adjustments to goodwill as a result of management finalizing its restructuring plans.

        At March 31, 2005, the restructuring reserves related to acquisitions consisted of lease losses on abandoned facilities of $12,521, severance costs for approximately 54 people of $2,141 and other exit costs of $5,259. These accruals are expected to be used prior to March 31, 2006 except for lease losses of $10,239 and severance contracts of $163, both of which are based on contracts that extend beyond one year.

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