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

                                    FORM 10-K
                                   (Mark One)

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
         OF THE SECURITIES EXCHANGE ACT OF 1934

         For the Fiscal Year Ended December 31, 1996
                                          OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
         OF THE EXCHANGE ACT OF 1934

         For the transition period from ______ to ______

                         Commission File Number 0-27584

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

                      Delaware                      04-3107342
                  (State or other                (I.R.S. Employer
                    jurisdiction                Identification No.)
                 of incorporation)

                 745 Atlantic Avenue
                     Boston, MA                        02111
                (Address of principal                (Zip Code)
                 executive offices)

                                  617-357-4455
              (Registrant's telephone number, including area code)

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

           Securities registered pursuant to Section 12(g) of the Act:
                 Common Stock, $.01 par value ("Common Stock")

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]  No [ ]

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

As of March 21, 1997, the aggregate market value of the Common Stock of the
registrant held by non-affiliates of the registrant was $132,852,724 based on
the closing price on the Nasdaq Stock Market's National Market (the "Nasdaq
National Market") on such date.

               Number of shares of the registrant=s
                 Common Stock at March 21, 1997: 9,684,419

               Number of shares of the registrant's
                 Non-Voting Common Stock
                 at March 21, 1997: 454,590



                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the 1997 Annual Meeting of
Stockholders, which will be filed on or before April 30, 1997, are incorporated
by reference into Part III.

<PAGE>





                                  IRON MOUNTAIN INCORPORATED

                                 1996 FORM 10-K ANNUAL REPORT

                                       Table of Contents

<TABLE>
<CAPTION>
                                           PART I
                                                                                         Page
<S>            <C>                                                                          <C>
Item 1.        Business....................................................................  1
Item 2.        Properties.................................................................. 19
Item 3.        Legal Proceedings........................................................... 20
Item 4.        Submission of Matters to a Vote of                                           
                  Security Holders......................................................... 21
                                                                                            
                                           PART II                                          
                                                                                            
Item 5.        Market for the Registrant's Common                                           
                  Stock and Related Stockholder Matters.................................... 23
Item 6.        Selected Consolidated Financial and Operating Information................... 24
Item 7.        Management's Discussion and Analysis of                                      
                  Financial Condition and Results of                                        
                  Operations............................................................... 26
Item 8.        Financial Statements and Supplementary Data................................. 37
Item 9.        Changes in and Disagreements with                                            
                  Accountants on Accounting and                                             
                  Financial Disclosure..................................................... 61
                                                                                            
                                          PART III                                          
                                                                                            
Item 10.       Directors and Executive Officers of the                                      
                  Registrant............................................................... 62
Item 11.       Executive Compensation...................................................... 62
Item 12.       Security Ownership of Certain Beneficial                                     
                  Owners and Management.................................................... 62
Item 13.       Certain Relationships and Related                                            
                  Transactions............................................................. 62
                                                                                            
                                           PART IV                                          
                                                                                            
Item 14.       Exhibits, Financial Statement Schedules                                      
                  and Reports on Form 8-K.................................................. 63
</TABLE>


<PAGE>
                                     PART I

  Item 1.  Business

  (a)  Development of Business.

         Iron Mountain Incorporated ("Iron Mountain" or the "Company," which
  terms include its consolidated subsidiaries unless the context indicates
  otherwise) is America's largest records management company, as measured by its
  revenues in the United States. Iron Mountain is a full-service provider of
  records management and related services, enabling customers to outsource data
  and records management functions. As of December 31, 1996, Iron Mountain
  managed approximately 30.6 million Cartons1 in 109 records centers in 33
  markets nationwide. Iron Mountain has a diversified base of over 23,000
  customer accounts, which includes more than half of the Fortune 500 and
  numerous legal, banking, healthcare, accounting, insurance, entertainment and
  government organizations. Iron Mountain 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 Iron Mountain's
  revenues since 1992), computer disks and tapes, microfilm and microfiche,
  master audio and video tapes, film and optical disks, X-rays and blueprints.
  Iron Mountain's principal services include filing, retrieval and destruction
  of records, courier pick-up and delivery, database management and customized
  reporting. Iron Mountain 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. The current Iron Mountain was incorporated in
  Delaware in 1990.

         As part of its growth strategy, since mid-1994, the Company has
  acquired 27 records management businesses, 20 of which have been consummated
  since January 1, 1996 (the "Recent Acquisitions"), and has entered into
  definitive agreements to acquire two additional records management businesses
  (the "Pending Acquisitions," and, together with the Recent Acquisitions, the
  "Acquisitions"). See "Description of Business--Recent and Pending
  Acquisitions" and "Growth Strategy."

         On February 19, 1997, the Company entered into an Agreement and Plan of
  Merger, as amended (the "Merger Agreement") with Safesite Records Management
  Corporation ("Safesite") providing for the merger of a wholly owned subsidiary
  of Iron Mountain with Safesite (the "Merger"). Safesite provides a full range
  of records storage and management services and data protection services for
  more than 7,000 customers in 14 markets, all of which are among the top 30
  U.S. markets. Ten of these markets overlap with current Iron Mountain
  operations, while four represent new markets.

--------
  1 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 Iron Mountain's vital records and
  data protection services.



                                       -1-

<PAGE>


         Under the Merger Agreement, Iron Mountain will acquire all of
  Safesite's outstanding capital stock for approximately $62 million, which will
  be paid in the form of Iron Mountain's Common Stock, par value $.01 per share
  (the "Common Stock"), and immediately exercisable options to acquire shares of
  Common Stock, to be valued at approximately $50 million, and approximately $12
  million in cash. The number of shares of the Common Stock will be determined
  based on the average market price for the 20 trading days ending three trading
  days before the closing, subject to a floor of $26.00 and a ceiling of $31.00.
  Accordingly, if such average price is less than $26.00 or greater than $31.00,
  the number of shares of Common Stock and immediately exercisable options to
  acquire Common Stock to be issued in the Merger will be based on a price of
  $26.00 or $31.00, as the case may be, and Iron Mountain would issue 1,919,615
  or 1,610,000, as the case may be, shares of Common Stock and shares underlying
  immediately exercisable options to acquire Common Stock. The Merger has been
  structured to be a tax-free reorganization.

          Although the Company believes the consummation of the Merger is
  probable, no assurances can be given that the Merger will occur or occur in
  the foregoing manner. The Merger, which is expected to close in the second
  quarter of 1997, is subject to various conditions to closing, including but
  not limited to, regulatory approvals, third-party consents and a Safesite
  stockholder vote. Certain major stockholders of Safesite have agreed to vote
  in favor of the Merger and other related matters.

         In March 1997, Iron Mountain experienced three fires that resulted in
  extensive damage to two of its record management facilities in South
  Brunswick, New Jersey. Approximately 1.0 million of the 1.2 million Cartons
  stored at these facilities were destroyed. The fires are believed to be caused
  by arson and are under investigation by local, state and federal authorities.
  The affected facilities account for only two of Iron Mountain's 117 facilities
  nationwide (as of March 21, 1997), and represented less than three percent of
  revenues and less than two percent of earnings before interest, taxes,
  depreciation, amortization and extraordinary charges ("EBITDA") for 1996. See
  "Management's Discussion and Analysis of Financial Condition and Results of
  Operations--Overview" for a more detailed description of such casualty and its
  anticipated impact on Iron Mountain.

  (b)  Description of Business.

  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 

                                      -2-
<PAGE>

  legal reasons or regulatory compliance or for occasional reference in support
  of ongoing business operations. Based on industry studies, Iron Mountain
  believes that inactive records make up approximately 80% of all records.

         Growth of Market; Outsourcing. Iron Mountain 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.

          Iron Mountain 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 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 PRISM International,
  a trade group with approximately 525 members (formerly known as the
  Association of Commercial Records Centers), 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. Iron
  Mountain believes that there are only a few national providers in the industry
  (including Iron Mountain and Safesite) and that the rest are regional or, in
  most instances, single-city operators.

         Increasing Industry Consolidation. Iron Mountain believes that there is
  a trend towards consolidation in the records management industry and that it
  will continue 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.


                                      -3-
<PAGE>

  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 32 consecutive quarters and have represented approximately
                60% of Iron Mountain's total revenues in each of the last five
                years. Once a customer places a record in storage with Iron
                Mountain and until that record is destroyed or permanently
                removed (for which Iron Mountain typically receives a service
                fee), Iron Mountain 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. Iron Mountain's
                customers have on average generated additional Cartons at a
                faster rate than stored Cartons have been destroyed or
                permanently removed. From January 1, 1992 through December 31,
                1996, net Cartons from existing customers grew at an average
                annual rate of 6.5%. Iron Mountain 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 Iron
                Mountain'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. Iron Mountain has over
                23,000 customer accounts in a variety of industries. Iron
                Mountain 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 Iron Mountain's customers accounted for more than 3% of
                revenues in each of the years from 1993 through 1996. From
                January 1, 1992 through December 31, 1996, average annual
                permanent removals of Cartons represented only approximately 4%
                of total Cartons stored.

                                      -4-

<PAGE>

  [bullet]      Capital Expenditures Related Primarily to Growth. Iron
                Mountain's business requires limited annual maintenance capital
                expenditures. Maintenance capital expenditures were $1.2
                million, $0.9 million and $1.1 million in 1994, 1995 and 1996,
                respectively. From 1992 to 1996, over 90% of Iron Mountain'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.

  Recent and Pending Acquisitions

         Since mid-1994, the Company has been pursuing a growth strategy, which
  has resulted in the acquisition of 27 records management businesses during
  such period. In addition to the Merger, the Company has one additional Pending
  Acquisition.

         The total purchase price of the Recent Acquisitions was approximately
  $87.1 million (not including contingent payments of up to $4.8 million based
  upon the achievement of certain revenue targets during 1997 and 1998), and the
  total purchase price of the Pending Acquisitions is approximately $75.0
  million. The Recent Acquisitions represent in the aggregate total annual
  revenues of approximately $37.3 million, and the Pending Acquisitions
  represent total annual revenues of approximately $24.1 million (calculated in
  each case by reference to the revenues of each such acquired business during
  the year ended December 31, 1996, which calculation includes an estimate of
  total revenues for the portion of 1996, if any, during which any such acquired
  business was included in the Company's results of operations).

         Giving effect to the Recent Acquisitions consummated after January 1,
  1997 and the Pending Acquisitions, as of December 31, 1996, the Company
  operated 141 record centers in 40 markets nationwide, servicing over 30,000
  customers.

                                      -5-

<PAGE>

         The following table presents certain information for each acquisition
  completed since mid-1994.

<TABLE>
<CAPTION>

                                                                  Principal
                                                                 State(s) of       Completion
Acquisitions                                                      Operation           Date
------------                                                      ---------           ----
<S>                                                              <C>              <C> 
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         April 1996
                                                                 Kentucky
Records management business of Output Technologies
  Central Region, Inc........................................    Missouri         May 1996
Records management business of The Fortress Corporation........  Massachusetts    July 1996
                                                                 and Florida
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
Data Storage Company, Inc. (d/b/a DataSafe)....................  Tennessee        October 1996
Dial-A-File Storage, Inc.......................................  Florida          October 1996
Mohawk Business Record Storage, Inc............................  Minnesota        November 1996
Magnetic Archives, Inc.........................................  Colorado         November 1996
Deliverex of Broward...........................................  Florida          November 1996

1997 Acquisitions
Security Archives II, Inc. and Security Archives of MSP, Inc...  Minnesota        February 1997
Records management business of Wellington Financial Services,
Inc. (d/b/a Michigan Data Storage, Michigan Safe Deposit         
and The Depository)............................................  Michigan         February 1997
Data Recovery Services, Inc....................................  Florida          February 1997
CBD Security Archives, Inc.....................................  Louisiana        March 1997
                                                                 and Texas
</TABLE>
                                      -6-

<PAGE>

         The closings of the Pending Acquisitions are subject to various
  conditions and no assurance can be given that either Pending Acquisition will
  be completed.

  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. Iron Mountain's goal is to be one of the
  largest records management companies in each of its markets. In addition,
  through its growth strategy, Iron Mountain seeks to attain increasing
  economies of scale in order to provide high-quality service at competitive
  prices.

         The following table sets forth Iron Mountain's approximate growth in
  Cartons stored by existing customers, new customers and as a result of
  acquisitions for the three years ended December 31, 1994, 1995 and 1996.

                          Cartons Added to Storage (1)
                                  (In millions)
<TABLE>
<CAPTION>

                                                            Year Ended December 31,
                                                      ---------------------------------
                                                      1994           1995          1996
                                                      ----           ----          ----

<S>                                                   <C>           <C>            <C> 
  Cartons at Beginning of Period..................    15.5          17.7           23.3
                                                      ====          ====           ====

  Additions from Existing Customers
    Gross Cartons Added...........................     2.6           2.5           3.3
    Cartons Deleted:
        Destructions..............................    (0.9)         (1.0)         (1.1)
        Permanent Removals........................    (0.6)         (0.6)         (0.9)
                                                      ----          ----          ---- 
  Net Carton Growth from Existing Customers.......     1.1           0.9           1.3
  Additions from New Customers....................     1.0           1.4           1.4
  Additions from Acquisitions.....................     0.1           3.3           4.6
                                                       ---           ---           ---
  Total Carton Additions..........................     2.2           5.6           7.3
                                                       ===           ===          ====
  Percentage Increase.............................      14%           32%           31%
</TABLE>

  (1)    Excludes storage volumes attributable to the Company's vital records
         services and data protection services.

         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, Iron Mountain seeks to maintain high levels of
  customer retention by providing premium customer service through its
  decentralized customer support staff.

                                      -7-

<PAGE>

         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. Iron Mountain's direct sales force is
  dedicated solely to establishing new account relationships and draws on Iron
  Mountain'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 years 1993 through 1995 and over 1,200 new customer
  accounts in 1996.

         Iron Mountain segments its market into large volume accounts (typically
  over 10,000 Cartons) and standard accounts. As of December 31, 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. Iron Mountain employs different database
  marketing techniques, program design features and pricing structures to meet
  the needs of each segment. In recent years Iron Mountain's large volume
  account segment has grown rapidly, driven by strategic outsourcing initiatives
  and Iron Mountain's marketing efforts. In 1994, 1995 and 1996, large volume
  accounts represented 70%, 76% and 66% 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, Iron Mountain in mid-1994 adopted a more
  active acquisition strategy and implemented changes in its management, systems
  and financial infrastructure, including the consummation of a public offering
  of its Common Stock in January 1996 to execute such strategy. Since June 1994,
  Iron Mountain has acquired 27 companies and has entered into definitive
  agreements to acquire two more.

         Iron Mountain currently operates in 36 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. Iron Mountain's corporate development
  staff is engaged in an ongoing review of acquisition candidates. Management
  believes that Iron Mountain is well-positioned to participate in the further
  consolidation of the records management industry.

         Iron Mountain 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. Iron Mountain seeks to acquire records management
  companies in markets where management believes there is the potential for
  growth. Within such markets, Iron Mountain 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.

                                      -8-

<PAGE>

         Iron Mountain 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. Iron Mountain 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 Iron Mountain's efficient
  storage, labor, transportation and other operating efficiencies into new
  markets; (iii) the increased utilization of efficiencies available through
  Iron Mountain'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 Iron Mountain's capital-raising activities.

         Iron Mountain also intends to continue to make fold-in acquisitions to
  augment its operations in existing markets. Iron Mountain's goal in its
  existing markets is to exploit economies of scale while maintaining high
  quality service. Following a new-market acquisition, Iron Mountain 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 Iron Mountain 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. Iron Mountain seeks to exploit its
  strengths in each of these areas to maintain customer relationships and to
  attract new customers.

         Reputation for Reliability. Iron Mountain believes it has a reputation
  for reliability based on its more than 45 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
  Iron Mountain to respond directly, effectively and flexibly to customers.
  Broad operating authority is delegated to regional Vice Presidents and 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. Iron Mountain has invested $16.3 million in
  technology since 1992 in order to provide faster and more flexible solutions
  for its customers and to enhance the 

                                      -9-
<PAGE>

  quality and lower the costs of its own operations. Iron Mountain believes that
  its technological capabilities, especially its Safekeeper system, are a
  significant tool in attracting new customers. Iron Mountain plans to continue
  to invest in its proprietary technologies in the future. See "Technology and
  Development; Information Systems."

         National Operating Presence. Iron Mountain believes it is one of only a
  few records management companies with a national operating presence (including
  Safesite). Traditionally, the purchase decision for large multi-site customers
  has been made at the local level. Recently, however, Iron Mountain 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. Iron Mountain 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. Iron Mountain 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 Iron
  Mountain's cost of sales, reducing per Carton storage costs is a primary
  strategic goal of Iron Mountain and its real estate management staff. Iron
  Mountain 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, Iron Mountain
  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 that of
  Iron Mountain's overall average Carton density.

         Labor and Transportation Efficiency. Iron Mountain 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, Iron Mountain seeks to maximize its courier
  delivery fleet usage and to increase delivery and routing efficiencies.

         Iron Mountain's incentive structure has also contributed to labor
  efficiency. Each of Iron Mountain'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 year ended December 31,
  1996, Iron Mountain's employees earned incentive compensation in an amount
  equal to approximately 12.0% of the base wages paid by Iron Mountain.

                                      -10-

<PAGE>

         General & Administrative and Management Information Systems
  Efficiencies. Iron Mountain'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, Iron Mountain's corporate staff is responsible for
  the design and support of all records management technology. Iron Mountain
  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; Information Systems

         Iron Mountain 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 Iron Mountain 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, Iron
  Mountain has invested $16.3 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
  Iron Mountain a substantial measure of flexibility and vendor independence,
  and reduces the risk of technological obsolescence.

         Safekeeper has improved Iron Mountain'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

                                      -11-
<PAGE>
                conversion routines to automate the conversion process and
                effectively translate customer and inventory information.

  [bullet]      Storage Efficiency. Safekeeper enables Iron Mountain 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 Iron Mountain'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.

                                      -12-
<PAGE>

  [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, Iron Mountain's data protection services
  facilities utilize Iron Mountain's Media LinkJ 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. Iron Mountain
  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 Iron Mountain's revenues. The balance of Iron Mountain's
  revenues come from the storage and service of vital records and data
  protection, consulting and other services.

         Storage Operations. Storage revenues accounted for approximately 60% of
  revenues in each of Iron Mountain'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 Iron Mountain'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.


                                      -13-

<PAGE>

         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. Iron Mountain 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. Iron Mountain currently utilizes a fleet of approximately 300
  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. Iron Mountain's charges for providing enhanced
  security and special climate-controlled environments for vital records are
  higher than for typical storage functions. Iron Mountain 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 Iron Mountain'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 the 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. Iron
  Mountain also sells a full line of specially designed corrugated cardboard,
  metal and plastic storage containers.

         Iron Mountain provides professional consulting services to large
  customers, enabling them to develop and implement comprehensive records
  management programs. Iron Mountain's consulting business draws on Iron
  Mountain's experience in records management to analyze the practices of such
  companies and assist them in creating more effective programs of records
  management. Iron Mountain'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, Iron Mountain has recently begun to provide services for the
  management of active records. Iron Mountain can provide these services, which
  generally include document and file processing and storage, both off-site at
 
                                      -14-

<PAGE>
 
  its own facilities and by supplying its own personnel to perform management
  functions on-site at the customer's premises. Iron Mountain sees active
  records management as a potential source of future revenue growth for Iron
  Mountain, although there can be no assurance in this regard.

  Potential International Investments

         Iron Mountain may consider capitalizing upon its expertise in the
  records management industry by making investments in records management
  businesses outside the United States. From time to time, Iron Mountain 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

         Iron Mountain's customer base is diversified in terms of revenue and
  industry concentration. Iron Mountain currently has over 23,000 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.

  [Graphic omitted: Graphic contains a pie chart showing the relative amounts of
  revenue by percentage attributable to certain business sectors as of June
  1994. Such percentages are as follows:

                        Other                           19%
                        Legal Services                  16%
                        Depository Institutions         14%
                        Health Care                     10%
                        Other Financial Institutions    10%
                        Professional Services            7%
                        Government                       6%
                        Insurance Companies              8%
                        Manufacturing                    4%
                        Retail                           4%
                        Entertainment                    2%   ]

         Iron Mountain services accounts of all sizes, from small businesses and
  professional groups to over half of the Fortune 500. Other than the Resolution
  Trust Corporation (the "RTC") or its successor, the Federal Deposit Insurance
  Corporation (the "FDIC"), which accounted for 6.3%, 4.8% and 3.5% of Iron
  Mountain's revenues for the years ended December 31, 1994, 1995 and 1996,

                                      -15-

<PAGE>

  respectively, no account or related set of accounts generated more than 3% of
  Iron Mountain's revenues during any such period.

         Iron Mountain'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 Iron Mountain's facilities may
  act as a disincentive to the FDIC 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

         Iron Mountain 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 in each of the years 1993 through 1995, and
  over 1,200 new customer accounts in 1996. The selling effort is bolstered by
  regional and senior managers focused on key account selling.

  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. Iron Mountain's current operations are divided
  into four areas, each headed by a senior executive, comprising twelve 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 currently further divided into a total of 36 markets,
  each managed by a General Manager. The Vice Presidents and General Managers
  have broad operating authority. Iron Mountain'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 1,456 full-time employees as of
  December 31, 1996, of whom approximately 90% are employed at the district
  level, 8% at the corporate level and the balance at the area and regional
  levels.

         Approximately 11% of Iron Mountain's employees are represented by
  various Teamsters Union locals under four different agreements. Two of these
  agreements, representing approximately 150 employees, have expired and are
  currently under negotiation. Based on its prior experience with the six union
  locals involved in these negotiations, Iron Mountain expects that it will
  enter into new agreements on satisfactory terms. The remaining two contracts
  expire in 1999. In addition, in 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. Iron Mountain is currently in
  negotiations with the union local.

                                      -16-

<PAGE>

         All non-union employees are eligible to participate in Iron Mountain'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
  Iron Mountain has good relationships with its employees and unions.

  Competition

         Iron Mountain competes with a few other national companies, one of
  which is Safesite, which will be acquired by Iron Mountain if the Merger is
  consummated, as well as a large number of local and regional concerns. Iron
  Mountain 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
  Iron Mountain. 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. In addition, Iron
  Mountain 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. Iron Mountain also faces competition for acquisition candidates.

         The substantial majority of Iron Mountain'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 Iron Mountain's
  business.

  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

                                      -17-

<PAGE>

  extraordinary expenses associated with business interruption and damage or
  loss from fire, 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 "Management's Discussion and Analysis of Financial Condition and
  Results of Operations--Overview" for disclosure concerning recent fires at two
  of Iron Mountain's facilities.

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

  Environmental Matters

         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 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. Iron Mountain is aware of the
  presence of ACMs at some of Iron Mountain's facilities, but believes that such
  materials are in acceptable condition at this time. Iron Mountain 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.

         Certain of the properties formerly or currently owned or operated by
  Iron Mountain were previously used for industrial or other purposes that
  involved the manufacture, 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
  addition, certain of such properties are adjacent to or near Superfund sites
  or other contaminated properties. 

                                      -18-

<PAGE>

  In connection with its former and current ownership or operation of certain
  properties, Iron Mountain may be potentially liable for environmental costs
  such as those discussed above, and as more specifically described below.

         At Iron Mountain'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, Iron Mountain
  filed certain reports documenting its efforts and site conditions with the
  appropriate environmental agencies pursuant to various environmental laws.
  Investigations conducted on behalf of Iron Mountain in connection with its
  on-site remedial activities disclosed that regional groundwater contamination,
  unrelated to Iron Mountain's property, exists. At this time, Iron Mountain has
  not received any notice from any regulatory agency or third party seeking
  further remediation of soil or groundwater by Iron Mountain; however, there
  can be no assurance that such further action will not be sought in the future.
  Iron Mountain 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. Iron Mountain believes the
  ultimate outcome of the foregoing will not have a material adverse effect on
  Iron Mountain's financial condition or results of operations. See Note 8 of
  Notes to Iron Mountain's Consolidated Financial Statements.

         Iron Mountain 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 Iron Mountain. Iron
  Mountain believes that it is in substantial compliance with all applicable
  material environmental laws. Iron Mountain 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 its 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 Iron Mountain might be
  liable in the future or that future regulatory action, as well as compliance
  with future environmental laws, will not require Iron Mountain to incur costs
  for or at its properties that could have a material adverse effect on Iron
  Mountain's financial condition and results of operations.

  Item 2.  Properties.

         As of December 31, 1996, Iron Mountain conducted operations through 94
  leased and 15 owned facilities containing a total of approximately 7.3 million
  square feet of space. The leased facilities typically have initial lease terms
  of 10 years or longer with options to renew for an additional 10 years. The
  weighted average remaining term of the leases on these facilities is
  approximately 7.5 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 Iron Mountain. See Note
  9 of Notes to Iron Mountain's Consolidated Financial Statements.

                                      -19-
<PAGE>

         As of December 31, 1996, Iron Mountain 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                                 25
  Colorado                                   4
  Connecticut                                2
  Delaware                                   1
  Florida                                    13
  Georgia                                    8
  Illinois                                   3
  Kansas                                     1
  Kentucky                                   1
  Maryland                                   3
  Massachusetts                              9
  Minnesota                                  4
  Missouri                                   2
  New Hampshire                              1
  New Jersey                                 5
  New York                                   5
  Ohio                                       4
  Pennsylvania                               2
  Rhode Island                               1
  Tennessee                                  2
  Texas                                      8
  Virginia                                   3
                                             ---
          Total                              109
                                             ===

         Iron Mountain or its principal subsidiary is a guarantor of a
  substantial portion of the leases to which other subsidiaries are party. See
  Note 8 of Notes to Iron Mountain's Consolidated Financial Statements for 
  information regarding the minimum annual rental commitments of Iron Mountain.

  Item 3.  Legal Proceedings.

         Iron Mountain 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 Iron Mountain, or any of its properties, is
  subject.

                                      -20-
<PAGE>

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

         There were no matters submitted to a vote of security holders of the
  Company during the fourth quarter of the fiscal year ended December 31, 1996.


                       EXECUTIVE OFFICERS OF IRON MOUNTAIN

         Pursuant to General Instruction G(3), the following information is
  included as an additional item in Part I:

<TABLE>
<CAPTION>

  Names of Executive Officers     Age               Position
  ---------------------------     ---               --------
  <S>                             <C>            <C>
  C.  Richard Reese               51             Chairman of the Board of Directors and Chief
                                                 Executive Officer
  David S.  Wendell               43             President and Chief Operating Officer,
                                                 Director
  Eugene B.  Doggett (1)          60             Executive Vice President and Chief Financial
                                                 Officer, Director
  John F. Kenny, Jr. (1)          39             Vice President of Corporate Development
  Robert G. Miller                40             Executive Vice President
  Kenneth F.  Radtke, Jr.         51             Executive Vice President
  Robert P.  Swift                55             Executive Vice President
  -------------
</TABLE>

  (1) Mr. Doggett has announced his intention to retire as Chief Financial
      Officer effective as of May 29, 1997. Mr. Kenny will be Mr. Doggett's
      successor in such capacity.

         The executive officers and other officers were elected by the Iron
  Mountain Board of Directors (the "Iron Mountain Board") on June 14, 1996, with
  the exception of Mr. Radtke, who was elected in late June 1996, and Mr.
  Miller, who was elected in December 1996. All executive officers and other
  officers hold office at the discretion of the Iron Mountain 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.

         C. Richard Reese is the Chairman of the Iron Mountain Board , 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 Capital Corporation ("Schooner"), an
  affiliate of Iron Mountain. 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 PRISM International. 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 

                                      -21-
<PAGE>

  was Executive Vice President, Atlantic Area and 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 Iron Mountain, he had extensive
  experience in commercial and investment banking, as well as financial and
  general management experience at senior levels. He holds a Master of Business
  Administration degree from Harvard Business School. Mr. Doggett has announced
  his intention to retire as Chief Financial Officer effective as of May 29,
  1997. Mr. Doggett will continue with Iron Mountain as an Executive Vice
  President, focusing on strategic issues and special projects, and as a
  Director. Mr. Kenny will succeed Mr. Doggett as Chief Financial Officer.

         John F. Kenny, Jr. will become the Chief Financial Officer of Iron
  Mountain upon the retirement of Mr. Doggett from such position on May 29,
  1997. Mr. Kenny is currently Vice President of Corporate Development, with
  primary responsibility for implementing Iron Mountain'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 investments. He holds a Master of Business Administration degree 
  from Harvard Business School.

         Robert G. Miller is an Executive Vice President of Iron Mountain, a
  position that he has held since December 1996. Mr. Miller joined Iron Mountain
  in 1988 and held the positions of district manager from 1988 through 1991 and
  regional vice president from 1991 through 1996. Prior to 1988, Mr. Miller was
  employed as a district manager at Bell & Howell Records Management Company.

         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 he 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.

         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.

         All biographical information is given as of March 21, 1997.

                                      -22-
<PAGE>



                                     PART II

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

         The Common Stock is traded on the Nasdaq National Market under the
  symbol "IMTN." Iron Mountain first issued its Common Stock to the public in
  February 1996. The following table sets forth the high and low sales prices on
  the Nasdaq National Market.

                                                               High     Low
                                                               ----     ---
                                                               Sale Prices
                                                               -----------
1996
      First Quarter (from February 1, 1996).................  $16.25  $13.75
      Second Quarter........................................   21.00   14.50
      Third Quarter.........................................   30.50   20.50
      Fourth Quarter........................................   32.00   28.50
1997
      First Quarter (through March 21, 1997)................  $31.00  $21.50

        As of March 21, 1997 there were 66 holders of record of Common Stock 
  and 3 holders of record of Non-voting Common Stock. The Company believes
  there are more than 1,750 beneficial owners of Common Stock.

        Iron Mountain does not currently pay dividends on shares of Common Stock
  or Non-voting Common Stock. The Iron Mountain Board currently intends to
  retain future earnings, if any, for the development of Iron Mountain's
  businesses and does not anticipate paying cash dividends on the Common Stock
  in the foreseeable future. Future determinations by the Iron Mountain Board to
  pay dividends on the Common Stock would be based primarily upon the financial
  condition, results of operations and business requirements of Iron Mountain.
  Dividends, if any, would be payable in the sole discretion of the Iron
  Mountain Board out of the funds legally available therefor. Certain
  agreements, pursuant to which the Company has borrowed funds, contain
  provisions that limit the amount of dividends and stock repurchases that the
  Company may make. See Note 3 to the Company's Consolidated Financial
  Statements.

      During the fourth quarter of the fiscal year ended December 31, 1996, the
  Company issued the following shares of Common Stock pursuant to option
  exercises by employees or former employees in reliance on Rule 701 promulgated
  under the Securities Act of 1933, as amended:

  Date of Sale                 Number of Shares             Aggregate Price Paid

  10/30/96                                925                        $ 5,998
  11/20/96                              4,698                        $44,062

                                      -23-
<PAGE>

  Item 6.  Selected Consolidated Financial and Operating Information.

         The following tables present selected consolidated financial and
  operating information relating to the financial condition and results of
  operations of the Company over the past five years, and should be read in
  conjunction with "Management's Discussion and Analysis of Financial Condition
  and Results of Operations" and with the Consolidated Financial Statements of
  the Company for the year ended December 31, 1996 set forth in Part IV hereof.


            Selected Consolidated Financial and Operating Information
            (In thousands, except per share amounts and Carton data)

<TABLE>
<CAPTION>

                                                                Year Ended December 31,
                                                     -----------------------------------------------
                                                     1992       1993      1994       1995       1996
                                                     ----       ----      ----       ----       ----
<S>                                                  <C>        <C>       <C>        <C>        <C>    
Consolidated Statements of Operations Data:
Revenues:
       Storage                                       $44,077    $48,892   $54,098    $64,165    $85,826
       Service and Storage Material Sales             26,596     32,781    33,520     40,271     52,892
                                                     -------    -------   -------    -------    -------
            Total Revenues                            70,673     81,673    87,618    104,436    138,718
Operating Expenses:
       Cost of Sales (Excluding Depreciation)         35,169     43,054    45,880     52,277     70,747
       Selling, General and Administrative            17,630     19,971    20,853     26,035     34,342
       Depreciation and Amortization                   5,780      6,789     8,690     12,341     16,936
                                                     -------    -------   -------    -------    -------
            Total Operating Expenses                  58,579     69,814    75,423     90,653    122,025
                                                     -------    -------   -------    -------    -------
Operating Income                                      12,094     11,859    12,195     13,783     16,693
Interest Expense                                       8,412      8,203     8,954     11,838     14,901
                                                     -------    -------   -------    -------    -------
Income before Provision for Income Taxes               3,682      3,656     3,241      1,945      1,792
Provision for Income Taxes                             2,095      2,088     1,957      1,697      1,435
                                                     -------    -------   -------    -------    -------
Income Before Extraordinary Charge                     1,587      1,568     1,284        248        357
Extraordinary Charge, Net of Tax Benefit                  --         --        --         --      2,126
                                                     -------    -------   -------    -------    -------
Net Income (Loss)                                      1,587      1,568     1,284        248    (1,769)
Accretion of Redeemable Put Warrant                      626        940     1,412      2,107        280
                                                     -------    -------   -------    -------    -------
Net Income (Loss) Applicable to
  Common Stockholders                                $   961    $   628    $(128)   $(1,859)   $(2,049)
                                                     =======    =======    ======   ========   ========
Income (Loss) Before Extraordinary Item per
  Common and Common Equivalent Share                   $0.12      $0.08   $(0.02)    $(0.24)      $0.01
Net Income (Loss) per Common and
  Common Equivalent Share                              $0.12      $0.08   $(0.02)    $(0.24)    $(0.20)
Weighted Average Common and Common
  Equivalent Shares Outstanding                        8,052      8,067     7,984      7,784     10,137
Other Data:

                                      -24-
<PAGE>

                                                                Year Ended December 31,
                                                     -----------------------------------------------
                                                     1992       1993      1994       1995       1996
                                                     ----       ----      ----       ----       ----
EBITDA(1)                                            $17,874    $18,648   $20,885    $26,124    $33,629
EBITDA as a Percentage of Total Revenues               25.3%      22.8%     23.8%      25.0%      24.2%
Capital Expenditures:
       Growth (2)(3)                                 $11,226    $13,605   $15,829    $14,395    $23,334
       Maintenance                                       818      1,846     1,151        858      1,112
                                                     -------    -------   -------    -------    -------
Total Capital Expenditures (3)                       $12,044    $15,451   $16,980    $15,253    $24,446
Additions to Customer Acquisition Costs               $1,268       $922    $1,366     $1,379     $1,642
Approximate Cartons in Storage at end of
       Period (in millions)(4)                          12.6       15.5      17.7       23.3       30.6
</TABLE>

<TABLE>
<CAPTION>

                                                                   As of December 31,
                                                     -----------------------------------------------
                                                     1992       1993      1994       1995       1996
                                                     ----       ----      ----       ----       ----
<S>                                                <C>        <C>       <C>        <C>        <C>      
Balance Sheet Data:
Cash and Cash Equivalents                          $     498  $     591 $   1,303  $   1,585  $   3,453
Total Assets                                         115,429    125,288   136,859    186,881    281,799
Total Debt                                            73,304     78,460    86,258    121,874    184,733
Stockholders' Equity                                  23,419     24,047    22,869     21,011     52,384
 -------------------
</TABLE>

  (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 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."

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

  (4)    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."

                                      -25-
<PAGE>

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

         The following discussion should be read in conjunction with Iron
  Mountain's 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 filing.

      Overview. The primary financial objective of Iron Mountain 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. Iron
  Mountain has benefited from growth in EBITDA, which has increased from $17.9
  million in 1992 to $33.6 million in 1996 (a compound annual growth rate of
  17.1%), but other measures of Iron Mountain's financial performance, such as
  net income and net income applicable to common stockholders, have been
  negatively affected by this objective. In 1994, 1995 and 1996, Iron Mountain
  experienced net losses applicable to common stockholders. Such net losses are
  attributable in part to significant increases in charges associated with Iron
  Mountain's pursuit of its growth strategy, namely, (i) increases in
  depreciation and amortization expenses associated with expansion of Iron
  Mountain's storage capacity and (ii) increases in goodwill amortization
  associated with acquisitions accounted for under the purchase method. In
  addition, net income applicable to common stockholders has been negatively
  affected by a charge for accretion of a redeemable put warrant and, in 1996,
  by an extraordinary charge related to the early retirement of debt. The put
  warrant was redeemed in February 1996, upon completion of Iron Mountain's
  initial public offering (the "Initial Public Offering"). See Note 5 of Notes
  to Iron Mountain's 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
  five years. Service and storage material sales revenues are derived primarily
  from Iron Mountain'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 Iron Mountain's total revenues have increased from $70.7 million in
  1992 to $104.4 million in 1995, average revenue on a per Carton basis declined
  over such period. The year-over-year declines in average revenue per Carton
  for 1993, 1994 and 1995 were approximately 8%, 7% and 2%, respectively. In
  1996, total revenues increased to $138.7 million, and there was no decline in
  average revenue per Carton. Such declines had been attributable to: (i)
  increases in sales to large volume accounts, which typically generate lower
  revenue per Carton (in particular the RTC account, which incorporated
  substantial volume discounts, although such discounts were offset by revenues
  from special service projects during 1994); (ii) a facilities management
  arrangement with a large volume account under which, prior to July 1996, Iron
  Mountain managed the customer's 

                                      -26-
<PAGE>

  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 the decline, Iron Mountain 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 1993, 1994, 1995 and 1996, EBITDA margins were 22.8%,
  23.8%, 25.0% and 24.2%, respectively.

      Cost of sales (excluding depreciation) 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, as well as
  travel, communications, professional fees, bad debts, training, office
  equipment and supplies expenses.

      Iron Mountain's depreciation and amortization charges result primarily
  from the capital-intensive nature of the records management industry and the
  acquisitions Iron Mountain 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. Iron Mountain 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 fair value of their net 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.

      In February 1996, Iron Mountain received net proceeds of $33.3 million
  from its Initial Public Offering. Iron Mountain used $6.6 million of such net
  proceeds to repurchase a warrant to acquire 444,385 shares of Iron Mountain
  Common Stock (the "Warrant"). For financial reporting purposes, Iron Mountain
  recorded a 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 Iron Mountain's Consolidated Financial
  Statements. The remaining net proceeds were used by Iron Mountain to fund 
  acquisitions, to repay indebtedness used to fund acquisitions and for working
  capital.

      On October 1, 1996, Iron Mountain completed the sale of $165.0 million of
  10-1/8% Senior Subordinated Notes due 2006 (the "Senior Subordinated Notes").
  The net proceeds to Iron Mountain were $160.1 million after underwriting
  discounts and commissions. The net proceeds of the sale of the Senior
  Subordinated Notes, after payment of related expenses, were used to repay

                                      -27-

<PAGE>

   outstanding bank debt under the existing credit agreement, its 13.42% Senior
   Subordinated Notes due December 14, 2000 (the "Chrysler Notes") and certain
   other indebtedness, to fund the purchase price of an acquisition and for
   general corporate purposes. In connection with the prepayment of such
   indebtedness, Iron Mountain incurred an extraordinary charge of $3.5 million,
   not including related tax benefit of $1.4 million, during the fourth quarter
   of 1996. The charge consists of a prepayment penalty, the write-off of
   deferred financing costs, an original issue discount and loss on termination
   of interest rate protection agreements. This charge did not impact Iron
   Mountain's EBITDA.

      In December 1995, Iron Mountain 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, Iron Mountain recorded a charge of $0.5 million in
  the fourth quarter of 1995 and a charge of $0.5 million for the year ended 
  December 31, 1996.

      In March 1997, Iron Mountain experienced three fires that resulted in
  extensive damage to two of its record management facilities in South
  Brunswick, New Jersey. Approximately 1.0 million of the 1.2 million Cartons
  stored at these facilities were destroyed. The fires are believed to be caused
  by arson and are under investigation by local, state and federal authorities.
  The affected facilities account for only two of Iron Mountain's 117 facilities
  nationwide (as of March 21, 1997), and represented less than three percent of
  revenues and less than two percent of EBITDA for 1996. Management believes 
  that insurance will cover substantially all of Iron Mountain's property and
  business interruption losses relating to the fires. However, Iron Mountain
  may incur costs as a result of the fires which will not be covered by 
  insurance. Management is unable to estimate at this time the magnitude of 
  such costs. The claims process is lengthy and its outcome cannot be predicted
  with certainty. Based on its present assessment of the situation, management
  does not believe that the fires will have a material adverse effect on Iron
  Mountain's financial condition or results of operations, although there can
  be no assurance in this regard.


                                      -28-
<PAGE>


      Results of Operations. The following table sets forth, for the periods
  indicated, information derived from Iron Mountain's consolidated statements of
  operations, expressed as a percentage of revenues. 

<TABLE>
<CAPTION>
                                                          Year Ended December 31,
                                                    ---------------------------------
                                                    1994          1995          1996
                                                    ---------------------------------
       <S>                                         <C>           <C>           <C>  
       Revenues:
          Storage                                   61.7%         61.4%         61.9%
          Service and Storage Material Sales        38.3          38.6          38.1
                                                    ----          ----          ----
             Total Revenues                        100.0         100.0         100.0
       Operating Expenses:
          Cost of Sales (Excluding Depreciation)    52.4          50.1          51.0
          Selling, General and Administrative       23.8          24.9          24.8
          Depreciation and Amortization              9.9          11.8          12.2
                                                     ---          ----          ----
             Total Operating Expenses               86.1          86.8          88.0
                                                    ----          ----          ----
       Operating Income                             13.9          13.2          12.0
       Interest Expense                             10.2          11.3          10.7
                                                    ----          ----          ----
       Income before Provision for Income Taxes      3.7           1.9           1.3
       Provision for Income Taxes                    2.2           1.7           1.0
                                                     ---           ---           ---
       Income Before Extraordinary Charge            1.5           0.2           0.3
       Extraordinary Charge, Net of Tax Benefit       --            --           1.6
                                                     ---           ---           ---
       Net Income (Loss)                             1.5           0.2         (1.3)
       Accretion of Redeemable Put Warrant           1.6           2.0           0.2
                                                     ---           ---           ---
       Net Loss Applicable to Common
       Stockholders                                 (0.1)%       (1.8)%        (1.5)%
                                                     ====         ====          ====
       EBITDA                                       23.8%         25.0%         24.2%
                                                    ====          ====          ====
</TABLE>

      Year Ended December 31, 1996 Compared to Year Ended December 31, 1995.
  Storage revenues increased from $64.2 million for the year ended December 31,
  1995 to $85.8 million for the year ended December 31, 1996, an increase of
  $21.6 million or 33.8%. Twenty acquisitions completed by Iron Mountain in 1995
  and 1996 accounted for $15.0 million or 69.1% 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 $40.3 million
  for the year ended December 31, 1995 to $52.9 million for the year ended
  December 31, 1996, an increase of $12.6 million or 31.3%. Acquisitions
  accounted for $9.2 million or 72.7% of the increase. The balance 

                                      -29-

<PAGE>

  of the 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 $104.4
  million for the year ended December 31, 1995 to $138.7 million for the year
  ended December 31, 1996, an increase of $34.3 million or 32.8%. Of this
  increase, $24.1 million, or 70.4%, was attributable to acquisitions completed
  by Iron Mountain in 1995 and 1996. The monthly average Cartons stored
  increased approximately 33% in 1996 as compared to 1995, from approximately
  20.4 million Cartons to approximately 27.1 million Cartons.

      Cost of sales (excluding depreciation) increased from $52.3 million for
  the year ended December 31, 1995 to $70.7 million for the year ended December
  31, 1996, an increase of $18.4 million or 35.3%, and increased as a percentage
  of revenues from 50.1% for the year ended December 31, 1995 to 51.0% for the
  year ended December 31, 1996. The $18.4 million 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. The increase as a
  percentage of revenue was primarily attributable to recent acquisitions, which
  initially have lower gross margins than Iron Mountain.

      Selling, general and administrative expenses increased from $26.0 million
  for the year ended December 31, 1995 to $34.3 million for the year ended
  December 31, 1996, an increase of $8.3 million or 31.9%, and decreased as a
  percentage of revenues from 24.9% for the year ended December 31, 1995 to
  24.8% for the year ended December 31, 1996. The $8.3 million increase was
  primarily attributable to the costs associated with accelerated acquisition
  activity, including certain redundant transitional expenses as new
  acquisitions were integrated into Iron Mountain, with the addition of
  personnel needed to support Iron Mountain's growth and with becoming a public
  company. A charge of $0.5 million related to moving the corporate accounting
  function from Los Angeles to Boston was recorded in 1996. Additionally, the 
  selling, general 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 $12.3 million for
  the year ended December 31, 1995 to $16.9 million for the year ended December
  31, 1996, an increase of $4.6 million or 37.2%, and increased as a percentage
  of revenues from 11.8% for the year ended December 31, 1995 to 12.2% for the
  year ended December 31, 1996. The $4.6 million 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
  $13.8 million for the year ended December 31, 1995 to $16.7 million for the
  year ended December 31, 1996, an increase of $2.9 million or 21.1%. As a
  percentage of revenues, operating income decreased from 13.2% for the year
  ended December 31, 1995 to 12.0% for the year ended December 31, 1996.

                                      -30-

<PAGE>

      Interest expense increased from $11.8 million for the year ended December
  31, 1995 to $14.9 million for the year ended December 31, 1996, an increase of
  $3.1 million or 25.9%. The $3.1 million increase was primarily attributable to
  increased indebtedness to finance acquisitions and capital expenditures. This
  increase was partially offset by a decrease in Iron Mountain's effective
  borrowing rates.

      As a result of the foregoing factors, income before provision for income
  taxes decreased from $1.9 million (1.9% of revenues) for the year ended
  December 31, 1995 to $1.8 million (1.3% of revenues) for the year ended
  December 31, 1996, a decrease of $0.1 million or 7.9%. Provision for income
  taxes decreased from $1.7 million (1.7% of revenues) for the year ended
  December 31, 1995 to $1.4 million (1.0% of revenues) for the year ended
  December 31, 1996. Iron Mountain'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 for asset purchases.
  Since Iron Mountain will acquire all of the outstanding capital stock of
  Safesite in the Merger, goodwill associated with the Merger will be
  nondeductible.

      In October 1996, Iron Mountain recorded an extraordinary charge of $3.5
  million, not including related tax benefit of $1.4 million, related to the 
  early retirement of certain indebtedness. The charge consists of a prepayment
  penalty, the write-off of deferred financing costs, an original issue discount
  and loss on termination of interest rate protection agreements.

      Net income (loss) was income of $0.2 million (0.2% of revenues) for the
  year ended December 31, 1995 compared to a loss of $1.8 million (1.3% of
  revenues) for the year ended December 31, 1996. Net loss applicable to common
  stockholders was $1.9 million (1.8% of revenues), after accretion of $2.1
  million related to the Warrant, for the year ended December 31, 1995 compared
  to $2.0 million (1.5% of revenues), after accretion of $0.3 million related to
  the Warrant, for the year ended December 31, 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 $26.1 million
  for the year ended December 31, 1995 to $33.6 million for the year ended
  December 31, 1996, an increase of $7.5 million, or 28.7%. As a percentage of
  revenues, EBITDA decreased from 25.0% for the year ended December 31, 1995 to
  24.2% for the year ended December 31, 1996.

      Iron Mountain acquired sixteen records management businesses in 1996
  compared to four records management businesses in 1995. Primarily as a result
  of Iron Mountain's acquisition activity, EBITDA margins were lower for the
  year ended December 31, 1996 compared to the prior year. The decrease was
  primarily attributable to the fact that the acquired businesses are initially
  less operationally efficient than Iron Mountain and the anticipated margin
  increases are generally not realized immediately.

      Year Ended December 31, 1995 Compared to Year Ended December 31, 1994.
  Storage revenues increased from $54.1 million for 1994 to $64.2 million for
  1995, an increase of $10.1 million or 

                                      -31-


<PAGE>

  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
  for 1994 to $40.3 million for 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 for 1994 to $104.4 million for 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 Iron Mountain 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 reasons described in the third paragraph under "Overview"
  above.

      Cost of sales (excluding depreciation) increased from $45.9 million for
  1994 to $52.3 million for 1995, an increase of $6.4 million or 13.9%, and
  decreased as a percentage of revenues from 52.4% for 1994 to 50.1% for 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
  for 1994 to $26.0 million for 1995, an increase of $5.1 million or 24.9%, and
  increased as a percentage of revenues from 23.8% for 1994 to 24.9% for 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 for
  1994 to $12.3 million for 1995, an increase of $3.6 million or 42.0%, and
  increased as a percentage of revenues from 9.9% for 1994 to 11.8% for 1995.
  Depreciation and amortization expenses, both in absolute dollars and as a
  percentage of revenues, continued to increase, primarily as a result of Iron
  Mountain'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 Iron Mountain's decision to sell such
  subsidiary at an 

                                      -32-
<PAGE>

  estimated price which is $0.9 million less than such subsidiary's book value
  and related goodwill. Iron Mountain subsequently decided not to sell such
  subsidiary.

      As a result of the foregoing factors, operating income increased from
  $12.2 million for 1994 to $13.8 million for 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 for 1994 to $11.8 million for
  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) for 1994 to $1.9 million
  (1.9% of revenues) for 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). Iron Mountain'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) for
  1994 to $0.2 million (0.2% of revenues) for 1995 as a result of the factors
  outlined above.

      As a result of the foregoing factors, EBITDA increased from $20.9 million
  for 1994 to $26.1 million for 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.

      Liquidity and Capital Resources. In February 1996, Iron Mountain 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.

      On October 1, 1996, Iron Mountain completed the sale of $165.0 million of
  the Senior Subordinated Notes. The net proceeds to Iron Mountain were $160.1
  million after underwriting discounts and commissions. The net proceeds of the
  sale of the Senior Subordinated Notes, after payment of related expenses, were
  used to repay outstanding bank debt under the existing credit agreement, the
  Chrysler Notes and certain other indebtedness, to fund the purchase price of
  an acquisition and for general corporate purposes. In connection with the
  prepayment of the outstanding bank debt, the Chrysler Notes and certain other
  indebtedness, Iron Mountain incurred an extraordinary charge of $3.5 million,
  not including related tax benefit of $1.4 million, during the fourth quarter 
  of 1996. The charge consists of a prepayment penalty, the write-off of 
  deferred financing costs an original issue discount and loss on termination of
  interest rate protection agreements. This charge did not impact Iron 
  Mountain's EBITDA.

                                      -33-

<PAGE>

      In connection with the sale of the Senior Subordinated Notes, Iron
  Mountain entered into a Credit Agreement dated as of September 30, 1996 (the
  "Credit Agreement"), which provided for $100 million of revolving credit
  availability. On March 3, 1997 the Company entered into an Amendment and
  Restatement of the Credit Agreement (the "Amendment"), which increased credit
  availability under the facility to $150 million.

      As Iron Mountain 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. These investments have been primarily funded through a portion of the
  net proceeds of the Initial Public Offering and the sale of the Senior
  Subordinated Notes, cash flows from operations and borrowings under Iron
  Mountain's credit agreements.

      Capital Investments. For 1994, 1995 and 1996, Iron Mountain's
  growth-related capital expenditures were $15.8 million, $14.4 million and
  $23.3 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 1996, Iron Mountain's maintenance
  capital expenditures were $1.2 million, $0.9 million and $1.1 million,
  respectively.

      In addition, Iron Mountain 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 1996, Iron
  Mountain's additions to customer acquisition costs were $1.4 million, $1.4
  million and $1.6 million, respectively.

      Recent and Pending Acquisitions. Iron Mountain's liquidity and capital
  resources have been significantly impacted by acquisitions and, given Iron
  Mountain's acquisition strategy, may be significantly impacted for the
  foreseeable future. In order to capitalize on industry consolidation, Iron
  Mountain, in mid-1994, adopted a more active acquisition strategy. Since
  mid-1994, Iron Mountain has acquired or entered into agreements to acquire 29
  records management businesses, 27 of which have been completed and two of
  which are pending, for a total purchase price of approximately $197.9 million
  (not including contingent payments of up to $4.8 million based upon the
  achievement of certain revenue targets during 1997 and 1998). Iron Mountain
  has historically financed its acquisitions with borrowings under its credit
  agreements in conjunction with cash flows provided by operations and, more
  recently, from a portion of the proceeds of the Initial Public Offering and
  the sale of the Senior Subordinated Notes. Under the terms of the Merger
  Agreement, however, approximately $50 million of the $62 million purchase
  price for Safesite will be in the form of shares of Common Stock or
  immediately exercisable options to acquire shares of Common Stock. Iron
  Mountain's future interest expense may increase significantly as a result of
  the additional indebtedness Iron Mountain may incur to finance possible future
  acquisitions. To the 

                                      -34-

<PAGE>

  extent that future acquisitions are financed by additional borrowings under
  the Credit Agreement or other credit facilities, the resulting increase in
  debt and interest expense could have a negative effect on such measures of
  liquidity, debt to equity, EBITDA to debt and EBITDA to interest expense.

      Sources of Funds. During 1996, Iron Mountain generated $15.9 million in
  net cash from operations compared to $15.7 million for the same period in
  1995. The slight increase in net cash provided by operations resulted from an
  increase in EBITDA, which was partially offset by an increase in accounts
  receivable related to increased revenues and decreases in accounts payable,
  accrued expenses and other asset and liability accounts. During the year ended
  December 31, 1994, Iron Mountain generated net cash from operations of $11.6
  million.

      At December 31, 1996, Iron Mountain had estimated net operating loss
  carryforwards of approximately $11.5 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.

      Net cash provided by financing activities was $6.7 million and $34.1
  million for 1994 and 1995, respectively, substantially all of which was
  provided under a then existing credit agreement, and $80.6 million for the
  year ended December 31, 1996, consisting primarily of the net proceeds of
  $160.1 million from the sale of the Senior Subordinated Notes and of $33.3
  million from the Initial Public Offering, offset by $102.1 million of
  increased indebtedness and by $6.6 million due to the retirement of the 
  Warrant.

      Credit Arrangements of Iron Mountain. The Credit Agreement, as amended, is
  a $150 million revolving credit facility. The Credit Agreement will terminate
  on September 30, 2001, at which time all outstanding revolving credit loans
  and other amounts payable thereunder will become due. Borrowings under the
  Credit Agreement may be used to finance possible future acquisitions, as well
  as for working capital and general corporate purposes. Iron Mountain's
  obligations under the Credit Agreement are guaranteed by substantially all of
  Iron Mountain's subsidiaries and are secured by the pledge of the stock of
  such subsidiaries. Prepayments of outstanding borrowings under the Credit
  Agreement are required in certain circumstances out of the proceeds of certain
  insurance payments, condemnations, issuances of indebtedness and asset
  dispositions.

      The Credit Agreement permits Iron Mountain to elect interest rates from
  time to time, as to all or a portion of the borrowings made thereunder, at
  interest rates based upon the applicable reference rate and a margin or spread
  over such reference rate (which spread varies based upon the ratio of Iron
  Mountain's indebtedness to EBITDA). The reference rate, at Iron Mountain's
  option, may be based upon (i) the agent's prime rate, (ii) a certificates of
  deposit rate, (iii) an overnight federal funds rate or (iv) for periods of up
  to 12 months, the interest rates prevailing on the date of determination in
  the London interbank markets.

      The Credit Agreement and the Indenture for the Senior Subordinated Notes
  (the "Note Indenture") contain covenants restricting the ability of Iron
  Mountain and its subsidiaries to, among 

                                      -35-


<PAGE>

  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. Iron Mountain 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. Iron Mountain has also made certain customary
  affirmative covenants. The Credit Agreement and the Note Indenture also
  contain customary events of default.

      The annual maturities of Iron Mountain's indebtedness for 1997, 1998,
  1999, 2000 and 2001 are $0.4 million, $0.4 million, $0.4 million, $7.8 million
  and $9.3 million respectively. Subsequent to December 31, 1996, Iron Mountain
  borrowed $15.0 million under the Credit Agreement to finance acquisitions. As
  of March 7, 1997, Iron Mountain had $199.6 million in total indebtedness and
  $126.0 million available under the Credit Agreement.

      Under the Credit Agreement, Iron Mountain is required to use interest rate
  protection products to reduce its exposure to increases in interest rates. As
  of December 31, 1996, Iron Mountain had $184.7 million of total debt, of which
  $175.7 million had fixed interest rates and $9.0 million had variable interest
  rates. Consistent with the Credit Agreement, the Company has in place interest
  rate cap agreements covering a notional amount of $30.0 million. See Note 3 of
  Notes to Iron Mountain's 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. 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.

      At the 1997 Annual Meeting of Stockholders, the stockholders of Iron
  Mountain will be asked to approve an amendment to the Restated Certificate of
  Incorporation of Iron Mountain to increase the number of shares of Common
  Stock that Iron Mountain is authorized to issue from 13,000,000 to 20,000,000
  shares. Such additional shares would provide Iron Mountain with additional
  flexibility to issue shares in connection with business acquisitions or for
  cash through sales of stock to public and private investors. There can be no
  assurance that such approval will be received.

      Seasonality. Historically, Iron Mountain's business has not been subject 
  to seasonality in any material respect.

      Inflation. Certain of Iron Mountain's expenses, such as wages and
  benefits, occupancy costs and equipment repair and replacement, are subject to
  normal inflationary pressures. Although Iron Mountain to date has been able to
  offset inflationary cost increases through increased operating 

                                      -36-

<PAGE>

  efficiencies, there can be no assurance that Iron Mountain will be able to
  offset any future inflationary cost increases through similar efficiencies or
  increased storage or service charges.

  Item 8.  Financial Statements and Supplementary Data.

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                              Page
  <S>                                                                                           <C>
  Report of Independent Public Accountants .....................................................38
  Consolidated Balance Sheets, December 31, 1995 and 1996.......................................39
  Consolidated Statements of Operations, Years ended December 31, 1994, 1995 and 1996...........40
  Consolidated Statements of Stockholders' Equity, Years ended December 31,
      1994, 1995 and 1996.......................................................................41
  Consolidated Statements of Cash Flows, Years ended December 31, 1994, 1995 and 1996...........44
  Notes to Consolidated Financial Statements....................................................45

  Financial Statement Schedule:
      Report of Independent Public Accountants .................................................59
      Schedule II - Valuation and Qualifying Accounts...........................................60
</TABLE>







                                       37



<PAGE>


                    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, 1995 and 1996 and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1996. 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, 1995 and 1996, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.



                                         ARTHUR ANDERSEN LLP

Boston, Massachusetts
March 4, 1997 (except for
Note 11.a and e. for which
the date is March 19, 1997)








                                       38



<PAGE>


                           IRON MOUNTAIN INCORPORATED
            CONSOLIDATED BALANCE SHEETS -- DECEMBER 31, 1995 AND 1996
                             (Amounts in thousands)

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                             December 31,
                                                                                     ---------------------------
                                                                                          1995           1996
                                                                                     ------------   ------------
<S>                                                                                  <C>            <C>
Current Assets:
  Cash and Cash Equivalents.....................................................     $      1,585   $      3,453
  Accounts Receivable (Less Allowances of $651 and $1,061
     as of 1995 and 1996, Respectively).........................................           16,936         24,136
  Inventories...................................................................              682            767
  Deferred Income Taxes.........................................................            1,943          3,378
  Prepaid Expenses and Other....................................................            1,862          3,054
                                                                                     ------------   ------------
          Total Current Assets..................................................           23,008         34,788

Property, Plant and Equipment:
  Property, Plant and Equipment.................................................          125,240        163,495
  Less -- Accumulated Depreciation..............................................          (32,564)       (45,146)
                                                                                     ------------   ------------
          Net Property, Plant and Equipment.....................................           92,676        118,349

Other Assets:
  Goodwill, net.................................................................           59,253        109,363
  Customer Acquisition Costs, net...............................................            5,210          6,334
  Deferred Financing Costs, net.................................................            2,638          7,358
  Other.........................................................................            4,096          5,607
                                                                                     ------------   ------------
          Total Other Assets....................................................           71,197        128,662
                                                                                     ------------   ------------
Total Assets....................................................................     $    186,881   $    281,799
                                                                                     ============   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Current Portion of Long-term Debt.............................................     $      2,578   $        396
  Accounts Payable..............................................................            4,797          3,750
  Accrued Expenses..............................................................           10,917         17,275
  Deferred Income...............................................................            3,108          4,995
  Other Current Liabilities.....................................................              469            414
                                                                                     ------------   ------------
          Total Current Liabilities.............................................           21,869         26,830

Long-term Debt, Net of Current Portion..........................................          119,296        184,337
Other Long-term Liabilities.....................................................            6,769          6,576
Deferred Rent...................................................................            7,983          7,651
Deferred Income Taxes...........................................................            3,621          4,021

Commitments and Contingencies (see Note 8)

Redeemable Put Warrant..........................................................            6,332             --

Stockholders' Equity:
  Preferred Stock...............................................................                5             --
  Common Stock..................................................................                0            101
  Additional Paid-In Capital....................................................           28,809         62,135
  Accumulated Deficit...........................................................           (7,803)        (9,852)
                                                                                     ------------   ------------
          Total Stockholders' Equity............................................           21,011         52,384
                                                                                     ------------   ------------
Total Liabilities and Stockholders' Equity......................................     $    186,881   $    281,799
                                                                                     ============   ============
</TABLE>


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


                                       39
<PAGE>


                           IRON MOUNTAIN INCORPORATED
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
                  (Amounts in thousands except per share data)

<TABLE>
<CAPTION>
                                                                                1994               1995             1996
                                                                            ------------      -------------     -------------
<S>                                                                         <C>               <C>               <C>
 Revenues:
   Storage...............................................................   $     54,098      $      64,165     $      85,826
   Service and Storage Material Sales....................................         33,520             40,271            52,892
                                                                            ------------      -------------     -------------
          Total Revenues.................................................         87,618            104,436           138,718

 Operating Expenses:
   Cost of Sales (Excluding Depreciation)................................         45,880             52,277            70,747
   Selling, General and Administrative...................................         20,853             26,035            34,342
   Depreciation and Amortization.........................................          8,690             12,341            16,936
                                                                            ------------      -------------     -------------
          Total Operating Expenses.......................................         75,423             90,653           122,025
                                                                            ------------      -------------     -------------

 Operating Income........................................................         12,195             13,783            16,693
 Interest Expense........................................................          8,954             11,838            14,901
                                                                            ------------      -------------     -------------

          Income Before Provision for Income Taxes.......................          3,241              1,945             1,792

 Provision for Income Taxes..............................................          1,957              1,697             1,435
                                                                            ------------      -------------     -------------

          Income Before Extraordinary Charge.............................          1,284                248               357

 Extraordinary Charge from Early Retirement of
          Debt (Net of  Tax Benefit of $1,413)...........................             --                 --             2,126
                                                                            ------------      -------------     -------------

          Net Income (Loss) .............................................          1,284                248            (1,769)

 Accretion of Redeemable Put Warrant.....................................          1,412              2,107               280
                                                                            ------------      -------------     -------------

          Net Loss Applicable to Common Stockholders.....................   $       (128)     $      (1,859)    $      (2,049)
                                                                            ============      =============     =============

 Net Income (Loss) per Common and Common Equivalent Share:

          Income Before Extraordinary Charge and
               Accretion of Put Warrant..................................   $       0.16      $        0.03     $        0.04
          Accretion of Put Warrant.......................................          (0.18)             (0.27)            (0.03)
                                                                            ------------      -------------     -------------
          Income (Loss) Before Extraordinary Charge .....................          (0.02)             (0.24)             0.01
          Extraordinary Charge (Net of Tax Benefit) .....................             --                 --             (0.21)
                                                                            ------------      -------------     -------------

 Net Loss Per Common and Common Equivalent Share.........................   $      (0.02)     $       (0.24)    $       (0.20)
                                                                            ============      =============     =============

 Weighted Average Common and Common
          Equivalent Shares Outstanding..................................          7,984              7,784            10,137
</TABLE>









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


                                       40
<PAGE>


                           IRON MOUNTAIN INCORPORATED
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                     AS OF DECEMBER 31, 1994, 1995 AND 1996
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                December 31,
                                                                              ---------------------------------------------
                                                                                  1994             1995            1996
                                                                              ------------     -----------     ------------
<S>                                                                           <C>              <C>             <C>
 Series A1 Preferred Stock:

   Balance, Beginning of Period........................................       $          2     $         1     $          0
   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)              --
   Conversion of 6,500 Shares of Series A1
      Preferred Stock to Common Stock - Voting.........................                 --              --               (0)
                                                                              ------------     -----------     ------------
    Balance, End of Period; (50,000, 6,500 and
      0 Shares Outstanding as of December 31,
      1994, 1995 and 1996, Respectively)...............................                  1               0               --
                                                                              ------------     -----------     ------------

 Series A2 Preferred Stock:

   Balance, Beginning of Period........................................                 --               1                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               --
   Conversion of 25,321 Shares of Series A2
      Preferred Stock to Common Stock - Non-Voting.....................                 --              --               (0)
   Conversion of 72,679 Shares of Series A2
      Preferred Stock to Common Stock - Voting.........................                 --              --               (1)
                                                                              ------------     -----------     ------------
   Balance, End of Period; (100,000, 98,000 and
      0 Shares Outstanding as of December 31,
      1994, 1995 and 1996, Respectively)...............................                  1               1               --
                                                                              ------------     -----------     ------------

 Series A3 Preferred Stock:

   Balance, Beginning of Period........................................                 --              --               1
   Conversion of 43,500 Shares of Series A1
      Preferred Stock to Series A3 Preferred Stock.....................                 --               1              --
   Conversion of 43,500 Shares of Series A3
      Preferred Stock to Common Stock - Voting.........................                 --              --              (1)
                                                                              ------------     -----------     -----------
   Balance, End of Period (None Outstanding as of December
     31, 1994; 43,500 and 0 Shares Outstanding as of
     December 31, 1995 and 1996, Respectively).........................                 --               1              --
                                                                              ------------     -----------     -----------

 Series C Preferred Stock:

   Balance, Beginning of Period........................................                  3               3               3
   Conversion of 351,395 Shares of Series C
      Preferred Stock to Common Stock - Voting.........................                 --              --              (3)
                                                                              ------------     -----------     -----------
   Balance, End of Period; (351,395, 351,395 and
      0 Shares Outstanding as of December 31, 1994,
      1995 and 1996, Respectively).....................................                  3               3              --
                                                                              ------------     -----------     -----------

      Total Preferred Stock............................................                  5               5              --
                                                                              ------------     -----------     -----------
</TABLE>



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


                                       41
<PAGE>


                           IRON MOUNTAIN INCORPORATED
         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY -- (Continued)
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                December 31,
                                                                             ---------------------------------------------
                                                                                  1994            1995            1996
                                                                             ------------     ------------    ------------
<S>                                                                                    <C>              <C>             <C>
Class A Common Stock:

  Balance, Beginning of Period........................................                  0                0               0
  Exercise of 15,976 Stock Options in 1995............................                 --                0              --
  Conversion of 44,888 Shares of Class A
     Common Stock to Common Stock - Voting............................                 --               --              (0)
                                                                             ------------     ------------    ------------
   Balance, End of Period; (28,912, 44,888 and 0 Shares
     Outstanding as of December 31, 1994, 1995 and
     1996, Respectively)..............................................                  0                0              --
                                                                             ------------     ------------    ------------

Class C Common Stock:

  Balance, Beginning of Period........................................                  0               --              --
  Repurchase of 17,289 Shares of Class C Common Stock.................                 (0)              --              --
                                                                             ------------     ------------    ------------
  Balance, End of Period; (None Outstanding as of
     December 31, 1994, 1995 and 1996, Respectively)..................                 --               --              --
                                                                             ------------     ------------    ------------

Common Stock - Voting:

  Balance, Beginning of Period........................................                 --               --              --
  Conversion of 474,074 Shares of Preferred Stock
     and 44,888 Shares of Class A Common Stock to
     Common Stock - Voting............................................                 --               --              73
  Issuance of 2,350,000 Shares in Initial Public Offering ............                 --               --              23
  Exercise of 6,896 Stock Options ....................................                 --               --               0
  Issuance of 915 Shares for Services ................................                 --               --               0
  Conversion of 22,705 Shares of Common
     Stock - Non-Voting to Common Stock - Voting......................                 --               --               0
                                                                             ------------     ------------    ------------
  Balance, End of Period; (None Outstanding as of
     December 31, 1994 and 1995; 9,657,657 Outstanding
     as of December 31, 1996).........................................                 --               --              96
                                                                             ------------     ------------    ------------
</TABLE>




















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


                                       42
<PAGE>


                           IRON MOUNTAIN INCORPORATED
         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY -- (Continued)
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                               December 31,
                                                                              -------------------------------------------
                                                                                  1994             1995           1996
                                                                              -----------       ----------      ---------
<S>                                                                           <C>               <C>             <C>
Common Stock - Non-Voting:

  Balance, Beginning of Period..........................................               --               --             --
  Conversion of 25,321 Shares of Series A2 Preferred Stock
     to 500,000 Shares of Common Stock - Non-Voting ....................               --               --              5
  Conversion of 22,705 Shares of Common
     Stock - Non-Voting to Common Stock - Voting........................               --               --             (0)
                                                                              -----------       ----------      ---------
  Balance, End of Period; (None Outstanding as of
     December 31, 1994 and 1995;  477,295 Outstanding
     as of December 31, 1996)...........................................               --               --              5
                                                                              -----------       ----------      ---------

     Total Common Stock.................................................               --               --            101
                                                                              -----------       ----------      ---------

Additional Paid in Capital:

  Balance, Beginning of Period..........................................      $    29,858       $   28,808      $   28,809
  Repurchase of 17,289 Shares of Class C Common Stock...................           (1,050)              --              --
  Repurchase of 2,000 Shares of Series A2 Preferred Stock...............               --             (199)             --
  Issuance of 15,976 Shares of Class A Common
     Stock Pursuant to Option Exercises ................................               --              200              --
  Conversion of Preferred Stock and Class A Common
    Stock to Common Stock - Voting and Common
      Stock - Non-Voting................................................               --               --             (73)
  Issuance of 2,350,000 Shares of Common Stock - Voting
     Pursuant to the Company's Initial Public Offering of
     Common Stock.......................................................               --               --          33,262
  Issuance of 6,896 Shares of Common
     Stock - Voting Pursuant to Option Exercises .......................               --               --              66
  Issuance of 915 Shares of Common
     Stock - Voting for Services .......................................               --               --              19
  Tax Benefit of Option Exercises.......................................               --               --              52
                                                                              -----------       ----------      ----------
  Balance, End of Period................................................           28,808           28,809          62,135
                                                                              -----------       ----------      ----------

Accumulated Deficit:

  Balance, Beginning of Period..........................................           (5,816)          (5,944)         (7,803)
  Net Income (Loss).....................................................            1,284              248          (1,769)
  Accretion of Redeemable Put Warrant...................................           (1,412)          (2,107)           (280)
                                                                              -----------       ----------      ----------
  Balance, End of Period................................................           (5,944)          (7,803)         (9,852)
                                                                              -----------       ----------      ----------

Total Stockholders' Equity..............................................      $    22,869       $   21,011      $   52,384
                                                                              ===========       ==========      ==========
</TABLE>











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

                                       43

<PAGE>


                           IRON MOUNTAIN INCORPORATED
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     AS OF DECEMBER 31, 1994, 1995 AND 1996
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                                 1994           1995           1996
                                                                              ---------      ---------      ----------
<S>                                                                           <C>            <C>            <C>
Cash Flows from Operating Activities:
  Net Income (Loss)...................................................        $   1,284      $     248      $  (1,769)
  Adjustments to Reconcile Net Income (Loss) to Cash
     Flows Provided by Operations:
     Depreciation and Amortization....................................            8,690         12,341         16,936
     Amortization of Financing Costs..................................            1,046          1,135            857
     Provision For Doubtful Accounts..................................              356            630            639
     Extraordinary Loss on Early Retirement of Debt...................               --             --          3,539
     Loss on Sale of Fixed Assets.....................................              278            400             --
     Other Long-term Liabilities......................................             (394)          (527)          (193)
  Changes in Assets and Liabilities (Exclusive of
     Acquisitions):
     Accounts Receivable..............................................           (2,163)        (3,171)        (4,395)
     Inventory, Prepaid Expenses and Other Assets.....................             (556)          (739)          (878)
     Deferred Income Taxes............................................            1,714          1,179           (973)
     Accounts Payable.................................................               83            265         (1,278)
     Accrued Expenses.................................................            1,191          4,252          3,642
     Deferred Rent....................................................              441           (110)          (332)
     Deferred Income..................................................              (26)          (301)           161
     Other Liabilities................................................             (369)           125            (56)
                                                                              ---------      ---------      ---------
     Cash Flows Provided by Operations................................           11,575         15,727         15,900
                                                                              ---------      ---------      ---------
Cash Flows from Investing Activities:
  Capital Expenditures................................................          (16,980)       (15,253)       (24,446)
  Additions to Customer Acquisition Costs.............................           (1,366)        (1,379)        (1,642)
  Cash Paid for Acquisitions..........................................           (2,846)       (33,048)       (68,496)
  Proceeds from Sale of Assets........................................            2,973             73             --
  Other, Net..........................................................              705             71            (25)
                                                                              ---------      ---------      ---------
     Cash Flows Used in Investing Activities..........................          (17,514)       (49,536)       (94,609)
                                                                              ---------      ---------      ---------
Cash Flows From Financing Activities:
  Repayment of Debt...................................................          (13,642)          (812)      (171,730)
  Net Proceeds from Borrowings........................................           21,350         36,350         69,570
  Net Proceeds from Sale of Senior Subordinated Notes.................               --             --        160,050
  Net Proceeds from Initial Public Offering...........................               --             --         33,285
  Retirement of Redeemable Put Warrant................................               --             --         (6,612)
  Prepayment Penalties on Early Retirement of Debt....................               --             --         (1,785)
  Cash From Exercise of Stock Options.................................               --            200             66
  Repurchase of Stock.................................................           (1,050)          (199)            --
  Financing Costs.....................................................               (7)        (1,448)        (2,267)
                                                                              ---------      ---------      ---------
     Cash Flows Provided by Financing Activities......................            6,651         34,091         80,577
                                                                              ---------      ---------      ---------
Increase in Cash......................................................              712            282          1,868
Cash and Cash Equivalents, Beginning of Year..........................              591          1,303          1,585
                                                                              ---------      ---------      ---------
Cash and Cash Equivalents, End of Year................................        $   1,303      $   1,585      $   3,453
                                                                              =========      =========      =========

Supplemental Information:

Cash Paid for Interest................................................        $   7,741      $   9,111      $  11,590
                                                                              =========      =========      =========

Cash Paid for Income Taxes............................................        $     339      $   1,177      $     197
                                                                              =========      =========      =========
</TABLE>


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


                                       44
<PAGE>



                           IRON MOUNTAIN INCORPORATED
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1996
                    (Amounts in thousands except share data)

1. Nature of Business

     The accompanying financial statements represent the consolidated accounts
of Iron Mountain Incorporated 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 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:

<TABLE>
             <S>                                                 <C>
             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
</TABLE>

     Property, plant and equipment consist of the following:

                                                           December 31,
                                                    --------------------------
                                                      1995              1996
                                                    --------          --------
     Real property.............................     $ 34,162          $ 38,552
     Leasehold improvements....................       11,206            14,918
     Racking...................................       53,348            72,854
     Warehouse equipment/vehicles..............        5,810             7,730
     Furniture and fixtures....................        2,754             3,839
     Computer hardware and software............       13,729            19,786
     Construction in progress..................        4,231             5,816
                                                    --------          --------
                                                    $125,240          $163,495
                                                    ========          ========

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


                                       45
<PAGE>



                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

     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.

    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 ("SFAS") No. 121, "Accounting for the Impairment
of Long Lived Assets and for Long Lived Assets to be Disposed Of." Accumulated
amortization of goodwill was $15,074 and $18,858 as of December 31, 1995 and
1996, respectively. In 1995, the Company recorded a $900 impairment of goodwill
related to one of its subsidiaries.

    e. Deferred Financing Costs

     Deferred financing costs are amortized over the life of the related debt
using the effective interest rate method. If debt is retired early, unamortized
deferred financing costs are written off as an extraordinary charge in the
period the debt is retired. As of December 31, 1995 and 1996, deferred financing
costs were $4,688, and $7,998, respectively, and accumulated amortization of
those costs were $2,050, and $640, 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, 1995 and 1996 those costs were
$6,492 and $8,134, respectively, and accumulated amortization of those costs
were $1,282 and $1,800, 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.


                                       46

<PAGE>

                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

    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,
                                       ----------------------------------
                                             1995                1996
                                       ----------------- ----------------
     Incentive compensation...........       $ 1,701          $ 2,287
     Interest.........................         1,737            4,247
     Workers' compensation............         2,415            2,949
     Payroll .........................           920            1,448
     Other............................         4,144            6,344
                                             -------          -------
                                             $10,917          $17,275
                                             =======          =======

    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 for 1994 and 1995 because their dilutive effect was immaterial.

     On March 3, 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share". The new standard must be applied beginning in 1998
and at that time will require restatement of previously reported earnings per
share. The new statement cannot be applied early. The Company believes that the
effect of applying the new standard will not be material.

    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. Cash and cash equivalents are carried at cost which approximates
fair market value.

   m.  Stock-Based Compensation

     Effective January 1, 1996, the Company adopted the provisions of SFAS No.
123, "Accounting for Stock-Based Compensation." The Company has elected to
continue to account for stock options at 


                                       47

<PAGE>

                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

intrinsic value with disclosure of the effects of fair value accounting on net
income and earnings per share on a pro forma basis.

    n.  Interest Rate Caps

     Premiums paid for interest rate cap agreements are amortized to interest
expense over the terms of the cap. Unamortized premiums are included in other
assets in the Consolidated Balance Sheets. Amounts receivable, if any, under cap
agreements are accounted for as a reduction of interest expense.

3. Debt

     Debt consists of the following:

<TABLE>
<CAPTION>
                                                                  December 31,
                                                           ------------------------------
                                                                1995           1996
                                                           -------------- ---------------
     <S>                                                      <C>             <C>
     10-1/8% Senior Subordinated Notes Due 2006 ...........   $     --        $165,000
     $100,000 New Credit Facility .........................         --           9,000
     Old Credit Agreement..................................     95,725              --
     Chrysler Notes........................................     14,772              --
     Real estate mortgages.................................     10,797          10,733
     Other.................................................        580              --
                                                              --------        --------
         Long-term debt....................................    121,874         184,733
         Less -- current portion...........................     (2,578)           (396)
                                                              --------        --------
         Long-term debt, net of current portion............   $119,296        $184,337
                                                              ========        ========
</TABLE>

     At December 31, 1995, the Company had two term loans, an acquisition credit
facility and a working capital facility (collectively, the "Old Credit
Agreement") of $125,000. The outstanding indebtedness under the Old Credit
Agreement was paid in full on October 1, 1996 with a portion of the net proceeds
from the sale of $165,000 of 10-1/8% Senior Subordinated Notes due 2006 (the
"Notes"). Interest on the facility was based, at the Company's option, on a
choice of base rates plus a margin. The margin varied depending on the base rate
selected.

     The Chrysler Notes were issued in 1990 with an original maturity date of
2000. 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 was being accounted for as an original
issue discount of the Chrysler Notes and was amortized as interest expense over
the life of the loan using the effective interest rate method. The Chrysler
Notes were paid in full with a portion of the net proceeds from the Notes.

     On September 30, 1996, Iron Mountain entered into a new $100 million
revolving credit facility (the "New Credit Facility"). The New Credit Facility
is a five year revolving credit facility maturing on September 30, 2001. At
December 31, 1996, the weighted average interest rate on outstanding borrowings
under the New Credit Facility was 8.0%.

     The New Credit Facility specifies certain minimum or maximum relationships
between operating cash flows (earnings before interest, taxes, depreciation,
amortization and extraordinary charges) and interest, total debt and fixed
charges. There are restrictions on dividends declared by the Company, sales or
pledging of assets, capital expenditures and changes in business and ownership;
cash dividends are effectively prohibited. As of December 31, 1996, the Company
was in compliance with all of its debt covenants. Loans under the New Credit
Facility are secured by the capital stock of all of the Company's subsidiaries.


                                       48

<PAGE>

                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

     The interest rate on loans under the New Credit Facility varies, at the
Company's option, on a choice of base rates plus an applicable margin. The
applicable margin varies depending on the base rate selected and certain debt
ratios. The timing of interest payments also varies with the base rate selected.

     Under the New Credit Facility, the Company is required to maintain an
interest rate protection program. Pursuant to this requirement, the Company has
only limited involvement with derivative financial instruments and does not use
them for trading purposes. 


      Interest rate cap agreements are used to reduce the potential impact of
increases in interest rates on floating rate long-term debt. At December 31,
1995 and 1996, the Company was a party to three interest rate cap agreements,
each covering a notional amount of $10,000. One agreement expires on August 12,
1997 and the other two agreements expire on March 24, 1998. The agreements
entitle the Company to receive from counterparties, on a quarterly basis,
certain payments, if the three month LIBOR rate exceeds 7.5%.

     The Company is exposed to credit losses in the event of nonperformance by
the counterparties to its interest rate cap agreements but has no off balance
sheet risk of accounting loss.

      On October 1, 1996, the Company issued $165 million of 10-1/8% Senior
Subordinated Notes due 2006. Interest on the Notes is payable semi-annually on
April 1 and October 1 commencing on April 1, 1997. The net proceeds were $160.1
million after underwriting discounts and commissions. The proceeds were used to
repay outstanding bank debt under the Old Credit Agreement, the Chrysler Notes
and certain other indebtedness, to fund the purchase price of an acquisition and
for general corporate purposes. In connection with the prepayment of such
indebtedness, the Company incurred an extraordinary charge of $3,539 not
including related tax benefit of $1,413, during the fourth quarter of 1996. The
charge consists of a prepayment penalty, the write-off of deferred financing
costs, original issue discount and loss on termination of interest rate
protection agreements.

     The Notes contain covenants and restrictions similar to, or less
restrictive than, the New Credit Facility. After September 30, 2001, and subject
to certain restrictions, the Company may, at its option, redeem any or all of
the Notes at face value, plus a premium ranging from approximately 2% to 9%
through September 30, 2004. Thereafter, the Notes may be redeemed at face value.
Additionally, under certain circumstances, including a change of control or
following certain asset sales, the holders of the Notes may require the Company
to repurchase the Notes.

     The Notes are fully and unconditionally guaranteed, on a joint and several
basis, on a senior subordinated basis, by all of the Company's direct and
indirect subsidiaries (the "Subsidiary Guarantors"). The Company is a holding
company, substantially all of the assets of which are the stock of the
Subsidiary Guarantors, and substantially all of the operations of which are
conducted by the Subsidiary Guarantors. Accordingly, the aggregate assets,
liabilities, earnings and equity of the Subsidiary Guarantors are substantially
equivalent to the assets, liabilities, earnings and equity of the Company on a
consolidated basis. Management of the Company believes that separate financial
statements of, and other disclosures with respect to, the Subsidiary Guarantors
are not meaningful or material to investors.

     The real estate mortgages consist of an $8,037, 10 year, 11% mortgage based
on 30 year amortization with a $7,495 balloon payment due October, 2000 and a
$3,000, 8% note that is payable in various installments commencing in 1997 and
maturing in November, 2006.


                                       49
<PAGE>

                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

     Maturities of long-term debt are as follows:

                    Year                        Amount
              ----------------------------- ------------
              1997.........................     $    396
              1998.........................          379
              1999.........................          389
              2000.........................        7,794
              2001.........................        9,300
              Thereafter...................      166,475
                                               ---------
                                                $184,733
                                               =========

      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 as of December 31, 1996:

                                                   Carrying       Fair
                                                    Amount        Value
                                                  ---------     ---------
      New Credit Facility.....................    $  (9,000)    $  (9,000)
      Real estate mortgages...................      (10,733)      (10,137)
      10-1/8% Senior Subordinated Notes ......     (165,000)     (156,398)

4. Acquisitions

     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, and assumed
certain liabilities, of four additional records management businesses and during
1996, the Company purchased substantially all of the assets, and assumed certain
liabilities, of another sixteen 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, $26,054 and $53,894 in 1994, 1995 and 1996, 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 credit facilities and a
portion of the net proceeds from the Offering and the sale of the Notes. A
summary of the cash consideration (not including contingent payments of
approximately $4,000 based on the achievement of certain revenue targets in 1997
and 1998) and allocation of the purchase price as of the acquisition dates are
as follows:

<TABLE>
<CAPTION>
                                                             1994              1995            1996
                                                           --------         --------         ---------
<S>                                                        <C>              <C>              <C>      
      Fair value of assets acquired..............          $  3,223         $ 41,286         $  73,370
      Liabilities assumed........................              (377)          (8,238)           (4,874)
                                                           --------         --------         ---------
      Cash paid..................................          $  2,846         $ 33,048         $  68,496
                                                           ========         ========         =========
</TABLE>


                                       50

<PAGE>

                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

     The following unaudited pro forma combined information shows the results of
the Company's operations for the years ended December 31, 1995 and 1996 as
though each of the completed acquisitions had occurred as of the beginning of
the period reported:

<TABLE>
<CAPTION>
                                                                                     1995                 1996
                                                                                 -------------        -------------
       <S>                                                                       <C>                  <C>
       Revenues .........................................................        $     140,900        $     154,076
       Loss before extraordinary charge .................................               (1,989)                (243)
       Net loss applicable to common stockholders .......................               (4,096)              (2,649)
       Loss per common and common equivalent share before
           extraordinary charge and accretion of put warrant ............                (0.26)               (0.02)
       Net loss per common and common equivalent share ..................                (0.53)               (0.27)
</TABLE>

     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 the beginning of the period reported 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. Certain acquisitions
completed in the fourth quarter of 1996 are not included in the pro forma
results as their effect was immaterial.

     In connection with the acquisitions completed in 1996, the Company has
undertaken certain restructurings of the acquired businesses. The restructuring
activities include certain reductions in staffing levels, elimination of
duplicate facilities and other costs associated with exiting certain activities
of the acquired businesses. In connection with these restructuring activities,
the Company established reserves of $1,883. These amounts were recorded as costs
of the acquisitions and were provided in accordance with Emerging Issues Task
Force Issue No. 95-3, "Recognition of Liabilities in Connection with a Purchase
Business Combination". During 1996, the Company expended $602 for restructuring
costs. These expenditures consisted primarily of severance costs, move costs and
costs relating to exited facilities. As of December 31, 1996, the Company had a
total of $1,340 accrued for restructuring costs on all of its acquisitions.

5. Capital Stock, Redeemable Put Warrant and Stock Options

    a.  Capital Stock

     On February 6, 1996, the Company completed an initial public offering of
its Common Stock (the "Offering"). Pursuant to the Offering, the Company issued
2,350,000 shares of Common Stock - Voting.

     In connection with the Offering, the Board of Directors approved, and the
shareholders ratified, a recapitalization and the designation of three new
classes of stock as follows:

                                                            Authorized
   Class                                                      Shares
   ------------------------------------------------ --------------------
   Preferred stock, $.01 par value.................         2,000,000
   Common stock - voting, $.01 par value...........        13,000,000
   Common stock - non-voting, $.01 par value.......         1,000,000


                                       51

<PAGE>

                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

     Upon consummation of the Offering, all shares of capital stock were
automatically converted into shares of Common Stock - Voting and, in the case of
one stockholder, Common Stock - Non-Voting. The number of common shares received
upon conversation were as follows:

<TABLE>
<CAPTION>
                                                                               Common
                                                ------------------------------------------------------
                                                     Preferred         Voting            Non-Voting
                                                ----------------- ------------------ -----------------
  <S>                                                 <C>                <C>               <C>
  Series A1 and Series A3...................           50,000              987,314              --
  Series A2.................................           98,000            1,435,146         500,000
  Series C..................................          351,395            4,809,793              --
</TABLE>

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

<TABLE>
<CAPTION>
                                                                              Number of Shares
                                                       ----------------------------------------------------------------
                                                                 Authorized                 Issued and Outstanding
                                                       -------------------------------- -------------------------------
Equity Type                              Par Value          1995            1996             1995            1996
-------------------------------------- --------------- --------------- ---------------- --------------- ---------------
<S>                                         <C>            <C>              <C>                <C>           <C>
Series A1 preferred stock ...........       $.01                6,500               --           6,500              --
Series A2 preferred stock ...........       $.01               98,000               --          98,000              --
Series A3 preferred stock ...........       $.01               43,500               --          43,500              --
Series B preferred stock ............       $.01              148,000               --              --              --
Series C preferred stock ............       $.01              351,395               --         351,395              --
Preferred stock .....................       $.01                   --        2,000,000              --              --
Class A common stock ................       $.01           13,000,000               --          44,888              --
Class B common stock ................       $.01           10,300,000               --              --              --
Class C common stock ................       $.01                    1               --              --              --
Common stock-voting .................       $.01                   --       13,000,000              --       9,657,657
Common stock-non-voting..............       $.01                   --        1,000,000              --         477,295
</TABLE>

     In 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. All weighted average
common share and stock related data in the consolidated financial statements
have been retroactively restated to reflect the stock split.

    b.  Redeemable Put Warrant

     In connection with the issuance of the Chrysler Notes, the Company also
issued a put 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. On February 7, 1996, in connection with the Offering,
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.

    c.  Stock Options

     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
could be issued at the discretion of the Stock Option Committee to key
employees, consultants and directors.

     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 


                                       52

<PAGE>

                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

1,000,000 shares of Common Stock are available for grant as options and other
rights under the Stock Option Plan, including the options issued under the 1991
plan.

     Effective December 21, 1995, the Board of Directors approved the 1995 Stock
Option Plan for Non-Employee Directors that permits non-employee Directors to
elect to receive all or a portion of their compensation in the form of Common
Stock. Directors electing to receive Common Stock will, as an incentive, receive
an amount of stock equivalent to 110% of the directors compensation otherwise
due to be paid in cash. During 1996, the Company issued 915 shares under the
plan. At December 31, 1996, there were 14,085 shares reserved for issuance under
the plan.


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

<TABLE>
<CAPTION>
                                                                   Weighted Average
                                                   Options          Exercise Price
                                             ----------------- ------------------------
<S>                                                <C>                   <C>
Options outstanding, December 31, 1993.....        286,618               $  6.85
  Canceled.................................        (25,134)                 6.48
                                                   -------
Options outstanding, December 31, 1994.....        261,484                  6.89
  Granted..................................         97,018                 12.58
  Exercised................................        (15,976)                12.58
  Canceled.................................         (8,219)                11.21
                                                   -------
Options outstanding, December 31, 1995.....        334,307                  8.16
  Granted..................................        453,854                 16.49
  Exercised................................         (6,896)                 9.58
  Canceled.................................        (18,404)                11.76
                                                    ------
Options outstanding, December 31, 1996.....        762,861                 13.02
                                                   =======
</TABLE>

     The stock options were granted with exercise prices equal to or greater
than the fair market value at the date of grant. The majority of options become
exercisable ratably over a period of five years unless the holder terminates
employment. As of December 31, 1996, 220,129 of the options outstanding were
exercisable at a weighted average exercise price of $7.06 per share. The number
of options available for grant at December 31, 1996 was 185,355.

     Effective January 1, 1996, the Company adopted the provisions of SFAS No.
123, "Accounting for Stock Based Compensation." The Company has elected to
continue to account for stock options at intrinsic value with disclosure of fair
value accounting on net income (loss) and earnings (loss) per share on a pro
forma basis. Had the Company elected to recognize compensation cost based on the
fair value of the options granted at grant date as prescribed by SFAS No. 123,
net income (loss) and earnings (loss) per common and common equivalent share
would have been reduced to the pro forma amounts indicated in the table below:

<TABLE>
<CAPTION>
                                                                                     Year Ended December 31,
                                                                               ---------------------------------
                                                                                   1995                 1996
                                                                               ------------         ------------
       <S>                                                                     <C>                  <C>
       Net loss applicable to common stockholders -- as reported ...           $  (1,859)           $  (2,049)
       Net loss applicable to common stockholders -- pro forma .....              (2,058)              (2,991)
       Net loss per common and common equivalent
           share -- as reported ....................................               (0.24)               (0.20)
        Net loss per common and common equivalent
           share -- pro forma ......................................               (0.26)               (0.30)
</TABLE>

                                       53

<PAGE>
                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

    Consistent with SFAS No. 123, pro forma net income (loss) and earnings
(loss) per share have not been calculated for options granted prior to January
1, 1995. Accordingly, pro forma compensation cost may not be representative of
that to be expected in future years.

    The weighted average fair value of options granted in 1995 and 1996 was
$5.22 and $7.38 per share, respectively. The values were estimated on the date
of grant using the Black-Scholes option pricing model. The following table
summarizes the weighted average assumptions used for grants in the year ended
December 31:

   Assumption                                1995           1996
   ------------------------------------ --------------- --------------
   Expected volatility ................     24.2%           24.2%
   Risk free interest rate ............     7.51            6.34
   Expected dividend yield ............      N/A             N/A
   Expected life of the option  .......     6.3 yrs         7.5 yrs

     At December 31, 1996, the options outstanding were exercisable at prices
ranging from $6.48 to $30.38 per share and had a weighted average remaining
contractual life of 7.8 years.

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:

<TABLE>
<CAPTION>
                                                                               December 31,
                                                                      ----------------------------
                                                                         1995              1996
                                                                      ----------       -----------
     <S>                                                              <C>              <C>
     Accrued liabilities........................................      $    1,585       $     1,757
     Accrued rent...............................................           3,462             3,056
     Net operating loss carryforwards...........................           2,522             4,751
     AMT credit.................................................             628               587
     Deferred income............................................             360                --
     Other......................................................           1,150             1,719
                                                                      ----------       -----------
           Gross deferred tax assets............................           9,707            11,870
                                                                      ----------       -----------
     Other assets principally due to differences in
        amortization............................................          (2,051)           (2,150)
     Plant and equipment, principally due to
        differences in depreciation.............................          (7,201)           (7,039)
     Customer acquisition costs.................................          (1,716)           (2,337)
     Other......................................................            (417)               --
                                                                      -----------      -----------
           Gross deferred tax liabilities.......................         (11,385)          (11,526)
                                                                      ----------       -----------
                   Net deferred tax asset (liability)...........      $   (1,678)      $       344
                                                                      ==========       ===========
</TABLE>

    At December 31, 1996, a non-current deferred tax asset of $987 is included
in Other Assets in the accompanying Balance Sheets.

     The Company and its subsidiaries file a consolidated Federal income tax
return. The provision for

                                       54


<PAGE>

                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

income taxes consists of the following components:

<TABLE>
<CAPTION>
                                                     Years ended December 31,
                                             ----------------------------------------
                                                1994            1995           1996
                                             ---------       ---------      ---------
    <S>                                      <C>             <C>            <C>      
    Federal -- current..................     $      68       $     422      $     958
    Federal -- deferred.................         1,416             837             57
    State -- current....................           175              96          1,450
    State -- deferred...................           298             342         (1,030)
                                             ---------       ---------      ---------
                                             $   1,957       $   1,697      $   1,435
                                             =========       =========      =========
</TABLE>

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

<TABLE>
<CAPTION>
                                                                     1994           1995            1996
                                                                   --------       --------        --------
       <S>                                                         <C>            <C>             <C>      
       Computed "expected" tax provision...................        $  1,102       $    661        $    609
       Increase in income taxes resulting from:
         State taxes (net of federal tax benefit)..........             312            289             278
         Non-deductible goodwill
            amortization...................................             521            843             602
         Other.............................................              22            (96)            (54)
                                                                   --------       --------        --------
                                                                   $  1,957       $  1,697        $  1,435
                                                                   ========       ========        ========
</TABLE>

     The Company has estimated Federal net operating loss carryforwards of
$11,510 at December 31, 1996 to reduce future Federal income taxes, if any,
which begin to expire in 2005. The Company also has estimated state net
operating loss carryforwards of approximately $3,610 to reduce future state
income taxes, if any. Additionally, the Company has alternative minimum tax
credit carryforwards of $587 which have no expiration date and are available to
reduce future income taxes, if any.

7. Quarterly Results of Operations (Unaudited)

<TABLE>
<CAPTION>
Quarter Ended                                          Mar. 31             June 30             Sept. 30            Dec. 31
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>                <C>                 <C>                 <C>
1995
Revenues .......................................        $  24,338          $   25,886          $    26,570         $   27,642
Gross profit ...................................           12,114              12,998               13,682             13,365
Net loss applicable to common
    stockholders - (1) .........................             (274)               (259) (4)            (822)  (5)         (504) (6)
Net loss per share applicable to
    common stockholders ........................            (0.04)              (0.03)               (0.11)             (0.06)
-------------------------------------------------------------------------------------------------------------------------------
1996
Revenues........................................        $  31,028          $   32,922          $    36,019         $   38,749
Gross profit ...................................           15,360              16,207               17,311             19,093
Income (loss) before extraordinary
    charge .....................................              286                 411                   --               (340)
Net income (loss) applicable to
    common stockholders ........................                6 (2)             411 (7)               --             (2,466) (3)
Income (loss) per share before
    extraordinary charge applicable to
    common stockholders ........................             0.00                0.04                 0.00              (0.03)
Net income (loss) per share applicable
    to common stockholders .....................             0.00                0.04                 0.00              (0.23)
</TABLE>


                                       55

<PAGE>

                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)


(1)  Includes charges of $452, $501, $554 and $600 respectively, related to the
     accretion of the put warrant.
(2)  Includes a charge of $280, related to the accretion of the put warrant.
(3)  Includes an extraordinary charge of $2,126, net of tax benefit, related to
     the prepayment of certain indebtedness.
(4)  Includes a $360 after tax charge for litigation.
(5)  Includes a $900 write-down of the goodwill of a subsidiary.
(6)  Includes a $300 after tax charge related to the relocation of the corporate
     accounting function from Los Angeles to Boston.
(7)  Includes a $193 after tax charge related to the relocation of the corporate
     accounting function from Los Angeles to Boston.

8. 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 or Consumer Price Index escalation clauses. The Company also leases
equipment under operating leases, primarily computers which have an average
lease life of three years. Trucks and office equipment are also leased and have
remaining lease lives ranging from one to seven years. Rent expense was $13,555,
$15,661, and $21,114 for the years ended December 31, 1994, 1995 and 1996,
respectively.

     Minimum future lease payments are as follows:

                    Year                                   Operating
                  -------------------------------------    ---------
                  1997.................................    $  20,210
                  1998.................................       17,397
                  1999.................................       17,106
                  2000.................................       16,896
                  2001.................................       16,242
                  Thereafter...........................       80,332
                                                           ---------
                  Total minimum lease payments.........    $ 168,183
                                                           =========

    b. Litigation

     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 approximately $800 to perform the
necessary remediation work are included in other liabilities in the accompanying
balance sheets. Management believes the ultimate outcome of the above issue will
not have a material adverse effect on Iron Mountain's financial condition or
results of operations.


                                       56

<PAGE>


                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

9. Related Party Transactions

     Iron Mountain leases space to an affiliated company, Schooner Capital
Corporation (Schooner) for its corporate headquarters located in Boston,
Massachusetts. For the years ended December 31, 1994, 1995 and 1996, Schooner
paid Iron Mountain rent totaling $58, $49 and $68, respectively. Iron Mountain
leases one facility from a landlord which is a related party. Total rental
payments for the years ended December 31, 1994, 1995 and 1996 for this facility
totaled $88, $93 and $94, respectively. In the opinion of management, both of
these leases were entered into at market prices and terms.

10. 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 $168,
$276 and $419 for the years ended December 31, 1994, 1995 and 1996,
respectively.

11. Subsequent Events

    a.  Acquisitions

      Subsequent to December 31, 1996, the Company agreed to acquire
substantially all of the assets and assume certain liabilities of five records
management businesses for approximately $31,600 (not including contingent
payments of up to approximately $800 based on the achievement of certain revenue
targets in 1997 and 1998), in transactions accounted for under the purchase
method. As of March 12, 1997, four of these transactions had been consummated.
The fifth acquisition is expected to close during the second quarter of 1997.

    b.  Agreement to Merge with Safesite Records Management Corporation

     In addition to the acquisitions described above, in February 1997, the
Company announced that it had reached a definitive agreement to merge with
Safesite Records Management Corporation ("Safesite"), a privately held company
based in the Boston, Massachusetts area.

     Safesite stockholders and holders of exercisable options will receive Iron
Mountain common stock valued at approximately $50 million, plus approximately
$12 million in cash. The number of shares of Iron Mountain common stock will be
determined based on its market price, using a "collar" with a floor of $26.00
and a ceiling of $31.00. The transaction is subject to regulatory approval and
the approval of Safesite's stockholders. The merger is expected to be completed
during the second quarter of 1997.

    c.  Amendment and Restatement of the New Credit Facility

     On March 3, 1997, the Company amended the New Credit Facility, increasing
the facility from $100 million to $150 million. In addition, certain other terms
of the New Credit Facility, including interest rates, commitment fees and
financial covenants were amended and restated.



                                       57

<PAGE>

                           IRON MOUNTAIN INCORPORATED
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

    d.  Actions of the Board of Directors

     On March 3, 1997, the Board of Directors:

     (1) Voted, subject to stockholder approval, to increase the number of
         authorized shares of Common Stock-Voting from 13,000,000 shares to
         20,000,000 shares.

     (2) Increased, subject to stockholder approval, the number of shares
         available for grant as options under the 1995 Stock Incentive Plan by
         400,000.

     (3) Amended the 1995 Stock Incentive Plan to, among other things,
         incorporate the provisions of the 1995 Non-Employee Directors' Plan.

     (4) Granted 22,900 options to various employees to purchase common stock at
         fair market value at the date of grant.

     (5) Voted to terminate the 1995 Non-Employee Directors' Plan as of June 30,
         1997.

    e.  Facility Fire


      In March 1997, Iron Mountain experienced three fires that resulted in
extensive damage to two of its record management facilities in South Brunswick,
New Jersey. The affected facilities represented less than three percent of
revenues and less than two percent of EBITDA for 1996. Management believes that
insurance will cover substantially all of Iron Mountain's property and business
interruption losses relating to the fires. However, Iron Mountain may incur
costs as a result of the fires which will not be covered by insurance.
Management is unable to estimate at this time the magnitude of such costs. The
claims process is lengthy and its outcome cannot be predicted with certainty.
Based on its present assessment of the situation, management does not believe
that the fires will have a material adverse effect on Iron Mountain's financial
condition or results of operations, although there can be no assurance in this
regard.



                                       58

<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
  Iron Mountain Incorporated:

     We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Iron Mountain Incorporated for each of
the three years in the period ended December 31, 1996 and have issued our report
thereon dated March 4, 1997. Our audits were made for the purpose of forming an
opinion on those statements taken as a whole. The supplemental schedule listed
in the accompanying index is the responsibility of the Company's management and
is presented for purposes of complying with the Securities and Exchange
Commission's rules and regulations under the Securities Exchange Act of 1934 and
is not a required part of the basic financial statements. The supplemental
schedule has been subjected to the auditing procedures applied in our audits of
the basic financial statements and, in our opinion, is fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.



                                              ARTHUR ANDERSEN LLP

Boston, Massachusetts
March 4, 1997



                                       59

<PAGE>


<TABLE>
<CAPTION>
                                                                                                                   Schedule II

                           IRON MOUNTAIN INCORPORATED
                        Valuation and Qualifying Accounts
                             (Amounts in Thousands)

                                                  Balance at
                                               Beginning of the                                             Balance at End of 
Year Ended December 31,                              Year          Charged to Expense       Deductions         the Year
-------------------------------------------- --------------------- -------------------- ------------------- -------------------
<S>                                            <C>                  <C>                    <C>                <C>
Allowance for doubtful accounts:

1994 ..................................        $         502        $        356           $     (327)        $       531

1995 ..................................                  531                 630                 (510)                651

1996 ..................................                  651                 639                 (229)              1,061
</TABLE>



                                       60

<PAGE>

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

    None.









                                       61


<PAGE>

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant.

        The information required by this item with respect to executive officers
is set forth in Part I, page 21 under the caption "Executive Officers of Iron
Mountain."

        The information required by this item with respect to Directors will be
included in Iron Mountain's definitive Proxy Statement and is incorporated
herein by reference.

Item 11.  Executive Compensation.

        The information required by this item will be included in Iron
Mountain's definitive Proxy Statement and is incorporated herein by reference.

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

        The information required by this item will be included in the Company's
definitive Proxy Statement and is incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions.

        The information required by this item will be included in the Company's
definitive Proxy Statement and is incorporated herein by reference.




                                       62

<PAGE>

                                     PART IV


Item 14.     Exhibits, Financial Statements, Schedules and Reports on Form 8-K.

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

    As listed in the Index to Financial Statements and Financial Statement
    Schedule on page 37 hereof.

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

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

(b)     Report on Form 8-K.

    On November 8, 1996 the Company filed a current report on Form 8-K under
    Item 2 pertaining to the consummation of the acquisition of Mohawk Business
    Record Storage, Inc. No financial statements were filed as they were
    previously reported in the Company's registration statement on Form S-1, as
    amended (No. 333-10359).




                                       63

<PAGE>

                                   SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                    Iron Mountain Incorporated


                                    By: /s/ C. Richard Reese
                                        ----------------------------------------
                                        C. Richard Reese, Chairman of the Board
                                        and Chief Executive Officer

Dated:  March 28, 1997

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

<TABLE>
<CAPTION>
        Signature                           Title                               Date
        ---------                           -----                               ----
<S>                                <C>                                     <C>
 /s/ C. Richard Reese              Chairman of the Board                   March 28, 1997
---------------------------        and Chief Executive Officer
C. Richard Reese                   


 /s/ David S. Wendell              President, Chief Operating              March 28, 1997
---------------------------        Officer and Director
David S. Wendell                   


 /s/ Eugene B. Doggett             Executive Vice President,               March 28, 1997
---------------------------        Chief Financial Officer and
Eugene B. Doggett                  Director
                                   

 /s/ Jean A. Bua                   Vice President and Corporate            March 28, 1997
-------------------------------    Controller (principal
Jean A. Bua                        accounting officer)  
                                   

 /s/ Constantin R. Boden           Director                                March 28, 1997
-------------------------
Constantin R. Boden


 /s/ Arthur D. Little              Director                                March 28, 1997
------------------------------
Arthur D. Little


 /s/ Vincent J. Ryan               Director                                March 28, 1997
-----------------------------
Vincent J. Ryan
</TABLE>



                                       64

<PAGE>

                                INDEX TO EXHIBITS


        Exhibits indicated below are incorporated by reference to documents of
the Company on file with the Securities and Exchange Commission. Exhibit numbers
in parentheses refer to the Exhibit numbers in the applicable filing (which are
identified in the footnotes appearing at the end of this Index). All other
exhibits are filed herewith. Each exhibit marked by a pound sign (#) is a
management contract or compensatory plan.

<TABLE>
<CAPTION>
    Exhibit No.                            Item                                   Exhibit
    -----------                            ----                                   -------
          <S>        <C>                                                    <C>

          2          Agreement and Plan of Merger, dated as of              Filed herewith as
                     February 19, 1997, by and among the Company,                Exhibit 2
                     IM-1 Acquisition Corp. and Safesite Records
                     Management Corporation

          3.1        Amended and Restated Certificate of                          (3.1)(1)
                     Incorporation of the Company, as amended

          3.2        By-Laws of the Company, as amended                           (3.2)(3)

          10.1       Credit Agreement, dated as of September 30,                  (10)(4)
                     1996, among the Company, the lenders party
                     thereto and The Chase Manhattan Bank, as
                     Administrative Agent

          10.2A      Amendment No. 1 to the Credit Agreement, dated         Filed herewith as
                     January 15, 1997, among the Company, the                 Exhibit 10.2A
                     lenders party thereto and The Chase Manhattan
                     Bank, as Administrative Agent

          10.2B      Amendment and Restatement to the Credit                Filed herewith as
                     Agreement, dated as of March 3, 1997, among the          Exhibit 10.2B
                     Company, the lenders party thereto and The
                     Chase Manhattan Bank, as Administrative Agent

          10.3       Indenture for 10-1/8% Senior Subordinated Notes        Filed herewith as
                     due 2006 by and among the Company, certain of            Exhibit 10.3
                     its subsidiaries and First National Association, 
                     as trustee, dated October 1, 1996

          10.4       Iron Mountain Incorporated 1995 Stock Incentive             (10.6)(1)
                     Plan #

          10.5       Form of Iron Mountain Incorporated 1995 Stock               (10.7)(1)
                     Option Plan for Non-Employee Directors #

<PAGE>


                                      -2-
    Exhibit No.                                                                   Page No.
    -----------                                                                   --------

          10.6       Asset Purchase Agreement, dated July 19, 1995,              (10.11)(1)
                     among IMRM, DataFile Services, Inc. and Cynthia
                     and Lee Macklin

          10.7       Asset Purchase and Sale Agreement, dated as of              (10.12)(1)
                     October 5, 1995, among IMRM, Brooks Records
                     Center, Inc. and Forty Acres, Ltd.

          10.8       Asset Purchase and Sale Agreement, dated as of              (10.13)(1)
                     November 1, 1995, among IMRM, Nashville Vault
                     Company, Ltd. and USA Vault Corporation

          10.9       Asset Purchase and Sale Agreement, dated                    (10.14)(1)
                     November 14, 1995, among IMRM, Data Vault
                     Corporation and Ralph Stoddard III

          10.10      Merger Agreement, dated as of November 17,                  (10.15)(1)
                     1995, among IMRM, Temp DSSI, Inc. and Data
                     Storage Systems, Inc.

          10.11      Asset Purchase and Sale Agreement, dated                    (10.16)(1)
                     November 17, 1995, among IMRM, Florida Data
                     Bank, Inc., Carl J. Strang III, Carl J. Strang
                     II and 6/10 Corporation

          10.12      Asset Purchase and Sale Agreement, dated                    (10.17)(1)
                     November 22, 1995 among IMRM, Data Management
                     Business Records Storage, Inc. and Outdoor
                     West, Inc.

          10.13      Record Center Storage Services Agreement                    (10.18)(1)
                     between IMRM and Resolution Trust Corporation,
                     dated July 31, 1992,  as renewed by letter
                     agreement effective July 26, 1996 between the
                     Company and the Federal Deposit Insurance
                     Corporation

          10.14      Lease between IMRM and IM Houston (CR) Limited              (10.19)(1)
                     Partnership, dated January 1, 1991

          10.15      Asset Purchase and Sale Agreement, dated July               (10.20)(2)
                     11, 1996, among IMRM, The Fortress Corporation
                     and certain subsidiaries
<PAGE>

                                      -3-


    Exhibit No.                                                                   Page No.
    -----------                                                                   --------

          10.16      Stock Purchase and Sale Agreement, dated as of              (10.21)(2)
                     August 9, 1996, among IMRM and the shareholders
                     of Data Archive Services of Miami, Inc. and
                     Data Archives Services, Inc.

          10.17      Asset Purchase and Sale Agreement, dated August             (10.22)(2)
                     13, 1996, among IMRM, International Record
                     Storage and Retrieval Service, Inc. and
                     Laurance Winnerman, Sanford Winnerman and Penny
                     Novak

          10.18      Asset Purchase Agreement, dated as of September             (10.23)(2)
                     6, 1996, among IMRM, Mohawk Business Record
                     Storage, Inc., Michael M. Rabin, Richard K.
                     Rabin, Herman Ladin and Sidney Ladin

          10.19      Registration Rights Agreement between the                    (4.1)(1)
                     Company and certain Stockholders, dated as of
                     December 14, 1990

          10.20      Stockholders' Agreement, dated as of                   Filed herewith as
                     February 19, 1997 by and among the Company and           Exhibit 10.20
                     certain stockholders of Safesite Records
                     Management Corporation

          11         Statement regarding computation of per share           Filed herewith as
                     earnings                                                   Exhibit 11

          12         Schedule of computation of ratio of earnings to        Filed herewith as
                     fixed charges                                              Exhibit 12

          21         Subsidiaries of the Company                            Filed herewith as
                                                                                Exhibit 21

          27         Financial Data Schedule                                Filed herewith as
                                                                                Exhibit 27
</TABLE>

----------------
(1)     Filed as an Exhibit to Iron Mountain's Registration Statement No.
        33-99950 filed with the Securities and Exchange Commission on December
        1, 1995.
(2)     Filed as an Exhibit to Iron Mountain's Registration Statement No.
        333-10359 filed with the Securities and Exchange Commission on August
        16, 1996.
(3)     Filed as an Exhibit to Iron Mountain's Quarterly Report on Form 10-Q for
        the quarter ended June 30, 1996, filed with the Securities and Exchange
        Commission, File No. 0-27584.
(4)     Filed as an Exhibit to Iron Mountain's Quarterly Report on Form 10-Q for
        the quarter ended September 30, 1996, filed with the Securities and
        Exchange Commission, File No. 0-27584.