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As filed with the Securities and Exchange Commission on June 25, 1999
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(AMENDMENT NO. 1)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1999
COMMISSION FILE NUMBER 0-13292
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MCGRATH RENTCORP
(Exact name of registrant as specified in its Charter)
CALIFORNIA 94-2579843
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5700 LAS POSITAS ROAD, LIVERMORE, CA 94550
(Address of principal executive offices)
Registrant's telephone number: (925) 606-9200
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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 [ ]
At May 14, 1999, 13,466,098 shares of Registrant's Common Stock
were outstanding.
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PART I FINANCIAL INFORMATION
The following item appearing in the Quarterly Report on Form 10-Q for McGrath
RentCorp (the Company), as originally filed May 14, 1999, is hereby amended.
ITEM 1. FINANCIAL STATEMENTS.
The following item amends the original filing as to the Consolidated Statements
of Cash Flows by reclassifying the Proceeds from Sale of Rental Equipment
from Cash Flows from Operating Activities to Cash Flow from Investing Activities
and changing the respective subtotals.
MCGRATH RENTCORP
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31,
----------------------------
(in thousands, except per share amounts) 1999 1998
- -------------------------------------------------------------------------------------
<S> <C> <C>
Revenues
Rental $ 18,979 $ 16,981
Rental Related Services 2,434 2,223
-------- --------
Rental Operations 21,413 19,204
Sales 6,863 7,952
Other 218 194
-------- --------
Total Revenues 28,494 27,350
-------- --------
Costs and Expenses
Direct Costs of Rental Operations
Depreciation 4,666 3,847
Rental Related Services 1,338 1,664
Other 3,133 3,025
-------- --------
Total Direct Costs of Rental Operations 9,137 8,536
Costs of Sales 4,860 5,249
-------- --------
Total Costs 13,997 13,785
-------- --------
Gross Margin 14,497 13,565
Selling and Administrative 4,199 3,705
-------- --------
Income from Operations 10,298 9,860
Interest 1,516 1,451
-------- --------
Income Before Provision for Income Taxes 8,782 8,409
Provision for Income Taxes 3,447 3,313
-------- --------
Income Before Minority Interest 5,335 5,096
Minority Interest in Income of Subsidiary (36) 128
-------- --------
Net Income $ 5,371 $ 4,968
======== ========
Earnings Per Share:
Basic $ 0.39 $ 0.34
-------- --------
Diluted $ 0.38 $ 0.34
-------- --------
Shares Used in Per Share Calculation:
Basic 13,820 14,436
Diluted 13,991 14,635
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</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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MCGRATH RENTCORP
CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
MARCH 31, DECEMBER 31,
------------------------------
(in thousands) 1999 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash $ 4,749 $ 857
Accounts Receivable, less allowance for doubtful
accounts of $650 in 1999 and 1998 15,717 21,811
Rental Equipment, at cost:
Relocatable Modular Offices 218,335 216,414
Electronic Test Instruments 66,686 66,573
--------- ---------
285,021 282,987
Less Accumulated Depreciation (86,013) (82,959)
--------- ---------
Rental Equipment, net 199,008 200,028
--------- ---------
Land, at cost 18,953 18,953
Buildings, Land Improvements, Equipment and Furniture,
at cost, less accumulated depreciation of $4,210
in 1999 and $3,858 in 1998 31,791 31,460
Prepaid Expenses and Other Assets 4,558 5,567
--------- ---------
Total Assets $ 274,776 $ 278,676
========= =========
Liabilities and Shareholders' Equity
Liabilities:
Notes Payable $ 101,450 $ 97,000
Accounts Payable and Accrued Liabilities 20,161 22,964
Deferred Income 2,753 5,574
Minority Interest in Subsidiary 2,548 2,584
Deferred Income Taxes 48,609 45,160
--------- ---------
Total Liabilities 175,521 173,282
--------- ---------
Shareholders' Equity:
Common Stock, no par value --
Authorized -- 40,000 shares
Outstanding -- 13,463 shares in 1999 and
13,970 shares in 1998 7,824 8,138
Retained Earnings 91,431 97,256
--------- ---------
Total Shareholders' Equity 99,255 105,394
--------- ---------
Total Liabilities and Shareholders' Equity $ 274,776 $ 278,676
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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MCGRATH RENTCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31,
----------------------------
(in thousands) 1999 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flow from Operating Activities:
Net Income $ 5,371 $ 4,968
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 5,059 4,202
Gain on Sale of Rental Equipment (1,313) (1,389)
Change In:
Accounts Receivable 6,094 1,470
Prepaid Expenses and Other Assets 1,009 (794)
Accounts Payable and Accrued Liabilities (3,056) (10,636)
Deferred Income (2,821) 972
Deferred Income Taxes 3,448 3,299
-------- --------
Net Cash Provided by Operating Activities 13,791 2,092
-------- --------
Cash Flow from Investing Activities:
Purchase of Rental Equipment (5,901) (9,888)
Purchase of Land, Buildings, Land Improvements,
Equipment and Furniture (724) (784)
Proceeds from Sale of Rental Equipment 3,567 3,512
-------- --------
Net Cash Used in Investing Activities (3,058) (7,160)
-------- --------
Cash Flow from Financing Activities:
Net Borrowings Under Notes Payable 4,450 15,747
Net Proceeds from the Exercise of Stock Options -- 183
Repurchase of Common Stock (9,894) (8,795)
Payment of Dividends (1,397) (1,162)
-------- --------
Net Cash Provided (Used) by Financing
Activities (6,841) 5,973
-------- --------
Net Increase in Cash 3,892 905
Cash Balance, Beginning of Period 857 538
-------- --------
Cash Balance, End of Period $ 4,749 $ 1,443
======== ========
Interest Paid During the Period $ 2,075 $ 1,440
======== ========
Income Taxes Paid During the Period $ (8) $ 14
======== ========
Dividends Declared but not yet Paid $ 1,616 $ 1,414
======== ========
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</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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MCGRATH RENTCORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
NOTE 1. CONSOLIDATED FINANCIAL INFORMATION
The consolidated financial information for the three months ended March
31, 1999 has not been audited, but in the opinion of management, all adjustments
(consisting of only normal recurring accruals, consolidation and eliminating
entries) necessary for the fair presentation of the consolidated results of
operations, financial position, and cash flows of McGrath RentCorp (the
"Company") have been made. The consolidated results of the three months ended
March 31, 1999 should not be considered as necessarily indicative of the
consolidated results for the entire year. It is suggested that these
consolidated financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's latest Form 10-K.
NOTE 2. NOTES PAYABLE
In April 1999, the Company amended its unsecured line of credit
agreement (the "Agreement") with its banks to reduce the minimum shareholders'
equity requirement to allow further repurchases of the Company's common stock.
The Agreement requires the Company to maintain shareholders' equity of not less
than $85,000,000 plus 50% of all net income generated subsequent to March 31,
1999 plus 90% of any new stock issuance proceeds. All other terms and conditions
remained the same.
NOTE 3. BUSINESS SEGMENTS
The Company defines its business segments based on the nature of
operations for the purpose of reporting under Statement of Financial Accounting
Standard No. 131, "Disclosures about Segments of an Enterprise and Related
Information" (SFAS 131). The Company's three reportable segments are Mobile
Modular Management Corporation (Modulars), McGrath-RenTelco (Electronics), and
Enviroplex. The operations of these three segments are described in the notes to
the consolidated financial statements included in the Company's latest Form
10-K. As a separate corporate entity, Enviroplex revenues and expenses are
separately maintained from Modulars and Electronics. Excluding interest expense,
allocations of revenues and expenses not directly associated with Modulars or
Electronics are generally allocated to these segments based on their pro-rata
share of direct revenues. Interest expense is allocated between Modulars and
Electronics based on their pro-rata share of average rental equipment, accounts
receivable and customer security deposits. The Company does not report total
assets by business segment. Summarized financial information for the three
months ended March 31, 1999 and 1998 for the Company's reportable segments is
shown in the following table:
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<TABLE>
<CAPTION>
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(in thousands) MODULARS ELECTRONICS ENVIROPLEX CONSOLIDATED
-------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH 31,
1999
Rental Operation Revenues $ 14,882 $ 6,531 $ -- $ 21,413
Sales and Other Revenues 2,688 2,395 1,998 7,081
Total Revenues 17,570 8,926 1,998 28,494
Depreciation on Rental Equipment 2,498 2,168 -- 4,666
Interest Expense 1,161 399 (44) 1,516
Income before Income Taxes 5,824 3,174 (216) 8,782
Rental Equipment Acquisitions 2,465 3,436 -- 5,901
Accounts Receivable, net (period end) 6,554 7,379 1,784 15,717
Rental Equipment, at cost (period end) 218,335 66,686 -- 285,021
1998
Rental Operation Revenues $ 13,656 $ 5,548 $ -- $ 19,204
Sales and Other Revenues 2,102 2,696 3,348 8,146
Total Revenues 15,758 8,244 3,348 27,350
Depreciation on Rental Equipment 2,191 1,656 -- 3,847
Interest Expense 1,094 325 32 1,451
Income before Income Taxes 4,631 3,013 765 8,409
Rental Equipment Acquisitions 5,642 4,246 -- 9,888
Accounts Receivable, net (period end) 7,034 7,070 6,220 20,324
Rental Equipment, at cost (period end) 200,067 52,341 -- 252,408
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</TABLE>
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT TO THE
QUARTERLY REPORT ON FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1999 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Date: June 23, 1999 MCGRATH RENTCORP
by: /s/ Thomas J. Sauer
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Thomas J. Sauer
Vice President, Chief Financial
Officer (Chief Accounting Officer)
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