FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[Mark One]
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No.: 0-15641
AMPLICON, INC.
(Exact name of registrant as specified in charter)
California 95-3162444
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Hutton Centre Dr., Ste. 500
Santa Ana, California 92707
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714) 751-7551
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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at October 27, 1995
Common Stock, $.01 par value 5,873,959
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1995
(unaudited) and June 30, 1995 3
Consolidated Statements of Earnings - Three months
ended September 30, 1995 and 1994 (unaudited) 4
Consolidated Statements of Cash Flows - Three months
ended September 30, 1995 and 1994 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited). 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
Signature 11
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED) (AUDITED)
September 30, June 30,
ASSETS 1995 1995
<S> <C> <C>
Cash and cash equivalents $ 2,916,000 $ 6,312,000
Investment securities 11,381,000 9,244,000
Net receivables 56,240,000 55,994,000
Inventories, primarily customer deliveries
in process 1,004,000 5,651,000
Net investment in capital leases 60,748,000 59,068,000
Net equipment on operating leases 39,000 36,000
Other assets 1,575,000 1,395,000
Discounted lease rentals assigned to lenders 277,462,000 266,816,000
$411,365,000 $404,516,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 7,846,000 $ 13,392,000
Accrued liabilities 2,755,000 3,809,000
Customer deposits 8,596,000 6,852,000
Nonrecourse debt 247,074,000 238,614,000
Deferred interest income 30,388,000 28,202,000
Net deferred income 1,912,000 1,913,000
Income taxes payable, including
deferred taxes 19,036,000 20,370,000
317,607,000 313,152,000
Commitments and contingencies
Stockholders' equity:
Preferred stock; 2,500,000 shares
authorized; none issued -0- -0-
Common stock; $.01 par value; 20,000,000
shares authorized; 5,873,959 and 5,867,959
issued and outstanding, as of September 30,
1995 and June 30, 1995, respectively 59,000 59,000
Additional paid in capital 6,133,000 6,091,000
Retained earnings 87,553,000 85,192,000
Investment securities valuation adjustment 13,000 22,000
93,758,000 91,364,000
$411,365,000 $404,516,000
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
<TABLE>
<CAPTION>
Three months ended September 30,
1995 1994
<S> <C> <C>
Revenues:
Sales of equipment $48,663,000 $38,534,000
Interest income 7,333,000 5,719,000
Investment income 270,000 375,000
Rental income 150,000 97,000
56,416,000 44,725,000
Costs:
Cost of equipment sold 43,860,000 34,061,000
Interest expense on nonrecourse debt 3,916,000 3,182,000
Depreciation of equipment on
operating leases 29,000 3,000
47,805,000 37,246,000
Gross profit 8,611,000 7,479,000
Selling, general and administrative
expenses 4,073,000 3,235,000
Interest expense-other 78,000 93,000
Earnings before income taxes 4,460,000 4,151,000
Income taxes 1,806,000 1,640,000
Net earnings $ 2,654,000 $ 2,511,000
Net earnings per common share $ .45 $ .43
Dividends declared $ .05 $ .05
Weighted average number of common shares
outstanding 5,868,676 5,857,022
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net earnings $ 2,654,000 $ 2,511,000
Adjustments to reconcile net earnings to cash flows
(used for) provided by operating activities:
Depreciation 29,000 3,000
Interest accretion of estimated unguaranteed
residual values ( 758,000) ( 794,000)
Estimated unguaranteed residual values recorded
on leases ( 1,781,000) ( 1,729,000)
Interest accretion of net deferred income ( 142,000) ( 85,000)
Increase in net deferred income 141,000 225,000
Net (decrease) increase in income taxes payable,
including deferred taxes ( 1,334,000) 577,000
Net increase in net receivables ( 246,000) ( 1,701,000)
Net decrease in inventories 4,647,000 2,314,000
Net decrease in accounts payable and
accrued liabilities ( 6,600,000) ( 2,710,000)
Net cash used for operating activities ( 3,390,000) ( 1,389,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in minimum lease payments receivable ( 878,000) ( 7,517,000)
Purchase of equipment on operating leases ( 32,000) -0-
Purchases of available-for-sale securities (38,600,000) (67,434,000)
Proceeds from sales of available-for-sale
investment securities 36,454,000 64,311,000
Net increase in other assets ( 180,000) ( 228,000)
Decrease in estimated unguaranteed
residual values 1,737,000 1,957,000
Net cash used for investing activities ( 1,499,000) ( 8,911,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in bank overdraft -0- 483,000
Increase (decrease) in customer deposits 1,744,000 ( 145,000)
Dividends to stockholders ( 293,000) ( 293,000)
Proceeds from exercise of stock options 42,000 -0-
Net cash provided by financing activities 1,493,000 45,000
NET CHANGE IN CASH AND CASH EQUIVALENTS ( 3,396,000) (10,255,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,312,000 10,255,000
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,916,000 $ -0-
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Increase (decrease) in lease rentals assigned to
lenders and related nonrecourse debt $10,646,000 ($ 3,438,000)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 78,000 $ 93,000
Income taxes $ 3,140,000 $ 1,066,000
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and pursuant to the rules and regulations
of the Securities and Exchange Commission. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's latest
Annual Report on Form 10-K.
In the opinion of management, the unaudited consolidated financial
statements contain all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the balance sheet as of
September 30, 1995 and the statements of earnings and cash flows for the
three month periods ended September 30, 1995 and 1994. The results of
operations for the three month period ended September 30, 1995 are not
necessarily indicative of the results of operations to be expected for
the entire fiscal year ending June 30, 1996.
NOTE 2- BALANCE SHEET
At September 30, 1995, deferred interest income of $30,388,000 is offset
by deferred interest expense related to the Company's discounted lease
rentals assigned to lenders of $30,388,000.
NOTE 3- INVESTMENT SECURITIES
Effective with the beginning of fiscal year 1995, the Company adopted FAS
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (the "Statement"). The Statement requires certain
disclosures for investments in debt and equity securities regardless of
maturity. The Company had previously classified investments with original
maturities of three months or less as cash and cash equivalents. The
Statement requires that all investments be classified as trading
securities, available-for-sale securities and held-to-maturity
securities. Under the criteria established by the Statement the Company
has classified all of its investments as available-for-sale securities.
The Statement requires that available-for-sale securities be reported at
fair value and that the unrealized gain or loss be reported as a separate
component of stockholders' equity (net of the effect of income taxes)
until the investments are sold. At the time of the sale the respective
gain or loss, calculated by the specific identification method, will be
recognized as a component of operating results.
The following is a summary of investment securities as of September 30,
1995 and 1994:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Available-for-sale securities
September 30,1995
Mortgage-backed securities $ 5,279,000 $ 6,000 $ -0- $ 5,285,000
Corporate debt securities 6,089,000 7,000 -0- 6,096,000
$11,368,000 $13,000 $ -0- $11,381,000
September 30, 1994
Mortgage-backed securities $22,203,000 $38,000 $ -0- $22,241,000
</TABLE>
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The estimated fair value of the available-for-sale securities at
September 30, 1995 and 1994, by contractual maturity, are shown below.
<TABLE>
<CAPTION>
September 30, September 30,
1995 1995 1994 1994
Cost Fair Value Cost Fair Value
<S> <C> <C> <C> <C>
Available-for-sale securities
Due in 3 months or less $11,368,000 $11,381,000 $12,798,000 $12,835,000
Due after 3 months and less than
one year -0- -0- 9,405,000 9,406,000
$11,368,000 $11,381,000 $22,203,000 $22,241,000
</TABLE>
Investment income for the three months ended September 30, 1995 and 1994
consisted of the following:
<TABLE>
<CAPTION>
September 30,
1995 1994
<S> <C> <C>
Interest income $ 266,000 $ 113,000
Gross realized gains 4,000 262,000
$ 270,000 $ 375,000
</TABLE>
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Three Months Ended September 30, 1995 and 1994
REVENUES. Total revenues for the three months ended September 30,
1995 were $56,416,000, an increase of $11,691,000 or 26.1% as compared
to the three months ended September 30, 1994. The increase from the prior
year was primarily the result of increases in sales of equipment and
interest income. Sales of equipment increased by $10,129,000 or 26.3% to
$48,663,000 in the quarter ended September 30, 1995 as compared to
$38,534,000 in the quarter ended September 30, 1994. The Company believes
the increase in sales of equipment was primarily due to the increased
productivity of the Company's more seasoned sales force. Interest income
for the quarter ended September 30, 1995 increased by $1,614,000 or 28.2%
to $7,333,000 as compared to $5,719,000 in the same quarter in the prior
year. The three months ended September 30, 1995 and 1994 included amounts
of $3,916,000 and $3,182,000, respectively, of interest income on
discounted lease rentals assigned to lenders (which is offset by interest
expense on nonrecourse debt). Interest income for the three months ended
September 30, 1995, net of interest income on discounted lease rentals
assigned to lenders, increased by $880,000 or 34.7% as compared to the
three months ended September 30, 1994. This increase is primarily the
result of higher interest income from investment in lease receivables
offset by slightly lower interest accretion on the residual value base.
The Companies investment in lease receivables and leases to be assigned
was greater during the three months ended September 30, 1995 than in the
same period in the prior year. Investment income decreased by $105,000 or
28.0% to $270,000 as compared to $375,000 for the same period in the
prior year. This decrease can be attributed to lower investment in
securities during the three months ended September 30, 1995. Rental
income increased by $53,000 or 54.6% to $150,000 in the three months
ended September 30, 1995 as compared to $97,000 for the three months
ended September 30, 1994 due to a slight increase in the number of short-
term lease renewals.
GROSS PROFIT. Gross profit for the quarter ended September 30, 1995
of $8,611,000, or 15.3% of total revenues, increased by $1,132,000 or
15.1% as compared to $7,479,000, or 14.2% of total revenues, for the
quarter ended September 30, 1994. The principal factors which contributed
to increased gross profit were higher profits from new lease transactions
and higher net interest income, offset by lower profits from lease
extensions and upgrades.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses as a percentage of total revenues remained the
same at 7.2% for the quarters ended September 30, 1995 and 1994. Selling,
general and administrative expenses increased by $838,000 or 25.9%
primarily due to increases in the number of sales professionals, higher
offices costs related to the expansion in the sales organization and
increased general and legal costs related to the increased volume of
lease transactions. Management anticipates that it will continue to
incur a higher level of SG&A expenses as it proceeds with its expansion
plans in fiscal 1996.
TAXES. The Company's tax rate was 40.5% and 39.5% for the quarters
ended September 30, 1995 and 1994, respectively, representing its
estimated annual tax rate for the years ending June 30, 1996 and 1995.
(continued)
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
(continued)
Financial and Capital Resources
The Company funds its operating activities through nonrecourse debt
and internally generated funds. Capital expenditures for equipment
purchases are primarily financed by assigning the lease payments to banks
or other financial institutions which are discounted at fixed rates such
that the lease payments are sufficient to fully amortize the aggregate
outstanding debt. The Company generally does not purchase equipment until
it has received a noncancelable lease from its customer and has
determined that the lease can be discounted on a nonrecourse basis. At
September 30, 1995, the Company had outstanding nonrecourse debt
aggregating $247,074,000 relating to equipment under capital and
operating leases. In the past, the Company has been able to obtain
adequate nonrecourse funding commitments, and the Company believes it
will be able to do so in the future.
From time to time, the Company retains equipment leases in its own
portfolio rather than assigning the leases to financial institutions.
During the three months ended September 30, 1995, the Company increased
its net investment in leases held in its own portfolio by $878,000 from
June 30, 1995. This increase was primarily due to an increased volume of
new lease transactions to be assigned on a nonrecourse basis at a later
date.
The Company generally funds its equity investments in leased
equipment and interim equipment purchases with internally generated
funds, and if necessary, borrowings under a $20,000,000 general line of
credit. At September 30, 1995 the Company did not have any borrowings
outstanding on this line of credit.
In November 1990, the Board of Directors authorized management, at
its discretion to repurchase up to 300,000 shares of the Company's Common
Stock. Under this authorization 100,678 shares remain available for
repurchase.
The need for cash used for operating activities will continue to
grow as the Company expands. The Company believes that existing cash
balances, cash flows from operations, cash flows from its financing
activities, available borrowings under its existing credit facility, and
assignments (on a nonrecourse basis) of anticipated lease payments will
be sufficient to meet its foreseeable financing needs.
Inflation has not had a significant impact upon the operations of
the Company.
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) 8-K Reports
There were no reports on Form 8-K for the three months ended
September 30, 1995.
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements 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.
AMPLICON, INC.
Registrant
DATE: October 30, 1995 BY: S. LESLIE JEWETT /s/
S. LESLIE JEWETT
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
<TABLE> <S> <C>
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<CIK> 0000803016
<NAME> AMPLICON, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> 2916
<SECURITIES> 11381
<RECEIVABLES> 90921
<ALLOWANCES> 1695
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</TABLE>
