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 March 31, 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 April 20, 1995
Common Stock, $.01 par value 5,864,922
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1995
(unaudited) and June 30, 1994 3
Consolidated Statements of Earnings - Three months and nine months
ended March 31, 1995 and 1994 (unaudited) 4
Consolidated Statements of Cash Flows - Nine months
ended March 31, 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 8-10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signature 12
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED) (AUDITED)
March 31, June 30,
ASSETS 1995 1994
<S> <C> <C>
Cash and cash equivalents $ -0- $ 10,255,000
Investment securities 16,994,000 19,080,000
Net receivables 44,001,000 39,905,000
Inventories, primarily customer deliveries
in process 1,877,000 4,975,000
Net investment in capital leases 66,950,000 59,305,000
Net equipment on operating leases 47,000 51,000
Other assets 1,298,000 1,075,000
Discounted lease rentals assigned to lenders 259,684,000 249,938,000
$390,851,000 $384,584,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Bank overdraft $ 1,156,000 $ -0-
Note payable secured by lease -0- 10,000,000
Accounts payable 10,934,000 14,246,000
Accrued liabilities 3,746,000 3,149,000
Customer deposits 6,799,000 7,370,000
Nonrecourse debt 233,130,000 225,746,000
Deferred interest income 26,554,000 24,192,000
Net deferred income 2,198,000 3,744,000
Income taxes payable, including
deferred taxes 17,779,000 15,262,000
302,296,000 303,709,000
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; 5,859,922 and
5,857,022 issued and outstanding,
as of March 31, 1995 and June 30, 1994,
respectively 59,000 59,000
Additional paid in capital 6,037,000 6,001,000
Retained earnings 82,389,000 74,815,000
Investment securities valuation adjustment 70,000 -0-
88,555,000 80,875,000
$390,851,000 $384,584,000
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Sales of equipment $46,761 $43,426 $130,191 $127,091
Interest income 6,216 5,579 18,003 17,734
Investment income 168 67 767 244
Rental income 358 18 903 165
53,503 49,090 149,864 145,234
Costs:
Cost of equipment sold 41,535 38,610 115,965 115,168
Interest expense on
nonrecourse debt 3,526 2,686 9,906 8,526
Depreciation of equipment
on operating leases 53 45 58 53
45,114 41,341 125,929 123,747
Gross profit 8,389 7,749 23,935 21,487
Selling, general and
administrative expenses 3,502 2,945 9,824 8,639
Interest expense-other 27 81 140 162
Earnings before income taxes 4,860 4,723 13,971 12,686
Income taxes 1,920 1,724 5,519 4,630
Net earnings $ 2,940 $ 2,999 $ 8,452 $ 8,056
Net earnings per common
share $ .50 $ .51 $ 1.44 $ 1.38
Dividends declared per common share
outstanding $ .05 $ -0- $ .15 $ -0-
Weighted average number of common shares
outstanding 5,860 5,851 5,858 5,847
</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>
Nine Months Ended March 31,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 8,452,000 $ 8,056,000
Adjustments to reconcile net earnings to
cash flows used for operating activities:
Depreciation 58,000 53,000
Sale or lease of equipment previously
on operating leases, net 27,000 12,000
Interest accretion of estimated
unguaranteed residual values ( 2,346,000) ( 2,272,000)
Estimated unguaranteed residual values
recorded on leases ( 3,825,000) ( 5,769,000)
Interest accretion of net deferred income ( 438,000) ( 726,000)
(Decrease) increase in net deferred income ( 1,107,000) 1,136,000
Net (decrease) increase in income taxes
payable, including deferred taxes 2,517,000 ( 659,000)
Net increase in net receivables ( 4,096,000) ( 26,991,000)
Net decrease in inventories 3,098,000 4,500,000
Net (decrease) increase in accounts
payable and accrued liabilities ( 2,715,000) ( 2,515,000)
Net cash used for by operating activities ( 375,000) ( 25,175,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in minimum lease payments
receivable ( 8,229,000) ( 12,692,000)
Purchases of available-for-sale securities (195,519,000) (154,691,000)
Proceeds from sales of available-for-sale
securities 197,674,000 150,298,000
Purchase of equipment on operating leases ( 82,000) ( 53,000)
Net (increase) decrease in other assets ( 223,000) 133,000
Decrease in estimated unguaranteed
residual values 6,756,000 4,000,000
Net cash provided by (used for) investing
activities 377,000 ( 13,005,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in bank overdraft 1,156,000 1,951,000
Assignment of discounted lease rentals -0- 7,162,000
(Decrease) increase in note payable
secured by lease ( 10,000,000) 10,000,000
Payments to repurchase common stock -0- ( 188,000)
(Decrease) increase in customer deposits ( 571,000) 2,672,000
Dividends to stockholders ( 878,000) -0-
Proceeds from exercise of stock options 36,000 168,000
Net cash (used for) provided by financing
activities ( 10,257,000) 21,765,000
NET CHANGE IN CASH AND CASH EQUIVALENTS ( 10,255,000) ( 16,415,000)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 10,255,000 16,415,000
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ -0- $ -0-
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Increase in lease rentals assigned to
lenders and related nonrecourse debt $ 7,384,000 $ 56,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 140,000 $ 162,000
Income taxes $ 3,006,000 $ 5,312,000
</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
March 31, 1995 and the statements of earnings for the three and nine
month periods ended March 31, 1995 and 1994 and the statements of cash
flows for the nine months ended March 31, 1995 and 1994. The results of
operations for the nine month period ended March 31, 1995 are not
necessarily indicative of the results of operations to be expected for
the entire fiscal year ending June 30, 1995.
NOTE 2- BALANCE SHEET
At March 31, 1995, deferred and net interest income of $26,554,000 is
offset by deferred interest expense related to the discounted lease
rentals assigned to lenders of $26,554,000.
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 March 31, 1995:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Available-for-sale securities
U.S. Treasury securities and
obligations of U.S.
government agencies $ 3,612,000 $11,000 $ -0- $ 3,623,000
Mortgage backed securities 13,312,000 59,000 -0- 13,371,000
$16,924,000 $70,000 $ -0- $16,994,000
</TABLE>
The estimated fair value of the available-for-sale securities at March
31, 1995, by contractual maturity, are shown below.
<TABLE>
<CAPTION>
Cost Fair Value
<S> <C> <C>
Available-for-sale securities
Due in 3 months or less $16,924,000 $16,994,000
</TABLE>
(continued)
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Investment income for the three and nine months ended March 31, 1995
consisted of the following:
<TABLE>
<CAPTION>
Three months ended Nine months ended
<S> <C> <C>
Interest income $165,000 $422,000
Gross realized gains 3,000 345,000
$168,000 $767,000
</TABLE>
NOTE 4- NOTE PAYABLE SECURED BY LEASE
In December 1993, the Company entered into an agreement, as amended in
November 1994, to borrow $10,000,000 (the "Note") at an interest rate
equal to the prime rate. This Note was secured by an in process lease
transaction (the "Lease"). This Lease was secured by an $11,000,000
letter of credit issued by a different financial institution. Interest
was payable monthly commencing January 15, 1994 and the Note was due on
January 31, 1995. This Note was paid in full prior to the due date and
the Lease was financed on a nonrecourse basis by the financial
institution which issued the Note.
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Three Months Ended March 31, 1995 and 1994
REVENUES. Total revenues for the three months ended March 31, 1995
were $53,503,000, an increase of $4,413,000 or 9.0% as compared to the
three months ended March 31, 1994. The increase from the prior year was
primarily the result of increases in sales of equipment. Sales of
equipment increased by $3,335,000 or 7.7% to $46,761,000 in the quarter
ended March 31, 1995 as compared to $43,426,000 in the quarter ended
March 31, 1994. The increase in sales is primarily due to higher revenue
from lease extensions and leased property sales, but also reflected an
increase in new lease transactions. Interest income for the quarter ended
March 31, 1995 increased by $637,000 or 11.4% to $6,216,000 as compared
to $5,579,000 in the same quarter in the prior year. The three months
ended March 31, 1995 and 1994 included amounts of $3,526,000 and
$2,686,000, 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 March 31, 1995, net of
interest expense on discounted lease rentals assigned to lenders,
decreased by $203,000 or 7.0% as compared to the three months ended March
31, 1994. This decrease is primarily the result of lower interest income
from investment in lease receivables. Investment income increased by
$101,000 or 150.7% to $168,000 as compared to $67,000 for the same period
in the prior year. This increase can be attributed to higher cash
balances invested in securities during the three months ended March 31,
1995. Rental income increased by $340,000 to $358,000 in the three months
ended March 31, 1995 as compared to $18,000 for the three months ended
March 31, 1994 reflecting increased rentals from lease extensions.
GROSS PROFIT. Gross profit for the quarter ended March 31, 1995 of
$8,389,000, or 15.7% of total revenues, increased by $640,000 or 8.3% as
compared to $7,749,000, or 15.8% of total revenues, for the quarter ended
March 31, 1994. The principal factor which contributed to increased gross
profit was higher profits from lease extensions and leased property
sales, offset by slightly lower net interest income.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses as a percentage of total revenues was 6.5% and
6.0% for the quarters ended March 31, 1995 and 1994, respectively.
Selling, general and administrative expenses increased by $557,000 or
18.9% primarily due to increases in sales and other personnel levels and
their related office costs, and higher legal expenses.
TAXES. The Company's tax rate was 39.5% and 36.5% for the quarters
ended March 31, 1995 and 1994, respectively, representing its estimated
annual tax rate for the years ending June 30, 1995 and 1994.
Nine months Ended March 31, 1995 and 1994
REVENUES. Total revenues for the nine months ended March 31, 1995
were $149,864,000, an increase of $4,630,000 or 3.2% as compared to the
nine months ended March 31, 1994. The increase from the prior year was
primarily the result of increases in sales of equipment. Sales of
equipment increased by $3,100,000 or 2.4% to $130,191,000 in the nine
months ended March 31, 1995 as compared to $127,091,000 in the same
period ended March 31, 1994. The increase in sales is primarily due to
higher revenue from lease extensions and leased property sales, offset by
a slight decrease in new lease transactions. Interest income for the nine
months ended March 31, 1995 increased by $269,000 or 1.5% to $18,003,000
as compared to $17,734,000 in the same period in the prior year. The nine
months ended March 31, 1995 and 1994 included amounts of $9,906,000 and
$8,526,000, respectively, of interest income on discounted lease rentals
assigned to lenders (which is offset by interest expense on nonrecourse
debt). Interest income for the nine months ended March 31, 1995, net of
interest expense on discounted lease rentals assigned to lenders,
decreased by $1,111,000 or 12.1% as compared to the nine months ended
March 31, 1994. This decrease is primarily the result of lower interest
income from the lease portfolio. Investment income increased by $523,000
or 214.3% to $767,000 as compared to $244,000 for the same period in the
prior year. This increase can be attributed to higher cash balances
invested in securities during the nine months ended March 31, 1995.
Rental income increased by $738,000 to $903,000 in the nine months ended
March 31, 1995 as compared to $165,000 for the nine months ended March
31, 1994 reflecting increased rentals from lease extensions.
(continued)
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
(continued)
GROSS PROFIT. Gross profit for the nine months ended March 31, 1995
of $23,935,000, or 16.0% of total revenues, increased by $2,448,000 or
11.4% as compared to $21,487,000, or 14.8% of total revenues, for the
nine months ended March 31, 1994. The principal factors which contributed
to increased gross profit were higher profits from lease extensions and
leased property sales, offset by lower profits from new lease
transactions and lower net interest income.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses as a percentage of total revenues was 6.6% and
6.0% for the nine months ended March 31, 1995 and 1994, respectively.
Selling, general and administrative expenses increased by $1,185,000 or
13.7% primarily due to increases in sales and other personnel levels and
their related office costs.
TAXES. The Company's tax rate was 39.5% and 36.5% for the nine
months ended March 31, 1995 and 1994, respectively, representing its
estimated annual tax rate for the years ending June 30, 1995 and 1994.
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. For many transactions which require staged equipment
installations, the Company funds the transactions with internal resources
prior to placing the lease rentals on a nonrecourse basis with a
financial institution. The Company 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 or the Company's
credit committee has approved the transaction for the Company's
portfolio. At March 31, 1995, the Company had outstanding nonrecourse
debt aggregating $233,130,000 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.
The Company borrowed $10,000,000 in December 1993 which was secured
by an in process lease transaction. The Company had a nonrecourse debt
commitment from the same financial institution to finance the lease
transaction once the lease transaction was completed. The lease was
assigned on a nonrecourse basis prior to the due date of the Note and the
note was paid in full (see Note 4 in the Notes to Consolidated Financial
Statements).
From time to time, the Company retains equipment leases in its own
portfolio rather than assigning the leases to financial institutions.
During the nine months ended March 31, 1995, the Company increased its
net investment in leases held in its own portfolio by $8,229,000. The
increase reflects a higher volume of lease transactions retained in the
Company's portfolio, in line with the growth in the Company's business
volume, and a higher volume of lease extensions.
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 March 31, 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.
(continued)
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
(continued)
As the Company's volume of lease transactions continues to grow, the
amount of working capital required to fund transactions will continue to
expand. The Company believes that existing cash balances, cash flows from
its activities, available borrowings under its existing credit facility,
and assignments (on a nonrecourse basis) of anticipated lease payments
will be sufficient to fund anticipated future growth and operating
requirements.
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
27. Financial Data Schedule
(b) 8-K Reports
There were no reports on Form 8-K for the three months ended
March 31, 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: April 28, 1995 BY: S. LESLIE JEWETT /s/
S. LESLIE JEWETT
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000803016
<NAME> AMPLICON, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 0
<SECURITIES> 16994
<RECEIVABLES> 83354
<ALLOWANCES> 1289
<INVENTORY> 1877
<CURRENT-ASSETS> 0
<PP&E> 3117
<DEPRECIATION> 1954
<TOTAL-ASSETS> 390851
<CURRENT-LIABILITIES> 40414
<BONDS> 0
<COMMON> 59
0
0
<OTHER-SE> 88496
<TOTAL-LIABILITY-AND-EQUITY> 390851
<SALES> 130191
<TOTAL-REVENUES> 149864
<CGS> 115965
<TOTAL-COSTS> 125929
<OTHER-EXPENSES> 9824
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 140
<INCOME-PRETAX> 13971
<INCOME-TAX> 5519
<INCOME-CONTINUING> 8452
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8452
<EPS-PRIMARY> 1.44
<EPS-DILUTED> 1.44
</TABLE>
