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, 1996
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 19, 1996
Common Stock, $.01 par value 5,838,959
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1996
(unaudited) and June 30, 1995 3
Consolidated Statements of Earnings - Three months and nine months
ended March 31, 1996 and 1995 (unaudited) 4
Consolidated Statements of Cash Flows - Nine months
ended March 31, 1996 and 1995 (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 1996 1995
<S> <C> <C>
Cash and cash equivalents $ 1,004,000 $ 6,312,000
Investment securities 13,021,000 9,244,000
Net receivables 55,349,000 53,959,000
Inventories, primarily customer deliveries
in process 857,000 5,651,000
Net investment in capital leases 70,725,000 58,687,000
Net equipment on operating leases 82,000 36,000
Other assets 1,446,000 1,395,000
Discounted lease rentals assigned to lenders 304,234,000 266,816,000
$446,718,000 $402,100,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable 12,128,000 12,325,000
Accrued liabilities 3,157,000 3,809,000
Customer deposits 7,979,000 6,852,000
Nonrecourse debt 272,118,000 238,614,000
Deferred interest income 32,116,000 28,202,000
Net deferred income 1,903,000 565,000
Income taxes payable, including
deferred taxes 18,156,000 20,369,000
347,557,000 310,736,000
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; 5,838,959 and 5,867,959 issued and
outstanding, as of March 31, 1996 and
June 30, 1995, respectively 59,000 59,000
Additional paid in capital 5,587,000 6,091,000
Retained earnings 93,506,000 85,192,000
Investment securities valuation adjustment 9,000 22,000
99,161,000 91,364,000
$446,718,000 $402,100,000
</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,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Sales of equipment $58,190 $46,761 $164,976 $130,191
Interest income 7,933 6,216 22,351 18,003
Investment income 266 168 733 767
Rental income 453 358 833 903
66,842 53,503 188,893 149,864
Costs:
Cost of equipment sold 51,666 41,535 147,699 115,965
Interest expense on nonrecourse
debt 4,544 3,526 12,576 9,906
Depreciation of equipment
on operating leases 193 53 245 58
56,403 45,114 160,520 125,929
Gross profit 10,439 8,389 28,373 23,935
Selling, general and
administrative expenses 4,869 3,502 13,060 9,824
Interest expense-other 36 27 118 140
Earnings before income taxes 5,534 4,860 15,195 13,971
Income taxes 2,186 1,920 6,002 5,519
Net earnings $ 3,348 $ 2,940 $ 9,193 $ 8,452
Net earnings per common share $ .57 $ .50 $ 1.57 $ 1.44
Dividends declared per common share
outstanding $ .05 $ .05 $ .15 $ .15
Weighted average number of common shares
outstanding 5,839 5,860 5,852 5,858
</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,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net earnings $ 9,193,000 $ 8,452,000
Adjustments to reconcile net earnings to cash flows
provided by (used for) operating activities:
Depreciation 245,000 58,000
Sale or lease of equipment previously on operating
leases, net -0- 27,000
Interest accretion of estimated unguaranteed
residual values ( 2,492,000) ( 2,346,000)
Estimated unguaranteed residual values recorded
on leases ( 9,057,000) ( 3,825,000)
Interest accretion of net deferred income ( 1,737,000) ( 438,000)
Increase (decrease) in net deferred income 3,075,000 ( 1,107,000)
Net (decrease) increase in income taxes payable,
including deferred taxes ( 2,213,000) 2,517,000
Net increase in net receivables ( 1,390,000) ( 4,096,000)
Net decrease in inventories 4,794,000 3,098,000
Net decrease in accounts payable and accrued
liabilities ( 849,000) ( 2,715,000)
Net cash used for operating activities ( 431,000) ( 375,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in minimum lease payments receivable ( 17,483,000) ( 8,229,000)
Purchases of available-for-sale securities (165,294,000) (195,519,000)
Proceeds from sales of available-for-sale
securities 161,504,000 197,674,000
Purchase of equipment on operating leases ( 291,000) ( 82,000)
Net increase in other assets ( 51,000) ( 223,000)
Decrease in estimated unguaranteed residual values 4,874,000 6,756,000
Net cash (used for) provided by investing activities( 16,741,000) 377,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Assignment of discounted lease rentals 12,120,000 -0-
Increase in bank overdraft -0- 1,156,000
Decrease in note payable secured by lease -0- ( 10,000,000)
Payments to repurchase common stock ( 546,000) -0-
Increase (decrease) in customer deposits 1,127,000 ( 571,000)
Dividends to stockholders ( 879,000) ( 878,000)
Proceeds from exercise of stock options 42,000 36,000
Net cash provided by (used for) financing activities 11,864,000 ( 10,257,000)
NET CHANGE IN CASH AND CASH EQUIVALENTS ( 5,308,000) ( 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 $ 1,004,000 $ -0-
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Increase in lease rentals assigned to lenders and related
nonrecourse debt $33,504,000 $ 7,384,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 118,000 $ 140,000
Income taxes $ 8,215,000 $ 3,006,000
</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, 1996 and the statements of earnings for the three and nine
month periods ended March 31, 1996 and 1995 and the statements of cash
flows for the nine months ended March 31, 1996 and 1995. The results of
operations for the nine month period ended March 31, 1996 are not
necessarily indicative of the results of operations to be expected for
the entire fiscal year ending June 30, 1996.
RECLASSIFICATIONS
Certain reclassifications have been made to the June 30, 1995
consolidated balance sheet to conform with the presentation of the
consolidated balance sheet as of March 31, 1996.
NOTE 2- BALANCE SHEET
At March 31, 1996, deferred interest income of $32,116,000 is offset
by deferred interest expense related to the discounted lease rentals
assigned to lenders of $32,116,000.
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 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, 1996
and 1995:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
March 31, 1996
Available-for-sale securities
U.S. Treasury securities and
obligations of U.S.
government agencies $ 9,974,000 $ 7,000 $ -0- $ 9,981,000
Mortgage-backed securities 1,040,000 1,000 -0- 1,041,000
Corporate debt securities 1,998,000 1,000 -0- 1,999,000
$13,012,000 $ 9,000 $ -0- $13,021,000
March 31, 1995
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>
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The estimated fair value of the available-for-sale securities at March
31, 1996 and 1995, by contractual maturity, are shown below.
<TABLE>
<CAPTION>
March 31, March 31,
1996 1996 1995 1995
Cost Fair Value Cost Fair Value
<S> <C> <C> <C> <C>
Available-for-sale securities
Due in 3 months or less $13,012,000 $13,021,000 $16,924,000 $16,994,000
</TABLE>
Investment income for the three and nine months ended March 31, 1996 and
1995 consisted of the following:
<TABLE>
<CAPTION>
Three months ended Nine months ended
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest income $266,000 $165,000 $722,000 $422,000
Gross realized gains -0- 3,000 11,000 345,000
$266,000 $168,000 $733,000 $767,000
</TABLE>
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Three Months Ended March 31, 1996 and 1995
REVENUES. Total revenues for the three months ended March 31, 1996
were $66,842,000, an increase of $13,339,000 or 24.9% as compared to the
three months ended March 31, 1995. The increase from the prior year was
primarily the result of increases in sales of equipment and higher
interest income. Sales of equipment increased by $11,429,000 or 24.4% to
$58,190,000 in the quarter ended March 31, 1996 as compared to
$46,761,000 in the quarter ended March 31, 1995. Sales from new lease
transactions increased by 31.2%, while sales from lease extensions and
property sales were down slightly by 7.4%. Interest income for the
quarter ended March 31, 1996 increased by $1,717,000 or 27.6% to
$7,933,000 as compared to $6,216,000 in the same quarter in the prior
year. The three months ended March 31, 1996 and 1995 included amounts of
$4,544,000 and $3,526,000, respectively, of interest income on discounted
lease rentals assigned to lenders (which is offset by interest expense on
nonrecourse debt). Interest income for the three months ended March 31,
1996, net of interest expense on discounted lease rentals assigned to
lenders, increased by $699,000 or 26.0% as compared to the three months
ended March 31, 1995. This increase is primarily the result of higher
interest income recognized from the amortization of deferred income and
from interest accretion on residual investments. Investment income
increased by $98,000 to $266,000 as compared to $168,000 for the same
period in the prior year. This increase can be attributed to improved
yield on invested securities during the three months ended March 31,
1996. Rental income increased by $95,000 to $453,000 in the three months
ended March 31, 1996 as compared to $358,000 for the three months ended
March 31, 1995 reflecting increased rentals from operating leases.
GROSS PROFIT. Gross profit for the quarter ended March 31, 1996 of
$10,439,000, or 15.6% of total revenues, increased by $2,050,000 or 24.4%
as compared to $8,389,000, or 15.7% of total revenues, for the quarter
ended March 31, 1995. The principal factors which contributed to
increased gross profit were higher profits from lease extensions and
leased property sales and higher net interest income.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses as a percentage of total revenues was 7.3% and
6.5% for the quarters ended March 31, 1996 and 1995, respectively.
Selling, general and administrative expenses increased by $1,366,000 or
39.0% primarily due to increases in the number of sales professionals,
higher office costs related to the expansion of the sales organization,
and higher general and legal expenses related to the increase in the
volume of lease transactions.
TAXES. The Company's tax rate was 39.5% for the quarters ended March
31, 1996 and 1995 representing its estimated annual tax rate for the
years ending June 30, 1996 and 1995.
Nine months Ended March 31, 1996 and 1995
REVENUES. Total revenues for the nine months ended March 31, 1996
were $188,893,000, an increase of $39,029,000 or 26.0% as compared to the
nine months ended March 31, 1995. The increase from the prior year was
primarily the result of increases in sales of equipment and higher
interest income. Sales of equipment increased by $34,785,000 or 26.7% to
$164,976,000 in the nine months ended March 31, 1996 as compared to
$130,191,000 in the same period ended March 31, 1995. The increase in
sales is primarily due to increases in new lease transactions of 31.8% as
a result of increases in the size of the Company's sales force and their
greater experience within the leasing marketplace. Interest income for
the nine months ended March 31, 1996 increased by $4,348,000 or 24.2% to
$22,351,000 as compared to $18,003,000 in the same period in the prior
year. The nine months ended March 31, 1996 and 1995 included amounts of
$12,576,000 and $9,906,000, 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, 1996, net of interest expense on discounted lease rentals
assigned to lenders, increased by $1,678,000 or 20.7% as compared to the
nine months ended March 31, 1995. This increase is primarily the result
of higher interest income realized through the amortization of deferred
income. Investment income decreased by $34,000 or 4.4% to $733,000 as
compared to $767,000 for the same period in the prior year. This
decrease can be attributed to slightly lower cash balances invested in
securities during the nine months ended March 31, 1996. Rental income
(continued)
<PAGE>
AMPLICON, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
(continued)
decreased by $70,000 to $833,000 in the nine months ended March 31, 1996
as compared to $903,000 for the nine months ended March 31, 1995
reflecting decreased rentals from operating leases.
GROSS PROFIT. Gross profit for the nine months ended March 31, 1996
of $28,373,000 or 15.0% of total revenues, increased by $4,438,000 or
18.5% as compared to $23,935,000, or 16.0% of total revenues, for the
nine months ended March 31, 1995. The principal factors which contributed
to increased gross profit were higher profits from new lease
transactions, higher net interest income and higher profits from lease
extensions and leased property sales.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses as a percentage of total revenues was 7.0% and
6.6% for the nine months ended March 31, 1996 and 1995, respectively.
Selling, general and administrative expenses increased by $3,236,000 or
32.9% primarily due to increases in the number of sales professionals,
higher office costs related to the expansion of the sales organization,
and higher general and legal expenses related to the increase in the
volume of lease transactions.
TAXES. The Company's tax rate was 39.5% for the nine months ended
March 31, 1996 and 1995 representing its estimated annual tax rate for
the years ending June 30, 1996 and 1995.
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, 1996, the Company had outstanding nonrecourse
debt aggregating $272,118,000 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 leases in its own portfolio
rather than assigning the leases to financial institutions. During the
nine months ended March 31, 1996, the Company increased its net
investment in leases held in its own portfolio by $5,363,000. The
increase reflects a higher volume of lease transactions retained in the
Company's portfolio, in line with the growth in the Company's volume of
lease extensions and new lease transactions.
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, 1996 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 65,678 shares remain available for
repurchase.
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
None
(b) 8-K Reports
There were no reports on Form 8-K for the three months ended
March 31, 1996.
<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 29, 1996 BY: S. LESLIE JEWETT /s/
S. LESLIE JEWETT
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 1004
<SECURITIES> 13021
<RECEIVABLES> 92439
<ALLOWANCES> 1695
<INVENTORY> 857
<CURRENT-ASSETS> 0
<PP&E> 3667
<DEPRECIATION> 2374
<TOTAL-ASSETS> 446718
<CURRENT-LIABILITIES> 41420
<BONDS> 0
0
0
<COMMON> 59
<OTHER-SE> 99102
<TOTAL-LIABILITY-AND-EQUITY> 446718
<SALES> 164976
<TOTAL-REVENUES> 188893
<CGS> 147699
<TOTAL-COSTS> 160520
<OTHER-EXPENSES> 13060
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 118
<INCOME-PRETAX> 15195
<INCOME-TAX> 6002
<INCOME-CONTINUING> 9193
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9193
<EPS-PRIMARY> 1.57
<EPS-DILUTED> 1.57
</TABLE>
