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, 1997
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
The number of shares outstanding of the Registrant's Common Stock,
par value $.005 per share, as of October 29, 1997 was 11,765,518.
<PAGE>
AMPLICON, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements
Balance Sheets - September 30, 1997
(unaudited) and June 30, 1997 3
Statements of Earnings - Three months
ended September 30, 1997 and 1996 (unaudited) 4
Statements of Cash Flows - Three months
ended September 30, 1997 and 1996 (unaudited) 5
Notes to Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
Signature 10
<PAGE>
AMPLICON, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED) (AUDITED)
September 30, June 30,
ASSETS 1997 1997
------------- ------------
<S> <C> <C>
Cash and cash equivalents $ 5,345,000 $ 5,780,000
Investment securities -0- -0-
Net receivables 94,227,000 87,743,000
Inventories, primarily customer
deliveries in process 1,738,000 1,558,000
Net investment in capital leases 106,380,000 103,961,000
Net equipment on operating leases -0- 2,000
Other assets 1,289,000 1,189,000
Discounted lease rentals assigned
to lenders 290,631,000 291,222,000
------------ ------------
$499,610,000 $491,455,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Note payable to bank $ 10,000,000 $ 10,000,000
Accounts payable 27,988,000 27,609,000
Accrued liabilities 6,482,000 5,929,000
Customer deposits 8,733,000 7,872,000
Nonrecourse debt 258,358,000 258,577,000
Deferred interest income 32,273,000 32,645,000
Net deferred income 5,527,000 4,019,000
Income taxes payable, including
deferred taxes 28,697,000 27,050,000
------------ ------------
378,058,000 373,701,000
------------ ------------
Commitments and contingencies
Stockholders' equity:
Preferred stock; 2,500,000 shares
authorized; none issued -0- -0-
Common stock; $.005 par value;
40,000,000 shares authorized;
11,789,718 and 11,752,518
issued and outstanding as of
September 30, 1997 and
June 30, 1997, respectively 59,000 59,000
Additional paid in capital 6,414,000 6,110,000
Retained earnings 115,079,000 111,585,000
Investment securities valuation
adjustment -0- -0-
------------ ------------
121,552,000 117,754,000
------------ ------------
$499,610,000 $491,455,000
============ ============
</TABLE>
The accompanying notes are an integral part
of these financial statements.
3
<PAGE>
AMPLICON, INC.
STATEMENTS OF EARNINGS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30,
1997 1996
----------- -----------
<S> <C> <C>
Revenues:
Sales of equipment $69,752,000 $57,137,000
Interest income 10,051,000 8,775,000
Investment income 90,000 117,000
Rental income 145,000 428,000
----------- -----------
80,038,000 66,457,000
----------- -----------
Costs:
Cost of equipment sold 63,708,000 51,614,000
Interest expense on nonrecourse
debt 5,175,000 4,636,000
Depreciation of equipment on
operating leases 3,000 35,000
----------- -----------
68,886,000 56,285,000
----------- -----------
Gross profit 11,152,000 10,172,000
Selling, general and administrative 4,560,000 4,903,000
expenses
Interest expense-other 38,000 27,000
----------- -----------
Earnings before income taxes 6,554,000 5,242,000
Income taxes 2,589,000 2,070,000
----------- -----------
Net earnings $ 3,965,000 $ 3,172,000
=========== ===========
Primary earnings per common share $ .34 $ .27
=========== ===========
Fully diluted earnings per common
share $ .32 $ .26
=========== ===========
Dividends declared per common share $ .04 $ .025
=========== ===========
Primary weighted average number of
common shares outstanding 11,768,000 11,671,000
=========== ===========
Fully diluted weighted average number
of common shares outstanding 12,323,000 11,979,000
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
4
<PAGE>
AMPLICON, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30,
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 3,965,000 $ 3,172,000
Adjustments to reconcile net earnings
to cash flows (used for) provided by
operating activities:
Depreciation 3,000 15,000
Sale or lease of equipment previously
on operating leases, net -0- 20,000
Interest accretion of estimated
unguaranteed residual values ( 1,353,000) ( 1,076,000)
Estimated unguaranteed residual values
recorded on leases ( 2,340,000) ( 2,684,000)
Interest accretion of net deferred income ( 848,000) ( 925,000)
Increase in net deferred income 2,356,000 1,507,000
Net increase in income taxes payable,
including deferred taxes 1,647,000 2,073,000
Net increase in net receivables ( 6,484,000) ( 9,000,000)
Net increase in inventories ( 180,000) ( 475,000)
Net increase in accounts payable and
accrued liabilities 932,000 8,688,000
----------- -----------
Net cash (used for) provided by
operating activities ( 2,302,000) 1,315,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of available-for-sale securities (34,629,000) (45,635,000)
Proceeds from sale of available-for-sale
securities 34,629,000 40,689,000
Net increase in minimum lease payments
receivable ( 1,253,000) ( 3,593,000)
Purchase of equipment on operating leases ( 1,000) -0-
Net increase in other assets ( 100,000) ( 55,000)
Decrease in estimated unguaranteed residual
values 2,527,000 2,090,000
----------- -----------
Net cash provided by (used for) investing
activities 1,173,000 ( 6,504,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in customer deposits 861,000 1,107,000
Dividends to stockholders ( 471,000) ( 292,000)
Proceeds from exercise of stock options 304,000 -0-
Purchase of common stock -0- ( 82,000)
----------- -----------
Net cash provided by financing activities 694,000 733,000
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS ( 435,000) ( 4,456,000)
----------- -----------
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 5,780,000 8,614,000
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,345,000 $ 4,158,000
=========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
(Decrease) increase in lease rentals
assigned to lenders and related
nonrecourse debt ($ 591,000) $ 5,886,000
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 38,000 $ 27,000
=========== ===========
Income taxes $ 942,000 $ 62,000
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
5
<PAGE>
AMPLICON, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1- BASIS OF PRESENTATION
The accompanying unaudited 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 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 financial statements contain
all adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of the balance sheet as of September 30,
1997 and the statements of earnings and cash flows for the three month
periods ended September 30, 1997 and 1996. The results of operations for
the three month period ended September 30, 1997 are not necessarily
indicative of the results of operations to be expected for the entire
fiscal year ending June 30, 1998.
Leases
------
Effective January 1, 1997, the Company has adopted Statement of Financial
Accounting Standards No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities" ("SFAS No. 125").
Under the requirements set forth in SFAS No. 125, the Company has
accounted for qualifying transfers of financial assets occurring on or
after January 1, 1997 by derecognizing all assets sold.
Common Stock
------------
On September 12, 1997, the Company's Board of Directors announced a 2-for-
1 Common Stock split to be effected on October 17, 1997, to stockholders
of record as of September 26, 1997. These financial statements have been
adjusted to reflect this stock split.
NOTE 2- BALANCE SHEET
At September 30, 1997, deferred interest income of $32,273,000 is offset
by deferred interest expense related to the Company's discounted lease
rentals assigned to lenders of $32,273,000.
6
<PAGE>
AMPLICON, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Three Months Ended September 30, 1997 and 1996
REVENUES. Total revenues for the three months ended September 30,
1997 were $80,038,000, an increase of $13,581,000 or 20% as compared to
the three months ended September 30, 1996. The increase from the prior
year was primarily the result of increases in sales of equipment and
interest income. Sales of equipment increased by $12,615,000 or 22% to
$69,752,000 in the quarter ended September 30, 1997 as compared to
$57,137,000 in the quarter ended September 30, 1996. The increase in
sales of equipment was primarily due to a 23% increase in sales from new
lease transactions. Interest income for the quarter ended September 30,
1997 increased by $1,276,000 or 15% to $10,051,000 as compared to
$8,775,000 in the same quarter of the prior year. The three months ended
September 30, 1997 and 1996, included amounts of $5,175,000 and
$4,636,000, 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, 1997,
net of interest expense on discounted lease rentals assigned to lenders,
increased by $737,000 or 18% to $4,876,000 as compared to $4,139,000
for the three months ended September 30, 1996. This increase is primarily
the result of higher interest income realized from a larger investment in
lease receivables and residual investments, as well as increased
accretion of deferred income. Investment income decreased by $27,000 or
23% to $90,000 as compared to $117,000 for the same period in the prior
year. This decrease can be attributed to the Company maintaining lower
investment balances during the three months ended September 30, 1997.
Rental income decreased by $283,000 to $145,000 in the three months
ended September 30, 1997 as compared to $428,000 for the three months
ended September 30, 1996 due to a decrease in the number of short-term
lease renewals.
GROSS PROFIT. Gross profit for the first quarter of fiscal 1998
increased 10% to $11,152,000 compared to $10,172,000 for the first
quarter of fiscal 1997. The improvement is primarily attributable to a
14% increase in profits from lease extensions and sales of lease
property, and higher net interest income, offset by a slight decrease in
income recognized from new lease transactions.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses as a percentage of total revenues were 5.7% and
7.4% for the quarters ended September 30, 1997 and 1996, respectively.
Selling, general and administrative expenses decreased by $343,000, or
7%, primarily due to a reduction in legal and general office expenses as
well as no increases in salaries and benefits.
TAXES. The Company's tax rate was 39.5% for the quarters ended
September 30, 1997 and 1996 representing its estimated annual tax rate
for the years ending June 30, 1998 and 1997.
(continued)
7
<PAGE>
AMPLICON, INC.
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 property 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, 1997, the Company had outstanding nonrecourse debt
aggregating $258,358,000 relating to property 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
three months ended September 30, 1997, the Company increased its net
investment in leases held in its own portfolio by $1,253,000 from June
30, 1997. This increase was primarily due to an increase in 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 September 30, 1997, the Company had $10,000,000 in
borrowings outstanding on this line of credit.
In November 1990, the Board of Directors authorized management, at
its discretion to repurchase up to 600,000 shares of the Company's Common
Stock. Under this authorization 111,356 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.
8
<PAGE>
AMPLICON, INC.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
(b) 8-K Reports
During the three months ended September 30, 1997, there was one
report on Form 8-K filed on September 19, 1997 regarding the
announcement of a 2-for-1 Common Stock split effective October 17,
1997 for stockholders of record on September 26, 1997.
9
<PAGE>
AMPLICON, INC.
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: November 5, 1997 BY: S. LESLIE JEWETT /s/
----------------- --------------------
S. LESLIE JEWETT
Chief Financial Officer
(Principal Financial and
Accounting Officer)
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000803016
<NAME> AMPLICON, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 5,345
<SECURITIES> 0
<RECEIVABLES> 160,487
<ALLOWANCES> 1,695
<INVENTORY> 1,738
<CURRENT-ASSETS> 0
<PP&E> 2,261
<DEPRECIATION> 1,255
<TOTAL-ASSETS> 499,610
<CURRENT-LIABILITIES> 81,900
<BONDS> 0
0
0
<COMMON> 59
<OTHER-SE> 121,493
<TOTAL-LIABILITY-AND-EQUITY> 499,610
<SALES> 69,752
<TOTAL-REVENUES> 80,038
<CGS> 63,708
<TOTAL-COSTS> 68,886
<OTHER-EXPENSES> 4,560
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38
<INCOME-PRETAX> 6,554
<INCOME-TAX> 2,589
<INCOME-CONTINUING> 3,965
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,965
<EPS-PRIMARY> .34
<EPS-DILUTED> .32
</TABLE>
