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 December 31, 1999
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 $.01 per share, as of February 2, 2000 was
11,561,218.
<PAGE>
AMPLICON, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION NUMBER
- ----------------------------- ------
Item 1. Financial Statements
Balance Sheets - December 31, 1999
(unaudited) and June 30, 1999 3
Statements of Earnings - Three months and six months
ended December 31, 1999 and 1998 (unaudited) 4
Statements of Cash Flows - Six months
ended December 31, 1999 and 1998 (unaudited) 5
Notes to Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-9
PART II. OTHER INFORMATION
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signature 11
<PAGE>
AMPLICON, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED) (AUDITED)
December 31, June 30,
ASSETS 1999 1999
- ------ ------------ ------------
<S> <C> <C>
Cash and cash equivalents $ 69,460,000 $ 59,337,000
Net receivables 23,514,000 22,785,000
Property acquired for transactions
in process 27,125,000 35,398,000
Net investment in capital leases 82,737,000 84,617,000
Net equipment on operating leases 406,000 9,000
Other assets 1,435,000 1,161,000
Discounted lease rentals assigned
to lenders 239,269,000 263,462,000
------------ ------------
$443,946,000 $466,769,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 2,582,000 $ 7,159,000
Accrued liabilities 5,103,000 5,661,000
Customer deposits 8,073,000 7,507,000
Nonrecourse debt 239,269,000 263,462,000
Income taxes payable, including
deferred taxes 29,873,000 29,405,000
------------ ------------
284,900,000 313,194,000
------------ ------------
Commitments and contingencies
Stockholders' equity:
Preferred stock 2,500,000 shares
authorized; none issued - -
Common stock; $.01 par value;
40,000,000 shares authorized;
11,567,218 and 11,831,918 issued
and outstanding,
as of December 31, 1999 and
June 30, 1999, respectively 116,000 118,000
Additional paid in capital 3,515,000 6,709,000
Retained earnings 155,415,000 146,748,000
------------ ------------
159,046,000 153,575,000
------------ ------------
$443,946,000 $466,769,000
============ ============
</TABLE>
The accompanying notes are an integral part
of these financial statements.
3
<PAGE>
AMPLICON, INC.
STATEMENTS OF EARNINGS (UNAUDITED)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, December 31,
1999 1998 1999 1998
------------------- ------------------
<S> <C> <C> <C> <C>
Revenues:
Direct financing leases $ 5,161 $ 6,052 $10,586 $12,973
Sales-type leases 7,813 5,028 12,775 10,078
Operating leases 342 189 834 384
------- ------- ------- -------
Leasing revenues 13,316 11,269 24,195 23,435
------- ------- ------- -------
Sales of leased property 5,981 8,011 8,657 10,557
Interest and other income 1,043 495 1,945 751
------- ------- ------- -------
20,340 19,775 34,797 34,743
------- ------- ------- -------
Costs:
Sales-type leases 3,551 1,019 5,185 2,644
Operating leases 68 5 79 6
Cost of leased property sold 3,252 4,732 4,820 5,903
Provision of credit losses 300 1,276 610 1,276
------- ------- ------- -------
7,171 7,032 10,694 9,829
------- ------- ------- -------
Gross profit 13,169 12,743 24,103 24,914
Selling, general and
administrative expenses 4,576 4,139 8,489 8,872
------- ------- ------- -------
Earnings before income taxes 8,593 8,604 15,614 16,042
Income taxes 3,308 3,313 6,011 6,176
------- ------- ------- -------
Net earnings $ 5,285 $ 5,291 $ 9,603 $ 9,866
======= ======= ======= =======
Basic earnings per common
share $ .46 $ .45 $ .82 $ .83
======= ======= ======= =======
Diluted earnings per common
share $ .44 $ .43 $ .80 $ .80
======= ======= ======= =======
Dividends declared per common
share outstanding $ .04 $ .04 $ .08 $ .08
======= ======= ======= =======
Weighted average common
shares outstanding 11,608 11,832 11,716 11,832
======= ======= ======= =======
Diluted common shares
outstanding 11,910 12,334 12,034 12,317
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part
of these financial statements.
4
<PAGE>
AMPLICON, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended December 31,
1999 1998
----------- -----------
<S> <C> <C >
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 9,603,000 $ 9,866,000
Adjustments to reconcile net earnings
to cash flows provided by (used for)
operating activities:
Depreciation 79,000 6,000
Interest accretion of estimated
unguaranteed residual values ( 3,098,000) ( 3,351,000)
Decrease in estimated unguaranteed
residual values 4,957,000 7,080,000
Provision for credit losses 610,000 1,276,000
Net increase (decrease) in income taxes
payable, including deferred taxes 468,000 ( 2,417,000)
Net increase in net receivables ( 729,000) ( 18,822,000)
Net decrease in property acquired for
transactions in process 8,273,000 26,057,000
Net (decrease) increase in accounts
payable and accrued liabilities ( 5,135,000) 2,839,000
Increase (decrease) in customer deposits 566,000 ( 1,301,000)
----------- -----------
Net cash provided by operating activities 15,594,000 21,233,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease in minimum lease payments
receivable 2,484,000 13,525,000
Purchase of equipment on operating leases ( 476,000) ( 16,000)
Net increase in other assets ( 274,000) ( 109,000)
Increase in estimated unguaranteed
residual values recorded
on leases ( 3,073,000) ( 4,517,000)
----------- -----------
Net cash (used for) provided by investing
activities ( 1,339,000) 8,883,000
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments to repurchase common stock ( 3,233,000) -
Dividends to stockholders ( 936,000) ( 948,000)
Proceeds from exercise of stock options 37,000 193,000
----------- -----------
Net cash used for financing activities ( 4,132,000) ( 755,000)
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 10,123,000 29,361,000
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 59,337,000 15,192,000
----------- -----------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $69,460,000 $44,553,000
=========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Decrease in lease rentals assigned to
lenders and related nonrecourse debt ($24,193,000) ($26,394,000)
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 20,000 $ 46,000
=========== ===========
Income taxes $ 5,543,000 $ 8,593,000
=========== ===========
</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 December 31,
1999 and the statements of earnings and cash flows for the three and six
month periods ended December 31, 1999 and 1998. The results of operations
for the six month period ended December 31, 1999 are not necessarily
indicative of the results of operations to be expected for the entire
fiscal year ending June 30, 2000.
Reclassifications
- -----------------
In fiscal 1999, the Company changed its presentation of reporting revenue
and cost of sales on certain capital leases. Historically, for all
capital leases, the Company recorded the discounted present value of the
aggregate lease rentals as sales of equipment and the lease property cost
less the discounted value of the residual, if any, as cost of equipment
sold. Under the new approach, for all capital leases that qualify as
direct financing leases, Amplicon no longer records any sales revenue or
cost of sales at lease inception, but will only recognize the gross
profit (unearned income) on the leases as direct financing lease revenue.
The new presentation had no impact on either gross profit or net income.
Total revenues as previously presented in the second quarter of fiscal
1999 and the six months ended December 31, 1998 were $63,031,000 and
$113,101,000, respectively. Total cost of sales as previously presented
in the second quarter of fiscal 1999 and the six months ended December
31, 1998 were $50,288,000 and $88,187,000, respectively.
Certain reclassifications have been made to the second quarter of fiscal
1999 financial statements to conform with the presentation of the second
quarter of fiscal 2000 financial statements.
6
<PAGE>
AMPLICON, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
General
- -------
Amplicon generates revenues from its leasing activities, the sale of
leased property and from interest income earned on its cash and liquid
investments. Direct financing lease revenues include interest income
earned on the Company's investment in lease receivables and residuals and
gains recognized on the sale of leases in which the Company retains no
significant continuing interest. Revenues from sales-type leases consist
of the re-lease of off-lease property ("lease extensions") and new lease
transactions that qualify as sales-type leases, generally where the fair
value of the property subject to the lease differs from the Company's
carrying cost. Revenues from operating leases generally involves the
short-term rental of leased property.
The Company's operating results are subject to quarterly and annual
fluctuations resulting from a variety of factors, including the volume of
new lease originations, the volume and profitability from re-marketing
leased property through re-lease or sale, variations in the mix of lease
originations, the credit quality of our portfolio and economic conditions
in general.
The Company conducts its leasing business in a manner designed to
minimize its credit exposures. However, the assumption of risk is a key
source of earnings in the leasing industry and the Company is subject to
risks through its investment in lease transactions in process,
investment in lease receivables held in its own portfolio and residual
investments. The Company establishes reserves to cover such risks and
regularly reviews their adequacy considering levels of non-performing
leases, lessees' financial condition, leased property values as well as
general economic conditions and credit quality indicators.
Three Months Ended December 31, 1999 and 1998
- ---------------------------------------------
REVENUES. Total revenues for the three months ended December 31,
1999 were $20,340,000, an increase of $565,000, or 3% from the same
quarter of the prior year. The increase was the result of increases in
leasing revenues of $2,047,000, and interest and other income of $548,000
offset by a decline of $2,030,000 in sales of leased property. The
increase in interest and other income for the quarter ended December 31,
1999 to $1,043,000, as compared to $495,000 in the quarter ended December
31, 1998, was a result of the Company maintaining higher levels of
interest bearing cash and cash equivalents. The decline in sales of
leased property for the quarter ended December 31, 1999 to $5,981,000 as
compared to $8,011,000 for the quarter ended December 31, 1998 was the
result of a decrease in the volume of leased property sales.
The 18% increase in leasing revenues to $13,316,000 for the second
quarter of fiscal 2000 resulted from an increase of $2,785,000 in sales-
type lease revenue to $7,813,000, and an increase of $153,000 in
operating lease revenue to $342,000, offset by a decrease of $891,000 in
direct financing revenues to $5,161,000. The reduction in direct
financing revenue can be attributed to lower unearned income recognized
from residual investments and assigned capital leases, offset by an
increase in interest income earned on the investment in lease receivables
held in our own portfolio. The increase in sales-type lease revenue is
attributed to an increase in revenue from new lease transactions
structured as sales-type leases and a higher volume of lease extensions.
The increase in operating lease revenue results from an increase in the
volume of short-term lease renewals.
GROSS PROFIT. Gross profit for the second quarter of fiscal 2000
increased $426,000, or 3%, to $13,169,000 when compared to the second
quarter of fiscal 1999. The higher gross profit reflected a lower
provision for credit losses and higher income from cash investments
offset by lower interest income earned from direct financing leases and
lower profits realized from the sale of leased property.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the quarter ended December 31, 1999 were
$4,576,000, an increase of $437,000 or 11%, when compared to the same
quarter of the prior year. The increase in S,G&A expenses reflected
higher legal and general expenses.
TAXES. The Company's tax rate was 38.5% for the quarters ending
December 31, 1999, and 1998 representing its estimated annual tax rate
for the years ending June 30, 2000 and 1999.
(continued)
7
<PAGE>
AMPLICON, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(continued)
Six Months Ended December 31, 1999 and 1998
- -------------------------------------------
REVENUES. Total revenue for the six months ended December 31, 1999
were $34,797,000 compared to $34,743,000 for the six months ended
December 31, 1998, a slight increase of $54,000. The change in revenues
reflects an increase of $760,000, or 3%, in leasing revenue to
$24,195,000 for the six months ended December 31, 1999 compared to
$23,435,000 for the same period of the prior year. Interest and other
income increased $1,194,000 to $1,945,000 for the six month period ended
December 31, 1999 compared to $751,000 for the same period of the prior
year. Offsetting these increases was a decrease in sales of leased
property of $1,900,000 to $8,657,000 for the six months ended December
31, 1999 compared to $10,557,000 for the same period of the prior year.
The increase in leasing revenue for the six months reflects a
decrease in revenue from direct financing leases of $2,387,000, or 18%,
to $10,586,000 offset by an increase of $2,697,000, or 27%, in revenues
from sales-type leases. The reduction in direct financing revenue can be
attributed to lower unearned income recognized from residual investments
and assigned capital leases offset by an increase in interest income
earned on the investment in lease receivables held in our own portfolio.
The increase in sales-type revenue is primarily attributed to increased
volume of lease extensions, but also to an increase from new lease
transactions structured as sales-type leases.
GROSS PROFIT. Gross profit for the six months ended December 31,
1999 decreased 3% to $24,103,000 compared to $24,914,000 for the six
months ended December 31, 1998. The lower gross profit was due to lower
interest income earned from direct financing leases offset by higher
interest income from cash investments and a smaller provision for credit
losses.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased 4%, or $383,000, to $8,489,000 for the
six months ended December 31, 1999 compared to $8,872,000 for the same
period of the prior year primarily the result of lower salary and benefit
expenses, offset by some increase in legal and general expenses.
TAXES. The Company's tax rate was 38.5% for the six months ended
December 31, 1999 and 1998 representing its estimated annual tax rate for
the years ending June 30, 2000 and 1999.
Liquidity and Capital Resources
- -------------------------------
The Company funds its operating activities through nonrecourse debt
and internally generated funds. Capital expenditures for leased property
purchases are primarily financed by assigning certain base term lease
payments to banks or other financial institutions. The assigned lease
payments are discounted at fixed rates such that the lease payments are
sufficient to fully amortize the aggregate outstanding debt. The Company
does not purchase property until it has received a noncancelable lease
from its customer and, generally, has determined that the lease can be
discounted on a nonrecourse basis. At December 31, 1999, the Company had
outstanding nonrecourse debt aggregating $239,269,000 relating to
property under capital 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
six months ended December 31, 1999, the Company decreased its minimum
lease payments receivable by $2,661,000. This decrease was primarily due
to fewer new lease transactions being held in the Company's own lease
portfolio.
The Company will often make payments to purchase leased property
prior to the commencement of the lease and assignment to other financial
institutions. The disbursements for such lease transactions in process
are generally made to facilitate the property implementation schedule of
the lessees. The lessee is contractually obligated by the lease to make
rental payments directly to the Company during the period that the
transaction is in process, and the lessee is generally obligated to
reimburse the Company for all disbursements under certain circumstances.
At December 31, 1999, the Company's investment in property acquired for
transactions in process decreased by $8,273,000 to $27,125,000 when
compared to June 30, 1999.
(continued)
8
<PAGE>
AMPLICON, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(continued)
The Company generally funds its equity investments in leased
property and transactions in process with internally generated funds and,
if necessary, borrowings under a $20,000,000 general line of credit. At
December 31, 1999, the Company did not have any borrowings outstanding on
this line of credit.
In November 1990 and April 1999, the Board of Directors authorized
management, at its discretion, to repurchase up to 600,000 shares each,
or a total of 1,200,000 of the Company's Common Stock. During the six
months ended December 31, 1999, the Company repurchased 269,000 shares at
an aggregate cost of $3,233,000. As of December 31, 1999, 398,356 shares
remain available under the April 1999 authorization.
The need for cash used for operating activities will increase as the
Company expands. The Company believes that existing cash balances, cash
flow from operations, cash flows from its financing and investing
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.
Year 2000
- ---------
The Year 2000 issue ("Y2K") is a problem that relates to the way
that computers store, manipulate, and interpret dates that define the
year using only two digits and perform leap year calculations. These
systems may have experienced problems handling dates beyond 1999 and
therefore, could cause computer or other systems to fail or provide
erroneous results. If a system or application will not recognize the
year 2000 as a leap year, then any date after February 29, 2000 will be
offset by one day. Date information can exist at any level of hardware
or software from micro code to application programs, in files and
databases, and might be present on any operating platform.
The Company addressed this issue by implementing a program to
assess, remediate and mitigate the potential impact of the Y2K problem.
The Company systematically addressed the Y2K compliance of its computer
related hardware, major application software programs, externally
supplied software, and major debt sources,, vendors and customers. These
efforts are generally described in the 10Q report for the quarter ended
September 30, 1999.
As of February 2, 2000 the Company ha s not experienced any Y2K
related problems which have impacted operations and is not aware that any
of its major debt sources, customers or vendors have experienced
significant Y2K related problems. However, Y2K compliance has many
elements and potential consequences, some of which may not be foreseeable
or may be realized in future periods. Therefore, there can be no
assurance that unforeseen circumstances may not arise, or that we will
not in the future identify equipment or systems which are not Y2K
compliant.
All Year 2000 information provided herein is a "Year 2000 Readiness
Disclosure" as defined in the Year 2000 Information and Readiness
Disclosure Act and is subject to the terms thereof. This Year 2000
information is provided pursuant to securities law requirements and it
may not be relied upon as a form of express or implied covenant,
warranty, representation or guarantee of any kind.
Forward-Looking Statements
--------------------------
This document contains forward-looking statements concerning our
operations, business results and financial condition. These statements
involve management assumptions as well as risks and uncertainties that
may be difficult to predict. Consequently, if such management assumptions
prove to be incorrect or such risks or uncertainties materialize, the
Company's actual results could differ materially from the results
forecast or implied in those statements. Factors that could cause such
differences include, but are not limited to: economic conditions and
trends; changes in interest rates; industry cycles and trends; changes in
the market for leasing capital assets and other collateral due to market
conditions, oversupply, obsolescence or other factors; disruptions in the
capital markets; changes in laws or regulations, and competitive
conditions and trends.
9
<PAGE>
AMPLICON, INC.
PAGE
PART II - OTHER INFORMATION NUMBER
- --------------------------- ------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
There were no reports on Form 8-K for the three months
ended December 31, 1999.
(a) Exhibits
--------
10.21 Amendment One to Business Loan Agreement, 12
dated as of December 20, 1999, between the
Company and Bank of America
10
<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: February 9, 2000 BY: S. Leslie Jewett/s/
-------------------
S. Leslie Jewett
Chief Financial Officer
(Principal Financial and
Accounting Officer)
11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000803016
<NAME> AMPLICON, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 69,460
<SECURITIES> 0
<RECEIVABLES> 68,603
<ALLOWANCES> 2,640
<INVENTORY> 27,125
<CURRENT-ASSETS> 0
<PP&E> 3,323
<DEPRECIATION> 2,146
<TOTAL-ASSETS> 443,946
<CURRENT-LIABILITIES> 15,758
<BONDS> 0
0
0
<COMMON> 116
<OTHER-SE> 158,930
<TOTAL-LIABILITY-AND-EQUITY> 443,946
<SALES> 24,195
<TOTAL-REVENUES> 34,797
<CGS> 5,264
<TOTAL-COSTS> 10,084
<OTHER-EXPENSES> 8,489
<LOSS-PROVISION> 610
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 15,614
<INCOME-TAX> 6,011
<INCOME-CONTINUING> 9,603
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,603
<EPS-BASIC> .82
<EPS-DILUTED> .80
</TABLE>
Bank of America
- ------------------------------------------------------------
- ------------------------------------------------------------
Amendment to Documents
AMENDMENT NO. 1 TO BUSINESS LOAN AGREEMENT
This Amendment No. 1 (the "Amendment") dated as of 12/20/99,
is between Bank of America, N.A. (the "Bank"), formerly Bank of
America NT&SA, and Amplicon, Inc. (the "Borrower").
RECITALS
--------
A. The Bank and the Borrower entered into a certain Business
Loan Agreement dated as of December 23, 1997 (the
"Agreement").
B. The Bank and the Borrower desire to amend the Agreement.
AGREEMENT
---------
1. Definitions. Capitalized terms used but not defined in
this Amendment shall have the meaning given to them in the
Agreement.
2. Amendments. The Agreement is hereby amended as follows:
2.1 In Paragraph 1.2 of the Agreement, the date "March
31, 2000" is substituted for the date "December
31, 1999."
3. Representations and Warranties. When the Borrower signs
this Amendment, the Borrower represents and warrants to
the Bank that: (a) there is no event which is, or with
notice or lapse of time or both would be, a default under
the Agreement except those events, if any, that have been
disclosed in writing to the Bank or waived in writing by
the Bank, (b) the representations and warranties in the
Agreement are true as of the date of this Amendment as if
made on the date of this Amendment, (c) this Amendment is
within the Borrower's powers, has been duly authorized,
and does not conflict with any of the Borrower's
organizational papers, and (d) this Amendment does not
conflict with any law, agreement, or obligation which by
the Borrower is bound.
4. Effect of Amendment. Except as provided in this Amendment,
all of the terms and conditions of the Agreement shall
remain in full force and effect.
This Amendment is executed as of the date stated at the
beginning of this Amendment.
Bank of America, N.A. Amplicon, Inc.
X Deborah Miller/s/ X Patrick E. Paddon/s/
----------------- --------------------
By: Deborah L. Miller, By: Patrick E. Paddon,
Senior Vice President Chief Executive Officer
X Glen T. Tsuma/s/
----------------
By: Glen T. Tsuma,
Chief Operating Officer
12
<PAGE>
