SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
[x] THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 Number: 033-68444
WILLIAMS SCOTSMAN, INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND 52-0665775
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8211 TOWN CENTER DRIVE 21236
BALTIMORE, MARYLAND (Zip Code)
(Address of principal executive offices)
(410) 931-6000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year - if changed since last
report)
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 Registrant is a wholly-owned subsidiary of Scotsman Holdings, Inc.,
a Delaware corporation. As of September 30, 1999, Scotsman Holdings, Inc. owned
3,320,000 shares of common stock ("Common Stock") of the Registrant.
<PAGE>
WILLIAMS SCOTSMAN, INC.
INDEX
FORM 10-Q
PART I - FINANCIAL INFORMATION Page
----
Item 1. Financial Statements
Consolidated Balance Sheets at September 30, 1999 1
and December 31, 1998
Consolidated Statements of Operations for the three and nine 2
months ended September 30, 1999 and 1998
Consolidated Statements of Cash Flows for the nine 3
months ended September 30, 1999 and 1998
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
WILLIAMS SCOTSMAN, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
September 30,
1999 December 31,
Assets (Unaudited) 1998
------ ----------- ----
(dollars in thousands)
<S> <C> <C>
Cash $ 688 $ 796
Trade accounts receivable, less allowance for
doubtful accounts 65,282 39,244
Prepaid expenses and other current assets 18,732 13,976
Rental equipment, net of accumulated depreciation of
$120,366 in 1999 and $102,614 in 1998 714,169 640,634
Property and equipment, net 53,813 46,679
Deferred financing costs, net 21,524 25,161
Goodwill and other intangible assets, net 174,351 159,817
Other assets 17,320 14,980
------ ------
$1,065,879 $ 941,287
========== ==========
Liabilities and Stockholders' Equity
- ------------------------------------
Accounts payable $ 18,047 $ 12,651
Accrued expenses 40,366 26,208
Rents billed in advance 23,837 21,702
Long-term debt 914,943 845,447
Deferred income taxes 117,959 98,537
--------- --------
Total liabilities 1,115,152 1,004,545
--------- ---------
Stockholders' equity:
Common stock, $.01 par value. Authorized 10,000,000
shares; issued and outstanding 3,320,000 shares 33 33
Additional paid-in capital 125,244 124,189
Retained deficit (174,550) (187,480)
--------- ---------
Total stockholders' deficit (49,273) (63,258)
--------- ---------
$1,065,879 $ 941,287
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
WILLIAMS SCOTSMAN, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
(in thousands except share and per share amounts)
<S> <C> <C> <C> <C>
Revenues:
Leasing $51,324 $39,650 $148,921 $104,884
Sales:
New units 22,869 15,694 54,078 34,435
Rental equipment 5,071 3,745 16,602 11,023
Delivery and installation 22,885 14,476 52,440 33,314
Other 10,763 6,874 28,215 18,517
------ ----- ------ ------
Total revenues 112,912 80,439 300,256 202,173
------- ------ ------- -------
Costs of sales and services:
Leasing:
Depreciation and amortization 8,538 6,894 25,535 18,940
Other direct leasing costs 8,828 5,943 22,767 15,629
Sales:
New units 18,656 13,298 44,190 28,548
Rental equipment 3,729 2,817 12,509 8,170
Delivery and installation 16,608 10,335 37,875 23,749
Other 2,088 1,511 6,103 3,865
----- ----- ----- -----
Total costs of sales and services 58,447 40,798 148,979 98,901
------ ------- ------- ------
Gross profit 54,465 39,641 151,277 103,272
------ ------ ------- -------
Selling, general and administrative expenses 17,356 15,209 53,271 41,714
Other depreciation and amortization 4,069 2,446 11,813 5,879
Interest, including amortization of deferred
financing costs 21,136 16,656 61,885 45,025
------ ------ ------ ------
Total operating expenses 42,561 34,311 126,969 92,618
------ ------ ------- ------
Income before income taxes 11,904 5,330 24,308 10,654
Income tax expense 5,328 5,588 11,277 7,654
Net income (loss) $ 6,576 $ (258) $13,031 $ 3,000
======= ======== ======== =======
Earnings (loss) per common share $ 1.98 $ (0.08) $ 3.93 $ 0.90
Dividends per common share $ - $ - $ 0.02 $ 6.87
======== ======= ======== =======
Weighted average shares outstanding 3,320,000 3,320,000 3,320,000 3,320,000
========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
WILLIAMS SCOTSMAN, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Nine months ended September 30, 1999 and 1998
(Unaudited)
1999 1998
---- ----
(dollars in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $13,031 $ 3,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 41,031 27,461
Provision for bad debts 2,756 1,769
Deferred income tax expense 10,777 7,541
Non-cash option compensation expense 1,055 2,044
Gain on sale of rental equipment (4,093) (2,853)
Increase in net trade accounts receivable (26,279) (15,305)
Increase in other assets (729) (339)
Increase in accrued expenses 13,158 12,920
Other (1,197) 4,959
----- -----
Net cash provided by operating activities 49,510 41,197
------ ------
Cash flows from investing activities:
Rental equipment additions (87,599) (95,741)
Proceeds from sales of rental equipment 16,602 11,023
Purchases of property and equipment, net (11,015) (8,283)
Purchase of Evergreen Mobile Company in 1999 and
Space Master International in 1998, net of cash acquired (37,000) (272,862)
------ -------
Net cash used in investing activities $(119,012) $(365,863)
------- --------
(continued)
</TABLE>
3
<PAGE>
WILLIAMS SCOTSMAN, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (continued)
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
---- ----
(dollars in thousands)
<S> <C> <C>
Cash flows from financing activities:
Proceeds from long-term debt $362,892 $ 490,492
Repayment of long-term debt (293,397) (201,110)
Increase in deferred financing costs (46) (6,097)
Payment of dividends (55) (22,810)
Equity contribution - 64,620
----------- ------
Net cash provided by financing activities 69,394 325,095
------ -------
Net (decrease) increase in cash (108) 429
Cash at beginning of period 796 294
------- -------
Cash at end of period $ 688 $ 723
======= ========
Supplemental cash flow information:
Cash paid for income taxes $ 205 $ 151
======= ========
Cash paid for interest $47,686 $31,334
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
WILLIAMS SCOTSMAN, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(Dollars in thousands, except share and per share amounts)
(1) FINANCIAL STATEMENTS
The financial information for the nine months ended September 30, 1999
and 1998 includes the accounts of Williams Scotsman, Inc. and its wholly
owned subsidiaries, Willscot Equipment, LLC (Willscot) and Williams
Scotsman of Canada, Inc., whose operations have not been significant to
date. Willscot, a special purpose subsidiary, was formed in May 1997 and
is a guarantor of the Company's credit facility and acts as a full,
unconditional and joint and several subordinated guarantor of the
Company's 9 7/8% Senior Notes. The operations of Willscot are limited to
the leasing of its mobile office units to the Company under a master
lease and issuing the guarantee.
The financial information referred to above has not been audited. In the
opinion of management, the unaudited financial statements contain all
adjustments (consisting only of normal, recurring adjustments) necessary
to present fairly the Company's financial position as of September 30,
1999 and its operating results and cash flows for the nine month periods
ended September 30, 1999 and 1998. The results of operations for the
periods ended September 30, 1999 and 1998 are not necessarily indicative
of the operating results for the full year.
Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. It is suggested that these
financial statements be read in conjunction with the financial statements
and notes thereto included in the Company's latest Form 10-K.
(2) ACQUISITION
On February 1, 1999, the Company acquired all of the outstanding stock of
Evergreen Mobile Company, a privately held Washington corporation
("EVG"), in a transaction accounted for under the purchase method of
accounting. Total consideration for the acquisition of EVG was
approximately $37,000, including the repayment of existing indebtedness
of EVG. The purchase price paid was allocated to the net assets acquired
of approximately $19,000 with the excess representing goodwill and other
intangible assets. The purchase price allocation was based upon estimates
of the fair value of the net assets acquired. These estimates may vary
from actual amounts ultimately recorded. The acquisition was financed
with borrowings under the Company's amended credit facility.
5
<PAGE>
WILLIAMS SCOTSMAN, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(3) GOODWILL AND OTHER INTANGIBLE ASSETS
The excess of cost over fair values of net assets acquired in purchase
transactions has been recorded as goodwill and is being amortized on a
straight line basis over 20 to 40 years. Other identifiable intangibles
acquired include assembled workforce and covenants not to compete, which
are being amortized on a straight line basis over periods of 21 to 86
months. As of September 30, 1999 and 1998, accumulated amortization was
$5,809 and $605, respectively.
On a periodic basis, the Company evaluates the carrying value of its
intangible assets to determine if the facts and circumstances suggest
that intangible assets may be impaired. If this review indicates that
intangible assets may not be recoverable, as determined by the
undiscounted cash flow of the entity acquired over the remaining
amortization period, the Company's carrying value of intangible assets is
reduced by the estimated shortfall of cash flows.
(4) INCOME TAXES
The difference between the Company's reported tax provision for the three
and nine months ended September 30, 1999 and the tax provision computed
based on U.S. statutory rates is primarily attributed to non-deductible
goodwill amortization expense of $1,420 and $4,059, respectively.
(5) EARNINGS AND DIVIDENDS PER SHARE
Earnings per common share is computed by dividing net earnings by the
weighted average number of common shares outstanding during the periods.
Dividends per common share is computed by dividing dividends paid by the
weighted average number of common shares outstanding during the periods.
6
<PAGE>
WILLIAMS SCOTSMAN, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(6) SUMMARIZED FINANCIAL INFORMATION OF SUBSIDIARY
The Company's 9 7/8% Senior Notes are guaranteed by Willscot, a wholly
owned subsidiary. The guarantee is full, unconditional and joint and
several. The operations of Willscot are limited to leasing its mobile
office units to the Company under a master lease and paying the Company a
fee to manage its mobile office units. Accordingly, based on the terms of
these agreements, it has recorded no net income for the applicable
periods. Full separate financial statements of the guarantor subsidiary
have not been included because management has determined that they are
not material to investors. Summarized financial statements of Willscot
are as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
<S> <C> <C>
Balance Sheet
Assets:
Rental equipment, at cost $612,287 $543,561
Less accumulated depreciation 73,545 60,320
--------- ------
Net rental equipment 538,742 483,241
Other assets 4,748 4,285
--------- ----------
Total assets $543,490 $487,526
======= ========
Total liabilities and stockholder's equity $543,490 $487,526
======= =======
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
Statement of Operations 1999 1998 1999 1998
- ----------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Leasing $15,295 $10,063 $44,405 $27,879
Other 116 102 354 206
-------- ------- -------- --------
15,411 10,165 44,759 28,085
------ ------ ------ ------
Expenses:
Selling, general and administrative 4,284 5,554 12,698 17,253
Depreciation 5,062 3,357 14,884 9,229
Interest 6,065 1,254 17,177 1,603
------ -------- ------ ------
15,411 10,165 44,759 28,085
------ ------ ------ ------
Net Income $ --- $ --- $ --- $ ---
========== ========== ========== ==========
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
FORWARD LOOKING STATEMENTS
Certain statements in this Form 10-Q for the quarter ended September 30,1999
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause actual results to differ materially from future
results expressed or implied by such forward-looking statements. Such factors
include, among others, the following: substantial leverage and the ability to
service debt; changing market trends in the mobile office industry; general
economic and business conditions including a prolonged or substantial recession;
the ability to finance fleet and branch expansion, to locate and finance
acquisitions, and to integrate recently acquired businesses into the Company;
the ability of the Company to implement its business and growth strategy and
maintain and enhance its competitive strengths; the ability of the Company to
obtain financing for general corporate purposes; intense industry competition;
availability of key personnel; industry over-capacity; risks associated with the
"Year 2000" phenomenon; and changes in, or the failure to comply with,
government regulations. No assurance can be given as to future results and
neither the Company nor any other person assumes responsibility for the accuracy
and completeness of these forward-looking statements. Consequently, undue
reliance should not be placed on such forward-looking statements, which speak
only as of the date hereof. The Company undertakes no obligation to publicly
release the result of any revision to these forward-looking statements that
maybe made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
RESULTS OF OPERATIONS
The results of operations for the three and nine month periods ended
September 30, 1999 include the effect of three acquisitions completed over a
nine-month period ended February 1999. These acquisitions added a total of
approximately 17,500 units with the most significant addition taking place in
September 1998.
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 1998.
Revenues in the quarter ended September 30, 1999 were $112.9 million, a
$32.5 million or 40.4% increase from revenues of $80.4 million in the same
period of 1998. The increase resulted from an $11.7 million or 29.4% increase in
leasing revenue, a $7.2 million or 45.7% increase in new unit sales revenue, an
$8.4 million or 58.1% increase in delivery and installation revenue, a $1.3
million or 35.4% increase in revenue from sale of used units and a $3.9 million
or 56.6% increase in other revenue. The increase in leasing revenue is
attributable to a 26.1% increase in the average lease fleet to approximately
76,800 units at September 30, 1999, combined with an increase of $4 in the
average monthly rental rate and a stable average fleet utilization of 86%. The
increase in new and used sales revenue is primarily due to the effect of the
acquisitions noted above and the overall branch expansion that the Company has
experienced over the last several years. The increase in delivery and
installation revenue is attributable to the increases in the leasing and sale
revenue described above. Other revenue increased as a result of increases in the
rental of steps and relocation services provided for customer-owned units.
8
<PAGE>
Gross profit for the quarter ended September 30, 1999 was $54.5
million, a $14.8 million or 37.4% increase from the third quarter of 1998 gross
profit of $39.6 million. This increase is primarily the result of an increase in
leasing gross profit of $7.1 million or 26.6%, an increase in new unit sales of
$1.8 million or 75.8%, an increase in delivery and installation of $2.1 million
or 51.6% and an increase in other gross profit of $3.3 million or 61.8%. The
increase in leasing gross profit is a result of the increase in leasing revenue
described above offset by a slight decrease in leasing margins from 67.6% in
1998 and 66.2% in 1999. Excluding depreciation and amortization, leasing margins
decreased to 82.8% at September 30, 1999 from 85% at September 30, 1998. The
increase in gross profit from other revenue is primarily related to the increase
in revenue noted above.
Other depreciation and amortization increased by $1.6 million to $4.1
million for the quarter ended September 30, 1999 from the same period in 1998.
Of this increase, $1.4 million relates to the amortization of goodwill and other
intangible assets recorded in connection with acquisitions. The remaining
increase relates to depreciation on increased balances of property and equipment
and inventories of steps and ramps associated with the overall growth of the
Company's branch network and fleet as discussed above.
Selling, general and administrative ("SG&A") expenses increased by $2.1
million or 14.1% from $15.2 million in the same period of 1998. This increase is
the result of the growth experienced by the Company both in terms of fleet size
and number of branches as compared to 1998. In addition to the effect of
acquisitions on the fleet size as noted above, the Company's branch network has
expanded from 78 branches at September 30, 1998 to 83 branches at September 30,
1999. The overall increases in SG&A are due to increases in field related
expenses, primarily payroll and occupancy, incurred in connection with this
branch expansion and fleet growth.
Interest expense increased by $4.5 million or 26.9% to $21.1 million in
1999 from $16.7 million in 1998. This increase in the result of increased
borrowings to finance acquisitions and other fleet and branch growth.
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1998.
Revenues for the nine months ended September 30, 1999 were $300.3
million, a $98.1 million or 48.5% increase from revenues of $202.2 million in
the same period of 1998. The increase resulted from a $44.0 million or 42.0%
increase in leasing revenue, a $19.6 million or 57% increase in new unit sales
revenue, a $19.1 million or 57.4% increase in delivery and installation revenue,
a $5.6 million or 50.6% increase in revenue from sales of used units and a $9.9
million or 52.4% increase in other revenue. The increase in leasing revenue is
attributable to a 38.6% increase in the average lease fleet to approximately
74,300 units for the nine months ended September 30, 1999 combined with an
increase of $3 in the average monthly rental rate while the average fleet
utilization remained consistent at 85%. The increase in new and used sales
revenue is primarily due to the effect of acquisitions noted above and the
overall branch expansion that the Company has experienced over the last several
years. The increase in delivery and installation revenue is attributable to the
increases in the leasing and sale revenue described above. Other revenue
increased as a result of increases in the rental of steps, ramps and furniture
and the relocation of customer-owned units.
Gross profit for the nine months ended September 30, 1999 was $151.2
million, a $48.0 million or 46.5% increase from 1998 gross profit of $103.3
million. This increase is primarily the result of an increase in leasing gross
profit of $30.3 million or 43.1%, an increase in gross profit from new sales of
$4.0 million or 68%, an increase in delivery and installation gross profit of
$5.0 million or 52.3%, an increase in gross
9
<PAGE>
profit from the sale of used units of $1.2 million or 43.5% and an increase in
the gross profit from other revenue of $7.5 million or 50.9%. The increase in
leasing gross profit is a result of the increase in leasing revenue described
above combined with a slight increase in leasing margins from 67.0% in 1998 to
67.6% in 1999. Excluding depreciation and amortization, leasing margins
decreased slightly from 85.1% in 1998 to 84.7% in 1999. The increases in gross
profit from new sales and delivery and installation are primarily due to the
increases in revenue as discussed above. The increase in gross profit from other
revenue is primarily related to the overall revenue increases noted above.
Other depreciation and amortization increased by $5.9 million to $11.8
million for the nine months ended September 30, 1999 from the same period in
1998. Of this increase, $4.1 million relates to the amortization of goodwill and
other intangible assets recorded in connection with acquisitions. The remaining
increase relates to depreciation on increased balances of property and equipment
and inventories of steps and ramps associated with the overall growth of the
Company's branch network and fleet as described above.
SG&A expenses increased by $11.6 million or 27.7% from 1998. This
increase is the result of the growth experienced by the Company both in terms of
fleet size and number of branches as compared to 1998. In addition to the effect
of acquisitions on fleet size as noted above, the Company's branch network has
expanded from 78 branches at September 30, 1998 to 83 branches at September 30,
1999. The overall increases in SG&A are due to increases in field related
expenses, primarily payroll and occupancy, incurred in connection with this
branch expansion and fleet growth.
Interest expense increased $16.9 million or 37.4% to $61.9 million in
1999 from $45.0 million in 1998. This increase is the result of increased
borrowings to finance acquisitions and other fleet and branch growth.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 1999 and 1998, the Company's
principal sources of funds consisted of cash flow from operating and financing
sources. Cash flow from operating activities of $49.5 million and $41.2 million
for the nine months ended September 30, 1999 and 1998, respectively, was largely
generated by the rental of units from the Company's lease fleet and sales of new
mobile office units.
The Company has increased its EBITDA and believes that EBITDA provides the
best indication of its financial performance and provides the best measure of
its ability to meet historical debt service requirements. The Company defines
EBITDA as net income before interest, taxes, depreciation, amortization and
non-cash compensation expense. EBITDA as defined by the Company does not
represent cash flow from operations as defined by generally accepted accounting
principles and should not be considered as an alternative to cash flows as a
measure of liquidity, nor should it be considered as an alternative to net
income as an indicator of the Company's operating performance. The Company's
EBITDA increased by $42.1 million or 50.9% to $124.6 million for the nine months
ended September 30, 1999 compared to $82.5 million for the same period of 1998.
This increase in EBITDA is a result of increased leasing activity resulting from
the overall increases in the number of units in the fleet, stable utilization
and an increase in the average monthly rental rate, offset by increased SG&A
expenses required to support the increased activities during the nine months
ended September 30, 1999.
10
<PAGE>
Cash flow used in investing activities was $119.0 million and $365.9 million
in the nine months ended September 30, 1999 and 1998, respectively. The
Company's primary capital expenditures are for the discretionary purchase of new
units for the lease fleet and units purchased through acquisitions. The Company
seeks to maintain its lease fleet in good condition at all times and generally
increases the size of its lease fleet only in those local or regional markets
experiencing economic growth and established unit demand. Cash provided by
financing activities of $69.4 million and $325.1 million in the nine months
ended September 30, 1999 and 1998, respectively, was primarily from borrowings
under the line of credit. In 1998, the Company paid dividends to its parent
company in the amount of $22.8 million primarily to effect the repayment of its
promissory note.
Effective September 15, 1999, the Company's Credit Agreement was amended
which modified its borrowing base calculation. Availability under the amended
Credit Agreement was $79.8 million at September 30, 1999. The Company believes
it will have, for the next 12 months, sufficient liquidity under its revolving
line of credit and from cash generated from operations to meet its expected
obligations as they arise.
IMPACT OF THE YEAR 2000
The Company has developed a comprehensive Year 2000 Compliance Plan designed
to ensure that all of its significant or "mission critical" computer systems
will function properly with respect to dates in the year 2000 and beyond. To
date, the Company has completed all phases of its plan, including the
assessment, remediation, testing and implementation of its key business computer
applications affected by the Year 2000 issue. During the past three years, the
Company has upgraded and/or replaced certain computer hardware and software
systems that are significant to its business operations. Such systems have been
determined to be Year 2000 compliant. Modification and testing of software
applications has been completed and the software is currently operational. Many
of these system replacements/upgrades were a part of the Company's business
expansion and technology initiatives and were not undertaken in response to
Year 2000 issues. Additionally, the Company has surveyed its significant
suppliers, large customers and financial institutions to ensure that those
parties have appropriate plans to remediate Year 2000 issues where their systems
interface with the Company's systems or otherwise impact its operations. To
date, the Company is not aware of any such third party with a Year 2000 issue
that would materially impact the Company's results of operations, liquidity or
capital resources. Lastly, the Company's products and services are not directly
impacted by the Year 2000 issue as there are no computer processors or embedded
systems in our products that make use of century date logic. While the Company
believes its planning efforts are adequate to address its Year 2000 concerns,
there can be no guarantee that the systems of other companies on which the
Company's systems and operations rely will be converted on a timely basis and
will not have a material effect on the Company. However, due to the geographic
diversity of the Company's 83 branch offices and the regionalized nature of
manufacturers and other vendors servicing the branch network, the likelihood of
Year 2000 failures having a material impact on the conduct of our daily business
operations is not significant. Total costs related to Year 2000 initiatives are
insignificant to the Company's results of operations or financial position. The
Company has prepared a contingency plan for all mission critical computer
applications that could be impacted by the Year 2000 issue. The contingency plan
involves manual workarounds, use of alternate vendors and manufacturers and
adjusting staffing strategies.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
10.8 First Amendment to Credit Agreement dated as of July 7, 1999.
10.9 Second Amendment to Credit Agreement dated as of September 15,
1999.
(b) Reports on Form 8-K.
None
12
<PAGE>
SIGNATURES
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.
WILLIAMS SCOTSMAN, INC.
By: /s/ Gerard E. Keefe
--------------------
Gerard E. Keefe
Senior Vice President and
Chief Financial Officer
Dated: November __, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
NAME CAPACITY DATE
---- -------- ----
/s/ Gerard E. Keefe Senior Vice President and November __, 1999
- ----------------------------- Chief Financial Officer
Gerard E. Keefe
/s/ Katherine K. Giannelli Vice President and Controller November __, 1999
--------------------------
Katherine K. Giannelli
13
<PAGE>
SIGNATURES
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.
WILLIAMS SCOTSMAN, INC.
By: _________________________
Gerard E. Keefe
Senior Vice President and
Chief Financial Officer
Dated: November ___, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
NAME CAPACITY DATE
Senior Vice President and November ___, 1999
- ------------------------ Chief Financial Officer
Gerard E. Keefe
- ------------------------ Vice President and Controller November___, 1999
Katherine K. Giannelli
13
FIRST AMENDMENT TO CREDIT AGREEMENT
-----------------------------------
FIRST AMENDMENT (this "Amendment"), dated as of July 7, 1999,
among SCOTSMAN HOLDINGS, INC., a Delaware corporation ("Holdings"), WILLIAMS
SCOTSMAN, INC., a Maryland corporation (the "Borrower"), the Lenders from time
to time party to the Credit Agreement referred to below, BANKERS TRUST COMPANY,
as Issuing Bank, BT COMMERCIAL CORPORATION, acting as Administrative Agent and
Co-Syndication Agent, NATIONSBANK, N.A., acting as Co-Syndication Agent, and
GOLDMAN SACHS CREDIT PARTNERS L.P., acting as Documentation Agent. All
capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, Holdings, the Borrower, the Lenders, the Issuing
Bank, the Administrative Agent, the Co-Syndication Agents and the Documentation
Agent are parties to a Credit Agreement, dated as of May 22, 1997 and amended
and restated as of September 1, 1998, (as in effect on the date hereof, the
"Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit
Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. Section 2.2(a)(ii)(B) of the Credit Agreement is hereby
amended by deleting the percentage "Sixty-five percent (65%)" set forth therein
and inserting the percentage "Seventy percent (70%)" in lieu thereof.
2. Section 7.17(a)(vii) of the Credit Agreement is hereby
amended by replacing the amount of "$25,000,000" set forth therein with the
amount of "$30,000,000".
3. Section 8.3(f) of the Credit Agreement is hereby amended by
replacing the amount of "$20,000,000" set forth therein with the amount of
"$40,000,000".
4. The definition of "Eligible Rental Equipment" is hereby
amended by deleting the phrase "type 'D' or 'E' consistent" set forth in clause
(i) thereof and inserting the phrase "type 'E' or 'F' consistent" in lieu
thereof.
5. In order to induce the Lenders to enter into this
Amendment, Holdings and the Borrower hereby represent and warrant that (i) the
representations, warranties and agreements contained in Article 6 of the Credit
Agreement are true and correct in all material respects on and as of the
Amendment Effective Date (as defined below) after giving effect to this
Amendment and (ii) there exists no Default or Event of Default on the Amendment
Effective Date after giving effect to this Amendment.
<PAGE>
6. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.
7. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with the Borrower and the Administrative Agent.
8. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.
9. This Amendment shall become effective on the date (the
"Amendment Effective Date") when Holdings, the Borrower, each Subsidiary
Guarantor and the Required Lenders shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have delivered
(including, without limitation, by usage of facsimile transmission) the same to
the Administrative Agent at its Notice Office. This Amendment and the agreements
contained herein shall be binding on the successors and assigns of the parties
hereto.
10. From and after the Amendment Effective Date, all
references in the Credit Agreement and each of the Credit Documents to the
Credit Agreement shall be deemed to be references to the Credit Agreement as
amended hereby.
* * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
SCOTSMAN HOLDINGS, INC.
By__________________________________________
Name:
Title:
WILLIAMS SCOTSMAN, INC.
By__________________________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Issuing Bank
By___________________________________________
Name:
Title:
BT COMMERCIAL CORPORATION,
Individually and as Administrative Agent and
Co-Syndication Agent
By___________________________________________
Name:
Title:
NATIONSBANK, N.A.,
Individually and as Co-Syndication Agent
By___________________________________________
Name:
Title:
<PAGE>
GOLDMAN SACHS CREDIT PARTNERS L.P.,
Individually and as Documentation Agent
By____________________________________
Name:
Title:
BANKBOSTON, N.A
By____________________________________
Name:
Title:
THE BANK OF NOVA SCOTIA
By____________________________________
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE
By____________________________________
Name:
Title:
THE CIT GROUP/BUSINESS CREDIT, INC.
By____________________________________
Name:
Title:
<PAGE>
CONGRESS FINANCIAL CORPORATION
By_________________________________
Name:
Title:
CRESCENT/MACH I PARTNERS, L.P.
by: TCW Asset Management Company
Its Investment Manager
By_________________________________
Name:
Title:
DEBT STATEGIES FUND III, INC.
By_________________________________
Name:
Title:
DIME COMMERCIAL CORP.
By_________________________________
Name:
Title:
FLEET BANK, N.A.
By_________________________________
Name:
Title:
<PAGE>
FLEET CAPITAL CORPORATION
By_________________________________
Name:
Title:
FREMONT FINANCIAL CORPORATION
By_________________________________
Name:
Title:
THE FUJI BANK, LIMITED
By_________________________________
Name:
Title:
GREEN TREE FINANCIAL SERVICING
CORPORATION
By_________________________________
Name:
Title:
HELLER FINANCIAL, INC.
By_________________________________
Name:
Title:
<PAGE>
IBJ SCHRODER BUSINESS CREDIT
CORPORATION
By____________________________________
Name:
Title:
LASALLE NATIONAL BANK
By____________________________________
Name:
Title:
MERCANTILE SAFE DEPOSIT AND TRUST
COMPANY
By___________________________________
Name:
Title:
NATIONAL BANK OF CANADA, A
CANADIAN CHARTERED BANK
By___________________________________
Name:
Title:
By____________________________________
Name:
Title:
<PAGE>
NATIONAL CITY COMMERICAL FINANCE,
INC.
By___________________________________________
Name:
Title:
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P. its General
Partner
By: Oak Hill Securities MGP, Inc., its General Partner
By_____________________________________________
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
By_____________________________________________
Name:
Title:
SENIOR HIGH INCOME PORTFOLIO, INC.
By_____________________________________________
Name:
Title:
<PAGE>
SOCIETE GENERALE
By__________________________________
Name:
Title:
SUMMIT COMMERCIAL/GIBRALTAR CORP.
By__________________________________
Name:
Title:
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By__________________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
formerly known as First Bank National
Association
By__________________________________
Name:
Title:
WELLS FARGO BANK, N.A.
By__________________________________
Name:
Title:
<PAGE>
Acknowledged and Agreed:
WILLSCOT EQUIPMENT, LLC
By: Williams Scotsman, Inc., as a Member
SPACE MASTER INTERNATIONAL, INC.
EVERGREEN MOBILE COMPANY
By__________________________
Name:
Title:
On behalf of each of the above
Subsidiary Guarantors
SECOND AMENDMENT TO CREDIT AGREEMENT
------------------------------------
SECOND AMENDMENT (this "Second Amendment"), dated as of
September 15, 1999, among SCOTSMAN HOLDINGS, INC., a Delaware corporation
("Holdings"), WILLIAMS SCOTSMAN, INC., a Maryland corporation (the "Borrower"),
the Lenders from time to time party to the Credit Agreement referred to below,
BANKERS TRUST COMPANY, as Issuing Bank, BT COMMERCIAL CORPORATION, acting as
Administrative Agent and Co-Syndication Agent, NATIONSBANK, N.A., acting as
Co-Syndication Agent, and GOLDMAN SACHS CREDIT PARTNERS L.P., acting as
Documentation Agent. All capitalized terms used herein and not otherwise defined
shall have the respective meanings provided such terms in the Credit Agreement.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Holdings, the Borrower, the Lenders, the Issuing
Bank, the Administrative Agent, the Co-Syndication Agents and the Documentation
Agent are parties to a Credit Agreement, dated as of May 22, 1997 and amended
and restated as of September 1, 1998, (as in effect on the date hereof, the
"Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit
Agreement as herein provided;
NOW, THEREFORE, it is agreed:
I. Amendments to Credit Agreement.
-------------------------------
1. Section 1.1 of the Credit Agreement is hereby amended by
inserting the following new definition in the appropriate alphabetical order:
"'Dedicated Basket Amount' shall mean $50,000,000; provided
that, at the option of the Borrower, at any time after the Restatement
Effective Date such amount may be (x) decreased to an amount not less
than $0 so long as the Borrower delivers to the Administrative Agent an
officer's certificate (1) setting forth such new Dedicated Basket
Amount and (2) certifying that, after giving effect to such decrease to
the Dedicated Basket Amount, the sum of (I) the aggregate principal
amount of then outstanding Revolving Loans and (II) the Letter of
Credit Obligations at such time, will not exceed the Senior Unsecured
Notes Borrowing Base as same will be in effect after giving effect to
the reduction to the Dedicated Basket Amount, or (y) thereafter
increased to an amount not greater than $50,000,000 so long as the
Borrower delivers to the Administrative Agent an officer's certificate
(1) setting forth such new Dedicated Basket Amount, (2) certifying that
Indebtedness is not then outstanding pursuant to Section 4.09(b)(14) of
the Senior Unsecured Notes Indenture (excluding Indebtedness
representing extensions of credit pursuant to the Revolving Credit
Commitments) in an amount in excess of
<PAGE>
$50,000,000 less the new Dedicated Basket Amount and (3) confirming the
Borrower's obligation to comply with Section 8.20."
2. Section 2.2(a)(iii) of the Credit Agreement is hereby
amended by deleting said Section in its entirety and inserting in lieu thereof
the following new Section 2.2(a)(iii):
"(iii) the amount then equal to:
(A) (i) 75% of the net book value of Eligible Rental Equipment
of the Borrower and its Restricted Subsidiaries (as defined in the
Senior Unsecured Notes Indenture) and (ii) 85% of the book value of the
Eligible Accounts Receivable of the Borrower and its Restricted
Subsidiaries (as defined in the Senior Unsecured Notes Indenture) less
(x) the amount of net proceeds which have been received in connection
with a Permitted Units Financing (as defined in the Senior Unsecured
Notes Indenture) permitted under clause (b)(13)(i) of Section 4.09 of
the Senior Unsecured Notes Indenture (provided that such reduction
shall apply only to the extent of any outstanding balance on such
financing and for so long as such Permitted Units Financing is in
effect) and (y) the amount of any outstanding Attributable Debt (as
defined in the Senior Unsecured Notes Indenture) incurred under clause
(b)(12) of Section 4.09 of the Senior Unsecured Notes Indenture (with
all determinations of the amount specified above in this clause (A) to
be made in accordance with the requirements of the Senior Unsecured
Notes Indenture), plus
----
(B) the Dedicated Basket Amount then in effect, minus
-----
(C) the aggregate principal amount of Term Loans then outstanding."
3. Article 8 of the Credit Agreement is hereby amended by inserting, at
the end thereof, the following new Section 8.20:
"8.20 Allocation of Senior Unsecured Notes Indenture Basket Amount.
-------------------------------------------------------------
Notwithstanding anything to the contrary set forth herein (including, without
limitation, Section 8.3 hereof), except for extensions of credit from time to
time made pursuant to the Revolving Credit Commitments, no Indebtedness may at
any time be outstanding pursuant to Section 4.09(b)(14) of the Senior Unsecured
Notes Indenture, except that at any time when the Dedicated Basket Amount has
been reduced to an amount which is less than $50,000,000, Indebtedness (other
than Indebtedness as a result of extensions of credit from time to time pursuant
to the Revolving Credit Commitments) may be incurred pursuant to Section
4.09(b)(14) of the Senior Unsecured Notes Indenture (so long as such
Indebtedness is also permitted to be incurred and remain outstanding pursuant to
Section 8.3 hereof) in an aggregate amount not to exceed at any time an amount
equal to $50,000,000 less the Dedicated Basket Amount as then in effect."
4. The Credit Agreement is hereby amended by deleting Exhibit R thereto
in its entirety and by inserting in lieu thereof new Exhibit R attached hereto.
-2-
<PAGE>
II. Miscellaneous.
--------------
1. In order to induce the Lenders to enter into this Second
Amendment, Holdings and the Borrower hereby represent and warrant that (i) the
representations, warranties and agreements contained in Article 6 of the Credit
Agreement are true and correct in all material respects on and as of the Second
Amendment Effective Date (as defined below) (unless such representations and
warranties relate to a specific earlier date, in which case such representations
and warranties shall be true and correct as of such earlier date) and (ii) there
exists no Default or Event of Default on the Second Amendment Effective Date, in
each case both before and after giving effect to this Second Amendment.
2. This Second Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.
3. This Second Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with the Borrower and the Administrative Agent.
4. THIS SECOND AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.
5. This Second Amendment shall become effective on the date
(the "Second Amendment Effective Date") when Holdings, the Borrower, each
Subsidiary Guarantor and the Required Lenders shall have signed a counterpart
hereof (whether the same or different counterparts) and shall have delivered
(including, without limitation, by usage of facsimile transmission) the same to
the Administrative Agent at its Notice Office. This Second Amendment and the
agreements contained herein shall be binding on the successors and assigns of
the parties hereto.
6. From and after the Second Amendment Effective Date, all
references in the Credit Agreement and each of the Credit Documents to the
Credit Agreement shall be deemed to be references to the Credit Agreement as
amended hereby.
* * *
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused a
counterpart of this Second Amendment to be duly executed and delivered as of the
date first above written.
SCOTSMAN HOLDINGS, INC.
By___________________________________________
Name:
Title:
WILLIAMS SCOTSMAN, INC.
By___________________________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Issuing Bank
By___________________________________________
Name:
Title:
BT COMMERCIAL CORPORATION,
Individually and as Administrative Agent and
Co-Syndication Agent
By___________________________________________
Name:
Title:
NATIONSBANK, N.A.,
Individually and as Co-Syndication Agent
By___________________________________________
Name:
Title:
<PAGE>
GOLDMAN SACHS CREDIT PARTNERS L.P.,
Individually and as Documentation Agent
By___________________________________________
Name:
Title:
BANKBOSTON, N.A
By___________________________________________
Name:
Title:
THE BANK OF NOVA SCOTIA
By___________________________________________
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE
By___________________________________________
Name:
Title:
THE CIT GROUP/BUSINESS CREDIT, INC.
By___________________________________________
Name:
Title:
<PAGE>
CONGRESS FINANCIAL CORPORATION
By___________________________________________
Name:
Title:
CRESCENT/MACH I PARTNERS, L.P.
By: TCW Asset Management Company,
its Investment Manager
By___________________________________________
Name:
Title:
DEBT STATEGIES FUND III, INC.
By___________________________________________
Name:
Title:
DIME COMMERCIAL CORP.
By___________________________________________
Name:
Title:
FLEET BANK, N.A.
By___________________________________________
Name:
Title:
<PAGE>
FLEET CAPITAL CORPORATION
By___________________________________________
Name:
Title:
FREMONT FINANCIAL CORPORATION
By___________________________________________
Name:
Title:
THE FUJI BANK, LIMITED
By___________________________________________
Name:
Title:
GREEN TREE FINANCIAL SERVICING
CORPORATION
By___________________________________________
Name:
Title:
HELLER FINANCIAL, INC.
By___________________________________________
Name:
Title:
<PAGE>
IBJ SCHRODER BUSINESS CREDIT
CORPORATION
By___________________________________________
Name:
Title:
LASALLE NATIONAL BANK
By___________________________________________
Name:
Title:
MERCANTILE SAFE DEPOSIT AND TRUST
COMPANY
By___________________________________________
Name:
Title:
NATIONAL BANK OF CANADA, A
CANADIAN CHARTERED BANK
By___________________________________________
Name:
Title:
By___________________________________________
Name:
Title:
<PAGE>
NATIONAL CITY COMMERICAL FINANCE, INC.
By___________________________________________
Name:
Title:
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P. its General
Partner
By: Oak Hill Securities MGP, Inc., its General Partner
By___________________________________________
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
By___________________________________________
Name:
Title:
SENIOR HIGH INCOME PORTFOLIO, INC.
By___________________________________________
Name:
Title:
<PAGE>
SOCIETE GENERALE
By___________________________________________
Name:
Title:
SUMMIT COMMERCIAL/GIBRALTAR CORP.
By___________________________________________
Name:
Title:
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By___________________________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
formerly known as First Bank National
Association
By___________________________________________
Name:
Title:
WELLS FARGO BANK, N.A.
By___________________________________________
Name:
Title:
<PAGE>
Acknowledged and Agreed:
WILLSCOT EQUIPMENT, LLC
By: Williams Scotsman, Inc., as a Member
SPACE MASTER INTERNATIONAL, INC.
EVERGREEN MOBILE COMPANY
By__________________________
Name:
Title:
On behalf of each of the above
Subsidiary Guarantors
<PAGE>
Exhibit R
---------
FORM OF BORROWING BASE CERTIFICATE
----------------------------------
OFFICER'S CERTIFICATE
This Certificate is being delivered pursuant to the Credit
Agreement, dated as of May 22, 1997 and amended and restated as of September 1,
1998, among Scotsman Holdings, Inc., Williams Scotsman, Inc., a Maryland
corporation (the "Borrower"), the financial institutions from time to time party
thereto, Bankers Trust Company, as Issuing Bank, BT Commercial Corporation, as
Administrative Agent and Co-Syndication Agent, NationsBank, N.A., as
Co-Syndication Agent, and Goldman Sachs Credit Partners L.P., as Documentation
Agent (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"). Unless otherwise defined herein, all terms used herein
shall have the meanings ascribed to them in the Credit Agreement.
The undersigned represents and warrants that the information
set forth on the attached Borrowing Base Certificate is, to the best of my
knowledge, true, correct and complete in all material respects (subject to
year-end audit adjustments [and adjustments, if any, reflected in the corrected
Borrowing Base Certificate to be delivered post-closing pursuant to Section 5.1
of the Credit Agreement]1) calculated in accordance with the Credit Agreement
and sets forth [my best good-faith estimate (to the extent relevant information
is not available) of]1 the Eligible Accounts Receivable and Eligible Rental
Equipment as of the close of business on __________ ____, ____.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of this ___ day of ________ _____.
WILLIAMS SCOTSMAN, INC.
By:__________________________________
Name:
Title:
- ------------------------
(1) Include bracketed language only in the Officer's Certificate delivered on
the Restatement Effective Date.
<PAGE>
Exhibit R
Page 2
BORROWING BASE CERTIFICATE FOR THE MONTH ENDING [DATE]
ISSUED BY WILLIAMS SCOTSMAN, INC.
---------------------------------
PART A - BORROWING BASE:
- ------------------------
1) Eligible Accounts Receivable
(a) Gross Accounts Receivable:
(i) Total per Accounts
Receivable Aging Report
Less: (ii) Unearned Income
- -----
Total Gross Accounts Receivable
(Item 1(a)(i) less Item 1(a)(ii))
(b) Less: Ineligible Accounts
Receivable (Schedule A)
(c) Total Eligible Accounts
Receivable (Item 1(a) minus Item 1(b))
(d) Advance Rate
(e) Accounts Receivable Availability
(Item 1(c) multiplied by Item 1(d))
Plus:
- -----
2) Eligible Rental Equipment
(a) Net book value of Rental Equipment per financial statements:
(i) Williams Scotsman, Inc.
(ii) Willscot Equipment, LLC
(iii) Space Master International, Inc.
Total Net Book Value of Rental Equipment per financial
statements (sum of Item 2(a)(i), Item 2(a)(ii) and Item
2(a)(iii))
(b) Less: Ineligible Rental
Equipment (Schedule B)
(c) Total Eligible Rental Equipment
(Item 2(a) minus Item 2(b))
(d) Advance Rate
(e) Rental Equipment Availability (Item 2(c) multiplied by Item
2(d))
<PAGE>
Exhibit R
Page 3
3) Total Borrowing Base before deductions (sum of Item
1(e) and Item 2(e))
Less:
- -----
4) Excess Other Liability Amount
5) Exposure under Interest Rate Agreements
6) Equity Blocked Commitments as defined in the Credit
Agreement
7) Total Borrowing Base $_______
Less: (i) Letter of Credit Obligations: $_____
- ----- (ii) Revolving Loans Outstanding: $_______
8) Excess Borrowing Base Availability (Deficiency) (Items 3 minus Item
4, Item 5, Item 6 and Item 7)
<PAGE>
Exhibit R
Page 4
PART B - SENIOR UNSECURED NOTES BORROWING BASE:
- -----------------------------------------------
1) Rental Equipment Availability (Item 1(a) multiplied by
Item 1(b))
(a) Total net book value of Eligible Rental
Equipment
(b) Advance Rate (75%)
Plus:
- -----
2) Accounts Receivable Availability (Item 2(a) multiplied
by Item 2(b))
(a) Total book value of Eligible Accounts
Receivable
Plus: (b) Advance Rate (85%)
- -----
3) Dedicated Basket Amount
Minus:
- ------
4) Net Proceeds from Permitted Units Financing (as defined
in Senior Unsecured Notes Indenture)
5) Outstanding Attributable Debt (as defined in Senior
Unsecured Notes Indenture)
6) Term Loans Outstanding
7) Senior Unsecured Notes Borrowing Base (Item 1 plus Item
Minus: 2 and Item 3 minus Item 4, Item 5 and Item 6)
- ------
8) Letter of Credit Obligations
9) Revolving Loans Outstanding
10) Excess Senior Unsecured Notes Borrowing Base
Availability (Deficiency) (Item 7 minus Item 8 and Item 9)
<PAGE>
Schedule A
----------
ACCOUNTS RECEIVABLE INELIGIBILITY
---------------------------------
1) Accounts arising out of sales or Leases
for which no invoice has been provided
to the account debtor
2) Accounts arising out of sales or Leases
made to Affiliates
3) Accounts unpaid on the date which is 90
days after the date on which the
original invoice provides that such
payment is due
4) Accounts (other than Accounts listed on
Part A of Schedule II to the Credit
Agreement that are not 30 days past due)
providing for payment more than 91 days
after the date of the original invoice
5) Accounts which do not meet the
Cross-Aging test (50%)
6) Accounts of account debtors (other than
Accounts supported or secured by
insurance acceptable to the
Administrative Agent or by a duly
pledged irrevocable letter of credit in
form and substance satisfactory to the
Administrative Agent and issued by a
financial institution satisfactory to
the Administrative Agent), when
aggregated with all other Accounts of
such account debtors, exceed 15% in face
value of all Accounts of the Borrower
and its Subsidiaries whose Accounts are
included in the Borrowing Base, to the
extent of such excess
7) Accounts of creditors of the Borrower
(other than Accounts with respect to
which a no-offset letter in form and
substance satisfactory to the
Administrative Agent has been delivered
to the Administrative Agent)
8) Accounts with respect to which account
debtors dispute liability on, or have made
any claim with respect to, such Accounts
or any other Account due from such
account debtors to the Borrower
9) Accounts which are, or may be, subject
to any right of set-off by the account
debtor
<PAGE>
Schedule A
Page 2
10) Accounts of bankrupt account debtors
11) Accounts (other than Accounts supported
or secured by insurance acceptable to
the Administrative Agent or by a duly
pledged irrevocable letter of credit in
form and substance satisfactory to the
Administrative Agent and issued by a
financial institution satisfactory to
the Administrative Agent) arising out of
sales or Leases to account debtors
located outside the United States or
Canada (except for receivables of
account debtors located in Canada not in
excess of 20% of Accounts and Accounts
listed on Part B of Schedule II to the
Credit Agreement)
12) Accounts arising from sales made on a
bill-and-hold, guaranteed sale,
sale-and-return, sale on approval,
consignment basis or otherwise providing
for repurchase or return (other than
pursuant to ordinary course of business
warranties)
13) Accounts which the Administrative Agent
has determined, in its Permitted
Discretion, may not be paid by reason of
the account debtor's financial inability to
pay
14) Accounts with respect to which the
account debtor is the United States or
any department, agency or
instrumentality thereof, unless the
Borrower duly assigns its rights to
payment of such Account to the
Collateral Agent pursuant to the
Assignment of Claims Act of 1940, as
amended
15) Accounts with respect to which the act
of Rental Equipment being leased and put
into service giving rise to such
Accounts has not occurred or the
services giving rise to such Accounts
have not been performed by the Borrower
and accepted by the account debtor
16) Accounts not representing a final sale
17) Accounts which do not comply in all
material respects with all applicable
legal requirements
<PAGE>
Schedule A
Page 3
18) Accounts with respect to which the
Collateral Agent does not have a valid
and perfected first priority security
interest in or Lien on such Accounts
(except for Permitted Liens, provided
that the value of any such Account shall
be reduced by the amount of the
obligations secured by such Permitted
Liens)
19) Accounts not conforming to the
representations and warranties contained
in the Credit Agreement or other Credit
Documents
20) Other ineligible Accounts pursuant to
the terms of the Credit Agreement
(including without limitation Accounts
of the Canadian Subsidiary, unless and
until the Canadian Subsidiary becomes a
Subsidiary Guarantor and a party to the
Security Agreement, and takes all other
actions as may be requested by the
Collateral Agent to ensure that the
Collateral Agent has a valid and
perfected first priority security
interest in or Lien on the Accounts of
the Canadian Subsidiary)
TOTAL INELIGIBLE ACCOUNTS
RECEIVABLE
<PAGE>
Schedule B
----------
RENTAL EQUIPMENT INELIGIBILITY
------------------------------
1) Rental Equipment not owned solely by the
Borrower or a Wholly-Owned Subsidiary
of the Borrower and with respect to which
the Borrower or a Wholly-Owned
Subsidiary of the Borrower does not have
good, valid and marketable title
2) Rental Equipment held by a third party for
sale on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval or
consignment basis
3) Rental Equipment (other than Rental
Equipment being leased or returned by a
customer) not stored on property owned or
leased by (i) the Borrower, (ii) a
Wholly-Owned Subsidiary of the Borrower or
(iii) a warehouseman under contract with
the Borrower or a Wholly-Owned Subsidiary
of the Borrower to store Rental Equipment
4) Rental Equipment (other than Rental
Equipment being leased or returned by a
customer) stored on property leased by the
Borrower or a Wholly-Owned Subsidiary of
the Borrower, but with respect to which
the Borrower has not delivered to the
Collateral Agent a Collateral Access
Agreement executed by the lessor of such
property [applicable only in the case of
calculations of Eligible Rental Equipment
made after the 90th day following the
Restatement Effective Date]
5) Rental Equipment (other than Rental
Equipment being leased or returned by a
customer) stored on property leased or
owned by a warehouseman under contract
with the Borrower or a Wholly-Owned
Subsidiary of the Borrower to store Rental
Equipment, but with respect to which the
Borrower has not delivered to the
Collateral Agent a Collateral Access
Agreement executed by such warehouseman
and, in the case of leased property, the
lessor of such property [applicable only
in the case of calculations of Eligible
Rental Equipment made after the 90th day
following the Restatement Effective Date]
6) Rental Equipment not subject to a
<PAGE>
Schedule B
Page 2
perfected first priority Lien in favor of
the Collateral Agent except: (i) with
respect to Rental Equipment of SMI
constituting Qualified Certificated Units
[applicable only in the case of
calculations of Eligible Rental Equipment
made within the 60 days following the
Restatement Effective Date], (ii) with
respect to Rental Equipment constituting
Non-Qualified Units, such Non-Qualified
Units with respect to which all applicable
UCC filings have been made as required by
the Credit Documents, (iii) Liens for
normal and customary warehouseman charges
in the case of Rental Equipment stored on
property owned or leased by a warehouseman
and (iv) Permitted Liens (provided that
the value of such Rental Equipment is
reduced by the amount of the obligations
secured by such Permitted Liens)
7) Rental Equipment not located in the United
States or Canada and with respect to which
arrangements for the granting and
perfection of a security interest in such
Rental Equipment have not been made in a
manner acceptable to the Administrative
Agent in its discretion
8) Rental Equipment not conforming in all
material respects to the representations
and warranties contained in the Credit
Agreement or the other Credit Documents
9) Rental Equipment not segregated or
otherwise separately identifiable from
goods of others stored on the same premises
10) Rental Equipment owned by the Borrower or
any of its Wholly-Owned Subsidiaries
(other than the Unit Subsidiary) not
constituting (A) (x) Certificated Units
with respect to Rental Equipment of SMI
and its Subsidiaries prior to the 90th day
following the Restatement Effective Date
or (y) Qualified Certificated Units with
respect to which all actions required to
be taken pursuant to Section 7.18 of the
Credit Agreement have been taken or (B)
Non-Certificated Units of SMI prior to the
60th day following the Restatement
Effective Date
11) Rental Equipment subject to Sales-Type
<PAGE>
Schedule B
Page 3
Leases
12) Rental Equipment leased by the Borrower as
lessor pursuant to Leases containing a
bargain purchase option
13) Rental Equipment that has been or
reasonably should be classified by the
Borrower or its Subsidiaries as type "E" or
"F" consistent with the manner in which
the Borrower classifies Rental Equipment
on the Original Effective Date
14) Other ineligible Rental Equipment pursuant
to the terms of the Credit Agreement
(including without limitation Rental
Equipment of the Canadian Subsidiary,
unless and until the Canadian Subsidiary
becomes a Subsidiary Guarantor and a party
to the Security Agreement, and takes all
other actions as may be requested by the
Collateral Agent to ensure that the
Collateral Agent has a valid and perfected
first priority security interest in or
Lien on the Rental Equipment of the
Canadian Subsidiary)
TOTAL INELIGIBLE RENTAL EQUIPMENT
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 688
<SECURITIES> 0
<RECEIVABLES> 66,752
<ALLOWANCES> 1,470
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 902,694
<DEPRECIATION> 134,712
<TOTAL-ASSETS> 1,064,879
<CURRENT-LIABILITIES> 0
<BONDS> 914,943
0
0
<COMMON> 33
<OTHER-SE> (49,306)
<TOTAL-LIABILITY-AND-EQUITY> 1,064,879
<SALES> 300,256
<TOTAL-REVENUES> 300,256
<CGS> 148,979
<TOTAL-COSTS> 148,979
<OTHER-EXPENSES> 65,084
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61,885
<INCOME-PRETAX> 24,308
<INCOME-TAX> 11,277
<INCOME-CONTINUING> 13,031
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,031
<EPS-BASIC> 3.93
<EPS-DILUTED> 3.93
</TABLE>
