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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
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Commission File Number 1-12804
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mobile mini, inc.
(Exact name of registrant as specific in its charter)
Delaware 86-0748362
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1834 West 3rd Street
Tempe, Arizona 85281
(Address of principal executive offices)
(602) 894-6311
(Registrant's telephone number, including area code)
Indicate by check 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
--------- ---------
As of May 12, 1997, there were outstanding 6,739,324 shares of the
issuer's common stock, par value $.01.
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<PAGE>
MOBILE MINI, INC.
INDEX TO FORM 10-Q FILING
FOR THE QUARTER ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
NUMBER
PART I.
FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets 3
March 31, 1997 (unaudited) and December 31, 1996
Consolidated Statements of Operations 4
Three Months ended March 31, 1997 and March 31, 1996
(unaudited)
Consolidated Statements of Cash Flows 5
Three Months Ended March 31, 1997 and March 31, 1996
(unaudited)
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and 7
Results of Operations
PART II.
OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 9
SIGNATURES 10
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOBILE MINI, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS March 31, 1997 December 31, 1996
(Unaudited)
---------------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 630,858 $ 736,543
Receivables, net 4,644,884 4,631,854
Inventories 6,724,769 4,998,382
Prepaid and other 554,725 742,984
----------- -----------
Total current assets 12,555,236 11,109,763
CONTAINER LEASE FLEET, net 36,221,160 34,313,193
PROPERTY, PLANT AND EQUIPMENT, net 18,243,569 17,696,046
OTHER ASSETS, net 1,556,859 1,697,199
----------- -----------
Total assets $68,576,824 $64,816,201
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,163,111 $ 2,557,329
Accrued interest 585,392 261,698
Accrued compensation 423,847 674,818
Accrued liabilities 1,021,039 1,255,597
Current portion of long-term debt 1,330,366 1,378,829
Current portion of obligations under capital leases 1,918,800 1,352,279
----------- -----------
Total current liabilities 8,442,555 7,480,550
LINE OF CREDIT 30,072,512 26,406,035
LONG-TERM DEBT, less current portion 5,287,642 5,623,948
OBLIGATIONS UNDER CAPITAL LEASES, less
current portion 4,495,277 5,387,067
DEFERRED INCOME TAXES 3,867,975 3,709,500
----------- -----------
Total liabilities 52,165,961 48,607,100
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock; $.01 par value, 17,000,000 shares
authorized, 6,739,324 issued and outstanding at March
31, 1997 and December 31, 1996 67,393 67,393
Additional paid-in capital 14,338,873 14,338,873
Retained earnings 2,004,597 1,802,835
----------- -----------
Total stockholders' equity 16,410,863 16,209,101
----------- -----------
Total liabilities and stockholders' equity $68,576,824 $64,816,201
=========== ===========
</TABLE>
See the accompanying notes to these consolidated balance sheets.
3
<PAGE>
MOBILE MINI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
REVENUES:
Container and other sales $ 4,542,631 $ 4,915,832
Leasing 3,898,948 3,171,300
Other 1,207,877 821,783
----------- -----------
9,649,456 8,908,915
COSTS AND EXPENSES:
Cost of container and other sales 3,445,770 3,925,438
Leasing, selling and general expenses 4,281,350 3,874,363
Depreciation and amortization 472,167 368,279
----------- -----------
Income from operations 1,450,169 740,835
OTHER INCOME (EXPENSE):
Interest income and other -- 4,000
Interest expense (1,089,879) (948,349)
----------- -----------
INCOME (LOSS) BEFORE PROVISION FOR INCOME
(BENEFIT) TAXES AND EXTRAORDINARY ITEM 360,290 (203,514)
PROVISION (BENEFIT) FOR INCOME TAXES 158,528 (89,546)
----------- -----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 201,762 (113,968)
EXTRAORDINARY ITEM (Note C) -- (410,354)
----------- -----------
NET INCOME (LOSS) $ 201,762 $ (524,322)
=========== ===========
EARNINGS (LOSS) PER SHARE OF COMMON STOCK
AND COMMON STOCK EQUIVALENT:
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM $ 0.03 $ (0.02)
EXTRAORDINARY ITEM -- (0.06)
----------- -----------
NET INCOME (LOSS) $ 0.03 $ (0.08)
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING 6,739,758 6,732,358
=========== ===========
</TABLE>
See the accompanying notes to these consolidated statements
4
<PAGE>
MOBILE MINI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1997 1996
------------ ------------
<S> <C> <C>
Net income (loss) $ 201,762 $ (524,322)
Adjustments to reconcile income to net cash used in
operating activities:
Extraordinary loss on early debt retirement -- 410,354
Depreciation and amortization 472,167 368,279
Gain on disposal of property, plant and equipment -- (4,000)
Changes in assets and liabilities:
Decrease (increase) in receivables, net (13,030) 863,478
Increase in inventories (1,815,657) (581,675)
Decrease (increase) in prepaids and other 188,259 (84,859)
Decrease in other assets 140,340 195,693
(Decrease) increase in accounts payable 605,782 (1,828,140)
(Decrease) increase in accrued liabilities (161,835) 49,304
(Decrease) increase in deferred income taxes 158,475 (411,967)
------------ ------------
Net cash used in operating activities (223,737) (1,547,855)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net purchases of container lease fleet (1,741,236) (78,861)
Net purchases of property, plant, and equipment (1,097,151) (425,433)
------------ ------------
Net cash used in investing activities (2,838,387) (504,294)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under lines of credit 3,666,477 12,512,634
Proceeds from issuance of long-term debt -- 6,635,069
Deferred costs on credit agreement -- (1,897,573)
Principal payments and penalties on early debt
extinguishment -- (14,405,879)
Principal payments on long-term debt (384,769) (549,747)
Principal payments on capital lease obligations (325,269) (931,839)
Additional paid in capital -- (21,063)
------------ ------------
Net cash provided by financing activities 2,956,439 1,341,602
------------ ------------
NET DECREASE IN CASH (105,685) (710,547)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 736,543 1,430,651
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 630,858 $ 720,104
============ ============
</TABLE>
See the accompanying notes to these consolidated statements.
5
<PAGE>
MOBILE MINI, INC. AND SUBSIDIARIES - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q. Accordingly, they do
not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations, and
cash flows for all periods presented have been made. The results of operations
for the three month period ended March 31, 1997 are not necessarily indicative
of the operating results that may be expected for the entire year ending
December 31, 1997. These financial statements should be read in conjunction with
the Company's December 31, 1996 financial statements and accompanying notes
thereto.
Certain amounts in the 1996 financial statements have been reclassified to
conform with the 1997 financial statement presentation.
NOTE B - Earnings (loss) per common share is computed by dividing net income
(loss) by the weighted average number of common share equivalents assumed
outstanding during the periods. Fully diluted earnings per common share is
considered equal to primary earnings per share in all periods presented.
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (SFAS No. 128).
SFAS No. 128 is effective for fiscal years ending after December 15, 1997, and
when adopted, will require restatement of prior periods earnings per share. The
effect of this statement is not significant on any period presented.
NOTE C - The Company entered into a credit agreement (the "Credit Agreement") in
March, 1996 with BT Commercial Corporation, as Agent for a group of lenders (the
"Lenders"). Under the terms of the Credit Agreement, the Lenders have provided
the Company with a $35.0 million revolving line of credit and a $6.0 million
term loan. Borrowings under the Credit Agreement are secured by substantially
all of the Company's assets.
In connection with the closing of the Credit Agreement, the Company repaid
long-term debt and obligations under capital leases totaling $14.1 million. As a
result, costs previously deferred related to this indebtedness and prepayment
penalties resulted in an extraordinary charge to earnings in 1996, of
approximately $410,000 after the benefit of income taxes.
NOTE D - Inventories are stated at the lower of cost or market, with cost being
determined under the specific identification method. Market is the lower of
replacement cost or net realizable value. Inventories consisted of the following
at:
March 31, 1997 December 31, 1996
-------------- -----------------
Raw material and supplies $3,903,561 $3,547,487
Work-in-process 911,543 288,986
Finished containers 1,909,665 1,161,909
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$6,724,769 $4,998,382
========== ==========
NOTE E - Property, plant and equipment consisted of the following at:
March 31, 1997 December 31, 1996
-------------- -----------------
Land $ 708,554 $ 708,555
Vehicles and equipment 11,581,984 11,218,281
Buildings and improvements 7,296,205 6,958,247
Office fixtures and equipment 2,620,597 2,514,812
------------ ------------
22,207,340 21,399,895
Less accumulated depreciation (3,963,771) (3,703,849)
------------ ------------
$ 18,243,569 $ 17,696,046
============ ============
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended March 31, 1997 Compared to
Three Months Ended March 31, 1996
Revenues for the quarter ended March 31, 1997 were $9,649,000 which
represents an 8.3% increase over revenues of $8,909,000 for the quarter ended
March 31, 1996. Revenues from the sales of the Company's products decreased 7.6%
due to a decrease in revenues from the Company's discontinued modular building
operations while revenues from the leasing of portable storage and office units
increased 22.9%. Revenues from the Company's trucking and other related leasing
activities increased 47.0%. The increase in lease revenue and lease related
revenue resulted from an increase in price, a substantial increase in the number
of containers on lease and an increase in ancillary income, including increased
late charge income and loss limitation waiver income.
Historically, the Company's business is partially seasonal with the
first quarter's revenues and earnings generally being the lowest.
Cost of container and other sales as a percentage of container and
other sales for the quarter ended March 31, 1997 was 75.9% compared to 79.9% for
the same quarter in 1996. This decrease primarily resulted from an increase in
margins on the sale of containers in addition to a decline in sales of the
Company's discontinued modular building line, which produced low margins during
fiscal 1996. It is uncertain whether the higher margins generated on container
sales during the first quarter will continue during the remainder of the year.
Leasing, selling and general expenses were 44.4% of total revenue in
the quarter ended March 31, 1997 compared to 43.5% in the quarter ended March
31, 1996.
Interest expense was 11.3% of revenues during the first quarter of 1997
compared to 10.6% of revenues during the quarter ended March 31, 1996. This
increase is primarily due to the costs related to financing the Company's growth
in its container lease fleet and equipment which permitted the Company to
substantially increase its leasing revenue. This increase is partially offset by
a 2.6% decrease in the Company's weighted average borrowing rate as a result of
lower interest rates under the credit facility (including the effect of
amortization of additional debt issuance costs in connections with that
facility).
Depreciation and amortization increased from 4.1% of revenues for the
quarter ended March 31, 1996 to 4.9% for the quarter ended March 31, 1997. This
increase is related to the increase in the Company's lease fleet and the
acquisition of additional equipment at the Company's various locations.
The Company posted net income of $202,000, or $.03 per share for the
quarter ended March 31, 1997 compared to the quarter ended March 31, 1996 during
which the Company posted a net loss before extraordinary item of $114,000 or
$.02 per share. During the quarter ended March 31, 1996, the Company prepaid
certain debt and capital leases in connection with entering into a new credit
agreement. The Company recognized an extraordinary charge to earnings of
$410,000 or $.06 per share, net of the benefit for income taxes, as a result of
this early extinguishment of debt.
7
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company continues to require increasing amounts of financing to
sustain the continued growth of its business. The financing primarily funds the
acquisition of containers for the Company's lease fleet in addition to property,
plant and equipment to support both the Company's leasing and manufacturing
operations. Most of new financing is funded through the Company's credit
facility where borrowings under the revolving line of credit are based on the
level of the Company's inventories, receivables and the container lease fleet.
As of March 31, 1997, the Company had borrowings outstanding of
$30,073,000 under its $35,000,000 revolving line of credit and $627,000 of
additional borrowing was available under that line.
During the quarter ended March 31, 1997 the Company utilized cash from
operations of $224,000. Cash was invested in higher inventory levels which were
partially offset by a reduction in prepaids and other assets and an increase in
accounts payable.
The Company invested $2,838,000 in its container lease fleet and other
equipment during the quarter ended March 31, 1997. This amount is net of
$413,000 in sales of containers from the lease fleet.
Cash flow from financing activities provided $2,956,000 for the quarter
ended March 31, 1997. This financing was utilized to fund the increase in the
lease fleet and related equipment and was partially offset by principal payments
on long-term debt and capitalized leases.
The Company believes that its current capitalization, together with
borrowings available under the Credit Agreement, is sufficient to maintain its
current level of operations. However, the Company will not be able to sustain
recent growth trends without additional availability of credit and equity to
support continued increase in its container lease fleet. The Company has begun
discussions with its lenders about increasing borrowing availability under its
credit agreement, but presently has no commitment from the lenders regarding
such increase. The Company has entered into an agreement with an unaffiliated
third party pursuant to which such party has the right to invest approximately
$1.6 million in the Company's common stock prior to July 2, 1997. While the
Company believes that it will be able to increase both its borrowing
availability and equity resources, especially due to recent operating results,
the timing and terms of such transactions cannot be predicted and may be
affected by factors outside of the Company's control.
EFFECTS OF INFLATION
The results of operations of the Company for the periods discussed have
not been significantly affected by inflation.
8
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Number Description
11 Computation of Earnings per Share for the
Three Month Period ended
March 31, 1997 and 1996
27 Selected Financial Data
(b) Reports on Form 8-K
none
9
<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.
MOBILE MINI, INC.
(Registrant)
Dated: May 14, 1997 /s/ Larry Trachtenberg
------------------------
Larry Trachtenberg
Chief Financial Officer &
Executive Vice President
10
Exhibit 11
MOBILE MINI, INC.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
----------------------------
<S> <C> <C>
PRIMARY:
Common Shares outstanding, beginning of year 6,739,324 4,835,000
Effect of weighting shares:
Employee stock options 88 --
Conversion of Series A preferred stock -- 1,897,358
----------------------------
Weighted average number of common
shares and common share equivalents outstanding 6,739,412 6,732,358
============================
Net Income available for common stock $ 201,762 $ (524,322)
============================
Net Income per common share and
common share equivalent (Note 1) $ 0.03 $ (0.08)
============================
FULLY DILUTED:
Common Shares outstanding, beginning of year 6,739,324 4,835,000
Effect of weighting shares:
Employee stock options 434 --
Conversion of Series A preferred stock -- 1,897,358
----------------------------
Weighted average number of common
shares and common share equivalents outstanding 6,739,758 6,732,358
============================
Net Income available for common stock $ 201,762 $ (524,322)
============================
Net Income per common share and
common share equivalent (Note 1) $ 0.03 $ (0.08)
============================
</TABLE>
Note 1 - Net income per common share and common share equivalent is calculated
after the effect of an extraordinary item recorded during the quarter ended
March 31, 1996.
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. Dollar
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 630,858
<SECURITIES> 0
<RECEIVABLES> 4,957,780
<ALLOWANCES> 312,896
<INVENTORY> 6,724,769
<CURRENT-ASSETS> 12,555,236
<PP&E> 22,207,340
<DEPRECIATION> 3,963,771
<TOTAL-ASSETS> 65,576,824
<CURRENT-LIABILITIES> 8,442,555
<BONDS> 0
0
0
<COMMON> 67,393
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 68,576,824
<SALES> 4,542,631
<TOTAL-REVENUES> 9,649,456
<CGS> 3,445,770
<TOTAL-COSTS> 8,119,287
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,089,879
<INCOME-PRETAX> 360,290
<INCOME-TAX> 158,528
<INCOME-CONTINUING> 1,450,169
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 201,762
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
