<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 30, 1999
Mobile Mini, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-12804 86-0748362
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
1834 West 3rd Street
Tempe, Arizona 85281
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (480) 894-6311
- -------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE> 2
Mobile Mini, Inc., a Delaware Corporation, hereby amends its report on Form 8-K
dated April 30, 1999 to include in Item 7 thereof the following:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired
National Security Containers, LLC
i) Report of Independent Public Accountants 4
ii) Balance Sheets as of December 31, 1998 (Audited) and
March 31, 1999 (Unaudited) 5
iii) Statements of Operations for the period from
inception (March 24, 1998) to December 31, 1998
(Audited) and the three months ended March 31, 1999 6
(Unaudited)
iv) Statements of Member's Equity 7
v) Statements of Cash Flows for the period from
inception (March 24, 1998) to December 31, 1998
(Audited) and the three months ended March 31, 1999 8
(Unaudited)
vi) Notes to Financial Statements 9
(b) Pro Forma Financial Information (Unaudited)
Mobile Mini, Inc. Unaudited Pro Forma Financial Statements
i) Introduction to Unaudited Pro Forma Consolidated
Financial Statements 17
ii) Unaudited Pro Forma Consolidated Balance Sheet as of
March 31, 1999 18
iii) Pro Forma Statement of Operations for twelve months
ended December 31, 1998 19
iv) Pro Forma Consolidated Statement of Operations for
the three months ended March 31, 1999 20
v) Notes to Unaudited Pro Forma Consolidated Statements 21
</TABLE>
2
<PAGE> 3
NATIONAL SECURITY CONTAINERS, LLC
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
TOGETHER WITH REPORT OF
INDEPENDENT PUBLIC ACCOUNTANTS
3
<PAGE> 4
[ARTHUR ANDERSEN LOGO]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To National Security Containers, LLC:
We have audited the accompanying balance sheet of NATIONAL SECURITY CONTAINERS,
LLC (an Arizona corporation) as of December 31, 1998, and the related statements
of operations, member's equity and cash flows for the period from inception
(March 24, 1998) to December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of National Security Containers,
LLC as of December 31, 1998, and the results of its operations and its cash
flows for the period from inception (March 24, 1998) to December 31, 1998, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Phoenix, Arizona,
April 19, 1999.
4
<PAGE> 5
NATIONAL SECURITY CONTAINERS, LLC
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1998 March 31, 1999
----------------- --------------
(Unaudited)
<S> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS $ 824,722 $ 1,282,242
RECEIVABLES, net of allowance for doubtful accounts of $895,000 and
$1,085,000, respectively 1,602,117 1,263,337
INVENTORIES 82,943 94,784
PORTABLE STORAGE UNIT LEASE FLEET, net of accumulated depreciation
of $271,157 and $360,289, respectively 9,358,115 9,546,066
VEHICLES AND EQUIPMENT, net of accumulated depreciation
of $183,881 and $237,851, respectively 890,039 1,037,869
DEPOSITS AND PREPAID EXPENSES 195,091 427,062
----------- -----------
Total assets $12,953,027 $13,651,360
=========== ===========
LIABILITIES AND MEMBER'S EQUITY
ACCOUNTS PAYABLE $ 58,873 $ 292,823
ACCRUED LIABILITIES 1,098,276 1,066,645
NOTE PAYABLE TO RELATED PARTY 4,500,000 4,500,000
OBLIGATIONS UNDER CAPITAL LEASES 512,051 670,886
----------- -----------
Total liabilities 6,169,200 6,530,354
COMMITMENTS AND CONTINGENCIES
MEMBER'S EQUITY:
Member's equity 5,295,100 5,295,100
Retained earnings 1,488,727 1,825,906
----------- -----------
Total member's equity 6,783,827 7,121,006
----------- -----------
Total liabilities and member's equity $12,953,027 $13,651,360
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
5
<PAGE> 6
NATIONAL SECURITY CONTAINERS, LLC
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From Inception
(March 24, 1998) to Three months ended
December 31, 1998 March 31, 1999
----------------- ------------------
(Unaudited)
<S> <C> <C>
REVENUES:
Leasing $ 5,544,572 $ 1,725,542
Sales 1,651,889 409,414
----------- -----------
Total revenues 7,196,461 2,134,956
----------- -----------
COSTS AND EXPENSES:
Cost of sales 1,056,768 277,714
Leasing, selling and general expenses 3,876,427 1,269,817
Depreciation 455,038 164,376
Organization costs 60,000 --
----------- -----------
Total costs and expenses 5,448,233 1,711,907
----------- -----------
INCOME FROM OPERATIONS 1,748,228 423,049
----------- -----------
OTHER INCOME (EXPENSE):
Interest income 71,389 21,193
Interest expense (330,890) (107,063)
----------- -----------
Total other income (expense) (259,501) (85,870)
----------- -----------
NET INCOME $ 1,488,727 $ 337,179
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
NATIONAL SECURITY CONTAINERS, LLC
STATEMENTS OF MEMBER'S EQUITY
<TABLE>
<S> <C>
INCEPTION, March 24, 1998 $ 100
Contributions 9,795,000
Distribution payable (4,500,000)
Net income 1,488,727
-----------
BALANCE, December 31, 1998 6,783,827
Net income (Unaudited) 337,179
-----------
BALANCE, March 31, 1999 (Unaudited) $ 7,121,006
===========
</TABLE>
The accompanying notes are an integral part of these statements.
7
<PAGE> 8
NATIONAL SECURITY CONTAINERS, LLC
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From Inception
(March 24, 1998) to Three months ended
December 31, 1998 March 31, 1999
----------------- --------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,488,727 $ 337,179
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation 455,038 164,376
Provision for trade receivables 171,149 34,191
Change in assets and liabilities, net of business acquired:
Trade receivables 171,893 130,105
Notes receivable 130,957 37,308
Due from related party (147,161) (82,022)
Other receivables (12,447) 219,197
Inventories (82,944) (11,841)
Deposits and prepaid expenses (195,091) (231,971)
Accounts payable (20,988) 233,950
Accrued liabilities 64,796 (21,767)
Customer deposits 12,375 7,801
Deferred revenue 108,299 (17,664)
------------ ------------
Net cash provided by operating activities 2,144,603 798,842
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for business acquired (9,408,000) --
Purchases of vehicles and equipment (561,530) (40,078)
Purchases of portable storage units, net (1,098,245) (282,616)
------------ ------------
Net cash used in investing activities (11,067,775) (322,694)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital leases (47,206) (18,628)
Member contribution 9,795,100 --
------------ ------------
Net cash provided by (used in) financing activities 9,747,894 (18,628)
------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS 824,722 457,520
CASH AND CASH EQUIVALENTS, beginning of period -- 824,722
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 824,722 $ 1,282,242
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 21,888
============
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
The Company incurred approximately $200,000 of obligations under capital
leases in connection with lease agreements for equipment in 1998.
The accompanying notes are an integral part of these statements.
8
<PAGE> 9
NATIONAL SECURITY CONTAINERS, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
(1) NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:
NATURE OF BUSINESS
National Security Containers, LLC (the Company) was formed in Arizona on March
24, 1998, by G-98, LLP, the Company's sole member (the Member). The Company
commenced operations on April 9, 1998, after acquiring certain assets from
National Security Containers, Inc. (National) and TEP-98, LP (TEP).
On April 9, 1998, the Company acquired the operations of National for $8,925,000
cash plus the assumption of certain liabilities (Note 2). In addition, on April
10, 1998, the Company purchased certain assets from TEP, a company related
through common ownership. These assets consisted of inventory, prepaid
advertising, office and yard equipment, and vehicles at branch locations. The
Company purchased these assets for approximately $663,000.
The Company acquires and refurbishes modular buildings and used ocean-going
shipping containers for lease primarily in Arizona, Colorado, Louisiana,
Tennessee and Texas. In addition to its leasing operations, the Company sells
portable storage units.
The Company's ability to obtain used containers for its lease fleet is subject
in large part to the availability of these containers in the market. This is in
part subject to international trade issues and the demand for containers in the
ocean cargo shipping business. Should there be a shortage in supply of used
containers, the Company may not be able to obtain containers at acceptable
rates. Should there be an overabundance of these used containers available, it
is likely that prices would fall. This could result in a reduction in the lease
rates the Company could obtain from its portable storage unit leasing
operations. These events could materially impact the Company's growth and
ability to fund ongoing operations.
A summary of the Company's significant accounting policies follows.
INTERIM FINANCIAL INFORMATION
The unaudited interim financial statements as of March 31, 1999 have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation
have been included. Operating results for the three months ended March 31, 1999
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1999.
9
<PAGE> 10
CASH AND CASH EQUIVALENTS
The Company classifies as cash and cash equivalents amounts on deposit in banks
and cash invested temporarily in various instruments with maturities of three
months or less at the time of purchase.
OTHER RECEIVABLES
Other receivables consist of approximately $219,000 due from National related to
the final settlement of the purchase of assets. Subsequent to December 31, 1998,
these receivables were collected.
INVENTORIES
Inventories consist primarily of raw material used for refurbishing portable
storage containers. These inventories are valued at the lower of cost (first-in,
first-out) or market.
NOTES RECEIVABLE
As part of the purchase of operations from National (see Note 2), the Company
acquired certain notes receivable for portable storage containers. These notes
receivable are due in monthly installments for periods ranging from three to
seven years and mature through the year 2001. The notes are secured by the
portable storage containers and bear interest ranging from 10% to 19% per annum.
Future maturities of notes receivable as of December 31, 1998, are as follows:
<TABLE>
<S> <C>
1999 $ 105,817
2000 106,472
2001 41,766
-----------
$ 254,055
===========
</TABLE>
PORTABLE STORAGE UNIT LEASE FLEET
The Company has a portable storage unit lease fleet consisting of refurbished or
purchased containers and modular buildings that are leased to customers under
short-term operating lease agreements with varying terms. Depreciation is
provided using the straight-line method over the portable storage units
estimated useful lives of 20 years for steel containers and 10 years for modular
buildings with salvage values estimated at 20% of cost. In the opinion of
management, estimated salvage values do not cause carrying values to exceed net
realizable value. Normal repairs and maintenance to the portable storage units
are expensed as incurred.
10
<PAGE> 11
VEHICLES AND EQUIPMENT
Vehicles and equipment are stated at cost, net of accumulated depreciation.
Depreciation is provided using the straight-line method over the shorter of the
lease terms or the assets' estimated useful lives. Normal repairs and
maintenance to vehicles and equipment are expensed as incurred.
Vehicles and equipment at December 31 consist of the following:
<TABLE>
<CAPTION>
Estimated
Useful
Life
in Years 1998
-------- --------------
<S> <C> <C>
Vehicles and equipment 3-8.5 $ 986,920
Office fixtures and equipment 3 87,000
-------------
1,073,920
Less - accumulated depreciation (183,881)
-------------
$ 890,039
=============
</TABLE>
The Company acquired vehicles of approximately $200,000 under capital leases
during the period ended December 31, 1998.
The Company held vehicles with a net carrying value of approximately $452,000 at
December 31, 1998, under capital lease agreements. Accumulated depreciation on
these assets totaled approximately $60,000 at December 31, 1998.
REVENUE RECOGNITION
The Company recognizes revenue from sales of containers upon delivery. Revenue
generated under container leases is recognized on a straight-line basis over the
term of the related lease. Accordingly, unearned leasing revenue at December 31,
1998, of $232,000 is recorded in deferred revenue in the accompanying balance
sheet. Revenue for container delivery, pick-up and hauling charges is recognized
as these related services are provided.
DEFERRED REVENUE
Included in deferred revenue in the accompanying balance sheet are prepayments
for portable storage container pickup charges totaling approximately $346,000
for the period ended December 31, 1998.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments has been determined by the
Company using available market information and valuation methodologies.
Considerable judgment is required in estimating fair values. Accordingly, the
estimates may not be indicative of the amounts the
11
<PAGE> 12
Company could realize in a current market exchange. The carrying amounts of cash
and cash equivalents, receivables, accounts payable and accrued liabilities
approximate fair value due to the short-term maturities of these instruments.
The notes receivable and obligations under capital leases approximate fair value
as rates on these instruments approximate market rates currently available for
instruments with similar terms and remaining maturities.
It is not practical to estimate fair value of note payable to related party and
due from related party as the agreements are between related parties.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
impact the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially expose the Company to concentrations of
credit risk, as defined by Statement of Financial Accounting Standards (SFAS)
No. 105, consist primarily of cash and receivables. Concentration of credit risk
with respect to receivables is limited due to the large number of customers
spread over a large geographic area in many industry segments. The Company's
receivables related to its sales operations are generally secured by the related
product sold to the customer. The Company's receivables related to its leasing
operations are primarily small month-to-month amounts generated from offsite
customers. The Company has the right to repossess the storage unit, including
any customer goods, for nonpayment.
The Company maintains amounts on deposit in financial institutions in excess of
federal deposit insurance limits.
INCOME TAXES
The Company, with the consent of the Member, is a limited liability company
which qualifies for tax treatment as a partnership for federal and state income
tax purposes. As a result, the Company's results of operations are included in
the income tax returns of the Member. Therefore, the accompanying financial
statements do not include any provisions for income taxes.
LONG-LIVED ASSETS
The Company periodically evaluates the carrying value of long-lived assets in
accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of. Under SFAS No. 121, long-lived
assets and certain identifiable intangible assets to be held and used in
operations are reviewed for impairment whenever events or circumstances indicate
that the carrying amount of an asset may not be fully recoverable. An
12
<PAGE> 13
impairment loss is recognized if the sum of the expected long-term undiscounted
cash flows is less than the carrying amount of the long-lived assets being
evaluated.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENT
During 1998, the Company adopted SFAS No. 131, Disclosures About Segments of an
Enterprise and Related Information, which established revised standards for the
reporting of financial and descriptive information about operating segments in
financial statements.
The Company has determined that it has one reportable operating segment.
Although the Company has eight operating segments which are managed based on the
regions of the United States in which each operates, each segment has similar
economic characteristics. Each regional operating segment leases and sells
portable storage units to similar classes of businesses and consumers in the
general geographic area of each branch. In addition, each segment exhibits
similar financial performance. As a result of the foregoing, the Company has
determined that it is appropriate to aggregate its operating segments into one
reportable segment consistent with the guidance in SFAS No. 131. Accordingly,
the Company has not presented separate financial information for each of its
operating segments as the Company's financial statements present its one
reportable segment.
(2) ACQUISITIONS:
NATIONAL SECURITY CONTAINERS, INC.
On April 9, 1998, the Company acquired certain assets from and assumed certain
liabilities of National. The acquisition was accounted for as a purchase in
accordance with Accounting Principles Board (APB) Opinion No. 16, and
accordingly, the purchased assets and assumed liabilities were recorded at their
estimated fair values at the date of acquisition. The accompanying financial
statements include the operations of the acquired company from the date of
acquisition. The aggregate cost of the National acquisition consisted of
$8,925,000 in cash and assumption of liabilities and acquisition costs of
$1,353,000.
The Company allocated the aggregate cost of the acquisition as follows:
<TABLE>
<S> <C>
Accounts receivable $ 1,050,000
Notes receivable 385,000
Portable storage units 8,531,000
Vehicles 312,000
--------------
$ 10,278,000
==============
</TABLE>
(3) NOTE PAYABLE TO RELATED PARTY:
The Company has a note payable to the Member of $4,500,000 for a distribution
payable to its Member. The note is due April 7, 2003 and bears interest at a
rate of 8% per annum with interest payments due monthly starting April 1999.
Accrued interest of approximately $262,000 related to this note is included in
accrued liabilities in the accompanying balance sheet.
13
<PAGE> 14
(4) RELATED PARTY TRANSACTIONS:
On April 10, 1998, the Company entered into a service agreement with TEP. The
agreement ends April 2001 and renews automatically each year thereafter unless
canceled by either party with written notice. The Company provides sales,
marketing, customer service, maintenance and service of TEP's facilities and
trailer inventory and general administrative services. Under this agreement, the
Company is to receive a reimbursement for costs incurred to perform these
functions. Amounts received under this agreement totaled $125,000 for the period
ended December 31, 1998, which has been reflected as an offset to leasing,
selling and general expenses on the accompanying statement of operations. In
addition, TEP reimburses the Company for direct expenses paid on TEP's behalf.
The Company has a receivable of approximately $147,000 at December 31, 1998, for
such expenses and is included in due from related party in the accompanying
balance sheet.
TEP owes the Company $275,000 for the purchase of assets from National that the
Company paid on TEP's behalf during 1998. The amount is included in due from
related party in the accompanying balance sheet.
(5) COMMITMENTS AND CONTINGENCIES:
OBLIGATIONS UNDER CAPITAL LEASES
The Company leases certain equipment under capital leases expiring through 2005.
These leases have been capitalized using interest rates ranging from
approximately 12% to 17%. The leases are secured by the equipment under lease.
These lease agreements require monthly payments of interest and principal of
approximately $1,000 per lease.
Future maturities under capital lease obligations, as of December 31, 1998, are
as follows:
<TABLE>
<S> <C>
1999 $ 152,203
2000 152,203
2001 135,187
2002 126,679
2003 68,965
Thereafter 88,068
-----------
Total minimum lease payments 723,305
Less - amount representing interest (211,254)
------------
$ 512,051
===========
</TABLE>
OPERATING LEASES
The Company leases its branch locations in Arizona, Colorado, Tennessee and
Texas under noncancelable operating leases which have varying monthly payments
and have expiration dates through 2002. The Company leases it Phoenix, Arizona,
facility on a month-to-month basis
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<PAGE> 15
requiring monthly payments of $3,300. The Company also leases certain equipment
under noncancelable operating leases. These leases require varying monthly
payments and have expiration dates through 2002.
Following is a schedule of future minimum lease payments required under
noncancelable operating leases as of December 31, 1998:
<TABLE>
<S> <C>
1999 $ 324,000
2000 291,000
2001 130,000
2002 28,000
-----------
$ 773,000
===========
</TABLE>
Rental expense totaled approximately $364,000 for the period ended December 31,
1998.
DEALER AGREEMENTS
The Company has dealers in Oklahoma and Arkansas. Under the dealer agreements,
the Company sells portable storage containers to the dealers who lease or resell
the containers to customers in these markets. The agreements also allow for the
dealers to lease portable storage containers under the Company's name. The
agreements automatically renew each October, unless canceled by either party
with written notice.
401(k) PLAN
The Company has a qualified 401(k) plan (the Plan) covering substantially all
its employees. All full-time employees who have completed 60 days of service are
eligible to participate in the Plan. Employees may defer up to 15% of their
compensation, not to exceed $10,000 per year. All employee contributions are
100% vested. The Company matches 25% of employee contributions up to 6%.
Participants vest in Company contributions as follows:
<TABLE>
<CAPTION>
Year of Percentage
Service Vested
------- ------
<S> <C>
1 0%
2 33.33
3 66.66
4 100
</TABLE>
The Company's matching contribution was approximately $3,000 for the period
ended December 31, 1998.
15
<PAGE> 16
LITIGATION
In the normal course of its business, the Company is subject to certain legal
proceedings and claims that arise in the conduct of its business. In
management's opinion, the amount of liability, if any, as a result of these
claims and proceedings is not likely to have a material effect on the financial
condition or results of operations of the Company.
(6) OPERATING AGREEMENT:
The Company operates under an operating agreement, which was entered into by its
original contributing Member on March 24, 1998. The Member made capital
contributions of $9,795,100. The Company registered in Arizona as a limited
liability company to acquire and refurbish modular buildings and used
ocean-going shipping containers for sale and lease.
The Company is managed by a manager (Manager) appointed by the Member.
Management of the Company and its business and affairs is vested solely in the
Manager and all decisions and actions concerning the Company and its affairs
shall be made or taken by the Manager.
No member shall withdraw any capital contributions or any money or other
property from the Company without the consent of the Manager. Distributions of
accumulated profits may be made in proportion to each member's percentage
interest at such times and in such amounts as determined by the Manager.
The Company shall continue until such time of dissolution. Dissolution will
occur upon the following: December 31, 2050, unless extended by the consent of
the Member; the sale of all or substantially all of the Company's assets; the
election by a majority in interest of the Member to dissolve the Company.
(7) SUBSEQUENT EVENT:
In April 1999, the Company entered into an agreement to sell substantially all
of its assets to Mobile Mini, Inc. for total consideration of $25.5 million. The
closing of the transaction is subject to a number of conditions but is expected
to close before the end of April 1999.
16
<PAGE> 17
MOBILE MINI, INC.
INTRODUCTION TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
The following Consolidated Balance Sheet, on a pro forma basis, as of March 31,
1999 assumes the completion of the Company's acquisition of National Security
Containers, L.L.C. (NSC) as of March 31, 1999. The Consolidated Statements of
Operations, on a pro forma basis, for the fiscal year ended December 31, 1998
and the three months ended March 31, 1999, give effect to the business
combination involving Mobile Mini, Inc. and National Security Containers, L.L.C.
as if the combination occurred at the beginning of each of those periods.
Such combination was accounted for as a purchase in accordance with Accounting
Principles Board (APB) Opinion No. 16, and accordingly, the purchased assets and
assumed liabilities have been recorded at their estimated fair values in the
proforma as adjusted financial statements.
Certain items affecting the purchase price and its allocation are preliminary.
Under the terms of the Purchase Agreement with NSC, there are certain
contractual adjustments which will be measured and the purchase allocation and
the purchase price could be adjusted accordingly. No adjustments will be
required unless the aggregate amount exceeds $100,000. The Consolidated
Financial Statements, on a pro forma basis, presented herein, do not reflect
any adjustments related to the contractual adjustment agreement, as none have
been identified to date.
The following information does not purport to present the combined financial
position or combined results of operations of Mobile Mini, Inc. and National
Security Containers, L.L.C. had the acquisition and the other events assumed
therein occurred on the dates specified, nor is it necessarily indicative of the
results of operations as they may be in the future or as they may have been had
the acquisition and such other events been consummated on the dates shown. The
Consolidated Financial Statements, on a pro forma basis, are based on certain
assumptions and adjustments described in the related Notes to Proforma
Consolidated Financial Statements and should be read in conjunction with the
Purchase Agreement and the audited historical financial statements and notes
thereto of Mobile Mini, Inc and National Security Containers, L.L.C.
17
<PAGE> 18
MOBILE MINI, INC.
BALANCE SHEET
MARCH 31, 1999
<TABLE>
<CAPTION>
Mobile Mini, Inc. National Security Pro Forma Pro Forma
Consolidated Containers L.L.P. Adjustments As Adjusted
----------------- ----------------- ------------------ --------------
<S> <C> <C> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS $ 1,048,031 $ 1,282,242 $ (18,265,321)(a) $ 2,330,273
18,265,321 (b)
RECEIVABLES, net 5,727,082 1,263,338 -- 6,990,420
INVENTORIES 10,413,737 94,784 -- 10,508,521
PORTABLE STORAGE UNIT LEASE FLEET, net 79,984,932 9,546,066 3,996,937 (c) 93,527,935
VEHICLES AND EQUIPMENT, net 20,829,331 1,037,869 (65,392)(d) 21,801,808
DEPOSITS AND PREPAID EXPENSES 586,682 427,062 250,000 (e) 1,263,744
OTHER ASSETS 3,155,272 -- 10,462,770 (f) 13,618,042
---------------- --------------- -------------- -------------
Total assets $ 121,745,067 $ 13,651,361 $ 14,644,315 $ 150,040,743
================ =============== ============== =============
LIABILITIES AND STOCKHOLDERS EQUITY
LIABILITIES:
ACCOUNTS PAYABLE $ 3,230,183 $ 292,823 $ -- $ 3,523,006
ACCRUED LIABILITIES 3,213,017 1,066,646 -- 4,279,663
LINE OF CREDIT 61,348,826 -- 18,265,321 (b) 79,614,147
NOTES PAYABLE 4,402,453 -- -- 4,402,453
NOTE PAYABLE TO RELATED PARTY -- 4,500,000 (4,500,000)(g) --
OBLIGATIONS UNDER CAPITAL LEASES 2,125,910 670,886 -- 2,796,796
SUBORDINATED NOTES, net 6,713,079 -- -- 6,713,079
DEFERRED INCOME TAXES 8,889,826 -- -- 8,889,826
---------------- --------------- -------------- -------------
Total liabilities 89,923,294 6,530,355 13,765,321 110,218,970
---------------- --------------- -------------- -------------
REDEEMABLE PREFERRED STOCK
Series B Redeemable preferred stock; $0.01 par
value 5,000,000 shares issued and outstanding -- -- 8,000,000 (h) 8,000,000
---------------- --------------- -------------- -------------
Total Redeemable Preferred Stock -- -- 8,000,000 8,000,000
---------------- --------------- -------------- -------------
STOCKHOLDERS EQUITY:
COMMON STOCK 81,704 -- -- 81,704
ADDITIONAL PAID IN CAPITAL 23,191,803 5,295,100 (5,295,100)(i) 23,191,803
RETAINED EARNINGS 8,548,266 1,825,906 (1,825,906)(i) 8,548,266
---------------- --------------- -------------- -------------
Total stockholders equity 31,821,773 7,121,006 (7,121,006) 31,821,773
---------------- --------------- -------------- -------------
Total liabilities and stockholders equity $ 121,745,067 $ 13,651,361 $ 14,644,315 $ 150,040,743
================ =============== ============== =============
</TABLE>
18
<PAGE> 19
MOBILE MINI, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
National Security
Mobile Mini, Inc. Containers L.L.P.
Consolidated From Inception
For the year ended (March 24, 1998) to Pro Forma Pro Forma
December 31, 1998 December 31, 1998 Adjustments as Adjusted
----------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Leasing $ 36,461,050 $ 5,544,572 $ -- $ 42,005,622
Sales 15,623,088 1,651,889 -- 17,274,977
Other 592,393 -- -- 592,393
----------------- ---------------- ----------- ------------
52,676,531 7,196,461 -- 59,872,992
COSTS AND EXPENSES:
Cost of sales 10,729,988 1,056,768 -- 11,786,756
Leasing, selling and general expenses 25,724,193 3,876,427 37,500 (a) 29,638,120
Depreciation and amortization 2,884,007 455,038 100,531 (b) 3,753,459
313,883 (c)
Organization Costs -- 60,000 -- 60,000
----------------- ---------------- ----------- ------------
INCOME FROM OPERATIONS 13,338,343 1,748,228 (451,914) 14,634,657
OTHER INCOME (EXPENSE):
Interest income 31,274 71,389 -- 102,663
Interest expense (5,896,339) (330,890) (657,346)(d) (6,884,575)
----------------- ---------------- ----------- ------------
INCOME BEFORE PROVISION FOR INCOME TAXES 7,473,278 1,488,727 (1,109,260) 7,852,745
PROVISION FOR INCOME TAXES 2,989,311 -- 151,787 (e) 3,141,098
----------------- ---------------- ----------- ------------
NET INCOME (LOSS) 4,483,967 1,488,727 (1,261,047) 4,711,647
PREFERRED STOCK DIVIDEND -- -- 440,000 (f) 440,000
----------------- ---------------- ----------- ------------
NET INCOME (LOSS) AVAILABLE TO COMMON
SHAREHOLDERS $ 4,483,967 $ 1,488,727 $(1,701,047) $ 4,271,647
================= ================ =========== ===========
EARNINGS PER SHARE:
Basic $ 0.57 $ 0.54
================= ===========
Diluted $ 0.53 $ 0.51
================= ===========
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
SHARE EQUIVALENTS OUTSTANDING:
Basic 7,839,623 7,839,623
================== ===========
Diluted 8,417,168 8,417,168
================== ===========
</TABLE>
19
<PAGE> 20
MOBILE MINI, INC.
STATEMENT OF OPERATIONS
Three Months Ended March 31, 1999
<TABLE>
<CAPTION>
Mobile Mini, Inc. National Security Pro Forma Pro Forma
Consolidated Containers L.L.P. Adjustments As Adjusted
-------------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Leasing $ 10,008,359 $ 1,725,542 -- $11,733,901
Sales 3,023,384 409,414 -- 3,432,798
Other 135,405 -- -- 135,405
-------------- -------------- --------- -----------
13,167,148 2,134,956 -- 15,302,104
COSTS AND EXPENSES:
Cost of sales 1,980,206 277,714 -- 2,257,920
Leasing, selling and general expenses 6,610,887 1,269,817 12,500 (a) 7,893,204
Depreciation and amortization 808,471 164,376 33,510 (b) 1,110,985
104,628 (c)
-------------- -------------- --------- -----------
INCOME FROM OPERATIONS 3,767,584 423,049 (150,638) 4,039,995
OTHER INCOME (EXPENSE):
Interest income 4,303 21,193 -- 25,496
Interest expense (1,586,773) (107,063) (222,349)(d) (1,916,185)
-------------- -------------- --------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES 2,185,114 337,179 (372,987) 2,149,306
PROVISION FOR INCOME TAXES 874,046 -- (14,323)(e) 859,723
-------------- -------------- --------- -----------
NET INCOME (LOSS) 1,311,068 337,179 (358,664) 1,289,583
PREFERRED STOCK DIVIDEND -- -- 100,000 (f) 100,000
-------------- -------------- --------- -----------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ 1,311,068 $ 337,179 $(458,664) $ 1,189,583
============== ============== ========= ===========
EARNINGS PER SHARE:
Basic $ 0.16 $ 0.15
============== ===========
Diluted $ 0.15 $ 0.14
============== ===========
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON SHARE
EQUIVALENTS OUTSTANDING:
Basic 8,151,426 8,151,426
============== ============
Diluted 8,627,473 8,627,473
============== ============
</TABLE>
20
<PAGE> 21
MOBILE MINI, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
BALANCE SHEET
(in thousands)
The total cost of the acquisition was made up of the following:
<TABLE>
<S> <C>
Cash $17,500
Mandatorily redeemable preferred stock 8,000
Other acquisition costs 765
--------
$26,265
========
</TABLE>
We have preliminarily allocated the purchase price as follows:
<TABLE>
<S> <C>
Tangible Assets $17,583
Goodwill 10,462
Covenant not to compete 250
Assumed Liabilities (2,030)
--------
$26,265
========
</TABLE>
PRO FORMA ADJUSTMENTS. The following adjustments have been made to the unaudited
pro forma consolidated balance sheet:
a) Cash payment to NSC for the purchase ($17,500) and payment of
acquisition costs ($765).
b) To reflect the effect of the indebtedness incurred as a result of the
acquisition.
c) To increase the value of tangible assets to fair market value based on
a third party appraisal.
d) To decrease the value of tangible assets to fair market value based on
management's estimates.
e) To record the Non-Competition Agreement.
f) To record as goodwill the excess of the purchase price over the net
assets acquired from NSC.
g) To eliminate the Note Payable to Related Party incurred by NSC which
the Company did not assume.
h) To record the mandatorily redeemable preferred stock issued in
connection with the acquisition of NSC.
i) To eliminate the equity accounts of NSC.
21
<PAGE> 22
MOBILE MINI, INC.
NOTES TO PRO FORMA CONSOLIDATED
STATEMENTS OF OPERATIONS
PRO FORMA ADJUSTMENTS. The following adjustments have been made to the unaudited
consolidated statements of operations:
(a) To amortize the non-competition agreement on a straight line basis
over 5 years.
(b) To increase depreciation for the increase in the containers and
decrease in the vehicles and equipment carrying value to fair value.
(c) To reflect the amortization of goodwill recorded in connection with
the acquisition, calculated based on a 25 year life.
(d) To eliminate the predecessor's interest expense related to debt not
assumed, and record interest expense on debt issued or assumed in
connection with the acquisition.
(e) To record the estimated tax provision associated with the pro forma
adjustments for the NSC acquisition and to record tax provision for
NSC which was a limited liability company for income tax purposes for
all periods prior to its acquisition by the Company. The effective
income tax rate used was 40%.
(f) To record dividends on the Series B Mandatorily Redeemable Preferred
Stock.
22
<PAGE> 23
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
MOBILE MINI, INC.
(Registrant)
Date: July 14, 1999 By /s/Larry Trachtenberg
------------- --------------------------
Larry Trachtenberg
Executive Vice President &
Chief Financial Officer
23
