-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BPUcnPYJeE1l016wuceGnYDuxyGAznXn+ReIlQ1nPhSaon4fXKj2zeg5IZFB7OBe D+xbVYEDlcS01X8s7jcW0Q== 0000032166-96-000012.txt : 19961015 0000032166-96-000012.hdr.sgml : 19961015 ACCESSION NUMBER: 0000032166-96-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961011 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELECTRO RENT CORP CENTRAL INDEX KEY: 0000032166 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 952412961 STATE OF INCORPORATION: CA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09061 FILM NUMBER: 96642111 BUSINESS ADDRESS: STREET 1: 6060 SEPULVEDA BLVD CITY: VAN NUYS STATE: CA ZIP: 91411 BUSINESS PHONE: 8187862525 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED AUGUST 31, 1996 COMMISSION FILE NUMBER 0-9061 ELECTRO RENT CORPORATION Exact name of registrant as specified in its charter CALIFORNIA 95-2412961 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6060 SEPULVEDA BOULEVARD VAN NUYS, CALIFORNIA 91411-2501 (Address of principal executive offices) (Zip code) (818) 786-2525 (Registrant's telephone number, including area code) 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 At October 2, 1996 registrant had 11,953,363 shares of common stock outstanding. ELECTRO RENT CORPORATION FORM 10-Q AUGUST 31, 1996 TABLE OF CONTENTS Page Part I: FINANCIAL INFORMATION Condensed Consolidated Statements of Income for the Three Months ended August 31, 1996 and August 31, 1995 3 Condensed Consolidated Balance Sheets at August 31, 1996 and May 31, 1996 4 Condensed Consolidated Statements of Cash Flows for the Three Months Ended August 31, 1996 and August 31, 1995 5 Notes to Condensed Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II: OTHER INFORMATION 8 SIGNATURES 9 Page 2 ELECTRO RENT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (000 omitted except per share data)
Three Months Ended August 31 1996 1995 --------- --------- Revenues: Rentals and leases $ 32,380 $ 28,613 Sales of equipment and other revenues 5,764 5,748 --------- --------- Total revenues 38,144 34,361 --------- --------- Costs and expenses: Depreciation of equipment 11,007 9,696 Costs of revenues other than depreciation 5,563 5,760 Selling, general and administrative expenses 10,179 9,388 Interest 300 612 --------- --------- Total costs and expenses 27,049 25,456 --------- --------- Income before income taxes 11,095 8,905 Income taxes 4,548 3,651 --------- --------- Net income $ 6,547 $ 5,254 ========= ========= Net income per common and common equivalent share $ 0.53 $ 0.43 ========= ========= Average common and common equivalent shares outstanding 12,426 12,224 ========= ========= See accompanying notes to condensed consolidated financial statements.
Page 3 ELECTRO RENT CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (000 omitted) ASSETS
August 31 May 31 1996 1996 --------- --------- Cash $ 926 $ 1,394 Accounts receivable, net 21,064 20,598 Rental and lease equipment, net of accumulated depreciation 123,350 122,206 Other property, net of accumulated depreciation and amortization 19,214 19,323 Other 7,847 7,907 --------- --------- $ 172,401 $ 171,428 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Bank borrowings $ 12,200 $ 16,800 Accounts payable 12,068 16,433 Accrued expenses 15,306 11,876 Deferred income taxes 11,562 11,696 --------- --------- Total liabilities 51,136 56,805 --------- --------- Shareholders' equity Common stock 9,536 9,441 Retained earnings 111,729 105,182 --------- --------- Total shareholders' equity 121,265 114,623 --------- --------- $ 172,401 $ 171,428 ========= ========= See accompanying notes to condensed consolidated financial statements.
Page 4 ELECTRO RENT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (000 omitted)
Three Months Ended August 31 1996 1995 --------- --------- Cash flows from operating activities: Net income $ 6,547 $ 5,254 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,440 10,098 Provision for losses on accounts receivable 188 173 Gain on sale of equipment (1,573) (1,675) Change in operating assets and liabilities: Increase in accounts receivable (654) (1,734) Increase (decrease) in other assets (90) 109 Decrease in accounts payable (932) (1,318) Increase in accrued expenses 3,430 3,370 Decrease in deferred income taxes (134) (548) --------- --------- Net cash provided by operating activities 18,222 13,729 --------- --------- Cash flows from investing activities: Proceeds from sale of equipment 5,183 5,247 Payments for purchase of rental and lease equipment (19,194) (13,789) Payments for purchase of other property (174) (150) --------- --------- Net cash used in investing activities (14,185) (8,692) --------- --------- Cash flows from financing activities: Decrease in short-term bank borrowings (4,600) (4,900) Proceeds from issuance of common stock 95 119 Payments for repurchase of common stock - (6) --------- --------- Net cash used in financing activities (4,505) (4,787) --------- --------- Net increase (decrease) in cash (468) 250 Cash at beginning of period 1,394 432 --------- --------- Cash at end of period $ 926 $ 682 ========= ========= See accompanying notes to condensed consolidated financial statements. Page 5 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1 -- Basis of Presentation - ----------------------------------- The unaudited consolidated financial statements are condensed and do not contain all information required by generally accepted accounting principles to be included in a full set of financial statements. The condensed consolidated financial statements include Electro Rent Corporation and the accounts of its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. The information furnished reflects all adjustments which are, in the opinion of management, necessary to a fair statement of the financial position and the results of operations of the Company. All such adjustments are of a normal recurring nature. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. Note 2 -- Net Income Per Common and Common Equivalent Share - ----------------------------------- Earnings per share were computed based on the weighted average number of common and common equivalent shares outstanding of 12,426,000 and 12,224,000 for the three month periods ended August 31, 1996 and 1995, respectively. Note 3 -- Interest and Income Taxes Paid - ------------------------------------------- Total interest paid during the three month period ended August 31, 1996 and 1995 was $296,000 and $612,000, respectively. Total income taxes paid during the three month period ended August 31, 1996 was $583,000 compared to $3,946,000 during the same period in the prior year. Note 4 -- Noncash Investing and Financing Activities - ------------------------------------------------------- The Company had acquired equipment totaling $12,399,000 and $15,832,000 as of August 31, 1996 and May 31, 1996, respectively, which was paid for during subsequent quarters. Note 5 -- Capital Leases - ---------------------------- The Company has certain customer leases providing bargain purchase options with a portion of lease revenue deferred until option exercise. At August 31, 1996 investment in sales-type leases of $1,044,000 net of deferred interest of $59,000 is included in other assets. Interest income is recognized over the life of the lease using the interest method. Page 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - -------------------------------------------------------------------- Results of Operations - ---------------------------- Total revenues increased 11% to $38,144,000 for the three month period ended August 31, 1996, over the same period last year, due to a 13% increase in rental and lease revenues, while sales and other revenues were essentially unchanged. The increase in rental and lease revenues for the first three months is primarily due to increases in rental equipment utilization, personal computer leasing and lease yields. Sales of equipment remained unchanged due to a reduction in equipment available for sale resulting from higher rental equipment utilization. For the three month period ended August 31, 1996 depreciation expense increased 14%, as compared to the prior year, due to increases in the pool of equipment for rental and lease. Costs of revenues other than depreciation decreased 3% for the first quarter mostly due to lower parts and accessories expense. Selling, general and administrative expenses increased 8% in the first quarter compared to last year, due in part to a rise in the total number of employees. The increase in staffing can be attributed to opening of new offices, the purchase of LDI in March 1996, and the general staff expansion associated with greater business volume. Interest expense decreased 51% in the first quarter reflecting lower borrowings due to strong cash flows. Financial Condition and Liquidity - ----------------------------------- During the first three months of fiscal 1997, net cash provided by operating activities was $18,222,000, compared to $13,729,000 for the same period last year. This increase can be substantially attributed to increased net income, depreciation, and receivables collections, as well as lower payments of accounts payable. Net cash used in investing activities for the three month period increased from $8,692,000 in fiscal 1996 to $14,185,000 in fiscal 1997, primarily due to substiantially greater payments for purchase of rental and lease equipment. Short-term bank borrowings decreased $4,600,000 during the first three months of fiscal 1997 as a result of continued positive cash flows, which compared with a $4,900,000 decrease in the prior year period. The Company expects cash flows as recorded in the first three months to continue at approximately the same levels for the rest of the fiscal year, if the Company's average equipment utilization and rental yield continue to remain at the comparatively high levels experienced during the the first quarter. While this is a positive indicator for future periods, the Company must continue to purchase substantial amounts of new product to meet customers' demands for technologically up-to-date equipment. Part II. OTHER INFORMATION - ---------------------------- Items 1. through 3. - ---------------------------- Nothing to report. Item 4. Submission of Matters to a Vote of Security Holders (a) On October 3, 1996, the 1996 Annual Meeting of Shareholders of the Registrant was held. Proxies pursuant to Regulation 14A were solicited in connection with the meeting. 10,982,943 shares were present in person or by proxy out of a total of 11,927,846 shares issued and outstanding and eligible to vote on the record date. (b) The meeting involved the election of directors. The following directors were elected by the number of affirmative votes set opposite their respective names: Name Number of Votes Gerald D. Barrone 10,944,019 Nancy Y. Bekavac 10,940,145 Daniel Greenberg 10,944,551 Joseph J. Kearns 10,944,154 Michael R. Peevey 10,939,464 Will Richeson, Jr. 10,944,019 William Weitzman 10,944,551 (c) Other matters submitted to a vote of security holders: The shareholders voted to approve the Electro Rent Corporation 1996 Stock Option Plan. 10,199,344 shares were voted for, 560,288 were voted against, and 47,909 shares abstained. The shareholders voted to approve the Electro Rent Corporation 1996 Director Option Plan. 10,324,493 shares were voted for, 431,805 were voted against, and 51,243 shares abstained. The shareholders ratified the appointment of Arthur Andersen LLP as the registrant's independent public accountants for the current year. 10,937,722 shares were voted for, 9,728 were voted against, and 35,493 shares abstained from voting. Item 5. - ---------------------------- Nothing to report. Item 6. Exhibits and Reports on Form 8-K - ------------------------------------------- Nothing to report. Page 9 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 thereto duly authorized. ELECTRO RENT CORPORATION DATED: October 3, 1996 /s/ Daniel Greenberg Daniel Greenberg Chairman and Chief Executive Officer DATED: October 3, 1996 /s/ William Weitzman William Weitzman President and Chief Operating Officer DATED: October 3, 1996 /s/ Craig R. Jones Craig R. Jones Vice President and Chief Financial Officer Page 10
EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 MAY-31-1997 JUN-1-1996 AUG-31-1996 3-MOS 926 0 22,692 1,628 0 0 270,657 128,093 172,401 0 0 0 0 9,536 0 172,401 5,764 38,144 5,563 26,749 0 0 300 11,095 4,548 6,547 0 0 0 6,547 0.53 0.53
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