-----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, IMtC1j8Eui4m1f8pIu5c5NaH1Xf/gY8VV2luDDo6ZJpcIyhCwty+L+NFVh3pufAU qdrbt45CIs0yFqTmuWZWnA== 0000032166-96-000003.txt : 19960116 0000032166-96-000003.hdr.sgml : 19960116 ACCESSION NUMBER: 0000032166-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951130 FILED AS OF DATE: 19960112 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: 96503087 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 NOVEMBER 30, 1995 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 January 12, 1996 registrant had 11,805,523 shares of common stock outstanding. ELECTRO RENT CORPORATION FORM 10-Q NOVEMBER 30, 1995 TABLE OF CONTENTS Page Part I: FINANCIAL INFORMATION Condensed Consolidated Statements of Income for the Three Months and Six Months Ended November 30, 1995 and November 30, 1994 3 Condensed Consolidated Balance Sheets at November 30, 1995 and May 31, 1995 4 Condensed Consolidated Statements of Cash Flows for the Three Months and Six Months Ended November 30, 1995 5 Notes to Condensed Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II: OTHER INFORMATION 9 SIGNATURES 10 Page 2 ELECTRO RENT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (000 omitted except per share data)
Three Months Ended Six Months Ended November 30 November 30 1995 1994 1995 1994 -------- -------- -------- -------- Revenues: Rentals and leases $ 29,825 $ 25,038 $ 58,438 $ 47,262 Sales of equipment and other revenues 4,738 5,713 10,486 11,277 -------- -------- -------- -------- Total revenues 34,563 30,751 68,924 58,539 -------- -------- -------- -------- Costs and expenses: Depreciation of equipment 10,118 9,428 19,814 17,495 Costs of revenues other than depreciation 5,055 4,830 10,815 9,708 Selling, general and administrative expenses 9,689 9,737 19,077 18,227 Interest 532 573 1,144 909 -------- -------- -------- -------- Total costs and expenses 25,394 24,568 50,850 46,339 -------- -------- -------- -------- Income before income taxes 9,169 6,183 18,074 12,200 Income taxes 3,759 2,535 7,410 5,002 -------- -------- -------- -------- Net income $ 5,410 $ 3,648 $ 10,664 $ 7,198 ======== ======== ======== ======== Net income per common and common equivalent share 0.44 0.30 $ 0.87 $ 0.59 ======== ======== ======== ======== Average common and common equivalent shares outstanding 12,332 12,134 12,326 12,114 ======== ======== ======== ======== See accompanying notes to condensed consolidated financial statements.
Page 3 ELECTRO RENT CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (000 omitted) ASSETS
November 30 May 31 1995 1995 -------- -------- Cash $ 1,850 $ 432 Accounts receivable, net 19,180 17,600 Rental and lease equipment, net of accumulated depreciation 119,541 118,192 Other property, net of accumulated depreciation and amortization 18,526 18,703 Other 7,169 7,982 -------- -------- $ 166,266 $ 162,909 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Bank borrowings $ 27,500 $ 36,100 Accounts payable 11,900 12,302 Accrued expenses 12,998 10,342 Deferred income taxes 10,866 11,977 -------- -------- Total liabilities 63,264 70,721 -------- -------- Shareholders' equity Common stock 8,753 8,597 Retained earnings 94,201 83,543 Cumulative translation adjustment 48 48 -------- -------- Total shareholders' equity 103,002 92,188 -------- -------- $ 166,266 $ 162,909 ======== ======== See accompanying notes to condensed consolidated financial statements.
Page 4 ELECTRO RENT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (000 omitted)
Six Months Ended November 30 1995 1994 -------- -------- Cash flows from operating activities: Net income $ 10,664 $ 7,198 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 20,526 18,047 Provision for losses on accounts receivable 341 178 Gain on sale of equipment (2,943) (3,090) Change in operating assets and liabilities: Increase in accounts receivable (1,921) (1,771) Decrease in other assets 628 1,101 Increase (decrease) in accounts payable 116 (3,157) Increase in accrued expenses 2,656 1,541 Decrease in deferred income taxes (1,111) (1,851) -------- -------- Net cash provided by operating activities 28,956 18,196 -------- -------- Cash flows from investing activities: Proceeds from sale of equipment 9,290 10,137 Purchase of subsidiary, net of cash acquired - (8,267) Payments for purchase of rental and lease equipment (28,028) (25,754) Payments for purchase of other property (350) (704) -------- -------- Net cash used in investing activities (19,088) (24,588) -------- -------- Cash flows from financing activities: Increase (decrease) in short-term bank borrowings (8,600) 5,147 Proceeds from issuance of common stock 156 14 Payments for repurchase of common stock (6) - -------- -------- Net cash provided by (used in) financing activities (8,450) 5,161 -------- -------- Net increase (decrease) in cash 1,418 (1,231) Cash at beginning of period 432 1,613 -------- -------- Cash at end of period $ 1,850 $ 382 ======== ======== 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. 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 12,332,000 and 12,134,000 for the three month periods ended November 30, 1995 and November 30, 1994, and 12,326,000 and 12,114,000 for the six month periods ended November 30, 1995 and November 30, 1994, respectively. On July 13, 1995 the Board of Directors declared a three-for-two stock split to be distributed August 18, 1995 to shareholders of record on July 31,1995. Earnings per share and shares outstanding have been restated to give retroactive effect to the stock split. Note 3 -- Interest and Income Taxes Paid - ------------------------------------------- Total interest paid during the six month period ended November 30, 1995 and November 30, 1994 was $1,168,000 and $1,256,000, respectively. Total income taxes paid during the six month period ended November 30, 1995 was $6,315,000 compared to $4,744,000 during the same period in the prior year. Note 4 -- Noncash Investing and Financing Activities - ------------------------------------------------------- The Company had acquired equipment totaling $9,625,000 and $10,143,000 as of November 30, 1995 and May 31, 1995, 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 November 30, 1995 investment in sales-type leases of $944,000 net of deferred interest of $65,000 is included in other assets. Interest income is recognized over the life of the lease using the interest method. Page 6 Note 6 -- Acquisition - ---------------------------- On September 30, 1994, the Company purchased all of the outstanding stock of Genstar Rental Electronics, Inc. (Genstar), a privately-held company engaged in the business of renting, leasing and selling computers, workstations and general purpose test and measurement equipment. The purchase price, based on Genstar's audited Net Worth at September 30, 1995, was $23.2 million, and consisted of cash and assumed debt. The acquisition has been accounted for by the purchase method and, accordingly, the results of operations of Genstar have been included with those of the Company since the date of acquisition. Page 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - -------------------------------------------------------------------- Results of Operations - ---------------------------- Total revenues increased 12% to $34,563,000 for the three month period ended November 30, 1995, over the same period last year, due to a 19% increase in rental and lease revenues, which was partially offset by a 17% decrease in sales and other revenues. For the six months ended November 30, 1995 total revenues increased 18% to $68,924,000, as a result of 24% higher rental and lease revenues, which was partially offset by 7% lower sales and other revenues, as compared to the same period last year. The increase in rental and lease revenues for the three and six month periods is due primarily to inclusion of Genstar's operations since its acquisition on September 30, 1994, and increases in average equipment utilization and rental yield. The decrease in sales of equipment is due to a reduction in equipment available for sale resulting from higher rental utilization, which was partially offset by increased sales related to Genstar. For the three and six month periods ended November 30, 1995 depreciation expense increased 7% and 13%, respectively, as compared to the prior year, primarily as a result of the Genstar acquisition, but improved utilization kept the growth rates lower than those of rental and lease revenues. Costs of revenues other than depreciation increased 5% for the second quarter and 11% for the first six months due to the Genstar acquisition and also due to increased parts expense. Selling, general and administrative expenses were relatively unchanged for the second quarter reflecting consolidation savings realized from the Genstar acquisition, while for the first six months the 5% increase results from the inclusion of Genstar beginning in October 1994, which was partially offset by consolidation savings fully realized in fiscal 1996. Interest expense decreased 7% for the second quarter reflecting lower borrowings due to strong cash flows, in spite of increased purchases of equipment. For the first six months interest expense increased 26% primarily due to the Genstar acquisition borrowings. Financial Condition and Liquidity - ----------------------------------- During the first six months of fiscal 1996, net cash provided by operating activities was $28,956,000, compared to $18,196,000 for the same period last year. This increase can be substantially attributed to increased net income and depreciation, as well as lower payments of accounts payable and accrued expenses. Net cash used in investing activities for the six month period decreased from $24,588,000 in fiscal 1995 to $19,088,000 in fiscal 1996 primarily as a result of the purchase of Genstar in the prior year, which was partially offset by increased equipment purchases in fiscal 1996. Short-term bank borrowings decreased $8,600,000 during the first half of fiscal 1996 as a result of improved cash flows, as compared with an increase of $5,147,000 in the prior year period resulting primarily from the Genstar purchase. The Company expects cash flows as recorded in the first half 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 second 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 current equipment. Page 8 Part II. OTHER INFORMATION - ---------------------------- Items 1. through 3. - ---------------------------- Nothing to report. Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ Nothing to report. 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: January 12, 1996 /s/ Daniel Greenberg Daniel Greenberg Chairman and Chief Executive Officer DATED: January 12, 1996 /s/ William Weitzman William Weitzman President and Chief Operating Officer DATED: January 12, 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 JUN-30-1996 JUN-1-1995 NOV-30-1995 6-MOS 1,850 0 20,497 1,317 0 0 262,220 124,153 166,266 0 0 0 0 8,753 48 166,266 10,486 68,924 10,815 49,706 0 0 1,144 18,074 7,410 10,664 0 0 0 10,664 0.87 0.87
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