8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

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) October 6, 2006

Electro Rent Corporation

(Exact Name of Registrant as Specified in Charter)

California	0-9061	95-2412961
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6060 Sepulveda Boulevard, Van Nuys, CA	91411-2501
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (818) 787-2100

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02(a). Results of Operations and Financial Condition

The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.”

On October 6, 2006, Electro Rent Corporation issued a press release announcing its financial results for the fiscal quarter ended August 31, 2006. A copy of the press release is furnished as Exhibit 99.1 to this report.

Item 9.01. Financial Statements and Exhibits.

     (c) Exhibits.

99.1 Press release dated October 6, 2006.

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SIGNATURES

     Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Electro Rent Corporation
Date: October 10, 2006	By:	/s/ Craig R. Jones
		Craig R. Jones
		Vice President and Chief Financial Officer

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EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Investor Contact:		Company Contact:
	Neil Berkman		Daniel Greenberg
	Berkman Associates		Chairman & CEO
	(310) 826-5051		Electro Rent Corporation
	info@BerkmanAssociates.com		(818) 786-2525

Electro Rent Corporation Reports
Fiscal 2007 First Quarter Results

     VAN NUYS, CALIFORNIA, October 6, 2006 — Electro Rent Corporation (NASDAQ:ELRC) today announced financial results for the first quarter of fiscal 2007.

     “Solid progress in our core test and measurement (T&M) equipment rental and lease business and in our various growth initiatives helped drive a 20% increase in rental and lease revenue and a 13% increase in total revenue for the first quarter compared to the first quarter of last year,” said Chairman and Chief Executive Officer Daniel Greenberg.

     “Profitability, however, did not live up to our expectations. Costs were higher and revenue lower at Rush Computer Rentals than we had anticipated for the period, as we grappled with integrating two different cultures and learning the trade show business. Also during the summer we navigated unfamiliar equipment rental patterns and other inevitable bumps in the road that come with gaining experience in our new operations in China and Europe, even as we continued to invest the resources required to establish the proper foundation for our new global T&M business and our growing domestic operations. We expect more moderate growth in SG&A for the balance of the fiscal year.

     “The strength of our T&M business as we move into the second fiscal quarter is an encouraging sign that we are on the right road for the future. We recently took another important step to expand this business with the signing of distribution agreements with three leading manufacturers for a range of basic equipment to be sold through our new Distribution Products Group. New product distribution complements our T&M equipment rental, lease and used product sales businesses, and makes Electro Rent a more comprehensive supplier than ever before.

     “We are increasingly confident that the global operating platform we are building will permit us to more effectively lever our operating and logistical capabilities and support our growth for the long term,” Greenberg said.

First Quarter Results

     For the three months ended August 31, 2006, total revenues increased 13% to $30.0 million compared to $26.6 million for the first quarter of fiscal 2006.

     Rental and lease revenue increased 20% to $25.4 million compared to $21.2 million last year, reflecting continued strong demand and improved rental rates for T&M equipment in the Company’s aerospace, telecommunications and wireless communications markets, the contributions of Electro Rent’s operations in China and Europe, and the acquisition of Rush Computer Rentals, Inc. in January 2006.

(more)

Electro Rent Corporation Reports Fiscal 2007 First Quarter Results
October 6, 2006
Page Two

     Revenue from equipment sales and other revenues decreased 15% compared to the first quarter of fiscal 2006, to $4.6 million from $5.4 million, as improved conditions in the Company’s rental business have reduced the incentive to sell equipment from its rental pool.

     Operating expenses increased 21% to $23.1 million from $19.1 million for the first quarter of fiscal 2006. In addition to higher depreciation expense for this year’s first quarter compared to prior year stemming from increased purchases of new equipment during the past few quarters, this increase reflected higher SG&A expenses associated with the acquisition of Rush Computer Rentals and investments to support the growth of Electro Rent’s operations in China and Europe.

     Net income for the first quarter of fiscal 2007 was $4.8 million, or $0.18 per diluted share. This compares to net income for the first quarter of fiscal 2006 of $5.0 million, or $0.19 per diluted share.

     Equipment purchases increased to $18.8 million for this year’s first quarter compared to $17.4 million for the first quarter of fiscal 2006. The book value of Electro Rent’s equipment pool rose to $147 million at August 31, 2006 from $140.1 million at May 31, 2006.

     Cash, cash equivalents and marketable securities were $81.6 million at August 31, 2006 compared to $81.5 million at fiscal 2006 year end. Electro Rent has no debt. Shareholders’ equity increased to $227 million at August 31, 2006 from $221.8 million at May 31, 2006.

About Electro Rent

     Electro Rent Corporation (www.ElectroRent.com) is one of the largest nationwide organizations devoted to the short-term rental and leasing of personal computers, servers and general purpose electronic test equipment.

“Safe Harbor” Statement:

     Except for the historical statements and discussions above, our statements above constitute forward-looking statements within the meaning of section 21E of the Securities Exchange Act of 1934. These forward-looking statements reflect our management’s current views with respect to future events and financial performance; however, you should not put undue reliance on these statements. When used, the words “anticipates,” “believes,” “expects,” “intends,” “future,” and other similar expressions identify forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties. We believe our management’s assumptions are reasonable; nonetheless, it is likely that at least some of these assumptions will not come true. Accordingly, our actual results will probably differ from the outcomes contained in any forward-looking statement, and those differences could be material. Factors that could cause or contribute to these differences include, among others, those risks and uncertainties discussed in our periodic reports on Form 10-K and 10-Q and our other filings with the Securities and Exchange Commission. Should one or more of the risks discussed, or any other risks, materialize, or should one or more of our underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, expected or projected. In light of the risks and uncertainties, there can be no assurance that any forward-looking statement will in fact prove to be correct. We undertake no obligation to update or revise any forward-looking statements.

* * * * *

Electro Rent Corporation

Condensed Consolidated Statements of Income

(Unaudited) (000 omitted except per share data)

	Three Months Ended
	August 31,
	2006		2005
Revenues:
Rentals and leases	$	25,448	$	21,156
Sales of equipment and other revenues		4,576		5,394
Total revenues		30,024		26,550
Operating expenses:
Depreciation of rental and lease equipment		9,882		8,452
Costs of revenues other than depreciation		2,616		2,663
Selling, general & administrative expenses		10,578		7,944
Total operating expenses		23,076		19,059
Operating profit		6,948		7,491
Interest and investment income, net		939		559
Income before income taxes		7,887		8,050
Income taxes		3,128		3,065
Net income	$	4,759	$	4,985
Earnings per share
Basic	$	0.19	$	0.20
Diluted	$	0.18	$	0.19
Shares used in per share calculation
Basic		25,550		25,119
Diluted		25,944		25,571

Electro Rent Corporation

Condensed Consolidated Balance Sheets

(unaudited) (000 omitted)

	Aug. 31,		May 31,
	2006		2006
Assets
Cash and cash equivalents	$	58,580	$	58,748
Marketable securities		23,050		22,750
Accounts receivable, net		14,475		14,001
Rental and lease equipment, net		146,980		140,108
Other property, net		15,362		15,528
Goodwill		2,028		2,083
Intangibles, net		2,023		2,127
Other		3,910		4,337
Total assets	$	266,408	$	259,682
Liabilities and Shareholders’ Equity
Liabilities:
Accounts payable	$	11,378	$	11,344
Accrued expenses		9,507		8,595
Deferred revenue		3,212		3,303
Deferred tax liability		15,381		14,599
Total liabilities		39,478		37,841
Shareholders’ equity
Common stock		26,681		26,351
Retained earnings		200,249		195,490
Total shareholders’ equity		226,930		221,841
Total liabilities & shareholders’ equity	$	266,408	$	259,682