e10vq
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2007
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 1-12804
(Exact name of registrant as specific in its charter)
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Delaware
(State or other jurisdiction of
incorporation or organization)
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86-0748362
(IRS Employer Identification No.) |
7420 S. Kyrene Road, Suite 101
Tempe, Arizona 85283
(Address of principal executive offices)
(480) 894-6311
(Registrants 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 þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer or a non-accelerated filer. See definition of accelerated filer and large accelerated filer
in Rule 12b-d of the Exchange Act.
Large accelerated filer þ Accelerated filer o Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined by Rule
12b-2 of the Securities Exchange Act of 1934). Yes o No þ
At August 3, 2007, there were outstanding 36,386,657 shares of the issuers common stock.
MOBILE MINI, INC.
INDEX TO FORM 10-Q FILING
FOR THE QUARTER ENDED JUNE 30, 2007
TABLE OF CONTENTS
2
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
MOBILE MINI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except per share data)
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December 31, 2006 |
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June 30, 2007 |
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(Note A) |
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(unaudited) |
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ASSETS |
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Cash and cash equivalents |
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$ |
1,370 |
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$ |
4,135 |
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Receivables, net of allowance for doubtful accounts of
$5,008 and $4,587 at December 31, 2006 and June 30,
2007, respectively |
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34,953 |
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35,592 |
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Inventories |
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27,863 |
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32,601 |
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Lease fleet, net |
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697,439 |
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752,636 |
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Property, plant and equipment, net |
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43,072 |
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52,959 |
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Deposits and prepaid expenses |
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9,553 |
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9,025 |
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Other assets and intangibles, net |
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9,324 |
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10,525 |
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Goodwill |
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76,456 |
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79,040 |
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Total assets |
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$ |
900,030 |
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$ |
976,513 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Liabilities: |
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Accounts payable |
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$ |
18,928 |
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$ |
19,071 |
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Accrued liabilities |
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39,546 |
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36,656 |
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Line of credit |
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203,729 |
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192,812 |
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Notes payable |
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781 |
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89 |
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Obligations under capital leases |
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35 |
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24 |
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Senior Notes |
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97,500 |
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149,336 |
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Deferred income taxes |
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97,507 |
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108,792 |
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Total liabilities |
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458,026 |
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506,780 |
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Commitments and contingencies |
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Stockholders equity: |
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Common stock; $.01 par value, 95,000 shares authorized,
35,898 and 36,377 issued and outstanding at December
31, 2006 and June 30, 2007, respectively |
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359 |
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364 |
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Additional paid-in capital |
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268,456 |
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276,124 |
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Retained earnings |
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169,718 |
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188,746 |
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Accumulated other comprehensive income |
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3,471 |
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4,499 |
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Total stockholders equity |
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442,004 |
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469,733 |
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Total liabilities and stockholders equity |
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$ |
900,030 |
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$ |
976,513 |
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See accompanying notes to the condensed consolidated financial statements.
3
MOBILE MINI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(unaudited)
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Three Months Ended June 30, |
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2006 |
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2007 |
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Revenues: |
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Leasing |
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$ |
59,331 |
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$ |
70,362 |
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Sales |
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6,590 |
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7,538 |
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Other |
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377 |
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350 |
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Total revenues |
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66,298 |
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78,250 |
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Costs and expenses: |
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Cost of sales |
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4,152 |
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5,160 |
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Leasing, selling and general expenses |
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33,849 |
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40,335 |
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Depreciation and amortization |
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4,004 |
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5,113 |
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Total costs and expenses |
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42,005 |
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50,608 |
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Income from operations |
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24,293 |
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27,642 |
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Other income (expense): |
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Interest income |
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372 |
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29 |
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Interest expense |
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(5,740 |
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(6,100 |
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Debt extinguishment expense |
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(6,425 |
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(11,224 |
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Foreign currency exchange |
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(51 |
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(1 |
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Income before provision for income taxes |
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12,449 |
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10,346 |
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Provision for income taxes |
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4,791 |
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4,015 |
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Net income |
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$ |
7,658 |
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$ |
6,331 |
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Earnings per share: |
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Basic |
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$ |
0.22 |
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$ |
0.18 |
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Diluted |
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$ |
0.21 |
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$ |
0.17 |
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Weighted average number of common and
common share equivalents outstanding: |
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Basic |
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35,191 |
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35,812 |
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Diluted |
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36,297 |
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36,840 |
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See accompanying notes to the condensed consolidated financial statements.
4
MOBILE MINI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(unaudited)
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Six Months Ended June 30, |
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2006 |
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2007 |
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Revenues: |
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Leasing |
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$ |
110,865 |
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$ |
136,415 |
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Sales |
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11,118 |
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14,192 |
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Other |
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735 |
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663 |
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Total revenues |
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122,718 |
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151,270 |
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Costs and expenses: |
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Cost of sales |
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7,066 |
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9,619 |
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Leasing, selling and general expenses |
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63,846 |
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77,173 |
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Depreciation and amortization |
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7,592 |
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10,004 |
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Total costs and expenses |
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78,504 |
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96,796 |
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Income from operations |
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44,214 |
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54,474 |
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Other income (expense): |
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Interest income |
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424 |
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37 |
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Interest expense |
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(12,186 |
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(12,053 |
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Debt extinguishment expense |
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(6,425 |
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(11,224 |
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Foreign currency exchange |
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(51 |
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(1 |
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Income before provision for income taxes |
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25,976 |
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31,233 |
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Provision for income taxes |
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10,114 |
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12,205 |
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Net income |
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$ |
15,862 |
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$ |
19,028 |
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Earnings per share: |
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Basic |
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$ |
0.48 |
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$ |
0.53 |
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Diluted |
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$ |
0.47 |
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$ |
0.52 |
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Weighted average number of common and
common share equivalents outstanding: |
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Basic |
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32,951 |
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35,727 |
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Diluted |
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34,001 |
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36,743 |
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See accompanying notes to the condensed consolidated financial statements.
5
MOBILE MINI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
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Six Months Ended June 30, |
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2006 |
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2007 |
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Cash Flows From Operating Activities: |
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Net income |
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$ |
15,862 |
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$ |
19,028 |
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Adjustments to reconcile income to net cash provided by operating
activities: |
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Debt extinguishment expense |
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1,438 |
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2,298 |
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Provision for doubtful accounts |
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2,032 |
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960 |
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Amortization of deferred financing costs |
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436 |
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428 |
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Share-based compensation expense |
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1,535 |
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2,150 |
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Depreciation and amortization |
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7,592 |
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10,004 |
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Gain on sale of lease fleet units |
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(2,232 |
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(2,741 |
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Loss on disposal of property, plant and equipment |
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40 |
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32 |
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Deferred income taxes |
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9,870 |
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11,153 |
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Foreign currency exchange loss |
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51 |
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1 |
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Changes in certain assets and liabilities, net of effect of businesses
acquired: |
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Receivables |
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(5,924 |
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(1,497 |
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Inventories |
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(2,373 |
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(4,070 |
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Deposits and prepaid expenses |
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294 |
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547 |
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Other assets and intangibles |
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(3 |
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(126 |
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Accounts payable |
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1,594 |
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571 |
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Accrued liabilities |
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(923 |
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(3,016 |
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Net cash provided by operating activities |
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29,289 |
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35,722 |
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Cash Flows From Investing Activities: |
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Cash paid for businesses acquired |
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(59,496 |
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(6,066 |
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Additions to lease fleet, excluding acquisitions |
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(60,442 |
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(64,164 |
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Proceeds from sale of lease fleet units |
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6,287 |
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7,639 |
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Additions to property, plant and equipment |
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(3,872 |
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(12,538 |
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Proceeds from sale of property, plant and equipment |
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61 |
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64 |
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Net cash used in investing activities |
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(117,462 |
) |
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(75,065 |
) |
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Cash Flows From Financing Activities: |
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Net borrowings (repayments) under lines of credit |
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23,159 |
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(10,917 |
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Proceeds from issuance of 6.785% Senior Notes |
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149,322 |
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Redemption of 9.5% Senior Notes |
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(52,500 |
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(97,500 |
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Deferred financing costs |
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(1,629 |
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(3,604 |
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Principal payments on notes payable |
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(608 |
) |
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(692 |
) |
Principal payments on capital lease obligations |
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(4 |
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(10 |
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Issuance of common stock, net |
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122,100 |
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5,175 |
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Net cash provided by financing activities |
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90,518 |
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41,774 |
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Effect of exchange rate changes on cash |
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146 |
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334 |
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Net increase in cash |
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2,491 |
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2,765 |
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Cash at beginning of period |
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207 |
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1,370 |
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Cash at end of period |
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$ |
2,698 |
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$ |
4,135 |
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Supplemental Disclosure of Cash Flow Information: |
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Interest rate swap changes in value charged to equity |
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$ |
233 |
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$ |
202 |
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See accompanying notes to the condensed consolidated financial statements.
6
MOBILE MINI, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE A Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in
conformity with U.S. generally accepted accounting principles applicable to interim financial
information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. In the opinion of management, all
adjustments (which include normal and recurring adjustments) necessary to present fairly the
financial position, results of operations, and cash flows for all periods presented have been made.
All significant inter-Company balances and transactions have been eliminated.
The local currency of our foreign operations are converted to U.S. currency for our condensed
consolidated financial statements for each period being presented and we are subject to foreign
exchange rate fluctuations in connection with our European and Canadian operations.
The condensed consolidated balance sheet at December 31, 2006, has been derived from the audited
consolidated financial statements at that date but does not include all of the information and
footnotes required by accounting principles generally accepted in the United States for complete
financial statements.
The results of operations for the six-month period ended June 30 2007, are not necessarily
indicative of the operating results that may be expected for the entire year ending December 31,
2007. Historically, Mobile Mini experiences some seasonality each year which has caused lower
utilization rates for our lease fleet and a marginal decrease in cash flow during the first half of
the year. These condensed consolidated financial statements should be read in conjunction with our
December 31, 2006, consolidated financial statements and accompanying notes thereto, which are
included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC)
on March 1, 2007.
NOTE B Recent Accounting Pronouncements
In June 2006, the Financial Accounting Standards Board (FASB) issued Financial Interpretation No.
(FIN) 48, Accounting for Uncertainty in Income Taxes, which clarifies the accounting for
uncertainty in income taxes recognized in an enterprises financial statements in accordance with
FASB Statement No. 109, Accounting for Income Taxes. The interpretation prescribes a recognition
threshold and measurement attribute for the financial statement recognition and measurement of a
tax position taken or expected to be taken in a tax return. FIN 48 is effective for fiscal years
beginning after December 15, 2006. We have adopted this interpretation as of January 1, 2007.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurement (SFAS No. 157). SFAS No.
157 defines fair value, establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurements, but does not require
any new fair value measurement. SFAS No. 157 is effective for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years. We are in the process of
determining the effect, if any, the adoption of SFAS No. 157 will have on our consolidated
financial statements. Because Statement No. 157 does not require any new fair value measurements
or remeasurements of previously computed fair values, we do not believe the adoption of this
Statement will have a material effect on our results of operations or financial condition.
On February 15, 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities (SFAS No. 159). Under this Standard, we may elect to report financial
instruments and certain other items at fair value on a contract-by-contract basis with changes in
value reported in earnings. This election is irrevocable. SFAS No. 159 provides an opportunity to
mitigate volatility in reported earnings that is caused by measuring hedged assets and liabilities
that were previously required to use a different accounting method than the related hedging
contracts when the complex provisions of SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, hedge accounting are not met. SFAS No. 159 is effective for years beginning
after November 15, 2007. We are currently evaluating the potential impact of adopting this
Standard.
7
MOBILE MINI, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited) Continued
In June 2007, the FASB ratified the Emerging Issues Task Force (EITF) consensus on EITF Issue No.
06-11, Accounting for Income Tax Benefits on Dividends on Share-Based Payment Awards. This EITF
indicates tax benefits of dividends on unvested restricted stock are to be recognized in equity as
an increase in the pool of excess tax benefits. If the related awards are forfeited or are no
longer expected to vest, then the benefits are to be reclassified from equity to the income
statement. The EITF is effective for fiscal years beginning after December 15, 2007. We do not
expect the adoption of EITF Issue No. 06-11 will have a material effect on our results of
operations or financial condition.
NOTE C Earnings per Share
Basic earnings per common share are computed by dividing net income by the weighted average number
of shares of common stock outstanding during the period. Diluted earnings per common share are
determined assuming the potential dilution of the exercise or conversion of options into common
stock. The following table shows the computation of earnings per share for the three-month and
six-month period ended June 30:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
|
(In thousands except earnings per share data) |
|
BASIC: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock outstanding
beginning of period |
|
|
35,154 |
|
|
|
35,645 |
|
|
|
30,521 |
|
|
|
35,640 |
|
Effect of weighting shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted shares issued during the
period ended June 30, |
|
|
37 |
|
|
|
167 |
|
|
|
2,430 |
|
|
|
87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares
outstanding |
|
|
35,191 |
|
|
|
35,812 |
|
|
|
32,951 |
|
|
|
35,727 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common shareholders |
|
$ |
7,658 |
|
|
$ |
6,331 |
|
|
$ |
15,862 |
|
|
$ |
19,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
$ |
0.22 |
|
|
$ |
0.18 |
|
|
$ |
0.48 |
|
|
$ |
0.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock outstanding,
beginning of period |
|
|
35,154 |
|
|
|
35,645 |
|
|
|
30,521 |
|
|
|
35,640 |
|
Effect of weighting shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted shares issued during the period
ended June 30, |
|
|
37 |
|
|
|
167 |
|
|
|
2,430 |
|
|
|
87 |
|
Employee stock options on nonvested
share-awards assumed converted during
the period ended June 30, |
|
|
1,106 |
|
|
|
1,028 |
|
|
|
1,050 |
|
|
|
1,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares
outstanding |
|
|
36,297 |
|
|
|
36,840 |
|
|
|
34,001 |
|
|
|
36,743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common
shareholders |
|
$ |
7,658 |
|
|
$ |
6,331 |
|
|
$ |
15,862 |
|
|
$ |
19,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
$ |
0.21 |
|
|
$ |
0.17 |
|
|
$ |
0.47 |
|
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
MOBILE MINI, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited) Continued
For the three months ended June 30, 2006 and 2007, options to purchase 466,900 and 302,550 shares
of the Companys stock, respectively, were excluded from the calculation of diluted earnings per
share because they were anti-dilutive. For the six months ended June 30, 2006 and 2007, options to
purchase 466,400 and 496,050 shares of the Companys stock, respectively, were excluded from the
calculation of diluted earnings per share because they were anti-dilutive. Basic weighted average
number of common shares outstanding as of June 30, 2006 and 2007 does not include 124,018 and
251,783 nonvested share-awards, respectively, as the stock is not vested. The six months ended
June 30, 2006 and 2007, do not include 26,350 and 3,907, respectively, nonvested share-awards in
the computation of diluted earnings per share because the effect would have been anti-dilutive.
NOTE D Share-Based Compensation
At June 30, 2007, the Company had three active share-based employee compensation plans. Stock
option awards under these plans are granted with an exercise price per share equal to the fair
market value of our common stock on the date of grant. Each option must expire no more than 10
years from the date it is granted and, historically, options are granted with vesting over a 4.5
year period.
In 2005, we began awarding nonvested shares under the existing share-based compensation plan. Our
nonvested share-awards vest in equal annual installments over either a four-year or five-year
period. The total value of these awards is expensed on a straight-line basis over the service
period of the employees receiving the grants. The service period is the time during which the
employees receiving grants must remain employees for the shares granted to fully vest. In December
2006, we granted to certain of our executive officers nonvested share-awards with vesting subject
to a performance condition. Vesting of these share-awards is dependent upon the officers
fulfilling the service period requirements as well as the Company achieving certain EBITDA targets
in each of the next four years. At the date of grant, the EBITDA targets were not known, and as
such, the measurement date for the nonvested share-awards had not yet occurred. This target was
established by our Board of Directors on February 21, 2007, at which point, the value of each
nonvested share-award was $28.77. We are required to assess the probability that such performance
conditions will be met. The likelihood of the performance condition being met has been deemed
probable by management, and we are recognizing the expense using the accelerated attribution
method. The accelerated attribution method could result in as much as 52% of the total value of
the shares being recognized in the first year of the service period if each of the four future
targets continue to be assessed as probable of being met.
Share-based compensation expense reduced income before income tax expense for the three-month and
six-month periods ended June 30, 2007, by approximately $1.2 million and $2.2 million,
respectively. It reduced net income for the three-month and six-month periods ended June 30, 2007
by approximately $0.9 million and $1.6 million, respectively. As a result, basic and diluted
earnings per share for the three-month and six-month periods ended June 30, 2007 were reduced by
approximately $0.02 per share and $0.04 per share, respectively. As of June 30, 2007, the total
amount of unrecognized compensation cost related to nonvested share awards was approximately $6.2
million, which is expected to be recognized over a weighted-average period of approximately 3.8
years.
The total value of the stock option awards is expensed on a straight-line basis over the service
period of the employees receiving the awards. As of June 30, 2007, total unrecognized compensation
cost related to stock option awards was approximately $6.0 million and the related weighted-average
period over which it is expected to be recognized is approximately 2.4 years.
9
MOBILE MINI, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited) Continued
A summary of stock option activity within the Companys stock-based compensation plans and changes
for the six months ended June 30, 2007 is as follows:
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Weighted |
|
|
|
Shares |
|
|
Average |
|
|
|
(In thousands) |
|
|
Exercise Price |
|
Balance at December 31, 2006 |
|
|
2,609 |
|
|
$ |
15.87 |
|
Granted |
|
|
9 |
|
|
|
30.47 |
|
Exercised |
|
|
(480 |
) |
|
|
10.78 |
|
Terminated/expired |
|
|
(49 |
) |
|
|
21.25 |
|
|
|
|
|
|
|
|
Balance at June 30, 2007 |
|
|
2,089 |
|
|
$ |
16.98 |
|
|
|
|
|
|
|
|
The intrinsic value of options exercised during the six months ended June 30, 2007 was $9.6
million.
A summary of nonvested share-awards activity within our share-based compensation plans and changes
is as follows (share amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
Grant |
|
|
|
|
|
|
|
Date Fair |
|
|
|
Shares |
|
|
Value |
|
Nonvested at December 31, 2006 |
|
|
258 |
|
|
$ |
27.61 |
|
Awarded |
|
|
4 |
|
|
|
30.59 |
|
Released |
|
|
(5 |
) |
|
|
33.98 |
|
Forfeited |
|
|
(5 |
) |
|
|
28.55 |
|
|
|
|
|
|
|
|
Nonvested at June 30, 2007 |
|
|
252 |
|
|
$ |
27.50 |
|
|
|
|
|
|
|
|
A summary of fully-vested stock options and stock options expected to vest, as of June 30, 2007, is
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
Aggregate |
|
|
Number of |
|
Weighted |
|
Average |
|
Intrinsic |
|
|
Shares |
|
Average |
|
Remaining |
|
Value |
|
|
(In |
|
Exercise |
|
Contractual |
|
(In |
|
|
thousands) |
|
Price |
|
Term |
|
thousands) |
Outstanding |
|
|
2,089 |
|
|
$ |
16.98 |
|
|
|
6.44 |
|
|
$ |
25,809 |
|
Vested and expected
to vest |
|
|
2,089 |
|
|
$ |
16.98 |
|
|
|
6.44 |
|
|
$ |
25,809 |
|
Exercisable |
|
|
1,373 |
|
|
$ |
15.36 |
|
|
|
5.66 |
|
|
$ |
19,083 |
|
The fair value of each stock option award is estimated on the date of the grant using the
Black-Scholes option pricing model. The following are the weighted average assumptions used for the
periods noted:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
Six Months Ended |
|
|
June 30, 2006 |
|
June 30, 2007 |
Risk-free interest rate |
|
|
5.05 |
% |
|
|
4.58 |
% |
Expected holding period
(years) |
|
|
3.55 |
|
|
|
3.00 |
|
Expected stock volatility |
|
|
36.86 |
% |
|
|
33.24 |
% |
Expected dividend rate |
|
|
0.00 |
% |
|
|
0.00 |
% |
10
MOBILE MINI, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited) Continued
The weighted average fair value of stock options granted during the six-month period ended June 30,
2006 and 2007 was $10.95 and $8.56, respectively. There were 9,400 shares granted during the
six-month period ended June 30, 2007.
NOTE E Inventories
Inventories are valued at the lower of cost (principally on a standard cost basis which
approximates the first-in, first-out (FIFO) method) or market. Market is the lower of replacement
cost or net realizable value. Inventories primarily consist of raw materials, supplies,
work-in-process and finished goods, all related to the manufacturing, refurbishment and maintenance
of units, primarily for our lease fleet and our units held for sale. Raw materials principally
consist of raw steel, wood, glass, paint, vinyl and other assembly components used in manufacturing
and refurbishing processes. Work-in-process primarily represents units being built at our
manufacturing facility that are either pre-sold or being built to add to our lease fleet upon
completion. Finished portable storage units primarily represent ISO (the International
Organization for Standardization) containers held in inventory until the containers are either sold
as is, refurbished and sold, or units in the process of being refurbished to be compliant with our
lease fleet standards before transferring the units to our lease fleet. There is no certainty when
we purchase the containers whether they will ultimately be sold, refurbished and sold, or
refurbished and moved into our lease fleet. Units that we add to our lease fleet undergo an
extensive refurbishment process that includes installing our proprietary locking system, signage,
painting and sometimes adding our proprietary security doors.
|
|
|
|
|
|
|
|
|
|
|
December 31, 2006 |
|
|
June 30, 2007 |
|
|
|
(In thousands) |
|
Raw material and supplies |
|
$ |
18,420 |
|
|
$ |
21,163 |
|
Work-in-process |
|
|
3,031 |
|
|
|
5,278 |
|
Finished portable storage units |
|
|
6,412 |
|
|
|
6,160 |
|
|
|
|
|
|
|
|
|
|
$ |
27,863 |
|
|
$ |
32,601 |
|
|
|
|
|
|
|
|
NOTE F Income Taxes
On January 1, 2007, we adopted the provision of FIN 48, Accounting for Uncertainty in Income
Taxesan interpretation of FASB Statement No. 109. FIN 48 contains a two-step approach to
recognizing and measuring uncertain tax positions accounted for in accordance with SFAS No. 109,
Accounting for Income Taxes. The first step is to evaluate the tax position for recognition by
determining if the weight of available evidence indicates that it is more likely than not that the
position will be sustained on audit, including resolution of related appeals or litigation
processes, if any. The second step is to measure the tax benefit as the largest amount that is more
than 50% likely of being realized upon ultimate settlement.
We file U.S. Federal tax returns, U.S. State tax returns, and foreign tax returns. We have
identified our U.S. Federal tax return as our major tax jurisdiction. For the U.S. Federal
return, years 2003 through 2006 are subject to tax examination by the U.S. Internal Revenue
Service. We do not currently have any ongoing tax examinations with the IRS. We believe that our
income tax filing positions and deductions will be sustained on audit and do not anticipate any
adjustments that will result in a material change to our financial position. Therefore, no reserves
for uncertain income tax positions have been recorded pursuant to FIN 48. In addition, we did not
record a cumulative effect adjustment related to the adoption of FIN 48. We do not anticipate that
the total amount of unrecognized tax benefit related to any particular tax position will change
significantly within the next 12 months.
Our policy for recording interest and penalties associated with audits is to record such items as a
component of income before taxes. Penalties and associated interest costs are recorded in leasing,
selling and general expenses in the Condensed Consolidated Statements of Income.
11
MOBILE MINI, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited) Continued
NOTE G Property, Plant and Equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation. Depreciation is
calculated using the straight-line method over the assets estimated useful lives. Residual values
are determined when the property is constructed or acquired and range up to 25%, depending on the
nature of the asset. In the opinion of management, estimated residual values do not cause carrying
values to exceed net realizable value. Normal repairs and maintenance to property, plant and
equipment are expensed as incurred. When property or equipment is retired or sold, the net book
value of the asset, reduced by any proceeds, is charged to gain or loss on the retirement of fixed
assets. Property, plant and equipment consist of the following at:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2006 |
|
|
June 30, 2007 |
|
|
|
(In thousands) |
|
Land |
|
$ |
772 |
|
|
$ |
772 |
|
Vehicles and equipment |
|
|
45,734 |
|
|
|
57,176 |
|
Buildings and improvements |
|
|
10,645 |
|
|
|
10,885 |
|
Office fixtures and equipment |
|
|
9,552 |
|
|
|
10,612 |
|
|
|
|
|
|
|
|
|
|
|
66,703 |
|
|
|
79,445 |
|
Less accumulated depreciation |
|
|
(23,631 |
) |
|
|
(26,486 |
) |
|
|
|
|
|
|
|
|
|
$ |
43,072 |
|
|
$ |
52,959 |
|
|
|
|
|
|
|
|
NOTE H Lease Fleet
Mobile Mini has a lease fleet primarily consisting of refurbished, modified and manufactured
portable storage and office units that are leased to customers under short-term operating lease
agreements with varying terms. Depreciation is calculated using the straight-line method over our
units estimated useful life, after the date that we put the unit in service, and are depreciated
down to their estimated residual values. Our steel units are depreciated over 25 years with an
estimated residual value of 62.5%. Wood office units are depreciated over 20 years with an
estimated residual value of 50%. Van trailers, which are a small part of our fleet, are
depreciated over seven years to a 20% residual value. Van trailers are only added to the fleet in
connection with acquisitions of portable storage businesses, and then only when van trailers are a
part of the business acquired.
In the opinion of management, estimated residual values do not cause carrying values to exceed
net realizable value. We continue to evaluate these depreciation policies as more information
becomes available from other comparable sources and our own historical experience.
Normal repairs and maintenance to the portable storage and mobile office units are expensed as
incurred. As of December 31, 2006, the lease fleet totaled $747.1 million as compared to $808.6
million at June 30, 2007, before accumulated depreciation of $49.7 million and $56.0 million,
respectively.
12
MOBILE MINI, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited) Continued
Lease fleet consists of the following at:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2006 |
|
|
June 30, 2007 |
|
|
|
(In thousands) |
|
Steel storage containers |
|
$ |
423,766 |
|
|
$ |
437,255 |
|
Offices |
|
|
320,160 |
|
|
|
367,020 |
|
Van trailers |
|
|
2,702 |
|
|
|
3,878 |
|
Other |
|
|
479 |
|
|
|
473 |
|
|
|
|
|
|
|
|
|
|
|
747,107 |
|
|
|
808,626 |
|
Accumulated depreciation |
|
|
(49,668 |
) |
|
|
(55,990 |
) |
|
|
|
|
|
|
|
|
|
$ |
697,439 |
|
|
$ |
752,636 |
|
|
|
|
|
|
|
|
NOTE I Segment Reporting
The Financial Accounting Standards Board (FASB) issued SFAS No. 131, Disclosures about Segments of
an Enterprise and Related Information, which establishes the standards for companies to report
information about operating segments. We have operations in the United States, Canada, the United
Kingdom and The Netherlands. All of our branches operate in their local currency and although we
are exposed to foreign exchange rate fluctuation in other foreign markets where we lease and sell
our products, we do not believe this will have a significant impact on our results of operations.
Currently, our branch operation is the only segment that concentrates on our core business of
leasing. Each branch has similar economic characteristics covering all products leased or sold,
including the same customer base, sales personnel, advertising, yard facilities, general and
administrative costs and the branch management. Managements allocation of resources, performance
evaluations and operating decisions are not dependent on the mix of a branchs products. We do not
attempt to allocate shared revenue nor general, selling and leasing expenses to the different
configurations of portable storage and office products for lease and sale. The branch operations
include the leasing and sales of portable storage units, portable offices and combination units
configured for both storage and office space. We lease to businesses and consumers in the general
geographic area surrounding each branch. The operation includes our manufacturing facilities,
which is responsible for the purchase, manufacturing and refurbishment of products for leasing and sale, as well as for manufacturing
certain delivery equipment.
In managing our business, we focus on earnings per share and on our internal growth rate in leasing
revenue, which we define as growth in lease revenues on a year-over-year basis at our branch
locations in operation for at least one year, without inclusion of same market acquisitions.
Discrete financial data on each of our products is not available and it would be impractical to
collect and maintain financial data in such a manner; therefore, based on the provisions of SFAS
No. 131, reportable segment information is the same as contained in our Condensed Consolidated
Financial Statements.
The tables below represent our revenue and long-lived assets as attributed to geographic locations
(in thousands):
Revenue from external customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
United States |
|
$ |
62,480 |
|
|
$ |
71,823 |
|
|
$ |
118,466 |
|
|
$ |
138,944 |
|
Other Nations |
|
|
3,818 |
|
|
|
6,427 |
|
|
|
4,252 |
|
|
|
12,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
66,298 |
|
|
$ |
78,250 |
|
|
$ |
122,718 |
|
|
$ |
151,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
MOBILE MINI, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited) Continued
Long-lived assets:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2006 |
|
|
June 30, 2007 |
|
United States |
|
$ |
710,155 |
|
|
$ |
760,254 |
|
Other Nations |
|
|
30,356 |
|
|
|
45,341 |
|
|
|
|
|
|
|
|
Total long-lived assets |
|
$ |
740,511 |
|
|
$ |
805,595 |
|
|
|
|
|
|
|
|
NOTE J Comprehensive Income
Comprehensive income, net of tax, consisted of the following at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
|
(In thousands) |
|
Net income |
|
$ |
7,658 |
|
|
$ |
6,331 |
|
|
$ |
15,862 |
|
|
$ |
19,028 |
|
Net unrealized holding
gain (loss) on
derivatives |
|
|
69 |
|
|
|
(84 |
) |
|
|
233 |
|
|
|
(202 |
) |
Foreign currency
translation adjustment |
|
|
109 |
|
|
|
1,138 |
|
|
|
114 |
|
|
|
1,229 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
$ |
7,836 |
|
|
$ |
7,385 |
|
|
$ |
16,209 |
|
|
$ |
20,055 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The components of accumulated other comprehensive income, net of tax, were as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2006 |
|
|
June 30, 2007 |
|
|
|
(In thousands) |
|
Accumulated net unrealized holding gain on derivatives |
|
$ |
523 |
|
|
$ |
322 |
|
Foreign currency translation adjustment |
|
|
2,948 |
|
|
|
4,177 |
|
|
|
|
|
|
|
|
Total accumulated other comprehensive income |
|
$ |
3,471 |
|
|
$ |
4,499 |
|
|
|
|
|
|
|
|
NOTE K Acquisitions
In January 2007, we acquired the portable storage assets of Worcester Leasing Company, Inc.,
operating in Worcester, Vermont. In May 2007, we acquired the portable storage assets of Site
Storage and Equipment, Inc. and Ace Container & Equipment Sales, Inc., located in Theodore,
Alabama. The acquired assets from the Alabama companies are serviced by our Pensacola branch which
conducts business in the Gulf Coast and surrounding regions. We paid cash of approximately $6.1
million and assumed certain liabilities in connection with the acquisitions in Vermont and Alabama.
The acquisitions were accounted for as a purchase in accordance with SFAS No. 141, Business
Combinations, and the purchased assets and the assumed liabilities were recorded at their estimated
fair values at the dates of acquisition.
The aggregate purchase price of the assets and operations acquired consists of the following,
in thousands:
|
|
|
|
|
Cash |
|
$ |
6,063 |
|
Other acquisition costs |
|
|
3 |
|
|
|
|
|
Total |
|
$ |
6,066 |
|
|
|
|
|
14
MOBILE MINI, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited) Continued
The fair value of the assets purchased has been allocated as follows, in thousands:
|
|
|
|
|
Tangible assets |
|
$ |
3,042 |
|
Intangible assets: |
|
|
|
|
Customer-related |
|
|
727 |
|
Other |
|
|
75 |
|
Goodwill |
|
|
2,414 |
|
Assumed liabilities |
|
|
(192 |
) |
|
|
|
|
Total |
|
$ |
6,066 |
|
|
|
|
|
The purchase price for the acquisitions has been allocated to the assets acquired and
liabilities assumed based upon estimated fair values as of the acquisition dates and are subject to
adjustment when additional information concerning asset and liability valuations is finalized.
Customer-related intangible assets are amortized on an accelerated basis over 11 years.
In May 2007, we opened our second Canadian branch by commencing operations in the Vancouver
metropolitan area.
At June 30, 2007, we operated 55 branches in the United States, two in Canada, six in the
United Kingdom, and one in The Netherlands.
NOTE L Other
During the second quarter of 2007 we redeemed all of the $97.5 million principal amount of our
issued and outstanding 9.5% Senior Notes due 2013. On May 7, 2007, we also completed the offering
of our $150.0 principal amount 6.875% Senior Notes due 2015, issued at 99.548% of par value,
through a private placement to institutional investors under the SECs Rule 144A.
On May 7, 2007, we received net proceeds of approximately $146.3 million, after underwriters
discounts and commissions, from our issuance of $150.0 million of 6.875% Senior Notes. We used
these proceeds to redeem our 9.5% Senior Notes, and we paid accrued interest, transaction costs and
the redemption premium on the 9.5% Notes. The additional net proceeds to us of approximately $33.2
million were used to repay borrowings under our revolving line of credit.
We also amended our revolving line of credit to increase the maximum amount we can borrow from
$350.0 million to $425.0 million and to extend the scheduled maturity date to May 7, 2012. Under
the amended agreement, we may further increase the maximum borrowing limit to $500.0 million
without lenders consent.
In the second quarter of 2007 we recorded debt extinguishment expense of $11.2 million in
connection with the early retirement of the 9.5% Senior Notes.
NOTE M
Subsequent Event
On
August 8, 2007, the
Board of Directors approved a common stock repurchase program
authorizing up to $50.0 million of our outstanding shares to be
repurchased over a six month period.
15
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read
together with our December 31, 2006 consolidated financial statements and the accompanying notes
thereto which are included in our Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 1, 2007. This discussion contains forward-looking statements. Forward-looking
statements are based on current expectations and assumptions that involve risks and uncertainties.
Our actual results may differ materially from those anticipated in those forward-looking statements
as a result of certain factors, including, but not limited to, those described below in this Item 2
under Certain Factors That May Affect Our Results.
The following discussion takes into account our acquisition on April 28, 2006, of the Royal Wolf
Companies. The operations acquired are included in our operating results for the three and six
months ended June 30, 2007. Only two months of results of these acquired operations are included
in the operating results for the three and six months ended June 30, 2006. As a result of this
acquisition, we added two new locations in California, six locations in the United Kingdom and a
branch in The Netherlands. We also consolidated operations at 10 locations in the United States
where there was branch overlap as a result of the acquisition.
Overview
General
In 1996, we initiated a strategy of focusing on leasing rather than selling our portable
storage units and we derive most of our revenues from the leasing of portable storage containers
and portable offices. The average North America intended lease term at lease inception is
approximately 10 months for portable storage units and approximately 13 months for portable
offices. In Europe, customers do not specify an initial intended lease term other than
month-to-month. After the expiration of the initial intended term, units continue on lease on a
month-to-month basis. In 2006, the Company-wide over-all lease duration averaged 23 months for
portable storage units and 20 months for portable offices. As a result of these long average lease
durations, our leasing business tends to provide us with a recurring revenue stream and minimizes
fluctuations in revenues. However, there is no assurance that we will maintain such lengthy
overall lease durations.
In addition to our leasing business, we also sell portable storage containers and occasionally
we sell portable office units. Since 1996, when we changed our focus to leasing, our sales
revenues, as a percentage of total revenues, have decreased to approximately 10% of revenues.
Beginning in 2006, sales revenues increased after being relatively flat for several years,
primarily due to our acquisition of our European operations in April 2006. These entities, which
in 2006 derived approximately 40% of their revenues from container sales, are being transitioned to
our leasing business model.
We have grown through internally generated growth and acquisitions which we use to gain a presence
in new markets. Typically, we enter a new market through the acquisition of the business of a
smaller local competitor and then apply our business model, which is usually much more customer
service and marketing focused than the business we are buying or its competitors in the market. If
we cannot find a desirable acquisition opportunity in a market we wish to enter, we establish a new location from the ground
up. As a result, a new branch location will often have fairly low operating margins during its
early years, but as our marketing efforts help us penetrate the new market and we increase the
number of units on rent at the new branch, we take advantage of operating efficiencies to improve
operating margins at the branch and usually reach company average levels after several years. When
we enter a new market, we incur certain costs in developing an infrastructure. For example,
advertising and marketing costs will be incurred and certain minimum staffing levels and certain
minimum levels of delivery equipment will be put in place regardless of the new markets revenue
base. Once we have achieved revenues during any period that are sufficient to cover our fixed
expenses, we generate high margins on incremental lease revenues. Therefore, each additional unit
rented in excess of the break even level contributes significantly to profitability. Conversely,
additional fixed expenses that we incur require us to achieve additional revenue as compared to the
prior period to cover the additional expense.
16
Among the external factors we examine to determine the direction of our business is the level
of non-residential construction activity, especially in areas of the country where we have a
significant presence. Customers in the construction industry represented approximately 40% of our
units on rent at December 31, 2006, and because of the degree of our operating leverage, increases
or declines in non-residential construction activity have proven to have a significant effect on
our revenue growth, operating margins and net income.
In managing our business, we focus on our internal growth rate in leasing revenue, which we define
as growth in lease revenues on a year-over-year basis at our branch locations in operation for at
least one year, without inclusion of leasing revenue attributed to same-market acquisitions. This
internal growth rate has remained positive every quarter, but has fallen to single digits during
years when the level of non-residential construction activity was especially weak and has exceeded
20% during years when it was strong. We achieved an internal growth rate of 19.9% in 2006. With
third party forecasts calling for the level of non-residential construction activity to remain
positive in 2007, but below 2006 levels, we currently expect that our internal growth rate will
further moderate over the next few quarters, but remain well above levels experienced during our
slowest periods. Our goal is to maintain a high internal growth rate so that revenue growth will
exceed inflationary growth in expenses, and we can continue to take advantage of the operating
leverage inherent in our business model.
We are a capital-intensive business, so in addition to focusing on earnings per share, we focus on
adjusted EBITDA to measure our results. We calculate this number by first calculating EBITDA,
which we define as net income before interest expense, debt restructuring or debt extinguishment
expense (if any during the relevant measurement period), provision for income taxes, and
depreciation and amortization. This measure eliminates the effect of financing transactions that
we enter into on an irregular basis based on capital needs and market opportunities, and this
measure provides us with a means to track internally generated cash from which we can fund our
interest expense and our lease fleet growth. In comparing EBITDA from year to year, we typically
further adjust EBITDA to ignore the effect of what we consider non-recurring events not related to
our core business operations to arrive at what we define as adjusted EBITDA. Because EBITDA is a
non-GAAP financial measure, as defined by the SEC, we include in the tables below reconciliations
of EBITDA to the most directly comparable financial measures calculated and presented in accordance
with accounting principles generally accepted in the United States.
We present EBITDA because we believe it provides useful information regarding our ability to meet
our future debt payment requirements, capital expenditures and working capital requirements and
that it provides an overall evaluation of our financial condition. In addition, EBITDA is a
component of certain financial covenants under our revolving credit facility and is used to
determine our available borrowing capacity and the interest rate in effect at any point in time.
EBITDA has certain limitations as an analytical tool and should not be used as a substitute for net
income, cash flows or other consolidated income or cash flow data prepared in accordance with
generally accepted accounting principles in the United States or as a measure of our profitability
or our liquidity. In particular, EBITDA, as defined does not include:
|
|
|
Interest expense because we borrow money to partially finance our capital
expenditures, primarily related to the expansion of our lease fleet, interest expense is a
necessary element of our cost to secure this financing to continue generating additional
revenues. |
|
|
|
|
Debt restructuring or extinguishment expense as defined in our revolving credit
facility, debt restructuring or debt extinguishment expenses are not deducted in our
various calculations made under the credit agreement and are treated no differently than
interest expense. As discussed above, interest expense is a necessary element of our cost
to finance a portion of the capital expenditures needed for the growth of our business. |
|
|
|
|
Income taxes EBITDA, as defined, does not reflect income taxes or the requirements
for any tax payments. |
|
|
|
|
Depreciation and amortization because we are a leasing company, our business is very
capital intensive and we hold acquired assets for a period of time before they generate
revenues, cash flow and earnings; therefore, depreciation and amortization expense is a
necessary element of our business. |
When evaluating EBITDA as a performance measure, and excluding the above-noted charges, all of
which have material limitations, investors should consider, among other factors, the following:
|
|
|
increasing or decreasing trends in EBITDA; |
|
|
|
|
how EBITDA compares to levels of debt and interest expense; and |
17
|
|
|
whether EBITDA historically has remained at positive levels. |
Because EBITDA, as defined, excludes some but not all items that affect our cash flow from
operating activities, EBITDA may not be comparable to a similarly titled performance measure
presented by other companies.
The table below is a reconciliation of EBITDA to net cash provided by operating activities for the
periods ended June 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
|
(In thousands) |
|
EBITDA |
|
$ |
28,618 |
|
|
$ |
32,783 |
|
|
$ |
52,179 |
|
|
$ |
64,514 |
|
Senior Note redemption premiums |
|
|
(4,987 |
) |
|
|
(8,926 |
) |
|
|
(4,987 |
) |
|
|
(8,926 |
) |
Interest paid |
|
|
(3,827 |
) |
|
|
(8,453 |
) |
|
|
(14,726 |
) |
|
|
(16,429 |
) |
Income and franchise taxes paid |
|
|
(46 |
) |
|
|
(479 |
) |
|
|
(111 |
) |
|
|
(594 |
) |
Share-based compensation expense |
|
|
781 |
|
|
|
1,210 |
|
|
|
1,535 |
|
|
|
2,150 |
|
Gain on sale of lease fleet units |
|
|
(1,301 |
) |
|
|
(1,447 |
) |
|
|
(2,232 |
) |
|
|
(2,741 |
) |
Loss on disposal of property, plant and equipment |
|
|
11 |
|
|
|
23 |
|
|
|
40 |
|
|
|
32 |
|
Changes in certain assets and liabilities, net
of effect of businesses acquired: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables |
|
|
(5,369 |
) |
|
|
(2,803 |
) |
|
|
(3,892 |
) |
|
|
(537 |
) |
Inventories |
|
|
(1,370 |
) |
|
|
(65 |
) |
|
|
(2,373 |
) |
|
|
(4,070 |
) |
Deposits and prepaid expenses |
|
|
287 |
|
|
|
1,220 |
|
|
|
294 |
|
|
|
547 |
|
Other assets and intangibles |
|
|
207 |
|
|
|
305 |
|
|
|
(3 |
) |
|
|
302 |
|
Accounts payable and accrued liabilities |
|
|
6,272 |
|
|
|
1,655 |
|
|
|
3,565 |
|
|
|
1,474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
19,276 |
|
|
$ |
15,023 |
|
|
$ |
29,289 |
|
|
$ |
35,722 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA is calculated as follows, without further adjustment, for the periods ended June 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
|
(In thousands except percentages) |
|
Net income |
|
$ |
7,658 |
|
|
$ |
6,331 |
|
|
$ |
15,862 |
|
|
$ |
19,028 |
|
Interest expense |
|
|
5,740 |
|
|
|
6,100 |
|
|
|
12,186 |
|
|
|
12,053 |
|
Provision for income taxes |
|
|
4,791 |
|
|
|
4,015 |
|
|
|
10,114 |
|
|
|
12,205 |
|
Depreciation and amortization |
|
|
4,004 |
|
|
|
5,113 |
|
|
|
7,592 |
|
|
|
10,004 |
|
Debt extinguishment expense |
|
|
6,425 |
|
|
|
11,224 |
|
|
|
6,425 |
|
|
|
11,224 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
28,618 |
|
|
$ |
32,783 |
|
|
$ |
52,179 |
|
|
$ |
64,514 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA margin(1) |
|
|
43.2 |
% |
|
|
41.9 |
% |
|
|
42.5 |
% |
|
|
42.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
EBITDA margin is calculated as EBITDA divided by total revenues expressed as a
percentage. |
In managing our business, we routinely compare our EBITDA margins from year to year and based upon
age of branch. We define this margin as EBITDA divided by our total revenues, expressed as a
percentage. We use this comparison, for example, to study internally the effect that increased
costs have on our margins. As capital is invested in our established branch locations, we achieve
higher EBITDA margins on that capital than we achieve on capital invested to establish a new
branch, because our fixed costs are already in place in connection with the established branches.
The fixed costs are those associated with yard and delivery equipment, as well as advertising,
sales, marketing and office expenses. With a new market or branch, we must first fund and absorb
the startup costs for setting up the new branch facility, hiring and developing the management and
sales team and developing our marketing and advertising programs. A new branch will have low
EBITDA margins in its early years until the number of units on rent increases. Because of our high
18
operating margins on incremental lease revenue, which we realize on a branch-by-branch basis when the branch
achieves leasing revenues sufficient to cover the branchs fixed costs, leasing revenues in excess
of the break-even amount produce large increases in profitability. Conversely, absent significant
growth in leasing revenues, the EBITDA margin at a branch will remain relatively flat on a
period-by-period comparative basis.
Accounting and Operating Overview
Our leasing revenues include all rent and ancillary revenues we receive for our portable storage,
combination storage/office and mobile office units. Our sales revenues include sales of these units
to customers. Our other revenues consist principally of charges for the delivery of the units we
sell. Our principal operating expenses are (1) cost of sales; (2) leasing, selling and general
expenses; and (3) depreciation and amortization, primarily depreciation of the portable storage
units in our lease fleet. Cost of sales is the cost of the units that we sold during the reported
period and includes both our cost to buy, transport, refurbish and modify used ocean-going
containers and our cost to manufacture portable storage units and other structures. Leasing,
selling and general expenses include among other expenses, advertising and other marketing
expenses, commissions and corporate expenses for both our leasing and sales activities. Annual
repair and maintenance expenses on our leased units over the last three fiscal years have averaged
approximately 3.5% of lease revenues and are included in leasing, selling and general expenses. We
expense our normal repair and maintenance costs as incurred (including the cost of periodically
repainting units).
Our principal asset is our lease fleet, which has historically maintained value close to its
original cost. The steel units in our lease fleet (other than van trailers) are depreciated on the
straight-line method over our units estimated useful life of 25 years after the date the unit is
placed in service, with an estimated residual value of 62.5%. The depreciation policy is supported
by our historical lease fleet data which shows that we have been able to obtain comparable rental
rates and sales prices irrespective of the age of our container lease fleet. Our wood mobile
office units are depreciated over 20 years to 50% of original cost. Van trailers, which constitute
a small part of our fleet, are depreciated over seven years to a 20% residual value. Van trailers,
which are only added to the fleet as a result of acquisitions of portable storage businesses, are
of much lower quality than storage containers and consequently depreciate more rapidly.
The table below summarizes those transactions that increased the net value of our lease fleet from
$697.4 million at December 31, 2006, to $752.6 million at June 30, 2007:
|
|
|
|
|
|
|
|
|
|
|
Dollars |
|
|
Units |
|
|
|
(In thousands) |
|
|
|
|
|
Lease fleet at December 31, 2006, net |
|
$ |
697,439 |
|
|
|
149,615 |
|
|
|
|
|
|
|
|
|
|
Purchases: |
|
|
|
|
|
|
|
|
Container purchases and containers obtained through acquisitions, including freight |
|
|
8,124 |
|
|
|
2,884 |
|
|
|
|
|
|
|
|
|
|
Non-core units |
|
|
99 |
|
|
|
249 |
|
|
|
|
|
|
|
|
|
|
Manufactured units: |
|
|
|
|
|
|
|
|
Steel storage containers, combination storage/office combo units and steel security
offices |
|
|
24,526 |
|
|
|
2,425 |
|
New wood mobile offices |
|
|
21,364 |
|
|
|
794 |
|
|
|
|
|
|
|
|
|
|
Refurbishment and customization(3): |
|
|
|
|
|
|
|
|
Refurbishment or customization of units purchased or acquired in the current year |
|
|
4,181 |
|
|
|
1,212 |
(1) |
Refurbishment or customization of 1,781 units purchased in a prior year |
|
|
7,017 |
|
|
|
68 |
(2) |
Refurbishment or customization of 2,230 units obtained through acquisition in a prior year |
|
|
1,382 |
|
|
|
119 |
(3) |
|
|
|
|
|
|
|
|
|
Other |
|
|
(273 |
) |
|
|
(297 |
) |
Cost of sales from lease fleet |
|
|
(4,898 |
) |
|
|
(1,916 |
) |
Depreciation |
|
|
(6,325 |
) |
|
|
|
|
|
|
|
|
|
|
|
Lease fleet at June 30, 2007, net(4) |
|
$ |
752,636 |
|
|
|
155,153 |
|
|
|
|
|
|
|
|
19
|
|
|
(1) |
|
These units represent the net additional units that were the result of splitting steel containers into one or more shorter units, such as
splitting a 40-foot container into two 20-foot units, or one 25-foot unit and one 15-foot unit. |
|
(2) |
|
Includes units moved from finished goods to lease fleet. |
|
(3) |
|
Does not include any routine maintenance. |
|
(4) |
|
Excludes 738 units in the United Kingdom which we lease from third parties on month-to-month contracts and we in turn sub-lease to our customers. |
The table below outlines the composition of our lease fleet (by book value and unit count) at June 30, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
Lease Fleet |
|
|
Units |
|
|
|
(In thousands) |
|
|
|
|
|
Steel storage containers |
|
$ |
437,255 |
|
|
|
127,483 |
|
Offices |
|
|
367,020 |
|
|
|
24,918 |
|
Van trailers |
|
|
3,878 |
|
|
|
2,752 |
|
Other |
|
|
473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
808,626 |
|
|
|
|
|
Accumulated depreciation |
|
|
(55,990 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
752,636 |
|
|
|
155,153 |
|
|
|
|
|
|
|
|
Our most recent fair market value and orderly liquidation value appraisals were conducted in
December 2006. At June 30, 2007, based on these appraisal values, the fair market value of our
lease fleet was approximately 117.2% of our lease fleet net book value, and the orderly liquidation
value appraisal, on which our borrowings under our revolving credit facility are based, was
approximately $631.2 million, which equates to 83.9% of the lease fleet net book value. These are
an independent third-party appraisers estimation of value under two sets of assumptions, and there
is no certainty that such values could in fact be achieved if any assumption were to prove
incorrect at the time of an actual sale or liquidation.
Our expansion program and other factors can affect our overall utilization rate. During the last
five fiscal years, our annual utilization levels averaged 80.8%, and ranged from a low of 78.7% in
2003 to a high of 82.9% in 2005. During years in which we enter many additional markets or in
which certain geographic areas are affected by a slowdown in non-residential construction,
utilization rates will tend to be lower. With the addition of fewer markets in 2003 and 2004, and
the improvement in non-residential construction in 2004, we focused on increasing our utilization
rate by balancing inventory between markets and decreasing the number of out-of-service units. Our
average utilization rate increased from 78.7% in 2003 to 82.7% in 2006. Our utilization is
somewhat seasonal, with the low realized in the first quarter and the high realized in the fourth
quarter.
20
RESULTS OF OPERATIONS
Three Months Ended June 30, 2007, Compared to
Three Months Ended June 30, 2006
Total revenues for the quarter ended June 30, 2007, increased by $12.0 million, or 18.0%, to $78.3
million from $66.3 million for the same period in 2006. Leasing revenues for the quarter increased
by $11.0 million, or 18.6%, to $70.3 million from $59.3 million for the same period in 2006. This
increase resulted from a 6.8% increase in the average rental yield per unit, an 11.4% increase in
the average number of units on lease and a 0.4% increase due to favorable foreign exchange rates,
in each case as compared to the 2006 second quarter. The increase in yield resulted from an
increase in average rental rates over the last year and an increase in revenue for ancillary rental
services, such as delivery charges. An increase in the mix of premium units having higher rental
rates being added to our fleet was offset by lower rental rates on units added through
acquisitions, especially in Europe, which on the average were smaller, were not refurbished and
were primarily storage containers rather than portable offices. Our internal growth rate, which we
define as the growth in lease revenues in markets opened for at least one year, excluding growth
arising as a result of additional acquisitions in those markets, was 14.1% for the three months
ended June 30, 2007, as compared to 22.4% for the comparable three-month period of 2006. Our sales
of portable storage and office units for the three months ended June 30, 2007, increased by 14.4%
to $7.5 million from $6.6 million during the same period in 2006, with the increase primarily
related to sales at our newer locations, both in the United States and especially in Europe. As a
percentage of total revenues, leasing revenues for the quarter ended June 30, 2007, represented
89.9% as compared to 89.5% for the same period in 2006. Our leasing business continues to be our
primary focus and leasing revenues have become the predominant part of our revenue mix over the
past several years. We expect this trend to continue as we transform our newly-acquired European
branches to our leasing business model.
Cost of sales are the costs related to our sales revenues only. Cost of sales for the quarter
ended June 30, 2007, increased to 68.5% of sales revenues from 63.0% of sales revenues in the same
period in 2006. Our gross margin was lower-than-typical level during 2007. The decrease in the
2007 gross margin results from characteristics of our European operations, where some of our sales
activity continues to be wholesale sales which are at lower margins.
Leasing, selling and general expenses increased $6.5 million, or 19.2%, to $40.3 million for the
quarter ended June 30, 2007, from $33.8 million for the same period in 2006. Leasing, selling and
general expenses, as a percentage of total revenues, increased to 51.5% for the quarter ended June
30, 2007, from 51.1% for the same period in 2006. The increase is primarily due to the
infrastructure we added to our European operations to support the transformation to our branch
business model, as well as staffing requirements and marketing costs associated with U.S. locations
we added in 2006 and 2007. Our results for the quarter ended June 30, 2006 include only two months
of the Royal Wolf acquisition operations as compared to three months included in the quarter ended
June 30, 2007. Increases in leasing, selling and general expenses in Europe primarily relate to
payroll related expenses, transportation expenses, marketing costs and real estate lease expense
related to our United Kingdom branch locations. As the markets we entered in the past few years
continue to mature and as their revenues increase to cover our fixed expenses at those locations,
those markets will begin to contribute to higher margins on incremental lease revenues. Each
additional unit on lease in excess of the break-even level contributes significantly to
profitability. Over the next few months, our leasing, selling and general expenses may continue to
increase modestly as we complete our transition to our business model at these locations. The
major increases in leasing, selling and general expenses for the quarter ended June 30, 2007, were
primarily payroll and related expenses to support the growth of our leasing activities, third-party
freight trucking expense, primarily related to our mobile office units, and lease fleet maintenance
costs.
EBITDA increased by $4.2 million, or 14.6%, to $32.8 million for the quarter ended June 30, 2007,
compared to $28.6 million for the same period in 2006.
Depreciation and amortization expenses increased $1.1 million, or 27.7%, to $5.1 million in the
quarter ended June 30, 2007, from $4.0 million during the same period in 2006. The increase
includes the growth in our lease fleet over the last year in order to meet increased demand and
market conditions, in addition to increases in equipment to provide the infrastructure needed to
support our operations in our European branches and the continued growth of our operations in the
U.S. Since June 30, 2006, our lease fleet cost basis for depreciation increased by approximately
$133.0 million.
21
Interest expense increased $0.4 million, or 6.3%, to $6.1 million for the quarter ended June 30,
2007 as compared to $5.7 million for the same period in 2006. Our average debt outstanding for the
three months ended June 30, 2007, compared to the same period in 2006, increased by 16.3%. Our
average borrowing rate declined during the second quarter of 2007 from the prior year level in part
because in May 2006, we paid down $52.5 million of our higher interest rate 9.5% Senior Notes and
in part because of a lower LIBOR spread under our revolving line of credit. The weighted average
interest rate on our debt for the three months ended June 30, 2007 was 7.1% compared to 7.7% for
the three months ended June 30, 2006 excluding amortization of debt issuance costs. Taking into
account the amortization of debt issuance costs, the weighted average interest rate was 7.3% in the
2007 quarter and 8.0% in the 2006 quarter. With the redemption of our 9.5% Senior Notes and the
issuance of our lower interest rated 6.875% Senior Notes, we anticipate that our weighted average
interest rate will decline during the quarter ended September 30, 2007.
Debt extinguishment expense for the 2007 period represents the deferred loan costs and the
redemption premium on $97.5 million aggregate principal amount of outstanding 9.5% Senior Notes
redeemed in the second quarter of 2007. For the 2006 period, this expense represents the portion
of deferred loan costs and the redemption premium on 35% of the then $150.0 million aggregate
principal amount of the 9.5% Senior Notes redeemed in May 2006.
Provision for income taxes was based on a blended annual effective tax rate of 38.8% in the quarter
ended June 30, 2007, as compared to 38.5% during the same period in 2006. Our 2007 second quarter
consolidated tax provision includes the expected tax rates for our operations in the United States,
Canada, United Kingdom and The Netherlands.
Net income for the three months ended June 30, 2007, was $6.3 million, as compared to net income of
$7.7 million for the same period in 2006. Our 2007 second quarter net income results were
primarily achieved through our 18.0% increase in revenues and the operating leverage associated
with this growth, partially offset by the effects of debt extinguishment expense. In 2007 and
2006, debt extinguishment expense related to the redemption of our 9.5% Senior Notes was $11.2
million ($6.9 million after tax) and $6.4 million ($4.0 million after tax), respectively.
Six Months Ended June 30, 2007, Compared to
Six Months Ended June 30, 2006
Total revenues for the six months ended June 30, 2007, increased by $ 28.6 million, or 23.3%, to
$151.3 million from $122.7 million for the same period in 2006. Leasing revenues for the six
months increased by $25.5 million, or 23.0%, to $136.4 million from $110.9 million for the same
period in 2006. This increase resulted from a 4.4% increase in the average rental yield per unit,
an 18.3% increase in the average number of units on lease and a 0.3% increase due to favorable
foreign exchange rates, in each case as compared to the same period in 2006. The increase in yield
resulted from an increase in average rental rates over the last year and an increase in revenue for
ancillary rental services, such as delivery charges. An increase in the mix of premium units
having higher rental rates being added to our fleet was offset by lower rental rates on units added
through acquisitions, especially in Europe, which on the average were smaller, were not refurbished
and were primarily storage containers rather than portable offices. Our internal growth rate,
which we define as the growth in lease revenues in markets opened for at least one year, excluding
growth arising as a result of additional acquisitions in those markets, was 14.7% for the six
months ended June 30, 2007, as compared to 22.8% for the comparable six-month period of 2006. Our
sales of portable storage and office units for the six months ended June 30, 2007, increased by
27.6% to $14.2 million from $11.1 million during the same period in 2006, with the increase
primarily related to sales at our newer locations, both in the United States and especially in
Europe. As a percentage of total revenues, leasing revenues for the six months ended June 30,
2007, represented 90.2% as compared to 90.3 % for the same period in 2006. Our leasing business
continues to be our primary focus and leasing revenues have become the predominant part of our
revenue mix over the past several years. We expect this trend to continue as we transform our
newly-acquired European branches to our leasing business model.
Cost of sales are the costs related to our sales revenues only. Cost of sales for the six months
ended June 30, 2007, increased to 67.8% of sales revenues from 63.6% of sales revenues in the same
period in 2006. Our gross margin was lower-than-typical level during 2007. The decrease in the
2007 gross margin results from characteristics of our European operations, where some of our sales
activity continues to be wholesale sales which are at lower margins.
Leasing, selling and general expenses increased $13.4 million, or 20.9%, to $77.2 million for the
six months ended June 30, 2007, from $63.8 million for the same period in 2006. Leasing, selling
and general expenses, as a percentage of total
22
revenues, decreased to 51.0% for the six months ended June 30, 2007, from 52.0% for the same period
in 2006. The increase is primarily due to the infrastructure we added to our European operations
to support the transformation to our branch business model, as well as staffing requirements and
marketing costs associated with U.S. locations we added in 2006 and 2007. Our results for the six
months ended June 30, 2006 include only two months of the Royal Wolf acquisition operations as
compared to six months included in the six months ended June 30, 2007. Increases in leasing,
selling and general expenses in Europe primarily relate to payroll related expenses, transportation
expenses, marketing costs and real estate lease expense related to our United Kingdom branch
locations. As the markets we entered in the past few years continue to mature and as their
revenues increase to cover our fixed expenses at those locations, those markets will begin to
contribute to higher margins on incremental lease revenues. Each additional unit on lease in
excess of the break-even level contributes significantly to profitability. Over the next few
months, our leasing, selling and general expenses may continue to increase modestly as we complete
our transition to our business model at these locations. The major increases in leasing, selling
and general expenses for the six months ended June 30, 2007, were primarily payroll and related
expenses to support the growth of our leasing activities, third-party freight trucking expense,
primarily related to our mobile office units, and lease fleet maintenance costs.
EBITDA increased by $12.3 million, or 23.6%, to $64.5 million for the six months ended June 30,
2007, compared to $52.2 million for the same period in 2006.
Depreciation and amortization expenses increased $2.4 million, or 31.8%, to $10.0 million in the
six months ended June 30, 2007, from $7.6 million during the same period in 2006. The increase
includes the growth in our lease fleet over the last year in order to meet increased demand and
market conditions, in addition to increases in equipment to provide the infrastructure needed to
support our operations in our European branches and the continued growth of our operations in the
U.S. Since June 30, 2006, our lease fleet cost basis for depreciation increased by approximately
$133.0 million.
Interest expense decreased $0.1 million, or 1.1%, to $12.1 million for the six months ended June
30, 2007, as compared to $12.2 million for the same period in 2006. Our average debt outstanding
for the six months ended June 30, 2007, compared to the same period in 2006, increased by 6.2%.
Our average borrowing rate declined during the second quarter of 2007 from the prior year level in
part because in May 2006, we paid down $52.5 million of our higher interest rate 9.5% Senior Notes
and in part because of a lower LIBOR spread under our revolving line of credit. The weighted
average interest rate on our debt for the six months ended June 30, 2007 was 7.2%, as compared to
7.8% for the six months ended June 30, 2006 excluding amortization of debt issuance costs. Taking
into account the amortization of debt issuance costs, the weighted average interest rate was 7.5%
in the 2007 quarter and 8.0% in the 2006 quarter. With the redemption of our 9.5% Senior Notes and
the issuance of our lower interest rated 6.875% Senior Notes, we anticipate that our weighted
average interest rate will decline during the period ended September 30, 2007.
Debt extinguishment expense for the 2007 period represents the deferred loan costs and the
redemption premium on $97.5 million aggregate principal amount of outstanding 9.5% Senior Notes
redeemed in the second quarter of 2007. For the 2006 period, this expense represents the portion
of deferred loan costs and the redemption premium on 35% of the then $150.0 million aggregate
principal amount of the 9.5% Senior Notes redeemed in May 2006.
Provision for income taxes was based on a blended annual effective tax rate of approximately 39.1%
in the six months ended June 30, 2007, as compared to 38.9% during the same period in 2006. Our
consolidated tax provisions include the expected tax rates for our operations in the United States,
Canada, United Kingdom and The Netherlands.
Net income for the six months ended June 30, 2007, was $19.0 million compared to net income of
$15.9 million for the same period in 2006. Our 2007 net income results were primarily achieved
through our 23.3% increase in revenues and the operating leverage associated with this growth,
partially offset by the effects of the debt extinguishment expenses. In 2007 and 2006, debt
extinguishment expense related to the redemption of our 9.5% Senior Notes was $11.2 million ($6.9
million after tax) and $6.4 million ($4.0 million after tax), respectively.
LIQUIDITY AND CAPITAL RESOURCES
Over the past several years, we have financed an increasing portion of our capital needs, most of
which are discretionary and are principally to acquire additional units for the lease fleet,
through working capital and funds generated from operations. Leasing is a capital-intensive
business that requires us to acquire assets before they generate revenues, cash flow and earnings.
The assets which we lease have very long useful lives and require relatively little recurrent
23
maintenance expenditures. Most of the capital that we deploy into our leasing business has been
used to expand our operations geographically, to increase the number of units available for lease
at our leasing locations, and to add to the mix of products we offer. During recent years, our
operations have generated annual cash flow that exceeds our pre-tax earnings, particularly due to
the deferral of income taxes caused by accelerated depreciation that is used for tax accounting.
At December 31, 2006, we had a $350.0 million senior secured revolving line of credit with a group
of lenders which was scheduled to mature in February 2011. On May 7, 2007, we amended our
revolving line of credit to increase from $350.0 million to $425.0 million the maximum amount we
can borrow under the line of credit and extended the expiration date to May 7, 2012. We have the
right under the credit agreement, at our option and without lenders consent, to further increase
the maximum borrowing limit to $500.0 million, during the term of the agreement.
In the second quarter of 2007, we redeemed all $97.5 million of our 9.5% Senior Notes outstanding
and issued $150.0 million of 6.875% Senior Notes due 2015. See Note L to our Condensed
Consolidated Financial Statements (refer to Part I, Item 1).
During the past two years, our capital expenditures and acquisitions have been funded by our
operating cash flow, a public offering of our common stock in March 2006 and through borrowings
under our revolving credit facility. Our operating cash flow is, in general, weakest during the
first quarter of each fiscal year when customers, who leased containers for holiday storage, return
the units. In addition to cash flow generated by operations, our principal current source of
liquidity is our revolving credit facility. See Note L to our Condensed Consolidated Financial
Statements (refer to Part I, Item 1) for additional information regarding our credit facility. The
majority of net proceeds from our equity offering in March 2006 were used to conclude the Royal
Wolf acquisition and to redeem $52.5 million principal amount of our 9.5 % Senior Notes.
During the six months ended June 30, 2007, we had net repayments under our credit facility of
approximately $10.9 million, as compared to additional net borrowings of $23.2 million for the same
period in 2006. The pay down on our revolving line of credit in 2007 was made possible through the
issuance of $150.0 million of 6.875% Senior Notes, that were discounted to 99.548%, and yielded to
us net proceeds of approximately $146.3 million, after underwriters discounts and commissions. We
used these proceeds to redeem $97.5 million the aggregate principal balance outstanding of the 9.5%
Senior Notes and for related redemption premiums, accrued interest and other issuance costs. The
remaining proceeds of approximately $33.2 million were used to repay borrowings under the revolving
line of credit. Excluding this repayment, borrowings under our revolving line of credit were used
in conjunction with cash provided by operating activities to fund the $64.2 million of additions in
our lease fleet during the six months ended June 30, 2007, purchase property, plant and equipment
of $12.5 million and complete $6.1 million in acquisitions in 2007. As of August 3, 2007,
borrowings outstanding under our credit facility were approximately $192.4 million and we had
approximately $2.0 million of short-term cash equivalents that had not been applied against
borrowings.
Operating Activities. Our operations provided net cash flow of $35.7 million for the six months
ended June 30, 2007, compared to $29.3 million during the same period in 2006. The $6.4 million
increase in cash generated by operations in 2007 is primarily related to a $3.2 million increase in
net income, $2.4 million increase in depreciation and amortization and a $1.3 million increase of
deferred income taxes. In both years, cash generated by operations, was negatively impacted by
increases in inventory levels and receivables and from a decrease in accrued liabilities.
Investing Activities. Net cash used in investing activities was $75.1 million for the six months
ended June 30, 2007, compared to $117.5 million for the same period in 2006. Capital expenditures
for acquisition of businesses were $6.1 million for the six months ended June 30, 2007 as compared
to $59.5 million for the same period in 2006. Capital expenditures for our lease fleet, net of
proceeds from sale of lease fleet units, were $56.5 million for the six months ended June 30, 2007,
and $54.2 million for the same period in 2006. The capital expenditures for our lease fleet are
primarily due to continued demand for our products, requiring us to purchase and refurbish more
containers and offices with the growth of our business. During the past several years, we have
increased the customization of our fleet, enabling us to differentiate our product from our
competitors product. Capital expenditures for property, plant and equipment, net of proceeds from
sales of property, plant and equipment, were $12.5 million for the six months ended June 30, 2007
compared to the $3.8 million for the same period in 2006. The majority of this increase was
expenditures for additions of delivery equipment, primarily trucks, trailers and forklifts, at our
U.S. locations and at our European branches. The amount of cash that we use during any period in
investing activities is almost entirely within managements discretion. We have no contracts or
other arrangements pursuant to which we are required to purchase a fixed or minimum amount of goods
or services in connection with any portion of our business.
24
Financing Activities. Net cash provided by financing activities was $41.8 million during the six
months ended June 30, 2007, compared to $90.5 million for the same period in 2006. In the six
months ended June 30, 2007, we received net proceeds of approximately $33.2 million, related to the
issuance of the $150.0 million 6.875% Senior Notes offset by redemption of the $97.5 million 9.5%
Senior Notes and related issuance and redemption costs, including accrued interest. The major
financing activity during the six-month period ended June 30, 2006 was our public offering of our
common stock, which provided us with approximately $120.3 million in net proceeds. In both 2007
and 2006, we also received approximately $5.2 million and $1.8 million, respectively from exercises
of employee stock options. In both years, borrowings under our revolving credit facility were used,
together with cash flow generated from operations, to fund expansion of the lease fleet and
purchase delivery equipment.
The interest rate under our $425.0 million revolving credit facility is based on our ratio of
funded debt to earnings before interest expenses, taxes, depreciation and amortization, debt
restructuring and extinguishment expenses, as defined, and any extraordinary gains or non-cash
extraordinary losses. The borrowing rate under the credit facility at December 31, 2006 was LIBOR
plus 1.25% per annum or the prime rate less 0.25% per annum, whichever we elect. The interest rate
spread from LIBOR and prime rate can change based on our debt ratio measured at the end of each
quarter, as defined in our credit agreement. The interest rate spread, based on our June 30, 2007
quarterly results remained unchanged.
We have interest rate swap agreements under which we effectively fixed the interest rate payable on
$50.0 million of borrowings under our credit facility so that the rate is based upon a spread from
a fixed rate, rather than a spread from the LIBOR rate. We account for the swap agreements in
accordance with SFAS No. 133 which resulted in a charge to comprehensive income for the six months
ended June 30, 2007, of $0.3 million, net of applicable income tax benefit of $0.1 million.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
Our contractual obligations primarily consist of our outstanding balance under our revolving credit
facility and our unsecured Senior Notes, together with other unsecured notes payable obligations.
We also have operating lease commitments for: 1) real estate properties for the majority of our
branches, 2) delivery, transportation and yard equipment, typically under a five-year lease with
purchase options at the end of the lease term at a stated or fair market value price; and 3) other
equipment, primarily office machines.
In connection with the issuance of our insurance policies, we have provided our various insurance
carriers approximately $3.2 million in letters of credit and an agreement under which we are
contingently responsible for $2.5 million to provide credit support for our payment of the
deductibles and/or loss limitation reimbursements under the insurance policies.
We currently do not have any obligations under purchase agreements or commitments. Historically,
we enter into capitalized lease obligations from time to time to purchase delivery, transportation
and yard equipment. Currently, we have two small capital lease commitments related to office
equipment.
OFF-BALANCE SHEET TRANSACTIONS
We do not maintain any off-balance sheet transactions, arrangements, obligations or other
relationships with unconsolidated entities or others that are reasonably likely to have a material
current or future effect on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital resources.
SEASONALITY
Demand from some of our customers is somewhat seasonal. Demand for leases of our portable storage
units by large retailers is stronger from September through December because these retailers need
to store more inventories for the holiday season. Our retail customers usually return these leased
units to us early in the following year. This causes lower utilization rates for our lease fleet
and a marginal decrease in cash flow during the first quarter of the year. Over the last few
years, we have reduced the percentage of our units we reserve for this seasonal business from the
levels we allocated in earlier years, decreasing our seasonality.
25
EFFECTS OF INFLATION
Our results of operations for the periods discussed in this report have not been significantly
affected by inflation.
CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS
Our consolidated financial statements have been prepared in accordance with U.S. generally accepted
accounting principles. The preparation of these consolidated financial statements requires us to
make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses during the reporting period. These estimates and assumptions are based upon our
evaluation of historical results and anticipated future events, and these estimates may change as
additional information becomes available. The Securities and Exchange Commission defines critical
accounting policies as those that are, in managements view, most important to our financial
condition and results of operations and those that require significant judgments and estimates.
Our critical accounting policies and use of estimates in the preparation of the condensed
consolidated financial statements as of June 30, 2007, remained unchanged from December 31, 2006.
Set forth below is information regarding certain of our critical accounting policies. Information
regarding our other critical accounting policies is discussed in our 2006 Form 10-K, as filed with
the SEC, and should be read in conjunction with our annual consolidated financial statements and
notes thereto.
Allowance for Doubtful Accounts. We maintain allowances for doubtful accounts for estimated losses
resulting from the inability of our customers to make required payments. We establish and maintain
reserves against estimated losses based upon historical loss experience and evaluation of past-due
accounts agings. Management reviews the level of allowances for doubtful accounts on a regular
basis and adjusts the level of the allowances as needed.
If we were to increase the factors used for our reserve estimates by 25%, it would have the
following approximate effect on our net income and diluted earnings per share as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
|
(In thousands) |
|
As Reported: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
7,658 |
|
|
$ |
6,331 |
|
|
$ |
15,862 |
|
|
$ |
19,028 |
|
Diluted earnings per share |
|
$ |
0.21 |
|
|
$ |
0.17 |
|
|
$ |
0.47 |
|
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted for change in estimates: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
7,464 |
|
|
$ |
6,283 |
|
|
$ |
15,552 |
|
|
$ |
18,882 |
|
Diluted earnings per share |
|
$ |
0.21 |
|
|
$ |
0.17 |
|
|
$ |
0.46 |
|
|
$ |
0.51 |
|
If the financial condition of our customers were to deteriorate, resulting in an impairment of
their ability to make payments, additional allowances may be required.
Depreciation Policy. Our depreciation policy for our lease fleet uses the straight-line method
over our units estimated useful life, after the date that we put the unit in service. Our steel
units are depreciated over 25 years with an estimated residual value of 62.5%. Wood offices units
are depreciated over 20 years with an estimated residual value of 50%. Van trailers, which are a
small part of our fleet, are depreciated over seven years to a 20% residual value. Van trailers
are only added to the fleet as a result of acquisitions of portable storage businesses.
We periodically review our depreciation policy against various factors, including the results of
our lenders independent appraisal of our lease fleet, practices of the larger competitors in our
industry, profit margins we are achieving on sales of depreciated units and lease rates we obtain
on older units. If we were to change our depreciation policy on our steel units from 62.5%
residual value and a 25-year life to a lower or higher residual and a shorter or longer useful
life, such change could have a positive, negative or neutral effect on our earnings, with the
actual effect being determined by the change.
26
For example, a change in our estimates used in our residual values and useful life would have the
following approximate effect on our net income and diluted earnings per share as reflected in the
table below.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Useful |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
Salvage |
|
|
Life in |
|
|
June 30, |
|
|
June 30, |
|
|
|
Value |
|
|
Years |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands except per share data) |
|
|
|
|
|
As Reported: |
|
|
62.5 |
% |
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
$ |
7,658 |
|
|
$ |
6,331 |
|
|
$ |
15,862 |
|
|
$ |
19,028 |
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
|
$ |
0.21 |
|
|
$ |
0.17 |
|
|
$ |
0.47 |
|
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted for change in
estimates: |
|
|
70 |
% |
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
$ |
7,658 |
|
|
$ |
6,331 |
|
|
$ |
15,862 |
|
|
$ |
19,028 |
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
|
$ |
0.21 |
|
|
$ |
0.17 |
|
|
$ |
0.47 |
|
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted for change in
estimates: |
|
|
50 |
% |
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
$ |
6,883 |
|
|
$ |
5,411 |
|
|
$ |
14,344 |
|
|
$ |
17,223 |
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
|
$ |
0.19 |
|
|
$ |
0.15 |
|
|
$ |
0.42 |
|
|
$ |
0.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted for change in
estimates: |
|
|
40 |
% |
|
|
40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
$ |
7,658 |
|
|
$ |
6,331 |
|
|
$ |
15,862 |
|
|
$ |
19,028 |
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
|
$ |
0.21 |
|
|
$ |
0.17 |
|
|
$ |
0.47 |
|
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted for change in
estimates: |
|
|
30 |
% |
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
$ |
6,650 |
|
|
$ |
5,135 |
|
|
$ |
13,888 |
|
|
$ |
16,682 |
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
|
$ |
0.18 |
|
|
$ |
0.14 |
|
|
$ |
0.41 |
|
|
$ |
0.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted for change in
estimates: |
|
|
25 |
% |
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
$ |
6,495 |
|
|
$ |
4,951 |
|
|
$ |
13,585 |
|
|
$ |
16,321 |
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
|
$ |
0.18 |
|
|
$ |
0.13 |
|
|
$ |
0.40 |
|
|
$ |
0.44 |
|
Deferred Taxes. In preparing our consolidated financial statements, we recognize income taxes in
each of the jurisdictions in which we operate. For each jurisdiction, we estimate the actual
amount of taxes currently payable or receivable as well as deferred tax assets and liabilities
attributable to temporary differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which
these temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the period that includes
the enactment date.
A valuation allowance is provided for those deferred tax assets for which it is more likely than
not that the related benefits will not be realized. In determining the amount of the valuation
allowance, we consider estimated future taxable income as well as feasible tax planning strategies
in each jurisdiction. If we determine that we will not realize all or a portion of our deferred
tax assets, we will increase our valuation allowance with a charge to income tax expense or offset
goodwill if the deferred tax asset was acquired in a business combination. Conversely, if we
determine that we will ultimately be able to realize all or a portion of the related benefits for
which a valuation allowance has been provided, all or a portion of the related valuation allowance
will be reduced with a credit to income tax expense except if the valuation allowance was created
in conjunction with a tax asset in a business combination.
27
We adopted FASB Interpretation 48 (FIN 48), Accounting for Uncertainty in Income Taxes, an
interpretation of FASB Statement No. 109, effective January 1, 2007. For discussion of the impact
of adoption of FIN 48, see note F to the Condensed Consolidated Financial Statements included else
where in this report. There have been no other significant changes in our critical accounting
policies, estimates and judgments during the six-month period ended June 30, 2007.
CERTAIN FACTORS THAT MAY AFFECT OUR RESULTS
Our disclosure and analysis in this report contains forward-looking information about our financial
results and estimates and our business prospects that involve substantial risks and uncertainties.
From time to time, we also may provide oral or written forward-looking statements in other
materials we release to the public. Forward-looking statements are expressions of our current
expectations or forecasts of future events. You can identify these statements by the fact that
they do not relate strictly to historic or current facts. They include words such as anticipate,
estimate, expect, project, intend, plan, believe, will, and other words and terms of
similar meaning in connection with any discussion of future operating or financial performance. In
particular, these include statements relating to future actions, future performance or results,
expenses, the outcome of contingencies, such as legal proceedings, and financial results. Among
the factors that could cause actual results to differ materially are the following:
|
|
|
economic slowdown that affects any significant portion of our customer base, including
economic slowdown in areas of limited geographic scope if markets in which we have
significant operations are impacted by such slowdown |
|
|
|
|
our ability to manage our planned growth, both internally and at new branches |
|
|
|
|
our European expansion may divert our resources from other aspects of our business |
|
|
|
|
our ability to obtain additional debt or equity financing on acceptable terms |
|
|
|
|
changes in the supply and price of used ocean-going containers |
|
|
|
|
changes in the supply and cost of the raw materials we use in manufacturing storage units, including steel |
|
|
|
|
competitive developments affecting our industry, including pricing pressures in newer markets |
|
|
|
|
the timing and number of new branches that we open or acquire |
|
|
|
|
our ability to protect our patents and other intellectual property |
|
|
|
|
interest rate fluctuations |
|
|
|
|
governmental laws and regulations affecting domestic and foreign operations, including tax obligations |
|
|
|
|
changes in generally accepted accounting principles |
|
|
|
|
any changes in business, political and economic conditions due to the threat of future
terrorist activity in the U.S. and other parts of the world, and related U.S. military
action overseas |
|
|
|
|
increases in costs and expenses, including cost of raw materials and employment costs |
We cannot guarantee that any forward-looking statement will be realized, although we believe we
have been prudent in our plans and assumptions. Achievement of future results is subject to risks,
uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties
materialize, or should underlying assumptions prove inaccurate, actual results could vary
materially from past results and those anticipated, estimated or projected. Investors should bear
this in mind as they consider forward-looking statements.
We undertake no obligation to publicly update forward-looking statements, whether as a result of
new information, future events or otherwise. You are advised, however, to consult any further
disclosures we make on related subjects in our Form 10-Q, 8-K and 10-K reports to the Securities
and Exchange Commission. Our Form 10-K filing for the fiscal year ended December 31, 2006, listed
various important factors that could cause actual results to differ materially from expected and
historic results. We note these factors for investors as permitted by the Private Securities
Litigation Reform Act of 1995. Readers can find them in Item 1A of that filing under the heading
Risk Factors. You may obtain a copy of our Form 10-K by requesting it from the Companys
Investor Relations Department at (480) 894-6311 or by mail to Mobile Mini, Inc., 7420 S. Kyrene
Rd., Suite 101, Tempe, Arizona 85283. Our filings with the SEC, including the Form 10-K, may be
accessed through Mobile Minis website at www.mobilemini.com, and at the SECs website at
http://www.sec.gov. Material on our website is not incorporated in this report, except by
express incorporation by reference herein.
28
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board (FASB) issued Financial Interpretation No.
(FIN) 48, Accounting for Uncertainty in Income Taxes, which clarifies the accounting for
uncertainty in income taxes recognized in an enterprises financial statements in accordance with
FASB Statement No. 109, Accounting for Income Taxes. The interpretation prescribes a recognition
threshold and measurement attribute for the financial statement recognition and measurement of a
tax position taken or expected to be taken in a tax return. FIN 48 is effective for fiscal years
beginning after December 15, 2006. We have adopted this interpretation as of January 1, 2007. The
impact of our adoption is discussed in Note F.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurement (SFAS No. 157). SFAS No.
157 defines fair value, establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurements, but does not require
any new fair value measurement. SFAS No. 157 is effective for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years. We are in the process of
determining the effect, if any, the adoption of SFAS No. 157 will have on our consolidated
financial statements. Because Statement No. 157 does not require any new fair value measurements
or remeasurements of previously computed fair values, we do not believe the adoption of this
Statement will have a material effect on our results of operations or financial condition.
On February 15, 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities (SFAS No. 159). Under this Standard, we may elect to report financial
instruments and certain other items at fair value on a contract-by-contract basis with changes in
value reported in earnings. This election is irrevocable. SFAS No. 159 provides an opportunity to
mitigate volatility in reported earnings that is caused by measuring hedged assets and liabilities
that were previously required to use a different accounting method than the related hedging
contracts when the complex provisions of SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, hedge accounting are not met. SFAS No. 159 is effective for years beginning
after November 15, 2007. We are currently evaluating the potential impact of adopting this
Standard.
In June 2007, the FASB ratified the Emerging Issues Task Force (EITF) consensus on EITF Issue No.
06-11, Accounting for Income Tax Benefits on Dividends on Share-Based Payment Awards. This EITF
indicates tax benefits of dividends on unvested restricted stock are to be recognized in equity as
an increase in the pool of excess tax benefits. If the related awards are forfeited or are no
longer expected to vest, then the benefits are to be reclassified from equity to the income
statement. The EITF is effective for fiscal years beginning after December 15, 2007. We do not
expect the adoption of EITF Issue No. 06-11 will have a material effect on our results of
operations or financial condition.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Swap Agreement. We seek to reduce earnings and cash flow volatility associated with
changes in interest rates through a financial arrangement intended to provide a hedge against a
portion of the risks associated with such volatility. We continue to have exposure to such risks
to the extent they are not hedged.
Interest rate swap agreements are the only instruments we use to manage interest rate fluctuations
affecting our variable rate debt. At June 30, 2007, we had interest rate swap agreements under
which we pay a fixed rate and receive a variable interest rate on $50.0 million of debt. For the
six months ended June 30, 2007, in accordance with SFAS No. 133, comprehensive income included a
$0.3 million charge, net of applicable income tax benefit of $0.1 million, related to the fair
value of our interest rate swap agreements.
Impact of Foreign Currency Rate Changes. We currently have branch operations outside the United
States and we bill those customers primarily in their local currency which is subject to foreign
currency rate changes. Our operations in Canada are billed in the Canadian Dollar, operations in
the United Kingdom are billed in Pound Sterling and operations in The Netherlands are billed in the
Euro. We are exposed to foreign exchange rate fluctuations as the financial results of our
non-United States operations are translated into U.S. Dollars. The impact of foreign currency rate
changes has historically been insignificant with our Canadian operations, but we have more exposure
to volatility with our European operations. In order to help minimize our exchange rate gain and
loss volatility, we finance our European entities through our revolving line of credit which allows
us to also borrow those funds in Pound Sterling denominated debt.
29
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures.
Under the supervision and with the participation of our management, including our Chief Executive
Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures, as such term is defined under Rule
13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the
Exchange Act). Based on this evaluation, our Chief Executive Officer and our Chief Financial
Officer concluded that our disclosure controls and procedures, subject to the limitations as noted
below, were effective during the period and as of the end of the period covered by this report.
Because of inherent limitations, our disclosure controls and procedures may not prevent or detect
misstatements. A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the controls system are met. Because of
the inherent limitations in all controls systems, no evaluation of controls can provide absolute
assurance that all controls issues and instances of fraud, if any, have been detected.
Changes in Internal Controls.
There were no changes in our internal controls over financial reporting that have materially
affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
30
PART II. OTHER INFORMATION
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors disclosed in Part I, Item 1A, of our 2006
Form 10-K.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Our annual meeting of stockholders was held on June 28, 2006, in Phoenix, Arizona. On the record
date for the annual meeting, 35,901,469 shares of common stock were outstanding and eligible to
vote. A quorum was present at the annual meeting. The table below briefly describes the proposal
and the results from the annual meeting of stockholders.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares Voted: |
|
|
(In thousands) |
|
|
For |
|
Withheld |
Election of Directors,
each to serve a three-year
term: |
|
|
|
|
|
|
|
|
Ronald J. Marusiak |
|
|
31,745,933 |
|
|
|
1,590,185 |
|
Lawrence Trachtenberg |
|
|
30,414,602 |
|
|
|
2,921,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For |
|
Against |
|
Withheld |
|
Broker Non-Votes |
Approval of the amendments
to the Mobile Mini, Inc.
2006 Equity Incentive
Plan: |
|
|
29,014,630 |
|
|
|
945,760 |
|
|
|
174,428 |
|
|
|
3,201,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratification of
appointment of Ernst &
Young LLP as the
independent registered
public accounting firm for
the fiscal year ending
December 31, 2007: |
|
|
33,143,447 |
|
|
|
28,711 |
|
|
|
163,960 |
|
|
|
|
|
In addition to the election of two directors at the annual meeting, the terms of four
directors continued after the meeting. The continuing directors are Steven G. Bunger, Jeffrey
S. Goble, Stephen A McConnell, and Michael L. Watts.
ITEM 6. EXHIBITS
|
|
|
Exhibits (filed herewith): |
|
|
|
Number |
|
Description |
10.1
|
|
First Amendment to Second Amended and Restated Loan and Security
Agreement, dated as of May 7, 2007, among Mobile Mini, Inc., Mobile
Mini UK Limited, each of the financial institutions a signatory
thereto, together with assigns, as Lenders, and Deutsche Bank AG, New
York Branch, as Agent (Filed herewith). |
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Item 601(b)(31)
of Regulation S-K. (Filed herewith). |
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Item 601(b)(31)
of Regulation S-K. (Filed herewith). |
|
|
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer
pursuant to item 601(b)(32) of Regulation S-K. (Filed herewith). |
31
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.
|
|
Date: August 9, 2007 |
/s/ Lawrence Trachtenberg
|
|
|
Lawrence Trachtenberg |
|
|
Chief Financial Officer &
Executive Vice President |
|
|
32