SEC Filing | McGrath

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1 As filed with the Securities and Exchange Commission on June 25, 1999 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A (AMENDMENT NO. 1) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH 31, 1999 COMMISSION FILE NUMBER 0-13292 --------------------------------------- MCGRATH RENTCORP (Exact name of registrant as specified in its Charter) CALIFORNIA 94-2579843 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 5700 LAS POSITAS ROAD, LIVERMORE, CA 94550 (Address of principal executive offices) Registrant's telephone number: (925) 606-9200 --------------------------------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] At May 14, 1999, 13,466,098 shares of Registrant's Common Stock were outstanding. ================================================================================

2 PART I FINANCIAL INFORMATION The following item appearing in the Quarterly Report on Form 10-Q for McGrath RentCorp (the Company), as originally filed May 14, 1999, is hereby amended. ITEM 1. FINANCIAL STATEMENTS. The following item amends the original filing as to the Consolidated Statements of Cash Flows by reclassifying the Proceeds from Sale of Rental Equipment from Cash Flows from Operating Activities to Cash Flow from Investing Activities and changing the respective subtotals. MCGRATH RENTCORP CONSOLIDATED STATEMENTS OF INCOME (unaudited) - ------------------------------------------------------------------------------------- THREE MONTHS ENDED MARCH 31, ---------------------------- (in thousands, except per share amounts) 1999 1998 - ------------------------------------------------------------------------------------- Revenues Rental $ 18,979 $ 16,981 Rental Related Services 2,434 2,223 -------- -------- Rental Operations 21,413 19,204 Sales 6,863 7,952 Other 218 194 -------- -------- Total Revenues 28,494 27,350 -------- -------- Costs and Expenses Direct Costs of Rental Operations Depreciation 4,666 3,847 Rental Related Services 1,338 1,664 Other 3,133 3,025 -------- -------- Total Direct Costs of Rental Operations 9,137 8,536 Costs of Sales 4,860 5,249 -------- -------- Total Costs 13,997 13,785 -------- -------- Gross Margin 14,497 13,565 Selling and Administrative 4,199 3,705 -------- -------- Income from Operations 10,298 9,860 Interest 1,516 1,451 -------- -------- Income Before Provision for Income Taxes 8,782 8,409 Provision for Income Taxes 3,447 3,313 -------- -------- Income Before Minority Interest 5,335 5,096 Minority Interest in Income of Subsidiary (36) 128 -------- -------- Net Income $ 5,371 $ 4,968 ======== ======== Earnings Per Share: Basic $ 0.39 $ 0.34 -------- -------- Diluted $ 0.38 $ 0.34 -------- -------- Shares Used in Per Share Calculation: Basic 13,820 14,436 Diluted 13,991 14,635 - ------------------------------------------------------------------------------------ The accompanying notes are an integral part of these consolidated financial statements. 1

3 MCGRATH RENTCORP CONSOLIDATED BALANCE SHEETS (unaudited) - ---------------------------------------------------------------------------------------------- MARCH 31, DECEMBER 31, ------------------------------ (in thousands) 1999 1998 - ---------------------------------------------------------------------------------------------- Assets Cash $ 4,749 $ 857 Accounts Receivable, less allowance for doubtful accounts of $650 in 1999 and 1998 15,717 21,811 Rental Equipment, at cost: Relocatable Modular Offices 218,335 216,414 Electronic Test Instruments 66,686 66,573 --------- --------- 285,021 282,987 Less Accumulated Depreciation (86,013) (82,959) --------- --------- Rental Equipment, net 199,008 200,028 --------- --------- Land, at cost 18,953 18,953 Buildings, Land Improvements, Equipment and Furniture, at cost, less accumulated depreciation of $4,210 in 1999 and $3,858 in 1998 31,791 31,460 Prepaid Expenses and Other Assets 4,558 5,567 --------- --------- Total Assets $ 274,776 $ 278,676 ========= ========= Liabilities and Shareholders' Equity Liabilities: Notes Payable $ 101,450 $ 97,000 Accounts Payable and Accrued Liabilities 20,161 22,964 Deferred Income 2,753 5,574 Minority Interest in Subsidiary 2,548 2,584 Deferred Income Taxes 48,609 45,160 --------- --------- Total Liabilities 175,521 173,282 --------- --------- Shareholders' Equity: Common Stock, no par value -- Authorized -- 40,000 shares Outstanding -- 13,463 shares in 1999 and 13,970 shares in 1998 7,824 8,138 Retained Earnings 91,431 97,256 --------- --------- Total Shareholders' Equity 99,255 105,394 --------- --------- Total Liabilities and Shareholders' Equity $ 274,776 $ 278,676 ========= ========= The accompanying notes are an integral part of these consolidated financial statements. 2

4 MCGRATH RENTCORP CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - ------------------------------------------------------------------------------------------ THREE MONTHS ENDED MARCH 31, ---------------------------- (in thousands) 1999 1998 - ------------------------------------------------------------------------------------------ Cash Flow from Operating Activities: Net Income $ 5,371 $ 4,968 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 5,059 4,202 Gain on Sale of Rental Equipment (1,313) (1,389) Change In: Accounts Receivable 6,094 1,470 Prepaid Expenses and Other Assets 1,009 (794) Accounts Payable and Accrued Liabilities (3,056) (10,636) Deferred Income (2,821) 972 Deferred Income Taxes 3,448 3,299 -------- -------- Net Cash Provided by Operating Activities 13,791 2,092 -------- -------- Cash Flow from Investing Activities: Purchase of Rental Equipment (5,901) (9,888) Purchase of Land, Buildings, Land Improvements, Equipment and Furniture (724) (784) Proceeds from Sale of Rental Equipment 3,567 3,512 -------- -------- Net Cash Used in Investing Activities (3,058) (7,160) -------- -------- Cash Flow from Financing Activities: Net Borrowings Under Notes Payable 4,450 15,747 Net Proceeds from the Exercise of Stock Options -- 183 Repurchase of Common Stock (9,894) (8,795) Payment of Dividends (1,397) (1,162) -------- -------- Net Cash Provided (Used) by Financing Activities (6,841) 5,973 -------- -------- Net Increase in Cash 3,892 905 Cash Balance, Beginning of Period 857 538 -------- -------- Cash Balance, End of Period $ 4,749 $ 1,443 ======== ======== Interest Paid During the Period $ 2,075 $ 1,440 ======== ======== Income Taxes Paid During the Period $ (8) $ 14 ======== ======== Dividends Declared but not yet Paid $ 1,616 $ 1,414 ======== ======== - ------------------------------------------------------------------------------------------ The accompanying notes are an integral part of these consolidated financial statements. 3

5 MCGRATH RENTCORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1999 NOTE 1. CONSOLIDATED FINANCIAL INFORMATION The consolidated financial information for the three months ended March 31, 1999 has not been audited, but in the opinion of management, all adjustments (consisting of only normal recurring accruals, consolidation and eliminating entries) necessary for the fair presentation of the consolidated results of operations, financial position, and cash flows of McGrath RentCorp (the "Company") have been made. The consolidated results of the three months ended March 31, 1999 should not be considered as necessarily indicative of the consolidated results for the entire year. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's latest Form 10-K. NOTE 2. NOTES PAYABLE In April 1999, the Company amended its unsecured line of credit agreement (the "Agreement") with its banks to reduce the minimum shareholders' equity requirement to allow further repurchases of the Company's common stock. The Agreement requires the Company to maintain shareholders' equity of not less than $85,000,000 plus 50% of all net income generated subsequent to March 31, 1999 plus 90% of any new stock issuance proceeds. All other terms and conditions remained the same. NOTE 3. BUSINESS SEGMENTS The Company defines its business segments based on the nature of operations for the purpose of reporting under Statement of Financial Accounting Standard No. 131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS 131). The Company's three reportable segments are Mobile Modular Management Corporation (Modulars), McGrath-RenTelco (Electronics), and Enviroplex. The operations of these three segments are described in the notes to the consolidated financial statements included in the Company's latest Form 10-K. As a separate corporate entity, Enviroplex revenues and expenses are separately maintained from Modulars and Electronics. Excluding interest expense, allocations of revenues and expenses not directly associated with Modulars or Electronics are generally allocated to these segments based on their pro-rata share of direct revenues. Interest expense is allocated between Modulars and Electronics based on their pro-rata share of average rental equipment, accounts receivable and customer security deposits. The Company does not report total assets by business segment. Summarized financial information for the three months ended March 31, 1999 and 1998 for the Company's reportable segments is shown in the following table: 4

6 - ----------------------------------------------------------------------------------------------------------------- (in thousands) MODULARS ELECTRONICS ENVIROPLEX CONSOLIDATED -------- ----------- ---------- ------------ THREE MONTHS ENDED MARCH 31, 1999 Rental Operation Revenues $ 14,882 $ 6,531 $ -- $ 21,413 Sales and Other Revenues 2,688 2,395 1,998 7,081 Total Revenues 17,570 8,926 1,998 28,494 Depreciation on Rental Equipment 2,498 2,168 -- 4,666 Interest Expense 1,161 399 (44) 1,516 Income before Income Taxes 5,824 3,174 (216) 8,782 Rental Equipment Acquisitions 2,465 3,436 -- 5,901 Accounts Receivable, net (period end) 6,554 7,379 1,784 15,717 Rental Equipment, at cost (period end) 218,335 66,686 -- 285,021 1998 Rental Operation Revenues $ 13,656 $ 5,548 $ -- $ 19,204 Sales and Other Revenues 2,102 2,696 3,348 8,146 Total Revenues 15,758 8,244 3,348 27,350 Depreciation on Rental Equipment 2,191 1,656 -- 3,847 Interest Expense 1,094 325 32 1,451 Income before Income Taxes 4,631 3,013 765 8,409 Rental Equipment Acquisitions 5,642 4,246 -- 9,888 Accounts Receivable, net (period end) 7,034 7,070 6,220 20,324 Rental Equipment, at cost (period end) 200,067 52,341 -- 252,408 - --------------------------------------------------------------------------------------------------------------- 5

7 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT TO THE QUARTERLY REPORT ON FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1999 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. Date: June 23, 1999 MCGRATH RENTCORP by: /s/ Thomas J. Sauer ------------------------------------- Thomas J. Sauer Vice President, Chief Financial Officer (Chief Accounting Officer) 6