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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------
Form 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
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Commission File Number 1-12804
-----------------------------------
mobile mini, inc.
(Exact name of registrant as specific in its charter)
Delaware 86-0748362
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1834 West 3rd Street
Tempe, Arizona 85281
(Address of principal executive offices)
(602) 894-6311
(Registrant's telephone number, including area code)
Indicate by check 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 ,
----------- -----------
As of May 12, 1998, there were outstanding 7,863,858 shares of the
issuer's common stock, par value $.01.
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1
MOBILE MINI, INC.
INDEX TO FORM 10-Q FILING
FOR THE QUARTER ENDED MARCH 31, 1998
TABLE OF CONTENTS PAGE
NUMBER
PART I.
FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets 3
March 31, 1998 (unaudited) and December 31, 1997
Consolidated Statements of Operations 4
Three Months ended March 31, 1998 and March 31, 1997
(unaudited)
Consolidated Statements of Cash Flows 5
Three Months Ended March 31, 1998 and March 31, 1997
(unaudited)
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II.
OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 11
SIGNATURES 12
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOBILE MINI, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS March 31, 1998 December 31,
(Unaudited) 1997
-------------- ------------
CASH AND CASH EQUIVALENTS $ 452,459 $ 1,005,204
RECEIVABLES, net of allowance for doubtful accounts
of $987,000 and $893,000, respectively 6,519,962 6,259,476
INVENTORIES 7,023,716 4,748,316
CONTAINER LEASE FLEET, net 55,179,126 50,906,908
PROPERTY PLANT AND EQUIPMENT, net 18,041,479 18,011,916
DEPOSITS AND PREPAID EXPENSES 831,491 898,615
OTHER ASSETS 2,748,296 2,221,587
----------- -----------
Total assets $90,796,529 $84,052,022
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
ACCOUNTS PAYABLE $ 3,015,151 $ 2,676,634
ACCRUED LIABILITIES 3,551,508 3,104,747
LINE OF CREDIT 36,114,170 35,883,104
NOTES PAYABLE 5,647,035 6,123,049
OBLIGATIONS UNDER CAPITAL LEASES 5,031,561 5,371,603
SUBORDINATED NOTES, net 6,660,915 6,647,874
DEFERRED INCOME TAXES 5,552,667 5,217,619
----------- -----------
Total liabilities 65,573,007 65,024,630
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock; $.01 par value, 17,000,000 shares
authorized, 7,845,736 and 6,799,524 issued and
outstanding at March 31, 1998 and December 31,
1997, respectively 78,457 67,995
Additional paid-in capital 21,358,657 16,206,166
Common stock to be issued, 85,468 shares 500,000 --
Retained earnings 3,286,408 2,753,231
----------- -----------
Total stockholders' equity 25,223,522 19,027,392
----------- -----------
Total liabilities and stockholders' equity $90,796,529 $84,052,022
=========== ===========
See the accompanying notes to these consolidated balance sheets.
3
MOBILE MINI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended March 31,
----------------------------
1998 1997
------------ ------------
REVENUES:
Leasing $ 7,512,912 $ 4,995,110
Container and other sales 3,128,400 4,542,631
Other 104,911 111,715
------------ ------------
10,746,223 9,649,456
COSTS AND EXPENSES:
Cost of container and other sales 2,147,577 3,445,770
Leasing, selling and general expenses 5,564,381 4,281,350
Depreciation and amortization 666,771 472,167
------------ ------------
INCOME FROM OPERATIONS 2,367,494 1,450,169
OTHER INCOME (EXPENSE):
Interest income 11,287 --
Interest expense (1,490,152) (1,089,879)
------------ ------------
INCOME BEFORE PROVISION FOR INCOME TAXES 888,629 360,290
PROVISION FOR INCOME TAXES 355,452 158,528
------------ ------------
NET INCOME AVAILABLE FOR COMMON STOCK $ 533,177 $ 201,762
============ ============
EARNINGS PER SHARE:
BASIC:
Net income $ 0.07 $ 0.03
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 7,440,628 6,739,324
============ ============
DILUTED:
Net income $ 0.07 $ 0.03
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON SHARE EQUIVALENTS OUTSTANDING 7,971,804 6,739,403
============ ============
See the accompanying notes to these consolidated statements
4
MOBILE MINI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended March 31,
----------------------------
1998 1997
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 533,177 $ 201,762
Adjustments to reconcile income to net cash used in
operating activities:
Reserve for doubtful accounts receivable 257,430 205,066
Amortization of deferred loan costs 178,343 122,941
Amortization of warrants issuance discount 13,041 --
Depreciation and amortization 666,771 472,167
Gain on disposal of property, plant and equipment (3,541) --
Deferred income taxes 335,048 158,475
Changes in certain assets and liabilities:
Increase in receivables (517,916) (218,096)
Increase in inventories (2,275,400) (1,815,657)
Decrease in deposits and prepaids 67,124 188,259
(Increase) decrease in other assets (205,052) 17,399
Increase in accounts payable 338,517 605,782
Increase (decrease) in accrued liabilities 446,761 (161,835)
----------- -----------
Net cash used in operating activities (165,697) (223,737)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net purchases of container lease fleet (4,476,082) (1,741,236)
Net purchases of property, plant, and equipment (488,929) (1,097,151)
----------- -----------
Net cash used in investing activities (4,965,011) (2,838,387)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under lines of credit 231,066 3,666,477
Principal payments on notes payable (476,014) (384,769)
Principal payments on capital lease obligations (340,042) (325,269)
Exercise of warrants 5,162,953 --
----------- -----------
Net cash provided by financing activities 4,577,963 2,956,439
----------- -----------
NET DECREASE IN CASH (552,745) (105,685)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 1,005,204 736,543
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 452,459 $ 630,858
=========== ===========
See the accompanying notes to these consolidated statements.
5
MOBILE MINI, INC. AND SUBSIDIARIES - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q. Accordingly, they do
not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations, and
cash flows for all periods presented have been made. The results of operations
for the three month period ended March 31, 1998 are not necessarily indicative
of the operating results that may be expected for the entire year ending
December 31, 1998. These financial statements should be read in conjunction with
the Company's December 31, 1997 financial statements and accompanying notes
thereto.
Certain amounts in the 1997 financial statements have been reclassified to
conform with the 1998 financial statement presentation.
NOTE B - The Company adopted SFAS No. 128, Earnings per Share in 1997. Pursuant
to SFAS No. 128, basic earnings per common share are computed by dividing net
income by the weighted average number of shares of common stock outstanding
during the year. Diluted earnings per common share are determined assuming that
options were exercised at the beginning of each year or at the time of issuance.
SFAS No. 128 is effective for financial statements for both interim periods
presented and as a result, all prior period earnings per share data presented
has been restated.
NOTE C - The Company's outstanding Common Stock Purchase Warrants, issued in
connection with the Company's initial public offering, expired on February 17,
1998. Prior to their expiration, 1,046,212 of the 1,067,500 warrants were
exercised, generating approximately $5.2 million in cash.
NOTE D - In January 1998, the Company acquired the assets of Nevada Storage
Containers, a Las Vegas, Nevada based container leasing and sales business, for
approximately $1.4 million in cash and approximately 85,000 shares of the
Company's common stock valued at $500,000. Under the purchase agreement, the
shares of common stock will not be issued until one year from the closing date.
NOTE E - In April 1998, the Company acquired the assets of Aspen Instant
Storage, a company engaged in container leasing and sales in Oklahoma City,
Oklahoma. The purchase price was approximately $540,000 in cash and
approximately 18,000 shares of the Company's common stock valued at $184,000.
In April 1998, the Company also opened a new leasing and sales branch in
Albuquerque, New Mexico. With this new location, the Company now operates 11
leasing and sales offices in 6 states, in addition to its dealer and
telecommunication divisions and its manufacturing facility.
6
NOTE F - Inventories are stated at the lower of cost or market, with cost being
determined under the specific identification method. Market is the lower of
replacement cost or net realizable value. Inventories consisted of the following
at:
March 31, 1998 December 31, 1997
-------------- -----------------
Raw material and supplies $5,449,314 $3,241,962
Work-in-process 832,283 631,399
Finished containers 742,118 874,955
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$7,023,716 $4,748,316
========== ==========
NOTE G - Property, plant and equipment consisted of the following at:
March 31, 1998 December 31, 1997
-------------- -----------------
Land $ 708,555 $ 708,555
Vehicles and equipment 13,040,084 12,721,917
Buildings and improvements 6,835,678 6,739,190
Office fixtures and equipment 3,182,789 3,109,904
------------ ------------
23,767,106 23,279,566
Less accumulated depreciation (5,725,627) (5,267,650)
------------ ------------
$ 18,041,480 $ 18,011,916
============ ============
NOTE H - The Company maintains a container lease fleet consisting of refurbished
or manufactured storage containers and office units that are leased to customers
with varying terms. Depreciation is provided using the straight-line method with
an estimated useful life of 20 years and a salvage value estimated at 70% of
cost. In management's opinion, estimated salvage values do not cause carrying
values to exceed net realizable value. Normal repairs and maintenance to the
lease fleet are expensed as incurred. As of March 31, 1998, the Company's lease
fleet, net of depreciation, was $55.2 million as compared to $50.9 million at
December 31, 1997. A portion of this increase reflects the acquisition of Nevada
Storage Container's container lease fleet.
NOTE I - The Company has adapted FASB No. 130 Reporting Comprehensive Income
effective January 1, 1998. The Company, however, has not incurred transactions
that are within the definitions of "Comprehensive Income" and accordingly, is
not required to make additional disclosures on the accompanying consolidated
financial statements for the current year or for the same period represented in
the prior year.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended March 31, 1998 Compared to
Three Months Ended March 31, 1997
Revenues for the quarter ended March 31, 1998 were $10,746,000, which
represents an 11.4% increase over revenues of $9,649,000 for the quarter ended
March 31, 1997. The Company has transitioned from primarily a seller of
containers and other structures, to primarily a lessor of containers and
portable offices. A change in the composition of the Company's revenues and
expense have occurred as the Company has continued to expand and concentrate its
efforts on leasing operations generating higher operating margins. This change
has resulted in a deferral of the recognition of revenues and corresponding
container costs. As such, income from operations as a percentage of revenues has
increased 7.0% over the same period of the prior year. Revenues from the leasing
of portable storage containers and office units increased 50.4%, while revenues
from the sales of the Company's products decreased 31.1%. The increase in lease
revenues resulted from an 8.4% increase in the average per unit container
revenue and a 38.7% increase in the average number of containers on lease. The
decrease of container sales primarily reflects the emphasis on leasing rather
than selling containers, the Company's discontinuance of its modular building
operations, which provided revenues of $491,000 during the first quarter of
1997, and lower sales levels in the Company's dealer division. The Company's
other revenues, primarily related to trucking services associated with sales
operations, remained relatively constant, decreasing by $7,000 as compared to
the quarter ended March 31, 1997.
Cost of container and other sales as a percentage of container and
other sales for the quarter ended March 31, 1998 was 68.6% compared to 75.9% for
the same quarter in 1997. This decrease resulted from the discontinuation of the
low-margin modular building business and from an increase in container sales
prices.
Leasing, selling and general expenses increased by 30.0% for the
quarter ended March 31, 1998 as compared to the quarter ended March 31, 1997.
This increase resulted from increased expenses associated with the 50.4%
increase in lease revenues and from additional administrative costs and staffing
needs to sustain growth levels.
Interest expense increased by 36.7% during the first quarter of 1998
compared to the prior year. This resulted from the growth in the Company's lease
fleet and the related borrowings to finance that growth, and interest costs
related to the Company's subordinated debt which was issued during the latter
part of 1997.
Depreciation and amortization increased by 41.2% for the three months
ended March 31, 1998 as compared to the prior year period. This resulted from
the increase in the Company's lease fleet and the acquisition of additional
equipment at the Company's various locations to support growth in the size of
the lease fleet.
The Company posted a 164.3% increase in net income to $533,000, or
$0.07 per share diluted for the quarter ended March 31, 1998 compared to net
income of $202,000 or $0.03 per share diluted during the same period in the
prior year. This increase is primarily a result of a 50.4% increase in container
leasing revenues, which produce higher net margins than container sales,
partially offset by higher administrative expenses and increased interest costs.
The Company's effective tax rate was reduced to 40% at March 31, 1998 from 44%
at March 31, 1997.
8
LIQUIDITY AND CAPITAL RESOURCES
The Company plans to continue to increase the size of its container
lease fleet and related property, plant and equipment. The recent acquisitions
of Nevada Storage Containers and Aspen Instant Storage and the growth in the
container lease fleet and related property, plant and equipment was primarily
funded through the Company's revolving line of credit, under its Credit
Agreement dated March 28, 1996 with BT Commercial Corp., as agent for a group of
lenders (the "Senior Credit Agreement") which permitted borrowings based on the
level of the Company's inventories, receivables and the size of its container
lease fleet. The $5.2 million of cash generated from the exercise of the
Company's Common Stock Purchase Warrants was used to reduce the line of credit
thereby making these funds available to finance this growth.
On May 12, 1998, the Company and its lenders amended the terms of the
Senior Credit Agreement. The revolving line of credit was increased from $40
million to $60 million, principal amortization on the $6 million term loan under
the Senior Credit Agreement was reduced, the term of the Senior Credit Agreement
was extended for an additional two years, and the interest rate was reduced. The
interest rate is now determined quarterly based on the Company's ratio of funded
debt to earnings before interest, taxes, depreciation and amortization (EBITDA).
The interest rate was initially adjusted from 3% to 1.75% above the Eurodollar
rate based upon the Company's leverage ratio at the time the amendment to the
Senior Credit Agreement became effective.
As of March 31, 1998, the Company had borrowings outstanding of
$36,114,000 under the revolving line of credit and $3,886,000 of additional
borrowing was available under that line. As of May 12, 1998, the Company had
borrowings outstanding of $38,335,000 and $9,476,000 of additional borrowing
availability under the Senior Credit Agreement, as amended.
During the three months ended March 31, 1998, the Company's operations
used cash of $166,000. This reflects an increase in inventories and receivables
relating to the growth of the Company's container leasing business, partially
offset by an increase in accounts payables and accrued liabilities.
The Company invested $4,965,000 in its container lease fleet and other
equipment during the three months ended March 31, 1998. This amount primarily
reflects $519,000 of sales from the container lease fleet.
Cash flow provided by financing activities totaled $4,578,000 for the
three months ended March 31, 1998. The primary source of financing was
approximately $5,200,000 received upon the exercise of warrants to purchase
1,046,212 shares of the Company's common stock prior to their expiration on
February 17, 1998. The warrant proceeds were used to reduce the line of credit
and to fund the increase in the container lease fleet, related property, plant
and equipment, inventory levels, and the acquisition of Nevada Storage
Containers. Cash flow from financing activities was partially offset by
principal payments on notes payable and capitalized leases.
The Company believes that its available resource will be sufficient to
maintain its current level of operations and permit continued growth over the
next 12 months. The Company expects to use a wide variety of financing sources
to fund its future growth, including public and private debt and equity, and
secured or unsecured bank financing, among other sources. There can be no
assurances that financing from such sources will be available in the future, or
if available that such financing will be available on terms acceptable to the
Company.
9
EFFECTS OF INFLATION
The results of operations of the Company for the periods discussed have
not been significantly affected by inflation.
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS, AND "SAFE HARBOR" STATEMENT
UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Statements in this Report which include such words as "believe",
"intends" or "anticipates", such as the statement regarding the Company's
ability to meet its obligations and capital needs during the next 12 months, are
forward-looking statements. The occurrence of one or more unanticipated events,
however, including a decrease in cash flow generated from operations, a material
increase in the borrowing rates under the Senior Credit Agreement (which rates
are based on the prime rate or the Eurodollar rates in effect from time to
time), a material increase or decrease in prevailing market prices for used
containers, or a change in general economic conditions resulting in decreased
demand for the Company's products, could cause actual results to differ
materially from anticipated results and have a material adverse effect on the
Company's ability to meet its obligations and capital needs, and cause future
operating results and other events not to occur as presently anticipated. The
Company issued $6.9 million of senior subordinated notes in October 1997, in a
public offering pursuant to a Registration Statement. That Registration
Statement and the Prospectus, dated October 8, 1997, which is a part of it (the
"Prospectus"), include a section entitled "Risk Factors", which describes
certain factors that may affect future operating results of the Company. That
section is hereby incorporated by reference in this Report. Those factors should
be considered carefully in evaluating an investment in the Company's Common
Stock. If you do not have a copy of the Prospectus, you may obtain one by
requesting it from the Company's Investor Relations Department at (602) 894-6311
or by mail at Mobile Mini, Inc., 1834 West Third Street, Tempe, Arizona 85281.
The Company's filings with the SEC may be accessed at the SEC's World Wide Web
site at http://www.sec.gov.
10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Number Description
10.5.5 Amendment No. 5 to Senior Credit Agreement
dated as of March 31, 1998,
by and among the Registrant,
each financial institution a party thereto,
and BT Commercial Corporation, as Agent
11 Computation of Earnings per Share for the
Three Month Period ended
March 31, 1998 and 1997
27 Selected Financial Data
(b) Reports on Form 8-K: none
11
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.
(Registrant)
Dated: May 15, 1998 /s/ Larry Trachtenberg
------------------------------
Larry Trachtenberg
Chief Financial Officer &
Executive Vice President
12
AMENDMENT NUMBER FIVE
TO
CREDIT AGREEMENT
This AMENDMENT NUMBER FIVE TO CREDIT AGREEMENT (this "Amendment"),
dated as of March 31, 1998, is entered into by and among MOBILE MINI, INC., a
Delaware corporation (the "Borrower"), each financial institution a party to the
Credit Agreement (collectively, the "Lenders"), and BT COMMERCIAL CORPORATION
acting as agent for the Lenders ("BTCC"), in light of the following facts:
R E C I T A L S
A. The parties hereto have previously entered into that certain Credit
Agreement, dated as of March 28, 1996, as amended by that certain Amendment
Number One to Credit Agreement, dated as of November __, 1996, that certain
Amendment Number Two to Credit Agreement, dated as of March 24, 1997, that
certain Amendment Number Three to Credit Agreement, dated as of March 31, 1997
and that certain Amendment Number Four to Credit Agreement, dated as of July 30,
1997 (as amended, the "Agreement").
B. The parties hereto desire to amend the Agreement in accordance with
the terms of this Amendment.
A G R E E M E N T
NOW, THEREFORE, the parties hereto agree as follows:
1. Defined Terms. All initially capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Agreement.
2. Amendment to Section 1.1.
The definition of "Expiration Date" in Section 1.1 of the
Agreement is hereby amended in its entirety and replaced with the following:
Expiration Date means the fifth anniversary of the Closing
Date; provided, however, in the event that no Event of Default shall
have occurred and be continuing on such fifth anniversary date then the
term of this Agreement shall be extended for one (1) year and the
Expiration Date shall be the sixth anniversary date of the date of this
Agreement upon the delivery by the Borrower to the Agent of the 90
days' prior written notice required under Section 11.15.
The definition of "Pricing Discount Period" is deleted in its
entirety.
3. Amendment to Section 2.1(b)(ii). Section 2.1(b)(ii) of the Agreement
is hereby deleted in its entirety and replaced with the following language:
"Borrower shall repay the principal amount of the Term Loans
made on the Closing Date in forty-eight (48) monthly installments of
$62,500 each with respect to the first twelve (12) monthly
installments, $83,333.33 with respect to installments thirteen through
twenty-four (13-24), and $104,166.67 with respect to installments
twenty-five through forty-eight (25-48) (each a Scheduled Term Loan
Installment" and collectively, the "Scheduled Term Loan Installments")
on the last day of each month commencing on April 30th, 1998. The Term
Loans shall be repaid in full on the Expiration Date and,
notwithstanding the foregoing, the Scheduled Term Loan Installment due
on the Expiration Date shall be in the amount necessary to repay the
Term Loans in full."
4. Amendment to Section 2.2. Section 2.2(a) of the Agreement, as
amended, is hereby amended by deleting the phrase "which shall not exceed
$40,000,000" from such Section and replacing it with the phrase "which shall not
exceed $60,000,000".
5. Amendment of Annex I. Annex I of the Agreement is hereby amended by
deleting the amount of the Revolving Credit Commitment for each Lender and
replacing such amounts as follows:
================================================================================
Lender Revolving Credit Commitment ($)
================================================================================
BT Commercial Corporation 15,000,000
- --------------------------------------------------------------------------------
Nationsbank of Texas, N.A. 15,000,000
- --------------------------------------------------------------------------------
Deutsche Financial Services Corporation 15,000,000
- --------------------------------------------------------------------------------
Summit Commercial/Gibraltar Corp. 15,000,000
================================================================================
and by deleting the amount of the Term Commitment for each Lender and replacing
such amount as follows:
================================================================================
Lender Revolving Credit Commitment ($)
================================================================================
BT Commercial Corporation 1,062,500
- --------------------------------------------------------------------------------
Nationsbank of Texas, N.A. 1,062,500
- --------------------------------------------------------------------------------
Deutsche Financial Services Corporation 1,062,500
- --------------------------------------------------------------------------------
Summit Commercial/Gibraltar Corp. 1,062,500
================================================================================
and by adding as a Lender, Summit Commercial/Gibraltar Corp., 546 5th Avenue,
20th Floor, New York, New York 10036, Attn: Harvey Friedman, telephone
212-997-3337, fax 212-398-6990.
6. Amendment to Section 4.1. Section 4.1 of the Agreement is hereby
deleted in its entirety and replaced with the following:
The Borrower shall be obligated to pay to the Lenders on the
first Business Day of each month interest on the Prime Rate Loans,
calculated monthly in arrears at an interest rate per annum equal to
the Prime Lending Rate plus (i) with respect to Revolving Loans
consisting of Prime Rate Loans the following basis points, relative to
the Debt Ratio in effect, as set forth below:
=======================================================================================
Debt Ratio as Defined in Section 8.6 Prime Interest Rate Plus
=======================================================================================
greater than or equal to 5.0 75 Basis Points (0.75%)
- ---------------------------------------------------------------------------------------
greater than or equal to 4.5 but less than 5.0 50 Basis Points (0.50%)
- ---------------------------------------------------------------------------------------
greater than or equal to 4.0 but less than 4.5 25 Basis Points (0.25%)
- ---------------------------------------------------------------------------------------
greater than or equal to 3.5 but less than 4.0 Zero Basis Points (0.0%)
- ---------------------------------------------------------------------------------------
less than 3.5 Zero Basis Points (0.0%)
=======================================================================================
(ii) with respect to Term Loans consisting of Prime Rate Loans
the following basis points relative to the Debt Ratio in effect, as set
forth below.
=======================================================================================
Debt Ratio as Defined in Section 8.6 Prime Interest Rate Plus
=======================================================================================
greater than or equal to 5.0 100 Basis Points (1.00%)
- ---------------------------------------------------------------------------------------
greater than or equal to 4.5 but less than 5.0 75 Basis Points (0.75%)
- ---------------------------------------------------------------------------------------
greater than or equal to 4.0 but less than 4.5 50 Basis Points (0.50%)
- ---------------------------------------------------------------------------------------
greater than or equal to 3.5 but less than 4.0 25 Basis Points (0.25%)
- ---------------------------------------------------------------------------------------
less than 3.5 25 Basis Points (0.25%)"
=======================================================================================
7. Amendment to Section 4.2. Section 4.2 of the Agreement is hereby
deleted in its entirety and replaced with the following:
Interest on Eurodollar Rate Loans shall be payable on the last
day of each Interest Period with respect to such Eurodollar Rate Loans
(and, in the case of any Eurodollar Rate Loan with an Interest Period
of six months, on the three-month anniversary of the commencement of
that Interest Period), at the date of conversion of such Eurodollar
Rate Loans (or a portion thereof) to a Prime Rate Loan and at maturity
of such Eurodollar Rate Loans at an interest rate per annum equal
during the Interest Period for such Eurodollar Rate Loans to the
Adjusted Eurodollar Rate for the Interest Period in effect for such
Eurodollar Rate Loans plus (i) with respect to Revolving Loans
consisting of Eurodollar Rate Loans the following basis points,
relative to the Debt Ratio in effect, as set forth below:
================================================================================================================
Debt Ratio as Defined Eurodollar Rate
in Section 8.6 (Adjusted Eurodollar Rate Plus)
================================================================================================================
greater than or equal to 5.0 Two Hundred Fifty Basis Points (2.5%)
- ----------------------------------------------------------------------------------------------------------------
greater than or equal to 4.5 but less than 5.0 Two Hundred Basis Points (2.0%)
- ----------------------------------------------------------------------------------------------------------------
greater than or equal to 4.0 but less than 4.5 One Hundred Seventy Five Basis Points (1.75%)
- ----------------------------------------------------------------------------------------------------------------
greater than or equal to 3.5 but less than 4.0 One Hundred Fifty Basis Points (1.50%)
- ----------------------------------------------------------------------------------------------------------------
less than 3.5 One Hundred Twenty Five Basis Points (1.25%)
================================================================================================================
(ii) with respect to Term Loans consisting of Eurodollar Rates
Loans the following basis points, relative to the Debt Ratio, as set
forth below:
==================================================================================================================
Debt Ratio as Defined Eurodollar Rate
in Section 8.6 (Adjusted Eurodollar Rate Plus)
==================================================================================================================
greater than or equal to 5.0 Two Hundred Seventy-Five Basis Points (2.75%)
- ------------------------------------------------------------------------------------------------------------------
greater than or equal to 4.5 but less than 5.0 Two Hundred Twenty-Five Basis Points (2.25%)
- ------------------------------------------------------------------------------------------------------------------
greater than or equal to 4.0 but less than 4.5 Two Hundred Basis Points (2.00%)
- ------------------------------------------------------------------------------------------------------------------
greater than or equal to 3.5 but less than 4.0 One Hundred Seventy-Five Basis Points (1.75%)
- ------------------------------------------------------------------------------------------------------------------
less than 3.5 One Hundred Fifty Basis Points (1.50%)
==================================================================================================================
The Agent upon determining the Adjusted Eurodollar Rate for any
Interest Period shall promptly notify the Borrower and the Lenders by telephone
(confirmed promptly in writing) or in writing thereof."
8. Amendment to Section 4.3. Section 4.3 is amended in its entirety
with the following language:
"The Borrower shall be obligated to pay to the Lenders on the
first Business Day of each month and on the Expiration Date a fee equal
to (0.375%) per annum calculated monthly in arrears on the average
unused portion of the Total Commitments at the close of business each
day during such month or occurring prior to the Expiration Date (the
"Unused Line Fee")."
9. Amendment to Section 4.4(a). Section 4.4(a) of the Agreement is
hereby deleted in its entirety and replaced with the following:
"The Borrower shall be obligated to pay to the Lenders on the
first Business Day of each month a fee (the "Letter of Credit Fee"), in
an amount equal to the Letter of Credit Fee listed on the chart below
that corresponds to the Debt Ratio, per annum of the daily weighted
average amount of Letter of Credit Obligations relating to Letters of
Credit outstanding during the immediately preceding month."
======================================================================================
Debt Ratio as Defined in Section 8.6 Letter of Credit Fees
======================================================================================
greater than or equal to 5.0 2.50% per annum
- --------------------------------------------------------------------------------------
greater than or equal to 4.5 but less than 5.0 2.00% per annum
- --------------------------------------------------------------------------------------
greater than or equal to 4.0 but less than 4.5 1.75% per annum
- --------------------------------------------------------------------------------------
greater than or equal to 3.5 but less than 4.0 1.50% per annum
- --------------------------------------------------------------------------------------
less than 3.5 1.25% per annum
======================================================================================
Notwithstanding the foregoing, Letter of Credit Fees on Letter of
Credit Obligations outstanding after the occurrence and during the continuance
of an Event of Default shall be payable on demand at a rate equal to the rate at
which the Letter of Credit Fees are charged pursuant to the first sentence of
this Section 4.4(a), plus two (2) percentage points (200 basis points).
10. Amendment to Section 8.6. Section 8.6 of the Agreement is amended
by deleting the Ratios for the four quarters of 1998 and replacing such Ratios
as set forth below:
================================================================================
Four Quarters Ended Ratio
================================================================================
3/31/98 4.75:1.0
- --------------------------------------------------------------------------------
6/30/98 4.75:1.0
- --------------------------------------------------------------------------------
9/30/98 4.60:1.0
- --------------------------------------------------------------------------------
12/31/98 4.60:1.0
================================================================================
11. Amendment to Section 8.7. Section 8.7 of the Agreement, as amended,
is hereby amended by deleting such Section in its entirety and replacing it with
the following:
"8.7 Minimum Utilization Rates. The Borrower shall maintain
minimum utilization rates for each fiscal quarter, calculated at the
end of each such quarter as the average amount during such quarter, and
calculated as:
(a) (i) the number of units of Borrower's Eligible Container
Fleet Inventory which is then subject to valid, current rental or lease
agreements between Borrower and the renters or lessees thereof, divided
by the aggregate number of units of Borrower's Eligible Container Fleet
Inventory, of not less than eighty-three percent (83%) for the quarter
ending March 31, 1998 and eighty-five percent (85%) for each other
quarter; and
(b) (i) the number of units of Borrower's Eligible Container
Fleet Inventory which is then subject to valid, current rental or lease
agreements
between Borrower and the renters or lessees thereof, divided by (ii)
sum of (A) the number of units of Borrower's Eligible Container Fleet
Inventory, and (B) the number of units of Borrower's Eligible Container
Inventory Held For Sale plus the number of units of Borrower's Eligible
Primary Raw Materials Inventory consisting of unrefurbished ISO units,
of not less than seventy-eight percent (78%) for the quarter ending
March 31, 1998 and eighty percent (80%) for each other quarter;
provided, that for the purposes of calculation of compliance with this
Section 8.7(b), the aggregate of the number of units of Eligible
Container Inventory Held For Sale plus the number of units of
Borrower's Eligible Primary Raw Materials Inventory consisting of
unrefurbished ISO units, as a percentage of the sum of clauses (A) and
(B) above, shall not exceed five percent (5%)."
12. Amendment to Section 11.15. Section 11.15 of the Agreement is
hereby amended by deleting the language before the semicolon and inserting the
following:
"This Agreement shall have a term expiring on the Expiration
Date (i.e., the fifth anniversary of the Closing Date)".
13. Conditions Precedent. The effectiveness of this Amendment is
subject to and conditioned upon the fulfillment of each and all of the following
conditions precedent:
(a) BTCC shall have received this Amendment duly executed by
Borrower and Majority Lenders;
(b) BTCC shall have received an affirmation letter duly
executed by each guarantor under the Guaranties, indicating the consent by each
such guarantor to the execution and delivery by Borrower of this Amendment;
(c) BTCC shall have received payment for all fees in
connection with this Amendment from Borrower;
(d) BTCC shall have received executed replacement revolving
promissory notes for each lender under the Agreement in form and substance
satisfactory to BTCC pursuant to the amendments to the Agreement under Section 2
herein; and
(e) BTCC shall have received executed modifications or other
necessary documents and such title insurance as BTCC shall require, either by
endorsement to the policy of title insurance, or by a new policy of title
insurance, insuring such deed(s) of trust or mortgages and that the lien(s)
created thereby continue to be first priority lien, all in form and substance
satisfactory to BTCC in its sole and absolute discretion, and subject to such
exceptions as are approved by BTCC.
14. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts, each of which
when so
executed and delivered shall be deemed to be an original. All such counterparts,
taken together, shall constitute but one and the same Amendment.
15. Reaffirmation of the Agreement. Except as specifically amended by
this Amendment, the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed at Los Angeles, California as of the date first hereinabove written.
MOBILE MINI, INC.,
a Delaware corporation
By:
------------------------------------
Larry Trachtenberg,
Chief Financial Officer
BT COMMERCIAL CORPORATION,
a Delaware corporation,
individually and as agent
By:
------------------------------------
Title:
---------------------------------
NATIONSBANK OF TEXAS, N.A.
By:
------------------------------------
Title:
---------------------------------
DEUTSCHE FINANCIAL SERVICES CORPORATION
By:
------------------------------------
Title:
---------------------------------
CONSENT OF GUARANTORS
Each of the undersigned, as a guarantor of the obligations of MOBILE
MINI, INC., a Delaware corporation ("Borrower"), arising out of that certain
Credit Agreement, dated as of March 28, 1996, as amended by that certain
Amendment Number One to Credit Agreement, dated as of November __, 1996, that
certain Amendment Number Two to Credit Agreement, dated as of March 24, 1997,
that certain Amendment Number Three to Credit Agreement, dated as of March 31,
1997 and that certain Amendment Number Four to Credit Agreement, dated as of
July 30, 1997 (as amended, the "Agreement"), among BT Commercial Corporation, a
Delaware corporation ("Agent") and the lenders party thereto ("Lenders"), on the
one hand, and Borrower, on the other hand, hereby acknowledges receipt of a copy
of that certain Amendment Number Five to Credit Agreement, dated as of March 31,
1998, among Agent, Lenders and Borrower, consents to the terms contained
therein, and agrees that the Continuing Guaranty executed by each of the
undersigned shall remain in full force and effect as a continuing guaranty of
the obligations of Borrower owing to Agent and Lenders under the Agreement.
Although Agent has informed us of the matters set forth above, and we
have acknowledged same, we understand and agree that Agent has no duty under the
Agreement, the Continuing Guaranty or any other agreement between us to so
notify us or to seek an acknowledgment, and nothing contained herein is intended
to or shall create such a duty as to any advances or transactions hereafter.
IN WITNESS WHEREOF, each of the undersigned has caused this Consent of
Guarantors to be duly executed by its respective authorized officers as of March
31, 1998.
MOBILE MINI I, INC.,
an Arizona corporation
By____________________________
Title_________________________
DELIVERY DESIGN SYSTEMS, INC.,
an Arizona corporation
By____________________________
Title_________________________
Exhibit 11
MOBILE MINI, INC.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
Three Months Ended March 31,
1998 1997
------------ -------------
BASIC:
Common shares outstanding, beginning of period 6,799,524 6,739,324
Effect of weighting shares:
Weighted common shares issued 574,629 --
Common stock to be issued 66,475 --
---------- ----------
Weighted average number of common shares outstanding 7,440,628 6,739,324
========== ==========
Net income available for common stock $ 533,177 $ 201,762
---------- ----------
Earnings per share $ 0.07 $ 0.03
========== ==========
DILUTED:
Common shares outstanding, beginning of period 6,799,524 6,739,324
Effect of weighting shares:
Weighted common shares issued 574,629 --
Employee stock options 241,931 79
Convertible warrants 242,951 --
IPO stock purchase options 46,294 --
Common stock to be issued 66,475 --
---------- ----------
Weighted average number of common and common equivalent shares
outstanding 7,971,804 6,739,403
========== ==========
Net income available for common stock $ 533,177 $ 201,762
---------- ----------
Earnings per share $ 0.07 $ 0.03
========== ==========
5
1
U.S. Dollars
3-MOS
DEC-31-1998
JAN-01-1998
MAR-31-1998
1
452,459
0
7,507,095
987,133
7,023,716
14,827,628
23,767,106
5,725,627
90,796,529
47,289,948
0
0
0
78,457
500,000
25,223,522
3,128,400
10,746,223
2,147,577
8,378,729
(11,287)
0
1,490,152
888,629
355,452
533,177
0
0
0
553,177
0.07
0.07
