SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 2003
Commission file number 0-13292
McGRATH RENTCORP
(Exact name of registrant as specified in its Charter)
| California |
94-2579843 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
5700 Las Positas Road, Livermore, CA 94551-7800
(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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined under Rule 12b-2 of the Exchange Act).
Yes x No ¨
At April 30, 2003, 12,036,630 shares of Registrant’s Common Stock were outstanding.
PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
McGRATH RENTCORP
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
| Three Months Ended March 31, |
||||||||
| (in thousands, except per share amounts) |
2003 |
2002 |
||||||
| REVENUES |
||||||||
| Rental |
$ |
18,441 |
|
$ |
21,292 |
| ||
| Rental Related Services |
|
3,547 |
|
|
3,971 |
| ||
| Rental Operations |
|
21,988 |
|
|
25,263 |
| ||
| Sales |
|
5,277 |
|
|
6,145 |
| ||
| Other |
|
196 |
|
|
356 |
| ||
| Total Revenues |
|
27,461 |
|
|
31,764 |
| ||
| COSTS AND EXPENSES |
||||||||
| Direct Costs of Rental Operations |
||||||||
| Depreciation of Rental Equipment |
|
3,115 |
|
|
5,368 |
| ||
| Rental Related Services |
|
2,161 |
|
|
2,231 |
| ||
| Impairment of Rental Equipment |
|
— |
|
|
11,887 |
| ||
| Other |
|
4,413 |
|
|
4,928 |
| ||
| Total Direct Costs of Rental Operations |
|
9,689 |
|
|
24,414 |
| ||
| Costs of Sales |
|
3,684 |
|
|
4,271 |
| ||
| Total Costs |
|
13,373 |
|
|
28,685 |
| ||
| Gross Margin |
|
14,088 |
|
|
3,079 |
| ||
| Selling and Administrative |
|
5,340 |
|
|
5,979 |
| ||
| Income (Loss) from Operations |
|
8,748 |
|
|
(2,900 |
) | ||
| Interest |
|
690 |
|
|
1,147 |
| ||
| Income (Loss) Before Provision for Income Taxes |
|
8,058 |
|
|
(4,047 |
) | ||
| Provision (Benefit) for Income Taxes |
|
3,215 |
|
|
(1,611 |
) | ||
| Income (Loss) Before Minority Interest |
|
4,843 |
|
|
(2,436 |
) | ||
| Minority Interest in Income (Loss) of Subsidiary |
|
(46 |
) |
|
(70 |
) | ||
| Net Income (Loss) |
$ |
4,889 |
|
$ |
(2,366 |
) | ||
| Earnings (Loss) Per Share: |
||||||||
| Basic |
$ |
0.40 |
|
$ |
(0.19 |
) | ||
| Diluted |
$ |
0.40 |
|
$ |
(0.19 |
) | ||
| Shares Used in Per Share Calculation: |
||||||||
| Basic |
|
12,261 |
|
|
12,427 |
| ||
| Diluted |
|
12,350 |
|
|
12,674 |
| ||
The accompanying notes are an integral part of these consolidated financial statements.
1
McGRATH RENTCORP
CONSOLIDATED BALANCE SHEETS
| March 31, |
December 31, |
|||||||
| (in thousands) |
2003 |
2002 |
||||||
| (unaudited) |
||||||||
| ASSETS |
||||||||
| Cash |
$ |
4 |
|
$ |
4 |
| ||
| Accounts Receivable, net of allowance for doubtful |
|
27,020 |
|
|
33,249 |
| ||
| Rental Equipment, at cost: |
||||||||
| Relocatable Modular Buildings |
|
287,147 |
|
|
285,901 |
| ||
| Electronic Test Instruments |
|
37,801 |
|
|
39,786 |
| ||
|
|
324,948 |
|
|
325,687 |
| |||
| Less Accumulated Depreciation |
|
(104,789 |
) |
|
(103,788 |
) | ||
| Rental Equipment, net |
|
220,159 |
|
|
221,899 |
| ||
| Property, Plant and Equipment, net |
|
48,154 |
|
|
48,379 |
| ||
| Prepaid Expenses and Other Assets |
|
9,436 |
|
|
9,603 |
| ||
| Total Assets |
$ |
304,773 |
|
$ |
313,134 |
| ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Liabilities: |
||||||||
| Notes Payable |
$ |
58,698 |
|
$ |
55,523 |
| ||
| Accounts Payable and Accrued Liabilities |
|
27,581 |
|
|
29,889 |
| ||
| Deferred Income |
|
13,500 |
|
|
17,337 |
| ||
| Minority Interest in Subsidiary |
|
2,674 |
|
|
3,107 |
| ||
| Deferred Income Taxes, net |
|
70,937 |
|
|
68,259 |
| ||
| Total Liabilities |
|
173,390 |
|
|
174,115 |
| ||
| Shareholders’ Equity: |
||||||||
| Common Stock, no par value— |
||||||||
| Authorized—40,000 shares |
||||||||
| Outstanding—12,033 shares in 2003 and |
|
15,803 |
|
|
16,320 |
| ||
| Retained Earnings |
|
115,580 |
|
|
122,699 |
| ||
| Total Shareholders’ Equity |
|
131,383 |
|
|
139,019 |
| ||
| Total Liabilities and Shareholders’ Equity |
$ |
304,773 |
|
$ |
313,134 |
| ||
The accompanying notes are an integral part of these consolidated financial statements.
2
McGRATH RENTCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| Three Months Ended March 31, |
||||||||
| (in thousands) |
2003 |
2002 |
||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net Income (Loss) |
$ |
4,889 |
|
$ |
(2,366 |
) | ||
| Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: |
||||||||
| Depreciation and Amortization |
|
3,610 |
|
|
5,883 |
| ||
| Impairment of Rental Equipment |
|
— |
|
|
11,887 |
| ||
| Provision for Doubtful Accounts |
|
8 |
|
|
132 |
| ||
| Gain on Sale of Rental Equipment |
|
(1,279 |
) |
|
(1,771 |
) | ||
| Change In: |
||||||||
| Accounts Receivable |
|
6,221 |
|
|
4,795 |
| ||
| Prepaid Expenses and Other Assets |
|
167 |
|
|
(417 |
) | ||
| Accounts Payable and Accrued Liabilities |
|
(2,899 |
) |
|
675 |
| ||
| Deferred Income |
|
(3,837 |
) |
|
(3,029 |
) | ||
| Deferred Income Taxes |
|
2,678 |
|
|
(2,182 |
) | ||
| Net Cash Provided by Operating Activities |
|
9,558 |
|
|
13,607 |
| ||
| CASH FLOW FROM INVESTING ACTIVITIES: |
||||||||
| Purchase of Rental Equipment |
|
(3,654 |
) |
|
(7,027 |
) | ||
| Purchase of Property, Plant and Equipment |
|
(271 |
) |
|
(67 |
) | ||
| Proceeds from Sale of Rental Equipment |
|
3,558 |
|
|
5,195 |
| ||
| Net Cash Used in Investing Activities |
|
(367 |
) |
|
(1,899 |
) | ||
| CASH FLOW FROM FINANCING ACTIVITIES: |
||||||||
| Net Borrowings (Repayments) Under Bank Lines of Credit |
|
3,175 |
|
|
(11,883 |
) | ||
| Proceeds from the Exercise of Stock Options |
|
90 |
|
|
2,156 |
| ||
| Repurchase of Common Stock |
|
(10,207 |
) |
|
— |
| ||
| Payment of Dividends |
|
(2,249 |
) |
|
(1,981 |
) | ||
| Net Cash Used in Financing Activities |
|
(9,191 |
) |
|
(11,708 |
|||