Electro Rent Corporation Reports Fiscal 2002 First Quarter Results
VAN NUYS, Calif.–(BUSINESS WIRE)–Sept. 26, 2001
Electro Rent Corporation (Nasdaq:ELRC) announced today that net income for the first quarter of fiscal 2002 ended August 31, 2001 was $4.0 million, or $0.16 per diluted share.
This compares to net income for the first quarter of fiscal 2001 of $8.9 million, or $0.36 per diluted share. Revenue was $43.0 million for this year’s first quarter compared to revenue of $57.3 million for the same period a year earlier.
Chairman and Chief Executive Officer Daniel Greenberg attributed the decline in revenue and profitability primarily to continued weakness in computer rental and lease activity, in addition to subdued demand in the telecommunications sector of Electro Rent’s test and measurement (T&M) equipment rental and lease business. Also, increased purchases of equipment in the fourth quarter of fiscal 2001 led to lower T&M equipment utilization rates compared to the prior year.
“Fortunately, our cash position, which is an extraordinarily important figure in today’s environment, increased to more than $64 million at the end of August, even after we paid for a substantial amount of telecommunications test equipment purchased during the fourth quarter to meet our customers’ physical layer, data link layer and network layer testing requirements. We now have built a comprehensive inventory of test equipment for the telecommunications sector while maintaining our traditional strength in the defense and aerospace sectors that remain the core of our T&M business,” Greenberg said.
“While Electro Rent’s performance this fiscal year certainly has been affected by the slowing economy, over the longer term the increase in defense spending that will follow the tragic events of September 11th is likely to have an ameliorative effect on our business. Based on our prior experience, our services historically have been used more frequently when volatility increases and capital budgets tighten. As our customers adjust to this uncertain environment, Electro Rent will respond vigorously to their needs,” Greenberg added.
“To adjust to the decline in our computer rental business, we implemented a 9% reduction of our workforce in September, the effects of which should begin to impact our results during the current quarter. We have also slowed the additions to our equipment pool to bring it into better balance with the current pace of activity,” Greenberg concluded. The book value of Electro Rent’s equipment pool was $159.7 million at August 31, 2001 compared to $167.5 million at May 31, 2001.
About Electro Rent
Electro Rent Corporation (www.ElectroRent.com) is the largest nationwide organization devoted to the short-term rental and leasing of personal computers, workstations and general purpose electronic test equipment.
“Safe Harbor” Statement: Except for the historical statements and discussions above, our statements above constitute forward-looking statements within the meaning of section 21E of the Securities Exchange Act of 1934. These forward-looking statements reflect our management’s current views with respect to future events and financial performance; however, you should not put undue reliance on these statements. We undertake no obligation to update or revise any forward-looking statements that are or may be affected by developments which our management does not deem material. When used, the words “anticipates,” “believes,” “expects,” “intends,” “future,” and other similar expressions identify forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties. We believe our management’s assumptions are reasonable, nonetheless, it is likely that at least some of these assumptions will not come true. Accordingly, our actual results will probably differ from the outcomes contained in any forward-looking statement, and those differences could be material. Factors that could cause or contribute to these differences include, among others, those risks and uncertainties discussed in our periodic reports on Form 10-K and 10-Q and our other filings with the Securities and Exchange Commission. Should one or more of the risks discussed , or any other risks, materialize, or should one or more of our underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, expected or projected.
Electro Rent Corporation
Condensed Consolidated Statements of Income
(Unaudited) (000 omitted except per share data)
Three Months Ended
Rentals and leases $35,169 $46,024
Sales of equipment and
other revenues 7,787 11,309
Total revenues 42,956 57,333
Costs and expenses:
Depreciation of equipment 16,422 19,006
Costs of revenues other
than depreciation 6,374 7,247
& general expenses 14,370 16,306
Interest (income) expense, net (651) 435
Total costs and expenses 36,515 42,994
Income before income taxes 6,441 14,339
Income taxes 2,447 5,449
Net income $3,994 $8,890
Earnings per share
Basic $0.16 $0.36
Diluted $0.16 $0.36
Average shares used in
per share calculation
Basic 24,518 24,389
Diluted 24,900 24,720
Electro Rent Corporation
Condensed Consolidated Balance Sheets
(unaudited) (000 omitted)
Aug. 31, May 31,
Cash and cash equivalents $64,205 $61,136
Accounts receivable, net 21,002 23,809
Rental and lease equipment, net 159,678 167,521
Other property, net 18,344 18,841
Goodwill, net 37,356 37,387
Other 3,733 3,774
Total assets $304,318 $312,468
Liabilities and Shareholders’ Equity
Accounts payable $13,441 $25,733
Accrued expenses 19,495 19,606
Deferred income taxes 16,968 16,943
Total liabilities 49,904 62,282
Common stock 12,016 11,782
Retained earnings 242,398 238,404
Total shareholders’ equity 254,414 250,186
& shareholders’ equity $304,318 $312,468
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