Electro Rent Corporation Reports Fiscal 2002 First Quarter Results

Electro Rent Corporation Reports Fiscal 2002 First Quarter Results

Business Editors

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

August 31,

2001 2000

——– ——–

Revenues:

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

Selling, administrative

& 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,

2001 2001

——– ——–

Assets

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

Liabilities:

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

——– ——–

Shareholders’ equity

Common stock 12,016 11,782

Retained earnings 242,398 238,404

——– ——–

Total shareholders’ equity 254,414 250,186

——– ——–

Total liabilities

& shareholders’ equity $304,318 $312,468

======== ========

COPYRIGHT 2001 Business Wire

COPYRIGHT 2001 Gale Group