FORM 10-Q1

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



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.D. C. 20549

                                _________________________----------------

                                    FORM 10-Q

               QUARTERLY REPORT UNDERPURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934



For the quarter ended September 30, 1997
                        Commission File No.FOR THE QUARTER ENDED MARCH 31, 1998              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, CALIFORNIACA 94550
                    (Address of principal executive offices)

         Registrant's telephone number:                   (510)(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
                         ______                    _______No.
                   -----                    -----



        At NovemberMay 11, 1997, 15,021,9181998, 14,144,730 shares of Registrant's Common Stock were
outstanding.




_________________________================================================================================

   McGrath RentCorp
                                                  Third Quarter 1997 Form 10-Q
                                                                        Page 12

                          PART 1.I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

                                  McGRATH RENTCORP
                         CONSOLIDATED STATEMENTS OF INCOME
                                     (unaudited)

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three months ended Nine months ended September 30, September 30, --------------------------- ----------------------------- --------------------------------------------------------------------------------------- THREE MONTHS ENDED MARCH 31, -------------------------------- 1998 1997 1996 1997 1996 ----------- ----------- ------------ ------------ --------------------------------------------------------------------------------------- REVENUES:REVENUES Rental operations-$16,980,893 $14,327,001 Rental $16,067,741 $12,321,796 $ 45,138,552 $35,573,650 Rental related services 3,608,892 3,920,071 8,892,168 7,672,245Related Services 2,222,709 2,640,842 ----------- ----------- ------------ ----------- 19,676,633 16,241,867 54,030,720 43,245,895Rental Operations 19,203,602 16,967,843 Sales and related services 25,675,496 9,255,338 51,621,927 19,598,0407,952,147 9,601,497 Other 194,392 272,170 ----------- ----------- ------------Total Revenues 27,350,141 26,841,510 ----------- ----------- COSTS AND EXPENSES Direct Costs of Rental Operations Depreciation 3,846,691 3,423,441 Rental Related Services 1,664,022 1,923,973 Other 3,025,471 2,641,926 ----------- ----------- Total revenues 45,352,129 25,497,205 105,652,647 62,843,935Direct Costs of Rental Operations 8,536,184 7,989,340 Costs of Sales 5,249,373 6,261,196 ----------- ----------- ------------ ----------- COSTS & EXPENSES: Direct costs of rental operations- Depreciation 3,649,571 3,108,151 10,537,344 9,188,972 Rental related services 1,991,688 2,048,185 5,606,739 4,227,682 Other direct rental costs 2,296,141 2,671,884 6,763,243 6,231,218Total Costs 13,785,557 14,250,536 ----------- ----------- ------------ ----------- 7,937,400 7,828,220 22,907,326 19,647,872 Cost of sales and related services 17,878,601 6,064,184 35,533,649 13,257,615 ----------- ----------- ------------ ----------- 25,816,001 13,892,404 58,440,975 32,905,487 ----------- ----------- ------------ ----------- Gross margin 19,536,128 11,604,801 47,211,672 29,938,448Margin 13,564,584 12,590,974 Selling and administrative expenses 5,429,859 3,729,591 12,970,953 9,576,391Administrative 3,704,663 3,357,564 ----------- ----------- ------------ ----------- Income from operations 14,106,269 7,875,210 34,240,719 20,362,057Operations 9,859,921 9,233,410 Interest expense 1,042,716 744,275 2,905,047 2,061,7011,450,846 872,885 ----------- ----------- ------------Income Before Provision for Income Taxes 8,409,075 8,360,525 Provision for Income Taxes 3,313,176 3,307,367 ----------- ----------- Income before provision for income taxes 13,063,553 7,130,935 31,335,672 18,300,356Before Minority Interest 5,095,899 5,053,158 Minority Interest in Income of Subsidiary 128,200 133,670 ----------- ----------- ------------ ----------- Provision for income taxes 5,361,199 2,667,070 12,632,183 7,110,824 ----------- ----------- ------------ ----------- Net incomeIncome $ 7,702,3544,967,699 $ 4,463,8654,919,488 =========== =========== Earnings Per Share: Basic $ 18,703,489 $11,189,532 ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- Net income per share0.34 0.33 =========== =========== Diluted $ 0.51 $ 0.29 $ 1.23 $ 0.73 ----------- ----------- ------------ ----------- ----------- ----------- ------------ -----------
0.34 0.33 =========== =========== Shares Used in Per Share Calculation: Basic 14,435,790 14,976,518 Diluted 14,634,560 15,123,004 - --------------------------------------------------------------------------------------- The accompanying notes are an integral part of these consolidated financial statements. 1 McGrath RentCorp Third Quarter 1997 Form 10-Q Page 23 McGRATH RENTCORP CONSOLIDATED BALANCE SHEETS (unaudited)
CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, December- --------------------------------------------------------------------------------------------- MARCH 31, DECEMBER 31, --------------------------------- 1998 1997 1996 ------------ ------------- --------------------------------------------------------------------------------------------- ASSETS Cash $ 1,341,9981,442,839 $ 686,333537,875 Accounts receivable,Receivable, less allowance for doubtful accounts of $650,000 in 1998 and 1997 and $605,000 in 1996 25,849,843 19,919,95420,323,911 21,794,028 Rental equipment,Equipment, at cost: Relocatable modular offices 179,968,456 158,376,950Modular Offices 200,067,260 196,132,895 Electronic test instruments 48,867,451 43,335,413 ------------ ------------ 228,835,907 201,712,363Test Instruments 52,341,460 50,350,777 ------------- ------------- 252,408,720 246,483,672 Less - Accumulated depreciation (70,142,706) (64,419,888) ------------ ------------ 158,693,201 137,292,475Depreciation (74,405,307) (72,398,374) ------------- ------------- Rental Equipment, net 178,003,413 174,085,298 ------------- ------------- Land, 20,167,647 20,167,647at cost 20,495,975 20,495,975 Buildings, Land improvements, furnitureImprovements, Equipment and equipment,Furniture, at cost, less accumulated depreciation of $2,934,896$3,500,913 in 1998 and $3,177,213 in 1997 29,350,043 28,921,513 Prepaid Expenses and $3,376,803 in 1996 25,416,597 19,572,015 Prepaid expenses and other assets 6,494,117 2,396,935 ------------ ------------ $237,963,403 $200,035,359 ------------ ------------ ------------ ------------Other Assets 7,351,873 6,557,534 ------------- ------------- Total Assets $ 256,968,054 $ 252,392,223 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Notes payablePayable $ 65,800,00097,746,987 $ 53,850,00082,000,000 Accounts payablePayable and accrued liabilities 22,757,765 15,280,543Accrued Liabilities 16,535,976 27,047,173 Deferred income 7,313,239 5,226,803Income 7,900,279 6,928,532 Minority Interest in Subsidiary 1,651,258 1,523,058 Deferred income taxes 37,627,123 36,869,734 ------------ ------------Income Taxes 39,546,912 36,247,956 ------------- ------------- Total liabilities 133,498,127 111,227,080 ------------ ------------Liabilities 163,381,412 153,746,719 ------------- ------------- Shareholders' equity:Equity: Common stock,Stock, no par value - Authorized - 4O,OOO,OOO-- 40,000,000 shares Outstanding - 15,015,918-- 14,107,890 shares in 1998 and 14,521,790 shares in 1997 7,697,531 7,756,054 Retained Earnings 85,889,112 90,889,450 ------------- ------------- Total Shareholders' Equity 93,586,643 98,645,504 ------------- ------------- Total Liabilities and 14,797,918 in 1996 7,718,062 7,161,168 Retained earnings 96,747,214 81,647,111Shareholders' Equity $ 256,968,055 $ 252,392,223 ============= ============= - --------------------------------------------------------------------------------------------- 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, ---------------------------------- 1998 1997 ------------ ------------ Total shareholders' equity 104,465,276 88,808,279 ------------ ------------ $237,963,403 $200,035,359 ------------ ------------ ------------ ------------
The accompanying notes are an integral part of these financial statements. McGrath RentCorp Third Quarter 1997 Form 10-Q Page 3
CONSOLIDATED STATEMENTS OF CASH FLOWS Increase (decrease) in cash (Unaudited) Nine months ended September 30, 1997 1996 ------------ ------------- ------------------------------------------------------------------------------------------- Cash flows from operating activities:CASH FLOWS FROM OPERATING ACTIVITIES: Net incomeIncome $ 18,703,4894,967,699 $ 11,189,5324,919,488 Adjustments to reconcile net incomeReconcile Net Income to net cash providedNet Cash Provided by operating activities:Operating Activities: Depreciation 11,191,451 9,787,419and Amortization 4,201,698 3,657,614 Gain on saleSale of rental equipment (5,453,700) (3,606,691)Rental Equipment (1,390,658) (1,513,842) Proceeds from Sale of Rental Equipment 3,496,525 3,542,735 Change in:In: Accounts receivable (5,929,889) (5,380,276) PrepaidsReceivable 1,470,117 2,224,004 Prepaid Expenses and other assets (4,097,182) (428,495)Other Assets (794,339) (1,642,300) Accounts payablePayable and accrued liabilities 7,313,283 3,931,629Accrued Liabilities (10,635,727) 1,364,540 Deferred income 2,086,436 (341,885)Income 971,747 (213,330) Deferred income taxes 757,389 1,826,972Income Taxes 3,298,956 2,524,553 ------------ ------------ Net cash providedCash Provided by operating activities 24,571,277 16,978,205Operating Activities 5,586,018 14,863,462 ------------ ------------ CASH FLOW FROM INVESTING ACTIVITIES: Purchase of Rental Equipment (9,870,673) (9,980,850) Purchase of Buildings, Land Improvements, Equipment and Furniture (783,537) (1,782,391) ------------ ------------ Net Cash Used in Investing Activities (10,654,210) (11,763,241) ------------ ------------ Cash flowsFlow from investing activities: PurchaseFinancing Activities: Net Borrowings Under Lines of rental equipment (41,240,592) (17,598,298) Purchase of land --- (678,347) Purchase of land improvements, furniture and equipment (6,498,689) (4,277,225)Credit 15,746,987 (1,850,000) Net Proceeds from salethe Exercise of rental equipment 14,756,222 9,511,633Stock Options 183,175 478,057 Repurchase of Common Stock (8,795,263) -- Payment of Dividends (1,161,743) (1,037,814) ------------ ------------ Net cash usedCash Provided (Used) by Financing Activities 5,973,156 (2,409,757) ------------ ------------ Net Increase in investing activities (32,983,059) (13,042,237)Cash 904,964 690,464 Cash Balance, Beginning of Period 537,875 686,333 ------------ ------------ Cash flows from financing activities: Net borrowings 11,950,000 8,645,000 PaymentBalance, End of dividends (3,439,447) (3,048,133) Repurchase of common stock --- (8,778,775) Net proceeds fromPeriod $ 1,442,839 $ 1,376,797 ============ ============ Interest Paid During the exercise of stock options 556,894 92,101 ------------ ------------ Net cash provided (used) by financing activities 9,067,447 (3,089,807) ------------ ------------ Net increase (decrease) in cash 655,665 846,161 Cash balance, beginning of period 686,333 221,075 ------------ ------------ Cash balance, end of periodPeriod $ 1,341,9983,302,380 $ 1,067,236 ------------ ------------ ------------ ------------ Interest paid during period892,867 ============ ============ Income Taxes Paid During the Period $ 2,859,79014,220 $ 2,028,226 ------------ ------------ ------------ ------------ Income taxes paid during period $ 8,274,674 $ 5,256,506 ------------ ------------731,200 ============ ============ Dividends declaredDeclared but not yet paidPaid $ 1,201,7531,414,473 $ 1,035,854 ------------ ------------ ------------ ------------
1,200,681 ============ ============ - ------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these consolidated financial statements. 3 McGrath RentCorp Third Quarter 1997 Form 10-Q Page 45 McGRATH RENTCORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 1997 __________________________________________MARCH 31, 1998 NOTE 1. CONSOLIDATED FINANCIAL INFORMATION The consolidated financial information for the ninethree months ended September 30, 1997March 31, 1998 has not been audited, but in the opinion of management, all adjustments (consisting of only of 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 ninethree months ended September 30, 1997March 31, 1998 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. The number of outstanding shares and equivalent shares used in the earnings per common share calculations were as follows:
Primary Fully Diluted ---------- ------------- Three months ended: September 30, 1997 15,242,764 15,250,148 September 30, 1996 15,172,408 15,194,300 Nine months ended: September 30, 1997 15,192,887 15,235,692 September 30, 1996 15,403,986 15,468,252
3. The Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share", which modifies the way in which earnings per share (EPS) is calculated and disclosed effective for periods ending after December 15, 1997. Primary EPS will be replaced by basic EPS which is computed by dividing reported net income by the weighted average number of shares of common stock outstanding during the period. Fully diluted EPS will be replaced with diluted EPS which is computed by dividing reported net income by the weighted average number of shares of common stock and dilutive common equivalent shares outstanding during the period. Common stock equivalents result from dilutive stock options computed using the treasury stock method with the average share price for the reported period. When implemented, the effect of this accounting change on previously reported EPS data is not significant. 4.NOTES PAYABLE In July 1997,April 1998, the Company entered into a new creditloan agreement amending and restating it's unsecured line of credit (the "Agreement") with one of its banks which expires June 30, 1999 and permits it to borrow up$15,000,000 on a short-term basis. The loan is required to $70,000,000.be repaid on the earlier of July 31, 1998 or the funding date of a contemplated private offering of debt securities. The Agreement requires the Company to pay interest at prime minus one-half percent or, at the Company's election, other rate options available under the Agreement. In addition, the Company pays a commitment fee on the daily average unused portion of the available line. Among other terms, the4 McGrath RentCorp Third Quarter 1997 Form 10-Q Page 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 1997 __________________________________________ Agreement requires (i) the Company to maintain shareholders' equity of not less than $77,800,000 plus 50% of all net income generated subsequent to June 30, 1997, (ii) a debt-to-equity ratio (excluding deferred income taxes) of not more than 3 to 1, (iii) interest coverage (income from operations compared to interest expense) of not less than 2 to 1, and (iv) debt service coverage of not less than 1.15 to 1. If the Company does not amend or renegotiate this Agreement for an additional time period prior to its expiration date, the principal amount outstanding at that time will be converted to a two-year term loan with the principal due and payable in eight (8) quarterly installments. In addition to the $70,000,000 unsecured line of credit, the Company has a $3,000,000 committed line of credit related to its cash management services and has $10,000,000 of uncommitted optional advance facilities all of which expire June 30, 1998. McGrath RentCorp Third Quarter 1997 Form 10-Q Page 6 ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Three and Nine Months Ended September 30,OPERATIONS THREE MONTHS ENDED MARCH 31, 1998 AND 1997 and 1996 McGrath RentCorp (the "Company") is engaged in the business of renting and selling relocatable modular offices and classrooms under its trade name "Mobile Modular," and electronic test and measurement instruments under the names "McGrath RentCorp" and "Rentelco". Although the Company's primary emphasis is on rentals, both modulars and electronics are sold to direct-use customers. The Company also manufactures portable classrooms through its majority owned (73.2%) subsidiary, Enviroplex, Inc., for direct sale to school districts. Rental revenues for the three and nine months ended September 30, 1997March 31, 1998 increased $3,745,945 (30%$2,653,892 (19%) and $9,564,902 (27%), respectively, over the same periodscomparative period in 1997. Modulars contributed 71.2%1997, with Mobile Modular Management Corporation ("MMMC") contributing $1,922,046 and 75.8% of theelectronics contributing $731,846. The significant rental revenue increase by MMMC resulted from the large quantities of equipment shipped to schools in 1997 for the three and nine months ended September 30,latter part of 1997. Average utilization for electronics during the first nine monthsquarter increased for Modulars, from 70.5%53.9% in 1997 to 80.0%,56.4% in 1998 and slightly declined for Electronics,modulars from 55.2%79.3% in 1997 to 55.0%76.6% in 1998. Modular utilization declined as a result of a substantial increase in the level of inventory through the addition of new equipment. Rental related services revenues for the first quarter of 1998 declined $418,133 (16%) as compared to the same period in 1996. The increase in utilization for Modulars is primarily the1997 as a result of rentalsless shipments and site requirements in 1998. Gross margins declined from 27% in 1997 to implement the class size reduction program25% in California schools. Rental related service revenues1998. Sales for the three months ended September 30, 1997 decreased $311,179 (8%March 31, 1998 declined $1,649,350 (17%) and for the nine months ended September 30, 1997 increased $1,219,923 (16%), respectively,as compared to the same periods in 1996. The three month comparative revenue decline resulted from many schools optingperiod in 1997 to include the normal upfront charges in the rental rate. The nine month comparative increase was primarily due to one commercial projectfewer new equipment sales by MMMC to school districts. Electronics and Enviroplex sales volumes were consistent with significant site work requirements which occurredthe 1997 comparative period. However, Enviroplex's deferred income increased $1,614,262 as it experienced delays in the first quarter of 1997. The gross margins for rental related services declined for the nine month comparative period from 45% in 1996shipment to 37% in 1997 partiallyschool districts as a result of the project noted above being performed at a lower gross margin. Sales and related servicesinclement weather in California. Gross margin on sales declined slightly for the three and nine months ended September 30,quarter from 35% in 1997 increased $16,420,158 (177%) and $32,023,887 (163%), respectively, over the same periodsto 34% in 1996. The table below indicates the sales and related services contribution for Modulars, Enviroplex and Electronics for nine months ended September 30, 1997 compared with the nine months ended September 30, 1996. Nine months ended September 30, ------------------------------- Increase Over 1997 1996 Prior Period ----------- ----------- ------------- Modulars $29,156,007 $ 9,216,794 $19,939,213 Enviroplex 16,755,733 6,150,920 10,604,813 Electronics 5,710,187 4,230,326 1,479,861 ----------- ----------- ------------ $51,621,927 $19,598,040 $32,023,887 ----------- ----------- ------------ ----------- ----------- ------------ McGrath RentCorp Third Quarter 1997 Form 10-Q Page 7 The significant increase in sales and related services for Modulars and Enviroplex is directly related1998. Sales continue to the higher demand by school districts in conjunction with the class size reduction program in California. Sales and related service revenues from school districts comprised 77% and 33%occur routinely as a normal part of the ModularsCompany's rental business; however, these sales and related services revenues for the nine months ended September 30, 1997 and 1996, respectively, while Enviroplex sells substantially all of its product to school districts. Future sales under the class size reduction program for the Company are subject to the state's funding of the program, the requirements of the various school districts and available supplies. Management believes the present sales and related services revenue levels for Modulars, and to a lesser degree Enviroplex, may not be sustainable in the future. Management continues to believe that sales and related servicescan fluctuate from quarter to quarter and year to year fluctuate baseddepending on customer requirements. Gross margins on salesdemands and related services declined slightly for the nine month period from 32.4% in 1996 to 31.2% in 1997.requirements. Depreciation on rental equipment for the three and nine months ended September 30, 1997March 31, 1998 increased $541,420 (17%$423,250 (12%) and $1,348,372 (15%), respectively, over the same periodscomparative period in 19961997 due to the additionsadditional rental equipment purchased during 1997. Rental equipment, at cost, increased 21% between March 31, 1997 and March 31, 1998. Other direct costs of both modular and electronic rental equipment.operations increased $383,545 (15%) over the first quarter in 1997. This increase primarily resulted from more customers requesting that certain lease costs be charged to them in the rental rate rather than as a one-time charge resulting in higher amortization expense of lease costs ($256,748) for items recovered in the customer's rental rate. Selling and administrative expenses increased $347,099 (10%) for the three and nine months ended September 30, 1997 increased $1,700,268 (46%) and $3,394,562 (35%), respectively, over the same periods in 1996. The increased business activity in the modular business for class size reduction has also translated into higher personnel costs for the nine months ended September 30, 1997 over the same nine month period in 1996. Personnel costs increased $1,580,152 overMarch 31, 1998 compared to the same period in 1996 and include1997 due to higher personnel costs. Personnel costs increased $318,095 over the comparative quarter in 1997 resulting from additional staff for sales and support, increased temporary contract labor, and increasedincluding the addition of electronics sales and performance bonuses. Additionally, selling and administrative expenses for Enviroplex increased $908,894 duringpeople on the nine month comparative period due to increased sales activity and includes the reduction of net income by the portion of earnings of Enviroplex related to the minority shareholder's interest.East Coast. Interest expense for the three and nine months ended September 30,increased $577,961 (66%) in 1998 over 1997 increased $298,441 (40%) and $843,346 (41%), respectively, over the same periods in 1996 as a result of 47%a corresponding 66% higher average borrowing levelslevel in 1998. The debt increase funded part of the significant rental equipment purchases made during the comparative period.1997. Income before provision for taxes, net income taxes for the three and nine months ended September 30, 1997 increased $5,932,618 (83%) and $13,878,662 (68%), respectively, over the same periods in 1996. Net income increased $3,238,489 (73%) for the three month period and $7,513,957 (67%) for the nine month period over the same periods in 1996. Earningsbasic earnings per share for the threeincreased slightly in 1998 as compared to 1997 and nine months ended September 30,amounted to $8,409,075, $4,967,699 and $0.34 per share, respectively. LIQUIDITY AND CAPITAL RESOURCES The Company had a total liabilities to equity ratio of 1.75 to 1 and 1.56 to 1 as of March 31, 1998 and December 31, 1997, increased 76%, from $0.29 to $0.51, and 68%, from $0.73 to $1.23. McGrath RentCorp Third Quarter 1997 Form 10-Q Page 8 Liquidity and Capital Resources.respectively. The debt (notes payable) to equity ratio was 0.631.04 to 1 at September 30, 1997 compared to 0.61 to 1 at December 31, 1996. The debt (total liabilities) to equity ratio at the end of the current period was 1.28 to 1 as compared to 1.25and 0.83 to 1 as of March 31, 1998 and December 31, 1996.1997, respectively. 5 7 The Company has made purchases of shares of its common stock from time to time in the over-the-counter market (NASDQ)(NASDAQ) and/or through privately negotiated, large block transactions under an authorization of the Board of Directors. Shares repurchased by the Company will beare cancelled and returned to the status of authorized but unissued stock. TheDuring the three months ended March 31, 1998, the Company has not repurchased any439,450 shares of its outstanding common stock for an aggregate purchase price of $8,795,263 (or an average price of $20.01 per share). On March 26, 1998, the Board of Directors authorized the repurchase of up to an additional 1,000,000 shares of its common stock during 1997 and currently is authorizedstock; no repurchases have been made to purchase up to 1,000,000 shares. The Company's primary use of funds is to purchase rental equipment and sales inventory, and funds will continue to be used fordate under this purpose in the future.new authorization. The Company also pays quarterly dividends, whichbelieves that its needs for working capital and capital expenditures through 1998 and beyond will constitute an additional use ofadequately be met by cash in 1997. McGrath RentCorp Third Quarter 1997 Form 10-Q Page 9flow and bank borrowings. PART II.II OTHER INFORMATION ITEM 5.3. OTHER INFORMATION In September 1997,On March 26, 1998, the Company declared a quarterly dividend on its Common Stock; the dividend was $0.08$0.10 per share. Subject to its continued profitability and favorable cash flow, the Company intends to continue the payment of quarterly dividends. ITEM 6.4. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS. Index to exhibits filed herewith as part of this report: Exhibit Number Title 4.1 $3,000,000 Committed Credit Facility dated July 29, 1997 between the Company and Union Bank of California, N.A. 4.2 $5,000,000 Optional Advance Facility Extension dated July 29, 1997 between the Company and Union Bank of California, N.A. 4.3 $5,000,000 Optional Advance Facility Extension dated August 13, 1997 between the Company and Fleet Bank, N.A.Exhibits.
NUMBER DESCRIPTION METHOD OF FILING ------ ----------- ---------------- 4.1 Third Amendment to the Restated Credit Agreement Filed herewith. 4.2 $15,000,000 Short-Term Business Loan Agreement Filed herewith. 27.1 Financial Data Schedule Filed herewith.
(b) REPORTS ON FORMReports on Form 8-K. No reports on form 8-K have been filed during the quarter for which this report is filed. McGrath RentCorp Third Quarter 1997 Form 10-Q Page 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act ofPURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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.THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. Date: NovemberMay 11, 1997 McGRATH1998 MCGRATH RENTCORP By:/s/by: /s/ Delight Saxton ----------------------------------------------------- Delight Saxton Senior Vice President, Chief Financial Officer (Chief Accounting Officer) and Senior Vice PresidentSecretary 6 8 INDEX TO EXHIBITS
NUMBER DESCRIPTION - ------ ----------- 4.1 Third Amendment to the Restated Credit Agreement 4.2 $15,000,000 Short-Term Business Loan Agreement 27.1 Financial Data Schedule