MINI defends its accounting:
biz.yahoo.com
RMonday April 1, 1:59 pm Eastern Time
Press Release
SOURCE: Mobile Mini, Inc.
Mobile Mini Files Annual Report On Form 10-K
Provides Expanded Information about Its Lease Fleet
TEMPE, Ariz.--(BUSINESS WIRE)--April 1, 2002--Mobile Mini, Inc. (NASDAQ National Market: MINI) today reported that its Annual Report on Form 10-K for the year ended December 31, 2001 provides expanded information about its lease fleet.
Mobile Mini's lease fleet at December 31, 2001 was comprised of over 70,000 steel storage containers, steel offices, wood-framed offices and van trailers.
Valuation
With respect to valuation, in the most recent appraisal completed in January 2002 by an independent appraisal firm selected by Mobile Mini's new asset based lenders, the Company's lease fleet was appraised at a fair market value in excess of 120% of the net book value at which it was carried on the Company's balance sheet. The 10-K filing notes that with respect to wood-framed mobile offices and van trailers included in the Company's lease fleet, the appraiser differentiated the value of the units based on the age of the assets. However, with respect to the storage containers and steel offices included in the fleet, the appraiser did not differentiate value based upon the age of the asset or the length of time it has been in the fleet. The steel product maintains its value due to the nature of the assets and Mobile Mini's stringent maintenance policy which keeps these assets in a similar condition to which they were in when they were initially refurbished or manufactured by the Company.
Depreciation Policy
The 10-K points out that the Company depreciates its lease fleet using the straight line method over the units' estimated useful life of 20 years to residual values of 70% on steel units and 50% on wood office units. The Company's largest competitor in the container storage market uses the same depreciation rate and residual value with respect to its storage containers. The Company's depreciation rate and residual value with respect of wood office units are consistent with the rates used by a majority of the leading wood office leasing companies. Van trailers, which represent a small part of Mobile Mini's fleet, are depreciated over seven years to a 20% residual value. Van trailers are only added to the fleet in connection with acquisitions of portable storage businesses and the Company intends to sell these units fairly rapidly because the Company considers van trailers a sub-standard method of portable storage.
The 10-K notes that Mobile Mini periodically reviews its depreciation policy against various factors, including the following:
Results of its lenders' independent appraisal of the lease fleet;
Practices of the larger competitors in the industry;
Profit margins Mobile Mini is achieving on sales of depreciated units; and
Lease rates Mobile Mini obtains on older units.
Sales of Containers
The Company noted in the 10-K that it does not sell containers from its lease fleet on a regular basis and that the majority of its container sales are very customized containers or containers that have been acquired for immediate resale. The Company noted, however, that it does sell some containers that have been it its lease fleet for some period of time. The 10-K contains information on profit margins on containers sold since 1997, based upon how long the container has been owned by the Company. The filing reported that profit margins increase on containers that had been in the lease fleet for greater lengths of time (and had therefore been significantly depreciated) because fair market value does not decline over the useful life of the container, as noted in the appraiser's report.
Rental Rates
Because steel storage containers maintain their value over time when properly maintained, Mobile Mini is able to lease containers that have been in the lease fleet for various lengths of time at similar rates, without regard to the age of the container. A review of the lease rates for eight types of containers in Mobile Mini's lease fleet illustrates that a container's age is not a meaningful factor in the lease rate. Today's filing points out that in addition to size and type of unit, lease rates vary principally by the length of contractual term, custom features, market conditions, geographic location, and to some extent competition.
2001 Lease Fleet Expansion and Current Composition of Lease Fleet
The 10-K contains detailed information as to the types of units added to the lease fleet and the cost of those units. The primary way Mobile Mini enlarges the lease fleet is through the purchase of used containers and containers obtained through new branch acquisitions, both of which it refurbishes and customizes. Refurbishment generally includes removing rust and dents, repairing floors, sidewalls and ceilings, painting, repairing seals, and adding signage and Mobile Mini's patented locking system. Customization may involve adding Mobile Mini's proprietary door system, adding shelving and splitting 40-foot units into two or more units of varying size.
Mobile Mini's average cost to purchase containers and freight them to the branch location, where they are initially to be placed in service, was $1,936 last year. The average value added to these units through refurbishment and/or customization was approximately $1,040, for a total cost of $2,976. The average cost per unit added to the lease fleet last year was higher than this amount due to the purchase of higher priced wood mobile offices, the manufacture of more expensive steel offices and storage containers, and the refurbishment of a significant number of units that had been added to the lease fleet through acquisitions in 1999 and 2000.
Maintenance Cost
The filing reports that the Company spent approximately 1.7% of its lease revenues to maintain its lease fleet. These costs, which are expensed when incurred, include the cost of periodically repainting containers and the cost of repairing any damage caused by handling of the units and by their exposure to the elements.
Mobile Mini, Inc. is the nation's leading provider of portable storage solutions through its fleet of over 71,000 portable storage units and portable offices at March 31, 2002. The Company currently has 36 branches and operates in 19 states. For two consecutive years Mobile Mini was named to Forbes Magazine's list of the 200 Best Small Companies in America and in 2001, the Company was named to the inaugural list of the 100 Fastest-Growing Publicly Held Small Businesses in America by Fortune Magazine (Small Business). Mobile Mini is included on the Russell 2000 and 3000 Indexes and the S&P Small Cap Index. |
