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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                         ------------------------------
                                    Form 10-K

     (Mark One)

[X]      ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OR THE  SECURITIES
         EXCHANGE ACT OF 1934 [Fee  Required] For the fiscal year ended December
         31, 1996

[ ]      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934 [No Fee Required] For the  transition  period from
         ___________ to ________________
   
                         ------------------------------
                         Commission File Number 1-12804
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                                mobile mini, inc.
             (Exact Name of Registrant as Specified in its Charter)

            Delaware                                      86-0748362
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)
                                               
                              1834 West 3rd Street
                              Tempe, Arizona 85281
                         (Address of Principal Executive
                                    Offices)

                                 (602) 894-6311
                         (Registrant's Telephone Number)

Securities Registered Under Section 12(g) of the Exchange Act:
         Title of Class                Name of Each Exchange on Which Registered
 Common Stock, $.01 par value                NASDAQ Stock Market National Market
Warrant to Purchase Common Stock            NASDAQ Stock Market Small Cap Market
      at $5.00 per share

         Indicate by checkmark 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 if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K.
                                      -1-

         The aggregate  market value on March 25, 1997 of the voting stock owned
by non-affiliates of the registrant was $11,872,272 (calculated by excluding all
shares held by executive officers, directors and holders of five percent of more
of the voting power of the registrant,  without  conceding that such persons are
"affiliates" of the registrant for purposes of the federal securities law).


         As of March 25, 1997,  there were  outstanding  6,739,324 shares of the
issuer's common stock, par value $.01.


         Documents  incorporated  by reference:  Portions of the Proxy Statement
for the Registrant's 1997 Annual Meeting of Stockholders are incorporated herein
by reference in Part III of this Form 10-K to the extent stated herein.
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                                       -2-

                                     PART I


         This Report contains forward-looking statements which involve risks and
uncertainties.  The  actual  results of Mobile  Mini,  Inc.  (together  with its
wholly-owned  subsidiaries,   the  "Company"  or  "Mobile  Mini")  could  differ
materially  from those  anticipated  in these  forward-looking  statements  as a
result of certain  factors,  including those set forth in this Form 10-K and the
Company's other  Securities and Exchange  Commission  filings.  See particularly
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Operations".


ITEM 1.  DESCRIPTION OF BUSINESS.


General

         Mobile Mini, Inc. (the "Company") is a Delaware corporation capitalized
effective December 31, 1993. From 1983 through 1993, the business  operations of
the Company were conducted as a sole  proprietorship  by Richard E. Bunger under
the tradename "mobile mini storage systems"  ("MMSS").  The business  operations
transferred  to the Company were  comprised  of MMSS and a related  corporation,
Delivery Design Systems,  Inc. ("DDS").  The Company's  subsidiaries include DDS
which   formerly   engaged  in  the  business  of  designing,   developing   and
manufacturing  truck  trailers  and other  delivery  systems  for the  Company's
portable  storage  containers  and  Mobile  Mini I, Inc.  which  engages  in the
business of acquiring and maintaining certain of the Company's  facilities.  The
business and assets of DDS were transferred to the Company in 1996.


         The Company's  operations  commenced in Phoenix,  Arizona, in 1983 when
Mr. Bunger,  then a designer and builder of integrated  animal  production (feed
lot) and traditional mini-storage facilities,  recognized the potential of using
ocean-going  shipping  containers  for inland  portable  storage.  Mr.  Bunger's
experience in the mini-storage  industry  indicated that the containers could be
profitably  leased as storage units to a wide range of business,  individual and
governmental users. By 1986 the portable storage concept had been proven and the
business was expanded through an additional sales and leasing branch established
in  Tucson,  Arizona.  In 1988,  the  Company  commenced  operations  in Rialto,
California to service the greater Los Angeles  area. In early 1990,  the Company
relocated  its  manufacturing  facility  from its original  site in Phoenix to a
heavy-industry  zoned  industrial  park  located  near  Maricopa,   Arizona  and
administrative  offices were established in Tempe, Arizona. In 1994, the Company
opened a "satellite" branch in San Diego,  California which is serviced from its
Rialto  "hub."  Also in 1994,  the  Company  opened  operations  in Texas by the
establishment of hub locations in Houston and Dallas/Fort  Worth. In early 1995,
the  Company  opened   satellite   locations  in  the  San  Antonio  and  Austin
metropolitan areas.


Products


         The Company designs and manufactures portable steel storage containers,
portable offices and telecommunication shelters and acquires,  refurbishes,  and
modifies  ocean-going  shipping  containers  for  sales  and  leasing  as inland
portable  storage units.  In addition,  the Company  designs and  manufactures a
variety of delivery systems to complement the Company's  storage container sales
and leasing activities. 
                                      -3-

         The  principal  products  of the  Company are  portable  steel  storage
containers,  portable  offices,  telecommunications  shelters and certain  other
products used in conjunction with the portable storage  containers.  The Company
also produces certain steel products built to special order specifications.  The
Company has patented,  proprietary or trade secret rights in all products it has
designed and  manufactured.  The locking system for the Company's  containers is
patented and provides virtually impenetrable security to the storage container.


         The  Company's  main  product  in its  storage  market  segment  is the
portable steel storage  container.  The Company acquires used ocean-going  cargo
containers which it reconditions and retrofits with its patented locking system.
To compensate for supply and price  fluctuations  associated with acquiring used
ocean-going  containers,  the Company  also  manufactures  various  lines of new
containers,  featuring  the  Company's  proprietary  "W" or "stud wall"  panels.
Storage  container units may be significantly  modified and turned into portable
offices, portable storage facilities,  open-sided storage and retail facilities,
as well as a large variety of other applications.


         The Company  sells and leases its storage  containers to a wide variety
of individual,  business and governmental  users. The Company's lease activities
include both on-site and off-site  leasing.  "Off-site"  leasing occurs when the
Company  leases  a  portable  storage  container  which is then  located  at the
customer's  place of use.  "On-site"  leasing occurs when the Company stores the
portable  container  containing  the  customer's  goods at one of the  Company's
facilities,  which are  similar to a standard  mini-storage  facility,  but with
increased security, ease of access and container delivery and pick-up service.


         In  mid-1995,  Mobile  Mini  established  a  telecommunication  shelter
division to complement  its storage  container  business,  diversify its product
line and target the domestic and  international  markets.  The Company's modular
telecommunication shelters, marketed under the name "Mobile Telestructures", can
be built in a vast variety of designs,  sizes,  strengths,  exterior appearances
and configurations.  The Company has developed proprietary technology that makes
these units very  portable,  lightweight,  highly secure and  virtually  weather
resistant.  The Company intends to devote additional  resources toward marketing
this product in 1997.


         The  Company has  developed  technology  to add a stucco  finish to the
exterior of its all steel buildings,  making them more  aesthetically  appealing
while retaining the strength and durability afforded by steel. This attribute is
especially   important   to  the   Mobile   Telestructures   operations,   where
telecommunication  companies are under  pressure to use shelters and towers that
blend in with the locale at which they are located.  In addition,  in 1996,  the
Company  introduced  its  ArmorKoat  line of  telecommunication  shelters  which
feature a specially  formulated  concrete  exterior coat to its steel  shelters.
This  formulation  increases the strength of the building and can meet the needs
of customers that require concrete buildings.


         The  Company  also  designs,   develops  and  manufactures  a  complete
proprietary  line of truck  trailers  and other  delivery  systems  utilized  in
connection with its storage container sales and leasing activities.  The Company
provides  delivery  and  pick-up  services  for  customers  at their  places  of
business, homes or other locations.
                                      -4-

Business Restructuring


         The  Company  previously  was  involved  in the  manufacture,  sale and
leasing of modular steel buildings in the state of Arizona. These buildings were
used primarily as portable schools, but could be used for a variety of purposes.
Although  the  Company  believes  its  modular  buildings  were  superior to the
wood-framed  buildings  offered by its competitors,  the Company was not able to
generate  acceptable  margins on this product  line.  During  1996,  the Company
implemented a strategic restructuring program designed to concentrate management
effort and resources and better position itself to achieve its strategic  growth
objectives.  As a result of this  program,  the Company's  1996 results  include
charges of $700,000 ($400,000 after tax, or $.06 per share) for costs associated
with restructuring the Company's manufacturing  operations and for other related
charges.  These  charges were recorded in the fourth  quarter of 1996,  and were
comprised of the write-down of assets used in the Company's discontinued modular
building  operations  and  related  severance  obligations  ($300,000),  and the
write-down  of other  fixed  assets  ($400,000).  By  discontinuing  its modular
building  operations,  the  Company  will  be  able to  utilize  the  management
resources and production capacity previously utilized by this division to expand
the Company's  telecommunications  shelter  business and its  container  leasing
operations.


Marketing


         The  Company  markets  its  storage  containers  both  directly  to the
consumer  and through its  national  dealer  network.  The Company has sales and
leasing  branches  in  Phoenix  and  Tucson,  Arizona,  San  Diego  and  Rialto,
California  and  Houston,  Dallas,  San Antonio and Austin,  Texas.  The Company
services  the greater Los Angeles,  California  area from its Rialto hub and its
Texas operations from its Houston and Dallas/Ft. Worth hubs.


         The  Company  sells and  leases  its  storage  containers  directly  to
consumers from each of its branches. With respect to leases, the Company engages
in both off-site and on-site  leasing.  Marketing for individual  consumer sales
and rentals is primarily  through Yellow Page ads,  direct mailings and customer
referrals.


         The  Company  markets  its Mobile  Telestructure  products  directly to
telecommunication   companies  as  well  as  to  companies   providing  turn-key
installations of shelters and towers.


         Sales are also made through the Company's national dealer network which
currently  provides  the  Company's  manufactured  containers  to 53 dealers for
retail  sale.  Such  dealers are in 75 separate  locations  in 28 states and one
Canadian  province.  Marketing  to dealers and  potential  dealers is  primarily
through  direct  solicitation,  trade  shows,  trade  magazine  advertising  and
referrals. The dealers receive pre-fabricated containers which they assemble and
paint. The Company  provides  training in assembly and marketing to its dealers.
None of the dealers are employed by the Company, nor does any dealer have a long
term requirements  contract for the supply of  pre-fabricated  containers or any
contract for training in assembly and  marketing  with the Company.  The Company
does,  however,  benefit  from the use of its  name by  several  dealers  on the
containers once they are constructed.


Leasing Operations


         Since its founding,  it has been the Company's primary goal to grow the
container  leasing  segment of its business.  This business,  which involves the
short-term  leasing of a product  with a long  useful  life and  relatively  low
depreciation,  offers  higher  margins  than the  Company's  other  products and
services.
                                      -5-

         The  Company  has  sought  to grow  this  business  by  opening  branch
facilities in several cities in the Southwestern United States. When the Company
opens  a  facility,  it  devotes  substantial  resources,  including  a  sizable
advertising budget, to the location. The new locations therefore generate losses
in early years,  but once the Company has added  sufficient  containers to cover
the high fixed costs, its operations may become  profitable at the new location.
Historically,  profitability  is not expected until  approximately  one to three
years after the new location is opened. The actual time to profitability depends
upon numerous  factors,  including  differences  in container  costs compared to
historic  cost  levels,  the  level  of  competition  in  the  new  market,  the
development of additional  storage  containers in the market by competitors  and
other factors which are generally beyond the Company's control.

         The Company plans to continue adding  additional  leased  containers to
existing  locations in order to increase  its  profitability.  During 1996,  the
Company obtained a credit line enabling it to substantially expand its container
leasing  operations.  See,  "Item  7.  MANAGEMENT'S DISCUSSION  AND  ANALYSIS OF
FINANCIAL   CONDITION   AND  RESULTS  OF  OPERATIONS  -  LIQUIDITY  AND  CAPITAL
RESOURCES".  The Company  increased  containers on lease at December 31, 1996 by
18% from December 31, 1995. This increase was achieved at branch  locations that
had been in operation during 1995.

         The  Company's  plan is to  continue  increasing  its  lease  fleet  at
existing  locations  in  1997,  at a rate in  line  with  historical  increases.
Management   believes  that  such  an  increase should   substantially   improve
profitability in 1997,  particularly if the cost of used ocean-going  containers
remains constant at year-end 1996 levels.

         The  Company  also  intends to expand its  operations  into  additional
cities on a  controlled  basis.  Such  expansion  could be through new  start-up
operations  by the  Company  or through  acquisitions  of  existing  operations.
Expansion  through  start-up  operations  would have the effect of reducing  net
income  during the early years of  operations  while the Company  increased  its
lease fleet at these locations. The Company has identified several potential new
markets,  and is investigating  start-up and acquisition  possibilities in those
markets.  As of the  date of this  Report,  the  Company  is not a party  to any
binding agreement respecting new sites or acquisition transactions.


Financing


         The Company has required increasing amounts of financing to support the
growth of its  business.  This  financing  was  required  primarily  to fund the
acquisition  of  containers  for the  Company's  lease  fleet  and to  fund  the
acquisition  of property,  plant and  equipment  to support  both the  Company's
container leasing and manufacturing operations.


         The Company  finances its  operations  and growth  primarily  through a
credit  agreement (the "Credit  Agreement") with BT Commercial  Corporation,  as
Agent for a group of lenders  (the  "Lenders").  The  Company  entered  into the
Credit  Agreement in March 1996,  as amended in March 1997,  in order to improve
its cash  flow,  increase  its  borrowing  availability  and fund its  continued
growth. Under the terms of the Credit Agreement, the Lenders provide the Company
with a $35.0  million  revolving  line of credit and a $6.0  million  term loan.
Borrowings under the Credit  Agreement are secured by  substantially  all of the
Company's assets.


         The term loan is to be repaid over a five-year period. Interest accrues
on the term  loan at the  Company's  option at either  prime  plus  1.75% or the
Eurodollar rate plus 3.25%.  Borrowings  under the term loan are payable monthly
as follows (plus interest):
                                      -6-

          Months 1 through 12                       $ 62,500
          Months 13 through 24                        83,333
          Months 25 through 60                       118,056


         Additional  principal  payments  equal to 75% of Excess  Cash Flow,  as
defined  in the  term  loan  documents  which  constitute  part  of  the  Credit
Agreement, are required annually. As of December 31, 1996, no additional payment
was required under this provision.


         Available  borrowings under the revolving line of credit are based upon
the level of the Company's  inventories,  receivables and container lease fleet.
The container lease fleet is appraised at least  annually,  and up to 90% of the
lesser of cost or  appraised  orderly  liquidation  value may be included in the
borrowing base.  Interest  accrues at the Company's  option at either prime plus
1.5% or the Eurodollar  rate plus 3% and is payable monthly or at the end of the
term of any  Eurodollar  borrowing.  The term of this  line of  credit  is three
years, with a one-year extension option.


         In  connection  with the closing of the Credit  Agreement,  the Company
terminated  its  line  of  credit  with  its  previous   lender,   repaying  all
indebtedness  under that line. In addition,  the Company repaid other  long-term
debt and obligations  under capital leases totaling $14.1 million.  As a result,
costs  previously  deferred  related  to  certain  indebtedness  and  prepayment
penalties  resulted in an  extraordinary  charge to  earnings  of  approximately
$410,000 after benefit for income taxes.


         The Credit Agreement  contains several financial  covenants and minimum
required  utilization rates in its lease fleet, limits on capital  expenditures,
acquisitions,  changes in control,  the  incurrence of  additional  debt and the
repurchase of common stock, and prohibits the payment of dividends.


         The Company has also financed its  operations  through the issuance and
sale of its equity  securities.  In February  1994,  the Company  completed  its
initial public  offering.  Net proceeds to the Company totaled  approximately $7
million.  In December 1995,  the Company  received net proceeds of $4.1 million,
through a private  placement of 50,000 shares of Series A Convertible  Preferred
Stock,  $.01 par value, $100 stated value ("Series A"). Pursuant to the terms of
the Series A, all 50,000 shares of Series A were converted into 1,904,324 shares
of the Company's  common stock at an average  conversion rate of $2.63 per share
during the first quarter of 1996.  These equity  issuances  provided the capital
necessary to obtain the financing available under the Credit Agreement.


         Prior to 1996,  the  Company's  growth  was  financed  in part  through
financing of containers pursuant to capital leases or secured borrowings.  These
financings  generally  required  repayment  in full over a five year  period and
provided for interest at a fixed rate.  Since the  Company's  containers  have a
useful life far in excess of five years,  these financings  required the Company
to pay in full the debt related to a capital  expenditure well in advance of the
related asset's useful life. The repayment terms of these  financings  adversely
affected cash flow prior to the refinancing pursuant to the Credit Agreement.


         The Company  believes  that its current  capitalization,  together with
borrowings  available under the Credit Agreement,  is sufficient to maintain its
current  level  of  operations  and  permit   controlled  growth  and  increased
profitability.  However, should demand for the Company's products exceed current
expectation  or should the cost of used  containers  continue to  increase,  the
Company would be required to secure additional  financing through debt or equity
offerings,  additional  borrowings or a combination of these  sources.  However,
there is no assurance that any such  financings  will be obtained or obtained on
terms acceptable to the Company. 
                                      -7-

Patents, Tradenames and Trade Secrets


         The Company has eight patents  issued by and four patents  pending with
the U.S.  Patent and Trademark  Office related to the design and  application of
its  products.  The Company  intends to process  other patent  applications  for
additional  products  developed  currently  or in the future,  to the extent the
Company  deems such  applications  appropriate.  "mobile  mini" and "mobile mini
storage  systems"  are  registered  trade names and service  marks in the United
States and  Canada.  The Company  has  applied to have  "mobile  telestructures"
registered as a trade name and service mark.


         The patents as well as the  various  state  trade  secrets  acts afford
proprietary  protection to the Company's products,  including the unique locking
system and design of its manufactured products. The Company has in place several
access  control  and  proprietary  procedure  policies  implemented  to meet the
requirements  of protecting its trade secrets under  applicable law. The Company
follows a policy of aggressively pursuing claims of patent,  tradename,  service
mark and trade  secret  infringement.  The  Company  does not  believe  that its
products and trademarks or other  confidential  and proprietary  rights infringe
upon  the  proprietary  rights  of third  parties.  There  can be no  assurance,
however,  that third  parties will not assert  infringement  claims  against the
Company in the future.  The  successful  assertion  of rights and the defense of
infringement  claims  could  have a  material  adverse  affect on the  Company's
business,  results  of  operations  and  financial  condition.  There  can be no
assurance that the Company will have sufficient  resources to sustain  expensive
or protracted legal actions to protect its proprietary rights or, alternatively,
to defend claims of infringement.


Customers


         The market for the  Company's  products  can  generally be divided into
four    distinct    areas    --    retail,    residential,     commercial    and
institutional/governmental.  Revenues are derived  from either  rentals or sales
directly to customers or through sales to the Company's dealers.


         The  Company's  customer  profile is  diverse  and does not rely on one
industry.  Instead, the Company targets several different markets within various
geographic  areas.  As of  December  31,  1996 the  Company's  leasing and sales
clients fall into the following categories and approximate percentages: (i) with
respect to leasing:  retail and  wholesale  businesses,  52%;  homeowners,  17%;
construction, 22%; institutions, 4%; government,  industrial and other, 5%; (ii)
with respect to sales: retail and wholesale  businesses,  54%;  homeowners,  5%;
construction, 12%; institutions, 14%; government, industrial and other, 15%.


         Customers utilize the Company's storage units in a variety of ways. For
example, retail companies use the Company's storage units for extra warehousing;
real estate  development  companies  utilize the Company's  products to securely
store equipment, tools and materials; and governmental agencies such as the U.S.
Armed Forces and the U.S.  Drug  Enforcement  Agency lease and buy the Company's
high-security, portable storage units to store equipment and confiscated goods.


Competition


         Because the Company  competes with its products and services in several
market  segments,  no one entity is known to be in direct  competition  with the
Company  in all  its  market  segments.  With  respect  to its  on-site  leasing
activities,   the  Company  competes  directly  with  conventional  mini-storage
warehouse  facilities  in the  localities  in  which  it  operates.  Some of the
Company's on-site leasing competitors include Space Shuttle, a franchiser with a
limited number of franchises 
                                      -8-

throughout the United States, Door to Door Storage,  Public Storage and Shurgard
Storage  Centers.  With respect to off-site  leasing and sales,  the Company has
several competitors,  which include Haulaway,  Mobile Storage, National Security
Containers, and a large number of smaller competitors. The Company believes that
its  products,  services,  pricing and  manufacturing  capabilities  allow it to
compete  favorably in each of the on-site  leasing,  off-site  leasing and sales
segments of the Company's markets in the areas it currently operates.


         The Company's Mobile  Telestructures  division competes against several
competitors that supply  shelters,  the largest of which the Company believes to
be  Fibrebond  Corporation,  the Rohn  division  of UNR  Industries  and  Andrew
Corporation.

         Management  believes  that  the  Company  has a number  of  competitive
advantages  both in  terms of  products  and  operations.  Among  its  product's
patented  features is the locking  system  which  serves to meet the  customer's
primary  concern,  security.  Based on reports from  customers who have suffered
burglary  attempts,  the  Company's  locking  system is  extremely  difficult to
defeat.  The Company's delivery trailers have largely been designed and built by
the Company and certain key features have patent potential which the Company may
pursue. These proprietary delivery systems,  which are specifically  designed to
transport,  load and unload containers,  allow the Company to deliver containers
economically in otherwise inaccessible locations.

         Operationally, the Company manufactures containers from raw steel as an
alternative to using ocean-going containers. In the event ocean-going containers
are in short  supply  or become  uneconomical  to  retrofit  to the needs of the
Company, the Company can manufacture its own container product. The Company will
continue to manufacture  new storage units for inclusion  primarily in its sales
inventory and also in its lease fleet.

         The Company's  ability to continue to compete  favorably in each of its
markets  is  dependent  upon  many  factors,   including  the  market  for  used
ocean-going  containers  and the costs of steel.  During 1996, the price of used
steel cargo containers  increased by approximately 20%. Management believes that
the  Company's  container  manufacturing  capabilities  makes the  Company  less
susceptible  than its competitors to ocean-going  container price  fluctuations,
particularly since the cost of used containers is affected by many factors, only
one of which is the cost of steel from which the  Company  can  manufacture  new
containers.

         The  Company  believes  that  competition  in each of its  markets  may
increase  significantly in the future. It is probable that such competitors will
have greater marketing and financial  resources than the Company. As competition
increases,  significant  pricing pressure and reduced profit margins may result.
Prolonged price competition, along with other forms of competition, could have a
material  adverse  affect on the Company's  business and results of  operations.
Additionally,  as the Company  continues to expand its  operations  in different
regions, start-up costs incurred reduce the Company's overall profit margins.


Employees

         As of March 1,  1997,  the  Company  had  approximately  800 full  time
employees  at all of its  locations.  The Company  believes  that its  continued
success depends on its ability to attract and retain highly qualified personnel.
The Company's employees are not represented by a labor union and the Company has
no  knowledge  of any  current  organization  activities.  The Company has never
suffered a work stoppage and considers its relations with employees to be good.


ITEM 2.  DESCRIPTION OF PROPERTY.

         The  Company  has  four  manufacturing  centers  located  in  Maricopa,
Arizona, Rialto, California, and Houston and Dallas/Fort Worth, Texas. Sales and
leasing are conducted from 
                                      -9-

Phoenix,  Rialto,  Houston  and  Dallas/Fort  Worth in  addition  to four  other
locations.  The Company's administrative and sales offices are located in Tempe,
Arizona.


         The   Company's   primary   manufacturing   center  is   located  in  a
heavy-industry  zoned industrial park near Maricopa,  Arizona,  approximately 30
miles  south of  Phoenix.  The  facility is seven years old and is located on an
approximate  45 acre  industrial  site.  Twenty-three  acres of this  site  were
purchased from Richard E. Bunger in 1996.  See, "ITEM 13. CERTAIN  RELATIONSHIPS
AND RELATED  TRANSACTIONS." The facility includes nine manufacturing  buildings,
totaling approximately 130,000 square feet, which house manufacturing, assembly,
construction, painting and vehicle maintenance operations.


         The  Phoenix,  Arizona  sales and leasing  branch  services the Phoenix
metropolitan  area  from  its  approximately   10.7  acre  facility,   of  which
approximately  5 acres were  leased in the first  quarter of 1997.  All  Phoenix
marketing and any on-site storage is conducted from this site. Approximately 3.4
acres  are  owned by the  Company,  approximately  5.8  acres  are  leased  from
non-affiliated  parties and the  remaining 1.5 acres are owned by members of the
Bunger family and are under lease at what management  believes to be competitive
market rates. See, "ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."


         The Rialto,  California sales and leasing hub is approximately 10 acres
in size,  with three  industrial  shops  used for  modification  of  ocean-going
containers,  assembly  of the  Company's  manufactured  containers  and  on-site
leases. The Rialto facility serves as the Company's southern  California hub and
supports the San Diego branch.  The Rialto site is owned by Mobile Mini Systems,
Inc., a separate  corporation  owned by Richard E. Bunger,  and is leased to the
Company at what management  believes to be competitive  market rates. See, "ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."


         The Texas  operations  are  supported by hub  facilities in Houston and
Dallas/Fort  Worth. Both facilities  contain  manufacturing  centers,  sales and
leasing  operations  and on-site  storage  facilities.  The Houston  facility is
located on seven acres with six buildings totaling  approximately  34,400 square
feet. The Dallas/Fort Worth facility,  which is owned by the Company, is located
on 17 acres with six buildings totaling approximately 36,600 square feet.


         The  Company's  administrative  and sales offices are located in Tempe,
Arizona.  The  facilities are leased by the Company from an  unaffiliated  third
party and have  approximately  28,800  square  feet of space  which the  Company
anticipates  will meet its needs for the near-term.  The Company's lease term is
through December 2000.

         In addition to its administrative offices and manufacturing facilities,
the Company has facilities used for sales, leasing and onsite storage. The major
properties owned or leased by the Company are listed in the table below:
Location Use Area Title -------- --------- ------ ------- Tempe, Arizona Corporate offices 8,700 sq. ft. Leased Tempe, Arizona Sales administration 20,100 sq. ft. Leased Maricopa, Arizona Manufacturing 44.8 acres Owned(1) Rialto, California Sales, leasing, manufacturing and 10 acres Leased(2) on-site storage
-10- Houston, Texas Sales, leasing, manufacturing and 7.0 acres Leased on-site storage Phoenix, Arizona Sales, leasing and on-site storage 10.7 acres Owned(1)/leased(3) Tucson, Arizona Sales, leasing and on-site storage 2.7 acres Leased(4) San Diego, California Sales, leasing and on-site storage 5.0 acres Leased Dallas, Texas Sales, leasing, manufacturing and 17 acres Owned(1) on-site storage San Antonio, Texas Sales, leasing and on-site storage 3.0 acres Leased Round Rock, Texas(5) Sales, leasing and on-site storage 5.0 acres Leased
- --------------------------- (1) Pledged pursuant to the Credit Agreement. See, "ITEM 1. DESCRIPTION OF BUSINESS - Financing." (2) Leased by the Company from an affiliate of Richard E. Bunger. See, "ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS." (3) Of the 10.7 acres comprising these sites, 3.4 acres are owned by the Company and 1.5 acres are subject to long-term leases from members of the Bunger family. See, "ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS." (4) This property is leased by the Company from members of the Bunger family. See "ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS." (5) A community of the Austin, Texas metropolitan area. ITEM 3. LEGAL PROCEEDINGS. The Company is not a party to any legal proceeding other than various claims and lawsuits arising in the normal course of its business which, in the opinion of the Company's management, are not individually or collectively material to its business. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS There were no matters submitted to a vote of security holders during the fourth quarter of 1996. EXECUTIVE OFFICERS Set forth below are the names and ages of and other relevant information about the directors, executive officers, and significant employees of the Company. Richard E. Bunger, age 59, Chairman of the Board, Chief Executive Officer, President and Director, founded the Company's operations in 1983 and has managed the Company's operations since its commencement. Mr. Bunger has been awarded approximately 70 patents, many related to portable storage technology. For a period of approximately 25 years prior to founding the Company, Mr. Bunger owned and operated Corral Industries Incorporated, a worldwide designer/builder of integrated animal production facilities, and a designer/builder of mini storage facilities. Lawrence Trachtenberg, age 40, Executive Vice President and Chief Financial Officer, General Counsel, Secretary, Treasurer and Director, joined the Company in December 1995. -11- Mr. Trachtenberg is primarily responsible for all accounting, banking and related financial matters for the Company. Mr. Trachtenberg is admitted to practice law in the States of Arizona and New York and is a Certified Public Accountant in New York. Prior to joining the Company, Mr. Trachtenberg served as Vice President and General Counsel at Express America Mortgage Corporation, a mortgage banking company, from February 1994 through September 1995 and as Vice President and Chief Financial Officer of Pacific International Services Corporation, a corporation engaged in car rentals and sales, from March 1990 through January 1994. Mr. Trachtenberg received his Juris Doctorate from Harvard Law School in 1981 and his B.A. - Accounting/Economics from Queens College - CUNY in 1977. Steven G. Bunger, age 35, Executive Vice President and Chief Operating Officer, was with the Company's predecessor since inception and was a founding director of the Company. Mr. Bunger oversees all of the Company's operations and sales activities with overall responsibility for advertising, marketing and pricing. From December 31, 1993 to January 1, 1995, Mr. Bunger served as Vice President of Operations. On January 1, 1995, Mr. Bunger became Vice President of Operations and Marketing and in November 1995 became the Company's Chief Operating Officer. Mr. Bunger graduated from Arizona State University in 1986 with a B.A.-Business Administration. He is the son of Richard E. Bunger. Burton K. Kennedy Jr., age 49, Senior Vice President of Sales and Marketing, was originally with the Company's predecessor from March 1986 when the Company had only a few hundred units to September 1991 when the Company had grown to several thousand units and rejoined the Company July of 1996. Mr. Kennedy has the overall responsibility for all branch lease and sale operations and also directs the acquisition of container inventory. From September 1993 through June 1996, Mr. Kennedy served in various executive positions with National Security Containers, a division of Cavco, Inc. From April 1992 through August 1993 he was a working partner in American Bonsai. PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Common Stock trades on the National Market tier of the NASDAQ Market under the symbol "MINI." Prior to December 26, 1995, the Common Stock was traded on the SmallCap Marketsm. The following table sets forth, for the indicated periods, the high and low sale prices for the Common Stock as reported by the NASDAQ Market. The quotations set forth below reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. The Company has approximately 79 holders of record of its Common Stock. The Company believes it has in excess of 400 beneficial owners of its Common Stock. FISCAL YEARS 1996 AND 1995: 1996 1995 ---------------------- ---------------------- HIGH LOW HIGH LOW ---- --- ---- --- Quarter ended March 31, $4 3/8 $2 7/8 $4 1/2 $3 1/2 Quarter ended June 30, 4 7/16 3 3/8 5 3 5/8 Quarter ended September 30, 4 3/8 2 13/16 6 1/8 4 3/4 Quarter ended December 31, 4 1/4 3 5 7/8 3 5/8 -12- Holders of the Common Stock are entitled to receive such dividends as may be declared by the Board of Directors of the Company. To date, the Company has neither declared nor paid any cash dividends on its Common Stock, nor does the Company anticipate that cash dividends will be paid in the foreseeable future. Additionally, the Company is subject to covenants pursuant to the Credit Agreement which prohibit the payment of dividends. The Company intends to apply any earnings to the expansion and development of its business. ITEM 6. SELECTED FINANCIAL DATA. The following table summarizes certain selected financial data of the Company and is qualified in its entirety by the more detailed consolidated financial statements and notes thereto appearing elsewhere herein. The data has been derived from the consolidated financial statements of the Company audited by Arthur Andersen LLP, independent public accountants.
YEAR ENDED DECEMBER 31, ---------------------------------------------------------------- 1996 1995 1994 1993(1) 1992(1) ------------ ------------ ------------ ------------- ----------- CONSOLIDATED STATEMENT OF INCOME (in thousands, except per share amounts) Revenues $ 42,210 $ 39,905 $ 28,182 $ 17,122 $ 12,001 Income from operations 4,527 4,306 2,791 1,514 710 Income before extraordinary item 481 777 956 276 200 Extraordinary item (410) 0 0 0 185 Net income 70 777 956 276 301 Earnings per common and common equivalent share: Income before extraordinary item 0.07 0.16 0.21 0.10 0.04 Extraordinary item (0.06) 0.00 0.00 0.00 0.07 Net income 0.01 0.16 0.21 0.10 0.11 CONSOLIDATED BALANCE SHEET DATA (as of December 31 of each year) Total assets 64,816 54,342 40,764 20,082 14,773 Long term lines of credit 26,406 4,099 -- -- -- Long term debt and obligations under capital leases, including current portion 13,742 24,533 16,140 9,334 6,622
(1) Prior to 1994, the Company's predecessor was operated as a sole proprietorship. Per share information are therefore calculated on a proforma basis assuming that the only common stock outstanding was that issued to Richard E. Bunger at the time the Company was capitalized and all significant transactions for the transfer of assets to the Company have been eliminated for the proforma statements. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. -13- General The Company was founded in 1983 and operated only in the Phoenix, Arizona area until 1986. In 1986 it expanded to Tucson, Arizona, in 1988 to southern California and in 1994 to Texas. From inception through 1988, the Company exclusively engaged in the refabrication of ocean-going cargo containers, which it leased to the public for storage containers and portable offices. In 1989, the Company began to sell containers. Contributing to growth of sales revenues was the development of a national distribution system (referred to by the Company as the national dealer network), manufacture of new Company designed containers from raw steel as an alternative and supplement to the refabrication of ocean-going containers, the manufacture of modular steel buildings (discontinued in 1996; see "Item 1. DESCRIPTION OF BUSINESS - BUSINESS RESTRUCTURING") and special order products which the Company sells and leases to schools, governmental entities and others, and the development of the telecommunication shelter division which commenced operations in mid-year 1995. The leasing of containers stored on-site at the Company's locations (similar to traditional mini-storage warehouses) as well as the leasing of containers stored off-site is becoming a more significant portion of the Company's business and is contributing to the Company's growth. Since 1993, the number of units at the Company's leasing locations has increased by the following percentages as compared to the preceding year: December 31, ------------------- 1993 38% 1994 62% 1995 32% 1996 18% As the leasing operations are the most profitable of the Company's operations, management plans to increase the level of these operations, especially at existing locations. In addition, the Company expects to open additional facilities on a controlled basis at locations which management believes can become profitable over a relatively short period of time. Uncertainties faced by the Company include variances in start-up costs for new storage locations, competition in new markets, and the opportunity cost of deploying sufficient containers in a new market to reach economic viability. While the Company has experience in entering new market areas and conducts preliminary market research to assure itself that viable markets exist, there can be no assurance of success when expanding into new markets. However, unlike fixed mini-storage facilities, the Company does have the ability to relocate its portable storage containers to other markets to adjust for market demand. Results of Operations The following table sets forth, for the periods indicated, the percentage, as a percent of total revenue, of certain items in the Consolidated Financial Statements of the Company, included elsewhere herein. The table and the discussion below should be read in conjunction with the Consolidated Financial Statements and Notes thereto. -14-
Year Ended December 31, --------------------------------------------- 1996 1995 1994 ---- ---- ---- REVENUES: Container and modular building sales 56.0% 60.8% 65.6% Leasing 32.3 30.6 25.5 Other 11.7 8.6 8.9 -------- -------- ------ 100.0 100.0 100.0 COSTS AND EXPENSES: Cost of container and modular building sales 47.2 47.9 49.3 Leasing, selling and general expenses 36.3 38.0 38.5 Depreciation and amortization 4.1 3.3 2.2 Restructuring charge 1.7 0.0 0.0 ------- -------- ------ Income from Operations 10.7 10.8 10.0 OTHER INCOME (EXPENSE): Interest income and other 0.5 0.7 0.6 Interest expense (9.2) (8.0) (4.5) -------- -------- ------- INCOME BEFORE PROVISION FOR INCOME TAXES AND EXTRAORDINARY ITEM: 2.0 3.5 6.1 PROVISION FOR INCOME TAXES 0.9 1.5 2.7 -------- -------- ------ INCOME BEFORE EXTRAORDINARY ITEM 1.1 2.0 3.4 EXTRAORDINARY ITEM 1.0 0.0 0.0 ------ -------- ----- NET INCOME 0.1% 2.0% 3.4% ======= ======= =======
Fiscal 1996 Compared to Fiscal 1995 Revenues for the year ended December 31, 1996 increased to $42,210,000 from $39,905,000 during 1995. Revenues during 1995 included $3,645,000 of container sale revenue recorded under sale-leaseback transactions. The revenue from sale-leaseback transactions was offset by an equal cost of container sales and did not produce any gross margin. The Company did not enter into sale-leaseback transactions during 1996. Excluding the effect of these sale-leaseback transactions, revenues increased by 16.4% from 1995 to 1996, primarily the result of increases in both sales and leasing revenues generated from existing branch locations and the sale of certain used modular buildings that had been previously leased. The Texas operations, which commenced in late 1994, sustained growth and contributed 8.5% and 15.8% to the Company's container sales and leasing revenues, respectively, during 1996 as compared to 7.0% and 9.6%, respectively, in 1995. The dealer and telecommunication shelter division contributed 25.5% and 4.1%, respectively, of the sales revenues in 1996 as compared to 27.2% and 5.8%, respectively, in 1995. Revenues related to container and modular building sales and leasing activities increased 14.5% and 11.7%, respectively, from the prior year, exclusive of container sale revenue recorded under sale-leaseback transactions. Excluding the effect of sale-leaseback transactions, cost of container and modular building sales as a percentage of container and modular building sales increased to 84.4% compared to 74.8% for the prior year. This increase is attributable to the mix of products sold, a shortage in supply of used containers, which caused an increase in the acquisition cost of these containers, in addition to an increase in sales of manufactured new containers which typically result in lower -15- margins to the Company, and a refinement in the Company's allocation of certain indirect manufacturing costs. Excluding the effect of sale-leaseback transactions, leasing, selling and general expenses were 36.3% of total revenue in 1996, compared to 41.8% in 1995. The decrease primarily results from the continued efficiencies obtained by the Company's Texas operations, which were in their start-up phase during 1995, and to the Company passing certain property tax expenses on to customers. The Company recorded a restructuring charge (See "ITEM 1. DESCRIPTION OF BUSINESS.- BUSINESS RESTRUCTURING") of $700,000 or 1.7% of total revenue in 1996. There was no similar charge in 1995. Income from operations was $4,527,000 in 1996 compared to $4,345,000 in 1995. Excluding the restructuring charge, income from operations would have been 12.4% of total revenue in 1996 as compared to 12.0% in 1995. Interest expense increased to $3,894,000 in 1996 compared to $3,212,000 in 1995. This increase in interest expense was primarily the result of an increase in the average balance of debt outstanding of 51.4% compared to 1995, (incurred in order to finance the substantial increase in the Company's equipment and container lease fleet), along with the related amortization of debt issuance costs, partially offset by a decrease of 3.0% in the Company's weighted average borrowing rate resulting from lower interest rates under the Company's Credit Agreement. Depreciation and amortization increased to 4.1% of revenues in 1996, from 3.3% in 1995, and is directly related to the expansion of the Company's manufacturing facility along with the substantial growth in the Company's lease fleet and additional support equipment at the Company's sales and leasing locations. The Company had income before extraordinary item of $481,000, or $.07 per share, in 1996, compared to net income of $777,000, or $.16 per share in 1995. This decrease primarily resulted from the $700,000 restructuring charge recorded by the Company in the fourth quarter of 1996 discussed above. See "Item 1. DESCRIPTION OF BUSINESS - BUSINESS RESTRUCTURING". Excluding this charge, 1996 earnings before extraordinary item were approximately $873,000, or $.13 per share. The weighted average common shares outstanding at the end of 1996 increased by 34% from the prior year due to the issuance of additional common stock in 1996 pursuant to the conversion of the Series A Convertible Preferred Stock, issued during the fourth quarter of 1995, which was converted to common stock in 1996. The Company prepaid approximately $14.1 million of debt and capital leases in connection with entering into the Credit Agreement in March 1996. As a result, the Company recognized an extraordinary charge to earnings of $410,000, or $.06 per share, net of the benefit for income taxes, as a result of this early extinguishment of debt. The Company also incurred financing costs of $2,000,000 in connection with the Credit Agreement, which have been deferred and are being amortized over the term of the Credit Agreement. Fiscal 1995 Compared to Fiscal 1994 Revenues for the year ended December 31, 1995 increased to $39,905,000 from $28,182,000 in 1994. This 41.6% increase was primarily the result of increases in both sales and leasing revenues generated from the new branch locations in Texas, coupled with increased demand for the -16- Company's product at its existing locations. The Texas operation contributed 7.0% and 9.6% to the Company's container sales and leasing revenues, respectively. Additionally, the telecommunication shelter division comprised 5.8% of sales revenues. Revenues related to container and modular building sales and leasing activities increased 31.3% and 70.2%, respectively, from the prior year. Additional revenues, primarily related to delivery operations, increased 35.6% from 1994 levels. Cost of sales increased to 78.7% of sales and leasing revenues from 75.2% of sales and leasing revenues in 1994. The increase was primarily attributable to the modular division which contracted for the construction of more sophisticated units requiring substantially more interior build-out than in previous years and the start up of the new telecommunication shelter division, which generated lower profit margins during the start-up phase. Leasing, selling and general expenses were 38.0% of total revenues in 1995, which approximated their 1994 level of 38.5% of total revenues. The Company's new branch locations incurred higher administrative and advertising costs than in 1994, which were offset by the increased revenues from the existing locations where a large portion of the leasing, selling and general expenses are fixed or semi-variable. Depreciation and amortization expense increased to $1,318,000 from $625,000 in 1994 as a result of the increase in the container lease fleet and the increase in support equipment required for the delivery operations and manufacturing facilities. Interest expense increased to $3,212,000 in 1995 compared to $1,274,000 in 1994. The Company utilized its line of credit availability more extensively in 1995, and also increased borrowings during the year to finance the substantial growth in its container lease fleet. The average outstanding balance on the line of credit was approximately $4.2 million and $1.1 million for 1995 and 1994, respectively. Net income for fiscal 1995 was $777,000 compared to $956,000 for 1994. The effective tax rate was 44% for both years. Earnings per share was $.16 per share for 1995, and $.21 per share in 1994. The weighted average number of common and common equivalent shares outstanding increased to 5,010,126 in 1995 compared to 4,496,904 in 1994. This increase was a result of the shares issued in the initial public offering in 1994 being outstanding for the entire year in 1995 and a private placement of 50,000 shares of Series A Convertible Preferred Stock in 1995. Quarterly Results of Operations The following table reflects certain selected unaudited quarterly operating results of the Company for each of the eight quarters through the quarter ended December 31, 1996. The Company believes that all necessary adjustments have been included to present fairly the quarterly information when read in conjunction with the Consolidated Financial Statements included elsewhere herein. The operating results for any quarter are not necessarily indicative of the results for any future period. -17- QUARTERLY RESULTS OF OPERATIONS
------------------------------------------------------------------------------------------- 1996 1995 ------------------------------------------------------------------------------------------- (in thousands, except per share amounts) Mar 31 June 30 Sept 30 Dec 31 Mar 31 June 30 Sept 30 Dec 31 REVENUES: Container and modular building sales $ 4,916 $ 5,746 $ 6,376 $ 6,581 $ 5,448 $ 6,313 $ 7,555 $ 4,948 Leasing 3,171 3,171 3,433 3,863 2,521 2,959 3,259 3,475 Other 770 1,344 1,348 1,491 706 1,118 702 901 ------------------------------------------------------------------------------------------- 8,857 10,261 11,157 11,935 8,675 10,390 11,516 9,324 COSTS AND EXPENSES: Cost of container and modular building sales 3,926 5,120 5,380 5,500 4,347 4,887 5,949 3,924 Leasing, selling and general expenses 3,874 3,215 3,680 4,575 3,466 4,141 3,942 3,625 Depreciation and amortization 368 380 452 513 238 312 359 409 Restructuring charge -- -- -- 700 -- -- -- -- ------------------------------------------------------------------------------------------- Income from operations 689 1,546 1,645 647 624 1,050 1,266 1,366 OTHER INCOME (EXPENSE): Interest income and other 56 31 23 115 115 7 73 98 Interest Expense (948) (1,001) (974) (971) (650) (723) (846) (993) ------------------------------------------------------------------------------------------- INCOME (LOSS)BEFORE PROVISION FOR INCOME TAX (BENEFIT) AND EXTRAORDINARY ITEM (203) 576 694 (209) 89 334 493 471 PROVISION FOR (BENEFIT OF) INCOME TAXES (89) 253 305 (92) 39 147 217 207 ------------------------------------------------------------------------------------------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (114) 323 389 (117) 50 187 276 264 EXTRAORDINARY ITEM (410) -- -- -- -- -- -- -- ------------------------------------------------------------------------------------------- NET INCOME (LOSS) $ (524) $ 323 $ 389 $ (117) $ 50 $ 187 $ 276 $ 264 =========================================================================================== EARNINGS (LOSS)PER COMMON AND COMMON EQUIVALENT SHARE: INCOME (LOSS) BEFORE EXTRAORDINARY ITEM $ (0.02) $ 0.05 $ 0.06 $ (0.02) $ 0.01 $ 0.04 $ 0.06 $ 0.05 EXTRAORDINARY ITEM (.06) -- -- -- -- -- -- -- ------------------------------------------------------------------------------------------- NET INCOME (LOSS) $ (0.08) $ 0.05 $ 0.06 $ (0.02) $ 0.01 $ 0.04 $ 0.06 $ 0.05 ===========================================================================================
-18- Quarterly results can be affected by a number of factors, including the timing of orders, customer delivery requirements, production delays, inefficiencies, the mix of product sales and leases, raw material availability and general economic conditions. Seasonality There is little seasonality inherent in the Company's operations. However, sales of custom built units can be dependent on the purchasers' timing needs to place the units into service. In addition, demand for off-site container leases is stronger from September through December due to increased needs for storing inventory for the holiday season by the Company's retail customers. Containers used by these customers are often returned early in the following year, causing a lower than normal occupancy rate for the Company during the first quarter. The occupancy levels have historically ranged from a low of 82% to a high of 95%. These seasonable fluctuations created a marginal decrease in cash flow for each of the first quarters during the past several years. On-site storage is not as subject to seasonal fluctuation, and the Company anticipates that as on-site storage becomes a larger percentage of its storage operations, that the Company will experience less seasonability. Liquidity and Capital Resources Due to the nature of its business, the Company required increased amounts of financing to support the growth of its business during the last several years. This financing has been required primarily to fund the acquisition and manufacture of containers for the Company's lease fleet and also to fund the acquisition of property, plant and equipment and to support both the Company's container leasing and manufacturing operations. In order to improve its cash flow, increase its borrowing availability and fund its continued growth, in March 1996 the Company entered into the Credit Agreement with BT Commercial Corporation, as Agent for a group of lenders (the "Lenders"). Under the terms of the Credit Agreement, the Lenders provided the Company with a $35.0 million revolving line of credit and a $6.0 million term loan. Borrowings under the Credit Agreement are secured by substantially all of the Company's assets. Borrowings under the term loan are to be repaid over a five-year period. Interest accrues on the term loan at the Company's option at either prime plus 1.75% or the Eurodollar rate plus 3.25%. Borrowings under the term loan are payable monthly as follows (plus interest): Months 1 through 12 $ 62,500 Months 13 through 24 83,333 Months 25 through 60 118,056 Additional principal payments equal to 75% of Excess Cash Flow, as defined in the term loan documents, are required annually. Available borrowings under the revolving line of credit are based upon the level of the Company's inventories, receivables and container lease fleet. The container lease fleet will be appraised at least annually, and up to 90% of the lesser of cost or appraised orderly liquidation value may be included in the borrowing base. Interest accrues at the Company's option at either prime plus 1.5% or the -19- Eurodollar rate plus 3% and is payable monthly or at the end of the term of any Eurodollar borrowing period. The term of this line of credit is three years, with a one-year extension option. As of December 31, 1996, $26.4 million of borrowings were outstanding and approximately $0.9 million of additional borrowing was available under the revolving line of credit. The Credit Agreement contains several financial covenants including a minimum tangible net worth requirement, a minimum fixed charge coverage ratio, a maximum ratio of debt-to-equity, minimum operating income levels and minimum required utilization rates. In addition, the Credit Agreement contains limits on capital expenditures, acquisitions, changes in control, the incurrence of additional debt, and the repurchase of common stock, and prohibits the payment of dividends. In connection with the closing of the Credit Agreement in March 1996, the Company terminated its line of credit with its previous lender, repaying all indebtedness under that line. In addition, the Company repaid other long-term debt and obligations under capital leases totaling $14.1 million. During 1996, the Company's operations provided cash flow of $1,390,000 compared to utilizing $166,000 in 1995. The improvement in cash flow primarily resulted from the improved financing terms under the Credit Agreement which permitted a reduction of accounts payables, partially offset by an increase in accrued liabilities and an increase in receivables. During 1996, the Company invested $10,751,000 in equipment and the container lease fleet. This amount is net of $2,707,000 in related sales and financing. Cash flow from financing activities totaled $8,667,000 during 1996. This was the result of increased borrowings to finance container lease fleet and equipment acquisitions and the restructuring of the Company's debt under the Credit Agreement, partially offset by the principal payments on indebtedness and an increase in other assets associated with deferred financing costs incurred in connection with the closing of the Credit Agreement. The Company believes that its current capitalization, together with borrowings available under the Credit Agreement, is sufficient to maintain its current level of operations and permit controlled growth and increased profitability for the next 12 months. However, should demand for the Company's products exceed current expectation or should the cost of used containers continue to increase, the Company would be required to secure additional financing through debt or equity offerings, additional borrowings or a combination of these sources. However, there is no assurance that any such financings will be obtained or obtained on terms acceptable to the Company. CERTAIN FACTORS AFFECTING FORWARD-LOOKING STATEMENTS - SAFE HARBOR STATEMENT This Report on Form 10-K contains forward looking statements that involve risks and uncertainties; the actual results of the Company could differ materially from those anticipated in these forward-looking statements as a result of certain factors discussed elsewhere in this Report, as well as the following: Uncertainty in Supply and Price of Used Containers The Company's ability to obtain used containers for its lease fleet is subject in large part to the availability of these containers in the market. This is in part subject to international trade issues and the -20- demand for containers in the ocean cargo shipping business. Should there be a shortage in supply of used containers, the Company could supplement its lease fleet with new manufactured containers. However, should there be an overabundance of these used containers available, it is likely that prices would fall. This could result in a reduction in the lease rates the Company could obtain from its container leasing operations. It could also cause the appraised orderly liquidation value of the containers in the lease fleet to decline. In such event, the Company's ability to finance its business through the Credit Agreement would be severely limited, as the maximum borrowing limit under that facility is based upon the appraised orderly liquidation value of the Company's container lease fleet. Uncertainty of Additional Financing The Company believes that its current capitalization, together with borrowings available under the Credit Agreement, is sufficient to maintain its current level of operations and permit controlled growth and increased profitability. However, should demand for the Company's products exceed current expectation, or should the cost of used containers continue to increase, the Company would be required to secure additional financing through debt or equity offerings, additional borrowings or a combination of these sources. However, there is no assurance that any such financings will be obtained or obtained on terms acceptable to the Company. Lease Utilization Levels Historically, the Company has maintained lease fleet utilization levels in the 85-to-92% range. During 1996, the Company's lease fleet utilization level was 90%. Should the Company experience an unexpected decline in demand for its lease units due to economic conditions, an increase in competition, an increase in supply of used containers or any other reason, the Company would expect to dispose of containers in order to maintain acceptable utilization levels. If this were to occur at a time when the market price of used containers has declined, it could result in losses on the sale of these containers. In addition, the Company's operating results would be adversely affected because it would continue to be subject to the high fixed costs of its branch operations but it would have reduced lease revenues. Uncertainty of Future Financial Performance; Fluctuations in Operating Results The Company's results of operations may vary from period to period due to a variety of factors, including expenditures to acquire or start-up and integrate into the Company's operations new businesses which the Company seeks to acquire as part of its expansion strategy, the introduction of new products by the Company or its competitors, availability of and cost increases of used containers from which the Company builds its container fleet, changes in marketing and sales expenditures, pricing pressures, market acceptance of the Company's products, particularly in new market areas in which the Company may expand, and general economic and industry conditions affect demand for the Company's products and influence the Company's operating costs and margins. Risk of Debt Covenant Default The Company has a $35 million credit facility that expires in March 1999. The Credit Agreement is secured by substantially all of the assets of the Company. The Company is required to comply with certain covenants and restrictions, including covenants relating to the Company's financial condition and results of operations. If the Company is unable or fails to comply with the covenants and restrictions, the lender would have the right not to make loans under the Credit Agreement and to require early payment of outstanding loans. The lack of availability of loans or the requirement to make early repayment of -21- loans would have a material adverse effect on the Company's business, financial condition, or results of operations. See "LIQUIDITY AND CAPITAL RESOURCES." Competition The Company believes that its products, services, pricing and manufacturing capabilities allow it to compete favorably in each of the on-site leasing, off-site leasing and sales segments of the Company's markets in the areas it currently operates. However, the Company's ability to continue to compete favorably in each of its markets is dependent upon many factors, including the market for used ocean-going shipping containers and the costs of steel. During 1996, the price of used steel cargo containers increased by approximately 20%. The Company believes that competition in each of its markets may increase significantly in the future. It is probable that such competitors will have greater marketing and financial resources than the Company. As competition increases, significant pricing pressure and reduced profit margins may result. Prolonged price competition, along with outer forms of competition, could have a material adverse affect on the Company's business and results of operations. -22- ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. INDEX Report of Independent Public Accountants 23 Financial Statements- Consolidated Balance Sheets - December 31, 1996 and 1995 24 Consolidated Statements of Operations - For the Years Ended December 31, 1996, 1995 and 1994 25 Consolidated Statements of Stockholders' Equity - For the Years Ended December 31, 1996, 1995 and 1994 26 Consolidated Statements of Cash Flows - For the Years Ended December 31, 1996, 1995 and 1994 27 Notes to Consolidated Financial Statements - December 31, 1996 and 1995 28 Schedule II - Valuation and Qualifying Accounts REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Mobile Mini, Inc.: We have audited the accompanying consolidated balance sheets of MOBILE MINI, INC. (a Delaware corporation) and subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mobile Mini, Inc. and subsidiaries as of December 31, 1996 and 1995 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in the index of the financial statements is presented for the purpose of complying with the Securities and Exchange Commission's rules and is not a required part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Phoenix, Arizona March 24, 1997. -23- MOBILE MINI, INC. CONSOLIDATED BALANCE SHEETS December 31, 1996 and 1995
ASSETS December 31, CURRENT ASSETS: 1996 1995 ----------- ------------- Cash $ 736,543 $ 1,430,651 Receivables, net of allowance for doubtful accounts of $268,000 and $158,000 at December 31, 1996 and 1995, respectively 4,631,854 4,312,725 Inventories 4,998,382 5,193,222 Prepaid and other 742,984 718,574 ----------- ------------- Total current assets 11,109,763 11,655,172 CONTAINER LEASE FLEET, net of accumulated depreciation of $1,244,000 and $911,000, respectfully 34,313,193 26,954,936 PROPERTY, PLANT AND EQUIPMENT, net (Note 5) 17,696,046 15,472,164 OTHER ASSETS 1,697,199 259,672 ----------- ----------- $64,816,201 $ 54, 341,944 =========== ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 2,557,329 $ 4,265,147 Accrued compensation 674,818 238,132 Other accrued liabilities 1,517,295 1,334,332 Current portion of long-term debt (Note 4) 1,378,829 737,181 Current portion of obligations under capital leases (Note 5) 1,352,279 2,488,205 ----------- ------------- Total current liabilities 7,480,550 9,062,997 LINE OF CREDIT (Note 3) 26,406,035 4,099,034 LONG-TERM DEBT, less current portion (Note 4) 5,623,948 8,363,333 OBLIGATIONS UNDER CAPITAL LEASES, less current portion (Note 5) 5,387,067 12,944,653 DEFERRED INCOME TAXES 3,709,500 3,711,985 ----------- ------------- Total liabilities 48,607,100 38,182,002 ----------- ------------- COMMITMENTS AND CONTINGENCIES (Notes 7 and 9) STOCKHOLDERS' EQUITY (Note 10): Series A Convertible Preferred Stock, $.01 par value, $100 stated value, 5,000,000 shares authorized, 0 and 50,000 shares issued and outstanding at December 31, 1996 and 1995, respectively -- 5,000,000 Common stock, $.01 par value, 17,000,000 shares authorized, 6,739,324 and 4,835,000 shares issued and outstanding at December 31, 1996 and 1995, respectively 67,393 48,350 Additional paid-in capital 14,338,873 9,378,979 Retained earnings 1,802,835 1,732,613 ----------- ------------- Total stockholders' equity 16,209,101 16,159,942 ----------- ------------- $64,816,201 $ 54,341,944 =========== =============
The accompanying notes are an integral part of these consolidated balance sheets. -24- MOBILE MINI, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994 ------------ ------------ ------------ REVENUES: Container and modular building sales $ 23,618,754 $ 24,264,547 $ 18,480,503 Leasing 13,638,635 12,213,888 7,174,585 Delivery, hauling and other 4,952,705 3,426,767 2,527,146 ------------ ------------ ------------ 42,210,094 39,905,202 28,182,234 COSTS AND EXPENSES: Cost of container and modular building sales 19,926,191 19,106,960 13,903,299 Leasing, selling, and general expenses 15,343,210 15,174,159 10,863,068 Depreciation and amortization 1,713,419 1,317,974 624,754 Restructuring charge (Note 1) 700,000 -- -- ------------ ------------ ------------ INCOME FROM OPERATIONS 4,527,274 4,306,109 2,791,113 OTHER INCOME (EXPENSE): Interest income and other 225,053 292,686 204,007 Interest expense (3,894,155) (3,211,659) (1,274,204) ------------ ------------ ------------ INCOME BEFORE PROVISION FOR INCOME TAXES AND EXTRAORDINARY ITEM 858,172 1,387,136 1,720,916 PROVISION FOR INCOME TAXES (377,596) (610,341) (765,098) ------------ ------------ ------------ INCOME BEFORE EXTRAORDINARY ITEM 480,576 776,795 955,818 EXTRAORDINARY ITEM, net of income tax benefit of $322,421 (Note 3) (410,354) -- -- ------------ ------------ ------------ NET INCOME $ 70,222 $ 776,795 $ 955,818 ============ ============ ============ EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE: Income before extraordinary item $ 0.07 $ 0.16 $ 0.21 Extraordinary item (0.06) -- -- ------------ ------------ ------------ Net income $ 0.01 $ 0.16 $ 0.21 ============ ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 6,737,592 5,010,126 4,496,904 ============ ============ ============
The accompanying notes are an integral part of these condolidated statements. -25- MOBILE MINI, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the years ended December 31, 1996, 1995, and 1994
Additional Total Preferred Common Paid-in Retained Stockholders' Stock Stock Capital Earnings Equity ------------ ------------ ------------ ------------ ------------ BALANCE, December 31, 1993 $ -- $ 27,000 $ 3,265,097 $ -- $ 3,292,097 Sale of common stock (Note 10) -- 21,350 7,005,768 -- 7,027,118 Net income -- -- -- 955,818 955,818 ------------ ------------ ------------ ------------ ------------ BALANCE, December 31, 1994 -- 48,350 10,270,865 955,818 11,275,033 Sale of preferred stock (Note 5,000,000 -- (891,886) -- 4,108,114 10) Net income -- -- -- 776,795 776,795 ------------ ------------ ------------ ------------ ------------ BALANCE, December 31, 1995 5,000,000 48,350 9,378,979 1,732,613 16,159,942 Conversion of preferred stock (Note 10) (5,000,000) 19,043 4,959,894 -- (21,063) Net income -- -- -- 70,222 70,222 ------------ ------------ ------------ ------------ ------------ BALANCE, December 31, 1996 $ -- $ 67,393 $ 14,338,873 $ 1,802,835 $ 16,209,101 ============ ============ ============ ============ ============
The accompanying notes are an integral part of these consolidated statements. -26- MOBILE MINI, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 70,222 $ 776,795 $ 955,818 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Extroardinary loss on early debt extinguishment 410,354 -- -- Amortization of deferred costs on credit agreement 385,473 -- -- Depreciation and amortization 1,713,419 1,317,974 624,754 Loss (gain) on disposal of property, plant and equipment 3,938 1,763 (399) Changes in assets and liabilities: Increase in receivables, net (319,129) (292,339) (2,255,883) Decrease (increase) in inventories 194,840 (1,085,216) (2,681,378) Increase in prepaid and other (24,410) (219,109) (112,169) Decrease (increase) in other assets 45,902 (87,617) (89,495) (Decrease) increase in accounts payable (1,707,818) (825,657) 3,551,884 (Decrease) increase in accrued liabilities 619,649 (382,147) 618,970 (Decrease) increase in deferred income taxes (2,485) 629,987 688,998 ------------ ------------ ------------ Net cash provided by (used in) operating 1,389,961 (165,566) 1,301,100 activities ------------ ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Net purchases of container lease fleet (7,737,552) (6,752,060) (6,512,209) Net purchases of property, plant and equipment (3,013,247) (4,025,574) (7,918,913) ------------ ------------ ------------ Net cash used in investing activities (10,750,799) (10,777,634) (14,431,122) ------------ ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings under lines of credit 22,307,001 876,804 1,427,208 Proceeds from issuance of long-term debt 7,127,997 5,855,982 3,290,005 Proceeds from sale-leaseback transactions -- 5,857,235 4,690,350 Payment for deferred financing costs (1,963,484) -- -- Principal payments and penalties on early debt extinguishment (14,405,879) -- -- Principal payments on long-term debt (1,334,083) (2,081,883) (1,081,740) Principal payments on capital lease obligations (3,043,759) (3,089,046) (1,505,677) Additional paid in capital (21,063) 4,108,114 7,027,118 ------------ ------------ ------------ Net cash provided by financing activities 8,666,730 11,527,206 13,847,264 ------------ ------------ ------------ NET INCREASE (DECREASE) IN CASH (694,108) 584,006 717,242 CASH, beginning of year 1,430,651 846,645 129,403 ------------ ------------ ------------ CASH, end of year $ 736,543 $ 1,430,651 $ 846,645 ============ ============ ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for interest $ 3,186,774 $ 2,745,542 $ 1,320,084 ============ ============ ============ Cash paid during the year for income taxes $ 59,958 $ 277,600 $ 300,692 ============ ============ ============
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES: Capital lease obligations of $548,697, $1,851,336 and $1,413,061 during 1996, 1995, and 1994, respectively, were incurred in connection with lease agreements for containers and equipment. The accompanying notes are an integral part of these consolidated statements. -27- MOBILE MINI, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 (1) THE COMPANY, ITS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Organization Mobile Mini, Inc., a Delaware corporation, designs and manufactures portable steel storage containers and telecommunications shelters and acquires and refurbishes ocean-going shipping containers for sale and lease primarily in Arizona, California and Texas. It also designs and manufactures a variety of delivery systems to compliment its storage container sales and leasing activities. Principles of Consolidation The consolidated financial statements include the accounts of Mobile Mini, Inc. and its wholly owned subsidiaries, Delivery Design Systems, Inc. ("DDS") and Mobile Mini I, Inc. (collectively the "Company"). All material intercompany transactions have been eliminated. Management's Plans The Company has experienced rapid growth during the last several years with revenues increasing at a 35.0% compounded rate during the last three years. This growth related to both the opening of additional sales and leasing offices in California and Texas and to an increase in leasing revenues due to the expansion of the Company's container lease fleet. Much of this growth was financed with short-term debt or capital leases, which was not adequate to meet the Company's growth needs. As discussed more fully in Note 3, in March 1996, the Company entered into a $41.0 million credit agreement (the "Credit Agreement") with a group of lenders. Initial borrowings under the Credit Agreement of $22,592,000 were used to refinance a majority of the Company's outstanding indebtedness with more favorable terms. The Company intends to use its remaining borrowing availability, primarily to expand its container lease fleet and related operations. The Company believes that its current capitalization together with borrowings available under the Credit Agreement, is sufficient to maintain the Company's current level of operations and permit controlled growth. However, should demand for the Company's products exceed current expectations, the Company would be required to secure additional financing through debt or equity offerings, additional borrowings or a combination of these sources. However, there is no assurance that any such financings will be available or will be available on terms acceptable to the Company. The Company's ability to obtain used containers for its lease fleet is subject in large part to the availability of these containers in the market. This is in part subject to international trade issues and the demand for containers in the ocean cargo shipping business. Should there be a shortage in supply of used containers, the Company could supplement its lease fleet with new manufactured containers. However, should there be an overabundance of these used containers available, it is likely that prices would fall. This could result in a reduction in the lease rates the Company could obtain from its container leasing operations. It could also cause the appraised orderly liquidation value of the containers in the lease fleet to decline. In such event, the Company's ability to finance its business through the Credit Agreement would be severly limited, as the maximum borrowing limit under that facility is based upon the appraised orderly liquidation value of the Company's container lease fleet. The Company previously was involved in the manufacture, sale and leasing of modular steel buildings in the state of Arizona. These buildings were used primarily as portable schools, but could be used for a variety of purposes. Although the Company believes its modular buildings were superior to the wood-framed buildings offered by its competitors, the Company was not able to generate acceptable margins on this product line. During 1996, the Company implemented a strategic restructuring program designed to concentrate management effort and resources and better position itself to achieve its strategic growth objectives. As a result of this program, the Company's 1996 results include charges of $700,000 ($400,000 after tax, or $.06 per share) for costs associated with restructuring the Company's manufacturing operations and for other related charges. These charges were recorded in the fourth quarter of 1996, and were comprised of the write-down of assets used in the Company's discontinued modular building operations and related severance obligations ($300,000), and the write-down of other fixed assets ($400,000). By discontinuing its modular building operations, the Company will be able to utilize the management resources and production capacity previously utilized by this division to expand the Company's telecommunications shelter business and its container leasing operations. -28- Revenue Recognition The Company recognizes revenue from sales of containers upon delivery. Revenue generated under container leases is recognized on a straight-line basis over the term of the related lease. Revenue under certain contracts for the manufacture of modular buildings is recognized using the percentage-of-completion method primarily based on contract costs incurred to date compared with total estimated contract costs. Provision for estimated losses on uncompleted contracts is made in the period in which such losses are determined. Costs and estimated earnings less billings on uncompleted contracts of approximately $141,000 and $112,000 in 1996 and 1995, respectively, represent amounts received in excess of revenue recognized and are included in accrued liabilities in the accompanying balance sheet. In 1995, costs and estimated revenue recognized in excess of amounts billed were included in receivables. Revenue for container delivery, pick-up and hauling is recognized as the related services are provided. Concentrations of Credit Risk Financial instruments which potentially expose the Company to concentrations of credit risk, as defined by Statement of Financial Accounting Standards ("SFAS") No. 105, consist primarily of trade accounts receivable. The Company's trade accounts receivable are generally secured by the related container or modular building sold or leased to the customer. The Company does not rely on any one customer base. The Company's sales and leasing customers by major category are presented below as a percentage of units sold/leased:
1996 1995 --------------------------- ---------------------------- Sales Leasing Sales Leasing Retail and wholesale businesses 54% 52% 50% 44% Homeowners 5% 17% 6% 22% Construction 12% 22% 10% 23% Institutions 14% 4% 20% 5% Government, industrial and other 15% 5% 14% 6%
Inventories Inventories are stated at the lower of cost or market, with cost being determined under the specific identification method. Market is the lower of replacement cost or net realizable value. Inventories at December 31 consisted of the following: 1996 1995 ---------- ---------- Raw materials and supplies $3,547,487 $2,858,181 Work-in-process 288,986 883,814 Finished containers 1,161,909 1,451,227 ========== ========== $4,998,382 $5,193,222 ========== ========== -29- Property, Plant and Equipment Property, plant and equipment are stated at cost, net of accumulated depreciation. Depreciation is provided using the straight-line method over the assets' estimated useful lives. Salvage values are determined when the property is constructed or acquired and range up to 25%, depending on the nature of the asset. In the opinion of management, estimated salvage values do not cause carrying values to exceed net realizable value. Normal repairs and maintenance to property, plant and equipment are expensed as incurred. Property, plant and equipment at December 31 consisted of the following:
Estimated Useful Life in Years 1996 1995 ---------------- ---------- Land - $ 708,555 $ 328,555 Vehicles and equipment 5 to 10 11,218,281 9,469,092 Buildings and improvements 30 6,958,247 6,363,154 Office fixtures and equipment 5 to 20 2,514,812 1,714,312 ------------ ------------- 21,399,895 17,875,113 Less-Accumulated depreciation (3,703,849) (2,402,949) ------------ ------------- $ 17,696,046 $ 15,472,164 ============== =============
At December 31, 1996 and 1995, substantially all property, plant and equipment has been pledged as collateral for long-term debt obligations and obligations under capital lease (see Notes 3, 4 and 5). Accrued Liabilities Included in accrued liabilities in the accompanying consolidated balance sheets are customer deposits and prepayments totaling approximately $412,000 and $505,000 for the years ended December 31, 1996 and 1995, respectively. Earnings Per Common and Common Share Equivalent Earnings per common and common share equivalent is computed by dividing net income by the weighted average number of common and common equivalent shares outstanding. Fully diluted and primary earnings per common and common share equivalent are considered equal for all periods presented. Fair Value of Financial Instruments The estimated fair value of financial instruments has been determined by the Company using available market information and valuation methodologies. Considerable judgment is required in estimating fair values. Accordingly, the estimates may not be indicative of the amounts the Company could realize in a current market exchange. The carrying amounts of cash, receivables and accounts payable approximate fair values. The carrying amounts of the Company's borrowing under the line of credit agreement and long-term debt instruments approximate their fair value. The fair value of the Company's long-term debt and line of credit is estimated using discounted cash flow analyses, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. Deferred Financing Costs Included in other assets are deferred financing costs of $1,659,218 and $172,715 at December 31, 1996 and 1995, respectively. These costs of obtaining long-term financing are being amortized over the term of the related debt, using the straignt line method. -30- Advertising Expense The Company expenses the costs of advertising the first time the advertising takes place, except for direct-response advertising, which is capitalized and amortized over its expected period of future benefits. Advertising expense totaled $2,341,000 and $2,258,000 in 1996 and 1995, respectively. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Recently Issued Accounting Standard Statement of Financial Accounting Standards No. 121 (SFAS No. 121), Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, was adopted in 1996. The adoption of SFAS No. 121 did not have a material effect on the Company's financial position or its results of operations. (2) CONTAINER LEASE FLEET: The Company has a container lease fleet consisting of refurbished or constructed containers and modular buildings that are leased to customers under operating lease agreements with varying terms. Depreciation is provided using the straight-line method over the containers' and modular buildings' estimated useful lives of 20 years with salvage values estimated at 70% of cost. In the opinion of management, estimated salvage values do not cause carrying values to exceed net realizable value. At December 31, 1996 and 1995, approximately $6.9 million and $24.9 million, respectively of containers and modular buildings included in the container lease fleet have been pledged as collateral for long-term debt and obligations under capital leases and, at December 31, 1996. The balance of the containers are secured as collateral under the Credit Agreement (see Notes 3, 4 and 5). Normal repairs and maintenance to the containers and modular buildings are expensed as incurred. (3) LINE OF CREDIT: In March 1996, the Company entered into the Credit Agreement with BT Commercial Corporation, as Agent for a group of lenders (the "Lenders"). Under the terms of the Credit Agreement, as amended, the Lenders have provided the Company with a $35.0 million revolving line of credit and a $6.0 million term loan. Borrowings under the Credit Agreement are secured by substantially all of the Company's assets. Available borrowings under the revolving line of credit are based upon the level of the Company's inventories, receivables and container lease fleet. The container lease fleet will be appraised at lease annually, and up to 90% of the lesser of cost or appraised orderly liquidation value, as defined, may be included in the borrowing base. Interest accrues at the Company's option at either prime plus 1.5% or the Eurodollar rate plus 3% and is payable monthly. The term of this line of credit is three years, with a one-year extension option. In connection with the closing of the Credit Agreement, the Company terminated its line of credit with its previous lender, repaying all indebtedness under that line. In addition, the Company repaid other long-term debt and obligations under capital leases totaling $14.1 million. As a result, the Company recognized costs previously deferred related to certain indebtedness and prepayment penalties resulting in an extraordinary charge to earnings of $410,000 ($732,000 net of a $322,000 benefit for income taxes). The line of credit balance outstanding at December 31, 1996, was approximately $26.4 million and is classified as a long-term obligation in the accompanying 1996 balance sheet. The amount available for borrowing was approximately $957,000 at December 31, 1996. Prior to the refinancing, the Company had available short-term lines of credit which bore interest at 1.5% over the prime rate. During 1996 and 1995, the weighted average interest -31- rate under the lines of credit was 8.73% and 10.2%, respectively, and the average balance outstanding during 1996 and 1995 was approximately $20.3 million and $4.2 million, respectively. The Credit Agreement contains several covenants including a minimum tangible net worth requirement, a minimum fixed charge coverage ratio, a maximum ratio of debt to equity, minimum operating income levels and minimum required utilization rates. In addition, the Credit Agreement contains limits on capital expenditures and the incurrence of additional debt, as well as prohibiting the payment of dividends. (4) LONG TERM DEBT: Long-term debt at December 31, consists of the following:
1996 1995 -------------- --------- Notes payable to BT Commercial Corporation, interest ranging from 3.25% over Eurodollar rate (5.6% at December 31, 1996) to 1.75% over prime (8.25% at December 31, 1996), fixed monthly installments of principal plus interest, due March 2001, secured by various classes of the Company's assets $ 5,437,500 $ - Notes payable, interest ranging from 9% to 12.2%, monthly installments of principal and interest, due March 1997 through September 2001, secured by equipment and vehicles 743,867 3,122,665 Notes payable, interest ranging from 11.49 % to 12.63%, monthly installments of principal and interest, due July 2000 through January 2001, secured by containers 706,796 4,342,043 Short term note payable to financial institution, interest at 6.89% payable in fixed monthly installments due March 1997, unsecured 114,614 - Notes payable to banks, interest ranging from 1.75% to 2.75% over prime, monthly installments of principal and interest, paid off in March 1996, secured by deeds of trust on real property. - 1,635,806 ----------- ----------- 7,002,777 9,100,514 Less: Current portion (1,378,829) (737,181) ----------- ----------- $ 5,623,948 $ 8,363,333 ============ ===========
Future maturities under long-term debt are as follows: Years ending December 31, 1996 ----------- 1997 $ 1,378,829 1998 1,673,650 1999 1,806,743 2000 1,707,031 2001 436,524 ----------- $ 7,002,777 Less: current portion (1,378,829) ----------- $ 5,623,948 =========== -32- The Credit Agreement with BT Commercial Corporation contains restrictive covenants. See Note 3 (5) OBLIGATIONS UNDER CAPITAL LEASES: The Company leases certain storage containers and equipment under capital leases expiring through 2001. Certain storage container leases were entered into under sale-leaseback arrangements with various leasing companies. The lease agreements provide the Company with a purchase option at the end of the lease term based on an agreed upon percentage of the original cost of the containers. These leases have been capitalized using interest rates ranging from approximately 8% to 14%. The leases are secured by storage containers and equipment under lease. During 1995 and 1994, the Company entered into multi-year agreements (the "Leases") to lease a number of portable classrooms to school districts in Arizona. Subsequent to entering the leases, the Company "sold" the portable classrooms and assigned the Leases to an unrelated third party financial institution (the "Assignee"). In addition, the Company entered into Remarketing/Releasing Agreements (the "Agreements") with the Assignee. The Agreements provide that the Company will be the exclusive selling/leasing agent upon the termination of the aforementioned Leases for a period of 12 months. If the Company is successful in releasing the buildings and the Assignee receives, via lease payments, an amount equal to the Base Price, as defined, plus any reimbursed remarketing costs of the Company, the Company has the option to repurchase the buildings for $1 each. If the Company sells any of the buildings, the Assignee shall receive from each sale that portion of the Base Price allocated to the building sold plus costs the Assignee has reimbursed to the Company plus interest on those combined amounts from the date of the Lease termination at the Assignee's prime rate plus 4%. Any sales proceeds in excess of this amount are to be remitted to the Company. In the event the Company has not released or sold the buildings within 12 months of the termination of the Leases, the Assignee has the right to require the Company to repurchase the buildings for the Base Price plus all costs the Assignee has reimbursed to the Company plus interest thereon at the Assignee's prime rate plus 4% since the termination of the Lease. For financial reporting purposes these transactions were accounted for as capital leases in accordance with SFAS No. 13, Accounting for Leases. For income tax purposes these transactions were treated as sales. During 1996, leases on 15 of the buildings matured and the Company sold all 15 portable buildings in 1996 pursuant to the Agreements. The revenues from these sales are included in the accompanying statements of operations and the underlying capital lease obligations for these buildings were paid in full at December 31, 1996. Future payments of obligations under capital leases: Years ending December 31, 1997 $ 2,091,580 -33- 1998 2,456,136 1999 2,405,222 2000 1,313,241 2001 54,418 ----------- Total payments 8,320,598 Less: Amounts representing interest (1,581,251) ----------- 6,739,347 Less: Current portion (1,352,279) ----------- $ 5,387,067 =========== Certain obligations under capital leases contain financial covenants which include that the Company maintains a specified interest expense coverage ratio and a required debt to equity ratio. Gains from sale-leaseback transactions have been deferred and are being amortized over the estimated useful lives of the related assets. Unamortized gains at December 31, 1996 and 1995, approximated $288,000 and $305,000, respectively, and are reflected as a reduction in the container lease fleet in the accompanying financial statements. Included in the accompanying statements of operations are revenues of approximately $3,645,000 in 1995 for container sales under sale-leaseback transactions where no profit was recognized. The Company did not enter into any significant sale-leaseback transactions during 1996. (6) INCOME TAXES: The Company accounts for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities at the tax rates in effect when these differences are expected to reverse. The provision for income taxes at December 31, 1996, 1995 and 1994 consisted of the following: 1996 1995 1994 -------- ---------- -------- Current $ - $ - $ - Deferred 377,596 610,341 765,098 -------- ---------- -------- Total $377,596 $ 610,341 $765,098 ======== ========== ======== -34- The components of the net deferred tax liability at December 31, 1996 and 1995 are as follows:
1996 1995 ---------------- ------------------ Net long-term deferred tax liability: Accelerated tax depreciation $ (7,363,000) $ (5,450,000) Deferred gain on sale-leaseback transactions (429,000) 136,000 Deferred revenue (Note 5) - (87,000) Alternative minimum tax credit 211,000 211,000 Reserve and other 324,500 (68,000) Net operating loss carryforwards 3,369,000 1,412,000 Valuation allowance (13,000) (13,000) ---------------- ------------------ (3,900,500) (3,859,000) ---------------- ------------------ Net short-term deferred tax asset: Valuation reserve for accounts receivable 113,000 66,000 Unicap adjustment 40,000 51,000 Vacation reserve 38,000 30,000 ---------------- ------------------ 191,000 147,000 ---------------- ------------------ $ (3,709,500) $ (3,712,000) ================ ==================
SFAS No. 109 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Stock issuances by the Company may cause a change in ownership under the provisions of the Internal Revenue Code Section 382; accordingly, the utilization of the Company's net operating loss carryforwards may be subject to annual limitations. Due to a change in ownership during 1996, approximately $1,300,000 of the Company's net operating losses are subject to limitation. A reconciliation of the federal statutory rate to the Company's effective tax rate for the years ended December 31 are as follows:
1996 1995 1994 --------------- ------------- ------------- Statutory federal rate 34% 34% 34% State taxes, net of federal benefit 6 6 8 Effect of permanent differences 4 4 2 =============== ============= ============= 44% 44% 44% =============== ============= =============
Net operating loss carryforwards for federal income tax purposes totalled $8.0 million and $3.6 million at December 31, 1996 and 1995, respectively, and expire from 2008 through 2011. (7) TRANSACTIONS WITH RELATED PARTIES: Effective December 31, 1993, Richard E. Bunger contributed substantially all of the assets and liabilities of Mobile Mini Storage Systems ("MMSS") and the stock of DDS to the Company in exchange for 2,700,000 shares of common stock and the assumption of certain liabilities by the Company. Such liabilities include liabilities associated with the MMSS operations and certain income tax liabilities of Mr. Bunger and an affiliate arising from the MMSS operations occurring prior to January 1, 1994. These income tax liabilities were approximately $2,821,000. The Company will indemnify and defend Mr. Bunger against loss or expense related to all liabilities assumed by the Company and for any contingent liabilities arising from past operations. -35- The Company leases a portion of the property comprising its Phoenix location and the property comprising its Tucson location from Mr. Bunger's five children. Annual payments under these leases currently total approximately $70,000 with an annual adjustment based on the Consumer Price Index. The term of each of these leases will expire on December 31, 2003. Additionally, the Company leases its Rialto, California facility from Mobile Mini Systems, Inc., an affiliate, wholly owned by Mr. Bunger, for total annual lease payments of $204,000, with annual adjustments based on the Consumer Price Index. The Rialto lease is for a term of 15 years expiring on December 31, 2011. Management believes the rental rates reflect the fair market value of these properties. The Company purchased certain leased property at its Maricopa, Arizona facility from Mr. Bunger on March 29, 1996, for a purchase price of $335,000, which management believes reflects the fair market value of the property. All ongoing and future transactions with affiliates will be on terms no less favorable than could be obtained from unaffiliated parties and will be approved by a majority of the independent and disinterested directors. (8) BENEFIT PLANS: Stock Option Plan In August 1994, the Company`s board of directors adopted the Mobile Mini, Inc. 1994 Stock Option Plan ("the Plan"). Under the terms of the Plan, both incentive stock options ("ISOs"), which are intended to meet the requirements of Section 422 of the Internal Revenue Code, and non-qualified stock options may be granted. ISOs may be granted to the officers and key personnel of the Company. Non-qualified stock options may be granted to the Company's directors and key personnel, and to providers of various services to the Company. The purpose of the Plan is to provide a means of performance-based compensation in order to attract and retain qualified personnel and to provide an incentive to others whose job performance or services affect the Company. Under the Plan, as amended in 1996, options to purchase a maximum of 543,125 shares of the Company's common stock may be granted. The exercise price for any option granted under the Plan may not be less than 100% (110% if the option is granted to a stockholder who at the time the option is granted owns stock comprising more than 10% of the total combined voting power of all classes of stock of the Company) of the fair market value of the common stock at the time the option is granted. The option holder may pay the exercise price in cash or by delivery of previously acquired shares of common stock of the Company that have been held for at least six months. The Plan is administered by the compensation committee of the board of directors which will determine whether such options will be granted, whether such options will be ISOs or non-qualified options, which directors, officers, key personnel and service providers will be granted options, the restrictions upon the forfeitablity of such options and the number of options to be granted, subject to the aggregate maximum number set forth above. Each option granted must terminate no more than 10 years from the date it is granted. The board of directors may amend the Plan at any time, except that approval by the Company's shareholders may be required for any amendment that increases the aggregate number of shares which may be issued pursuant to the Plan, changes the class of persons eligible to receive such options, modifies the period within which the options may -36- be granted, modifies the period within which the options may be exercised or the terms upon which options may be exercised, or increases the material benefits accruing to the participants under the Plan. Unless previously terminated by the board of directors, the Plan will terminate in November, 2003, but any option granted thereunder will continue throughout the terms of such option. The following summarizes the activity for the Plan for the years ended December 31, 1996 and 1995:
1996 1995 ------------------------------ ---------------------------------- Number Weighted Average Number Weighted Average of Shares Exercise Price of Shares Exercise Price ------------------------------------------------------------------- Options outstanding, beginning of year 241,000 $4.04 128,000 $4.11 Granted 156,000 $3.43 143,000 $3.94 Canceled/Expired (50,000) $3.16 (30,000) $3.88 Exercised - - - - --------------- ---- ---------------- ------------ Options outstanding, end of year 347,000 $3.89 241,000 $4.04 --------------- ---- ---------------- ------------ Options exercisable, end of year 158,500 89,250 --------------- ---------------- Range of exercise prices $3.12-$3.85 $3.75-$5.38 =============== ================ Weighted average fair value of $1.70 $ .97 options granted =============== ================
At December 31, 1996, the weighted average remaining contractual life of the options outstanding was 7.6 years. Statement of Financial Accounting Standards No. 123 During 1995, the Financial Accounting Standards Board issued SFAS No. 123, Accounting for Stock-Based Compensation, which defines a fair value based method of accounting for an employee stock option or similar equity instrument and encourages all entities to adopt that method of accounting for all of their employee stock compensation plans. However, it also allows an entity to continue to measure compensation cost related to stock options issued to employees under the Plan using the method of accounting prescribed by the Accounting Principles Board Opinion No. 25 (APB No. 25), Accounting for Stock Issued to Employees. Entities electing to remain under the accounting in APB No. 25 must make pro forma disclosures of net income and earnings per share, as if the fair value based method of accounting defined in SFAS No. 123 has been applied. The Company has computed for pro forma disclosure purposes the value of all options and warrants granted during 1995 and 1996, using the following weighted average assumptions used for grants: -37- Risk free interest rate 6.4% Expected dividend yield None Expected holding period 4 years Expected volatility 48% Options were assumed to be exercised at the end of the four year expected life for the purpose of this valuation. Adjustments were not made for options forfeited prior to vesting. The total value of options granted was computed to be the following approximate amounts, which would be amortized on the straight-line basis over the average holding period of options: Year ended December 31, 1996 $99,418 Year ended December 31, 1995 $56,838 If the Company had accounted for stock options issued to employees using a fair value based method of accounting, the Company's net income and net income per share would have been reported as follows: Year Ended December 31, 1996 1995 ------------ ------------ Net Income: As reported $ 70,222 $ 776,795 Pro forma 14,548 744,966 Net income per common share and common share equivalent: As reported $ 0.01 $ 0.16 Pro forma 0.00 0.15 The effects of applying SFAS No. 123 for providing pro forma disclosures for 1996 and 1995 are not likely to be representative of the effects on reported net income and net income per common share equivalent for future years, because options vest over several years and additional awards generally are made each year, and SFAS No. 123 has not been applied to options granted prior to January 1, 1995. 401(k) Plan In 1995, the Company established a contributory retirement plan (the "401(k) Plan") covering eligible employees with at least one year of service. The 401(k) Plan is designed to provide tax-deferred income to the Company's employees in accordance with the provisions of Section 401(k) of the Internal Revenue Code. The 401(k) Plan provides that each participant may annually contribute 2% to 15% of their respective salary, not to exceed the statutory limit. The Company may elect to make a qualified non-elective contribution in an amount as determined by the Company. Under the terms of the 401(k) Plan, the Company may also make discretionary profit sharing contributions. Profit sharing contributions are allocated among participants based on their annual compensation. Each participant has the right to direct the investment of his or her funds among certain named plans. The Company did not elect to make any qualified non-elective contributions or profit sharing contributions to the 401(k) Plan during 1996 or 1995. -38- (9) COMMITMENTS AND CONTINGENCIES: As discussed more fully in Note 7, the Company is obligated under noncancelable operating leases with related parties. The Company also leases its corporate offices and other properties, as well as operating equipment from third parties under noncancelable operating leases. Rent expense under these agreements was approximately $649,000, $515,000 and $342,000 for the years ended December 31, 1996, 1995, and 1994, respectively. Total future commitments under all noncancelable agreements for the years ended December 31, are as follows: 1997 $800,987 1998 821,825 1999 837,417 2000 770,668 2001 585,319 Thereafter 3,821,386 --------- $7,637,602 ========== The Company is involved in certain administrative proceedings arising in the normal course of business. In the opinion of management, the Company's potential exposure under the pending administrative proceedings is adequately provided for in the accompanying financial statements and any adverse outcome will not have a material impact on the Company's results of operations or its financial condition. (10) STOCKHOLDERS' EQUITY: Initial Public Offering In February 1994, the Company successfully completed an initial public offering of 937,500 Units, each Unit consisting of two shares of common stock and one detachable common stock warrant for the purchase of one share of common stock for $5.00 per share. An additional 130,000 Units were sold in March 1994 pursuant to the underwriters' over-allotment option. Net proceeds to the Company totaled $7,027,118. The Company also granted the underwriters a warrant ("Underwriters' Warrant") for the purchase of an additional 93,750 Units. The Underwriters' Warrant is exercisable for four years, commencing on February 17, 1995, at an exercise price of $12.00 per unit. As of December 31, 1995, none of the detachable common stock warrants or Underwriters' Warrants had been exercised. Series A Convertible Preferred Stock In December 1995, the Company completed the private placement of 50,000 shares of Series A Convertible Preferred Stock ("Series A"), $.01 par value, $100 stated value, for aggregate net proceeds of $4.1 million. Pursuant to the terms of the Series A, all 50,000 shares of Series A were converted into 1,904,324 shares of the Company's common stock at an average conversion rate of $2.63 per share during the first quarter of 1996. -39- ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. ITEM 11. EXECUTIVE COMPENSATION. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information required to be disclosed in Items 10, 11, and 12 of this Report are incorporated by reference to the Company's Proxy Statement relating to its 1997 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Effective December 31, 1993, Richard E. Bunger, an executive officer, director and founder of the Company, contributed substantially all of the assets and liabilities of MMSS and the stock of DDS to the Company in exchange for 2,700,000 shares of Common Stock and the assumption of certain liabilities by the Company. Such liabilities include liabilities associated with the MMSS assets and operations and certain income tax liabilities of Mr. Bunger and an affiliate arising from the MMSS operations occurring prior to January 1, 1994. Such income tax liabilities were estimated at $428,000. Deferred income tax liabilities associated with the assets contributed, established at $2,393,000, were also required to be recognized by the Company in connection with such capitalization. The Company will indemnify and defend Mr. Bunger against loss or expense related to all liabilities assumed by the Company and for any contingent liabilities arising from past operations. Prior to the capitalization of the Company, Mr. Bunger personally guaranteed the Company's lines of credit and other material debts. These obligations have subsequently been extinguished by payment of the debts by the Company. The Company leases certain of its business locations from affiliates of Mr. Bunger, including his children. The Company entered into an agreement, effective January 1, 1994, to lease a portion of the property comprising its Phoenix location and the property comprising its Tucson location from Richard E. Bunger's five children. Total annual base lease payments under these leases currently equal $66,000, with annual adjustment based on the consumer price index. Lease payments in fiscal year 1996 equaled $69,702. The term of each of these leases will expire on December 31, 2003. Prior to 1994, these properties were leased by the Company's predecessor at annual rental payments equaling $14,000. Additionally, the Company entered into an agreement effective January 1, 1994 to lease its Rialto facility from Mobile Mini Systems, Inc. for total annual base lease payments of $204,000 with annual adjustments based on the consumer price index. This lease agreement was extended for and additional five years during 1996. Lease payments in fiscal year 1996 equaled $215,442. Prior to 1994, the Rialto site was leased to the Company's predecessor at an annual rate of $132,000. Management believes the increase in rental rates reflect the fair market rental value of these properties. Prior to the effectiveness of the written leases, the terms were approved by the Company's independent and disinterested directors. -40- In March 1994 the Company's manufacturing facility in Maricopa, Arizona needed additional acreage to expand its manufacturing capabilities and began using approximately 22 acres of property owned by Richard E. Bunger. The Company leased this property from Mr. Bunger with annual payments of $40,000 with an annual adjustment based on the Consumer Price Index. The Company purchased the property from Mr. Bunger on March 29, 1996 for a purchase price of $335,000, which management believes reflects the fair market value of the property. -41- PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) Documents filed as part of this Report: (1) The financial statements required to be included in this Report are included in ITEM 8 of this Report. (2) The following financial statement schedule for the years ended December 31, 1996, 1995 and 1994 is submitted herewith: Schedule II - Valuation and Qualifying Accounts All other schedules have been omitted because they are not applicable or not required. (3) Exhibits
Number Description Page 3.1(1) Certificate of Incorporation of Mobile Mini, Inc.; Amendment to Certificate of Incorporation of Mobile Mini, Inc.; Second Amendment to Certificate of Incorporation of Mobile Mini, Inc.; Third Amendment to Certificate of Incorporation of Mobile Mini, Inc.; Fourth Amendment to Certificate of Incorporation of Mobile Mini, Inc.; By-Laws of Mobile Mini, Inc. 3.2(4) Fifth Certificate of Amendment to Certificate to Certificate of Incorporation of Mobile Mini, Inc. 3.3(4) Certificate of Designations of Series A Convertible Preferred Stock of Mobile Mini, Inc. 4.1(1) Form of Underwriters' Warrant 4.2(1) Form of Warrant Agreement by and between Mobile Mini, Inc. and Bank One, Arizona, NA dated January 31, 1994 4.3(1) Form of Common Stock Certificate 4.4(1) Form of Warrant Certificate 10.2(1) Form of Employment Agreement 10.3(2) Mobile Mini, Inc. 1994 Stock Option Plan dated August 1, 1994 10.4 Statement regarding amendment to 1994 Stock Option Plan 10.5(5) Credit Agreement dated as of March 28, 1996 among Mobile Mini, Inc., each of the financial institutions initially a signatory thereto, together with assignees, as Lenders, and BT Commercial Corporation, as Agent. 10.6 Amendment No. 1 to Credit Agreement 10.7 Amendment No. 2 to Credit Agreement 10.8(1) Lease Agreement by and between Steven G. Bunger, Michael J. Bunger, Carolyn A. Clawson, Jennifer J. Blackwell, Susan E. Bunger (collectively "Landlord") and Mobile Mini Storage Systems ("Tenant") dated January 1, 1994 10.9(1) Lease Agreement by and between Steven G. Bunger, Michael J. Bunger, Carolyn A. Clawson, Jennifer J. Blackwell, Susan E. Bunger (collectively "Landlord") and Mobile Mini Storage Systems ("Tenant") dated January 1, 1994 10.10(1) Lease Agreement by and between Steven G. Bunger, Michael J. Bunger, Carolyn A. Clawson, Jennifer J. Blackwell, Susan E. Bunger (collectively "Landlord") and Mobile Mini Storage Systems ("Tenant") dated January 1, 1994 10.11(1) Lease Agreement by and between Mobile Mini Systems, Inc. ("Landlord") and Mobile Mini Storage Systems ("Tenant") dated January 1, 1994 10.12(2) Amendment to Lease Agreement by and between Steven G. Bunger, Michael J. Bunger, Carolyn A. Clawson,
-42-
Jennifer J. Blackwell, Susan E. Bunger (collectively "Landlord") and Mobile Mini Storage Systems ("Tenant") dated August 15, 1994 10.13(2) Amendment to Lease Agreement by and between Steven G. Bunger, Michael J. Bunger, Carolyn A. Clawson, Jennifer J. Blackwell, Susan E. Bunger (collectively "Landlord") and Mobile Mini Storage Systems ("Tenant") dated August 15, 1994 10.14(2) Amendment to Lease Agreement by and between Steven G. Bunger, Michael J. Bunger, Carolyn A. Clawson, Jennifer J. Blackwell, Susan E. Bunger (collectively "Landlord") and Mobile Mini Storage Systems ("Tenant") dated August 15, 1994 10.15(3) Amendment to Lease Agreement by and between Mobile Mini Storage Systems, Inc., a California corporation, ("Landlord"), and the Company dated December 30, 1994. 10.16(5) Lease Agreement by and between Richard E. and Barbara M. Bunger ("Landlord") and the Company ("Tenant'") dated November 1, 1995. 10.17(5) Amendment to Lease Agreement by and between Richard E. and Barbara M. Bunger ("Landlord") and the Company ("Tenant'") dated November 1, 1995. 10.18 Amendment No. 2 to Lease Agreement between Mobile Mini Storage Systems, Inc. and the Company 10.19(1) Patents and Patents Pending 10.20(1) U.S. and Canadian Tradename and Service Mark Registration 11 Statement Re: Computation of Per Share Earnings 21 Subsidiaries of Mobile Mini, Inc. 23 Consent of Arthur Andersen LLP 99 Selected Financial Data All other exhibits are omitted as the information required is inapplicable (1) Incorporated by reference from the Registrant's Registration Statement on Form SB-2 (No. 33-71528-LA), as amended (2) Incorporated by reference from the Registrant's Form 10-QSB for the quarter ended September 30, 1994 (3) Incorporated by reference from the Registrant's Form 10-KSB for the fiscal year ended December 31, 1994 (4) Incorporated by reference from the Registrant's Form 8-A filed January 29, 1996 (5) Incorporated by reference from the Registrant's Form 10-KSB for the fiscal year ended December 31, 1995 (b) Reports on Form 8-K None
-43- SCHEDULE II MOBILE MINI, INC. VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 December 31, ----------------------------------------- 1996 1995 1994 ---- ---- ---- Allowance for doubtful accounts: Balance at beginning of period $157,659 $256,022 $105,694 Provision charged to expense 502,065 382,653 339,642 Write-offs (391,543) (481,016) (189,314) ------- ------- ------- Balance at end of period $268,181 $157,659 $256,022 ======= ======= ======= In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MOBILE MINI, INC. (Registrant) Date: March 28, 1997 By: /s/ Richard E. Bunger ----------------------------- Richard E. Bunger, Chief Executive Officer and Director
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: March 28, 1997 By: /s/ Richard E. Bunger ----------------------------- Richard E. Bunger, Chief Executive Officer and Director Date: March 28, 1997 By: /s/ Lawrence Trachtenberg --------------------------------- Lawrence Trachtenberg, Chief Financial Officer and Director Date: March 28, 1997 By: /s/ Steven G. Bunger ---------------------------- Steven G. Bunger, Chief Operating Officer and Director Date: March 28, 1997 By: /s/ Ronald J. Marusiak ------------------------------ Ronald J. Marusiak, Director Date: March 28, 1997 By: /s/ George Berkner -------------------------- George Berkner, Director
-44-
         On July 1, 1996,  the Board of  Directors  approved a proposal to amend
the Company's  1994 Stock Option Plan (the "1994 Plan"),  subject to approval by
the  Company's  stockholders,  to increase  the number of shares of common stock
that may be issued pursuant to the 1994 Plan from 343,125 to 543,125 shares. The
proposal was approved at the Annual Meeting of  Stockholders  held on August 27,
1996.
                                      -45-
                              AMENDMENT NUMBER ONE
                                       TO
                                CREDIT AGREEMENT



                  This   AMENDMENT   NUMBER  ONE  TO  CREDIT   AGREEMENT   (this
"Amendment"),  dated as of  November  ___,  1996,  is entered  into by and among
MOBILE MINI,  INC., a Delaware  corporation  (the  "Borrower"),  each  financial
institution  a party to the  Credit  Agreement  ("Lenders"),  and BT  COMMERCIAL
CORPORATION  acting  as agent for the  Lenders  (the  "Agent"),  in light of the
following facts:

                                 R E C I T A L S


         (a) The parties hereto have previously entered into that certain Credit
Agreement, dated as of March 28, 1996 (the "Agreement").

         (b) The parties hereto desire to amend the Agreement in accordance with
the terms of this Amendment.

                                A G R E E M E N T

                  NOW THEREFORE, the parties hereto agree as follows:

                  (i) Defined Terms.  All initially  capitalized  terms used but
not  defined  herein  shall  have the  meanings  assigned  to such  terms in the
Agreement.  In  addition  Section  1.1 of the  Agreement  is amended by deleting
therefrom  the  definitions  of  EBITDA  and  Consolidated   Fixed  Charges  and
substituting therefor the following:

                           EBITDA for a period means the consolidated net income
         of the Borrower and its Subsidiaries  (excluding  extraordinary  gains,
         non-cash  extraordinary  losses, and extraordinary  losses arising from
         prepayments  of  Indebtedness  incurred on or about the Closing Date in
         connection  with the  initial  funding of the Loans) for the period (a)
         plus  all  Interest  Expense,  income  tax  expense,  depreciation  and
         amortization   (including   amortization   of  any  goodwill  or  other
         intangibles) for the period, (b) less gains or plus losses attributable
         to any fixed asset sales (excluding sales of containers held for lease)
         in the period and (c) plus or minus any other  non-cash  charges  which
         have been subtracted or added in calculating consolidated net income.
                                      -46-

                           Consolidated  Fixed  Charges  means  the  sum  of (i)
Interest Expense and (ii) the principal amounts (including the principal portion
of rentals
payable under capital leases) of all Indebtedness  (but excluding  repayments of
Revolving Loans which do not permanently  reduce the Commitments,  and excluding
payments  of   Indebtedness   made  from  the  proceeds  of  asset  sales  which
Indebtedness is payable by Borrower due to the sale of assets  previously  under
lease) of the Borrower and its Subsidiaries payable for the applicable period.

         (ii)  Conditions  Precedent.  The  effectiveness  of this  Amendment is
subject to and conditioned upon the fulfillment of each and all of the following
conditions precedent:

                  i. BTCC shall have  received this  Amendment  duly executed by
Borrower and Majority Lenders; and

                  ii.  BTCC shall  have  received  an  affirmation  letter  duly
executed by each guarantor under the Guaranties,  indicating the consent by each
such guarantor to the execution and delivery by Borrower of this Amendment.

         (iii)  Counterparts.  This  Amendment  may be executed in any number of
counterparts and by different  parties on separate  counterparts,  each of which
when so  executed  and  delivered  shall be deemed to be an  original.  All such
counterparts, taken together, shall constitute buy one and the same Amendment.

         (iv) Reaffirmation of the Agreement.  Except as specifically amended by
this Amendment, the Agreement shall remain in full force and effect.
                                      -47-

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement  to be  executed  at Los  Angeles,  California  as of the  date  first
hereinabove written.


                           MOBILE MINI, INC.,
                           a Delaware corporation

                           By: /s/
                              ------------------------------------------
                                    Larry Trachtenberg, Chief Financial Officer



                           BT COMMERCIAL CORPORATION, a Delaware
                           corporation, individually and as Agent

                           By: /s/
                              ------------------------------------------

                           Title:
                                 ---------------------------------------



                           NATIONSBANK OF TEXAS, N.A.

                           By: /s/
                              ------------------------------------------

                           Title:
                                 ---------------------------------------



                           DEUTSCHE FINANCIAL SERVICES CORPORATION

                           By: /s/
                              ------------------------------------------

                           Title:
                                 ---------------------------------------
                                      -48-
                              AMENDMENT NUMBER TWO
                                       TO
                                CREDIT AGREEMENT


         This AMENDMENT NUMBER TWO TO CREDIT AGREEMENT (this "Amendment"), dated
as of March 24, 1997, is entered into by and among MOBILE MINI, INC., a Delaware
corporation (the "Borrower"),  each financial  institution a party to the Credit
Agreement (collectively, the "Lenders"), and BT COMMERCIAL CORPORATION acting as
agent for the Lenders (the "Agent"), in light of the following facts:

                                 R E C I T A L S

         A. The parties hereto have previously  entered into that certain Credit
Agreement,  dated as of March 28,  1996,  as amended by that  certain  Amendment
Number One to Credit Agreement,  dated as of November __, 1996 (as amended,  the
"Agreement").

         B. The parties hereto desire to amend the Agreement in accordance  with
the terms of this Amendment.

                                A G R E E M E N T

         NOW THEREFORE, the parties hereto agree as follows:

         1. Defined Terms. All initially  capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Agreement.

         2. Amendments. The Agreement is hereby amended as follows:

                  (a) Section 8.1 of the Agreement is hereby amended by deleting
such Section in its entirety and replacing it with the following:

                           "8.1  Consolidated  Tangible Net Worth.  The Borrower
shall  maintain  a  Consolidated  Tangible  Net Worth as of the last day of each
fiscal quarter of not less than the amount set forth below:
==================================================================================================================== Quarter-Ended Amount - -------------------------------------------------------------------------------------------------------------------- 6/30/96 $10,900,000 - -------------------------------------------------------------------------------------------------------------------- 9/30/96 $11,500,000 - -------------------------------------------------------------------------------------------------------------------- 12/31/96 $12,100,000 - -------------------------------------------------------------------------------------------------------------------- 3/31/97 $12,300,000
1 - -------------------------------------------------------------------------------------------------------------------- 6/30/97 $12,900,000 - -------------------------------------------------------------------------------------------------------------------- 9/30/97 $13,700,000 - -------------------------------------------------------------------------------------------------------------------- 12/31/97 $14,100,000 - -------------------------------------------------------------------------------------------------------------------- 3/31/98 $15,000,000 - -------------------------------------------------------------------------------------------------------------------- 6/30/98 $15,900,000 - -------------------------------------------------------------------------------------------------------------------- 9/30/98 $17,100,000 - -------------------------------------------------------------------------------------------------------------------- 12/31/98 $18,100,000 - -------------------------------------------------------------------------------------------------------------------- 3/31/99 $18,800,000 and thereafter ====================================================================================================================
(b) Section 8.2 of the Agreement is hereby amended by deleting such Section in its entirety and replacing it with the following: "8.2 EBITDA. The Borrower shall maintain EBITDA for the immediately preceding four fiscal quarters calculated as of the last day of each such quarter of not less than the amount set forth below:
================================================================================================================== Quarter-Ended Amount - ------------------------------------------------------------------------------------------------------------------ 6/30/96 $6,100,000 - ------------------------------------------------------------------------------------------------------------------ 9/30/96 $6,900,000 - ------------------------------------------------------------------------------------------------------------------ 12/31/96 $6,400,000 - ------------------------------------------------------------------------------------------------------------------ 3/31/97 $6,900,000 - ------------------------------------------------------------------------------------------------------------------ 6/30/97 $7,200,000 - ------------------------------------------------------------------------------------------------------------------ 9/30/97 $7,500,000 - ------------------------------------------------------------------------------------------------------------------ 12/31/97 $9,000,000 - ------------------------------------------------------------------------------------------------------------------ 3/31/98 $10,200,000 - ------------------------------------------------------------------------------------------------------------------ 6/30/98 $10,800,000 - ------------------------------------------------------------------------------------------------------------------ 9/30/98 $11,300,000 - ------------------------------------------------------------------------------------------------------------------ 12/31/98 $11,900,000 - ------------------------------------------------------------------------------------------------------------------ 3/31/99 and thereafter $12,500,000 ==================================================================================================================
2 (c) Section 8.3 of the Agreement is hereby amended by deleting such Section in its entirety and replacing it with the following: "8.3 Fixed Charge Coverage Ratio. The Borrower shall maintain for the quarter ended June 30, 1996, for the two quarters ended September 30, 1996, for the three quarters ended December 31, 1996, and thereafter for the immediately preceding four fiscal quarters a ratio of EBITDA to Consolidated Fixed Charges of not less than the ratio set forth below, in each case calculated as of the end of each such quarter:
==================================================================================================================== Four Quarters Ended Ratio - -------------------------------------------------------------------------------------------------------------------- 6/30/96 1.15:1.0 - -------------------------------------------------------------------------------------------------------------------- 9/30/96 1.25:1.0 - -------------------------------------------------------------------------------------------------------------------- 12/31/96 1.10:1.0 - -------------------------------------------------------------------------------------------------------------------- 3/31/97 1.0:1.0 - -------------------------------------------------------------------------------------------------------------------- 6/30/97 1.0:1.0 - -------------------------------------------------------------------------------------------------------------------- 9/30/97 1.0:1.0 - -------------------------------------------------------------------------------------------------------------------- 12/31/97 1.20:1.0 - -------------------------------------------------------------------------------------------------------------------- 3/31/98 1.30:1.0 - -------------------------------------------------------------------------------------------------------------------- 6/30/98 1.35:1.0 and thereafter ====================================================================================================================
(d) Section 8.4 of the Agreement is hereby amended by deleting such Section in its entirety and replacing it with the following: "8.4 Interest Coverage Ratio. The Borrower shall maintain for the immediately preceding four fiscal quarters a ratio of (a) EBITDA to (b) Interest Expense of not less than the ratio set forth below, in each case calculated as of the end of each such quarter:
==================================================================================================================== Four Quarters Ended Ratio - -------------------------------------------------------------------------------------------------------------------- 6/30/96 1.65:1.0 - -------------------------------------------------------------------------------------------------------------------- 9/30/96 1.75:1.0 - -------------------------------------------------------------------------------------------------------------------- 12/31/96 1.60:1.0 - -------------------------------------------------------------------------------------------------------------------- 3/31/97 1.60:1.0 - -------------------------------------------------------------------------------------------------------------------- 6/30/97 1.60:1.0 - --------------------------------------------------------------------------------------------------------------------
3 - -------------------------------------------------------------------------------------------------------------------- 9/30/97 1.60:1.0 - -------------------------------------------------------------------------------------------------------------------- 12/31/97 1.90:1.0 - -------------------------------------------------------------------------------------------------------------------- 3/31/98 2.20:1.0 - -------------------------------------------------------------------------------------------------------------------- 6/30/98 2.30:1.0 - -------------------------------------------------------------------------------------------------------------------- 9/30/98 2.40:1.0 - -------------------------------------------------------------------------------------------------------------------- 12/31/98 2.50:1.0 - -------------------------------------------------------------------------------------------------------------------- 3/31/99 2.60:1.0 and thereafter ====================================================================================================================
(e) Section 8.6 of the Agreement is hereby amended by deleting such Section in its entirety and replacing it with the following: "8.6 Debt Ratio. The Borrower shall maintain for the four immediately preceding fiscal quarters, calculated as of the end of each such quarter, a ratio of Funded Debt to EBITDA of not more than the ratio set forth below:
==================================================================================================================== Four Quarters Ended Ratio - -------------------------------------------------------------------------------------------------------------------- 6/30/96 5.95:1.0 - -------------------------------------------------------------------------------------------------------------------- 9/30/96 5.50:1.0 - -------------------------------------------------------------------------------------------------------------------- 12/31/96 6.30:1.0 - -------------------------------------------------------------------------------------------------------------------- 3/31/97 6.0:1.0 - -------------------------------------------------------------------------------------------------------------------- 6/30/97 6.0:1.0 - -------------------------------------------------------------------------------------------------------------------- 9/30/97 6.0:1.0 - -------------------------------------------------------------------------------------------------------------------- 12/31/97 5.50:1.0 - -------------------------------------------------------------------------------------------------------------------- 3/31/98 4.35:1.0 - -------------------------------------------------------------------------------------------------------------------- 6/30/98 4.25:1.0 - -------------------------------------------------------------------------------------------------------------------- 9/30/98 4.15:1.0 - -------------------------------------------------------------------------------------------------------------------- 12/31/98 3.95:1.0 - -------------------------------------------------------------------------------------------------------------------- 3/31/99 3.70:1.0 and thereafter ====================================================================================================================
(f) Section 8.8 of the Agreement is hereby amended by deleting such Sections in its entirety and replacing it with the following: 4 "8.8 Capital Expenditures. The Borrower shall not make payments for Capital Expenditures (net of sales of Eligible Container Fleet Inventory) in excess of the following amounts per fiscal year; provided, that Borrower may carry forward and add to the next year's limitation amount (but not beyond such next year) the unused portion of the limitation on Capital Expenditures for the prior year, up to a maximum of one-half (1/2) of the prior year's limitation amount; and provided, further, that the amount set forth in this Section 8.8 as an annual limit to Capital Expenditures shall be increased, for a year in which Borrower effects any sale of equity securities of Borrower, by an amount equal to three hundred percent of the net proceeds received by Borrower from any such sale of equity securities of Borrower. The Borrower shall not make any Capital Expenditures that are not directly related to the business conducted on the Closing Date by the Borrower.
=================================================================================================================== Fiscal Year Capital Expenditures Capital Expenditures For Plant, Ended Property and Equipment Only (i.e., Excluding Container Fleet Inventory Held For Sale) - ------------------------------------------------------------------------------------------------------------------- 12/31/96 $11,700,000 $3,650,000 - ------------------------------------------------------------------------------------------------------------------- 12/31/97 $12,800,000 $4,100,000 - ------------------------------------------------------------------------------------------------------------------- 12/31/98 $11,600,000 $2,800,000 - ------------------------------------------------------------------------------------------------------------------- 12/31/99 $10,900,000 $2,600,000 and thereafter ===================================================================================================================
3. Conditions Precedent. The effectiveness of this Amendment is subject to and conditioned upon the fulfillment of each and all of the following conditions precedent: (a) BTCC shall have received this Amendment duly executed by Borrower and Majority Lenders; and (b) BTCC shall have received an affirmation letter duly executed by each guarantor under the Guaranties, indicating the consent by each such guarantor to the execution and delivery by Borrower of this Amendment. 4. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed and delivered shall be deemed to be an original. All such counterparts, taken together, shall constitute but one and the same Amendment. 5 5. Reaffirmation of the Agreement. Except as specifically amended by this Amendment, the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed at Los Angeles, California as of the date first hereinabove written. MOBILE MINI, INC., a Delaware corporation By: /s/ Larry Trachtenberg ------------------------------------- Larry Trachtenberg, Chief Financial Officer BT COMMERCIAL CORPORATION, a Delaware corporation, individually and as Agent By: /s/ ------------------------------------- Title: ---------------------------------- NATIONSBANK OF TEXAS, N.A. By: /s/ ------------------------------------- Title: ---------------------------------- DEUTSCHE FINANCIAL SERVICES CORPORATION By: /s/ ------------------------------------- Title: ---------------------------------- 6 CONSENT OF GUARANTORS Each of the undersigned, as a guarantor of the obligations of MOBILE MINI, INC., a Delaware corporation ("Borrower"), arising out of that certain Credit Agreement, dated as of March 28, 1996, as amended by that certain Amendment Number One to Credit Agreement, dated as of November __, 1996 (as amended, the "Agreement"), among BT Commercial Corporation, a Delaware corporation ("Agent") and the lenders party thereto ("Lenders"), on the one hand, and Borrower, on the other, hereby acknowledges receipt of a copy of that certain Amendment Number Two to Credit Agreement, dated as of March 24, 1997, among Agent, Lenders and Borrower, consents to the terms contained therein, and agrees that the Continuing Guaranty executed by each of the undersigned shall remain in full force and effect as a continuing guaranty of the obligations of Borrower owing to Agent and Lenders under the Agreement. Although Agent has informed us of the matters set forth above, and we have acknowledged same, we understand and agree that Agent has no duty under the Agreement, the Guaranty or any other agreement between us to so notify us or to seek an acknowledgment, and nothing contained herein is intended to or shall create such a duty as to any advances or transactions hereafter. IN WITNESS WHEREOF, each of the undersigned has caused this Consent of Guarantors to be duly executed by their respective authorized officers as of March 24, 1997. MOBILE MINI I, INC., an Arizona corporation By /s/ ------------------------------------- Title ----------------------------------- DELIVERY DESIGN SYSTEMS, INC., an Arizona corporation By /s/ ------------------------------------- Title ----------------------------------- 7
                            SECOND AMENDMENT TO LEASE
         THIS SECOND  AMENDMENT  TO LEASE (the "Second  Amendment")  amends that
certain  Lease  entered  into as of January 1, 1994 by and between  Landlord and
Tenant  related  to the  Premises  located  at  2660  North  Locust  in  Rialto,
California,  as  previously  amended by an Amendment to Lease,  dated August 15,
1994 (the Lease and Amendment to Lease are collectively  referred to hereinafter
as  the  "Original  Lease").  Unless  specified  to  the  contrary  herein,  all
capitalized terms in this Second Amendment shall have the meanings set forth for
such  terms in the  Original  Lease.  The  terms of this  Second  Amendment  are
incorporated  into  and  shall  be  effective  as of the  effective  date of the
Original Lease.

         1.       Section 1.3 is amended in its entirety to read as follow:

                  1.3 Term.  The term of this Lease shall commence on January 1,
                  1994  (the  "Commencement  Date")  and  shall  expire,  unless
                  extended as provided in  Section 3.3 on April 1, 2011.

         2.       Except as  amended  herein,  the terms of the  Original  Lease
                  shall  remain in full  force and  effect and the terms of this
                  Second  Amendment  and the  Original  lease as amended  hereby
                  shall  bind,  extend  to  and  inure  to  the  benefit  of the
                  respective  heirs,  legal  representatives  and successors and
                  assigns of both Landlord and Tenant;  provided,  however, that
                  this paragraph  shall not permit any transfer  contrary to the
                  provisions of Article 20 of the Original Lease.

         IN WITNESS WHEREOF, the parties have duly executed the Second Amendment
as of the 1st day of June, 1996.

                                        LANDLORD:
                                        MOBILE MINI SYSTEMS, INC., a California
                                          corporation


                                        By       /s/
                                           -------------------------------------
                                                 Richard E. Bunger, President


                                        TENANT:
                                        MOBILE MINI, INC., a Delaware 
                                        corporation


                                        By       /s/
                                           -------------------------------------
                                                 Richard E. Bunger, President
                                      -49-
                                                                      Exhibit 11


                                MOBILE MINI, INC.
                 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Year Ended December 31, ----------------------- 1996 1995 ----------- ---------- PRIMARY: Common shares outstanding, beginning of year 4,835,000 4,835,000 Effect of weighting shares: Employee stock options -- 5,309 Effect of warrants exercised -- -- Effect of conversion of Series A Convertible Preferred Stock 1,902,592 -- Assumed conversion of Series A Convertible Preferred Stock -- 169,817 ----------- ---------- Weighted average number of common shares and common share equivalents outstanding 6,737,592 5,010,126 =========== ========== Net income available for common stock $ 70,222 $ 776,795 =========== ========== Earnings per common and common share equivalent $ 0.01 $ 0.16 =========== ========== FULLY DILUTED: Common shares outstanding, beginning of year 4,835,000 4,835,000 Effect of weighting shares: Employee stock options -- 5,309 Effect of warrants exercised -- -- Effect of conversion of Series A Convertible Preferred Stock 1,902,592 -- Assumed conversion of Series A Convertible Preferred Stock -- 169,817 ----------- ---------- Weighted average number of common shares and common share equivalents outstanding 6,737,592 5,010,126 =========== ========== Net income available for common stock $ 70,222 $ 776,795 =========== ========== Earnings per common and common equivalent share $ 0.01 $ 0.16 =========== ==========
-50-
                                                                      Exhibit 21


                                 SUBSIDIARIES OF
                                MOBILE MINI, INC.


            1.    Delivery Design Systems, Inc., an Arizona corporation


            2.    Mobile Mini I, Inc., an Arizona corporation



CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS




As independent public accountants, we hereby consent to the incorporation of our
reports  included  in  this  Form  10-K  into  the  Company's  previously  filed
Registration Statement File No. 333-2868.


                                                             ARTHUR ANDERSEN LLP


Phoenix, Arizona,
  March 24, 1997.
 


5 1 U. S. Dollar Year DEC-31-1996 JAN-01-1996 DEC-31-1996 1 736,543 0 4,631,854 268,000 4,998,382 11,109,763 21,399,895 3,703,849 64,816,201 7,480,550 0 0 0 67,393 0 64,816,201 23,618,754 42,210,094 19,926,191 36,982,820 700,000 0 3,669,102 858,172 377,596 480,576 0 410,354 0 70,222 0.01 0.01