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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)  OF  THE
                  SECURITIES  EXCHANGE  ACT OF 1934 For the  fiscal  year  ended
                  December 31, 1997

        [ ]       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
                         ------------------------------
                                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



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. [_]

The  aggregate  market  value on March 18,  1998 of the  voting  stock  owned by
non-affiliates  of the registrant was approximately  $47,299,000  (calculated by
excluding all shares held by executive  officers,  directors and holders of five
percent or 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 18, 1998,  there were  outstanding  7,845,736 shares of the issuer's
common stock, par value $.01.

Documents  incorporated by reference:  Certain Exhibits are incorporated in Item
14 of this Report by reference to other reports and  registration  statements of
the  Registrant   which  have  been  filed  with  the  Securities  and  Exchange
Commission,  and  certain  risk  factors  are  incorporated  in Item 7 hereof by
reference to the Registrant's  Registration  Statement dated August 26, 1997 and
as amended.
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                                      -1-

                                     PART I

This Annual 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 - Factors That May Affect Future Operating Results".

ITEM 1.  DESCRIPTION OF BUSINESS.

General

Mobile Mini, Inc. 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. 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.

During the last few years,  the Company has focused  primarily on expanding  its
leasing  operations,  which provide  higher margins and  profitability  than its
other  operations,  see  "Leasing  Operations".  In January of 1998 the  Company
acquired the assets of Nevada Storage  Containers,  a Las Vegas based  container
leasing and sales business.

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 sale and lease 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. 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. In reconditioning and manufacturing its products,
the Company  uses,  in addition to used  ocean-going  containers,  commodity raw
materials  including  steel,  vinyl,  wood,  glass and other raw materials  from
various suppliers.

The  Company  leases  and sells its  storage  containers  to a wide  variety  of
individual,  business and  governmental  users.  The Company's lease  activities
include both off-site and on-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 
                                      -2-

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   telecommunication
shelters,  marketed under the name "Mobile  Tele-structures",  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.

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   Tele-structures   operations,   where
telecommunication  companies are under  pressure to use shelters and towers that
blend in with the locale at which they are located.  The Company also 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 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.

Business Restructuring

Prior to 1997, the Company 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.  Accordingly, 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 is 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,  Houston,
Dallas,  San  Antonio  and  Austin,  Texas and Las Vegas,  Nevada.  The  Company
services the greater Los Angeles, California area from its Rialto hub.

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 Tele-structures  products directly to
telecommunication   companies,  as  well  as  to  companies  providing  turn-key
installations of shelters and telecommunication towers.

Sales  are also  made  through  the  Company's  national  dealer  network  which
currently  provides  the  Company's  manufactured  containers  to 45 dealers for
retail  sale.  Such  dealers are in 69 separate  locations  in 24 states and two
Canadian  provinces.  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
                                      -3-

Since its founding, it has been the Company's primary goal to grow the container
leasing  portion 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.

The Company has sought to grow its container  leasing 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  typically
generate  losses in early  years,  but once the  Company  has  added  sufficient
containers to cover the relatively  high fixed costs,  its operations  generally
become   profitable.   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  revolving  line of credit  enabling it to  substantially  expand its
container leasing operations. Borrowings available under the line of credit were
increased to $40.0 million during 1997.  Additionally,  the Company  completed a
public  offering  during 1997 of 12% Senior  Subordinated  Notes.  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, 1997 by 33% from  December 31, 1996.  This increase was
achieved at branch locations that had been in operation at December 31, 1996.

The  Company's  plan is to  continue  increasing  its  lease  fleet at  existing
locations  in  1998.   Management   believes   that  such  an  increase   should
substantially  improve  profitability in 1998,  particularly if the cost of used
ocean-going containers remains constant at year-end 1997 levels.

The Company intends to continue 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  could have the effect of  reducing  net income  during the
early years of operations  while the Company  increases its lease fleet at these
locations.  Management plans to control the number of new start up locations and
their  cost,  in order to  minimize  the effect on current  year  earnings.  The
Company has identified several potential new markets, and is investigating start
up and  acquisition  possibilities  in those markets.  The Company  acquired the
assets of a Las Vegas,  Nevada  based  container  leasing and sales  business in
January 1998, and it is the Company's strategy to review potential  acquisitions
of container leasing businesses or their assets.

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 "Senior Credit  Agreement")  with BT Commercial  Corporation,  as
Agent for a group of lenders  (the  "Lenders").  The  Company  entered  into the
Senior  Credit  Agreement in March 1996, as amended in 1997, in order to improve
its cash  flow,  increase  its  borrowing  availability  and fund its  continued
growth.  Under the terms of the Senior Credit  Agreement,  the Lenders currently
provide the Company with a $40.0 million revolving line of credit and provided a
$6.0 million term loan. Borrowings under the Senior 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):

             Months 1   through 12 (April 1996 - March 1997)            $ 62,500
             Months 13 through 24 (April 1997 - March 1998)               83,333
             Months 25 through 60 (April 1998 - March 2001)              118,056
                                      -4-

Additional  principal  payments  equal to 75% of Excess Cash Flow, as defined in
the term loan documents which  constitute  part of the Senior Credit  Agreement,
are  required  annually.  As of December  31, 1997,  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 revolving line of credit is
three years, with a one-year extension option.

In  connection  with the  closing of the Senior  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  in  1996  of
approximately $410,000 after benefit for income taxes.

The Senior 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 and debt  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. In July 1997, the Company  completed a private
placement of $3.0 million of 12% senior  subordinated notes (the "Bridge Notes")
and  warrants to purchase  50,000  shares of Mobile Mini,  Inc.  common stock at
$5.00 per share.  The Bridge Notes were due the earlier of July 31, 2002,  or on
the refinancing of the Bridge Notes on  substantially  similar terms. In October
1997, the Company issued $6.9 million of 12% Senior Subordinated Notes ("Notes")
with  redeemable  warrants to purchase  172,500  shares of the Company's  common
stock at $5.00 per share.  The Notes are due November 1, 2002,  and requires the
Company to establish an interest reserve escrow account (Reserve Account) and to
maintain  in the reserve  account,  while any of the Notes are  outstanding,  an
amount equal to six months  interest on the Notes based on the principal  amount
outstanding.  Interest is payable  semi-annually on May 1 and November 1 of each
year,  commencing May 1, 1998.  From the proceeds of the sale of the Notes,  the
Company repaid the $3.0 million in Bridge Notes and accrued interest and reduced
the  borrowings  outstanding  under the  revolving  line under the Senior Credit
Agreement  with the  remainder of the net proceeds.  The warrants  issued to the
Bridge Note lender were canceled, in exchange for 15,000 shares of common stock.
Because the Notes were  offered as part of a unit with  Redeemable  Warrants,  a
portion of the original offering price for a unit was allocated to the Notes and
a portion to the  Redeemable  Warrants  based on their  respective  fair  market
values.  The resulting  discount  increases  the effective  interest rate of the
Notes and is being  amortized  to interest  expense  over the life of the Notes.
These equity and debt issuances provided  additional capital in conjunction with
obtaining the financing available under the Senior Credit Agreement. In February
1998,  the  Company  realized  proceeds  of  approximately  $5.2  million on the
exercise of warrants  issued in connection  with its initial public  offering in
1994.

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 may 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 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  at  its
manufacturing  facility,   several  access  control  and  proprietary  procedure
policies  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
                                      -5-

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, 1997,  the  Company's  leasing and sales clients fall
into the following categories and approximate  percentages:  (i) with respect to
leasing:  retail and wholesale businesses,  47%; homeowners,  17%; construction,
24%; institutions,  7%; government,  industrial and other, 5%; (ii) with respect
to sales: retail and wholesale  businesses,  42%; homeowners,  6%; construction,
13%; institutions, 21%; government, industrial and other, 18%.

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  of
inventory and records;  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 other goods.

Competition

The Company  competes with its products and services in several market segments,
and the Company  knows of no one entity that is 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 and the pick-up and delivery services offered by certain of
these  facilities in the localities in which it operates.  Some of the Company's
on-site leasing competitors include Door to Door Storage, Public Storage, U-Haul
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   Tele-structures   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.  Management  believes  that the  Company's
container manufacturing  capabilities make 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
has begun to purchase  its raw steel  directly  from steel  mills,  lowering its
average cost of steel.

The Company  believes  that  competition  in each of its  markets  may  increase
significantly  in the future.  It is possible  that such  competitors  will have
greater  marketing  and financial  resources  than the Company.  As  competition
increases, significant pricing
                                      -6-

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 18, 1998, 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 Phoenix,  Rialto,  Houston and Dallas/Fort  Worth, and five 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
158,000 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 9.8 acre facility,  of which  approximately 7 acres
are leased. All Phoenix marketing and any on-site storage is conducted from this
site. Approximately 3.4 acres are owned by the Company,  approximately 5.0 acres
are leased from non-affiliated  parties and the remaining 1.4 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.  As of March
1, 1998, the major  properties  owned or leased by the Company are listed in the
table below:
                                      -7-

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 45 acres Owned(1) Rialto, California Sales, leasing, manufacturing and 10 acres Leased(2) on-site storage Houston, Texas Sales, leasing, manufacturing and 7 acres Leased on-site storage Phoenix, Arizona Sales, leasing and on-site storage 10 acres Owned(1)/leased(3) Tucson, Arizona Sales, leasing and on-site storage 5 acres Leased(4) San Diego, California Sales, leasing and on-site storage 5 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 acres Leased Round Rock, Texas(5) Sales, leasing and on-site storage 5 acres Leased Las Vegas, Nevada Sales and leasing 2 acres Leased(6)
(1) Pledged pursuant to the Senior 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 14 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) 2.7 acres are leased by the Company from members of the Bunger family and 2.3 acres are leased from a non-affiliate of the Company. See "ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS." (5) A community of the Austin, Texas metropolitan area. (6) A portion of the land and buildings under lease are currently subleased to a non-affiliated party. ITEM 3. LEGAL PROCEEDINGS. In April 1997, the Company entered into a stock purchase agreement with an individual who had agreed to work for the Company. Under the stock purchase agreement, the individual was to purchase 500,000 shares of common stock on July 1, 1997. On June 30, 1997, at the individual's request, the Company extended the closing date to July 3, 1997. The individual did not tender funds by the extended closing date. In July 1997, the Company brought an action in US District Court for the District of Arizona to have the court declare the Company's obligations under the stock purchase agreement terminated. The individual opposes the Company's request, and has requested that the Company be ordered to perform under the stock purchase or, alternatively, pay him damages, including treble damages. In addition, the individual has filed a counterclaim alleging constructive discharge. The Company is vigorously pursuing the action and does not believe it will have any material impact on the financial condition or the results of operations of the Company. The Company is not a party to any other 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. -8- ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The annual meting of the stockholders of the Company was held on November 12, 1997, in Phoenix, Arizona. On the record date for the annual meeting, 6,739,324 shares of the common stock were outstanding and eligible to be voted. The table below briefly describes the proposals and results from the annual meeting of stockholders.
Number of Shares Voted: ----------------------- Election of Directors: For Withheld --- -------- Richard E. Bunger 5,550,884 157,164 Steven G. Bunger 5,552,688 155,360 Lawrence Trachtenberg 5,560,690 147,358 George E. Berkner 5,560,188 147,860 Ronald J. Marusiak 5,560,188 147,860 For Against Abstain Amendment to the Company's --- ------- ------- Certificate of Incorporation 3,855,339 409,846 10,067 Amendment to the Company's 1994 Stock Option Plan 5,370,126 264,416 14,816 Ratification of appointment of Arthur Andersen LLP as the Independent Auditors 5,687,161 14,547 6,321
PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Common Stock trades on the Nasdaq Stock Market under the symbol "MINI." Prior to December 26, 1995, the Common Stock was traded on the Nasdaq 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 Stock Market. The Company had approximately 76 holders of record of its Common Stock on March 1, 1998. The Company believes it has in excess of 400 beneficial owners of its Common Stock. FISCAL YEARS 1997 AND 1996 1997 1996 --------------- --------------- HIGH LOW HIGH LOW ---- --- ---- --- Quarter ended March 31, $3.625 $3.000 $4.375 $2.875 Quarter ended June 30, 4.500 3.000 4.437 3.375 Quarter ended September 30, 5.375 4.437 4.375 2.812 Quarter ended December 31, 6.438 5.000 4.250 3.000 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 Senior Credit Agreement prohibits the payment of dividends. The Company intends to apply any earnings to the expansion and development of its business. -9- 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, ----------------------- 1997 1996(2) 1995(2) 1994(2) 1993(1)(2) ---- ---- ---- ---- ---- CONSOLIDATED STATEMENT OF INCOME (in thousands, except share amounts) Revenues $ 46,083 $ 42,426 $ 40,184 $ 28,350 $ 17,169 Income from operations 8,698 4,743 4,585 2,959 1,562 Income before extraordinary item 2,200 480 777 956 276 Extraordinary item -- (410) -- -- -- Net income 2,200 70 777 956 276 Preferred stock dividends -- -- (1,250) -- -- Net income (loss) available for common stock 2,200 70 (473) 956 276 Earnings per share: Basic: Income (loss) before extraordinary item $ 0.33 $ 0.07 $ (0.10) $ 0.21 $ 0.10 Extraordinary item 0.00 (0.06) 0.00 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Net income (loss) available for common stock $ 0.33 $ 0.01 $ (0.10) $ 0.21 $ 0.10 =========== =========== =========== =========== =========== Weighted average number of common shares outstanding 6,752,147 6,737,592 4,835,000 4,496,904 2,700,000 Diluted: Income (loss) before extraordinary item $ 0.32 $ 0.07 $ (0.10) $ 0.21 $ 0.10 Extraordinary item 0.00 (0.06) 0.00 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Net income (loss) available for common stock $ 0.32 $ 0.01 $ (0.10) $ 0.21 $ 0.10 =========== =========== =========== =========== =========== Weighted average number of common and common equivalent shares outstanding 6,800,303 6,744,229 4,835,000 4,497,230 2,700,000 CONSOLIDATED BALANCE SHEET DATA (as of December 31 of each year) Total assets $ 84,052 $ 64,816 $ 54,342 $ 40,764 $ 20,082 Lines of credit 35,883 26,406 4,099 -- -- Notes payable and obligations under capital leases 11,495 13,742 24,533 16,140 9,334 Subordinated notes, net 6,648 -- -- -- --
-10- (1) Prior to 1994, the Company's predecessor was operated as a sole proprietorship. Per share information is 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. (2) Certain amounts have been reclassified to conform with the current year's presentation. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 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, in 1994 to Texas and in 1998 to Nevada. 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 leases and sells 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 has become the 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% 1997 33% 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 through acquisitions or the start up of new locations on a controlled basis at locations which management believes can become profitable over a relatively short period of time. The Company manufactures and/or refurbishes containers for use in its lease fleet. Containers are transferred to the lease fleet at cost, without recognizing any manufacturing profit on the value added to the refurbished containers or new containers. In addition, the Company's container lease fleet has been acquired over the last 15 years. During parts of this period, raw container prices were significantly lower than they are today. An appraisal of the fair market value of the container lease fleet performed in 1997 resulted in a total fair market value of approximately $64,500,000. This exceeds the carrying value of the containers by approximately $15,800,000 at December 31, 1997. In accordance with generally accepted accounting principals, this differential is not recognized in the Company's financial statements. Uncertainties faced by the Company include variances in start up costs for new storage locations, the availability of acquisitions on terms acceptable to the Company, 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. -11- 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.
YEAR ENDED DECEMBER 31, ----------------------- 1997 1996 1995 ----- ----- ----- REVENUES: Leasing 54.0% 42.1% 38.5% Container and other sales 44.5 55.7 60.4 Other 1.5 2.2 1.1 ----- ----- ----- 100.0 100.0 100.0 COSTS AND EXPENSES: Cost of container and other sales 31.5 47.0 47.5 Leasing, selling and general expenses 44.7 36.2 37.8 Depreciation and amortization 4.9 4.0 3.3 Restructuring charge -- 1.6 -- ----- ----- ----- INCOME FROM OPERATIONS 18.9 11.2 11.4 OTHER INCOME (EXPENSE): Interest income 0.0 0.0 0.0 Interest expense (10.9) (9.2) (8.0) ----- ----- ----- INCOME BEFORE PROVISION FOR INCOME TAXES AND EXTRAORDINARY ITEM 8.0 2.0 3.4 PROVISION FOR INCOME TAXES 3.2 0.9 1.5 ----- ----- ----- INCOME BEFORE EXTRAORDINARY ITEM 4.8 1.1 1.9 EXTRAORDINARY ITEM -- 1.0 -- ----- ----- ----- NET INCOME 4.8 0.1 1.9 PREFERRED STOCK DIVIDEND -- -- (3.1) ----- ----- ----- NET INCOME (LOSS) AVAILABLE FOR COMMON STOCK 4.8% 0.1% (1.2)% ===== ===== =====
Fiscal 1997 Compared to Fiscal 1996 The Company's business plan in 1997 was focused on increasing its number of containers on lease at existing branch locations because the incremental lease revenue results in higher margins. In addition, the Company increased prices on container sales and withdrew from the low margin modular building business. Revenues for the year ended December 31, 1997 increased 8.6% to $46,083,000 from $42,426,000 during 1996. Revenues from the Company's leasing operations were $24,870,000 which represents a 39.1% increase from 1996 leasing revenues of $17,876,000. This increase resulted from a 33% increase in the number of containers on lease, and an increase in ancillary lease revenue per container resulting from the introduction of the Company's new loss limitation waiver program. Sales of the Company's products decreased by 13.1%, primarily due to the discontinuation of the modular building operations. This decline in sales was offset, to some extent, by an approximate $2,200,000 increase in the sale of telecommunication shelters. During 1997 the Company implemented price increases on the sale of containers through its branches and through the National Dealer Program. These actions, together with the withdrawal from the low margin modular building business, caused a substantial increase in gross margins on sales. As a result, cost of containers and other sales as of percentage of container and other sales decreased to 70.9% from 84.4% during 1996. -12- Leasing, selling and general expenses increased 34.2% to $20,585,000 compared to $15,343,000 in the prior year. This increase was attributable to increased leasing related expenses associated with the 33% increase in the number of containers out on lease, increased commission levels offered to dealers in connection with the leasing of containers and increased expenses associated with developing an infrastructure for future growth. Depreciation and amortization increased to 4.9% of revenues in 1997 compared to 4.0% in 1996. The increase reflects the increase in the Company's container lease fleet and support equipment for manufacturing and maintaining the lease fleet and operational equipment at all the sales and leasing locations. The Company recorded a restructuring charge in 1996 of $700,000. There was no similar charge in 1997. Operating margins increased from 11.2% in 1996 to 18.9% in 1997 as a result of change in the Company's focus to its leasing business, as well as the increased gross margins on sales. Interest expense increased to $5,035,000 in 1997 compared to $3,894,000 in 1996. The increase in interest expense includes the additional interest related to the 40.8% increase in the Company's average balance of debt outstanding compared to 1996 and the amortization of debt issuance costs. The increase in the Company's average outstanding debt is partially related to the issuance in 1997 of $6.9 million of subordinated notes and increased borrowings under the Senior Credit Agreement to finance the growth in the container lease fleet. The weighted average interest rate decreased 0.75% in 1997 to 9.45% from 10.2% in 1996, excluding amortization of deferred loan costs. Including amortization of deferred loan costs, the weighted average interest rate was 10.61% and 11.56% for 1997 and 1996, respectively. The Company generated net income of $2,200,000, or $0.32 per share diluted, in 1997 compared to net income before extraordinary item of $481,000, or $0.07 per share diluted in 1996. This increase is primarily a result of the 39.1% increase in leasing revenues in 1997 and a 14% increase in gross margin on sales in 1997 as compared with 1996. The Company recorded a $700,000 restructuring charge in 1996. Excluding the 1996 restructuring charge, earnings before extraordinary item were approximately $873,000, or $0.13 per share diluted. In 1996, the Company prepaid approximately $14.1 million of debt and capital lease obligations in connection with entering into the Senior Credit Agreement. As a result, in 1996 the Company recognized an extraordinary charge to earnings of $410,000, or $0.06 per share, net of the benefit of income taxes. Fiscal 1996 Compared to Fiscal 1995 Revenues for the year ended December 31, 1996 increased to $42,426,000 from $40,184,000 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 16.1% 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, an increase in sales of manufactured new containers which typically result in lower margins to the Company, and an accounting refinement in the Company's allocation of certain indirect manufacturing costs. -13- Excluding the effect of sale-leaseback transactions, leasing, selling and general expenses were 36.2% of total revenue in 1996, compared to 41.5% in 1995. The decrease primarily resulted 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 ancillary expenses on to customers. The Company recorded a restructuring charge (See "ITEM 1. DESCRIPTION OF BUSINESS.- BUSINESS RESTRUCTURING") of $700,000 or 1.6% of total revenue in 1996. There was no similar charge in 1995. Income from operations was $4,743,000 in 1996 compared to $4,585,000 in 1995. Excluding the restructuring charge, income from operations would have been 12.8% of total revenue in 1996 as compared to 11.4% 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 a 51.4% increase in the average balance of debt outstanding compared to 1995, 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 Senior Credit Agreement. The additional debt in 1996 was incurred in order to finance the substantial increase in the Company's equipment and container lease fleet in 1996. Depreciation and amortization increased to 4.0% 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 diluted, in 1996, compared to net income of $777,000 or $.16 per share diluted in 1995 before the effect of dividends on the Company's Series A Convertible Preferred Stock of $(.25) per share diluted (see notes 1 and 11 of the Notes to Consolidated Financial Statements). 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 and common equivalent shares outstanding at the end of 1996 increased by 39% 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 Senior 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 Senior Credit Agreement, which have been deferred and are being amortized over the term of the Senior Credit Agreement. 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, 1997. 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. -14- QUARTERLY RESULTS OF OPERATIONS
1997 -------------------------------------------- (in thousands, except per share amounts) Mar 31 June 30 Sept 30 Dec 31 -------- -------- -------- -------- REVENUES: Leasing $ 4,995 $ 5,660 $ 6,668 $ 7,547 Container and modular building sales 4,543 6,197 4,702 5,086 Other 112 337 130 106 -------- -------- -------- -------- TOTAL REVENUE 9,650 12,194 11,500 12,739 COSTS AND EXPENSES: Cost of container and other sales 3,446 4,565 3,109 3,427 Leasing, selling and general expenses 4,281 5,011 5,295 5,998 Depreciation and amortization 472 530 596 655 Restructuring charge -- -- -- -- -------- -------- -------- -------- INCOME FROM OPERATIONS 1,451 2,088 2,500 2,659 OTHER INCOME (EXPENSE): Interest income -- -- 1 3 Interest expense (1,090) (1,159) (1,317) (1,469) -------- -------- -------- -------- INCOME BEFORE PROVISION FOR INCOME TAX AND EXTRAORDINARY ITEM 361 929 1,184 1,193 PROVISION FOR INCOME TAXES 159 409 521 378 -------- -------- -------- -------- INCOME BEFORE EXTRAORDINARY ITEM 202 520 663 815 EXTRAORDINARY ITEM -- -- -- -- -------- -------- -------- -------- NET INCOME AVAILABLE FOR COMMON STOCK $ 202 $ 520 $ 663 $ 815 ======== ======== ======== ======== EARNINGS PER SHARE: BASIC: INCOME BEFORE EXTRAORDINARY ITEM $ 0.03 $ 0.08 $ 0.10 $ 0.12 EXTRAORDINARY ITEM -- -- -- -- -------- -------- -------- -------- NET INCOME $ 0.03 $ 0.08 $ 0.10 $ 0.12 ======== ======== ======== ======== DILUTED: INCOME BEFORE EXTRAORDINARY ITEM $ 0.03 $ 0.08 $ 0.10 $ 0.11 EXTRAORDINARY ITEM -- -- -- -- -------- -------- -------- -------- NET INCOME $ 0.03 $ 0.08 $ 0.10 $ 0.11 ======== ======== ======== ========
1996 -------------------------------------------- (in thousands, except per share amounts) Mar 31 June 30 Sept 30 Dec 31 -------- -------- -------- -------- REVENUES: Leasing $ 3,925 $ 4,185 $ 4,627 $ 5,139 Container and modular building sales 4,916 5,746 6,376 6,581 Other 64 360 177 330 -------- -------- -------- -------- TOTAL REVENUE 8,905 10,291 11,180 12,050 COSTS AND EXPENSES: Cost of container and other sales 3,926 5,120 5,380 5,500 Leasing, selling and general expenses 3,874 3,215 3,680 4,575 Depreciation and amortization 368 380 452 514 Restructuring charge -- -- -- 700 -------- -------- -------- -------- INCOME FROM OPERATIONS 737 1,576 1,668 762 OTHER INCOME (EXPENSE): Interest income 8 1 -- -- Interest expense (948) (1,001) (974) (971) -------- -------- -------- -------- INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAX AND EXTRAORDINARY ITEM (203) 576 694 (209) PROVISION (BENEFIT) FOR INCOME TAXES (89) 253 305 (92) -------- -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (114) 323 389 (117) EXTRAORDINARY ITEM (410) -- -- -- -------- -------- -------- -------- NET INCOME (LOSS) AVAILABLE FOR COMMON STOCK $ (524) $ 323 $ 389 $ (117) ======== ======== ======== ======== EARNINGS (LOSS) PER HARE: BASIC: INCOME (LOSS) BEFORE EXTRAORDINARY ITEM $ (0.02) $ 0.05 $ 0.06 $ (0.02) EXTRAORDINARY ITEM (0.06) -- -- -- -------- -------- -------- -------- NET INCOME (LOSS) $ (0.08) $ 0.05 $ 0.06 $ (0.02) ======== ======== ======== ======== DILUTED: INCOME (LOSS) BEFORE EXTRAORDINARY ITEM $ (0.02) $ 0.05 $ 0.06 $ (0.02) EXTRAORDINARY ITEM (0.06) -- -- -- -------- -------- -------- -------- NET INCOME (LOSS) $ (0.08) $ 0.05 $ 0.06 $ (0.02) ======== ======== ======== ========
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. -15- Seasonality 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, usually 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. Liquidity and Capital Resources 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, the acquisition of property, plant and equipment and the expansion of the Company's manufacturing facilities. In February 1998, the Company received proceeds of $5.2 million in connection with the exercise of warrants to purchase 1,046,000 shares of common stock at $5.00 per share. These warrants had been issued in connection with the Company's initial public offering in 1994. In October 1997, the Company issued $6.9 million of 12% Senior Subordinated Notes ("Notes") with redeemable warrants to purchase 172,500 shares of the Company's common stock at $5.00 per share. The Notes are due November 1, 2002. From the net proceeds of the sale of the Notes, the Company repaid $3.0 million in bridge notes issued in July 1997 and reduced the borrowings outstanding under the revolving line of credit under the Senior Credit Agreement with the remainder of the net proceeds. Because the Notes were offered as part of a unit with Redeemable Warrants, a portion of the original offering price for a unit was allocated to the Notes and a portion to the Redeemable Warrants based on their respective fair market values. The resulting discount increases the effective interest rate of the Notes and is being amortized to interest expense over the life of the Notes. The indenture related to the Notes requires the Company to comply with certain covenants including maintaining a specific tangible net worth, a maximum total funded indebtedness ratio and a maximum senior funded indebtedness ratio. The Company has been in compliance with the financial covenants at all determination dates. In order to improve its cash flow, increase its borrowing availability and fund its continued growth, in March 1996 the Company entered into the Senior Credit Agreement with BT Commercial Corporation, as Agent for a group of lenders (the "Lenders"). Under the terms of the Senior Credit Agreement, the Lenders provided the Company with a $35.0 million revolving line of credit, amended in 1997 to $40.0 million, and a $6.0 million term loan. Borrowings under the Senior 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 (April 1996 - March 1997) . . . $ 62,500 Months 13 through 24 (April 1997 - March 1998) . . . 83,333 Months 25 through 60 (April 1998 - March 2001) . . . 118,056 Additional principal payments equal to 75% of Excess Cash Flow, as defined in the term loan documents which constitute part of the Senior Credit Agreement, are required annually. As of December 31, 1997, 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 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 Eurodollar rate plus 3% and is payable monthly or at the end of the term of any Eurodollar borrowing period. The term of this revolving line of credit is three years, with a one-year extension option. As of December 31, 1997, $35.9 million of borrowings were outstanding and approximately $4.1 million of additional borrowing was available under the revolving line of credit. At March 18, 1998, $35.1 million of borrowings were outstanding and approximately $4.9 million of additional borrowing was available. -16- The Senior 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 Senior 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. The Company has been in compliance with such financial covenants at all determination dates. During 1997, the Company's operations provided cash flow of $6,077,000, compared to utilizing $1,390,000 in 1996. The improvement in cash flow resulted primarily from improved operating results achieved in 1997. Cash flow in 1996 was adversely affected by a reduction of accounts payables partially offset by an increase in leasing receivables which typically have a longer turnover period. During 1997, the Company invested $19,219,000 in equipment and the container lease fleet. This amount is net of $2,447,000 in container sales and equipment financing. Cash flow from financing activities totaled $13,410,000 during 1997. This was the result of increased borrowings, under the revolving line of credit, to finance container lease fleet and equipment acquisitions, and the issuance of the Notes, partially offset by the principal payments on indebtedness and additional financing costs incurred. The Company believes that its current capitalization, together with borrowings available under the Senior Credit Agreement, is sufficient to maintain its current level of operations and permit a modest level of growth. However, should demand for the Company's products continue to grow at a significant rate, the Company would be required to secure additional financing through additional borrowings, debt or equity offerings, or a combination of these sources to meet this demand. The Company believes that such financing will be available; however, there is no assurance that any such financings will be obtained or obtained on terms acceptable to the Company. FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS The Company issued and sold $6,900,000 of 12% Senior Subordinated Notes due 2002 and Redeemable Warrants to purchase shares of the Company's common stock, in October 1997, in a public offering subject to its Registration Statement dated August 26, 1997, as amended (Securities and Exchange Commission ("SEC") File Number 333-34413). That Registration Statement and the Prospectus dated October 8, 1997, which is a part of it (the "Prospectus"), include a section entitled "Risk Factors," which describes certain factors that may affect future operating results of the Company. That section is hereby incorporated by reference in this Report. Those factors should be considered carefully in evaluating an investment in the Company's Common Stock or other securities. You may obtain a copy of the Prospectus by request to the Company's Investor Relations Department by phone, at (602) 894-6311, or by mail at Mobile Mini, Inc., 1834 West Third Street, Tempe, Arizona 85281. The Prospectus is also available through the SEC's EDGAR Database on the World Wide Web through the SEC's Internet address at "http://www.sec.gov." "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995 The statements contained in this Report which are not historical facts may be deemed to contain forward-looking statements with respect to events, the occurrence of which involve risks and uncertainties, including, without limitation, demand for the Company's products and services. The continued availability to the Company of adequate financing, the ability of the Company to manage its growth, and other risks or other uncertainties detailed in the Company's SEC filing, including the Prospectus. Year 2000 Compliance The Company has recently upgraded its primary system using software that has been certified by the vendor to be fully compliant with the Year 2000 transactions. The Company has begun to test this software for such compliance and is developing a plan to assure that all other Company systems are Year 2000 compliant. Such plan will include testing all computers and making sure all software is upgraded to versions that are Year 2000 compliant. The Company does not anticipate any material impact to its financial condition or results of operations as a result of any failure by the Company to have systems that are Year 2000 compliant. The Company does not believe that a failure of its customers to be Year 2000 compliant will have a material adverse effect on the Company, since the principal effect which the Company foresees is late payments if customer computer systems fail to track the correct date. -17- The Company is advised by the Agent under the Senior Credit Agreement that the Year 2000 is not expected to cause delays or other effects in connection with transactions thereunder. -18- ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. INDEX Report of Independent Public Accountants 20 Financial Statements- Consolidated Balance Sheets - December 31, 1997 and 1996 21 Consolidated Statements of Operations - For the Years Ended December 31, 1997, 1996 and 1995 22 Consolidated Statements of Stockholders' Equity - For the Years Ended December 31, 1997, 1996 and 1995 23 Consolidated Statements of Cash Flows - For the Years Ended December 31, 1997, 1996 and 1995 24 Notes to Consolidated Financial Statements - December 31, 1997 and 1996 25 Financial Statement Schedule - Valuation and Qualifying Accounts - For the Years Ended 47 December 31, 1997, 1996 and 1995 -19- 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, 1997 and 1996, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1997. 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, 1997 and 1996 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, 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, February 25, 1998. -20- MOBILE MINI, INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1997 AND 1996
ASSETS 1997 1996 ----------- ----------- CASH AND CASH EQUIVALENTS $ 1,005,204 $ 736,543 RECEIVABLES, net of allowance for doubtful accounts of $893,000 and $268,000, respectively 6,259,476 4,631,854 INVENTORIES 4,748,316 4,998,382 CONTAINER LEASE FLEET, net of accumulated depreciation of $1,735,000 and $1,212,000, respectively 49,150,986 32,540,855 MODULAR LEASE FLEET, net of accumulated depreciation of $49,000 and $32,000, respectively 1,755,922 1,772,338 PROPERTY PLANT AND EQUIPMENT, net 18,011,916 17,696,046 DEPOSITS AND PREPAID EXPENSES 898,615 742,984 OTHER ASSETS 2,221,587 1,697,199 ----------- ----------- Total assets $84,052,022 $64,816,201 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: ACCOUNTS PAYABLE $ 2,676,634 $ 2,557,329 ACCRUED LIABILITIES 3,104,747 2,192,113 LINE OF CREDIT 35,883,104 26,406,035 NOTES PAYABLE 6,123,049 7,002,777 OBLIGATIONS UNDER CAPITAL LEASES 5,371,603 6,739,346 SUBORDINATED NOTES, net 6,647,874 -- DEFERRED INCOME TAXES 5,217,619 3,709,500 ----------- ----------- Total liabilities 65,024,630 48,607,100 ----------- ----------- COMMITMENTS AND CONTINGENCIES (NOTE 10) STOCKHOLDERS' EQUITY: Common stock; $0.01 par value, 17,000,000 shares authorized, 6,799,524 and 6,739,324 issued and outstanding at December 31, 1997 and 1996, respectively 67,995 67,393 Additional paid-in capital 16,206,166 15,588,873 Retained earnings 2,753,231 552,835 ----------- ----------- Total stockholders' equity 19,027,392 16,209,101 ----------- ----------- Total liabilities and stockholders' equity $84,052,022 $64,816,201 =========== ===========
The accompanying notes are an integral part of these consolidated balance sheets. -21- MOBILE MINI, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995 ------------ ------------ ------------ REVENUES: Leasing $ 24,870,141 $ 17,876,236 $ 15,461,425 Container and other sales 20,527,477 23,618,754 24,264,547 Other 685,005 930,611 458,262 ------------ ------------ ------------ 46,082,623 42,425,601 40,184,234 COSTS AND EXPENSES: Cost of container and other sales 14,546,347 19,926,191 19,106,960 Leasing, selling and general expenses 20,585,458 15,343,210 15,174,159 Depreciation and amortization 2,253,264 1,713,419 1,317,974 Restructuring charge -- 700,000 -- ------------ ------------ ------------ INCOME FROM OPERATIONS 8,697,554 4,742,781 4,585,141 OTHER INCOME (EXPENSE): Interest income 4,628 9,546 13,654 Interest expense (5,034,856) (3,894,155) (3,211,659) ------------ ------------ ------------ INCOME BEFORE PROVISION FOR INCOME TAXES AND EXTRAORDINARY ITEM 3,667,326 858,172 1,387,136 PROVISION FOR INCOME TAXES 1,466,930 377,596 610,341 ------------ ------------ ------------ INCOME BEFORE EXTRAORDINARY ITEM 2,200,396 480,576 776,795 EXTRAORDINARY ITEM, net of income tax benefit of $322,421 -- (410,354) -- ------------ ------------ ------------ NET INCOME 2,200,396 70,222 776,795 PREFERRED STOCK DIVIDENDS -- -- 1,250,000 ------------ ------------ ------------ NET INCOME (LOSS) AVAILABLE FOR COMMON STOCK $ 2,200,396 $ 70,222 $ (473,205) ============ ============ ============ EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE: BASIC: Income (loss) before extraordinary item $ 0.33 $ 0.07 $ (0.10) Extraordinary item -- (0.06) -- ------------ ------------ ------------ Net income (loss) $ 0.33 $ 0.01 $ (0.10) ============ ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 6,752,147 6,737,592 4,835,000 ============ ============ ============ DILUTED: Income (loss) before extraordinary item $ 0.32 $ 0.07 $ (0.10) Extraordinary item -- (0.06) -- ------------ ------------ ------------ Net income (loss) $ 0.32 $ 0.01 $ (0.10) ============ ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON SHARE EQUIVALENTS OUTSTANDING 6,800,303 6,744,229 4,835,000 ============ ============ ============
The accompanying notes are an integral part of these consolidated statements. -22- MOBILE MINI, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the years ended December 31, 1997, 1996 and 1995
Additional Preferred Common Paid-in Retained Stockholders' Stock Stock Capital Earnings Equity ------------ ------------ ------------ ------------ ------------ BALANCE, December 31, 1994 $ -- $ 48,350 $ 10,270,865 $ 955,818 $ 11,275,033 Sale of preferred stock (Note 11) 5,000,000 -- 358,114 -- 5,358,114 Net income -- -- -- 776,795 776,795 Preferred stock dividend (Note 11) -- -- -- (1,250,000) (1,250,000) ------------ ------------ ------------ ------------ ------------ BALANCE, December 31, 1995 5,000,000 48,350 10,628,979 482,613 16,159,942 Conversion of preferred stock (Note 11) (5,000,000) 19,043 4,959,894 -- (21,063) Net income -- -- -- 70,222 70,222 ------------ ------------ ------------ ------------ ------------ BALANCE, December 31, 1996 -- 67,393 15,588,873 552,835 16,209,101 Issuance of common stock (Notes 6 & 11) -- 600 333,175 -- 333,775 Exercise of stock options -- 2 648 -- 650 Warrants issued (Note 11) -- -- 283,470 -- 283,470 Net income -- -- -- 2,200,396 2,200,396 ------------ ------------ ------------ ------------ ------------ BALANCE, December 31, 1997 $ -- $ 67,995 $ 16,206,166 $ 2,753,231 $ 19,027,392 ============ ============ ============ ============ ============
The accompanying notes are an integral part of these consolidated statements. -23- MOBILE MINI, INC. Consolidated Statement of Cash Flows For the Years Ended December 31, 1997, 1996 and 1995
1997 1996 1995 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,200,396 $ 70,222 $ 776,795 Adjustments to reconcile income to net cash provided by (used in) operating activities: Extraordinary loss on early debt extinguishment -- 410,354 -- Amortization of deferred costs on credit agreement 548,725 385,473 -- Depreciation and amortization 2,253,264 1,713,419 1,317,974 Loss on disposal of property, plant and equipment 56,247 3,938 1,763 Deferred income taxes 1,508,119 (2,485) 629,987 Changes in certain assets and liabilities: Increase in receivables, net (1,627,622) (319,129) (292,339) Decrease (increase) in inventories 250,066 194,840 (1,085,216) Increase in prepaids and other (155,631) (24,410) (219,109) Decrease (increase) in other assets 11,996 45,908 (87,617) (Decrease) increase in accounts payable 119,305 (1,707,818) (825,657) (Decrease) increase in accrued liabilities 912,634 619,649 (382,147) ------------ ------------ ------------ Net cash provided by (used in) operating activities 6,077,499 1,389,961 (165,566) ------------ ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Net purchases of container lease fleet (17,078,799) (7,737,552) (6,752,060) Net purchases of property, plant and equipment (2,140,205) (3,013,247) (4,025,574) ------------ ------------ ------------ Net cash used in investing activities (19,219,004) (10,750,799) (10,777,634) ------------ ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings under lines of credit 9,477,069 22,307,001 876,804 Proceeds from issuance of notes payable 10,391,748 7,127,997 5,855,982 Proceeds from sale-leaseback transactions -- -- 5,857,235 Deferred financing costs (727,434) (1,963,484) -- Principal payments and penalties on early debt extinguishment -- (14,405,879) -- Principal payment on notes payable (4,632,298) (1,334,083) (2,081,883) Principal payments on capital lease obligations (1,367,833) (3,043,759) (3,089,046) Warrant issuance (Note 11) 260,820 -- -- Other 8,094 (21,063) -- Proceeds from preferred stock issuance -- -- 4,108,114 ------------ ------------ ------------ Net cash provided by financing activities 13,410,166 8,666,730 11,527,206 ------------ ------------ ------------ NET INCREASE (DECREASE) IN CASH 268,661 (694,108) 584,006 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 736,543 1,430,651 846,645 ------------ ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,005,204 $ 736,543 $ 1,430,651 ============ ============ ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for interest $ 4,347,025 $ 3,186,774 $ 2,745,542 ============ ============ ============ Cash paid during the year for income taxes $ -- $ 59,958 $ 277,600 ============ ============ ============
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES: The Company issued 60,000 shares of common stock and 15,000 warrants to purchase Company's common stock in 1997 as consideration for services performed in connection with the Bridge Notes and the $6.9 million debt offering with an aggregate value of $357,675 (Note 6). Capital lease obligations of $548,697 and $1,851,336 during 1996 and 1995, respectively, were incurred in connection with lease agreements for containers and equipment. The Company did not enter into any capital lease obligations during 1997. The accompanying notes are an integral part of these consolidated statements. -24- MOBILE MINI, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1997 (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, Texas and Nevada. 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. Certain amounts in the accompanying financial statements have been reclassified to conform to current year's financial presentation. Management's Plans The Company has experienced rapid growth during the last several years with lease revenues increasing at a 41% compounded rate during the last four 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. As discussed more fully in Note 3, in March 1996, the Company entered into a $41.0 million credit agreement (the "Senior Credit Agreement") with BT Commercial Corporation, as Agent for a group of lenders (the "Lenders"). Initially, the Senior Credit Agreement provided a $6.0 million term loan facility and a $35.0 million line of credit. Initial borrowings under the Senior Credit Agreement of $22,592,000 were used to refinance a majority of the Company's then outstanding indebtedness with the more favorable terms available under the Senior Credit Agreement. The Company's revolving line of credit under the Senior Credit Agreement was increased from $35.0 million to $40.0 million during 1997. 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 Senior 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 continue to grow at a significant rate, the Company would be required to secure additional financing through additional borrowings, debt or equity offerings, or a combination of these sources. The Company believes that such financing will be available; however, there is no assurance that any such financings will be obtained or obtained 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 Senior 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. -25- 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. 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 and telecommunication shelters 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 are made in the period in which such losses are determined. Costs and estimated earnings in excess of billings on incomplete contracts is approximately $307,000 at December 31, 1997 and are included in receivables in the accompanying consolidated balance sheet. Costs and estimated earnings less billings on incomplete contracts of approximately $141,000 in 1996, represent amounts received in excess of revenue recognized and are included in accrued liabilities in the accompanying consolidated balance sheet. 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 receivables. Concentration of credit risk with respect to receivables are limited due to the large number of customers spread over a large geographic area in many industry segments. The Company's receivables related to its sales operations are generally secured by the related product sold to the customer. The Company's receivables related to its leasing operations are primarily small month-to-month amounts generated from both offsite and on site customers. The Company has the right to repossess the storage unit, including any customer goods, for failure of non payment. The Company's sales and leasing customers by major category are presented below as a percentage of units leased/sold: 1997 1996 ------ ------ Leasing Sales Leasing Sales ------- ----- ------- ----- Retail and wholesale businesses 47% 42% 52% 54% Construction 24% 13% 22% 12% Institutions 7% 21% 4% 14% Homeowners 17% 6% 17% 5% Government, industrial and other 5% 18% 5% 15% Cash and Cash Equivalents -26- Cash and cash equivalents at December 31, 1997 include $416,845 (including earned interest) in an interest reserve account as required under the Indenture (see Note 6) in connection with the issuance of 12% Senior Subordinated Notes and represents an amount equal to at least six months' interest based on the principal amount outstanding. 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 consist of the following: 1997 1996 ------ ------ Raw materials and supplies $3,241,962 $3,547,487 Work-in-process 631,399 288,986 Finished containers 874,955 1,161,909 ---------- ---------- $4,748,316 $4,998,382 ========== ========== 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 consist of the following:
Estimated Useful Life in Years 1997 1996 ---------- ---------- Land - $ 708,555 $ 708,555 Vehicles and equipment 5 to 10 12,721,917 11,218,281 Buildings and improvements 30 6,739,190 6,958,247 Office fixtures and equipment 5 to 20 3,109,904 2,514,812 ---------- ---------- 23,279,566 21,399,895 Less-Accumulated depreciation (5,267,650) (3,703,849) ---------- ---------- $18,011,916 $17,696,046 ========== ==========
Property, plant and equipment includes assets acquired under capital leases of approximately $603,000 and $613,000, and accumulated amortization of approximately $107,000 and $65,000 at December 31, 1997 and 1996, respectively. At December 31, 1997 and 1996, substantially all property, plant and equipment has been pledged as collateral for notes payable obligations and obligations under capital leases (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 $485,000 and $507,000 for the years ended December 31, 1997 and 1996, respectively. Earnings (Loss) Per Share -27- During 1997, the Company adopted SFAS No. 128, Earnings per Share. Pursuant to SFAS No. 128, basic earnings per common share are computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year. Diluted earnings (loss) per common share are determined assuming that options were exercised at the beginning of each year or at the time of issuance. No outstanding options were assumed to be exercised for purposes of calculating diluted earnings per share for the year ended December 31, 1995 as their effect was anti-dilutive. SFAS No. 128 is effective for financial statements for both interim and annual periods presented after December 15, 1997 and as a result, all prior period earnings per share (EPS) data presented has been restated. Below are the required disclosures pursuant to SFAS No. 128 for the years ended December 31, 1997, 1996 and 1995:
1997 1996 1995 ----------- ----------- ----------- Basic earnings (loss) per share: Net income $ 2,200,396 $ 70,222 $ 776,795 Preferred stock dividends -- -- (1,250,000) ----------- ----------- ----------- Income (loss) available for common stock $ 2,200,396 $ 70,222 $ (473,205) =========== =========== =========== Weighted average common shares 6,752,147 6,737,592 4,835,000 ----------- ----------- ----------- Basic per share amount $ 0.33 $ 0.01 $ (0.10) =========== =========== =========== Diluted earning (loss) per share: Net income $ 2,200,396 $ 70,222 $ 776,795 Preferred stock dividends -- -- (1,250,000) ----------- ----------- ----------- Income (loss) available for common stock $ 2,200,396 $ 70,222 $ (473,205) =========== =========== =========== Weighted average common shares 6,752,147 6,737,592 4,835,000 Options assumed converted 48,156 6,637 -- ----------- ----------- ----------- Weighted average common shares plus assumed conversion 6,800,303 6,744,229 4,835,000 =========== =========== =========== Diluted per share amount $ 0.32 $ 0.01 $ (0.10) =========== =========== ===========
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 revolving line of credit and long-term debt instruments approximate fair value. The fair value of the Company's long-term debt and revolving 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 approximately $2,104,000 and $1,659,000 at December 31, 1997 and 1996, respectively. These costs of obtaining long-term financing are being amortized over the term of the related debt, using the straight-line method. The difference between amortizing the deferred financing costs using the straight-line method and amortizing such costs using the effective interest method is not material. 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 -28- 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. (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. The containers on lease, excluding the modular buildings, are leased to customers under short term operating lease agreements. 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. Containers and modular buildings included in the container lease fleet with an original loan value of approximately $9.2 million at December 31, 1997 and 1996, have been pledged as collateral for notes payable and obligations under capital leases. The balance of the containers are pledged as collateral under the Senior Credit Agreement (see Notes 3, 4 and 5). Normal repairs and maintenance to the containers and modular buildings are expensed as incurred. Container lease fleet includes assets acquired under capital leases of approximately $8,255,000 and $8,043,000, and accumulated amortization of approximately $317,000 and $204,000 at December 31, 1997 and 1996, respectively. (3) LINE OF CREDIT: In March 1996, the Company entered into the Senior Credit Agreement. Under the terms of the Senior Credit Agreement, as amended, the Lenders have provided the Company with a $40.0 million revolving line of credit and a $6.0 million term loan. Borrowings under the Senior 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 is 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 Senior 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 resulted in an extraordinary charge to earnings in 1996 of $410,000 after benefit for income taxes. The revolving line of credit balance outstanding at December 31, 1997, was approximately $35.9 million. The amount available for borrowing was approximately $4.1 million at December 31, 1997. Prior to the refinancing, the Company had available short-term lines of credit which bore interest at 1.5% over the prime rate. During 1997 and 1996, the weighted average interest rate under the lines of credit was 8.93% and 8.73%, respectively, and the average balance outstanding during 1997 and 1996 was approximately $32.2 million and $20.3 million, respectively. The Senior Credit Agreement contains several covenants including a minimum consolidated 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 Senior Credit Agreement contains limits on capital expenditures and the incurrence of additional debt, as well as prohibiting the payment of dividends. Additional principal payments equal to 75% of Excess Cash Flow, as defined in the term loan documents which constitute part of the Senior Credit Agreement, are required annually. As of December 31, 1997, no additional payment was required under this provision. -29- (4) NOTES PAYABLE: Notes payable at December 31 consist of the following:
1997 1996 ------ ------ Notes payable to BT Commercial Corporation, interest ranging from 3.25% over Eurodollar rate (5.8% at December 31, 1997) to 1.75% over prime (8.5% at December 31, 1997), fixed monthly installments of principal plus interest, due March 2001, secured by various classes of the Company's assets $4,500,000 $5,437,500 Notes payable, interest ranging from 10.5% to 12.2%, monthly installments of principal and interest, due October 1999 through May 2002, secured by equipment and vehicles 848,926 743,867 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 558,032 706,796 Notes payable to financial institution, interest ranges from 6.49% to 7.75%, payable in fixed monthly installments due March 1998 through January 1999, unsecured 216,091 114,614 --------- --------- $6,123,049 $7,002,777 ========= =========
Future maturities under notes payable are as follows: Years ending December 31, ------------------------- 1998 $ 1,937,680 1999 1,870,951 2000 1,772,540 2001 509,255 2002 32,623 --------- $6,123,049 ========= The Senior Credit Agreement 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 -30- 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 $1.00 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 not recorded as sales but accounted for as collateralized borrowings in accordance with SFAS No. 13. 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, 1998 $2,431,383 1999 2,405,222 2000 1,313,241 2001 54,418 --------- Total payments 6,204,264 Less: Amounts representing interest (832,661) --------- $5,371,603 ========= Certain obligations under capital leases contain financial covenants which include that the Company maintain a specified interest expense coverage ratio and a required debt to tangible net worth 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, 1997 and 1996, approximated $271,000 and $288,000, respectively, and are reflected as a reduction in the container lease fleet in the accompanying consolidated financial statements. Included in the accompanying consolidated 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 either in 1996 or 1997. (6) 12% SENIOR SUBORDINATED NOTES: In October 1997, the Company issued $6.9 million of 12% Senior Subordinated Notes ("Notes") with a scheduled maturity date of November 1, 2002 and which are considered unsecured obligations of the Company. The Notes were issued as part of a unit with Redeemable Warrants to purchase 172,500 shares of the Company's common stock at $5.00 per share. The Company is required to maintain an interest reserve account and to maintain in the reserve account, while any of the Notes are outstanding, an amount equal to six months interest on the Notes based on the principal amount outstanding. Interest is payable semi-annually on May 1 and November 1 of each year, commencing May 1, 1998. The Notes were issued in denominations and integral multiples of $5,000. Because the Notes were offered as part of a unit with Redeemable Warrants, a portion of the original offering price for a unit was allocated to the Notes and a portion to the Redeemable Warrants based on their respective fair market values. The resulting discount increases the effective interest rate of the Notes and is being amortized to interest expense over the life of the Notes. As of December 31, 1997, the outstanding balance of the Notes was $6,647,874, net of the remaining unamortized discount of approximately $252,000. -31- In July 1997, the Company completed a private placement of $3.0 million of 12% senior subordinated notes (the "Bridge Notes") and warrants to purchase 50,000 shares of the Company's common stock at $5.00 per share. The Bridge Notes were due the earlier of July 31, 2002, or on the refinancing of the Bridge Notes on substantially similar terms. The Company used a portion of the proceeds from the sale of the Notes described above to repay the Bridge Notes in October of 1997. The Bridge Note lender received 15,000 shares of common stock as consideration for the cancellation of the warrants originally issued to the Bridge Note lender. The Indenture governing the notes requires the Company to comply with certain covenants including maintaining a specific tangible net worth, a maximum total funded indebtedness ratio and a maximum senior funded indebtedness ratio. (7) 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, 1997, 1996 and 1995 consisted of the following: 1997 1996 1995 ---- ---- ---- Current $ - $ - $ - Deferred 1,467,000 377,596 610,341 --------- ------- ------- Total $1,467,000 $377,596 $610,341 ========= ======= ======= The components of the net deferred tax liability at December 31, are as follows:
1997 1996 ---- ---- Deferred Tax Assets (Liabilities): Net operating loss carryforward $ 4,286,000 $ 3,369,000 Allowance for doubtful accounts 354,000 113,000 Alternative minimum tax credit 211,000 211,000 Other 220,000 389,500 Accelerated tax depreciation (9,433,000) (7,363,000) Deferred gain on sale-leaseback transactions (856,000) (429,000) ----------- ----------- Net deferred tax liability $(5,218,000) $(3,709,500) =========== ===========
A reconciliation of the federal statutory rate to the Company's effective tax rate for the years ended December 31 are as follows: 1997 1996 1995 ---- ---- ---- Statutory federal rate 34% 34% 34% State taxes, net of federal benefit 6 6 6 Other - 4 4 ---- ---- ---- 40% 44% 44% ==== ==== ==== The Company has a federal net operating loss carryover at December 31, 1997 of approximately $10,775,000 which expires if unused in years 2008 to 2012. As a result of stock ownership changes during 1996 and 1997, it is possible that the Company has undergone one or more changes in ownership which can limit the amount of net operating loss that is currently available as a deduction. Such limitation could result in the Company being required to pay tax currently because only a portion of the net operating loss is available. Management believes that it will fully realize its net operating loss carryforward and that a valuation reserve is not necessary at December 31, 1997. -32- (8) TRANSACTIONS WITH RELATED PARTIES: 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 which were subsequently paid by the Company. 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 through payment by the Company. 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 base payments under these leases total approximately $66,000 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 base 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 reflected 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. The Company obtains services throughout the year from Skilquest, Inc., a company engaged in sales and management support programs. Skilquest, Inc. is owned by Carolyn Clawson, the daughter of Mr. Richard E. Bunger and sister to Steven G. Bunger. The Company made aggregate payments of approximately $73,000 to Skilquest, Inc. in 1997 which the Company believes reflects the fair market value for the services performed. (9) 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 1997, options to purchase a maximum of 750,000 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 an ISO 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 determines 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. -33 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 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 term of such option. The Company accounts for its stock-based compensation plan under APB No. 25, under which no compensation expense has been recognized in the accompanying financial statements for stock-based employee awards. All stock options have been granted with an exercise price equal to or greater than the fair value of the Company's common stock on the date of grant. The Company adopted SFAS No. 123 for disclosure purposes in fiscal 1996. For purposes of SFAS No. 123, the fair value of each option granted has been estimated at the date of the grant using the Black-Scholes option pricing model using the following assumptions: Risk free interest rates range 6.0 to 6.6% Expected holding period 4.0 years Dividend rate 0.0% Expected volatility 55.4% Under these assumptions, the fair value of the stock options granted was $190,570 and $99,418 for the years ended December 31, 1997 and 1996, respectively. These amounts would be amortized on the straight-line basis as compensation expense, over the average holding period of the options. If the Company had accounted for stock options consistent with SFAS No. 123, utilizing the assumptions detailed above, the Company's net income (loss) and earnings (loss) per share would have been reported as follows at December 31: 1997 1996 1995 ---------- ---------- ---------- Net income As reported $2,200,396 $ 70,222 $ (473,205) Pro forma 2,086,054 14,548 (505,034) Basic EPS: As reported $ 0.33 $ 0.01 $ (0.10) Pro forma 0.31 0.00 (0.10) Diluted EPS: As reported $ 0.32 $ 0.01 $ (0.10) Pro forma 0.31 0.00 (0.10) The effect of applying SFAS No. 123 for providing pro forma disclosures is not likely to be representative of the effect on reported net income (loss) or earnings (loss) per share for future years, because options vest over several years, additional stock options are generally awarded in each year, and SFAS No. 123 has not been applied to options granted prior to January 1, 1995. -34- The following summarizes the activities under the Company's stock option plan at December 31, 1997, 1996 and 1995:
1997 1996 1995 -------------------------- -------------------------- -------------------------- Weighted Weighted Weighted Number of Average Number of Average Number of Average Shares Exercise Price Shares Exercise Price Shares Exercise Price --------- -------------- --------- -------------- --------- -------------- Options outstanding, beginning of year 347,000 $3.89 241,000 $4.04 128,000 $4.11 Granted 206,500 3.64 156,000 3.43 143,000 3.94 Canceled/Expired (1,300) 3.25 (50,000) 3.16 (30,000) 3.88 Exercised (200) 3.25 - - - - ------- ------- ------- Options outstanding, end of year 552,000 $3.80 347,000 $3.89 241,000 $4.04 ------- ------- ------- Options exercisable, end of year 247,050 $3.91 148,500 $4.02 89,250 $4.05 ------- ------- ------- Options available for grant, end of year 197,800 196,125 102,125 ======= ======= ======= Weighted average fair value of options granted $1.75 $1.70 $0.97
Options outstanding and exercisable by price range as of December 31, 1997 are as follows:
Options Outstanding Options Exercisable ------------------------------------ ----------------------- Weighted Average Weighted Weighted Remaining Average Average Range of Options Contractual Exercise Options Exercise Exercise Prices Outstanding Life Price Exercisable Price - ------------------- --------------- --------------- ------------ --------------- ------------ $3.12 - $3.88 348,000 8.33 $3.49 132,800 $3.61 $4.00 - $4.81 201,000 6.69 4.31 111,250 4.23 $5.38 - $5.38 3,000 7.58 5.38 3,000 5.38 --------- ------ ------ -------- ------ $3.12 - $5.38 552,000 7.73 $3.80 247,050 $3.91 ========= ====== ====== ======== ======
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 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 their funds among certain named plans. The Company did not make any qualified non-elective contributions or profit sharing contributions to the 401(k) Plan during 1996 or 1995. In 1997 the Company contributed 10% of the employees contributions up to a maximum of $500 per employee. (10) COMMITMENTS AND CONTINGENCIES: As discussed more fully in Note 8, 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 -35- leases. Rent expense under these agreements was approximately $932,000, $649,000, and $515,000 for the years ended December 31, 1997, 1996, and 1995, respectively. Total future commitments under all noncancelable agreements for the years ended December 31, are approximately as follows: 1998 $ 999,000 1999 1,003,000 2000 943,000 2001 758,000 2002 582,000 Thereafter 3,201,000 --------- $7,486,000 ========= In April 1997, the Company entered into a stock purchase agreement with an individual who had agreed to work for the Company. Under the stock purchase agreement, the individual was to purchase 500,000 shares of common stock on July 1, 1997. On June 30, 1997, at the individual's request, the Company extended the closing date to July 3, 1997. The individual did not tender funds by the extended closing date. In July 1997, the Company brought an action in US District Court for the District of Arizona to have the court declare the Company's obligations under the stock purchase agreement terminated. The individual opposes the Company's request, and has requested that the Company be ordered to perform under the stock purchase or, alternatively, pay him damages, including treble damages. In addition, the individual has filed a counterclaim alleging constructive discharge. The Company is vigorously pursuing the action and does not believe it will have any material impact on the financial condition or the results of operations of the Company. 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. (11) 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 warrant (the "Warrants") for the purchase of one share of common stock for $5.00 per share, which expired on February 17, 1998. 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, 1997, none of the 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, at which time all such shares of the Series A convertible Preferred Stock became authorized but unissued shares of Preferred Stock which may be reissued. In connection with the issuance of the Series A the Company recorded a preferred stock dividend of $1,250,000 at December 31, 1995 in accordance with the accounting treatment announced by the staff of the SEC at the March 13, 1997 meeting of the Emerging Issues Task Force whereas the Series A had "beneficial conversion" features which permitted the holder to convert their holdings to common shares at a fixed discount off of the market price of the common shares when converted. The effect of the dividend resulted -36- in a decrease in earnings per share applicable to common shareholders of $.25, however, the recognition in the calculation of earnings (loss) per share did not have any effect on the cash flows of the Company. Redeemable Warrants Redeemable Warrants to purchase 187,500 shares of the Company's common stock at $5.00 per share (subject to adjustment as described below) were issued in connection with the issuance of the Notes (Note 6). A portion of the original offering price was allocated to the Notes and the Redeemable Warrants based on their relative fair values. The Redeemable Warrants first become exercisable on March 1, 1998. The expiration date of the Redeemable Warrants is November 1, 2002. After October 13, 1999, the Company has the right to redeem the Redeemable Warrants at any time after the date that the closing price of the common stock has equaled or exceeded $8.75 per share for a period of 20 consecutive trading days. The redemption price is $0.05 per Redeemable Warrant. The number of shares of common stock for which a Redeemable Warrant is exercisable and the purchase price thereof are subject to adjustment from time to time upon the occurrence of certain events, including, among other things, certain dividends and distributions and issuances of shares of common stock at a price below the market price. A Redeemable Warrant does not entitle the holder thereof to receive any dividends paid on common stock nor does a holder of Redeemable Warrants, as such, have any rights of a stockholder of the Company. (12) SUBSEQUENT EVENTS: On January 20, 1998 the Company acquired the assets of Nevada Storage Containers ("NSC"), a Las Vegas based container leasing and sales business. The purchase price included approximately $1.4 million in cash and approximately 85,000 shares of the Company's common stock. The Company acquired NSC's containers under lease to customers and other operating equipment. Under the purchase agreement, the shares of common stock will not be issued until one year after the closing date. As of their expiration date of February 17, 1998, 1,046,212 of the 1,067,500 warrants issued in connection with the Company's initial public offering in February 1994, have been exercised for an equal amount of shares of the Company's common stock. The Company received proceeds of approximately $5.2 million which the Company intends to use for working capital purposes. 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. Set forth below are the names and ages of and other relevant information about the directors and executive officers of the Company. Richard E. Bunger, age 60, has served as the Chairman of the Board and a Director since the Company's inception in 1983. He also served as the Company's Chief Executive Officer and President from inception through April 1997. Since April 1997, Mr. Bunger has served as the Company's Director of Product Research and Market Development. 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. Steven G. Bunger, age 36, has served as Chief Executive Officer and President since April 1997 and is a founding Director of the Company. Prior to April 1997, Mr. Bunger served as the Company's Chief Operating Officer and was responsible for overseeing all of the Company's operations and sales activities with overall responsibility for advertising, marketing and pricing. Mr. Bunger graduated from Arizona State University in 1986 with a BA - Business Administration. He is the son of Richard E. Bunger. -37- Lawrence Trachtenberg, age 41, Executive Vice President and Chief Financial Officer, General Counsel, Secretary, Treasurer and Director, joined the Company in December 1995. 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 BA - Accounting/Economics from Queens College City University of New York 1977. Burton K. Kennedy Jr., age 50, 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. George E. Berkner, age 63, Director, became a member of the Board of Directors of the Company in December, 1993. From August, 1992 to present, Mr. Berkner has been the Vice President of AdGraphics, Inc., a computer graphics company. From May, 1990 to August, 1992, Mr. Berkner was a private investor. From February, 1972 until May, 1990, Mr. Berkner was the President and Chief Executive Officer of Gila River Products, a plastics manufacturer with 155 employees. Mr. Berkner is also a director of Auto X-Ray, Inc. Mr. Berkner graduated from St. Johns University with a BA-Economics/Business in 1956. Ronald J. Marusiak, age 50, Director, became a member of the Board of Directors of the Company in February 1996. From January 1988 to present, Mr. Marusiak has been the Division President of Micro-Tronics, Inc., a corporation engaged in precision machining and tool and die building for companies throughout the U.S. Mr. Marusiak is the co-owner of R2B2 Systems, Inc., a computer hardware and software company. Mr. Marusiak is also a director of W.B. McKee Securities Inc. Mr. Marusiak received a Masters of Science in Management from LaVerne University in 1979 and graduated from the United States Air Force Academy in 1971. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the Company's officers and directors, and persons who beneficially own more than ten percent of a registered class of the Company's equity securities, to file reports of ownership and change in ownership with the Securities and Exchange Commission (the "SEC") and The Nasdaq Stock Market. Such reports are filed on Form 3, Form 4, and Form 5 under the Exchange Act. Officers, directors and greater than ten-percent shareholders are required by Exchange Act regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such forms received by it, the Company believes that, during fiscal year ended December 31, 1997 all officers, directors, and greater than ten-percent beneficial owners complied with the applicable Section 16(a) filing requirements. ITEM 11. EXECUTIVE COMPENSATION. Compensation Summary of Executive Officers The following table sets forth certain compensation paid or accrued by the Company during the fiscal year ended December 31, 1997 to the Chairman of the Board and executive officers of the Company whose salary and bonus exceeded $100,000. -38- SUMMARY COMPENSATION TABLE
Long Term Annual Compensation Compensation ------------------- ------------ Other Annual Fiscal Compen- All Other Name and Principal Position Year Salary Bonus sation Stock Options Compensation - -------------------------------------------------------------------------------------------------------------------------- Richard E. Bunger, 1997 $175,000 $163,059 -- 40,000 $25,087(1) Chairman of the Board 1996 100,000 107,873 -- -- 21,100(1) 1995 104,167 77,808 -- -- 20,358(1) Steven G. Bunger, 1997 $170,000 $119,577 -- 40,000 $5,000(2) President, Chief Executive Officer 1996 50,000 95,887 -- 25,000 5,000(2) 1995 42,500 94,128 -- 50,000 4,375(2) Lawrence Trachtenberg, 1997 $145,000 $102,494 -- 40,000 $ 5,000(2) Chief Financial Officer, 1996 50,000 95,887 -- 25,000 5,000(2) Executive Vice President 1995 -- -- -- 50,000 -- -- Burton K. Kennedy Jr., 1997 $ 99,045 $11,296 5,000 $ 5,000(2) Senior Vice President 1996 14,423 31,320 50,000 22,500(3)
- -------------------- (1) The Company provides Mr. Bunger with the use of a Company-owned vehicle and a $2 million life insurance policy. The amount shown represents the Company's estimate of costs borne by it in connection with the vehicle, including fuel, maintenance, license fees and other operating costs (approximately $4,100 for such years) and the life insurance premiums paid by the Company. (2) Mr. Steven Bunger and Mr. Trachtenberg are each paid $5,000 per year in consideration of their respective non-compete agreements. Mr. Bunger entered into such agreement after the commencement of the 1995 fiscal year. (3) Mr. Kennedy is paid $5,000 per year in consideration of his non-compete agreement. Mr. Kennedy entered into such agreement upon the commencement of his employment with the Company in July, 1996. In 1996, Mr. Kennedy received a sign-up incentive in connection with his employment and such non-compete agreement. Option Grants The following table sets forth certain information regarding the grant and exercise of options to the Named Officers in 1997. OPTION GRANTS IN FISCAL YEAR 1997
% of Total Potential Realizable Value at Options/SARs Assumed Annual Rate of Stock Price Granted to Exercise or Appreciation for Option Name Options/SARs Employees in Base Price Expiration Term(1) Granted Fiscal Year ($/Sh) Date 5% ($) 10% ($) - ----------------------------------------------------------------------------------------------------------------------------------- Richard E. Bunger 40,000 19% $3.25 March 2007 $211,756 $337,187 March & Steven G. Bunger 40,000 19% $3.25 & $4.50 June 2007 $252,479 $402,030 March & Lawrence Trachtenberg 40,000 19% $3.25 & $4.50 June 2007 $252,479 $402,030 Burton K. Kennedy Jr. 5,000 2% $3.25 March 2007 $26,470 $42,148
-39- (1) This disclosure is provided pursuant to Item 402(c) of Regulation S-K and assumes that the actual stock price appreciation over the maximum remaining option terms (10 years) will be at the assumed 5% and 10% levels. Option Exercises and Values The following table sets forth certain information regarding the exercise and values of options held by the Named Officers as of December 31, 1997 AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Value of Unexercised Number of Unexercised In-the-Money Options at Options at December 31, December 31, 1997 1997(1) Shares Acquired on Exercisable/ Exercisable/ Name Exercise Value Realized Unexercisable Unexercisable - --------------------------------------------------------------------------------------------------------------------------- Richard E. Bunger - - 68,000/47,000 $282,200/$168,050 Steven G. Bunger - - 44,000/71,000 $175,400/$282,350 Lawrence Trachtenberg - - 44,000/71,000 $160,500/$269,500 Burton K. Kennedy Jr. - - 11,000/44,000 $41,250/$165,000
(1) All the exercisable options were exercisable at a price less than the last reported sale price of the Common Stock ($5.812) on the Nasdaq Stock Market on December 31, 1997. Employment Agreements The Company provides Mr. Richard Bunger with a $2 million life insurance policy, a Company owned vehicle, and all the employee benefits provided to the Company's executive employees. Although the Company has not entered into any long-term employment contracts with any of its employees, the Company has entered into numerous agreements with key employees which are terminable at will, with or without cause, including agreements with Steven G. Bunger, Lawrence Trachtenberg and Burton K. Kennedy Jr. Each of these agreements contains a covenant not to compete for a period of two years after termination of employment and a covenant not to disclose confidential information of a proprietary nature to third parties. The Company had numerous bonus and incentive arrangements with several employees during 1997, including Mr. Richard Bunger, Mr. Steven G. Bunger, Mr. Trachtenberg and Mr. Kennedy. These agreements included an incentive program to provide financial awards for an increase in revenues or for the attainment of quotas. These compensation agreements were evaluated by an independent executive compensation consulting organization and effective January 1, 1997, these above named employees were compensated in 1997 based on commensurate fair market salaries plus an incentive program. Compensation of Directors The Company's directors (other than directors who are officers of the Company) received cash compensation for service on the Board of Directors and committees thereof in the amount of $500 per quarterly meeting. Prior to August 1, 1997, non-employee directors had the right to receive options to acquire 3,000 shares of Common Stock on each August 1 while serving as members of the compensation committee; from and after August 1, 1997, this was increased to 7,500 shares of common stock on each August 1. -40- ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The following table sets forth certain information as of March 18, 1998 with respect to the beneficial ownership of the Company's Common Stock by each shareholder known by the Company to be the beneficial owner of more than five percent of its outstanding Common Stock, by each director who owns shares of the Company's Common Stock, and by all executive officers and directors as a group. Each person named has sole voting and investment power with respect to all of the shares indicated, except as otherwise noted.
Common Stock Name and Address of Beneficial Owner Beneficially Owned(1) Percent(2) - ---------------------------------------------------------------------------------------------------- Richard E. Bunger 2,373,000(3) 29.9% 1834 West 3rd Street Tempe, Arizona 85281 Steven G. Bunger 302,953(4) 3.8% 1834 West 3rd Street Tempe, Arizona 85281 Lawrence Trachtenberg 60,191(5) * 1834 West 3rd Street Tempe, Arizona 85281 Ronald J. Marusiak 124,575(6) 1.6% 1834 West 3rd Street Tempe, Arizona 85281 George Berkner 23,625(7) * 1834 West 3rd Street Tempe, Arizona 85281 REB/BMB Family Limited Partnership(8) 2,290,000 29.2% 1834 West 3rd Street Tempe, Arizona 85281 Bunger Holdings, L.L.C.(9) 410,000 5.2% 1834 West 3rd Street Tempe, Arizona 85281 Kennedy Capital Management, Inc.(10) 362,925 4.6% 10829 Olive Boulevard St. Louis, MO 63141-7739 All Directors and Executive Officers as a group 2,718,170 33.7% (5 persons)(3)(4)(5)(6)(7)
* Less than 1%. -41- (1) The inclusion herein of any shares of Common Stock does not constitute an admission of beneficial ownership of such shares, but are included in accordance with rules of the Securities and Exchange Commission. (2) Includes shares of Common Stock subject to options which are presently exercisable or which may become exercisable within 60 days of March 18, 1998. (3) Includes 2,290,000 shares owned by REB/BMB Family Limited Partnership and 83,000 shares subject to exercisable options. Mr. Bunger disclaims any beneficial ownership of shares held by REB/BMB Family Limited Partnership in excess 1,894,379. All shares held by Mr. Bunger are held as community property. (4) Includes 82,000 shares owned by Bunger Holdings, L.L.C., 166,174 shares owned by REB/BMB Family Limited Partnership 1,779 shares and 53,000 shares subject to exercisable options. Of the 166,174 shares owned by REB/BMB Family Limited Partnership, 80,150 are held for members of Mr. Bunger's immediate family. (5) Includes 7,191 shares and 53,000 shares subject to exercisable options. (6) Includes: (a) 12,400 shares held by Mr. Marusiak's children; (b) 11,050 shares held by Mr. Marusiak and his wife (c) 92,500 shares held by Micro-Tronics, Inc.'s Profit Sharing Plan and Trust (the "Plan") of which Mr. Marusiak is Trustee and Plan Administrator. Mr. Marusiak disclaims any beneficial ownership of 80% of the shares held by the Plan, as his pro rata ownership interest is limited to 20% of the Plan's assets; and (d) 8,625 shares subject to exercisable options.. (7) Includes 9,000 shares, and 14,625 shares subject to exercisable options. (8) Richard E. Bunger and his wife, Barbara M. Bunger, are the general partners of REB/BMB Family Limited Partnership. (9) The members of Bunger Holdings, L.L.C. are Steven G. Bunger, Carolyn Clawson, Michael Bunger, Jennifer Blackwell and Susan Keating, each a child of Richard E. Bunger. (10) Furnished in reliance upon information set forth in a Schedule 13G dated February 10, 1998 and filed by Kennedy Capital Management, Inc. ("KCMI") with the Securities and Exchange Commission. KCMI is an Investment Advisor registered under the Investment Advisors Act of 1940 according to information set forth in its Schedule 13G. As of December 31, 1997, KCMI was a beneficial owner of more than five percent of the Company's Common Stock. Subsequently, publicly held warrants were converted to approximately 1,046,200 shares of common stock, increasing the number of outstanding shares of common stock to approximately 7,845,700 shares. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The Company leases certain of its business locations from affiliates of Mr. Richard E. Bunger, including his children. Mr. Bunger is an executive officer, director and founder of the Company. 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 1997 equaled $71,824. 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 1997 equaled $222,000. 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. 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 reflected the fair market value of the property. The Company obtains services throughout the year from Skilquest, Inc., a company engaged in sales and management support programs. Skilquest, Inc. is owned by Carolyn Clawson, the daughter of Mr. Richard E. Bunger and sister to Steven G. Bunger. The Company made aggregate payments of approximately $73,000 to Skilquest, Inc. in 1997 which the Company believes reflects the fair market value for the services performed. -42- 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, 1997, 1996 and 1995 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 Amended and Restated Certificate of Incorporation of Mobile Mini, Inc. 4.1(1) Form of Underwriters' Warrant 4.2(1) Form of Common Stock Certificate 4.3(2) Agreement and Form of Warrant for Warrants issued in connection with 12% Notes. 4.4(2) Indenture dated as of October 14, 1997 between the Registrant and Harris Trust and Savings Bank 10.2(1) Form of Employment Agreement 10.3 Mobile Mini, Inc. Amended and Restated 1994 Stock Option Plan 10.5(5) Senior 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. 10.5.1(6) Amendment No. 1 to Senior Credit Agreement 10.5.2(6) Amendment No. 2 to Senior Credit Agreement 10.5.3(7) Amendment No. 3 to Senior Credit Agreement 10.5.4(2) Amendment No. 4 to Senior 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(3) 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
-43-
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(3) 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(4) 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 27.1 Financial Data Schedule 27.2 Restated Selected Financial Data, December 31, 1996 27.3 Restated Selected Financial Data, December 31, 1995 27.4 Restated Selected Financial Data, December 31, 1997
All other exhibits are omitted as the information required is inapplicable (1) Incorporated by reference to the Registrant's Registration Statement on Form SB-2 (No. 33-71528-LA), as amended (2) Incorporated by reference to the Registrant's Registration Statement on Form S-2 (No. 333-34413) (3) Incorporated by reference from the Registrant's Form 10-QSB for the quarter ended September 30, 1994 (4) Incorporated by reference from the Registrant's Form 10-KSB for the fiscal year ended December 31, 1994 (5) Incorporated by reference from the Registrant's Form 10-KSB for the fiscal year ended December 31, 1995 (6) Incorporated by reference to the Registrant's Report on Form 10-K for the fiscal year ended December 31, 1996 (7) Incorporated by reference to the Registrant's Report on Form 10-Q for the quarter ended June 30, 1997 (b) Reports on Form 8-K None -44- SCHEDULE II MOBILE MINI, INC. VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 December 31, ------------ 1997 1996 1995 ------ ------ ------ Allowance for doubtful accounts: Balance at beginning of year $268,181 $157,659 $256,022 Provision charged to expense 1,104,863 502,065 382,653 Write-offs (480,052) (391,543) (481,016) -------- -------- -------- Balance at end of year $892,992 $268,181 $157,659 ======== ======== ======== -45- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MOBILE MINI, INC. Date: _________________ By:___________________________________________________________ Steven G. Bunger, President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: _________________ By:___________________________________________________________ Steven G. Bunger, President, Chief Executive Officer and Director (Principal Executive Officer) Date: _________________ By:___________________________________________________________ Lawrence Trachtenberg, Executive Vice President, Chief Financial Officer and Director (Principal Financial Officer and Principal Accounting Officer) Date: _________________ By:___________________________________________________________ Deborah Keeley, Executive Vice President and Controller (Chief Accounting Officer) Date: _________________ By:___________________________________________________________ Richard E. Bunger, Chairman and Director Date: _________________ By:___________________________________________________________ Ronald J. Marusiak, Director Date: _________________ By:___________________________________________________________ George Berkner, Director
-46-
Exhibit 3.1
                              AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                                MOBILE MINI, INC.



         The  undersigned,  for  the  purpose  of  amending  and  restating  the
Certificate of Incorporation,  hereby certifies that the name of the Corporation
is Mobile Mini, Inc. The original  Certificate of  Incorporation  was filed with
the Secretary of State of Delaware on July 21, 1993. Pursuant to Section 242 and
Section 245 of the Delaware Corporation Law, the Certificate of Incorporation is
hereby further amended and restated as follows:

         FIRST: The name of the corporation Mobile Mini, Inc. (hereinafter,  the
"Corporation").

         SECOND: The address,  including street, number, city and county, of the
registered  office of the  Corporation  in the State of  Delaware is 1209 Orange
Street, City of Wilmington, County of New Castle; and the name of the registered
agent of the  corporation  in the State of  Delaware  is The  Corporation  Trust
Company.

         THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which  corporations may be organized under the General  Corporation
Law of the State of Delaware.

         FOURTH:  The total  number of shares of all  classes of stock which the
Corporation shall have authority to issue is twenty-two million  (22,000,000) of
which  seventeen  million  (17,000,000)  shares shall be common stock of the par
value of one cent ($0.01) per share and five million (5,000,000) shares shall be
preferred stock with the par value of one cent ($0.01) per share.

                  As to preferred  stock, the power to issue any shares of stock
of any class or any  series of any class and to  designate  the  voting  powers,
designations, preferences, and relative participating, optional or other rights,
if any, or the qualifications,  limitations,  or restrictions thereof,  shall be
vested in the Board of Directors.

                  Cumulative voting as provided for by Section 214 of Title 8 of
the  Delaware  Code  shall not apply to the  Corporation.  Preemptive  rights as
provided for by Section  102(b)(3) of Title 8 of the Delaware  Code shall not be
granted and are hereby expressly denied.

         FIFTH: [Name of Incorporator -- intentionally omitted.]

         SIXTH: The Corporation is to have perpetual existence.

         SEVENTH:  Whenever a compromise or arrangement is proposed  between the
Corporation  and  its  creditors  or  any  class  of  them  and/or  between  the
Corporation and its

stockholders  or any class of them, any court of equitable  jurisdiction  within
the  State  of  Delaware  may,  on  the  application  in a  summary  way  of the
Corporation or any of any creditor or stockholder  thereof or on the application
of any receiver or receivers  appointed for the Corporation under the provisions
of Section 291 of Title 8 of the Delaware code or on the application of trustees
in  dissolution  or of any receiver or receivers  appointed for the  Corporation
under the  provisions  of Section  279 of Title 8 of the  Delaware  Code order a
meeting of the creditors or class of creditors,  and/or of the  stockholders  or
class of stockholders of the Corporation,  as the case may be, to be summoned in
such  manner as the said court  directs.  If a majority  in number  representing
three-fourths  in value of the  creditors or class of  creditors,  and/or of the
stockholders or class of stockholders  of the  Corporation,  as the case may be,
agree  to  any  compromise  or  arrangement  and to  any  reorganization  of the
Corporation  as  consequence  of  such  compromise  or  arrangement,   the  said
compromise or arrangement  and the said  reorganization  shall, if sanctioned by
the  court  to which  the  application  has been  made,  be  binding  on all the
creditors  or class of  creditors,  and/or on all the  stockholders  or class of
stockholders,  of  the  Corporation,  as  the  case  may  be,  and  also  on the
Corporation.

         EIGHTH:  The number of Directors of the Corporation  shall be a minimum
of three (3) and a maximum of  thirteen  (13)  persons.  The Board of  Directors
shall have sole  authority  to  determine  the number of  Directors,  within the
limits set forth  herein,  and may  increase  or  decrease  the exact  number of
Directors from time by resolution duly adopted by such Board. No decrease in the
number  of  Directors  shall  have  the  effect  of  shortening  the term of any
incumbent  Director.  The exact number of  Directors  shall be five (5) until so
increased or decreased.

                  The  number  of  Directors  shall be  divided  into  three (3)
classes,  as nearly  equal in  number as may be, to serve in the first  instance
until the first,  second and third  annual  meetings of the  stockholders  to be
held,  respectively,  and until  their  successors  shall be  elected  and shall
qualify.  In the  case  of  any  increase  in the  number  of  Directors  of the
Corporation, the additional Directors shall be so classified that all classes of
Directors  shall be  increased  equally as nearly as may be, and the  additional
Directors  shall be  elected  as  provided  herein  by the  Directors  or by the
stockholders  at an annual  meeting.  In case of any  decrease  in the number of
Directors  of the  Corporation,  all  classes of  Directors  shall be  decreased
equally,  as nearly as may be.  Election  of  Directors  shall be  conducted  as
provided in this Certificate of Incorporation, by law or in the Bylaws.

         NINTH:  The personal  liability of the Directors of the  Corporation is
hereby eliminated to the fullest extent permitted by the provisions of paragraph
(7) of subsection (b) of Section 102 of the General Corporation Law of the State
of Delaware, as the same may be amended and supplemented.

         TENTH:  The Corporation  shall, to the fullest extent  permitted by the
provisions  of  Section  145 of the  General  Corporation  Law of the  State  of
Delaware,  as the same may be amended and  supplemented,  indemnify  any and all
persons  whom it shall  have power to  indemnify  under  such  section  from and
against any and all of the expenses, liabilities or other matters referred to in
or covered by such section,  and the  indemnification  provided for herein shall
not be deemed  exclusive of any other rights to which those  indemnified  may be
entitled
                                       2

under any Bylaw,  agreement,  vote of stockholders or Disinterested Directors or
otherwise,  both as to action in his or her official capacity and a to action in
another  capacity  while holding such office,  and shall continue as to a person
who has ceased to be a director,  officer,  employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.

         ELEVENTH:  From time to time any of the provisions of this  Certificate
of  Incorporation  may be amended,  altered or  repealed,  and other  provisions
authorized  by the laws of the  State of  Delaware  at the time in force  may be
added or inserted in the manner and at the time prescribed by such laws, and all
rights at any time conferred upon the  stockholders  of the  Corporation by this
Certificate  of  Incorporation  are granted  subject to the  provisions  of this
Article ELEVENTH.

         TWELFTH:  In case any  vacancy  shall  occur on the Board of  Directors
because  of  death,  resignation,  retirement,  disqualification,   removal,  an
increase in the authorized  number of Directors or any other cause, the Board of
Directors  shall have the sole and exclusive  authority  to, at any meeting,  by
resolution  adopted by the affirmative  vote of a majority of the Directors then
in office, though less than a quorum, elect a Director or Directors to fill such
vacancy  or  vacancies  until the next  election  of the  class  for which  such
Director or Directors shall have been chosen.

                  If, as a result of a disaster or emergency,  (as determined in
good faith by the then remaining Directors),  it becomes impossible to ascertain
whether or not  vacancies  exist on the Board of  Directors,  and a person is or
persons are elected by Directors,  who in good faith believe  themselves to be a
majority of the remaining  Directors,  to fill a vacancy or vacancies  that said
remaining  Directors in good faith believe exists,  then the acts of such person
or persons who are so elected as  Directors  shall be valid and binding upon the
Corporation and the stockholders,  although it may subsequently  develop that at
the time of the election (i) there was in fact no vacancy or vacancies  existing
on the Board of  Directors,  or (ii) the Directors who so elected such person or
persons did not in fact constitute a majority of the remaining Directors.

         THIRTEENTH:  Special  meetings of the  stockholders of the Corporation,
for any purpose or purposes,  unless otherwise  prescribed herein or by statute,
may be called by the Chairman of the Board and shall be called by the  Secretary
at the written request,  or by resolution  adopted by the affirmative vote, of a
majority  of the Board of  Directors.  Such  request  shall state the purpose or
purposes of the proposed  meeting.  Stockholders of the Corporation shall not be
entitled to request a special meeting of the stockholders.

         FOURTEENTH:  All  action by holders  of the  Corporation's  outstanding
voting  securities  shall  be taken  at an  annual  or  special  meeting  of the
stockholders following notice as provided by law or in the Bylaws.  Stockholders
of the Corporation shall not have the power to act by means of written consent.

         FIFTEENTH:  No person shall be elected to the Board of Directors of the
Corporation at an annual meeting of the  stockholders,  or at a special  meeting
called for that purpose, unless a written nomination of such person to the Board
of  Directors  by a  stockholder  of the  Corporation  shall be  received by the
Secretary of the Corporation at least sixty (60) days prior to such meeting.
                                       3

         SIXTEENTH:  Notwithstanding  the fact that a lesser  percentage  may be
specified by law, the  affirmative  vote of the holders of  two-thirds  (2/3) of
each class of stock of the  Corporation  entitled  to vote shall be  required to
amend or repeal,  or adopt any provisions  inconsistent  with,  Article  FOURTH,
Article EIGHTH,  Article TWELFTH,  Article FOURTEENTH,  Article FIFTEENTH and/or
this Article SIXTEENTH of the Certificate of Incorporation;  provided,  however,
that the  provisions  of this Article  SIXTEENTH  shall not be applicable to any
amendment to the  Certificate of  Incorporation,  and such amendment  shall only
require such  affirmative  vote as required by law, if such amendment shall have
been  approved by a majority  of  Disinterested  Directors.  As used  herein,  a
"Disinterested  Director"  means  any  Director  of the  Corporation  who  was a
Director as of July 1, 1997, or was thereafter  elected by the  stockholders  or
appointed  by the Board of Directors of the  Corporation  and is not  associated
with or an affiliate of an  Interested  Stockholder  (as that term is defined in
this Article  SIXTEENTH)  directly or indirectly  involved in the transaction or
proposal  before the Board,  or a person  designated,  before his or her initial
election or appointment as a Director, as a Disinterested Director by a majority
of Disinterested Directors then on the Board.

                  As used herein,  Interested Stockholder shall mean any person,
firm,  corporation  or  other  entity  which,  as of the  record  date  for  the
determination  of  stockholders  entitled to notice of and to vote on any of the
above  transactions,  is the beneficial owner,  directly or indirectly,  of more
than five percent (5%) of any class of voting stock of the Corporation.  For the
purposes hereof, any person,  firm,  corporation or other entity shall be deemed
to be the  beneficial  owner of any  shares of voting  stock of the  Corporation
which (i) it has the right to acquire pursuant to any agreement or upon exercise
of conversion  rights,  warrants or options,  or  otherwise,  or (ii) are owned,
directly or indirectly (including shares deemed owned through the application of
clause (i) above), by any other person,  firm,  corporation or other entity with
which it has any  agreement,  arrangement or  understanding  with respect to the
acquisition,  holding,  voting or  disposition of stock of the  Corporation,  or
which is its  "affiliate" or "associate" as those terms are defined in the Rules
and Regulations under the Securities Exchange Act of 1934.

         IN WITNESS  WHEREOF,  the  undersigned  has  executed  this Amended and
Restated Certificate of Incorporation on the 19 day of November, 1997.

                                        MOBILE MINI, INC.




                                        By______________________________
                                              President

ATTEST:



______________________
Secretary
                                       4

STATE OF ARIZONA     )
                     )ss.
County of Maricopa   )

         The foregoing  instrument  was  acknowledged  before me this ___ day of
November, 1997.

                                             ________________________________
                                                      Notary Public

My Commission Expires:

_____________________
                                       5
Exhibit 10.3
                                MOBILE MINI, INC.
                              AMENDED AND RESTATED
                             1994 STOCK OPTION PLAN
                     (as amended through November 12, 1997)


1.  PURPOSE OF PLAN.

         (a) General  Purpose.  The purpose of THE MOBILE MINI, INC. AMENDED AND
RESTATED  1994 STOCK OPTION PLAN  ("Plan") is to further the interests of Mobile
Mini, Inc., a Delaware  corporation (the  "Corporation") and its stockholders by
providing an incentive based form of  compensation  to the directors,  officers,
other key employees of the Corporation and providers of various  services to the
Corporation,  and by  encouraging  such  persons  to  invest  in  shares  of the
Corporation's  Common Stock,  thereby  acquiring a  proprietary  interest in its
business  and an  increased  personal  interest  in its  continued  success  and
progress and ongoing inducement to remain in the Corporation's employ.

         (b) Incentive  Stock Options.  Some one or more of the options  granted
under the Plan may be  intended  to qualify as an  "incentive  stock  option" as
defined in Section 422 of the  Internal  Revenue  Code of 1986,  as amended (the
"Code"),  and any grant of such an option shall clearly specify that such option
is intended to so qualify.  If no such  specification is made, an option granted
hereunder  shall be intended to not qualify as an "incentive  stock  option," as
previously defined.

         (c)  Adoption of and  Amendments  to the Plan.  The Plan was  initially
adopted by the Board of Directors of the  Corporation  (the  "Board") in August,
1994 and approved by the stockholders at the Corporation's  1994 annual meeting.
In July,  1996,  the Board  adopted an  amendment  to the Plan to increase  from
343,125 to 543,125 the number of shares of the Corporation's  common stock, $.01
par value (the "Common  Stock")  issuable  pursuant to options granted under the
Plan,  and the  stockholders  approved the amendment at the  Corporation's  1996
annual  meeting.  On July 1, 1997, the Board adopted  further  amendments to the
Plan,  including  amendments  (i)  increasing to 750,000 the number of shares of
Common  Stock  issuable  pursuant  to  options  granted  under  the  Plan,  (ii)
increasing  from 3,000 to 7,500 the number of shares of Common Stock  subject to
options granted  automatically  to non-employee  directors of the Corporation on
each August 1, commencing  August 1, 1997, and eliminating any limitation on the
aggregate   maximum   number  of  shares   that  could  be  subject  to  options
automatically  granted,  and (iii)  limiting to 150,000  the  maximum  number of
shares of Common  Stock  that may be  granted to any  salaried  employee  of the
Corporation  in any calendar year, in order to comply with Section 162(m) of the
Code. The amendments  were approved by the  stockholders on November 12, 1997 at
the Corporation's 1997 annual meeting. This document incorporates all amendments
to the Plan which have been approved by the Board and the  stockholders  through
November 12, 1997.

2. STOCK AND MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN.

         (a)  Description  of Stock  and  Maximum  Shares  Allocated.  The stock
subject to the  provisions  of the Plan and  issuable  upon  exercise of options
granted under the Plan are shares of Common Stock, $.01 par value,  which may be
either  unissued  or  treasury  shares,  as the  Board  may  from  time  to time
determine. Subject to adjustments as provided in Section 7, the aggregate number
of shares of Common Stock  covered by the Plan and issuable upon exercise of all
options  granted  hereunder  shall be  750,000  shares,  which  shares  shall be
reserved  for use upon the  exercise of options to be granted from time to time.
Provided,  however, that in no event shall options to purchase more than 150,000
shares of Common Stock be granted to any salaried employee of the Company in any
one year.

         (b)  Restoration  of  Unpurchased  Shares.  If  an  option  expires  or
terminates  for any reason  prior to its exercise in full and before the term of
the Plan expires,  the shares subject to, but not issued under,  such option and
such shares shall again be available for other options thereafter granted.

3.  ADMINISTRATION; AMENDMENTS.

         (a) Administration by Committee.

                  (i) The Plan shall be  administered by a committee of not less
         than two  persons  that  also  serve on the  Board  (the  "Compensation
         Committee"),  with full power to administer  the Plan, to interpret the
         Plan  and  to  establish  and  amend  rules  and  regulations  for  its
         administration.  All members of the  Compensation  Committee shall not,
         during one year prior to service on the  Compensation  Committee,  have
         been granted or awarded any equity  securities of the Corporation or of
         any  affiliate  of the  Corporation,  or  during  such  service  on the
         Compensation   Committee  receive  a  grant  or  award  of  any  equity
         securities of the  Corporation or of any affiliate of the  Corporation,
         except  for  grants or awards  made (A)  prior to  registration  of the
         Corporation's  Common Stock under Section 12 of the Securities Exchange
         Act of 1934 or (B)  pursuant  to a plan which meets the  conditions  of
         Regulation ss.240.16b-3 of the Securities Exchange Act.

                  (ii) In accordance with Section  3(a)(i)(B)  above,  effective
         August 1, 1997 and on each August 1 thereafter  throughout  the term of
         this Plan, each of the members of the  Compensation  Committee and each
         other  Director  of the  Corporation  who is  not  an  employee  of the
         Corporation  shall be granted  an option to  purchase  7,500  shares of
         Common Stock at 100% of the fair market  value per share as  determined
         in Section 3(b) below, as of the date of such grant.  Such option shall
         vest and be  non-forfeitable  in the  amount  of 625  shares  per month
         commencing  on August 31 in the year of grant and in the  amount of 625
         shares on the last day of each  month  thereafter  provided  the person
         receiving such option  remains a member of the Board of Directors.  Any
         option  granted under this Section  3(a)(ii)  shall (A) be  exercisable
         immediately  in whole or in part upon the vesting  thereof,  (B) if not
         otherwise forfeited or terminated hereunder, expire if not
                                      -2-

         exercised  prior  to  5:00  p.m.  Mountain  Standard  Time  on the  day
         preceding the tenth  anniversary of the effective date of grant of such
         option and (C) be subject to all terms and provisions of this Plan.

                  (iii)  In  lieu  of the  grant  of the  option  under  Section
         3(a)(ii),  a  member  of the  Compensation  Committee  may  elect to be
         compensated  in cash in the amount of $3,000 per  annum,  which  amount
         will be payable to such member of the  Compensation  Committee $250 per
         month  commencing  August  31,  1997 and on the last day of each  month
         thereafter  so long as such  person  remains  a member  of the Board of
         Directors.

         (b)  Exercise  Price.  Upon the grant of any option,  the  Compensation
Committee  shall  specify the exercise  price for the shares  issuable  upon its
exercise.  In no event may an option  exercise price per share be less than 100%
of the fair market value per share of the Corporation's Common Stock on the date
such option or right is granted.  Fair market value on any  particular day shall
be determined as follows:

                  (i) If the shares of Common  Stock are listed or  admitted  to
         trading on any securities exchange,  the fair market value shall be the
         closing sales price on such day on the New York Stock  Exchange on such
         other  securities  exchange  on  which  such  stock is then  listed  or
         admitted to trading,  or if no sale takes place on such day on any such
         exchange, on the next preceding day on which sales occur;

                  (ii) If the  shares  of Common  Stock  are not then  listed or
         admitted to trading on any securities  exchange,  the fair market value
         shall be the closing sales price on such day or, if no sale takes place
         on such day,  on the next  preceding  day on which  sales  occur in the
         over-the-counter  market as furnished by the  National  Association  of
         Securities Dealers Automated Quotations ("NASDAQ"), or if NASDAQ at the
         time is not  engaged in the  business  of  reporting  such  prices,  as
         furnished  by any  similar  firm  then  engaged  in such  business  and
         selected by the Board; or

                  (iii) If the  shares  of Common  Stock are not then  listed or
         admitted  to trading in the  over-the-counter  market,  the fair market
         value  shall  be  the  amount  determined  by  the  Board  in a  manner
         consistent with Treasury Regulation ss. 20.2031-2 promulgated under the
         Code or such other manner  prescribed  by the Secretary of the Treasury
         or the Internal Revenue Service.

         (c)   Interpretation.   The  interpretation  and  construction  by  the
Compensation  Committee  of the  terms  and  provisions  of this Plan and of the
agreements  governing  options and rights  granted under the Plan shall be final
and conclusive except for the grant of options or payment of cash to the members
of the Compensation Committee which shall be governed by the Board. No member of
the Compensation Committee shall be liable for any action taken or determination
made in good faith.
                                      -3-

         (d) Amendments to Plan. The Compensation  Committee may, without action
on the part of the  stockholders  of the  Corporation,  make such amendments to,
changes in and additions to the Plan as it may,  from time to time,  deem proper
and in the best  interests of the  Corporation;  provided that the  Compensation
Committee may not,  without consent of the  optionholder,  take any action which
disqualifies  any option granted under the Plan as an incentive stock option for
treatment  as such or which  affects or impairs  the rights of the holder of any
option outstanding under the Plan, and further provided that, except as provided
in Section  7, the Board may not,  without  the  approval  of the  Corporation's
stockholders,  (i)  increase  the  aggregate  number of  shares of Common  Stock
subject  to the Plan,  (ii)  change  the class of  persons  eligible  to receive
options,  (iii)  modify the period  within  which  options may be granted,  (iv)
modify the period within which options may be exercised,  the exercise  price or
the terms upon which  options may be  exercised,  or (iv)  increase the material
benefits accruing to participants under the Plan.

         (e) Ratification By Compensation  Committee.  The Board may act in lieu
of  the  Compensation  Committee  in  administering,   granting  options  under,
construing and interpreting the Plan contingent upon and subject to ratification
by the Compensation Committee.

4.  PARTICIPANTS; DURATION OF PLAN.

         (a) Eligibility and Participation.  Options may be granted in the total
amount for the period as  allocated  by the Board as  provided  in Section  4(b)
below  only to persons  who at the time of grant are  directors,  key  executive
employees,  key  managerial  employees,  or  key  supervisory  employees  of the
Corporation or to such other persons which provide  services to the  Corporation
as determined by the Board,  whether or not such persons are also members of the
Board;  provided,  however,  that no incentive  stock option may be granted to a
director of the Corporation unless such person is also a key executive employee,
key managerial employee, or key supervisory employee of the Corporation.

         (b) Allotment. The Board shall determine the aggregate number of shares
of Common  Stock  which may be optioned  from time to time but the  Compensation
Committee  shall have sole  authority to determine  the number of shares and the
recipient  thereof to be optioned at any time. The Compensation  Committee shall
not be required to grant all options allocated by the Board for any given period
if it determines,  in its sole and exclusive judgment, that such grant is not in
the best  interests  of the  Corporation.  The grant of an option to any  person
shall neither entitle such  individual to, nor disqualify such individual  from,
participation in any other grant of options under the Plan.

         (c)  Duration  of  Plan.  The  term  of  the  Plan,  unless  previously
terminated by the Board, is ten years  commencing on the date of adoption of the
Plan by the Board.  No option  shall be granted  under the Plan  unless  granted
within  ten  years  of the  adoption  of the  Plan  by the  Board,  but  options
outstanding on that date shall not be terminated or otherwise affected by virtue
of the Plan's expiration.
                                      -4-

5.  TERMS AND CONDITIONS OF OPTIONS AND RIGHTS.

         (a)  Individual  Agreements.  Options  granted  under the Plan shall be
evidenced by  agreements  in such form as the Board from time to time  approves,
which agreements shall substantially  comply with and be subject to the terms of
the Plan, including the terms and conditions of this Section 5.

         (b)  Required  Provisions.  Each  agreement  shall  state (i) the total
number of shares to which it pertains,  (ii) the  exercise  price for the shares
covered by the option,  (iii) the time at which the option becomes  exercisable,
(iv) the scheduled  expiration date of the option, (v) the vesting period(s) for
such options, and (vi) the timing and conditions of issuance of any stock option
exercise.

         (c) Period. No option granted under the Plan shall be exercisable for a
period in excess of ten years  from the date of its  grant,  subject  to earlier
termination in the event of  termination  of employment,  retirement or death of
the holder as  provided  in Section 6 or  otherwise  set forth in the  agreement
granting  the option.  An option may be exercised in full or in part any time or
from time to time during the term thereof, or provide for its exercise in stated
installments at stated times during such term.

         (d) No Fractional Shares. Options shall be granted and exercisable only
for whole  shares;  no  fractional  shares will be issuable upon exercise of any
option granted under the Plan.

         (e) Method of Exercising Option.  Options shall be exercised by written
notice to the  Corporation,  addressed to the Corporation at its principal place
of business. Such notice shall state the election to exercise the option and the
number of  shares  with  respect  to which it is being  exercised,  and shall be
signed by the person exercising the option. Such notice shall be accompanied (i)
by the certificate  described in Section 8(b) and (ii) by payment in full of the
exercise price for the number of shares being purchased.  Payment may be made in
cash or by bank cashier's check or by tendering duly endorsed  certificates  for
shares of the  Corporation's  Common Stock then owned by the  optionholder.  The
Corporation shall deliver a certificate or certificates  representing the option
shares to the  purchaser as soon as  practicable  after payment for those shares
has been  received.  If an option is  exercised  pursuant to Section 6(c) by any
person  other  than  the  optionholder,  such  notice  shall be  accompanied  by
appropriate proof of the right of such person to exercise the option. All shares
that are  purchased and paid for in full upon the exercise of an option shall be
fully paid and non-assessable.

         (f) No Rights of a Stockholder. An optionholder shall have no rights as
a stockholder with respect to shares covered by an option. No adjustment will be
made for dividends  with respect to an option for which the record date is prior
to the date a stock  certificate  is issued  upon  exercise  of an option.  Upon
exercise  of an option,  the holder of the  shares of Common  Stock so  received
shall  have all rights of a  stockholder  of the  Corporation  as of the date of
issuance.

         (g) Compliance with Law. No shares of Corporation Common Stock shall be
issued or  transferred  upon the  exercise  of any  option  unless and until the
following occurs:
                                      -5-

                  (i)All  legal  requirements  applicable  to  the  issuance  or
         transfer of such shares have been complied with; and

                  (ii) All requirements of any national  securities  exchange or
         association  upon which the shares are  listed,  traded or quoted  have
         been met, in each case to the satisfaction of the Board and free of any
         conditions unacceptable to the Compensation Committee. The Compensation
         Committee  shall have the right to condition the issuance of any shares
         made to any person hereunder on such person's undertaking in writing to
         comply with such  restrictions on his or her subsequent  disposition of
         such  shares as the  Compensation  Committee  shall deem  necessary  or
         advisable as a result of any  applicable  law,  regulation  or official
         interpretation  thereof, and a legend may be placed on the certificates
         representing such shares to reflect any such restriction.

         (b) Other  Provisions.  The option  agreements  may contain  such other
provisions as the Board deems  necessary to effectuate  the sense and purpose of
the Plan,  including  covenants on the holder's part not to compete and remedies
to the Corporation in the event of the breach of any such covenant.

6.  TERMINATION OF EMPLOYMENT; ASSIGNABILITY; DEATH.

         (a)  Termination  of  Employment.  If any  optionholder  ceases to be a
director or employee of the Corporation,  or ceases to render services  pursuant
to a consulting, management or other agreement, other than for death, disability
or  discharge  for  cause,  such  holder (or its  successors  in the case of the
holder's death after the termination of employment or directorship)  may, within
three  months  after the date of  termination,  but in no event after the stated
expiration  date of the option,  purchase some or all of the shares with respect
to which such  optionholder was entitled to exercise such option or exercise the
rights  which such holder  held,  on the date such  employment  or  directorship
terminated  and the  option  shall  thereafter  be void  for all  purposes.  Any
termination  of an  agreement  pursuant to which  services  are  rendered to the
Corporation  by any party  who is an  optionholder,  without  a renewal  of that
agreement  or entry  into a similar  successor  agreement,  may be  treated as a
termination of the employment of the third party.

         (b)  Assignability.  No option granted under the Plan or the privileges
conferred  thereby shall be assignable or transferable by a holder other than by
will  or the  laws of  descent  and  distribution,  and  such  option  shall  be
exercisable by such holder during the lifetime of the holder only.

         (c) Disability.  If the employment or directorship of the  optionholder
is terminated due to disability,  the optionholder may exercise the options,  in
whole or in part,  to the  extent  they  were  exercisable  on the date when the
optionholder's  employment or directorship terminated,  at any time prior to the
expiration  date of the options or within one year of the date of termination of
employment or directorship, whichever is earlier.
                                      -6-

         (d)  Discharge for Cause.  If the  employment  or  directorship  of the
optionholder  with the Corporation is terminated due to discharge for cause, the
options  shall  terminate  upon  receipt by the  optionholder  of notice of such
termination  or the  effective  date of the  termination,  whichever is earlier.
Discharge for cause shall include  discharge  for personal  dishonesty,  willful
misconduct in performance of duties, failure, impairment or inability to perform
required  duties,  inefficiencies  or omissions in performing  required  duties,
breach  of  fiduciary  duty or  conviction  of any  felony  or  crime  of  moral
turpitude. The Compensation Committee shall have the sole and exclusive right to
determine whether the optionholder has been discharged for cause for purposes of
the Plan and the date of such discharge.

         (e) Death of Holder. If an optionholder dies while in the Corporation's
employ,  an option shall be exercisable until the stated expiration date thereof
by the person or persons  ("successors")  to whom the holder's rights pass under
will or by the laws of descent and distribution, but only to the extent that the
holder was entitled to exercise  the option at the date of death.  An option may
be exercised  (and  payment of the option price made in full) by the  successors
only after written notice to the Corporation, specifying the number of shares to
be  purchased  or rights to be  exercised.  Such  notice  shall  comply with the
provisions of Section 5(e), and shall be accompanied by the certificate required
by Section 8(b).

7.  CERTAIN ADJUSTMENTS.

         (a) Capital Adjustments.  Except as limited by Section 422 of the code,
the aggregate  number of shares of Common Stock subject to the Plan,  the number
of shares covered by outstanding options, and the price per share stated in such
options  shall be  proportionately  adjusted for any increase or decrease in the
number of outstanding shares of Common Stock of the Corporation resulting from a
subdivision or  consolidation  of shares or any other capital  adjustment or the
payment of a stock  dividend or any other  increase or decrease in the number of
such  shares  effected  without  receipt  by the  Corporation  of  consideration
therefor in money, services or property.

         (b) Mergers, Etc. Except as limited by the provisions of Section 422 of
the Code,  if the  Corporation  is the  surviving  corporation  in any merger or
consolidation,  any option  granted under the Plan shall pertain to and apply to
the securities to which a holder of the number of shares of Common Stock subject
to the option would have been  entitled.  A dissolution  or  liquidation  of the
Corporation shall cause every option outstanding hereunder to terminate,  unless
specifically provided otherwise by the Board. A merger or consolidation in which
the Corporation is not the surviving  corporation  shall also cause every option
outstanding  hereunder to terminate,  unless specifically  provided otherwise by
the Board, but each holder shall have the right immediately prior to a merger or
consolidation  in which the  Corporation  is not the surviving  corporation,  to
exercise  such  option  in  whole  or in  part  without  regard  to any  vesting
requirements  or  installment  provisions  contained  in the  option  agreement;
provided  that if the  number  of  shares  qualified  as being  issued  under an
incentive  stock option plan at a similar  price is afforded a holder under this
Plan, subject to proportional adjustment pursuant to the merger or consolidation
agreement,  then such  incentive  stock options  outstanding  hereunder may, but
shall not be required to, be terminated. 
                                      -7-

8.  DELIVERY OF STOCK; LEGENDS; REPRESENTATIONS.

         (a) Legend on  Certificates.  All certificates  representing  shares of
Common Stock  issued upon  exercise of options  granted  under the Plan shall be
endorsed with a legend reading as follows:

                           The  shares  of  Common   Stock   evidenced  by  this
                  certificate  have  been  issued  to the  registered  owner  in
                  reliance upon written  representations  that these shares have
                  been purchased solely for investment.  These shares may not be
                  sold,  transferred  or  assigned  unless in the  option of the
                  Corporation  and its legal  counsel  such  sale,  transfer  or
                  assignment  will not be in violation of the  Securities Act of
                  1933, as amended, and the Rules and Regulations thereunder.

         (b) Private  Offering for Investment Only. The options are and shall be
made available only to a limited number of present and future key executives and
key  employees  who have  knowledge of the  Corporation's  financial  condition,
management  and its  affairs.  The Plan is not  intended  to provide  additional
capital  for  the  Corporation,  but to  encourage  stock  ownership  among  the
Corporation's  key  personnel.   By  the  act  of  accepting  an  option,   each
optionholder agrees (i) that, if he or his successors exercise his option, he or
his  successors  will purchase the subject  shares solely for investment and not
with any intention at such time to resell or redistribute those shares, and (ii)
that  he or  his  successors  will  confirm  such  intention  by an  appropriate
certificate at the time the option is exercised. However, the neglect or failure
to execute such a certificate shall not limit or negate the foregoing agreement.

         (c) Registration  Statement.  If a Registration  Statement covering the
shares of Common Stock  issuable upon the exercise of options  granted under the
Plan is filed under the  Securities  Act of 1933,  as  amended,  and is declared
effective by the Securities and Exchange  Commission,  the provisions of Section
8(a)  relating to  endorsement  of a  restrictive  legend and the  provisions of
Securities  8(b) relating to investment  covenants  shall  terminate  during the
period  that  the  Registration  Statement,  as  periodically  amended,  remains
effective.

9.  APPLICATION OF FUNDS.


         The proceeds  received by the Corporation from the sale of Common Stock
pursuant to the exercise of options will be used for general corporate purposes.
                                      -8-
Exhibit 10.18

                           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 as of January
1,  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 follows:

                  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.       Attachment  "A" is deleted in its entirety  and replaced  with
                  Attachment "A" hereto.

         3.       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:--------------------------------
                                                   Richard E. Bunger, President

                                             TENANT:

                                             MOBILE MINI, INC.,
                                             a Delaware corporation


                                             By:--------------------------------
                                                   Richard E. Bunger, President
Exhibit 11
                                MOBILE MINI, INC.

                 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE

Year Ended December 31, 1997 1996 1995 ----------- ----------- ----------- BASIC: Common shares outstanding, beginning of year 6,739,324 4,835,000 4,835,000 Effect of weighting shares: Weighted common shares issued in 1997 12,823 -- -- Effect of conversion of Series A Convertible Preferred Stock -- 1,902,592 -- ----------- ----------- ----------- Weighted average number of common shares outstanding 6,752,147 6,737,592 4,835,000 =========== =========== =========== Net income (loss) available for common stock $ 2,200,396 $ 70,222 $ (473,205) =========== =========== =========== Earnings (loss) per share $ 0.33 $ 0.01 $ (0.10) =========== =========== =========== DILUTED: Common shares outstanding, beginning of year 6,739,324 4,835,000 4,835,000 Effect of weighting shares: Weighted common shares issued in 1997 12,823 -- -- Employee stock options 48,156 6,637 -- Effect of conversion of Series A Convertible Preferred Stock -- 1,902,592 -- ----------- ----------- ----------- Weighted average number of common and common equivalent shares outstanding 6,800,303 6,744,229 4,835,000 =========== =========== =========== Net income (loss) available for common stock (Note 1) $ 2,200,396 $ 70,222 $ (473,205) =========== =========== =========== Earnings (loss) per share $ 0.32 $ 0.01 $ (0.10) =========== =========== ===========
Note 1 - 1996 Earnings per share calculated after effect of extraordinary item
Exhibit 21


                                MOBILE MINI, INC.
                      Re: Subsidiaries of Mobile Mini, Inc.

          Name of                      Jurisdiction                 Percent
        Subsidiary                   of Incorporation           Ownership by MMI


Mobile Mini I, Inc.                       Arizona                    100%

Delivery Design Systems, Inc.(1)          Arizona                    100%

Note 1 - An inactive corporation.
Exhibit 23


                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent  public  accountants,  we hereby consent to the  incorporation by
reference of our report dated February 25, 1998, included in this Form 10-K into
the Company's  previously  filed  Registration  Statements File No. 333-2868 and
333-41495.

                                                             ARTHUR ANDERSEN LLP

Phoenix, Arizona,
February 25, 1998.
 


5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1997 AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME AND OF CASH FLOWS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997 OF MOBILE MINI, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS EXHIBIT SHALL NOT BE DEEMED FILED FOR THE PURPOSE OF SECTION 11 OF THE SECURITIES ACT OF 1933 AND SECTION 18 OF THE SECURITIES EXCHANGE ACT OF 1934, OR OTHERWISE SUBJECT TO THE LIABILITY OF SUCH SECTIONS, NOR SHALL IT BE DEEMED A PART OF ANY OTHER FILING WHICH INCORPORATES THIS REPORT BY REFERENCE, UNLESS SUCH OTHER FILING EXPRESSLY INCORPORATES THIS EXHIBIT BY REFERENCE. 1 U.S. Dollars YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 1 1,005,204 0 7,152,468 892,992 4,748,316 12,911,611 23,279,566 5,267,650 84,052,022 9,647,849 0 0 0 67,995 0 84,052,022 20,527,477 46,082,623 14,546,347 37,385,069 (4,628) 0 5,034,856 3,667,326 1,466,930 2,200,396 0 0 0 2,200,396 0.33 0.32 The information has been prepared in accordance with SFAS No. 128, and therefore basic and diluted EPS have been entered in place of primary and fully dilutive, respectively.
 


5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1996 AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME AND OF CASH FLOWS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996 OF MOBILE MINI INC., IN ADDITION, CERTAIN ENTRIES HAVE BEEN AMENDED FROM THE PREVIOUS FINANCIAL DATA SCHEDULE FILED FOR THIS PERIOD. THIS SCHEDULE IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS EXHIBIT SHALL NOT BE DEEMED FILED FOR THE PURPOSE OF SECTION 11 OF THE SECURITIES ACT OF 1933 AND SECTION 18 OF THE SECURITIES EXCHANGE ACT OF 1934, OR OTHERWISE SUBJECT TO THE LIABILITY OF SUCH SECTIONS, NOR SHALL IT BE DEEMED A PART OF ANY OTHER FILING WHICH INCORPORATES THIS REPORT BY REFERENCE, UNLESS SUCH OTHER FILING EXPRESSLY INCORPORATES THIS EXHIBIT BY REFERENCE. 1 U.S. Dollars YEAR DEC-31-1996 JAN-01-1996 DEC-31-1996 1 736,543 0 4,900,035 268,181 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 42,425,601 19,926,191 36,982,820 700,000 0 3,884,609 858,172 377,596 480,576 0 410,354 0 70,222 0.01 0.01 The information has been prepared in accordance with SFAS No. 128, and therefore basic and diluted EPS have been entered in place of primary and fully dilutive, respectively.
 

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1995 AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME AND OF CASH FLOWS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995 OF MOBILE MINI INC., IN ADDITION, CERTAIN ENTRIES HAVE BEEN AMENDED FROM THE PREVIOUS FINANCIAL DATA SCHEDULE FILED FOR THIS PERIOD. THIS SCHEDULE IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS EXHIBIT SHALL NOT BE DEEMED FILED FOR THE PURPOSE OF SECTION 11 OF THE SECURITIES ACT OF 1933 AND SECTION 18 OF THE SECURITIES EXCHANGE ACT OF 1934, OR OTHERWISE SUBJECT TO THE LIABILITY OF SUCH SECTIONS, NOR SHALL IT BE DEEMED A PART OF ANY OTHER FILING WHICH INCORPORATES THIS REPORT BY REFERENCE, UNLESS SUCH OTHER FILING EXPRESSLY INCORPORATES THIS EXHIBIT BY REFERENCE. 1 U.S. Dollars YEAR DEC-31-1995 JAN-01-1995 DEC-31-1995 1 1,430,651 0 4,470,384 157,659 5,193,222 11,655,172 17,875,113 2,402,949 54,341,944 9,062,997 0 0 0 48,350 0 54,341,944 24,264,547 40,184,234 19,106,960 35,599,093 (13,654) 0 3,211,659 1,387,136 610,341 776,795 0 0 0 (473,205) (0.10) (0.10) The information has been prepared in accordance with SFAS No. 128, and therefore basic and diluted EPS have been entered in place of primary and fully dilutive, respectively.
 


5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1997 AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME AND OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 OF MOBILE MINI INC., AS RESTATED PURSUANT TO STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 128, EARNINGS PER SHARE ("SFAS NO. 128"). THIS SCHEDULE IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. NO OTHER QUARTERLY FINANCIAL STATEMENTS FOR THE COMPANY'S FISCAL YEAR ENDED DECEMBER 31, 1997 WERE RESTATED AS A RESULT OF SFAS NO. 128. THIS EXHIBIT SHALL NOT BE DEEMED FILED FOR THE PURPOSE OF SECTION 11 OF THE SECURITIES ACT OF 1933 AND SECTION 18 OF THE SECURITIES EXCHANGE ACT OF 1934, OR OTHERWISE SUBJECT TO THE LIABILITY OF SUCH SECTIONS, NOR SHALL IT BE DEEMED A PART OF ANY OTHER FILING WHICH INCORPORATES THIS REPORT BY REFERENCE, UNLESS SUCH OTHER FILING EXPRESSLY INCORPORATES THIS EXHIBIT BY REFERENCE. 1 U.S. Dollars 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 1 1,336,275 0 7,317,498 543,912 5,666,538 15,153,768 22,858,824 4,786,540 80,969,801 10,647,427 0 0 0 67,393 0 80,969,807 15,441,124 33,343,196 11,118,979 27,304,788 (1,423) 0 3,565,737 2,474,094 1,088,601 1,385,493 0 0 0 1,385,493 0.21 0.20 The information has been prepared in accordance with SFAS No. 128, and therefore basic and diluted EPS have been entered in place of primary and fully dilutive, respectively.