Mobile Mini (MINI) 10-Q 2001 Q2 Quarterly report

U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q

     (Mark One)

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

For the quarterly period ended June 30, 2001

           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 1-12804

(Exact name of registrant as specific in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 86-0748362
(IRS Employer Identification No.)

7420 S. Kyrene Road, Suite 101
Tempe, Arizona 85283
(Address of principal executive offices)

(480) 894-6311
(Registrant’s telephone number, including area code)

     Indicate by check 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           No 

     As of August 3, 2001, there were outstanding 14,035,852 shares of the issuer’s common stock, par value $.01.

1

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II. OTHER INFORMATION
	ITEM 4. SUBMISSION TO A VOTE OF SECURITY HOLDERS
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES

MOBILE MINI, INC.
INDEX TO FORM 10-Q FILING
FOR THE QUARTER ENDED JUNE 30, 2001

TABLE OF CONTENTS

		PAGE
		NUMBER
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets      December 31, 2000 and June 30, 2001	3
	Condensed Consolidated Statements of Operations    Three Months and Six Months ended June 30, 2000 and    June 30, 2001	4
	Condensed Consolidated Statements of Cash Flows    Six Months Ended June 30, 2000 and June 30, 2001	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
	PART II. OTHER INFORMATION
Item 4.	Submission to a Vote of Security Holders	16
Item 6.	Exhibits and Reports on Form 8-K	17
	SIGNATURES	18

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MOBILE MINI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

				December 31, 2000		June 30, 2001
			ASSETS
Cash				$	1,528,526	$	999,486
Receivables, net of allowance for doubtful accounts of $1,618,000 and $1,876,000, respectively					12,016,024		12,621,401
Inventories					11,288,195		16,234,111
Portable storage unit lease fleet, net					195,864,789		226,375,954
Property plant and equipment, net					27,231,280		30,488,519
Deposits and prepaid expenses					5,291,275		6,604,712
Other assets, net					26,740,061		28,601,512
			TOTAL ASSETS	$	279,960,150	$	321,925,695
		LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Accounts payable				$	7,358,748	$	7,075,181
Accrued liabilities					7,398,069		7,554,450
Line of credit					138,700,000		121,689,536
Notes payable					11,190,721		9,641,358
Obligations under capital leases					199,035		156,712
Deferred income taxes					22,682,230		27,271,068
			TOTAL LIABILITIES		187,528,803		173,388,305
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Common stock; $.01 par value, 95,000,000 shares authorized, 11,594,584 and 14,032,552 issued and outstanding at December 31, 2000 and June 30, 2001, respectively					115,917		140,325
Additional paid-in capital					62,854,726		111,758,868
Retained earnings					29,460,704		37,154,336
					92,431,347		149,053,529
Accumulated other comprehensive loss					—		(516,139	)
	TOTAL STOCKHOLDERS’ EQUITY				92,431,347		148,537,390
	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	279,960,150	$	321,925,695

See the accompanying notes to these condensed consolidated balance sheets.

3

MOBILE MINI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended June 30,
		2000			2001
REVENUES:
	Leasing	$	18,168,872		$	23,748,656
	Sales		3,362,704			3,625,399
	Other		135,946			92,466
			21,667,522			27,466,521
COSTS AND EXPENSES:
	Cost of sales		2,183,970			2,432,786
	Leasing, selling and general expenses		10,763,674			13,493,591
	Depreciation and amortization		1,474,385			1,953,970
INCOME FROM OPERATIONS			7,245,493			9,586,174
OTHER INCOME (EXPENSE):
	Interest income		7,433			11,549
	Interest expense		(2,235,436	)		(2,250,074	)
INCOME BEFORE PROVISION FOR INCOME TAXES			5,017,490			7,347,649
PROVISION FOR INCOME TAXES			1,912,276			2,865,583
NET INCOME		$	3,105,214		$	4,482,066
EARNINGS PER SHARE:
BASIC		$	0.27		$	0.32
DILUTED		$	0.26		$	0.31
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON SHARE EQUIVALENTS OUTSTANDING:
BASIC			11,537,167			13,936,383
DILUTED			11,973,900			14,400,622

See the accompanying notes to these condensed consolidated balance sheets.

4

MOBILE MINI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		Six Months Ended June 30,
		2000			2001
REVENUES:
	Leasing	$	33,222,254		$	44,858,040
	Sales		6,921,929			7,134,004
	Other		289,722			267,347
			40,433,905			52,259,391
COSTS AND EXPENSES:
	Cost of sales		4,478,546			4,735,754
	Leasing, selling and general expenses		19,945,794			26,002,352
	Depreciation and amortization		2,765,502			3,747,205
INCOME FROM OPERATIONS			13,244,063			17,774,080
OTHER INCOME (EXPENSE):
	Interest income		68,377			27,261
	Interest expense		(3,840,505	)		(5,188,832	)
INCOME BEFORE PROVISION FOR INCOME TAXES			9,471,935			12,612,509
PROVISION FOR INCOME TAXES			3,694,055			4,918,877
NET INCOME		$	5,777,880		$	7,693,632
EARNINGS PER SHARE:
BASIC		$	0.50		$	0.60
DILUTED		$	0.48		$	0.57
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON SHARE EQUIVALENTS OUTSTANDING:
BASIC			11,499,420			12,928,963
DILUTED			11,914,125			13,385,517

See the accompanying notes to these condensed consolidated statements.

5

MOBILE MINI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

				Six Months Ended June 30,
				2000			2001
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income			$	5,777,880		$	7,693,632
	Adjustments to reconcile income to net cash provided by operating activities:
		Provision for doubtful accounts			729,082			737,291
		Amortization of deferred loan costs			189,464			299,961
		Amortization of accrued option compensation			—			38,127
		Depreciation and amortization			2,765,502			3,747,205
		Loss (gain) on disposal of property, plant and equipment			69,989			(6,393	)
		Deferred income taxes			3,891,522			4,918,828
	Changes in certain assets and liabilities, net of effect of businesses acquired:
		Increase in receivables			(1,313,426	)		(1,342,668	)
		Increase in inventories			(1,474,930	)		(4,776,616	)
		Increase in deposits and prepaid expenses			(1,595,189	)		(1,263,437	)
		Increase in other assets			(606,452	)		(69,591	)
		Increase (decrease) in accounts payable			4,339,646			(283,567	)
		Decrease in accrued liabilities			(660,795	)		(770,981	)
			NET CASH PROVIDED BY OPERATING ACTIVITIES		12,112,293			8,921,791
CASH FLOWS FROM INVESTING ACTIVITIES:
	Cash paid for businesses acquired				(25,740,933	)		(5,660,450	)
	Net purchases of portable storage unit lease fleet				(21,285,586	)		(29,724,040	)
	Net purchases of property, plant and equipment				(3,808,069	)		(4,350,114	)
			NET CASH USED IN INVESTING ACTIVITIES		(50,834,588	)		(39,734,604	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Net borrowings (repayments) under line of credit				39,496,130			(17,010,464	)
	Deferred financing costs				—			(4,500	)
	Principal payments on notes payable				(915,747	)		(1,549,363	)
	Principal payments on capital lease obligations				(74,114	)		(42,323	)
	Exercise of warrants				28,291			251,525
	Issuance of common stock				202,970			48,638,898
			NET CASH PROVIDED BY FINANCING ACTIVITIES		38,737,530			30,283,773
NET INCREASE (DECREASE) IN CASH					15,235			(529,040	)
CASH AT BEGINNING OF PERIOD					547,124			1,528,526
CASH AT END OF PERIOD				$	562,359		$	999,486

See the accompanying notes to these condensed consolidated statements.

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MOBILE MINI, INC. AND SUBSIDIARIES —NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A —The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for all periods presented have been made. The results of operations for the six month period ended June 30, 2001, are not necessarily indicative of the operating results that may be expected for the entire year ending December 31, 2001. These condensed financial statements should be read in conjunction with the Company’s December 31, 2000 financial statements and accompanying notes thereto.

NOTE B —Basic earnings per common share are computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share are determined assuming that options were exercised at the beginning of each period or at the time of issuance. The following table shows the computation of earnings per share for the three month period and the six month period ended June 30:

		Three months ended				Six months ended
		June 30,				June 30,
		2000		2001		2000		2001
BASIC:
Common shares outstanding, beginning of period			11,508,751		13,874,147		11,438,356		11,591,584
Effect of weighting shares:
	Weighted common shares issued		28,416		62,236		61,064		1,337,379
Weighted average number of common shares outstanding			11,537,167		13,936,383		11,499,420		12,928,963
Net income available to common shareholders		$	3,105,214	$	4,482,066	$	5,777,880	$	7,693,632
Earnings per share		$	0.27	$	0.32	$	0.50	$	0.60
DILUTED:
Common shares outstanding, beginning of period			11,508,751		13,874,147		11,438,356		11,591,584
Effect of weighting shares:
	Weighted common shares issued		28,416		62,236		61,064		1,337,379
	Options assumed converted		346,223		403,444		325,323		382,702
	Warrants		90,510		60,795		89,382		73,852
Weighted average number of common and common equivalent shares outstanding			11,973,900		14,400,622		11,914,125		13,385,517
Net income available to common shareholders		$	3,105,214	$	4,482,066	$	5,777,880	$	7,693,632
Earnings per share		$	0.26	$	0.31	$	0.48	$	0.57

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NOTE C —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 consisted of the following at:

	December 31, 2000		June 30, 2001
Raw material and supplies	$	8,756,336	$	13,501,792
Work-in-process		722,313		845,697
Finished portable storage units		1,809,546		1,886,622
	$	11,288,195	$	16,234,111

NOTE D —Property, plant and equipment consisted of the following at:

	December 31, 2000			June 30, 2001
Land	$	777,668		$	777,668
Vehicles and equipment		24,121,739			28,059,112
Buildings and improvements		8,812,352			9,023,736
Office fixtures and equipment		4,840,134			5,240,927
		38,551,893			43,101,443
Less accumulated depreciation		(11,320,613	)		(12,612,924	)
	$	27,231,280		$	30,488,519

NOTE E —The Company maintains a portable storage and portable office unit lease fleet consisting primarily of refurbished or manufactured containers and portable offices that are leased to customers under short-term operating lease agreements with varying terms. Depreciation is provided using the straight-line method with an approximate estimated useful life of 20 years and a salvage value estimate at approximately 50% to 70% of cost. In the opinion of management, estimated salvage values do not cause carrying values to exceed net realizable value. Normal repairs and maintenance to the lease fleet are expensed when incurred. As of June 30, 2001, the lease fleet totaled $234.8 million as compared to $202.5 million at December 31, 2000, less accumulated depreciation of $8.4 million and $6.6 million, respectively.

NOTE F —The Company’s management approach to the disclosure of segment information includes evaluating each segment on which operating decisions are made based on performance, results and profitability. The Company currently has one reportable segment, its branch operations. The branch operations segment includes the leasing and sales of portable storage units to customers in the general geographic area of each branch. This segment also includes the Company’s manufacturing facilities, which are responsible for the purchase, manufacturing and refurbishment of the Company’s products for leasing, sales or equipment additions to the Company’s delivery system, and its discontinued dealer program.

The Company evaluates performance and profitability before interest costs, depreciation, income taxes and major non-recurring transactions. The Company does not account for intersegment revenues or expenses between its divisions.

The Company’s reportable segment concentrates on the Company’s core business of leasing, manufacturing, and selling portable storage and office units. The operating segment has managers who meet regularly and are accountable to the chief executive officer for financial results and ongoing plans including the influence of competition.

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For the Three Months Ended:

	Branch
	Operations		Other			Combined
June 30, 2000
Revenues from external customers	$	21,651,126	$	16,396		$	21,667,522
Segment profit (loss) before allocated interest, depreciation and amortization expense		10,500,014		(1,574,283	)		8,925,731
Allocated interest expense		2,235,436		—			2,235,436
Depreciation and amortization expense		1,379,416		94,969			1,474,385
Segment profit		3,099,806		5,408			3,105,214
June 30, 2001
Revenues from external customers	$	27,503,830	$	(37,309	)	$	27,466,521
Segment profit (loss) before allocated interest, depreciation and amortization expense		14,018,354		(2,234,479	)		11,783,875
Allocated interest expense		2,250,074		—			2,250,074
Depreciation and amortization expense		1,869,443		84,527			1,953,970
Segment profit (loss)		4,492,562		(10,496	)		4,482,066

For the Six Months Ended:

	Branch
	Operations		Other			Combined
June 30, 2000
Revenues from external customers	$	40,383,116	$	50,789		$	40,433,905
Segment profit (loss) before allocated interest, depreciation and amortization expense		19,682,595		(3,190,212	)		16,492,383
Allocated interest expense		3,840,505		—			3,840,505
Depreciation and amortization expense		2,542,290		223,212			2,765,502
Segment profit (loss)		5,787,215		(9,335	)		5,777,880
June 30, 2001
Revenues from external customers	$	52,259,391	$	—		$	52,259,391
Segment profit (loss) before allocated interest, depreciation and amortization expense		26,232,242		(4,201,744	)		22,030,498
Allocated interest expense		5,188,832		—			5,188,832
Depreciation and amortization expense		3,589,536		157,669			3,747,205
Segment profit (loss)		7,704,128		(10,496	)		7,693,632

As of:

	Branch
	Operations		Other		Combined
June 30, 2000
Segment assets – lease fleet	$	155,982,278	$	—	$	155,982,278
Segment assets – property, plant and equipment		25,106,893		975,577		26,082,470
Expenditures for long-lived assets – lease fleet		21,285,586		—		21,285,586
Expenditures for long-lived assets – PPE		3,481,681		326,388		3,808,069
June 30, 2001
Segment assets – lease fleet	$	226,375,954	$	—	$	226,375,954
Segment assets – property, plant and equipment		29,369,298		1,119,221		30,488,519
Expenditures for long-lived assets – lease fleet		29,724,040		—		29,724,040
Expenditures for long-lived assets – PPE		4,211,135		138,979		4,350,114

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NOTE G — New Accounting Pronouncements. The Company adopted Staff Accounting Bulletin (SAB) 101,Revenue Recognition in Financial Statements,effective October 1, 2000. The adoption of SAB 101 did not materially affect results of operations or financial position.

The Company recognizes revenues from sales of containers upon delivery. Revenue and related expenses generated under portable storage unit leases are recognized monthly when the customer is invoiced. Revenues and expenses from portable storage unit delivery and hauling are recognized when these services are billed, in accordance with SAB 101, as these services are considered inconsequential to the overall leasing transaction.

In June 1998, SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities, was issued and was subsequently amended by SFAS No. 137 and No. 138. This statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires that changes in the fair value of the derivative be recognized currently in earnings unless specific hedge accounting criteria are met. If specific hedge accounting criteria are met, changes in the fair value of derivatives will either be offset against the change in the fair value of the hedged assets, liabilities, or firm commitments through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value will be immediately recognized in earnings. SFAS No. 133, as amended, is effective January 1, 2001, for the fiscal year ended December 31, 2001. The Company has adopted SFAS No. 133 effective January 1, 2001. At June 30, 2001, SFAS No. 133 resulted in a charge to comprehensive income of $516,000, net of an applicable income tax benefit of $330,000.

In June 2001, the Financial Accounting Standards Board issued SFAS No. 142Goodwill and Other Intangible Assets(“SFAS No. 142”). Upon initial adoption, it eliminates the amortization of all existing and newly acquired goodwill on a prospective basis and requires companies to assess goodwill impairment, at least annually, based on the fair value of the reporting unit. The Company will be required to adopt SFAS No. 142 on January 1, 2002, however, goodwill acquired in transactions that close after June 30, 2001 will not be amortized, in accordance with the new pronouncement. Management has not determined the impact of the adoption of SFAS No. 142 on the Company’s financial statements.

NOTE H — In February 2001, the Company acquired substantially all the assets of KRJ Systems, Inc., a privately owned portable storage leasing company operating in the states of Kansas and Missouri. In April 2001, the Company purchased the portable storage assets of Giuffrey Bros./Cranes, Inc., which operated in the greater Milwaukee, Wisconsin area. The Company also acquired portable storage assets of Metrolina Truck and Trailer Service, Inc., which operated in the Charlotte, North Carolina area. The Company paid cash of approximately $5.7 million in connection with these transactions.

The acquisitions were accounted for as purchases in accordance with Accounting Principles Board Opinion No. 16,Business Combinationsand, accordingly, the purchased assets and assumed liabilities were recorded at their estimated fair values at the acquisition date.

The purchase price of the acquired operations were paid for as follows:

Cash		$	5,612,000
Other Acquisition Costs			48,000
	Total	$	5,660,000

The fair value of assets purchased has been allocated as follows:

Tangible assets		$	3,054,000
Deposits, prepaid expenses and other assets			50,000
Goodwill			2,637,000
Assumed liabilities			(81,000	)
	Total	$	5,660,000

10

Goodwill for acquisitions completed through June 30, 2001, is amortized using the straight-line method over 25 years from the date of the acquisition.

In July 2001, the Company entered the major metropolitan areas of northern California including San Francisco, Oakland, Sacramento, Stockton and Modesto, through the acquisition of certain portable storage assets from A-Quik–Space Storage Container Company Incorporated. Additionally, the Company purchased the portable storage assets of Container Storage Rental, LLC, a privately owned leasing company operating in Nashville, Tennessee. The Company paid cash of approximately $4.9 million in connection with these two transactions. At August 3, 2001, the Company operated 34 branches located in 18 states.

NOTE I — On March 20, 2001 the Company completed a public offering of 2,875,000 shares of its common stock. Of the shares sold, 2,239,713 shares were sold by the Company and 635,287 shares were sold by selling shareholders. The Company received gross proceeds of approximately $50.2 million. The Company is using the net proceeds to fund its lease fleet and branch expansion and for working capital having initially used these proceeds to reduce borrowings under its line of credit.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Three Months Ended June 30, 2001 Compared to
Three Months Ended June 30, 2000

     Total revenues for the quarter ended June 30, 2001 increased by $5.8 million, or 26.8%, to $27.5 million from $21.7 million for the same period in 2000. Leasing revenues for the quarter increased by $5.6 million, or 30.7%, to $23.7 million from $18.2 million in the same period of 2000. This increase resulted from a 29.9% increase in the average number of portable storage units on lease and a 0.6% increase in the average rent per unit. In the quarter ended June 30, 2001, our internal lease revenues in markets opened for at least one year (excluding acquisitions in those markets) grew at a rate of 25.4%. Our sales of portable storage units for the three months ended June 30, 2001 increased by 7.8% to $3.6 million from $3.4 million in the same period in 2000.

     Cost of sales for the quarter ended June 30, 2001 increased to 67.1% on sales revenues of $3.6 million from 64.9% on sales revenues of $3.4 million in the same quarter in 2000.

     Leasing, selling and general expenses increased $2.7 million, or 25.4%, to $13.5 million for the quarter ended June 30, 2001, from $10.8 million for the same period in 2000. Leasing, selling and general expenses, as a percentage of total revenues, decreased to 49.1% in the quarter ended June 30, 2001, from 49.7% for the same period in 2000. The increase in leasing-related expenses is primarily due to leasing continuing to be a larger percentage of the business in 2001 as compared with 2000. In addition, economies of scale achieved at our more established branches as their lease fleets have grown were offset by higher leasing related expenses (as a percentage of revenues) at newer branches which had fewer containers on rent. In general, a new branch initially has lower profit margins until the branch’s fixed operating costs are spread over a larger lease fleet which is developed as the branch grows and matures.

     Depreciation and amortization expenses increased by $480,000, or 32.5%, to $2.0 million in the quarter ended June 30, 2001, from $1.5 million during the same period in 2000. The increase is due to our larger lease fleet and amortization of goodwill associated with our acquisitions.

     Interest expense remained relatively unchanged at $2.3 million for the quarter ended June 30, 2001, compared to $2.2 million for the same period in 2000. Our average debt outstanding for the three months ended June 30, 2001 compared to the same period in 2000, increased by 10.5%, primarily from increased borrowings under our credit facility to expand our lease fleet and fund our branch expansion. This was offset by a decrease in the weighted average interest rate on our debt from 7.5% for the three months ended June 30, 2000 to 6.7% for the three months ended June 30, 2001, excluding amortization of debt issuance costs. Including amortization of debt issuance costs, the weighted average interest rate was 7.1% in 2001 and 7.8% in 2000.

     Provision for income taxes was based on an annual effective tax rate of approximately 39.0% for both quarters ended June 30, 2001 and 2000.

     Net income for the three months ended June 30, 2001, was $4.5 million, an increase of 44.3%, compared to $3.1 million for the same period in 2000. Net income as a percentage of total revenues increased 2.0% in the second quarter of 2001 to 16.3%, compared to 14.3% in the same period in 2000.

12

Six Months Ended June 30, 2001 Compared to
Six Months Ended June 30, 2000

     Total revenues for the six months ended June 30, 2001 increased by $11.8 million, or 29.2%, to $52.3 million from $40.4 million for the same period in 2000. Leasing revenues for the six months ended June 30, 2001 increased by $11.6 million, or 35.0%, to $44.9 million from $33.2 million in the same period of 2000. This increase resulted from a 35.3% increase in the average number of portable storage units on lease, partially offset by a 0.2% decrease in the average rent per unit. In the six months ended June 30, 2001, our internal lease revenues in markets opened for at least one year (excluding acquisitions in those markets) grew at a rate of 24.2%. Our sales of portable storage units for the six months ended June 30, 2001 increased by 3.1% to $7.1 million from $6.9 million in the same period in 2000.

     Cost of sales for the six months ended June 30, 2001 increased to 66.4% on sales revenues of $7.1 million from 64.7% on sales revenues of $6.9 million in the same period in 2000.

     Leasing, selling and general expenses increased $6.1 million, or 30.4%, to $26.0 million for the six months ended June 30, 2001, from $19.9 million for the same period in 2000. Leasing, selling and general expenses, as a percentage of total revenues, increased to 49.8% in the six months ended June 30, 2001, from 49.3% for the same period in 2000. The increase in leasing-related expenses is primarily due to leasing becoming a larger percentage of the business in 2001 as compared with 2000. In addition, economies of scale achieved at our more established branches as their lease fleets have grown, were offset by higher leasing related expenses (as a percentage of revenues) at newer branches which had fewer containers on rent. In general, a new branch initially has lower profit margins until the branch’s fixed operating costs are spread over a larger lease fleet which is developed as the branch grows and matures.

     Depreciation and amortization expenses increased by $982,000, or 35.5%, to $3.7 million in the six months ended June 30, 2001, from $2.8 million during the same period in 2000. The increase is due to our larger lease fleet and amortization of goodwill associated with our acquisitions.

     Interest expense increased by $1.3 million, or 35.1%, to $5.2 million for the six months ended June 30, 2001, compared to $3.8 million for the same period in 2000. The increase is primarily the result of higher average debt outstanding during 2001. Our average debt outstanding increased by 40.1%, primarily from additional borrowings under our credit facility to expand our lease fleet and fund our branch expansion. This was offset by a decrease in the weighted average interest rate on our debt from 7.3% for the six months ended June 30, 2000 to 7.0% for the six months ended June 30, 2001, excluding amortization of debt issuance costs. Including amortization of debt issuance costs, the weighted average interest rate was 7.5% in 2001 and 7.7% in 2000.

     Provision for income taxes was based on an annual effective tax rate of 39.0% for the six months ended June 30, 2001 and 2000.

     Net income for the six months ended June 30, 2001, was $7.7 million, an increase of 33.2% compared to $5.8 million for the same period in 2000. Net income as a percentage of total revenues increased 0.4% in the six months ended June 30, 2001 to 14.7% as compared to 14.3% in the same period in 2000. The number of shares deemed outstanding under applicable accounting principles at June 30, 2001 increased 21.3% to 14.0 million from 11.6 million at June 30, 2000.

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LIQUIDITY AND CAPITAL RESOURCES

     Growing our lease fleet is very capital intensive. We have financed the growth of our lease fleet and our higher working capital requirements through cash flows from operations, proceeds from equity financings and borrowings under our credit facility.

     Operating Activities.Our operations provided net cash flow of $8.9 million during the six months ended June 30, 2001, and $12.1 million during the same period in 2000. In 2001, cash flow provided by net income, depreciation, amortization and deferred income taxes increased by $3.9 million. However, these increases were offset by a reduction in accounts payable in 2001 versus a $4.3 million increase in 2000 and by an increase of $3.3 million in our level of inventories as we expanded our operations at existing and new branches.

     Investing Activities.Net cash used in investing activities was $39.7 million for the six months ended June 30, 2001, and $50.8 million for the same period in 2000. This decrease was due to a reduced level of business acquisition activity in 2001 compared to 2000, but that decrease was partially offset by higher levels of capital expenditures for lease fleet expansion in the 2001 period. Capital expenditures for our lease fleet were $29.7 million for the six months ended June 30, 2001, and $21.3 million for the same period in 2000. Capital expenditures for property, plant and equipment were $4.4 million during the six months ended June 30, 2001, and $3.8 million for the same period in 2000. We spent $5.7 million during the six months ended June 30, 2001, and $25.7 million for the same period in 2000 for acquisitions.

     Financing Activities.Net cash provided by financing activities was $30.3 million for the six months ended June 30, 2001, and $38.7 million for the same period in 2000. During the six months ended June 30, 2001, net cash provided by financing activities was primarily provided by our sale of approximately 2.2 million shares of common stock in March 2001, which resulted in net proceeds to us of approximately $47.2 million. These proceeds were used to pay down our borrowings outstanding under our line of credit. We then use borrowings from the line of credit to continue to fund our lease fleet and branch expansion and for working capital.

     Our principal source of liquidity has been our credit facility, which currently consists of a revolving line of credit and a term loan. The interest rate under our credit facility is determined quarterly, based on our ratio of funded debt to earnings before interest, taxes, depreciation and amortization (EBITDA). As of August 3, 2001, we had $129.7 million of outstanding borrowings under our $160.0 million revolving line of credit, and $30.3 million of additional borrowings were available under the credit facility.

     We have entered into Interest Rate Swap Agreements under which we have effectively fixed, for a three year period, the interest rate payable on an aggregate of $85 million of borrowings under our revolving line of credit so that the rate is based upon a spread from fixed rates, rather than a spread from the Eurodollar rate. Under these agreements, we have effectively fixed, for a three-year period expiring in February 2004, the interest rate payable on $25 million, $30 million and $30 million of borrowings under our revolving line of credit so that the rate is based upon a spread from 5.33%, 5.35% and 5.46%, respectively, rather than a spread from the Eurodollar rate. These swap agreements are covered by SFAS No. 133 and accordingly resulted in a charge to comprehensive income of $516,000, net of applicable income tax benefit of $330,000. See Note G to the Notes to Condensed Consolidated Financial Statements included at Part I, Item 1 of this Report.

     We believe that our working capital, together with our cash flow from operations and borrowings available under our credit facility will be sufficient to fund our operations and planned growth for at least 12 months.

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SEASONALITY

     Demand from some of our customers is somewhat seasonal. Demand for leases of our portable storage units by large retailers is stronger from September through December because these retailers need to store more inventory for the holiday season. Our retail customers usually return these leased units to us early in the following year. This has caused lower utilization rates for our lease fleet and a marginal decrease in cash flow during the first quarter of the past several years.

EFFECTS OF INFLATION

     Our results of operations for the periods discussed in this Report have not been significantly affected by inflation.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We seek to reduce earnings and cash flow volatility associated with changes in interest rates by entering into financial arrangements intended to provide a hedge against a portion of the risks associated with such volatility. We continue to have exposure to such risks to the extent they are not hedged.

     Interest rate swap agreements are the only instruments we use to manage interest rate fluctuations affecting our variable rate debt. At June 30, 2001, we had three outstanding interest rate swap agreements under which we pay a fixed rate and receive a variable interest rate on $85.0 million of debt. During the six months ended June 30, 2001, in accordance with SFAS No. 133 we recorded a $516,000 charge to comprehensive income, net of applicable income tax benefit of $330,000, related to the fair value of our interest rate swap agreements.

FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS, AND “SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

     Statements in this Report which include such words as “believe”, “expect”, “intends” or “anticipates”, such as the statement regarding our ability to meet our obligations and capital needs during the next 12 months, are forward-looking statements. The occurrence of one or more unanticipated events, however, including a decrease in cash flow generated from operations, a material increase in the borrowing rates under our Credit Agreement (which rates are based on the prime rate or the Eurodollar rates in effect from time to time), a material increase or decrease in prevailing market prices for used containers, or a change in general economic conditions resulting in decreased demand for our products, could cause actual results to differ materially from anticipated results and have a material adverse effect on our ability to meet our obligations and capital needs, and cause future operating results and other events not to occur as presently anticipated. Our annual report, Form 10-K, filed with the U.S. Securities and Exchange Commission, includes a section entitled “Factors That May Affect Future Operating Results”, which describes certain factors that may affect our future operating results. That section is hereby incorporated by reference in this Report. Those factors should be considered carefully in evaluating an investment in our common stock. If you do not have a copy of the Form 10-K, you may obtain one by requesting it from the Company’s Investor Relations Department at (480) 894-6311 or by mail to Mobile Mini, Inc., 7420 S. Kyrene Rd., Suite 101, Tempe, Arizona 85283. Our filings with the SEC, including the Form 10-K, may be accessed at the SEC’s World Wide Web site at http://www.sec.gov.

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PART II. OTHER INFORMATION

ITEM 4. SUBMISSION TO A VOTE OF SECURITY HOLDERS

     Our annual meeting of stockholders was held on June 20, 2001 in Phoenix, Arizona. On the record date for the annual meeting, 13,918,152 shares of common stock, were outstanding and eligible to vote. A quorum was present at the annual meeting. The table below briefly describes the proposals and results from the annual meeting of stockholders.

		Number of Shares Voted:
		For		Withheld
Election of Directors, each to serve a three year term:
	Lawrence Trachtenberg		10,930,576		1,511,904
	Ronald J. Marusiak		12,347,238		95,242

							Broker
	For		Against		Abstain		Non-Vote
Approve amendments to the Company’s 1999 Stock Option Plan to increase the number of shares of common stock authorized for issuance under the plan from 500,000 shares to 1,200,000 shares and to provide for the automatic annual grant to each non-employee director of options to purchase 7,500 shares of common stock beginning on August 1, 2002:		9,162,503		1,434,525		17,110		1,828,342
Ratification of appointment of Arthur Andersen LLP as the Independent Auditors for the fiscal year 2001:		12,416,681		15,563		10,236	None

     In addition to the election of two directors at the annual meeting, the terms of four directors continued after the meeting. The continuing directors are Steven G. Bunger, George E. Berkner, Stephen A McConnell and Carolyn A. Clawson.

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:None

Number	Description
10	Amended and Restated 1999 Stock Option Plan of the Registrant (as amended through June 20, 2001). Incorporated by reference to the Registrant’s Definitive Proxy Statement filed with the Commission on April 30, 2001 under cover of Schedule 14A.

(b) Reports on Form 8-K:none

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SIGNATURES

     Pursuant to the requirements 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.
(Registrant)

Dated: August 14, 2001
 
/s/ Larry Trachtenberg                                 
      Larry Trachtenberg
      Chief Financial Officer &
      Executive Vice President

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