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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
OR
[_] 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 0-26324
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ROCKFORD INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
CALIFORNIA 33-0075112
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
1851 E. FIRST ST.
SANTA ANA, CA 92705
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(714) 547-7166
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
----------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
The number of shares outstanding of the registrant's no par value Common
Stock at November 3, 1998 was 4,108,785
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ROCKFORD INDUSTRIES, INC.
INDEX
PAGE
NUMBER
------
PART I. FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets--September 30, 1998 (unaudited) and
December 31, 1997.................................................... 1
Consolidated Statements of Income--Three months and Nine months ended
September 30, 1998 and 1997 (unaudited).............................. 2
Consolidated Statements of Cash Flows--Nine months ended September 30,
1998 and 1997 (unaudited)............................................ 3
Notes to Consolidated Financial Statements............................ 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS............................................. 5-8
PART II. OTHER INFORMATION.............................................. 9
SIGNATURES.............................. ............................... 10
ROCKFORD INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
(UNAUDITED)
(IN THOUSANDS EXCEPT
NUMBER OF SHARES AND PER
SHARE DATA)
ASSETS
------
Cash and cash equivalents........................... $ 3,188 $ 1,077
Restricted cash and cash equivalents................ 20,254 15,590
Accounts receivable (net of allowance for doubtful
accounts of $123 at September 30, 1998 and $610 at
December 31, 1997)................................. 22,693 14,532
Prepaid expenses.................................... 2,029 1,767
Income taxes receivable............................. 2,606 2,606
Net investment in direct finance leases (net of
lease receivable and residual valuation allowance
of $1,442 at September 30, 1998 and $1,445 at
December 31, 1997)................................. 22,449 24,346
Net fixed assets.................................... 3,480 3,264
Discounted lease rentals assigned to lenders........ 40,135 61,885
-------- --------
$116,834 $125,067
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities:
Lines of credit..................................... $ 12,035 $ 15,862
Accounts payable.................................... 22,599 8,566
Accrued expenses and other liabilities.............. 4,019 1,888
Estimated recourse obligations...................... 5,291 2,123
Deferred income taxes............................... 5,720 5,720
Nonrecourse debt.................................... 43,691 69,017
-------- --------
Total liabilities................................. 93,355 103,176
-------- --------
Commitments and contingencies
Stockholders' equity:
Series A redeemable preferred stock............... 1,575 1,575
Common stock no par value; 10,000,000 shares au-
thorized; 4,108,785 and 4,107,117 shares out-
standing......................................... 14,057 14,045
Retained earnings................................. 7,847 6,271
-------- --------
Total stockholders' equity...................... 23,479 21,891
-------- --------
$116,834 $125,067
======== ========
See notes to financial statements
1
ROCKFORD INDUSTRIES INC.
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------- -------------------
1998 1997 1998 1997
--------- --------- --------- ---------
(IN THOUSANDS EXCEPT SHARES OUTSTANDING
AND PER SHARE DATA)
REVENUES:
Gain on sale of financing transac-
tions.............................. $ 3,707 $ 3,247 $ 9,654 $ 7,803
Finance income...................... 879 920 2,782 3,047
Servicing related revenue........... 486 747 1,437 2,439
Other income........................ 843 488 1,899 1,223
--------- --------- --------- ---------
Total revenues.................... 5,915 5,402 15,772 14,512
--------- --------- --------- ---------
COSTS:
Operating expenses.................. 3,988 2,661 10,793 7,207
Provision for losses................ 461 921 942 1,872
Interest expense.................... 295 423 1,281 1,568
--------- --------- --------- ---------
Total costs....................... 4,744 4,005 13,016 10,647
--------- --------- --------- ---------
Income before income taxes............ 1,171 1,397 2,756 3,865
Income taxes.......................... 457 513 1,077 1,500
--------- --------- --------- ---------
Net income............................ $ 714 $ 884 $ 1,679 $ 2,365
========= ========= ========= =========
Net income applicable to Common stock-
holders.............................. $ 680 $ 849 $ 1,577 $ 2,275
========= ========= ========= =========
Net income per share:
Basic............................... 0.17 0.21 0.38 0.55
Diluted............................. 0.16 0.20 0.38 0.53
Weighted average shares outstanding:
Basic............................... 4,108,785 4,105,517 4,107,951 4,105,517
Diluted............................. 4,501,323 4,458,400 4,471,338 4,422,233
See notes to financial statements
2
ROCKFORD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
1998 1997
--------- ---------
(IN THOUSANDS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...................................... $ 1,681 $ 2,365
Adjustments to reconcile net income to net cash pro-
vided by operating activities:
Depreciation and amortization........................ 1,464 420
Provision for losses................................. 942 (390)
Estimated recourse obligations....................... 3,168 1,868
(Gain) loss on sale of residuals..................... 35 (324)
Gain on sale of financing transactions excluding est.
recourse obligations................................ (12,822) (6,904)
Initial direct cost amortization..................... 602 941
Net amortization of deferred interest................ (3,130) (2,420)
Changes in assets and liabilities:
Restricted cash...................................... (4,240) (7,782)
Accounts receivable and prepaid expenses............. (9,102) 1,164
Income taxes receivable.............................. -- 665
Accounts payable and accrued liabilities............. 14,668 (545)
Income taxes payable................................. 1,075 --
Deferred income taxes................................ -- 1,139
--------- ---------
Net cash used in operating activities.............. (5,659) (9,803)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds sales and assignments of leases and payments
received from lessees................................. 185,545 144,090
Proceeds from sale of residuals........................ 4,767 1,265
Purchase of fixed assets............................... (802) (985)
Initial direct cost capitalization..................... (9,194) (7,450)
Equipment purchased for financing...................... (168,649) (122,213)
--------- ---------
Net cash provided by (used in) investing activi-
ties.............................................. 11,667 14,707
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit........................... 173,322 79,069
Preferred stock dividends.............................. (70) (90)
Payments on line of credit............................. (177,149) (87,123)
--------- ---------
Net cash provided by financing activities.......... (3,897) (8,144)
--------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS..... 2,111 (3,240)
CASH AND CASH EQUIVALENTS, beginning of year............. 1,077 3,985
--------- ---------
CASH AND CASH EQUIVALENTS, end of period................. $ 3,188 $ 745
========= =========
SUPPLEMENTAL DISCLOSURES:
Income taxes paid...................................... $ -- $ --
========= =========
Interest paid.......................................... $ 1,281 $ 607
========= =========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES--
Estimated lessee payments made directly to nonrecourse
lending institutions.................................. $ 41,604 $ 39,405
========= =========
See notes to financial statements
3
ROCKFORD INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--BASIS OF PRESENTATION
The accompanying consolidated financial statements, including the accounts
of Rockford Industries, Inc. and its wholly-owned subsidiaries (the "Company),
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC"). Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
("GAAP") for complete financial statements. The financial statements should be
read in conjunction with the financial statements and notes thereto included
in the Company's Annual Report on Form 10-K filed with the SEC on March 31,
1998.
In the opinion of management, the consolidated financial statements contain
all adjustments, consisting only of normal recurring adjustments, considered
necessary for a fair statement of the balance sheets as of September 30, 1998
and December 31, 1997, the statements of income for the three month and nine
month periods ended September 30, 1998 and 1997, and the statements of cash
flows for the nine month periods ended September 30, 1998 and 1997. The
results of operations for the three month and nine month periods ended
September 30, 1998 are not necessarily indicative of the results of operations
to be expected for the entire fiscal year ending December 31, 1998.
NOTE 2--NEW ACCOUNTING PRONOUNCEMENTs
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS No.
128"). Under SFAS No. 128, the Company is required to disclose basic earnings
per share ("EPS") and diluted EPS for all periods for which income is
presented. SFAS No. 128 requires adoption for fiscal periods ending after
December 15, 1997. The Company has adopted the provisions of SFAS No. 128
beginning with the 1997 year-end consolidated financial statements. EPS for
the three month and nine month periods ending September 30, 1997 have been
restated to conform with SFAS No. 128.
In June 1997, FASB issued SFAS No. 130. Reporting Comprehensive Income,
which is effective for annual and interim periods beginning after December 15,
1997. This statement requires all items to be recognized under accounting
standards as comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. The Company
has adopted SFAS No. 130 beginning March 31, 1998. Comprehensive income for
the three month and nine month periods ending September 30, 1998 was $680,000
and $1,577,,000 respectively. Comprehensive income differs from net income by
$34,000 and $102,000 for the respective three month and nine month periods
ending September 30, 1998. This difference is attributable to preferred stock
dividends.
In June 1997, FASB issued SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, which is effective for annual and interim
periods beginning after December 15, 1997. This statement establishes
standards for the method that public entities report information about
operating segments in annual financial statements and requires enterprises
report selected information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about product and services, geographical areas and major
customers. The adoption of this standard does not have a material effect on
the Company's financial reporting.
In June 1998, FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which is effective for annual periods
beginning after June 15, 1999. This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. The
adoption of this standard is not expected to have a material effect on the
Company's financial condition, results of operations or cash flows.
4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS--THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
FINANCE CONTRACT ORIGINATIONS AND REVENUES. Finance contract originations
increased by approximately $19.1 million or 48% to $59.0 million in the
quarter ended September 30, 1998 from $39.9 million in the quarter ended
September 30, 1997 reflecting the benefits of an expanded sales force. Total
revenues for the quarter ended September 30, 1998 were $5.9 million as
compared to $5.4 million for the quarter ended September 30, 1997. This
increase is primarily due from increased finance contract originations and
gains derived from securitizations and non recourse sales. During the quarter,
the Company sold approximately $60.7 million of finance contracts for a gain
of $3.7 million compared to $37.0 million of finance contract sales and a gain
of $2.3 million in the same quarter in 1997. The gain of $2.3 million in the
third quarter in 1997 excludes a one time gain of $898,000 attributed to the
amended securitization agreement with SunAmerica dated August 28, 1997. Gain
margins decreased to 6.1% compared to 6.3% for the same period a year ago. The
decline in gain margin is primarily a result of increasing the gain on sale
loss reserve assumption from 1.5% in 1997 to 2.5% in 1998, partially offset by
a lower cost of funds.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses in the third quarter of 1998 were $4.0 million as
compared to $2.7 million in the third quarter of 1997, representing an
increase of $1.3 million or 48%. This increase was primarily due to expenses
related to the Company's expanded sales and marketing group and additional
investment in the infrastructure necessary to service and support an
increasing level of finance contract originations and the increased size of
the securitized portfolio.
PROVISION FOR LOSSES. Provision for losses for the quarter ending September
30, 1998 were $461,000 as compared to $921,000 for the same period a year ago,
representing a decrease of $460,000 or 50%. The Company records provision for
losses on transactions in which the past due receivable is greater than 120
days. Provision for losses on securitized transactions sold subsequent to
January 1, 1997 are netted against finance gains per SFAS No. 125. The Company
believes its estimates of reserves at September 30, 1998 are adequate based
upon historical data and industry standards.
INTEREST EXPENSE. Interest expense decreased to $295,000 for the quarter
ending September 30, 1998 from $423,000 for the quarter ending September 30,
1997. This decrease is primarily due to principal amortization of non recourse
debt, which decreased from $70 million at September 30, 1997 to $40 million at
June 30, 1998.
NET INCOME. Income before taxes was $1,171,000 for the quarter ended
September 30, 1998 as compared to $1,397,000 for the same quarter of the prior
year. The effective income tax rate remained consistent for the comparative
periods shown. Net income was $714,000 for the quarter ended September 30,
1998 as compared to $884,000 for the same quarter of the prior year,
representing a decrease of $170,000 or 19%. Basic net income of $.17 per share
on weighted average shares outstanding of 4,109,000 was earned during the
third quarter of 1998, as compared to basic net income of $.21 per share on
weighted average shares outstanding of 4,106,000 for the third quarter of
1997. Diluted net income of $.16 per share on weighted average shares
outstanding of 4,501,000 was earned for the third quarter of 1998, as compared
to diluted net income of $.20 per share on weighted average shares outstanding
of 4,458,000 for the third quarter of 1997.
RESULTS OF OPERATIONS--NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
FINANCE CONTRACT ORIGINATIONS AND REVENUES. Finance contract originations
increased by approximately $45.6 million or 37% to $167.8 million for the nine
months ended September 30, 1998 from $122.2 million for the nine months ended
September 30, 1997, reflecting the benefits of an expanded sales force. Total
revenues for the nine months ended September 30, 1998 were $15.8 million as
compared to $14.6 million for the nine months ended September 30, 1997. This
increase is primarily due from increased finance contract originations and
gains
5
derived from securitizations and non recourse sales. During the nine month
period, the Company sold approximately $159.7 million of finance contracts for
a gain of $9.7 million compared to $113.9 million of finance contract sales
and a gain of $6.9 million for the same period in 1997. 1997 gain excludes a
one time gain of $898,000 attributed to the amended securitization agreement
with SunAmerica dated August 28, 1997. Gain margins decreased to 6.0% compared
to 6.1% for the same period a year ago due to increasing gain on sale loss
reserve assumption from 1.5% in 1997 to 2.5% in 1998, partially offset by a
lower cost of funds.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the nine months ended September 30, 1998 were
$10.8 million as compared to $7.2 million for the same period a year ago,
representing a increase of $3.6 million or 50%. This increase was primarily
due to expenses related to the Company's expanded sales and marketing group
and additional investment in the infrastructure necessary to service and
support an increasing level of finance contract originations and the increased
size of the securitized portfolio.
PROVISION FOR LOSSES. Provision for losses for the nine months ending
September 30, 1998 were $942,000 as compared to $1,872,000 for the same period
a year ago, representing a decrease of $930,000 or 50%. The Company records
provision for losses on transactions in which the past due receivable is
greater than 120 days. Provision for losses on securitized transactions sold
subsequent to January 1, 1997 are netted against finance gains per SFAS No.
125. The Company believes it estimates of reserves at September 30, 1998 are
adequate based upon historical data and industry standards.
INTEREST EXPENSE. Interest expense decreased to $1,281,000 for the nine
months ending September 30, 1998 from $1,568,000 for the nine months ending
September 30, 1997. This decrease is primarily due to principal amortization
of non recourse debt.
NET INCOME. Income before taxes was $2,756,000 for the nine months ended
September 30, 1998 as compared to $3,865,000 for the same period of the prior
year. The effective income tax rate remained consistent for the comparative
periods shown. Net income was $1,679,000 for the nine months ended September
30, 1998 as compared to $2,365,000 for the same period of the prior year,
representing a decrease of $686,000 or 29%. Basic net income of $.38 per share
on weighted average shares outstanding of 4,108,000 was earned during the nine
months ending September 30, 1998, as compared to basic net income of $.55 per
share on weighted average shares outstanding of 4,106,000 for the nine months
ending September 30, 1997. Diluted net income of $.38 per share on weighted
average shares outstanding of 4,471,000 was earned for the nine months ending
September 30, 1998, as compared to diluted net income of $.53 per share on
weighted average shares outstanding of 4,422,000 for the same period of 1997.
LIQUIDITY AND CAPITAL RESOURCES
Because equipment financing is a capital intensive business, the Company
requires continual access to substantial short and long-term credit to
generate its new equipment financings and sales. The principal sources of
funding for the Company's equipment finance contracts are (i) funding obtained
from sales of asset-backed securities (backed by pools of the Company's
equipment finance contracts) to SunAmerica Life Insurance Company
("SunAmerica") and First Union N.A., pursuant to the terms of each
securitization arrangement, (ii) nonrecourse borrowings from institutional
lenders, and (iii) standard recourse borrowings under its revolving line of
credit ("Revolver") which was increased from $17 million to $20 million in
April 1998, used by the Company from time to time to temporarily fund a
portion of its equipment finance contracts, pending more permanent funding
arrangements for such contracts, and (iv) $7 million working capital line of
credit. The Company has $142 million available in its securitization
facilities for future sales of asset backed securities, as well as $15.0
million available credit related to the Revolver and working capital line of
credit as of September 30, 1998.
CASHFLOWS. The Company's cash and cash equivalents at September 30, 1998 was
$3.1 million compared to $1.1 million at September 30, 1997. During the nine
months ended September 30, 1998, the Company's cash
6
position increased by $2.1 million, reflecting the use of cash in operations
and financing activities of $5.7 million and $3.9 million, respectively and
the cash provided by investing activities of $11.7 million. The most
significant aspects of the change during this period was from cash invested in
equipment for financing of $168.6 million, increases in receivables and
prepaids of $9.1 million, increases in accounts payable and accrued
liabilities of $14.7 million and proceeds from sales and assignments of leases
and payments received from lessees of $185.5 million. This was largely due to
the higher level of the Company's finance contract originations. In
comparison, the Company's cash position decreased by $3.2 million during the
nine months ended September 30, 1997, reflecting the use of cash in operations
and financing activities of $9.8 million and $8.1 million, respectively, and
the cash provided by financing activities of $14.7 million. The change in cash
was primarily due to cash used to purchase equipment for financing of $122.2
million, increase in restricted cash of $7.8 million and proceeds from sales
and assignments of leases and payments from lessees of $144.0 million.
The Company believes that existing cash balances, cash flows from
activities, proceeds from securitization arrangements, nonrecourse
assignments, and bank credit lines will be sufficient to meet its financing
needs for the next twelve months.
IMPACT OF INFLATION
The Company funds a majority of its equipment finance contracts with fixed
rate loans in order to maintain a spread between the interest rates charged to
the Company and those implicit in the financing the Company provides. Due to
this timely matching of finance contract yields with funding rates, the
Company generally has mitigated the effects of rising interest rates during
inflationary periods. General inflation in the economy has driven upward the
operating expenses of many businesses, and accordingly, the Company has
increased salaries and borne higher prices for most other goods and services.
The Company continuously seeks methods of reducing costs and streamlining
operations while maximizing efficiencies and internal operating controls
through development of cost reducing funding mechanisms, such as the
securitization program, and through systems automation and enhancement. While
the Company is subject to inflation as described above, the Company believes
that inflation does not have a material effect on its operating results.
YEAR 2000 COMPLIANCE
The Company recognizes the uncertainty regarding the effect of the year 2000
problem as it relates to computer systems properly identifying and
distinguishing the year 2000 from the year 1900. The Company's major
operating, financial and telecommunication systems are licensed or purchased
from well known vendors in the information technology market. The Company has
determined, through discussions and documentation provided by its vendors,
that the majority of its software and hardware systems are year 2000
compliant. In specific cases the Company is working with its vendors to
install system upgrades which would be year 2000 compliant. The Company plans
to be fully compliant by December 31, 1999.
The cost of becoming year 2000 compliant has been minimal and future cost of
compliance are not expected to have a material adverse effect on the future
results of operations for the Company.
The Company is aware a system failure may adversely effect revenues in the
short term, however the Company does not believe this will have a material
effect on the Company's results of operations, liquidity, and financial
position. The Company is developing a contingency plan which will help insure
a continuity of operations which should be completed in the first quarter of
1999.
Although the Company believes it will be year 2000 compliant by December 31,
1999, the company can not measure the impact of the year 2000 problem as it
relates to vendors, suppliers, and other parties with which the Company
conducts business, some of which may have an adverse impact on future results
of operations.
7
SAFE HARBOR STATEMENT
Statements which are not historical facts, including statements about the
Company's confidence and strategies and its expectations regarding reductions
in cost of funds, plans to increase market share, plans to enter new markets,
and the impact of SFAS No. 125 are forward looking statements that involve
risks and uncertainties. These include but are not limited to (i) reducing
borrowing costs by expanding the Company's asset-backed securitization funding
program; (ii) increasing origination of equipment finance contracts by
maintaining and expanding strategic relationships with vendors of medical and
medical-related equipment; (iii) increasing business with high volume vendors;
(iv) increasing its financing of non-medical equipment; (v) expanding into new
market niches and the international market; (vi) reducing indirect costs
associated with the Company's financings; (vii) minimizing delinquencies
relating to contracts retained and serviced by the Company, as well as
contracts held by the Company's lenders; (viii) the Company's ability to
realize the residual equipment value reflected on its balance sheet; (ix)
maintaining a diverse base of customers to which the Company provides
equipment financing; (x) successfully enlarging the Company's sales force and
the Company's geographic penetration of the medical equipment market; and (xi)
the size and growth rate of the medical equipment leasing industry. The
historical results achieved are not necessarily indicative of future prospects
of the Company.
The forward-looking statements included herein are based upon current
expectations that involve a number of risks and uncertainties. These forward-
looking statements are based upon assumptions that the Company will continue
to finance equipment on a regular and predictable basis, that competitive
conditions within the equipment financing market will not change materially or
adversely, that the equipment financing market will continue to experience
steady growth, that demand for the Company's financing will remain strong,
that the Company will retain existing sales representatives and key management
personnel, that the Company's will accurately anticipate market demand that
planned financing arrangements will be completed satisfactorily and that there
will be no material adverse change in the Company's operations or business.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although
the Company believes that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate and,
therefore, there can be no assurance that the results contemplated in the
forward looking statements will be realized. In addition, as disclosed above,
the business and operations of the Company are subject to substantial risks
which increase the uncertainty inherent in such forward-looking statements.
Any of the other factors disclosed above could cause the Company's net income
or growth in net income to differ materially from prior results.
8
PART II--OTHER INFORMATION
ITEM 1--LEGAL PROCEEDINGS--NOT APPLICABLE
ITEM 2--CHANGES IN SECURITIES--NOT APPLICABLE
ITEM 3--DEFAULTS UPON SENIOR SECURITIES--NOT APPLICABLE
ITEM 4--SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5--OTHER INFORMATION
ITEM 6--EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.36 Employment Agreement, dated as of January 1, 1998 between the
Registrant and Gerry Ricco.
10.37 Employment Agreement, dated as of January 1, 1998 between the
Registrant and Brian Seigel.
10.38 Employment Agreement, dated as of January 1, 1998 between the
Registrant and Larry Hartmann.
10.39 Amended, Restated and Consolidated Pooling and Servicing Agreement
dated August 28, 1997, by and among Rockford Limited I, the
registrant, Texas Commerce Bank National Association and Sun
America Life Insurance Company.
10.40 Amended, Restated and Consolidated Equipment and Lease Purchase
Agreement dated August 28, 1997, by and between Rockford Limited I,
and the registrant.
10.41 Purchase Agreement dated August 28, 1997, by and among Rockford
Limited I, the registrant, Texas Commerce Bank National Association
and Sun America Life Insurance Company.
10.42 First Amendment to Amended, Restated and Consolidated Pooling and
Servicing Agreement dated April 8, 1998, by and among Rockford
Limited I, the registrant, Chase Bank of Texas, N.A., f/k/a Texas
Commerce Bank National Association and Sun America Life Insurance
Company.
10.43 First Amendment to Amended, Restated and Consolidated Equipment and
Lease Purchase Agreement dated April 8, 1998 by and between
Rockford Limited I, and the registrant.
10.44 First Amendment to Purchase Agreement dated April 8, 1998, by and
among Rockford Limited I, the registrant, Chase Bank of Texas,
N.A., f/k/a Texas Commerce Bank National Association and Sun
America Life Insurance Company.
27 Financial Data Schedule
(b) Reports on Form 8-K;
No reports were filed on form 8-K during the quarter for which this
report is filed.
9
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.
Rockford Industries, Inc.
(Registrant)
Date: November 13, 1998 /s/ Gerry J. Ricco
________________________________________
Gerry J. Ricco
President, Chief Executive Officer and
Director
(Principal Executive Officer)
Date: November 13, 1998 /s/ Kevin McDonnell
________________________________________
Kevin McDonnell
Executive Vice President and Chief
Financial Officer
(Principal Financial and
Accounting Officer)
10