Table of Contents



U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


Form 10-Q

               ( Mark One )

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

For the quarterly period ended June 30, 2004

      

o 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


(MOBILE MINI, INC.)

(Exact name of registrant as specific in its charter)
     
Delaware   86-0748362
(State or other jurisdiction of   (IRS Employer Identification No.)
incorporation or organization)    

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 [X] No [   ]

     Indicate by check whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act). Yes [X] No [   ]

     At July 30, 2004, there were outstanding 14,578,641 shares of the issuer’s common stock.



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MOBILE MINI, INC.
INDEX TO FORM 10-Q FILING
FOR THE QUARTER ENDED JUNE 30, 2004

TABLE OF CONTENTS

                 
            PAGE
            NUMBER
               
               
Item 1.       3  
            3  
       
Condensed Unaudited Consolidated:
       
            4  
            5  
            6  
            7  
Item 2.       13  
Item 3.       23  
Item 4.       24  
               
               
Item 4.       25  
Item 6.       25  
            26  
  EX-10.3.7
  EX-10.20
  EX-31.1
  EX-31.2
  EX-32.1

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PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

MOBILE MINI, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
                 
    December 31,   June 30,
    2003
  2004
            (unaudited)
ASSETS
               
Cash
  $ 97,323     $ 289,351  
Receivables, net of allowance for doubtful accounts of $2,102,000 and $2,608,000 at December 31, 2003 and June 30, 2004, respectively
    15,907,342       19,198,152  
Inventories
    15,058,918       17,699,581  
Lease fleet, net
    382,753,903       408,110,624  
Property, plant and equipment, net
    34,506,768       34,800,540  
Deposits and prepaid expenses
    7,165,735       6,933,425  
Other assets and intangibles, net
    7,082,890       6,644,015  
Goodwill
    52,506,979       52,506,364  
 
   
 
     
 
 
Total assets
  $ 515,079,858     $ 546,182,052  
 
   
 
     
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Liabilities:
               
Accounts payable
  $ 7,178,725     $ 8,876,929  
Accrued liabilities
    30,640,865       26,122,990  
Line of credit
    89,000,000       107,706,751  
Notes payable
    1,610,158       894,672  
Senior Notes
    150,000,000       150,000,000  
Deferred income taxes
    47,357,603       51,535,053  
 
   
 
     
 
 
Total liabilities
    325,787,351       345,136,395  
 
   
 
     
 
 
Commitments and contingencies
               
Stockholders’ equity:
               
Common stock; $.01 par value, 95,000,000 shares authorized, 14,352,703 and 14,578,241 issued and outstanding at December 31, 2003 and June 30, 2004, respectively
    143,528       145,782  
Additional paid-in capital
    116,956,025       120,741,802  
Retained earnings
    72,295,170       80,032,378  
Accumulated other comprehensive income (loss)
    (102,216 )     125,695  
 
   
 
     
 
 
Total stockholders’ equity
    189,292,507       201,045,657  
 
   
 
     
 
 
Total liabilities and stockholders’ equity
  $ 515,079,858     $ 546,182,052  
 
   
 
     
 
 

Note: The consolidated balance sheet at December 31, 2003, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. See accompanying notes to the condensed consolidated financial statements.

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MOBILE MINI, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
                 
    Three Months Ended June 30,
    2003
  2004
Revenues:
               
Leasing
  $ 30,941,606     $ 35,744,191  
Sales
    3,990,030       5,274,555  
Other
    119,862       94,497  
 
   
 
     
 
 
Total revenues
    35,051,498       41,113,243  
 
   
 
     
 
 
Costs and expenses:
               
Cost of sales
    2,493,776       3,439,854  
Leasing, selling and general expenses
    19,541,980       22,025,181  
Florida litigation expense
    154,601        
Depreciation and amortization
    2,673,060       3,041,786  
 
   
 
     
 
 
Total costs and expenses
    24,863,417       28,506,821  
 
   
 
     
 
 
Income from operations
    10,188,081       12,606,422  
Other income (expense):
               
Interest income
    462        
Interest expense
    (3,239,795 )     (4,970,041 )
Debt restructuring expense
    (10,440,346 )      
 
   
 
     
 
 
Income (loss) before provision for (benefit from) income taxes
    (3,491,598 )     7,636,381  
Provision for (benefit from) income taxes
    (1,361,723 )     3,054,552  
 
   
 
     
 
 
Net income (loss)
  $ (2,129,875 )   $ 4,581,829  
 
   
 
     
 
 
Earnings (loss) per share:
               
Basic
  $ (0.15 )   $ 0.32  
 
   
 
     
 
 
Diluted
  $ (0.15 )   $ 0.31  
 
   
 
     
 
 
Weighted average number of common and common share equivalents outstanding:
               
Basic
    14,297,310       14,377,075  
 
   
 
     
 
 
Diluted
    14,297,310       14,608,953  
 
   
 
     
 
 

See accompanying notes.

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MOBILE MINI, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
                 
    Six Months Ended June 30,
    2003
  2004
Revenues:
               
Leasing
  $ 60,645,850     $ 67,891,347  
Sales
    7,850,005       9,472,798  
Other
    297,632       272,510  
 
   
 
     
 
 
Total revenues
    68,793,487       77,636,655  
 
   
 
     
 
 
Costs and expenses:
               
Cost of sales
    4,947,770       6,154,654  
Leasing, selling and general expenses
    38,649,484       42,603,969  
Florida litigation expense
    219,041        
Depreciation and amortization
    5,289,947       6,021,173  
 
   
 
     
 
 
Total costs and expenses
    49,106,242       54,779,796  
 
   
 
     
 
 
Income from operations
    19,687,245       22,856,859  
Other income (expense):
               
Interest income
    1,247       7  
Interest expense
    (6,455,928 )     (9,961,520 )
Debt restructuring expense
    (10,440,346 )      
 
   
 
     
 
 
Income before provision for income taxes
    2,792,218       12,895,346  
Provision for income taxes
    1,088,966       5,158,138  
 
   
 
     
 
 
Net income
  $ 1,703,252     $ 7,737,208  
 
   
 
     
 
 
Earnings per share:
               
Basic
  $ 0.12     $ 0.54  
 
   
 
     
 
 
Diluted
  $ 0.12     $ 0.53  
 
   
 
     
 
 
Weighted average number of common and common share equivalents outstanding:
               
Basic
    14,295,785       14,364,945  
 
   
 
     
 
 
Diluted
    14,412,245       14,564,223  
 
   
 
     
 
 

See accompanying notes.

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MOBILE MINI, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
                 
    Six Months Ended June 30,
    2003
  2004
Cash Flows From Operating Activities:
               
Net income
  $ 1,703,252     $ 7,737,208  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Debt restructuring expense
    10,440,346        
Provision for doubtful accounts
    1,303,129       1,245,216  
Amortization of deferred financing costs
    210,934       378,219  
Depreciation and amortization
    5,289,947       6,021,173  
Loss (gain) on disposal of property, plant and equipment
    24,808       (2,689 )
Gain on sale of short-term investment
    (59,185 )      
Deferred income taxes
    1,140,713       5,053,196  
Changes in operating assets and liabilities:
               
Receivables
    (188,182 )     (4,536,026 )
Inventories
    (2,430,977 )     (2,640,663 )
Deposits and prepaid expenses
    (1,147,448 )     232,310  
Other assets and intangibles
    (44,234 )     18,484  
Accounts payable
    (3,051,238 )     1,698,205  
Accrued liabilities
    43,471       (4,037,924 )
 
   
 
     
 
 
Net cash provided by operating activities
    13,235,336       11,166,709  
 
   
 
     
 
 
Cash Flows From Investing Activities:
               
Net purchases of lease fleet
    (25,093,884 )     (29,105,645 )
Net purchases of property, plant and equipment
    (2,083,934 )     (2,448,542 )
Net proceeds on sale of short-term investment
    122,912        
Change in other assets
    294,240       615  
 
   
 
     
 
 
Net cash used in investing activities
    (26,760,666 )     (31,553,572 )
 
   
 
     
 
 
Cash Flows From Financing Activities:
               
Net borrowings (repayments) under line of credit
    (130,866,078 )     18,706,751  
Proceeds from issuance of Senior Notes
    150,000,000        
Deferred financing costs
    (6,558,917 )     (13,362 )
Principal payments on notes payable
    (655,504 )     (715,486 )
Principal payments on capital lease obligations
    (17,994 )      
Issuance of common stock
    49,859       2,696,602  
 
   
 
     
 
 
Net cash provided by financing activities
    11,951,366       20,674,505  
 
   
 
     
 
 
Effect of exchange rate changes on cash
    101,220       (95,614 )
 
   
 
     
 
 
Net increase (decrease) in cash
    (1,472,744 )     192,028  
Cash at beginning of period
    1,635,468       97,323  
 
   
 
     
 
 
Cash at end of period
  $ 162,724     $ 289,351  
 
   
 
     
 
 
Supplemental Disclosure of Cash Flow Information:
               
Unrealized gain (loss) on interest rate swap agreement, net of tax
  $ (444,307 )   $ 323,525  
 
   
 
     
 
 
Realized loss on termination of derivatives, net of tax
  $ 3,679,186     $  
 
   
 
     
 
 

See accompanying notes.

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

NOTE A –

Basis of Presentation

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 and Article 10 of Regulation S-X. 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 normal and recurring accruals) necessary to present fairly the financial position, results of operations, and cash flows for all periods presented have been made. Certain previous period amounts in the accompanying condensed consolidated financial statements have been reclassified to conform to current presentation.

The results of operations for the six-month period ended June 30, 2004, are not necessarily indicative of the operating results that may be expected for the entire year ending December 31, 2004. Mobile Mini experiences some seasonality each year which has caused lower utilization rates for our lease fleet and a marginal decrease in cash flow during each of the first two quarters. These condensed consolidated financial statements should be read in conjunction with our December 31, 2003 consolidated financial statements and accompanying notes thereto which are included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 15, 2004.

Stock Based Compensation

We grant stock options for a fixed number of shares to employees and directors with an exercise price equal to the fair market value of the shares at the date of grant. We account for such stock option grants using the intrinsic-value method of accounting in accordance with Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, and the disclosure requirements of Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation and SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure . Under APB No. 25, we generally recognize no compensation expense with respect to such awards. Also, we do not record any compensation expense in connection with our Employee Stock Option Plan. If we had accounted for stock options consistent with SFAS No. 123, these amounts would be amortized on a straight-line basis as compensation expense over the average holding period of the options and our net income and earnings per share would have been reported as follows for the three month period and six month period ended June 30:

                                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2003
  2004
  2003
  2004
Net income (loss) as reported
  $ (2,129,875 )   $ 4,581,829     $ 1,703,252     $ 7,737,208  
Compensation expense, net of income tax benefit
    (596,449 )     (595,142 )     (1,190,720 )     (1,228,659 )
 
   
 
     
 
     
 
     
 
 
Pro forma net income (loss)
  $ (2,726,324 )   $ 3,986,687     $ 512,532     $ 6,508,549  
 
   
 
     
 
     
 
     
 
 
Basic EPS:
                               
As reported
  $ (0.15 )   $ 0.32     $ 0.12     $ 0.54  
Pro forma
    (0.19 )     0.28       0.04       0.45  
Diluted EPS:
                               
As reported
  $ (0.15 )   $ 0.31     $ 0.12     $ 0.53  
Pro forma
    (0.19 )     0.27       0.04       0.45  

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NOTE B – Recent Accounting Pronouncement. In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. FIN 46, Consolidation of Variable Interest Entities (FIN 46) and subsequently revised this Interpretation in December 2003 (FIN 46R). FIN 46R requires the primary beneficiary of a variable interest entity (VIE) to include the VIE’s assets, liabilities and operating results in its consolidated financial statements. FIN 46R also requires the disclosure of information about the VIE’s assets and liabilities and the nature, purpose and activities of consolidated VIE’s in the primary beneficiary’s financial statements. Additionally, FIN 46R requires disclosure of information about the nature, purpose and activities for unconsolidated VIEs in which a company holds a significant variable interest. The adoption of FIN 46 and FIN 46R did not affect our financial condition or results of operations.

NOTE C — 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 the potential dilution of the exercise or conversion of options and warrants into common stock. The following table shows the computation of earnings per share for the three month period and six month period ended June 30:

                                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2003
  2004
  2003
  2004
BASIC:
                               
Common shares outstanding, beginning of period
    14,294,814       14,353,279       14,292,714       14,352,703  
Effect of weighting shares:
                               
Weighted common shares issued during the period
ended June 30
    2,496       23,796       3,071       12,242  
 
   
 
     
 
     
 
     
 
 
Weighted average number of common shares outstanding
    14,297,310       14,377,075       14,295,785       14,364,945  
 
   
 
     
 
     
 
     
 
 
Net income (loss) available to common shareholders
  $ (2,129,875 )   $ 4,581,829     $ 1,703,252     $ 7,737,208  
 
   
 
     
 
     
 
     
 
 
Earnings (loss) per share
  $ (0.15 )   $ 0.32     $ 0.12     $ 0.54  
 
   
 
     
 
     
 
     
 
 
DILUTED:
                               
Common shares outstanding, beginning of period
    14,294,814       14,353,279       14,292,714       14,352,703  
Effect of weighting shares:
                               
Weighted common shares issued during the period
ended June 30
    2,496       23,796       3,071       12,242  
Employee stock options and warrants assumed converted during the period ended June 30
          231,878       116,460       199,278  
 
   
 
     
 
     
 
     
 
 
Weighted average number of common shares outstanding
    14,297,310       14,608,953       14,412,245       14,564,223  
 
   
 
     
 
     
 
     
 
 
Net income (loss) available to common shareholders
  $ (2,129,875 )   $ 4,581,829     $ 1,703,252     $ 7,737,208  
 
   
 
     
 
     
 
     
 
 
Earnings (loss) per share
  $ (0.15 )   $ 0.31     $ 0.12     $ 0.53  
 
   
 
     
 
     
 
     
 
 

For the three months ended June 30, 2004, 582,550 shares subject to stock options are not included in the computation of diluted earnings per share (EPS) because of the anti-dilutive effect of such shares on EPS.

For the six months ended June 30, 2003 and 2004, 1,028,100 and 934,070, respectively, of shares subject to stock options are not included in the computation of diluted earnings per share because of the anti-dilutive effect of such shares on EPS.

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NOTE D — 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, 2003
  June 30, 2004
Raw material and supplies
  $ 12,634,192     $ 13,217,982  
Work-in-process
    758,603       967,105  
Finished portable storage units
    1,666,123       3,514,494  
 
   
 
     
 
 
 
  $ 15,058,918     $ 17,699,581  
 
   
 
     
 
 

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

                 
    December 31, 2003
  June 30, 2004
Land
  $ 772,014     $ 772,014  
Vehicles and equipment
    37,842,400       39,245,464  
Buildings and improvements
    9,697,128       9,836,851  
Office fixtures and equipment
    7,532,319       8,432,287  
 
   
 
     
 
 
 
    55,843,861       58,286,616  
Less accumulated depreciation
    (21,337,093 )     (23,486,076 )
 
   
 
     
 
 
 
  $ 34,506,768     $ 34,800,540  
 
   
 
     
 
 

NOTE F — Mobile Mini has a lease fleet primarily consisting of refurbished, modified and manufactured units that are leased to customers under short-term operating lease agreements with varying terms. Depreciation is provided using the straight-line method over our units’ estimated useful life after the date that we put the unit in service. Our steel units are depreciated over 25 years with an estimated residual value of 62.5%. Wood office units are depreciated over 20 years with an estimated residual value of 50%. Van trailers, which are a small part of our fleet, are depreciated over 7 years to a 20% residual value. Van trailers are only added to the fleet in connection with acquisitions of portable storage businesses, and then only when van trailers are a part of the business acquired.

In 2004, our depreciation policy on our steel units was modified to increase the useful life to 25 years (from 20 years), and to decrease the residual value to 62.5% (from 70%) which effectively resulted in continued depreciation on these units for five additional years at the same annual rate (1.5%). This change was made to reflect that some of our steel units have now been in our lease fleet longer than 20 years and these units continue to be effective income producing assets that do not show signs of reaching the end of their useful life. The depreciation policy is supported by our historical lease fleet data that shows we have been able to retain comparable rental rates and sales prices irrespective of the age of the unit in our container lease fleet.

In the opinion of management, estimated residual values do not cause carrying values to exceed net realizable value. We continue to evaluate these depreciation policies as more information becomes available from other comparable sources and our own historical experience.

Normal repairs and maintenance to the portable storage and mobile office units are expensed when incurred. As of June 30, 2004, the lease fleet totaled $434.4 as compared to $405.6 million at December 31, 2003, before accumulated depreciation of $26.3 million and $22.8 million, respectively.

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The table below summarizes those transactions that increased the net value of our lease fleet from $382.8 million at December 31, 2003 to $408.1 million at June 30, 2004:

                 
    Dollars
  Units
Lease fleet at December 31, 2003, net
  $ 382,753,903       89,492  
Purchases:
               
Container purchases
    773,525       540  
Manufactured units:
               
Steel storage containers, combination office units and steel security offices
    17,373,581       2,086  
Wood mobile offices
    7,712,912       370  
Refurbishment and customization:
               
Refurbishment or customization of 540 units purchased or acquired in the current year
    1,160,482          
Refurbishment or customization of 1940 units purchased in a prior year
    3,543,452       870 (1)
Refurbishment or customization of 545 units obtained through acquisition in a prior year
    785,818       43 (2)
Other
    (273,638 )     (66 )
Cost of sales from lease fleet
    (2,258,115 )     (877 )
Depreciation
    (3,461,296 )        
 
   
 
     
 
 
Lease fleet at June 30, 2004, net
  $ 408,110,624       92,458  
 
   
 
     
 
 

(1)   These units represent the net additional units that were the result of splitting steel containers into one or more shorter units, such as splitting a 40-foot container into two 20-foot units, or one 25-foot unit and one 15-foot unit.
 
(2)   Includes units moved from finished goods to lease fleet.

The table below outlines the composition of our lease fleet at June 30, 2004:

                 
    Net Book   Number of
    Value
  Units
Steel storage containers
  $ 265,881,432       77,254  
Offices
    164,234,809       12,784  
Van trailers
    3,988,251       2,420  
Other, primarily flatbed type chassis
    296,109          
Accumulated depreciation
    (26,289,977 )        
 
   
 
     
 
 
 
  $ 408,110,624       92,458  
 
   
 
     
 
 

NOTE G – The Financial Accounting Standards Board (FASB) issued SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, which establishes the standards for companies to report information about operating segments. Currently, our branch operation is the only segment that concentrates on our core business of leasing. Each branch has similar economic characteristics covering all products leased or sold, including the same customer base, sales personnel, advertising, yard facilities, general and administrative costs and the branch management. Management’s allocation of resources, performance evaluations and operating decisions are not dependent on the mix of a branch’s products. We do not attempt to allocate shared revenue nor general, selling and leasing expenses to the different configurations of portable storage and office products for lease and sale. The branch operations include the leasing and sales of portable storage units, portable offices and combination units configured for both storage and office space. We lease to businesses and consumers in the general geographic area relative to each branch. The operation includes Mobile Mini’s manufacturing facilities, which are responsible for the purchase, manufacturing and refurbishment of products for leasing, sales or equipment additions to our delivery system, and residual sales from our dealer program that was discontinued in 1998.

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In managing our business, we focus on our internal growth rate in leasing revenue, which we define as growth in lease revenues on a year over year basis at our branch locations in operation for at least one year, without inclusion of same market acquisitions. In addition, we focus on earnings per share and on adjusted EBITDA. We calculate this number by first calculating EBITDA, which is a measure of our earnings before interest expense, debt restructuring costs, income tax, depreciation and amortization. This measure eliminates the effect of financing transactions that we enter into on an irregular basis based on capital needs and market opportunities. It provides us with a means to measure internally generated available cash from which we can fund our interest expense and our lease fleet growth. In comparing EBITDA from year to year, we typically ignore the effect of what we consider non-recurring events not related to our core business operations to arrive at adjusted EBITDA. The only such event during the last several years has been the effect of the Florida litigation, which was concluded in 2003.

Discrete financial data on each of our products is not available and it would be impractical to collect and maintain financial data in such a manner; therefore, based on the provisions of SFAS 131, reportable segment information is the same as contained in our condensed consolidated financial statements.

NOTE H – Comprehensive income, net of tax, consisted of the following at:

                                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2003
  2004
  2003
  2004
Net income (loss)
  $ (2,129,875 )   $ 4,581,829     $ 1,703,252     $ 7,737,208  
Market value change in derivatives
    (383,075 )     600,642       (444,307 )     323,525  
Realized loss on termination of derivatives
    3,786,044             3,679,186        
Unrealized gain on short-term investment
                (34,835 )      
Foreign currency translation gain (loss)
    45,686       (80,467 )     101,220       (95,614 )
 
   
 
     
 
     
 
     
 
 
Total comprehensive income
  $ 1,318,780     $ 5,102,004     $ 5,004,516     $ 7,965,119  
 
   
 
     
 
     
 
     
 
 

The components of accumulated other comprehensive income (loss), net of tax, were as follows:

                 
    December 31, 2003
  June 30, 2004
Market value change in derivatives
  $ (292,771 )   $ 30,754  
Foreign currency translation
    190,555       94,941  
 
   
 
     
 
 
Total accumulated other comprehensive income (loss)
  $ (102,216 )   $ 125,695  
 
   
 
     
 
 

NOTE I – On June 26, 2003, we completed the sale of $150.0 million in aggregate principal amount of 9.5% Senior Notes due 2013 through a private placement under Rule 144A of the Securities Act of 1933. The net proceeds from the sale of Senior Notes were used to pay down borrowings under our revolving credit facility and to pay transaction costs and expenses.

In conjunction with the $150.0 million Senior Note offering, we concurrently amended and restated our $250.0 million revolving credit facility. The term of the revolving credit facility was extended to February 2008 and certain covenants were amended to reduce the spread over LIBOR and to permit us to issue the Senior Notes to operate at higher levels of leverage and to reduce required fleet utilization rates. In January 2004, we amended our Loan and Security Agreement to permit us to purchase on the open market securities consisting of our common stock for an aggregate amount up to $10.0 million. In March 2004, the Loan and Security Agreement was amended to permit further expansion of our lease fleet should there be a stronger demand, by changing our minimum required fixed charge coverage ratio from 2.10 to 1.0 to 1.85 to 1.0. In August 2004, our lenders agreed to further amend our Loan and Security Agreement to reduce the interest rate, which is a spread over LIBOR and which varies based upon our ratio of funded debt to earnings before interest expense, taxes, depreciation and amortization and certain excluded expenses.

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Based upon our current ratio, the spread over LIBOR has been reduced, effective August 1, 2004, from 2.25% to 2.00%.

NOTE J – In July 2004, we opened a new branch in Detroit, Michigan through the acquisition of portable container assets of AAA Instant Storage, Inc., a privately owned company operating in the Detroit metropolitan area, for a purchase price of approximately $1.3 million. With this acquisition, we operate 48 branches located in 28 states and one Canadian province.

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

The following discussion of our financial condition and results of operations should be read together with our December 31, 2003 consolidated financial statements and the accompanying notes thereto which are included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 15, 2004. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in those forward-looking statements as a result of certain factors, including, but not limited to, those described under “Cautionary Factors that May Affect Future Results.”

Overview

General

Since 1996, we have followed a strategy focused on leasing rather than selling our portable storage units. Today, we derive most of our revenues from the leasing of portable storage containers and portable offices. In 2003, the average contracted lease term at lease inception was approximately 11 months for portable storage units and approximately 15 months for portable offices. After the expiration of the contracted lease term, units continue on lease on a month-to-month basis. In 2003, the over-all lease term averaged 25 months for portable storage units and 22 months for portable offices. As a result of these relatively long average lease terms, our leasing business tends to provide us with a recurring revenue stream and minimizes fluctuations in revenues. However, there is no assurance that the Company will maintain such lengthy overall lease terms.

In addition to our leasing business, we also sell portable storage containers and occasionally we sell portable office units. Since 1996, when we changed our focus to leasing, our sales revenues, as a percentage of total revenues, has decreased over the years.

Over the last six years, Mobile Mini has grown both through internally generated growth and through acquisitions, which we use to gain presence in new markets. Typically, we enter a new market through the acquisition of the business of a smaller local competitor and then apply our business model, which is usually much more customer and marketing focused than the business we are buying or its competitors in the market. As a result, a new branch location will typically have fairly low operating margins during its early years, but as our marketing efforts help us penetrate the new market and we increase the number of units on rent at the new branch, we take advantage of operating efficiencies to improve operating margins at the branch and typically reach company average levels after several years. When we enter a new market, we incur certain costs in developing an infrastructure. For example, advertising and marketing costs will be incurred and certain minimum staffing levels and certain minimum levels of delivery equipment will be put in place regardless of the new market’s revenue base. Once we have achieved revenues during any period that are sufficient to cover our fixed expenses, we generate high margins on incremental lease revenues. Therefore, each additional unit put on lease in excess of the break even level contributes significantly to profitability. Conversely, additional fixed expenses that we incur require us to achieve additional revenue as compared to the prior period to cover the additional expense. We believe that we incur lower start-up costs and a quicker growth curve using this acquisition model than if we were to establish the new location from the ground up, without the acquisition of assets immediately producing lease revenue in the new market.

Among the external factors we examine to determine the direction of our business is the level of non-residential construction activity, especially in areas of the country where we have a significant presence. Our customers that are engaged in construction activity represented approximately 32% of our units on rent at December 31, 2003, and because of the degree of operating leverage we have, declines in non-residential construction activity can have a significant effect on our operating margins and net income. In 2003 we continued to see weakness in the level of leasing revenues from the non-residential construction sector of our customer base. The lower than historical growth rate combined with increases in fixed costs depressed our growth in adjusted EBITDA (as defined below) in 2003. In 2004, the level of non-residential construction activity in the U.S. leveled off and rose slightly after two years of steep declines. As a result the leveling off of the non-residential construction sector and general improvements in the economy, our adjusted EBITDA began to grow more rapidly in 2004.

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In managing our business, we focus on our internal growth rate in leasing revenue, which we define as growth in lease revenues on a year over year basis at our branch locations in operation for at least one year, without inclusion of same market acquisitions. This internal growth rate has remained positive every quarter in 2003 and 2004, but had fallen to single digits, from over 20% prior to 2002, due to the slowdown in the economy, especially as the slowdown affected the non-residential construction sector in certain areas where we have large branch operations, including Texas and Colorado. In the quarter ended December 31, 2003, our internal growth rate began to increase, and during the quarter ended June 30, 2004, our internal growth rate reached almost 15%, reflecting an improvement in both economic and market conditions. Mobile Mini’s goal is to maintain or increase this internal growth rate so that revenue growth will exceed inflationary growth in expenses and we can continue to take advantage of the operating leverage inherent in our business model.

We are a capital-intensive business, so in addition to focusing on earnings per share, we focus on adjusted EBITDA to measure our results. We calculate this number by first calculating EBITDA, which is a measure of our earnings before interest expense, debt restructuring costs, provision for income taxes, depreciation and amortization. This measure eliminates the effect of financing transactions that we enter into on an irregular basis based on capital needs and market opportunities, and this measure provides us with a means to track internally generated cash from which we can fund our interest expense and our lease fleet growth. In comparing EBITDA from year to year, we typically further adjust EBITDA to ignore the effect of what we consider non-recurring events not related to our core business operations to arrive at adjusted EBITDA. The only non-recurring event reflected in the adjusted EBITDA has been the effect in 2003 of our Florida litigation expense. This litigation concluded in 2003. In addition, several of the covenants contained under our revolving credit facility are expressed by reference to this adjusted EBITDA financial measure, similarly computed. Because EBITDA is a non-GAAP financial measure as defined by the Securities and Exchange Commission (SEC), we included in our annual report filed on Form 10-K with the SEC on March 15, 2004, a reconciliation of EBITDA to the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States. Our EBITDA is calculated as follows, without further adjustment, for the three month and six month periods ended June 30:

                                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2003
  2004
  2003
  2004
Net income (loss)
  $ (2,129,875 )   $ 4,581,829     $ 1,703,252     $ 7,737,208  
Interest expense
    3,239,795       4,970,041       6,455,928       9,961,520  
Debt restructuring expense
    10,440,346             10,440,346        
Provision for (benefit of) income taxes
    (1,361,723 )     3,054,552       1,088,966       5,158,138  
Depreciation and amortization
    2,673,060       3,041,786       5,289,947       6,021,173  
 
   
 
     
 
     
 
     
 
 
EBITDA
  $ 12,861,603     $ 15,648,208     $ 24,978,439     $ 28,878,039  
 
   
 
     
 
     
 
     
 
 

In managing our business, we routinely compare our adjusted EBITDA margins from year to year and based upon age of branch. We define this margin as adjusted EBITDA divided by our total revenues, expressed as a percentage. We use this comparison, for example, to study internally the effect that increased costs have on our margins. As capital is invested in our established branch locations, we achieve higher adjusted EBITDA margins on that capital than we achieve on capital invested to establish a new branch, because our fixed costs are already in place in connection with the established branches. The fixed costs are those associated with yard and delivery equipment, as well as advertising, sales, marketing and office expenses. With a new market or branch, we must first fund and absorb the startup costs for setting up the new branch facility, hiring and developing the management and sales team and developing our marketing and advertising programs. A new branch will have low adjusted EBITDA margins in its early years until the number of units on rent increases. Because of our high operating margins on incremental lease revenue, which we realize on a branch by branch basis when the branch achieves leasing revenues sufficient to cover the branch’s fixed costs, leasing revenues in excess of the break-even amount produce large increases in profitability. Conversely, absent significant growth in leasing revenues, the adjusted EBITDA margin at a branch will remain relatively flat on a period by period comparative basis.

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Accounting and Operating Overview

Our leasing revenues include all rent and ancillary revenues we receive for our portable storage, combination storage/office and mobile office units. Our sales revenues include sales of these units to customers. Our other revenues consist principally of charges for the delivery of the units we sell. Our principal operating expenses are (1) cost of sales; (2) leasing, selling and general expenses; and (3) depreciation and amortization, primarily depreciation of the portable storage units in our lease fleet. Cost of sales is the cost of the units that we sold during the reported period and includes both our cost to buy, transport, refurbish and modify used ocean-going containers and our cost to manufacture portable storage units and other structures. Leasing, selling and general expenses include among other expenses, advertising and other marketing expenses, commissions and corporate overhead for both our leasing and sales activities. Annual repair and maintenance expenses on our leased units over the last three fiscal years have averaged approximately 2.0% of lease revenues and are included in leasing, selling and general expenses. We expense our normal repair and maintenance costs as incurred (including the cost of periodically repainting units).

Our principal asset is our lease fleet, which has historically maintained value close to its original cost. Our steel lease fleet units (other than van trailers) are depreciated on the straight-line method over our units’ estimated useful life (25 years after the date that we put the unit in service, with estimated residual values of 62.5%). The depreciation policy is supported by our historical lease fleet data which shows that we have been able to retain comparable rental rates and sales prices irrespective of the age of our container lease fleet. Our wood mobile office units are depreciated over 20 years to 50% of original cost. Van trailers, which constitute a small part of our fleet, are depreciated over seven years to a 20% residual value. Van trailers, which are only added to the fleet as a result of acquisitions of portable storage businesses, are of much lower quality than storage containers and consequently depreciate more rapidly.

Our branch expansion program and other factors can affect our overall utilization rate. From 2000 through 2003, our annual utilization levels ranged from a high of 85.3% in 2000 to a low of 78.7% in 2003. The lower utilization rate in the last two years was primarily a result of (i) the fact that many of our acquired branches, at the time of the acquisition transaction and for various periods thereafter, have had utilization levels lower than our historic average rates, especially after we add our proprietary product, (ii) the fact that it is easier to maintain a higher utilization rate at a large branch but we increased the number of small branches in more recent years, and (iii) the economic slowdown in the general economy and in particular the slowdown in the construction sector. We entered six markets in 2001, 11 markets in 2002, and one market in 2003, resulting in reduced overall utilization rates as our system absorbs the added assets. With the addition of fewer markets in 2003 and to date in 2004, we are focusing on increasing our utilization rate by balancing inventory between markets and decreasing the number of out of service units. Our utilization is somewhat seasonal, with the low realized in the first quarter and the high realized in the fourth quarter. Our utilization rate for the quarter ended June 30, 2004 averaged 78.7% compared to an average of 77.3% in the same period the prior year.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2003 Compared to
Three Months Ended June 30, 2004

Total revenues for the quarter ended June 30, 2004 increased by $6.1 million, or 17.3%, to $41.1 million from $35.1 million for the same period in 2003. Leasing revenues for the quarter increased by $4.8 million, or 15.5%, to $35.7 million from $30.9 million for the same period in 2003. The leasing revenues increase resulted from a 5.0% increase in the average rental yield per unit and a 10.0% increase in the average number of units on lease. Our internal growth rate, which we define as the growth in lease revenues in markets opened for at least one year, excluding any growth arising as a result of additional acquisitions in those markets, increased to 14.9% for the three months ended June 30, 2004, the fourth consecutive quarterly increase in internal growth rate. Our sales of portable storage and office units for the three months ended June 30, 2004 increased by 32.2% to $5.3 million from $4.0 million during the same 2003 period. This increase is attributable to a large government related sale during the second quarter of 2004 and to an increase in both the price of steel and used containers, which was passed on to customers who purchased units, resulting in a higher price per unit sold.

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Cost of sales is the cost to us of units that we sold during the period. Cost of sales for the quarter ended June 30, 2004 increased to 65.2% of sales from 62.5% of sales in the same period in 2003. The lower profit margin in the second quarter ended June 30, 2004 is attributable to the lower profit margin on the government related sale and to the sale of a sizable number of van trainers from the fleet at margins lower than our normal levels.

Leasing, selling and general expenses increased $2.5 million, or 12.7%, to $22.0 million for the quarter ended June 30, 2004, from $19.5 million for the same period in 2003. Leasing, selling and general expenses, as a percentage of total revenues, decreased to 53.6% in the quarter ended June 30, 2004, from 55.8% for the same period in 2003. Among the major increases in leasing, selling and general expenses for the quarter ended June 30, 2004 were payroll and related costs, insurance expense, personal property tax expense, rent expense, and repairs and maintenance expense.

EBITDA increased $2.8 million, or 21.7%, to $15.6 million for the quarter ended June 30, 2004, compared to $12.9 million for the same period in 2003.

Florida litigation expenses in 2003 represents the litigation and related costs expensed during the period related to the defense of Nuko Holdings I, LLC v Mobile Mini which is discussed in the Company’s prior SEC filings. The litigation was concluded during 2003 and there are no similar expenses in 2004.

Depreciation and amortization expenses increased $0.4 million, or 13.8%, to $3.0 million in the quarter ended June 30, 2004, from $2.7 million during the same period in 2003. The increase is primarily due to our larger lease fleet and the inclusion in the lease fleet of additional modular offices which have a higher depreciation rate than our containers. Since June 30, 2003, our lease fleet cost basis for depreciation increased by $56.0 million.

Interest expense increased $1.7 million, or 53.4%, to $5.0 million for the quarter ended June 30, 2004, compared to $3.2 million for the same period in 2003. Our average debt outstanding increased by 15.1% for the three months ended June 30, 2004, compared to the same period in 2003. This increase was primarily due to borrowings to fund the growth of our lease fleet, payment of the Florida litigation judgment and debt refinancing costs, including the cost of unwinding certain interest rate swap agreements. Effective interest costs were higher in 2004 primarily because (i) we replaced lower interest rate secured debt with the unsecured Senior Notes, which bear interest at a higher annual rate, and (ii) we had more debt outstanding. The increase in interest expense associated with our Senior Notes increased the weighted average interest rate on our debt from 5.6% for the three months ended June 30, 2003 to 7.5% for the three months ended June 30, 2004, excluding amortization of debt issuance costs. Taking into account the amortization of debt issuance costs, the weighted average interest rate was 5.8% in the 2003 quarter and 7.8% in the 2004 quarter. Our weighted average interest rate was higher during the second half of 2003 due to the issuance of Senior Notes issued on June 26, 2003. As explained below in the section entitled “Liquidity and Capital Resources” the issuance of the Senior Notes substantially increased our liquidity, providing us with an additional source of financing, and reduced our dependence on equity financing.

Debt restructuring expense in 2003 was $10.4 million and includes the expenses related to unwinding certain interest rate swap agreements relating to debt repaid with the proceeds from the sale of $150.0 million Senior Notes (approximately $8.7 million) and the write off of certain capitalized debt issuance costs associated with our revolving credit agreement before it was amended and restated in June 2003 (approximately $1.7 million).

Provision for income taxes was based on an annual effective tax rate of 40.0% in the quarter ended June 30, 2004, as compared to 39.0% during the same period in 2003.

Net income for the three months ended June 30, 2004 was $4.6 million compared to a net loss of $2.1 million for the same period in 2003. The 2003 second quarter net income results were adversely affected by debt restructuring expense of $10.4 million ($6.4 million, net of applicable income tax benefit of $4.0 million). Our second quarter net income results were adversely affected by the higher interest costs associated with the higher average interest rate on our debt outstanding during the 2004 quarter compared to the 2003 quarter, partially offset by an increase in income from operations. In the second quarter 2004, net income per share was reduced by approximately $0.06 due to the increased interest costs associated with the issuance of the 9.5% Senior Notes in June 2003 and the use of the proceeds to pay down lower interest rate secured debt.

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Six Months Ended June 30, 2003 Compared to
Six Months Ended June 30, 2004

Total revenues for the six months ended June 30, 2004 increased by $8.8 million, or 12.9%, to $77.6 million from $68.8 million for the same period in 2003. Leasing revenues for the six month period increased by $7.2 million, or 11.9%, to $67.9 million from $60.6 million for the same period in 2003. The leasing revenue increase resulted from a 2.9% increase in the average rental yield per unit and an 8.8% increase in the average number of units on lease. Our internal growth rate, excluding any growth arising as a result of additional acquisitions in those markets, increased to 11.4% for the six months ended June 30, 2004, compared to 8.2% during the 2003 six month period. Our sales of portable storage and office units for the six months ended June 30, 2004 increased by 20.7%, to $9.5 million from $7.9 million during the same 2003 period. This increase is attributable to a large government related sale during the second quarter of 2004 and to an increase in both the price of steel and used containers, which was passed on to customers who purchased units, resulting in a higher price per unit sold.

Cost of sales is the cost to us of units that we sold during the period. Cost of sales for the six months ended June 30, 2004 increased to 65.0% of sales from 63.0% of sales in the same period in 2003. The lower profit margin in the six months ended June 30, 2004 is attributable to the lower profit margin on the government related sale and to the sale of van trailers from the fleet at margins lower than our normal levels.

Leasing, selling and general expenses increased $4.0 million, or 10.2%, to $42.6 million for the six months ended June 30, 2004, from $38.6 million for the same period in 2003. Leasing, selling and general expenses, as a percentage of total revenues, decreased to 54.9% in the six months ended June 30, 2004, from 56.2% for the same period in 2003. Among the major increases in leasing, selling and general expenses for the first six months ended June 30, 2004 were payroll and related costs, insurance expense, personal property tax expense, rent expense, and repairs and maintenance expense.

EBITDA increased $3.9 million, or 15.6%, to $28.9 million for the six months ended June 30, 2004, compared to $25.0 million for the same period in 2003.

Florida litigation expenses in 2003 represents the litigation and related costs expensed during the period related to the defense of Nuko Holdings I, LLC v Mobile Mini which is discussed in the Company’s prior SEC filings. The litigation was concluded during 2003 and there are no similar expenses in 2004.

Depreciation and amortization expenses increased $0.7 million, or 13.8%, to $6.0 million in the six months ended June 30, 2004, from $5.3 million during the same period in 2003. The increase is primarily due to our larger lease fleet and the inclusion in the lease fleet of additional modular offices which have a higher depreciation rate than our containers. Since June 30, 2003, our lease fleet cost basis for depreciation increased by $56.0 million.

Interest expense increased $3.5 million, or 54.3%, to $10.0 million for the six months ended June 30, 2004, compared to $6.5 million for the same period in 2003. Our average debt outstanding increased by 11.0% for the six months ended June 30, 2004, compared to the same period in 2003. This increase was primarily due to borrowings to fund the growth of our lease fleet, payment of the Florida litigation judgment and debt refinancing costs, including the cost of unwinding certain interest rate swap agreements. Effective interest costs were higher in 2004 primarily because (i) we replaced lower interest rate secured debt with the unsecured Senior Notes, which bear interest at a higher annual rate, and (ii) we had more debt outstanding. The increase in interest expense associated with our Senior Notes increased the weighted average interest rate on our debt from 6.8% for the six months ended June 30, 2003 to 7.5% for the six months ended June 30, 2004, excluding amortization of debt issuance costs. Taking into account the amortization of debt issuance costs, the weighted average interest rate was 7.1% in the 2003 six month period and 7.8% in the 2004 six month period. Our weighted average interest rate was higher during the second half of 2003 and during subsequent periods due to the issuance of our 9.5% Senior Notes on June 26, 2003. As explained below in the section entitled “Liquidity and Capital Resources”, the issuance of the Senior Notes substantially increased our liquidity, providing us with an additional source of financing, and reduced our dependence on equity financing.

Debt restructuring expense in 2003 was $10.4 million and includes the expenses related to unwinding certain interest rate swap agreements relating to debt repaid with the proceeds from the sale of $150.0 million Senior Notes ($8.7 million) and the write off of certain capitalized debt issuance costs ($1.7 million) associated with our revolving credit

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agreement before it was amended and restated in June 2003.

Provision for income taxes was based on an annual effective tax rate of 40.0% in the six months ended June 30, 2004, as compared to 39.0% during the same period in 2003.

Net income for the six months ended June 30, 2004 was $7.7 million compared to net income of $1.7 million for the same period in 2003. The 2003 net income results were adversely affected by debt restructuring expense of $10.4 million ($6.4 million, net of applicable income tax benefit of $4.0 million). Our 2004 net income results were additionally affected by our higher interest costs associated with our higher average debt outstanding during the 2004 six month period compared to the 2003 six month period, partially offset by an increase in income from operations. In the first six month period 2004, net income per share was reduced by approximately $0.12 due to the increased interest costs associated with our 9.5% Senior Notes issued in June 2003 and the use of the proceeds to pay down lower interest rate secured debt.

LIQUIDITY AND CAPITAL RESOURCES

Since 1996, Mobile Mini has focused the growth of its business on its leasing operations. Over the past several years, we have financed an increasing portion of our capital needs, most of which are discretionary and are used principally to acquire additional units for our lease fleet, through working capital and funds generated from operations. Leasing is a capital intensive business that requires that we acquire assets before they generate revenues, cash flow and earnings. The assets which we lease have very long useful lives and require relatively little recurrent maintenance expenditures. Most of the capital Mobile Mini has deployed into its leasing business has been of a discretionary nature in order to expand the company’s operations geographically, to increase the number of units available for lease at the company’s leasing locations, and to add to the mix of products the company offers. During recent years, Mobile Mini’s operations have generated annual cash flow that exceeds the company’s pre-tax earnings, particularly due to the deferral of income taxes due to accelerated depreciation that is used for tax accounting.

Historically, we have funded much of our growth through equity and debt issuances and borrowings under our revolving credit facility. In June 2003, we issued $150.0 million of 9.5% Senior Notes and amended our $250.0 million senior secured revolving line of credit. The effect of this transaction was to (i) increase our interest expense, (ii) replace floating rate debt with fixed rate debt and (iii) through changes in covenants in our senior secured revolving line of credit, made possible by the issuance of the Senior Notes, to substantially increase our borrowing availability for use in connection with expansion. At June 30, 2004, we had unused borrowing availability of approximately $91.1 million under our revolving credit facility, based upon the most restrictive covenant. Recently, we have been able to fund most of our capital expenditures from operating cash flow. Our borrowings under our revolving credit facility increased $18.7 million from December 31, 2003 to June 30, 2004. A large portion of this increase resulted from the payment of our Florida litigation judgment of $8.0 million, with the remainder of the increase used to finance expansion capital expenditures as demand for our portable storage product and portable offices accelerated. Our operating cash flow is, in general, weakest during the first half of each year.

As of August 1, 2004, our lenders agreed to amend our senior secured revolving line of credit to reduce the interest rate by reducing the spread over LIBOR at various levels of leverage. Based upon our current level of leverage, our interest rate has been reduced from LIBOR plus 2.25% to LIBOR plus 2.00%.

Operating Activities. Our operations provided net cash flow of $11.2 million during the six months ended June 30, 2004 compared to $13.2 million during the same period in 2003. The $2.0 million decrease in cash provided by operating activities was due primarily to the payment of the $8.0 million Florida litigation judgment in the first quarter of 2004, and an increase in receivables in 2004. These factors were partially offset by an increase in accounts payable in 2004. During 2003, operating cash flow had been negatively impacted by the debt restructuring expense of $10.4 million.

Investing Activities. Net cash used in investing activities was $31.6 million for the six months ended June 30, 2004, compared to $26.8 million for the same period in 2003. Capital expenditures for our lease fleet were $29.1 million for the six months ended June 30, 2004 and $25.1 million for the same period in 2003. These expenditures relate to costs of new lease fleet units, which we added at our branches to meet demand, and refurbishment costs associated with bringing containers acquired in prior years up to Mobile Mini standards. Capital expenditures during 2004 were higher primarily because the Company’s growth rate accelerated and additional fleet units were needed to meet customer

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demand. In addition, costs of raw material and used shipping containers increased over the prior year. Capital expenditures for property, plant and equipment were $2.4 million during the six months ended June 30, 2004 and $2.1 million for the same period in 2003. The amount of cash that we use during any period in investing activities is almost entirely within management’s discretion. Mobile Mini has no contracts or other arrangements pursuant to which we are required to purchase a fixed or minimum amount of goods or services in connection with any portion of our business.

Financing Activities. Net cash provided by financing activities was $20.7 million during the six months ended June 30, 2004 compared to $12.0 million for the same period in 2003. During the six months ended June 30, 2004 net cash provided by financing activities was primarily provided by our revolving credit facility and was used together with cash flow generated from operations to fund our expansion of the lease fleet, and to fund payment of the Florida litigation judgment of $8.0 million. Cash provided by financing activities included the exercise of $2.7 million of employee stock options. During the six months ended June 30, 2003, the Company issued $150.0 million of its 9.5% Senior Notes and repaid $130.9 million of its revolving credit facility. The net borrowings were used together with cash flow from operations to primarily fund the expansion of the lease fleet.

In addition to cash flow generated by operations, our principal current source of liquidity is our $250.0 million revolving line of credit. During the six month period ended June 30, 2004, we had net additional borrowings under our credit facility of $18.7 million as compared to $12.6 million for the same period in 2003, before giving effect to our issuance of $150.0 million of Senior Notes in June 2003. As of June 30, 2004, we had $107.7 million of borrowings outstanding under our credit facility, and approximately $91.1 million of additional borrowings were then available to us under the facility under our most restrictive covenant. As of July 30, 2004, borrowings outstanding under our credit facility were $116.0 million.

The interest rate under our revolving credit facility is based on our ratio of funded debt to earnings before interest expense, taxes, depreciation and amortization, debt restructuring expenses and any judgment or settlement costs related to our Florida litigation.

We have an interest rate swap agreement under which we effectively fixed the interest rate payable on $25.0 million of borrowings under our credit facility so that the rate is based upon a spread from a fixed rate, rather than a spread from the LIBOR rate. Accounting for the swap agreement is covered by SFAS No. 133 and accordingly resulted in comprehensive income for the six months ended June 30, 2004 of $0.3 million, net of applicable income tax provision of $0.2 million.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

Our contractual obligations primarily consist of our outstanding balance under our secured revolving credit facility and $150.0 million of unsecured Senior Notes, together with other notes payable obligations both secured and unsecured. We also have operating lease commitments for: 1) real estate properties for the majority of our branches, 2) delivery, transportation and yard equipment, typically under a five-year lease with purchase options at the end of the lease term at a stated or fair market value price; and 3) other equipment, primarily office machines.

In connection with the issuance of our insurance policies, we have provided our various insurance carriers approximately $2.8 million in letters of credit and an agreement under which we are contingently responsible for $1.2 million to provide credit support for our payment of the deductibles and/or loss limitation reimbursements under the insurance policies.

We currently do not have any obligations under purchase agreements. Historically, we enter into capitalized lease obligations from time to time to purchase delivery, transportation and yard equipment, but currently have no commitments recorded as a capital lease.

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OFF-BALANCE SHEET TRANSACTIONS

Mobile Mini does not maintain any off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities or others that are reasonably likely to have a material current or future effect on Mobile Mini’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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 causes lower utilization rates for our lease fleet and a marginal decrease in cash flow during the first quarter of the year.

CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS

The following discussion addresses our most critical accounting policies, some of which require significant judgment.

Mobile Mini’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the reporting period. These estimates and assumptions are based upon our evaluation of historical results and anticipated future events, and these estimates may change as additional information becomes available. The Securities and Exchange Commission defines critical accounting policies as those that are, in management’s view, most important to our financial condition and results of operations and those that require significant judgments and estimates. Management believes that our most critical accounting policies relate to:

Revenue Recognition. Lease and leasing ancillary revenues and related expenses generated under portable storage units and office units are recognized monthly, which approximates a straight-line basis. Revenues and expenses from portable storage unit delivery and hauling are recognized when these services are billed, in accordance with SAB 101, as amended by SAB 104, as these services are considered inconsequential to the overall leasing transaction. We recognize revenues from sales of containers upon delivery.

Allowance for Doubtful Accounts. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We establish and maintain reserves against estimated losses based upon historical loss experience and evaluation of past due accounts aging. Management reviews the level of the allowances for doubtful accounts on a regular basis and adjusts the level of the allowances as needed. If we were to increase the factors used for our reserve estimates by 25%, it would have the following approximate effect on our net income and diluted earnings per share as follows:

                                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2003
  2004
  2003
  2004
As Reported:
                               
Net income (loss)
  $ (2,129,876 )   $ 4,581,829     $ 1,703,252     $ 7,737,208  
Diluted earnings (loss) per share
  $ (0.15 )   $ 0.31     $ 0.12     $ 0.53  
As adjusted for change in estimates:
                               
Net income (loss)
  $ (2,238,978 )   $ 4,502,838     $ 1,491,411     $ 7,550,272  
Diluted earnings (loss) per share
  $ (0.16 )   $ 0.31     $ 0.10     $ 0.52  

If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

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Impairment of Goodwill. We assess the impairment of goodwill and other identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Some factors we consider important which could trigger an impairment review include the following:

  significant under-performance relative to historical, expected or projected future operating results;
 
  significant changes in the manner of our use of the acquired assets or the strategy for our overall business;
 
  our market capitalization relative to net book value, and
 
  significant negative industry or general economic trends.

When we determine the carrying value of goodwill and other identified intangibles may not be recoverable, we measure impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets , on January 1, 2002, we ceased amortizing goodwill arising from acquisitions completed prior to July 1, 2001. We tested goodwill for impairment using the two-step process prescribed in SFAS 142. The first step is a screen for potential impairment, while the second step measures the amount of the impairment, if any. We performed the annual required impairment tests for goodwill at December 31, 2003 and determined that the carrying amount of goodwill was not impaired as of that date. We will perform this test in the future as required by SFAS 142.

Impairment Long-Lived Assets. We review property, plant and equipment and intangibles with finite lives (those assets resulting from acquisitions) for impairment when events or circumstances indicate these assets might be impaired. We test impairment using historical cash flows and other relevant facts and circumstances as the primary basis for its estimates of future cash flows. This process requires the use of estimates and assumptions, which are subject to a high degree of judgment. If these assumptions change in the future, whether due to new information or other factors, we may be required to record impairment charges for these assets.

Depreciation Policy. Our depreciation policy for our lease fleet uses the straight-line method over our units’ estimated useful life, after the date that we put the unit in service. Our steel units are depreciated over 25 years with an estimated residual value of 62.5%. Wood offices units are depreciated over 20 years with an estimated residual value of 50%. Van trailers, which are a small part of our fleet, are depreciated over 7 years to a 20% residual value. Van trailers are only added to the fleet as a result of acquisitions of portable storage businesses.

In 2004, our depreciation policy on our steel units was modified to increase the useful life to 25 years (from 20 years), and to decrease the residual value to 62.5% (from 70%) which effectively resulted in continued depreciation on steel units for five additional years at the same annual rate (1.5%). This change was made to reflect that some of our steel units have now been in our lease fleet longer than 20 years and these units continue to be effective income producing assets that do not show signs of reaching the end of their useful life. The depreciation policy is supported by our historical lease fleet data that shows we have been able to retain comparable rental rates and sales prices irrespective of the age of the unit in our container lease fleet.

We periodically review our depreciation policy against various factors, including the results of our lenders’ independent appraisal of our lease fleet, practices of the larger competitors in our industry, profit margins we are achieving on sales of depreciated units and lease rates we obtain on older units. If we were to change our depreciation policy on our steel units from 62.5% residual value and a 25-year life to a lower or higher residual and a shorter or longer useful life, such change could have a positive, negative or neutral effect on our earnings, with the actual effect being determined by the change. For example, a change in our estimates used in our residual values and useful life would have the following approximate effect on our net income and diluted earnings per share as reflected in the table below.

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            Useful   Three Months Ended   Six Months Ended
    Residual   Life In   June 30,   June 30,
    Value
  Years
  2003
  2004
  2003
  2004
As Reported:
    62.5 %     25                                  
Net income (loss)
                  $ (2,129,875 )   $ 4,581,829     $ 1,703,253     $ 7,737,208  
Diluted earnings (loss) per share
                  $ (0.15 )   $ 0.31     $ 0.12     $ 0.53  
As adjusted for change in estimates:
    70 %     20                                  
Net income (loss)
                  $ (2,129,875 )   $ 4,581,829     $ 1,703,253     $ 7,737,208  
Diluted earnings (loss) per share
                  $ (0.15 )   $ 0.31     $ 0.12     $ 0.53  
As adjusted for change in estimates:
    50 %     20                                  
Net income (loss)
                  $ (2,594,957 )   $ 4,062,572     $ 785,535     $ 6,710,501  
Diluted earnings (loss) per share
                  $ (0.18 )   $ 0.28     $ 0.05     $ 0.46  
As adjusted for change in estimates:
    40 %     40                                  
Net income (loss)
                  $ (2,129,875 )   $ 4,581,829     $ 1,703,253     $ 7,737,208  
Diluted earnings (loss) per share
                  $ (0.15 )   $ 0.31     $ 0.12     $ 0.53  
As adjusted for change in estimates:
    30 %     25                                  
Net income (loss)
                  $ (2,734,481 )   $ 3,906,796     $ 510,220     $ 6,402,489  
Diluted earnings (loss)per share
                  $ (0.19 )   $ 0.27     $ 0.04     $ 0.44  
As adjusted for change in estimates:
    25 %     25                                  
Net income (loss)
                  $ (2,827,498 )   $ 3,802,944     $ 326,676     $ 6,197,147.  
Diluted earnings (loss) per share
                  $ (0.20 )   $ 0.26     $ 0.02     $ 0.43  

Insurance Reserves. Our worker’s compensation, auto and general liability insurance is purchased under large deductible programs. Our current per incident deductibles are: worker’s compensation $250,000, auto $100,000 and general liability $100,000. We expense the deductible portion of the individual claims. However, we generally do not know the full amount of our exposure to a deductible in connection with any particular claim during the fiscal period in which the claim is incurred and for which we must make an accrual for the deductible expense. We make these accruals based on a combination of the claims review by our staff and our insurance companies, and, at year end, the accrual is reviewed and adjusted, in part, based on an independent actuarial review of historical loss data and using certain actuarial assumptions followed in the insurance industry. A high degree of judgment is required in developing these estimates of amounts to be accrued, as well as in connection with the underlying assumptions. In addition, our assumptions will change as our loss experience is developed. All of these factors have the potential for significantly impacting the amounts we have previously reserved in respect of anticipated deductible expenses, and we may be required in the future to increase or decrease amounts previously accrued.

Contingencies. We are a party to various claims and litigation in the normal course of business. Management’s current estimated range of liability related to various claims and pending litigation is based on claims for which our management can determine that it is probable (as that term is defined in FAS 5) that a liability has been incurred and the amount of loss can be reasonably determined. Because of the uncertainties related to both the probability of incurred and possible range of loss on pending claims and litigation, management must use considerable judgments in making reasonable determination of the liability that could result from an unfavorable outcome. As additional information becomes available, we will assess the potential liability related to any pending litigation and revise our estimates. Such revisions in our estimates of the potential liability could materially impact our results of operation. We do not anticipate that the resolution of such matters, known at this time, will have a material adverse effect on our business or consolidated financial position.

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RECENT ACCOUNTING PRONOUNCEMENT

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46) and subsequently revised this Interpretation in December 2003 (FIN 46R). FIN 46R requires the primary beneficiary of a variable interest entity (VIE) to include the VIE’s assets, liabilities and operating results in its consolidated financial statements. FIN 46R also requires the disclosure of information about the VIE’s assets and liabilities and the nature, purpose and activities of consolidated VIE’s in the primary beneficiary’s financial statements. Additionally, FIN 46R requires disclosure of information about the nature, purpose and activities for unconsolidated VIEs in which a company holds a significant variable interest. The adoption of FIN 46 and FIN 46R did not affect our financial condition or results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Swap Agreement. We seek to reduce earnings and cash flow volatility associated with changes in interest rates through a financial arrangement 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, 2004, we had one interest rate swap agreement under which we pay a fixed rate and receive a variable interest rate on $25.0 million of debt. For the six months ended June 30, 2004, in accordance with SFAS No. 133, comprehensive income included $0.3 million, net of applicable income tax provision of $0.2 million, related to the fair value of our interest rate swap agreement.

Impact of Foreign Currency Rate Changes. We currently have branch operations in Toronto, Canada, and we invoice those customers primarily in the local currency, the Canadian Dollar, under the terms of our lease agreements with those customers. We are exposed to foreign exchange rate fluctuations as the financial results of our Canadian branch operation are translated into U.S. dollars. The impact of foreign currency rate changes have historically been insignificant.

CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS

Our disclosure and analysis in this report contains forward-looking information about our Company’s financial results and estimates and our business prospects that involve substantial risks and uncertainties. From time to time, we also may provide oral or written forward-looking statements in other materials we release to the public. Forward-looking statements are expressions of our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historic or current facts. They include words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results, expenses, the outcome of contingencies, such as legal proceedings, and financial results. Among the factors that could cause actual results to differ materially are the following:

  our ability to manage our planned growth, both internally and at new branches
 
  competitive developments affecting our industry, including pricing pressures in newer markets
 
  economic slowdown that affects any significant portion of our customer base, including economic slowdown in areas of limited geographic scope if markets in which we have significant operations are impacted by such slowdown
 
  the timing and number of new branches that we open or acquire
 
  changes in the supply and price of used ocean-going containers
 
  changes in the supply and cost of the raw materials we use in manufacturing storage units
 
  legal defense costs, insurance expenses, settlement costs and the risk of an adverse decision or settlement related legal proceedings
 
  our ability to protect our patents and other intellectual property
 
  interest rate fluctuations

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  governmental laws and regulations affecting domestic and foreign operations, including tax obligations
 
  changes in generally accepted accounting principles
 
  any changes in business, political and economic conditions due to the threat of future terrorist activity in the U.S. and other parts of the world, and related U.S. military action overseas
 
  increases in costs and expenses, including costs of raw materials

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements.

We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Form 10-Q, 8-K and 10-K reports to the Securities and Exchange Commission. Our Form 10-K filing for the fiscal year ended December 31, 2003, listed various important factors that could cause actual results to differ materially from expected and historic results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. Readers can find them in Item 1 of that filing under the heading “Cautionary Factors That May Affect Future Results.” We incorporate that section of that Form 10-K in this filing and investors should refer to it. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties. You may obtain a copy of our Form 10-K 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 through Mobile Mini’s web site at www.mobilemini.com, and at the SEC’s World Wide Web site at http://www.sec.gov. Material on our web site is not incorporated in this report, except by express incorporation by reference herein.

ITEM 4. CONTROLS AND PROCEDURES

Mobile Mini maintains disclosure controls and procedures designed to provide reasonable assurance that the information required to be disclosed in the reports that it submits to the Securities Exchange Commission is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Mobile Mini’s management, with the participation of the chief executive officer and the chief financial officer, has evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on the evaluation, our chief executive officer and our chief financial officer have concluded that, as of the end of such period, Mobile Mini’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by Mobile Mini in the reports it files or submits under the Exchange Act.

There were no changes in Mobile Mini’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, Mobile Mini’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS

Our annual meeting of stockholders was held on June 23, 2004 in Phoenix, Arizona. On the record date for the annual meeting, 14,353,303 shares of common stock were outstanding and eligible to vote. A quorum was present at the annual meeting. The table below briefly describes the proposal and the 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
    14,014,084       89,082  
Ronald J. Marusiak
    13,873,980       229,186  
                         
    For
  Against
  Withheld
Ratification of appointment of Ernst & Young LLP as the Independent Auditors for the fiscal year ending December 31, 2004:
    13,831,574       266,481       5,111  

In addition to the election of two directors at the annual meeting, the terms of five directors continued after the meeting. The continuing directors are Steven G. Bunger, Thomas R. Graunke, Michael L. Watts, Stephen A McConnell and Carolyn A. Clawson.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     
(a)
  Exhibits (filed herewith):
     
Number
  Description
10.3.7
  Third Amendment to Amended and Restated Loan and Security Agreement
 
   
10.20
  Form of Indemnification Agreement between the Registrant and its Directors and Executive Officers
 
   
31.1
  Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-K. (Filed herewith).
 
   
31.2
  Certification of Chief Financial Officer pursuant to Item 601(b)(31) of Regulation S-K. (Filed herewith).
 
   
32.1
  Certification of Chief Executive Officer and Chief Financial Officer pursuant to item 601(b)(32) of Regulation S-K. (Filed herewith).
     
(b)
  Reports on Form 8-K:

    We filed a report on Form 8-K filed May 4, 2004 related to our announcement of first quarter 2004 financial results.
 
    We filed a report on Form 8-K filed June 23, 2004 related to our press release pertaining to our earnings guidance for the 2004 second quarter and for the 2004 fiscal year.

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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.
 
   
Dated: August 9, 2004
  /s/ Lawrence Trachtenberg
 
 
  Lawrence Trachtenberg
  Chief Financial Officer &
  Executive Vice President

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EXHIBIT INDEX

     
Number
  Description
10.3.7
  Third Amendment to Amended and Restated Loan and Security Agreement
 
   
10.20
  Form of Indemnification Agreement between the Registrant and its Directors and Executive Officers
 
   
31.1
  Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-K. (Filed herewith).
 
   
31.2
  Certification of Chief Financial Officer pursuant to Item 601(b)(31) of Regulation S-K. (Filed herewith).
 
   
32.1
  Certification of Chief Executive Officer and Chief Financial Officer pursuant to item 601(b)(32) of Regulation S-K. (Filed herewith).

27

 

Exhibit 10.3.7

THIRD AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

     This THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as of August    , 2004, and entered into by and among FLEET CAPITAL CORPORATION (“Fleet”), a Rhode Island corporation with an office at One South Wacker Drive, Suite 3400, Chicago, IL 60606-4616, individually as a Lender and as Agent (“Agent”) for itself and any other financial institution which is or becomes a party to the Loan Agreement referred to below (each, a “Lender” and collectively, the “Lenders”), the LENDERS signatory hereto and MOBILE MINI, INC. , a Delaware corporation with its chief executive office and principal place of business at 7420 South Kyrene Road, Suite 101, Tempe, Arizona 85283.

      Whereas, Borrower, Agent, Deutsche Bank Securities Inc. and Washington Mutual Bank, as Co-Documentation Agents, Bank One, NA and JP Morgan Chase Bank, as Co-Syndication Agents, and the Lenders have entered into that certain Amended and Restated Loan and Security Agreement dated as of February 11, 2002, as amended and restated as of June 26, 2003, and amended by that certain First Amendment to Amended and Restated Loan and Security Agreement dated as of January 14, 2004 and that certain Second Amendment to Amended and Restated Loan and Security Agreement dated as of March 16, 2004 (as it may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Loan Agreement”); capitalized terms used in this Amendment without definition shall have the meanings given such terms in the Loan Agreement; and

      Whereas, Borrower has requested further amendments to the Loan Agreement; and

      Whereas, the Lenders are willing to agree to amend the Loan Agreement, subject to the conditions and on the terms set forth herein;

      Now Therefore, in consideration of the premises and the mutual agreements set forth herein, Borrower, the Lenders and Agent agree as follows:

     1.  AMENDMENT TO LOAN AGREEMENT . Subject to the conditions and on the terms set forth in this Amendment and in reliance on the representations and warranties of Borrower set forth in this Amendment, the Loan Agreement is hereby amended as follows:

        1.1 Amendment to Appendix A. Appendix A of the Loan Agreement is amended to delete the grid in the definition of “Applicable Margin” and to replace it with the following:

1


 

                 
Adjusted Debt Ratio
  Base Rate Portion
  LIBOR Portion
³ 5.25
    0.75 %     2.50 %
³ 4.75 but <5.25
    0.50 %     2.25 %
³ 4.0 but <4.75
    0.25 %     2.00 %
<4.0
    0.00 %     1.75 %

     2.  REPRESENTATIONS AND WARRANTIES OF BORROWER. In order to induce the Lenders and Agent to enter into this Amendment, Borrower represents and warrants to each Lender and Agent that the following statements are true, correct and complete:

        2.1 Corporate Action. Borrower is duly authorized and empowered to enter into, execute, deliver and perform this Amendment and the Loan Agreement as amended hereby and Guarantors are duly authorized to enter into, execute, deliver and perform the Consent of Guarantors and Reaffirmation Agreement attached hereto (the “Guarantor Consent”). The execution, delivery and performance of this Amendment, the Loan Agreement as amended hereby and the Guarantor Consent, and the purchase of the Securities in accordance with the terms hereof, have been duly authorized by all necessary corporate or other relevant action and do not and will not (i) require any consent or approval of the shareholders of Borrower or any of the Guarantors; (ii) contravene Borrower’s or any of the Guarantors’ charter or articles or certificate of incorporation or other organizational documents, as applicable; (iii) violate, or cause Borrower or any Guarantor to be in default under, any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award in effect having applicability to Borrower or any Guarantor; (iv) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which Borrower or any Guarantor is a party or by which it or its Properties may be bound or affected (including without limitation the Senior Note Documents); or (v) result in, or require, the creation or imposition of any Lien upon or with respect to any of the Properties now owned or hereafter acquired by Borrower or any Guarantor. As of the date hereof, the Collateral does not include any “margin stock” (as defined in Regulation U of the Board of Governors of the Federal Reserve Board.

        2.2 Legally Enforceable Agreement. This Amendment and the Guarantor Consent have been duly executed and delivered by Borrower and the Guarantors. Each of this Amendment and the Loan Agreement as amended hereby is a legal, valid and binding obligation of Borrower, enforceable against it in accordance with its terms, and the Guarantor Consent is a legal, valid and binding obligation of the Guarantors, enforceable against each of them in accordance with its terms, except in each case as limited by applicable bankruptcy or insolvency laws, and by general principles of equity.

        2.3 Solvent Financial Condition. Borrower is Solvent.

2


 

        2.4 No Default or Event of Default. No event has occurred and is continuing or will result from the execution and delivery of this Amendment that would constitute a Default or an Event of Default. Borrower is in compliance with the terms of the Senior Note Documents.

        2.5 No Material Adverse Effect. No event has occurred that has resulted, or could reasonably be expected to result, in a Material Adverse Effect.

        2.6 Representations and Warranties. Each of the representations and warranties contained in the Loan Documents is and will be true and correct in all material respects on and as of the date hereof and as of the effective date of this Amendment, except to the extent that such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects as of such earlier date.

     3.  CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT. This Amendment shall be effective only if and when signed by, and when counterparts hereof shall have been delivered to the Agent or its counsel (by hand delivery, mail or telecopy) by, Borrower and all Lenders and only if and when each of the following conditions is satisfied:

        3.1 Consent of Guarantors. Each of the Guarantors shall have executed and delivered to Agent as its counsel the Guarantor Consent.

        3.2 No Default or Event of Default; Accuracy of Representations and Warranties. No Default or Event of Default shall exist and each of the representations and warranties made by the various parties herein and in or pursuant to the Loan Documents shall be true and correct in all material respects as if made on and as of the date on which this Amendment becomes effective (except that any such representation or warranty that is expressly stated as being made only as of a specified earlier date shall be true and correct as of such earlier date).

        3.3 Payment of Amendment Fee. Agent shall have received, for the ratable benefit of the Lenders, an amendment fee of $250,000.

     4.  EFFECTIVE DATE. This Amendment shall become effective on the date ( the “Amendment Effective Date”) of the satisfaction of the conditions set forth in Section 3, but once effective the amendment set forth in Section 1 above shall be effective as of August 1, 2004.

     5.  EFFECT OF THIS AMENDMENT. From and after the Amendment Effective Date, all references in the Loan Documents to the Loan Agreement shall mean the Loan Agreement as amended hereby. Except as expressly amended hereby, the Loan Agreement and the other Loan Documents, including the Liens granted thereunder, shall remain in full force and effect, and are hereby ratified and confirmed.

     6.  GOVERNING LAW. THIS AMENDMENT HAS BEEN NEGOTIATED AND DELIVERED IN AND SHALL BE DEEMED TO HAVE BEEN MADE IN LOS ANGELES, CALIFORNIA. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

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     7.  COMPLETE AGREEMENT. This Amendment sets forth the complete agreement of the parties in respect of any amendment to any of the provisions of any Loan Document or any waiver thereof.

     8.  CATCHLINES & COUNTERPARTS. The catchlines and captions herein are intended solely for convenience of reference and shall not be used to interpret or construe the provisions hereof. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts (including by telecopy), each of which when so executed and delivered shall be deemed an original, but all of which shall together constitute one and the same agreement.

[signatures follow; remainder of page intentionally left blank]

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     IN WITNESS WHEREOF, this Third Amendment To Amended and Restated Loan and Security Agreement has been duly executed on the day and year specified at the beginning of this Third Amendment To Amended and Restated Loan and Security Agreement.

     
  MOBILE MINI, INC. , a Delaware corporation
 
   
  By:__________________________________
  Name: Lawrence Trachtenberg
  Title: Executive Vice President
 
   
  FLEET CAPITAL CORPORATION ,
  a Rhode Island corporation,
  as Agent and as a Lender
 
   
  By:__________________________________
  Name: Jason Riley
  Title: Vice President

Third Amendment Signature Page

[Additional signature pages omitted]

 


 

CONSENT OF GUARANTORS AND REAFFIRMATION AGREEMENT

     Reference is hereby made to that certain Third Amendment to Amended and Restated Loan and Security Agreement, dated as of August    , 2004 (as the same shall be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Amendment”), among Fleet Capital Corporation (“Fleet”), a Rhode Island corporation with an office at One South Wacker Drive, Suite 3400, Chicago, IL 60606-4616, individually as a Lender and as Agent (“Agent”) for itself and any other financial institution which is or becomes a party to the Loan Agreement (as defined below) (each such financial institution, including Fleet, is referred to hereinafter individually as a “Lender” and collectively as the “Lenders”), the Lenders, and Mobile Mini, Inc., a Delaware corporation with its chief executive office and principal place of business at 7420 South Kyrene Road, Suite 101, Tempe, Arizona 85283 (“Borrower”). Capitalized terms used herein and not otherwise defined shall have the meanings given them in the Amended and Restated Loan and Security Agreement, dated as of February 11, 2002 as amended and restated as of June 26, 2003, by and among Borrower, the Lenders, Agent, Deutsche Bank Securities Inc. and Washington Mutual Bank, as Co-Documentation Agents, and Bank One, NA and JP Morgan Chase Bank, as Co-Syndication Agents, as amended by the First Amendment to Amended and Restated Loan and Security Agreement dated as of January 14, 2004 and the Second Amendment to Amended and Restated Loan and Security Agreement dated as of March 16, 2004 (the “Loan Agreement”).

     Each of the undersigned hereby (a) acknowledges receipt of a copy of the Amendment, (b) consents to the terms of the Amendment, (c) agrees and reaffirms that the Guaranty executed by it remains in full force and effect as a continuing guaranty of the Obligations owing to the Agent and Lenders under the Loan Agreement and the Loan Documents referred to therein and (d) agrees and reaffirms that all of its Obligations under each other Loan Document executed by it pursuant to the Loan Agreement, and all liens and security interests granted thereunder, remain in full force and effect, unimpaired by the execution and delivery of the Amendment and continue to secure its Obligations. Following the effectiveness of the Amendment, all references in the Loan Documents to the Loan Agreement shall be deemed to refer to the Loan Agreement as amended by the Amendment.

     Although Agent has informed us of the matters set forth above, and we have acknowledged same, we understand and agree that Agent has no duty under the Loan Agreement or any other Loan Document or any other agreement between us to so notify us or to seek an acknowledgement, and nothing contained herein is intended to or shall create such a duty as to any advances or transactions hereafter.

     THIS CONSENT OF GUARANTORS AND REAFFIRMATION AGREEMENT HAS BEEN NEGOTIATED AND DELIVERED IN AND SHALL BE DEEMED TO HAVE BEEN MADE IN LOS ANGELES, CALIFORNIA. THIS CONSENT OF GUARANTORS AND REAFFIRMATION AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

Consent of Guarantors

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     This Consent of Guarantors and Reaffirmation Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all of which shall together constitute one and the same agreement.

     IN WITNESS WHEREOF, each of the Guarantors has executed and delivered this Consent of Guarantors and Reaffirmation Agreement as of the date set forth in the first paragraph hereof.

         
    GUARANTORS:
 
       
    MOBILE MINI I, INC. ,
    an Arizona corporation
 
       
    By: ___________________________________
    Name: Lawrence Trachtenberg
    Title: Executive Vice President
 
       
    MOBILE MINI HOLDINGS, INC. ,
    a Delaware corporation
 
       
    By:___________________________________
    Name: Lawrence Trachtenberg
    Title: President
 
       
    DELIVERY DESIGN SYSTEMS, INC. ,
    an Arizona corporation
 
       
    By:___________________________________
    Name: Lawrence Trachtenberg
    Title: Executive Vice President
 
       
    MOBILE MINI, LLC ,
    a Delaware limited liability company
 
       
    By:___________________________________
    Name: Lawrence Trachtenberg
    Title: Executive Vice President
 
       
    MOBILE MINI, LLC ,
    a California limited liability company
 
       
    By:___________________________________
    Name: Lawrence Trachtenberg
    Title: Executive Vice President
 
       
    MOBILE MINI OF OHIO, LLC ,
    a Delaware limited liability company
 
       
    By:___________________________________
    Name: Lawrence Trachtenberg
    Title: Executive Vice President

Consent of Guarantors

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    MOBILE MINI TEXAS LIMITED PARTNERSHIP, L.L.P.
    a Texas limited partnership
 
       
    By:___________________________________
    Name: Lawrence Trachtenberg
    Title: Treasurer

Consent of Guarantors

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Exhibit 10.20

AGREEMENT

     THIS AGREEMENT, made and entered into as of the    day of    , 2004 (“Agreement”), by and between MOBILE MINI, INC. a Delaware corporation (the “Company”), and (“Indemnitee”):

RECITALS

     WHEREAS, highly competent persons are becoming more reluctant to serve publicly-held corporations as directors or in other capacities unless they are provided with adequate protection through insurance and adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;

     WHEREAS, current uncertainties associated with obtaining adequate insurance and the uncertainties relating to indemnification have increased the difficulty of attracting and retaining such persons;

     WHEREAS, the Board of Directors of the Company (the “Board”) has determined that the difficulties of attracting and retaining such persons is detrimental to the best interests of the Company and the Company’s stockholders, and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

     WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified; and

     WHEREAS, Indemnitee is willing to serve and to take on additional service for or on behalf of the Company on the condition that he or she be so indemnified. Use of the masculine pronoun hereinafter shall be deemed to include use of the feminine pronoun where appropriate. All capitalized terms shall have the meaning ascribed to them in Section 17 herein.

     NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

     Section 1. Services By Indemnitee. Indemnitee agrees to serve or continue to serve the Company in his Corporate Status. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in any such position.

     Section 2. Indemnification — General. The Company shall indemnify, and advance Expenses to Indemnitee as provided in this Agreement and to the fullest extent permitted by applicable law in effect on the date hereof and to such greater extent as applicable law may thereafter from time to time permit. The rights of Indemnitee

 


 

provided under the preceding sentence shall include, but shall not be limited to, the rights set forth in the other Sections of this Agreement.

     Section 3. Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 3 if, by reason of his Corporate Status, he is, or is threatened to be made, a party to any threatened, pending, or completed Proceeding, other than a Proceeding by or in the right of the Company. Pursuant to this Section 3, Indemnitee shall be indemnified against Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, had no reasonable cause to believe his conduct was unlawful.

     Section 4. Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 4 if, by reason of his Corporate Status, he is, or is threatened to be made, a party to any threatened, pending or completed Proceeding brought by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section, Indemnitee shall be indemnified against Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. Notwithstanding the foregoing, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company if applicable law prohibits such indemnification; provided, however, that, if applicable law so permits, indemnification against Expenses shall nevertheless be made by the Company in such event if and only to the extent that the Court of Chancery of the State of Delaware, or the Court in which such Proceeding shall have been brought or is pending, shall determine.

     Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

     Section 6. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding, he shall be indemnified against all

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Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

     Section 7. Advancement of Expenses. The Company shall advance all reasonable Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding within 20 days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses.

     Section 8. Procedure for Determination of Entitlement to Indemnification.

     (a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.

     (b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 8(a) hereof, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel (unless Indemnitee shall request that such determination be made by the Board of Directors or the stockholders, in which case by the person or persons or in the manner provided for in clauses (ii) or (iii) of this Section 8(b)) in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), or (B) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee or (C) by the stockholders of the Company; or (iii) as provided in Section 9(b) of this Agreement; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within 10 days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorneys’ fees and disbursements) incurred by

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     Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

     (c) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8(b) hereof, the Independent Counsel shall be selected as provided in this Section 8(c). If a Change of Control shall not have occurred, the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change of Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within 7 days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection. Such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 17 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. If such written objection is made, the Independent Counsel so selected may not serve as Independent Counsel unless and until a court has determined that such objection is without merit. If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 8(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom an objection is so resolved or the person so appointed shall act as Independent Counsel under Section 8(b) hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 8(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 8(c), regardless of the manner in which such Independent Counsel was selected or appointed. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 10(a)(iii) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

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     Section 9. Presumptions and Effect of Certain Proceedings.

     (a) If a Change of Control shall have occurred, in making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 8(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption.

     (b) If the person, persons or entity empowered or selected under Section 8 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within 60 days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 9(b) shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 8(b) of this Agreement and if (A) within 15 days after receipt by the Company of the request for such determination the Board of Directors has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to beheld within 75 days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within 15 days after such receipt for the purpose of making such determination, such meeting is held for such purpose within 60 days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8(b) of this Agreement.

     (c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best

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interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

     Section 10. Remedies of Indemnitee.

     (a) In the event that (i) a determination is made pursuant to Section 8 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 7 of this Agreement, (iii) the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8(b) of this Agreement and such determination shall not have been made and delivered in a written opinion within 90 days after receipt by the Company of the request for indemnification, or (iv) payment of indemnification is not made pursuant to Section 6 of this Agreement within 10 days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within 10 days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 8 or 9 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of his entitlement to such indemnification or advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 10(a). The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

     (b) In the event that a determination shall have been made pursuant to Section 8 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 10 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. If a Change of Control shall have occurred, in any judicial proceeding or arbitration commenced pursuant to this Section 10 the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

     (c) If a determination shall have been made or deemed to have been made pursuant to Section 8 or 9 of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 10, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in

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connection with the request for indemnification, or(ii) a prohibition of such indemnification under applicable law.

     (d) The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 10 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.

     (e) In the event that Indemnitee, pursuant to this Section 10, seeks a judicial adjudication of or an award in arbitration to enforce his rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all expenses (of the types described in the definition of Expenses in Section 17 of this Agreement) actually and reasonably incurred by him in such judicial adjudication or arbitration, but only if he prevails therein. If it shall be determined in said judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advancement or expenses sought, the expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.

     Section 11. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.

     (a) The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the By-Laws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or termination of this Agreement or any provision hereof shall be effective as to any Indemnitee with respect to any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or termination.

     (b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies.

     (c) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

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     (d) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

     Section 12. Duration of Agreement. This Agreement shall continue until and terminate upon the later of: (a) 10 years after the date that Indemnitee shall have ceased to serve as a director, or (b) the final termination of all pending Proceedings in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 10 of this Agreement relating thereto. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and his heirs, executors and administrators.

     Section 13. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

     Section 14. Exception to Right of Indemnification or Advancement of Expenses. Notwithstanding any other provision of this Agreement, Indemnitee shall not be entitled to indemnification or advancement of Expenses under this Agreement with respect to any Proceeding, or any claim therein, brought or made by him against the Company.

     Section 15. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

     Section 16. Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

     Section 17. Definitions. For purposes of this Agreement:

     (a) “Change in Control” means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported under the Securities Exchange Act of 1934 (the “Act”), whether or not

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the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if after the Effective Date (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such person attaining such percentage interest; (ii) the Company is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (including for this purpose any new director whose election or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors.

     (b) “Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company.

     (c) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

     (d) “Effective Date” means    , 2004.

     (e) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding.

     (f) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

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     (g) “Proceeding” includes any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative or investigative, except one initiated by an Indemnitee pursuant to Section 10 of this Agreement to enforce his rights under this Agreement.

     Section 18. Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

     Section 19. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder.

     Section 20. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

         
  (a)   If to Indemnitee, to:
 
       
      [Insert Name of Indemnitee]
      Mobile Mini, Inc.
      7420 S. Kyrene Road, Suite 101
      Tempe, Arizona 85283
 
       
  (b)   If to the Company to:
 
       
      Mobile Mini, Inc.
      7420 S. Kyrene Road, Suite 101
      Tempe, Arizona 85283
      Attention: Corporate Secretary

or such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

     Section 21. Governing Law. The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware.

[Intentionally Left Blank]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

     
ATTEST:
  MOBILE MINI INC.
 
   
By: _________________________
  By: _________________________
  Name:
  Title:
  Address: Mobile Mini, Inc.
        7420 S. Kyrene Road, Suite 101
        Tempe, Arizona 85283
 
   
  [INSERT NAME OF INDEMNITEE]
 
   
  By: _________________________
  Name:
  Title:
  Address:

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Exhibit 31.1

CERTIFICATION

I, Steven G. Bunger, certify that:

1.   I have reviewed this Report on Form 10-Q of Mobile Mini, Inc.;
 
2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation and
 
(c)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
         
     
Date: August 9, 2004  /s/Steven G. Bunger    
  Steven G. Bunger   
  Chief Executive Officer   

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Exhibit 31.2

CERTIFICATION

I, Lawrence Trachtenberg, certify that:

1.   I have reviewed this Report on Form 10-Q of Mobile Mini, Inc.;
 
2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation and
 
(c)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
         
     
Date: August 9, 2004  /s/Lawrence Trachtenberg    
  Lawrence Trachtenberg   
  Chief Financial Officer   

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Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

               In connection with the quarterly report of Mobile Mini, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Steven G. Bunger, Chief Executive Officer of the Company, and Lawrence Trachtenberg, Chief Financial Officer of the Company, each, certify, to the best of our knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented.
         
     
  /s/ Steven G. Bunger    
August 9, 2004  Steven G. Bunger   
  Chief Executive Officer
Mobile Mini, Inc. 
 
 
         
     
  /s/ Lawrence Trachtenberg    
August 9, 2004  Lawrence Trachtenberg   
  Executive Vice President and
Chief Financial Officer
Mobile Mini, Inc. 
 
 

This certification accompanies this Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by Mobile Mini, Inc. for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that Mobile Mini, Inc. specifically incorporates it by reference.

A signed original of this written statement required by Section 906 has been provided to Mobile Mini, Inc. and will be retained by Mobile Mini, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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