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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended May 31, 1999 Commission File No. 0-9061
ELECTRO RENT CORPORATION
A California corporation I.R.S. Employer
Identification No. 95-2412961
6060 Sepulveda Boulevard
Van Nuys, California 91411-2512
(Address of principal executive offices)
Registrant's telephone number, including area code: (818) 786-2525
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock without par value.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [ ].
The aggregate market value of the voting stock of the registrant held by
non-affiliates of the registrant as of August 9, 1999 was $246,049,572.
Number of shares of Common Stock outstanding as of August 9, 1999:
24,480,813 shares.
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ELECTRO RENT CORPORATION
FORM 10-K ANNUAL REPORT
DOCUMENTS INCORPORATED BY REFERENCE
1. Pages 1 and 15 to 29 of the Annual Report to Security Holders for the
fiscal year ended May 31, 1999 (the "1999 Annual Report") are incorporated by
reference in this Form 10-K Annual Report.
2. Proxy Statement for the Annual Meeting of Shareholders to be held on
October 7, 1999 (the "1999 Proxy Statement").
CROSS REFERENCE SHEET
Showing Location in 1999 Annual Report
and 1999 Proxy Statement of Information
Required by Items of Form 10-K
Caption and Reference
Form 10-K Item in 1999 Annual Report ("AR")
Number and Caption or 1999 Proxy Statement ("PS")
------------------ ------------------------------
PART II
5. Market for the Registrant's
Common Equity and Related
Shareholders Matters AR page 29
6. Selected Financial Data AR page 1
7. Management's Discussion and
Analysis of Financial
Condition and Results of
Operations AR pages 15 to 18
7A. Quantitative and Qualitative
Disclosure About Market Risk AR page 18
8. Financial Statements and
Supplementary Data AR pages 19 to 29
PART III
10. Directors and Executive
Officers of the Registrant PS pages 1 to 3
11. Executive Compensation PS pages 5 to 10
12. Security Ownership of
Certain Beneficial Owners
and Management PS pages 1 and 2
13. Certain Relationships and
Related Transactions PS page 4
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PART I
THIS ANNUAL REPORT ON FORM 10-K CONTAINS FORWARD-LOOKING STATEMENTS
WHICH REFLECT THE COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND
FINANCIAL PERFORMANCE. IN THIS REPORT, THE WORDS "ANTICIPATE," "BELIEVES,"
"EXPECTS," "INTENDS," "FUTURE," AND OTHER SIMILAR EXPRESSIONS IDENTIFY
FORWARD-LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES, INCLUDING THOSE DISCUSSED IN "BUSINESS" BELOW,
IN "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS," AND IN "QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK,"
THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM HISTORICAL RESULTS OR
THOSE ANTICIPATED.
Item 1. Business.
Electro Rent Corporation (the "Company" or "Electro Rent") was
incorporated in California in 1965. The Company became a publicly held
corporation on March 31, 1980.
The Company primarily engages in the rental, lease and sale of
state-of-the-art electronic equipment. About 48% of the Company's equipment
portfolio at acquisition cost is composed of general purpose test and
measurement instruments purchased from leading manufacturers such as Hewlett
Packard and Tektronix. The remainder comprises personal computers and
workstations. Personal computer lines include those from Compaq, Dell, IBM,
Apple, and Toshiba; while workstations are purchased primarily from Sun
Microsystems and Hewlett Packard. A large part of its equipment portfolio is
rented or leased to Fortune 500 companies in the aerospace, defense, electronics
and telecommunications industries. Management believes that the Company's test
and measurement equipment is primarily used in research and development
activities and that a significant amount of this equipment is used in connection
with government-generated projects. The Company also rents equipment to
companies of various sizes representing a cross-section of American industry. No
customer accounted for more than 10% of the Company's revenues for the fiscal
year ended May 31, 1999. No significant portion of the Company's revenues are
currently derived from direct United States Government contracts.
An important aspect of the Company's equipment portfolio management is
the resale of equipment from the portfolio, generally three to five years after
purchase, which, on the average, have been at prices above book value. Such
sales have historically provided a substantial portion of revenues and operating
cash flow.
The Company services its customers through a network of equipment,
calibration and service centers in the United States and Canada
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which are linked by an on-line computer system. These centers also function as
depots for the sale of used equipment.
Data Rentals/Sales, Inc., a California corporation, and Genstar Rental
Electronics, Inc., a Delaware corporation, formerly wholly owned subsidiaries of
the Company, have been merged into the Company and are operated as divisions of
the Company.
In April 1998 the Company sold its interest in its Japanese venture with
Nas-Fritzke International Corp.
Since it acquired the rental business of General Electric Technology
Management Services in November 1997, Electro Rent has become one of the larger
companies in the highly competitive electronic equipment rental and lease
business. Independent industry publications have identified a number of major
competitors, including Newcourt Technology Finance Group, a division of Newcourt
Financial; Hewlett-Packard Financial Remarketing Division; Telogy; and
Continental Resources. Since the larger of these firms are divisions of large
corporations, these firms have access to greater financial and other resources
than does the Company.
Electro Rent's business is relatively non-seasonal except for the third
quarter months of December, January and February, when rental activity declines
because a number of customers close for extended Christmas-New Year vacation. In
addition, the shortness of February results in a reduced level of rental
billing.
Electro Rent purchases the majority of its equipment from leading
suppliers of electronic equipment. The research and development, manufacturing
and marketing trends and activities of the Company's major suppliers tend to
shape the nature of the rental and lease demand of the Company's customers and
the availability of equipment. As a result, Electro Rent's business is
significantly affected by the continued research and development, manufacturing
and financial condition of its major suppliers, particularly Hewlett-Packard.
Electro Rent believes that its relationships with its major suppliers
are good. Because of the volume of its purchases and its long-term purchase
arrangements, the Company obtains favorable price discounts.
At May 31, 1999, Electro Rent and its subsidiary employed approximately
713 individuals. None of the employees is a member of a labor union. Electro
Rent considers its employee relations to be satisfactory and provides standard
employee benefits and pays certain of the costs of employee education.
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Item 2. Properties.
Electro Rent's corporate headquarters are located at 6060 Sepulveda
Boulevard, Van Nuys, California. The building contains approximately 84,500
square feet of office space. Approximately 24,800 square feet are currently
being leased to others, all of which will be available for future needs of the
Company. There is no additional space in the building available for leasing.
Electro Rent owns a facility in Wood Dale, Illinois containing
approximately 30,750 square feet. It houses the Company's Chicago sales office,
and currently has approximately 10,000 square feet available for lease.
The Company's building at 15385 Oxnard Street, Van Nuys, California
contains approximately 68,200 square feet, all of which is used by the Company.
It houses the Company's California warehouse and laboratory operations and Los
Angeles sales office.
As of May 31, 1999 Electro Rent had both sales offices and equipment,
calibration and service centers in the metropolitan areas of Atlanta, Boston,
Chicago and Los Angeles. Electro Rent also has sales offices in Albany, Atlanta,
Cleveland, Chicago, Dallas, Denver, Detroit, Houston, Kansas City, Minneapolis,
Montreal, New York/ Newark, Philadelphia, Phoenix, Portland (OR), Rochester, San
Diego, Seattle, Stamford, Toronto and Washington/Baltimore.
Electro Rent's facilities aggregate approximately 626,000 square feet.
Except for the corporate headquarters, the Chicago area facilities, and the
Oxnard Street building, all of the facilities are rented pursuant to leases for
up to five years for aggregate annual rentals of approximately $3,997,000 in
fiscal 1999. No rented facility is considered essential to the Company. The
Company considers its facilities to be in good condition, well maintained and
adequate for its needs.
Item 3. Legal Proceedings.
The Company is engaged in an arbitration proceeding with General
Electric Technology Management Services ("TMS") which involves a variety of
claims arising out of the November 1997 purchase by the Company of certain
assets and business of TMS.
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Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of the security holders of the Company.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
The Company's common stock is listed by the National Association of
Securities Dealers and is quoted on the NATIONAL MARKET SYSTEM OF NASDAQ. The
symbol is ELRC. The quarterly market price ranges for the common stock for the
two fiscal years ended May 31, 1999 as quoted on NASDAQ, shareholder information
and dividend information are set forth on page 29 of the 1999 Annual Report and
are incorporated herein by reference.
None of the Company's preferred shares are issued and outstanding.
Item 6. Selected Financial Data.
The summary of the selected financial data referred to as Financial
Highlights, appearing on page 1 of the 1999 Annual Report, is hereby
incorporated by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Information appearing under the above caption on pages 15 to 18 of the
1999 Annual Report is hereby incorporated by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risks.
The information appearing under the caption Quantitative and Qualitative
Market Risk Disclosure on page 18 of the 1999 Annual Report is hereby
incorporated by reference.
Item 8. Financial Statements and Supplementary Data.
The Company's consolidated financial statements together with the report
thereon of Arthur Andersen LLP appearing on pages 19 to 29 of the 1999 Annual
Report are hereby incorporated by reference.
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Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
Nothing to report.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Information appearing in the 1999 Proxy Statement under the captions
Election of Directors (pages 1 to 3), Executive Officers (page 3), Compliance
With Section 16 of the Securities Exchange Act of 1934 (page 4), and
Transactions With Management (page 4), is hereby incorporated by reference.
Item 11. Executive Compensation.
Information appearing in the 1999 Proxy Statement under the caption
Executive Compensation (pages 5 to 10) is hereby incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Information concerning the ownership of the Company's securities by the
principal holders and by management is set forth in the 1999 Proxy Statement
(pages 1 to 3), and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
Information appearing in the 1999 Proxy Statement under the caption
Transactions With Management (page 4) is hereby incorporated by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following financial statements and financial statement schedule
covered by the Report of Independent Public Accountants are filed as a part of
this report and are included or incorporated herein by reference to the
following page or pages of the 1999 Annual Report.
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Page Number
-----------
1999 Annual
Item Report Form 10-K
---- ------ ---------
Consolidated Balance Sheets at
May 31, 1999 and 1998 20
Consolidated Statements of Income
for each of the three years in
the period ended May 31, 1999 19
Consolidated Statements of Shareholders'
Equity for each of the three years in
the period ended May 31, 1999 21
Consolidated Statements of Cash Flows
for each of the three years in the
period ended May 31, 1999 22
Notes to Consolidated Financial Statements 23 to 28
Report of Independent Public Accountants 29
Schedule for each of the three years in the
period ended May 31, 1999:
II - Valuation and qualifying accounts 12
Consent and Report of Independent Public
Accountants 14
All other schedules have been omitted since the required information is
not present or is not present in amounts sufficient to require submission of a
schedule, or because the information required is included in the financial
statements or related notes.
(b) Reports on Form 8-K.
During the last quarter of the period covered by this Annual Report,
Form 10-K, the Registrant did not file and was not required to file any Current
Reports on Form 8-K.
(c) Exhibits listed by numbers corresponding to Exhibit Table of
Item 601 of Regulation S-K.
(3) Articles of Incorporation (Restated) and bylaws are incorporated by
reference to Exhibits 1.2 and 6.1, respectively, of Registration Statement (Form
S-14), File No. 2-63532. A copy of the Restated Articles of Incorporation and
the Certificate of Amendment of
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Restated Articles of Incorporation filed October 24, 1988 are incorporated by
reference to Exhibit (3) to the Annual Report (Form 10-K) for the fiscal year
ended May 31, 1989. A copy of the Certificate of Amendment of Restated Articles
of Incorporation filed October 15, 1997 is filed as Exhibit (3) to this Annual
Report. A copy of the amendment to the bylaws adopted October 6, 1994 is
incorporated by reference to the Annual Report (Form 10-K) for the fiscal year
ended May 31, 1995. A copy of the amendment to the bylaws adopted November 15,
1996 is incorporated by reference to Exhibit (3) of the Annual Report (Form
10-K) for the fiscal year ended May 31, 1997.
(10)(A) The ELECTRO RENT CORPORATION EMPLOYEE STOCK OWNERSHIP AND
SAVINGS PLAN, JUNE 1, 1985 RESTATEMENT, and the ELECTRO RENT CORPORATION
EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN TRUST AGREEMENT, are incorporated by
reference to Exhibits 10(A)-(1) and 10(A)-(2) of the Registrant's Annual Report
(Form 10-K) for the fiscal year ended May 31, 1985. A copy of AMENDMENT NO. ONE
to the RESTATED ESOSP is incorporated by reference to Exhibit (10)(A) of
Registrant's Annual Report (Form 10-K) for the fiscal year ended May 31, 1987.
A copy of the ELECTRO RENT CORPORATION EMPLOYEE STOCK OWNERSHIP AND
SAVINGS PLAN, RESTATED AS OF JUNE 1, 1989 is incorporated by reference to
Exhibit (10)(A) of the Annual Report (Form 10-K) for the fiscal year ended May
31, 1989.
Copies of the following documents amending and supplementing the ESOSP
and ESOP as heretofore amended are incorporated by reference to Exhibit
(10)(A)-(1) to (7) of the Annual Report (Form 10-K) for the fiscal year ended
May 31, 1995:
ADOPTION AGREEMENT FOR THE VANGUARD PROTOTYPE 401(k) SAVINGS PLAN dated
August 1, 1994.
ELECTRO RENT CORPORATION SAVINGS PLAN TRUST AGREEMENT dated September 1,
1994.
ELECTRO RENT SAVINGS PLAN SUPPLEMENT TO THE VANGUARD PROTOTYPE 401(k)
SAVINGS PLAN ADOPTION AGREEMENT dated September 24, 1994.
SECOND AMENDMENT TO ELECTRO RENT CORPORATION EMPLOYEE STOCK OWNERSHIP &
SAVINGS PLAN (RESTATED AS OF JUNE 1, 1989) dated as of June 1, 1991.
THIRD AMENDMENT TO ELECTRO RENT CORPORATION EMPLOYEE STOCK OWNERSHIP AND
SAVINGS PLAN (RESTATED AS OF JUNE 1, 1989) dated June 15, 1994.
FOURTH AMENDMENT TO ELECTRO RENT CORPORATION SAVINGS PLAN (RESTATED AS
OF JUNE 1, 1989) dated September 1, 1994.
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ELECTRO RENT CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN TRUST AGREEMENT
dated September 1, 1994.
A copy of the GE Rentals Supplement to the Vangard Prototype 401(k)
Savings Plan Adoption Agreement adopted October 10, 1997 is incorporated by
reference to Exhibit 10(A) of the Annual Report (Form 10-K) for the fiscal year
ended May 31, 1998.
(10)(B) The 1980 Stock Option Plan and form of Stock Option Agreement
are incorporated by reference to Exhibits 1.1 and 2, respectively, of
Registration Statement (Form S-8), File No. 2-70763.
The Incentive Stock Option Plan (as Amended and Restated to July 8,
1982) and Amendment No. One to Stock Option Agreement are incorporated by
reference to Exhibit (10)(B) of the Annual Report (Form 10-K) for the fiscal
year ended May 31, 1982. Amendment No. One to the Plan as Amended and Restated
and the Stock Option Agreement, NonQualified Stock Options are incorporated by
reference to Exhibit 10(B) of the Annual Report (Form 10-K) for the fiscal year
ended May 31, 1984.
(10)(C) A copy of the ELECTRO RENT CORPORATION SUPPLEMENTAL RETIREMENT
PLAN is incorporated by reference to Exhibit (10)(C) of Registrant's Annual
Report (Form 10-K) for the fiscal year ended May 31, 1987.
(10)(D) The EXECUTIVE EMPLOYMENT AGREEMENT between the Company and
Daniel Greenberg, Chairman of the Board of Directors and Chief Executive
Officer, and between the Company and William Weitzman, President and Chief
Operating Officer, each originally entered into December 15, 1986 and amended
November 22, 1988 by AMENDMENT NO. ONE TO EXECUTIVE EMPLOYMENT AGREEMENT was
each further amended and restated as of July 15, 1992. A copy of each EXECUTIVE
EMPLOYMENT AGREEMENT (AMENDED AND RESTATED AS OF JULY 15, 1992) is incorporated
by reference to Exhibits (10)(D)-(1) and (10)(D)-(2) of Registrant's Annual
Report (Form 10-K) for the fiscal year ended May 31, 1993.
(10)(E) A copy of the Electro Rent Corporation 1990 Stock Option
Plan, the Electro Rent Corporation Stock Option Agreement (Incentive Stock
Option) and the Electro Rent Corporation Stock Option Agreement (Nonstatutory
Option) are incorporated by reference to Exhibits (10)(E)-(1), (10)(E)-(2) and
(10)(E)-(3), respectively to the Annual Report (Form 10-K) for the fiscal year
ended May 31, 1990. A copy of AMENDMENT NUMBER ONE TO ELECTRO RENT CORPORATION
1990 STOCK OPTION PLAN adopted October 3, 1991 is incorporated by reference to
Exhibit (10)(E) of the Annual Report (Form 10-K) for the fiscal year ended May
31, 1992. A copy of AMENDMENT NUMBER TWO TO ELECTRO RENT CORPORATION 1990 STOCK
OPTION PLAN adopted April 11, 1995 is incorporated by reference to Exhibit
(10)(E) of the Annual Report (Form 10-K) for the fiscal year ended May 31, 1995.
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(10)(E) A copy of the Electro Rent Corporation 1996 Stock Option Plan,
the Electro Rent Corporation Stock Option Agreement (Incentive Stock Options)
and the Electro Rent Corporation Stock Option Agreement (Nonstatutory Stock
Options) are incorporated by reference to Exhibits (10)(E)-(1), (2) and (3)
respectively to the Annual Report (Form 10-K) for the fiscal year ended May 31,
1996. A copy of AMENDMENT NUMBER ONE TO ELECTRO RENT CORPORATION 1996 STOCK
OPTION PLAN adopted November 1, 1996 is incorporated by reference to EXHIBIT
(10)(E) of the Annual Report (Form 10-K) for the fiscal year ended May 31, 1998.
(10)(E) A copy of the Electro Rent Corporation 1996 Director Option Plan
and the Electro Rent Corporation Stock Option Agreement for the 1996 Director
Option Plan are incorporated by reference to Exhibits (10)(E)-(4) and (5)
respectively to the Annual Report (Form 10-K) for the fiscal year ended May 31,
1996.
(11) Statement re computation of per share earnings is incorporated by
reference to the 1999 Annual Report, pages 19, 24 and 26.
(13) 1999 Annual Report. Only those portions of the 1999 Annual Report
to security holders expressly incorporated hereby by reference are deemed
"filed."
(21) Subsidiaries of the Registrant.
Genstar Rental Electronics, Inc., a Canadian corporation
(formerly a subsidiary of Genstar Rental Electronics, Inc., a Delaware
corporation).
Electro Rent de Mexico S.A. de C.V., a Mexican corpora- tion.
Data Rentals/Sales, Inc., a California corporation, and Genstar
Rental Electronics, Inc., a Delaware corporation, the Registrant's formerly
wholly owned subsidiaries, have been merged into the Registrant, their parent,
by statutory merger. Their functions are conducted by divisions of Electro Rent.
(22) Pages 1 and 15 to 29 of the Annual Report to Security Holders for
the fiscal year ended May 31, 1999 are appended hereto as Exhibit 22 hereof and
are being electronically filed with this Form 10-K Annual Report.
(d) Schedule of Financial Statements Required by Regulation S-X which is
excluded from the 1999 Annual Report by Rule 14 a 3(b) (1):
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ELECTRO RENT CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended May 31, 1999, 1998 and 1997
(in thousands)
Balance
at Additions Balance
Beginning Charged to at End
Description of Year Income Deductions* of Year
----------- --------- ---------- ----------- -------
Allowance for doubtful
receivables
1999 $4,715 $2,714 $1,595 $5,834
1998 $1,773 $3,158 $ 216 $4,715
1997 $1,464 $ 717 $ 408 $1,773
* Represents accounts written off against the allowance, net of recoveries.
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SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Electro Rent Corporation
Dated: August 23, 1999. By /s/ Daniel Greenberg
-----------------------------------
Daniel Greenberg, Chief
Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Daniel Greenberg Chairman of the Board
- -------------------------- and Chief Executive Officer August 23, 1999
Daniel Greenberg
/s/ William Weitzman President, Chief Operating
- -------------------------- Officer and Director August 23, 1999
William Weitzman
/s/ Craig R. Jones Chief Financial Officer August 23, 1999
- -------------------------
Craig R. Jones
/s/ Gerald D. Barrone Director August 23, 1999
- -------------------------
Gerald D. Barrone
Director August 23, 1999
- -------------------------
Nancy Y. Bekavac
Director August 23, 1999
- -------------------------
Joseph J. Kearns
/s/ S. Lee Kling Director August 23, 1999
- -------------------------
S. Lee Kling
/s/ Michael R. Peevey Director August 23, 1999
- -------------------------
Michael R. Peevey
/s/ Will Richeson, Jr. Director August 23, 1999
- -------------------------
Will Richeson, Jr.
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports incorporated by reference in this Form 10-K, into
the Company's previously filed Registration Statement No. 3-37692.
Arthur Andersen LLP
Los Angeles, California
August 26, 1999
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Electro Rent Corporation:
We have audited the accompanying consolidated balance sheets of Electro
Rent Corporation (a California corporation) and subsidiaries as of May 31, 1999
and 1998, and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period ended May 31,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Electro Rent
Corporation and subsidiaries as of May 31, 1999 and 1998, and the results of
their operations and their cash flows for each of the three years in the period
ended May 31, 1999 in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Los Angeles, California
August 6, 1999
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