Modular booking levels for the first four months of 2011 are up favorably over a year ago, and from levels experienced in the later part of 2010. This increase is being driven by higher business activity levels outside of the California market. A great deal of uncertainty remains in the California modular market due to its continuing large budget deficit and high unemployment rate.

Our portable storage, environmental test equipment and Mid-Atlantic modular initiatives all continued to make good progress in their market penetration efforts and booking levels during the quarter.

We’ve recently completed a new issuance of senior notes that secured access to an additional $100 million of capital today, and up to an additional $100 million under a new shelf agreement. The notes have attractive terms, including a five-year average life, final maturity in April 2018 and an interest rate of slightly over 4%. By converting a portion of our current variable interest rate debt to fixed interest rate debt the Company's average interest rate in 2011 will likely increase while also providing greater interest rate certainty for 2011 and future years.

In support of favorable business activity levels during the first quarter of 2011 and a more promising outlook for the remainder of the year, we had a net addition of approximately $20 million in rental assets during quarter. This rental equipment is primarily for the growth of Adler Tank Rentals, and for our test equipment and portable storage businesses.”

All comparisons presented below are for the quarter ended March 31, 2011 to the quarter ended March 31, 2010 unless otherwise indicated.


For the first quarter of 2011, the Company’s Mobile Modular division reported a 26% decrease in income from operations to $5.6 million. Rental revenues decreased 4% to $19.8 million and other direct costs increased 6% to $5.4 million, which resulted in a decrease in gross profit on rental revenues of 9% to $11.0 million. Sales revenues more than doubled to $3.9 million with gross profit on sales revenues increasing 53% to $1.0 million, primarily due to higher margins on new equipment sales revenues in the first quarter of 2011. Selling and administrative expenses increased 17% to $7.8 million as a result of increased investment in our Portable Storage growth initiative and increased salary and benefit costs.

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