UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report(date of earliest event reported) July 22, 1997 ------------ Litchfield Financial Corporation - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Massachusetts 0-19822 04-3023928 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 789 Main Road, Stamford, VT 05352 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (802)694-1200 ------------- - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Item 5. Other Events NEWS RELEASE NASDAQ Symbol - LTCH FOR IMMEDIATE RELEASE Contact : Heather A. Sica, Executive Vice President Telephone : 802-694-1200 x 123 Fax: 802-694-1552 LITCHFIELD FINANCIAL CORPORATION ANNOUNCES RECORD SECOND QUARTER EARNINGS. Stamford, Vermont (July 22, 1997) ... Litchfield Financial Corporation (NASDAQ : LTCH) announced today that earnings per share for the second quarter of 1997 increased 19% to $0.32 from $0.27 in the second quarter of 1996. Second quarter net income increased 20% to $1,880,000 from $1,564,000 in the second quarter of 1996. Revenues for the second quarter of 1997 were $7.7 million, up 26% from $6.1 million in the second quarter of 1996. Earnings per share for the six months ended June 30, 1997 increased 27% to $0.52 from $0.41 for the first half of 1996. Net income for the first six months of 1997 increased 28% to $3,025,000 from $2,362,000 in the 1996 period. Revenues for the six months ended June 30,1997 were $14.1 million, up 31% from $10.8 million in the six months ended June 30, 1996. Randy Stratton, President and CEO of Litchfield commented, "Our goal is to deliver attractive earnings growth on a consistent basis. We believe our success can be attributed to the strength of our origination network and underwriting standards, as well as strict expense control. In addition, approximately 70% of our revenues come from interest and servicing income which provide a significant base of stable, recurring revenues." Litchfield recently announced that its second quarter originations increased 45% to $47.2 million from $32.6 million in the second quarter of 1996. Litchfield's originations for the six months ended June 30, 1997 increased 41% to $83.3 million from $59.0 million for the six months ended June 30, 1996. Loan sales for the second quarter of 1997 were $27.4 million. Approximately $12.1 million were sold through Litchfield's existing land and timeshare commercial paper facilities and $15.3 million of dealer hypothecation loans were sold in a private placement. Mr. Stratton added, "We continue to have strong demand for our land and VOI loans. Our improved bank and loan sale facilities will enable us to further expand our marketing by offering more attractive terms to certain customers. In addition, we have had good success in related niches of lending such as construction and receivables finance." Litchfield Financial Corporation is a specialty finance company which provides financing for the purchase of rural and vacation properties, financing of vacation ownership interests (popularly known as timeshare interests), loans to rural land dealers and resort developers secured by consumer receivables or real estate, and other secured loans. Litchfield is listed on the NASDAQ Stock Market under the symbol LTCH. LITCHFIELD FINANCIAL CORPORATION SECOND QUARTER RESULTS CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (All numbers in 000's except per share data and number of shares) Three months ended Six months ended June 30, June 30, ------------------ ------------------- 1997 1996 1997 1996 ------ ------ ------- ------- Revenues : Interest income $4,783 $3,348 $ 9,329 $ 6,640 Gain on sale of loans 2,563 2,474 4,067 3,354 Servicing and other income 345 279 702 757 ------ ------ ------ ------ 7,691 6,101 14,098 10,751 ------ ------ ------ ------ Expenses : Interest expense 2,648 1,768 5,042 3,297 Salaries and employee benefits 833 645 1,646 1,382 Other operating expenses 853 618 1,756 1,282 Provision for loan losses 300 529 735 954 ------ ------ ------ ------ 4,634 3,560 9,179 6,915 ------ ------ ------ ------ Income before income taxes 3,057 2,541 4,919 3,836 Provision for income taxes 1,177 977 1,894 1,474 ------ ------ ------ ------ Net income $1,880 $1,564 $3,025 $2,362 ====== ====== ====== ====== Earnings per share $ 0.32 $ 0.27 $ 0.52 $ 0.41 ====== ====== ====== ====== Weighted average number of shares 5,917,911 5,708,191 5,861,180 5,698,866 ========= ========= ========= ========= CONSOLDIATED CONDENSED BALANCE SHEETS June 30, December 31, 1997 1996 --------- ------------ (unaudited) Assets : Cash and cash equivalents $ 7,061 $ 5,557 Restricted cash 21,364 18,923 Loans held for sale, net 20,475 12,260 Other loans, net 91,750 79,996 Retained interest in loan sales 27,759 28,912 Other assets 6,901 7,041 -------- -------- Total assets $175,310 $152,689 ======== ======== Liabilities and Stockholder's Equity : Liabilities : Lines of credit $ 34,287 $ 36,299 Term note payable 6,396 7,428 Accounts payable and accrued liabilities 3,981 3,811 Dealer/developer reserves 10,626 10,628 Deferred income taxes 6,035 5,080 Long-term notes 66,382 46,995 Stockholder's equity 47,603 42,448 -------- -------- Total liabilities and stockholders' equity $175,310 $152,689 ======== ======== Notes to Investors This press release may contain certain forward-looking statements which involve a number of risks and uncertainties that could cause actual results to differ materially. Specifically, comments related to originations, revenues, net income, profitability, delinquencies, defaults may be considered forward-looking and subject to a number of risks and uncertainties, including but not limited to : demand for loans, declines in real estate value, changes in prevailing interest rates, continued availability of various funding sources, economic cycles, prepayment, timing of loan sales, collection and delinquency risks, contingent repurchase obligations, dependence on senior management, competition, regulation and environmental liabilities. Refer to Form 10-K for the year ended 1996 for a complete list of factors as discussed under "Risk Factors". XXX