Exhibit 99(a)
For Immediate Release Contact:
Richard F. Latour
President and CEO
Tel: 781-994-4800
MicroFinancial Incorporated Announces
Fourth Quarter and Year End 2002 Results
Waltham, MA-- April 16, 2003-- MicroFinancial Incorporated (NYSE-MFI), a leader
in Microticket leasing and finance, announced today its financial results for
the fourth quarter and the year ended December 31, 2002.
Fourth quarter revenue for the period ended December 31, 2002 decreased 24.0%,
or $8.9 million to $28.0 million compared to $36.9 million last year. The net
loss for the quarter was $7.7 million, or ($0.60) per diluted share as compared
with net income of $2.1 million or $0.16 per diluted share in the prior year's
fourth quarter. The decline in net income for the quarter is primarily the
result of a 30.4% decline in lease and loan revenues to $11.2 million, a 46.1%
decline in service fee and other revenues to $4.0 million, and a 32.7% increase
in the provision for credit losses to $22.5 million as compared with the fourth
quarter ended December 31, 2001. While revenue reductions were primarily related
to lower origination volume, the additional provision for credit losses was
required to maintain the Company's reserve policy requirements.
Total operating expenses for the quarter, before the provision for credit
losses, remained relatively flat at $18.4 million compared to the same period in
2001. Interest expense declined 1.0% to $3.0 million as a result of lower debt
balances of approximately $34.0 million offset by increased interest costs.
Selling, general and administrative expenses decreased $200,000 to $11.2 million
for the fourth quarter ended December 31, 2002 versus $11.4 million for the same
period last year. The decrease was attributable to reductions in personnel
related expenses of approximately $1.8 million, which was offset by increases in
legal expenses. The provision for credit losses increased to $22.5 million for
the quarter ended December 31, 2002 from $16.9 million for the same period last
year, while net charge offs increased to $28.8 million. Past due balances
greater than 31 days delinquent at December 31, 2002 increased to 22.9% from
17.2% last quarter. Net cash provided by operating activities for the quarter
decreased 4.0% to $29.1 million compared to $30.2 million during the same period
in 2001.
Revenues for the year ended December 31, 2002 decreased 18.0% to $126.8 million
compared to $154.0 million during the same period in fiscal 2001. The net loss
for the year ending December 31, 2002 was $22.1 million versus net income of
$16.3 million for the same period last year. Fully diluted earnings per share
for the year was a loss of $1.72 on 12,862,834 shares.
Total operating expenses for the year, before the provision for credit losses,
increased 2.0% to $74.7 million compared to $73.6 million in 2001. Interest
expense declined 25.0% to $10.8 million as a result of lower average debt
balances of approximately $17.3 million and lower interest costs of
approximately 122 basis points. Selling, general and administrative expenses
increased $600,000 to $45.5 million for the year ended December 31, 2002 versus
$44.9 million for the same period last year. The decrease was driven by a
reduction in personnel related expenses of approximately $2.1 million, as
management reduced headcount from 380 to 203, but this was offset by increases
in legal expenses. Depreciation and Amortization increased 28.0% to $18.3
million compared to $14.4 million in 2001. The provision for credit losses,
including the additional provision of $35.0 million taken in the third quarter
of 2002, increased to $88.9 million for the year ended December 31, 2002 from
$54.1 million for the same period last year. The additional provision was
required to reserve against dealer receivables and certain portfolio assets. Net
charge-offs increased 27.0% to $65.0 million and gross lease investment was down
16.0% or $71.1 million from the same period last year, primarily caused by lower
origination volume activity in 2002. Net cash provided by operating activities
for the year ended December 31, 2002 decreased 1.0% to $120.6 million compared
to $122.3 million for the year ended December 31, 2001.
MicroFinancial Incorporated continues to operate without the use of gain on sale
accounting treatment and a balance sheet with total liabilities less
subordinated debt to total equity plus subordinated debt of 2.3 to 1.
MICROFINANCIAL INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, December 31,
----------------------------------
2001 2002
---- ----
ASSETS
Net investment in leases and loans:
Receivables due in installments $ 399,361 $ 334,623
Estimated residual value 37,114 30,754
Initial direct costs 7,090 4,891
Loans receivable 2,248 1,796
Less:
Advance lease payments and deposits (287) (96)
Unearned income (104,538) (67,574)
Allowance for credit losses (45,026) (69,294)
--------- ---------
Net investment in leases and loans $ 295,962 $ 235,100
Investment in service contracts 14,126
14,463
Cash and cash equivalents 4,429
5,494
Restricted Cash 16,216 18,516
Property and equipment, net 16,034 9,026
Income taxes receivable -- 8,652
Other assets 14,961 3,834
--------- ---------
Total assets $ 361,728 $ 295,085
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $ 203,053 $ 168,927
Subordinated notes payable 3,262 3,262
Capitalized lease obligations 833 471
Accounts payable 2,517 3,840
Dividends payable 642 --
Other liabilities 6,182 6,776
Income taxes payable 4,211 1,400
Deferred income taxes payable 30,472 23,806
--------- ---------
Total liabilities 251,172 208,482
--------- ---------
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized;
no shares issued at 12/31/01 and 12/31/02 -- --
--------- ---------
Common stock, $.01 par value; 25,000,000 shares authorized;
13,410,646 shares issued at 12/31/01 and 12/31/02 134 134
Additional paid-in capital 47,723 47,723
Retained earnings 69,110 45,089
Treasury stock (588,700 shares of common stock
at 12/31/01 and 12/31/02), at cost (6,343) (6,343)
Notes receivable from officers and employees (68) --
--------- ---------
Total stockholders' equity 110,556 86,603
--------- ---------
Total liabilities and stockholders' equity $ 361,728 $ 295,085
========= =========
For the three months ended
December 31,
--------------------------------
2001 2002
---- ----
Revenues:
Income on financing leases and loans $16,035 $11,167
Income on service contracts 2,245 2,402
Rental income 9,533 8,859
Loss and damage waiver fees 1,598 1,567
Service fees and other 7,477 4,033
--------------------------------
Total revenues 36,888 28,028
--------------------------------
Expenses:
Selling general and administrative 11,438 11,246
Provision for credit losses 16,942 22,488
Depreciation and amortization 3,678 4,182
Interest 2,994 2,964
--------------------------------
Total expenses 35,052 40,880
--------------------------------
Income (loss) before provision (benefit) for income taxes 1,836 (12,852)
Provision (benefit) for income taxes (244) (5,142)
--------------------------------
Net income (loss) $2,080 ($7,710)
================================
Net income (loss) per common share - basic $0.16 ($0.60)
================================
Net income (loss) per common share - diluted $0.16 ($0.60)
================================
For the Years Ended
December 31,
--------------------------------
2001 2002
---- ----
Revenues:
Income on financing leases and loans $70,932 $53,012
Income on service contracts 8,665 9,734
Rental income 37,664 37,154
Loss and damage waiver fees 6,344 6,257
Service fees and other 30,486 20,665
--------------------------------
Total revenues 154,091 126,822
--------------------------------
Expenses:
Selling general and administrative 44,899 45,535
Provision for credit losses 54,092 88,948
Depreciation and amortization 14,378 18,385
Interest 14,301 10,787
--------------------------------
Total expenses 127,670 163,655
--------------------------------
Income (loss) before provision (benefit) for income taxes 26,421 (36,833)
Provision (benefit) for income taxes 10,104 (14,735)
--------------------------------
Net income (loss) $16,317 ($22,098)
================================
Net income (loss) per common share - basic $1.28 ($1.72)
================================
Net income (loss) per common share - diluted $1.26 ($1.72)
================================
MicroFinancial Inc. (NYSE: MFI), headquartered in Woburn, MA, is a financial
intermediary specializing in leasing and financing for products in the $500 to
$10,000 range. The company has been in operation since 1986.
Statements in this release that are not historical facts are forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. In addition, words such as "believes,"
"anticipates," "expects," "views, " and similar expressions are intended to
identify forward-looking statements. The Company cautions that a number of
important factors could cause actual results to differ materially from those
expressed in any forward-looking statements made by or on behalf of the Company.
Readers should not place undue reliance on forward-looking statements, which
reflect the management's view only as of the date hereof. The Company undertakes
no obligation to publicly revise these forward-looking statements to reflect
subsequent events or circumstances. The Company cannot assure that it will be
able to anticipate or respond timely to changes which could adversely affect its
operating results in one or more fiscal quarters. Results of operations in any
past period should not be considered indicative of results to be expected in
future periods. Fluctuations in operating results may result in fluctuations in
the price of the Company's common stock. For a more complete description of the
prominent risks and uncertainties inherent in the Company's business, see the
risk factors described in documents the Company files from time to time with the
Securities and Exchange Commission.