Exhibit 99(a)
For Release May 7 Contact:
4:01 PM Richard F. Latour
President and CEO
Tel: 781-994-4800
MICROFINANCIAL INCORPORATED ANNOUNCES
FIRST QUARTER 2003 RESULTS
- Sequential Net Loss Improves to $0.06 Per Diluted Share -
- Secures Amendment to Credit Agreement -
Woburn, MA-- May 7, 2003-- MicroFinancial Incorporated (NYSE-MFI), a leader in
Microticket leasing and finance, announced today its financial results for the
first quarter ended March 31, 2003.
First quarter revenue for the period ended March 31, 2003 was $25.6 million
compared to $35.3 million for the same period last year. The net loss for the
quarter was $0.8 million, or ($0.06) per diluted share compared with net income
of $3.2 million, or $0.25 per diluted share in the prior year's first quarter.
The reduction in revenue and income are attributable to the Company's decision
to suspend originations in October 2002. This resulted in a 35.5% decline in
lease and loan revenues to $9.8 million, a 44.6% drop in service fee and other
revenues to $3.5 million, and a 13.3% decrease in the rental income to $8.5
million versus the first quarter ended March 31, 2002.
Total operating expenses for the quarter decreased 10.3% or $3.1 million as
compared to the same period in 2002. Salary, general and administrative expense
declined 27.4% to $9.1 million for the quarter compared to $12.6 million for the
same period last year. The decrease was attributable to reductions in
personnel-related expenses of approximately $1.8 million, collection related
expenses of $0.9 million and lower cost of goods sold of $0.6 million as
compared to the first quarter of 2002. Despite an increase in interest costs,
interest expense declined 4.3% to $2.6 million as a result of lower debt
balances. The provision for credit losses decreased to $10.8 million for the
quarter ended March 31, 2003 from $11.0 million for the same period last year,
while net charge offs increased to $13.7 million from $11.2 million for the same
period last year. Past due balances greater than 31 days delinquent at March 31,
2003 remained relatively flat at 24.3% versus 24.9% last quarter.
Dealer fundings decreased $21.4 million to $1.2 million in the quarter, versus
the three months ended March 31, 2002. This decrease was a result of the
Company's decision to suspend new contract originations in October 2002, until
an alternative source of financing could be obtained. Investment in lease and
loan receivables due in installments, estimated residuals, rentals, and service
contracts were down $104.0 million to $357.4 million as compared to the same
period last year. Net cash provided by operating activities in the quarter
decreased to $25.7 million compared to $31.9 million in the same period of 2002.
The Company repaid notes payable in the amount of $23.7 million in the first
quarter of 2003.
On a sequential basis, net income for the first quarter of 2003 increased $6.9
million from a loss of $7.7 million last quarter. This increase was primarily
driven by a reduction in the provision for credit losses of $11.7 million.
Richard Latour, President and Chief Executive Officer stated, "We are pleased
that our first quarter results met our internal collection goals on the existing
portfolio and that the Company's ongoing strategy of driving down expenses had a
positive impact on our results."
Mr. Latour continued, "Microfinancial also reached a critical milestone in our
effort to reposition the Company and strengthen our capital structure. In April,
we secured a long-term amendment of our credit facility and a permanent waiver
for our securitization facility. This provides a solid foundation that will
allow us to focus our attention on seeking a financial partner as we actively
consider various financing, restructuring and strategic alternatives."
Mr. Latour concluded, "Over the next few quarters we will continue to maximize
our portfolio collections, while simultaneously pursuing a business strategy
that further strengthens our balance sheet."
MICROFINANCIAL INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
December 31, March 31,
----------- --------
2002 2003
---- ----
ASSETS
Net investment in leases and loans:
Receivables due in installments $ 334,623 $ 299,442
Estimated residual value 30,754 28,404
Initial direct costs 4,891 4,057
Loans receivable 1,796 1,783
Less:
Advance lease payments and deposits (96) (77)
Unearned income (67,574) (55,666)
Allowance for credit losses (69,294) (66,359)
--------- ---------
Net investment in leases and loans $ 235,100 $ 211,584
Investment in service contracts 14,463 12,843
Cash and cash equivalents 5,494 9,803
Restricted cash 18,516 14,419
Property and equipment, net 9,026 8,103
Income taxes receivable 8,652 8,652
Other assets 3,834 4,288
--------- ---------
Total assets $ 295,085 $ 269,692
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $ 168,927 $ 145,191
Subordinated notes payable 3,262 3,262
Capitalized lease obligations 471 356
Accounts payable 3,840 3,945
Other liabilities 6,776 6,343
Income taxes payable 1,400 1,392
Deferred income taxes payable 23,806 23,303
--------- ---------
Total liabilities 208,482 183,792
--------- ---------
Commitments and contingencies - -
Stockholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized; no shares
issued at 12/31/02 and 3/31/03 - -
Common stock, $.01 par value; 25,000,000 shares authorized; 13,410,646 and
13,730,500 shares issued at 12/31/02 and 3/31/03, respectively 134 137
Additional paid-in capital 47,723 47,977
Retained earnings 45,089 44,334
Treasury stock (588,700 shares of common stock at 12/31/02 and 3/31/03),
at cost (6,343) (6,343)
Deferred compensation 0 (205)
--------- ---------
Total stockholders' equity 86,603 85,900
--------- ---------
Total liabilities and stockholders' equity $ 295,085 $ 269,692
========= =========
MICROFINANCIAL INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
For the three months ended
March 31,
------------------------------
2002 2003
---- ----
Revenues:
Income on financing leases and loans $ 15,235 $ 9,821
Income on service contracts 2,395 2,251
Rental income 9,863 8,547
Loss and damage waiver fees 1,526 1,483
Service fees and other 6,266 3,469
---------------------------
Total revenues 35,285 25,571
---------------------------
Expenses:
Selling general and administrative 12,574 9,131
Provision for credit losses 10,964 10,799
Depreciation and amortization 3,639 4,270
Interest 2,747 2,629
---------------------------
Total expenses 29,924 26,829
---------------------------
Income/(loss) before provision for income taxes 5,361 (1,258)
Provision/(benefit) for income taxes 2,145 (503)
---------------------------
Net income/(loss) $ 3,216 ($ 755)
===========================
Net income/(loss) per common share - basic $ 0.25 ($ 0.06)
===========================
Net income/(loss) per common share - diluted $ 0.25 ($ 0.06)
===========================
Weighted-average shares used to compute:
Basic net income per share 12,821,946 12,854,642
---------------------------
Fully diluted net income per share 12,853,061 12,854,642
---------------------------
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.