Exhibit 99
For Release March 10, 2004 Contact:
4:01 pm Richard F. Latour
President and CEO
Tel: 781-994-4800
MicroFinancial Incorporated Announces
Fourth Quarter and Year End 2003 Results
Woburn, MA-- March 10, 2004-- MicroFinancial Incorporated (NYSE-MFI) announced
today its financial results for the fourth quarter and the year ended December
31, 2003. The reduction in revenues is directly related to the Company's
inability to fund new originations beyond October 2002 as a result of its
Lenders not renewing MicroFinancial's revolving credit facility on September 30,
2002.
Revenues for the year ended December 31, 2003 were $91.6 million, compared to
$126.8 million during the same period in fiscal 2002. The net loss for the year
ending December 31, 2003 improved to $15.7 million, versus a net loss of $22.1
million for the same period last year. Loss per share for the year improved 30%
to ($1.20) on 13,043,744 shares, versus ($1.72) on 12,821,946 shares for the
same period last year.
Total operating expenses for the year decreased 28.1% to $117.7 million compared
to $163.7 million in 2002. Interest expense declined 30.3% to $7.5 million, as a
result of lower average debt balances. Selling, general and administrative
expenses decreased $11.7 million to $33.9 million for the year ended December
31, 2003, versus $45.5 million for the same period last year. The decrease was
driven in part by a reduction in personnel related expenses of approximately
$5.8 million, as management reduced headcount from 203 to 136, $2.0 million in
collection expenses, $1.8 million in cost of goods sold, and $0.7 million in
rent.
Depreciation and Amortization expense decreased 9.8% to $16.6 million, compared
to $18.4 million in 2002. The provision for credit losses decreased $29.1
million to $59.8 million for the year ended December 31, 2003 from $88.9 million
for the same period last year. Gross charge-offs increased 21.9% to $93.2
million while recoveries decreased 39.5% to $7.1 million. Net cash provided by
operating activities decreased 18.7% to $98.1 million, compared to $120.6
million last year.
Richard Latour, President and Chief Executive Officer said, "I am pleased that
the Company repaid debt balances on its senior credit facility and
securitizations of $110.1 million in 2003. The Company has outperformed the
financial expectations of our bank agreement by accelerating its required
repayments."
Fourth quarter revenue for the period ended December 31, 2003 decreased 28.7%,
or $8.0 million to $20.0 million compared to $28.0 million last year. The net
loss per diluted share for the quarter was down slightly at ($0.61), or a net
loss of $8.0 million, compared to $7.7 million in the prior year's fourth
quarter. The year-over-year decline in net income for the quarter was primarily
the result of a reduction of the following: 50.5% in lease and loan revenues to
$5.5 million, 32.6% in service fee and other revenues to $2.7 million, and 19.2%
in income on service contracts to $1.9 million. The reduction in revenue was
primarily related to the suspension in October 2002 of new origination volume.
Total operating expenses for the quarter declined 18.5% to $33.3 million
compared to the same period in 2002. Interest expense was $1.2 million as a
result of lower debt balances. Selling, general and administrative expenses
decreased $3.1 million to $8.2 million versus $11.2 million for the same period
last year, as the Company continued to align its infrastructure with current
business conditions.
The provision for credit losses decreased to $19.9 million from $22.5 million
for the same period in 2002, while net charge offs increased to $33.3 million
versus $28.9 million. Sequentially, past due balances greater than 31 days
delinquent on December 31, 2003 decreased to 19.9%. Net cash provided by
operating activities for the quarter decreased 31.6% to $19.9 million compared
to $29.1 million during the same period in 2002. In addition, the Company repaid
debt of $26.7 million on its senior credit facility and securitizations during
the quarter.
The Company remains in full compliance with the terms and conditions of its
securitizations and senior credit facility. The Company has made or exceeded all
scheduled payments on these debt instruments in a timely manner. During the
quarter, MicroFinancial was able to reduce its bank debt by $18.2 million to
$55.3 million.
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 1.1 to 1.
MICROFINANCIAL INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31,
-------------------------
2002 2003
---- ----
ASSETS
Net investment in leases and loans:
Receivables due in installments $ 334,623 $ 175,788
Estimated residual value 30,754 19,110
Initial direct costs 4,891 1,804
Loans receivable 1,796 --
Less:
Advance lease payments and deposits (96) (37)
Unearned income (67,574) (23,729)
Allowance for credit losses (69,294) (43,011)
----------------------
Net investment in leases and loans $ 235,100 $ 129,925
Investment in service contracts 14,463 8,844
Cash and cash equivalents 5,494 6,533
Restricted cash 18,516 2,376
Property and equipment, net 9,026 5,844
Income taxes receivable 8,652 --
Other assets 3,834 2,892
----------------------
Total assets $ 295,085 $ 156,414
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $ 168,927 $ 58,843
Subordinated notes payable 3,262 3,262
Capitalized lease obligations 471 209
Accounts payable 3,840 3,186
Other liabilities 6,776 4,104
Income taxes payable 1,400 7,789
Deferred income taxes payable 23,806 7,755
----------------------
Total liabilities 208,482 85,148
----------------------
Stockholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized;
none issued at 12/31/02 and 12/31/03 -- --
Common stock, $.01 par value; 25,000,000 shares authorized;
13,410,646 shares issued at 12/31/02 and 12/31/03 134 134
Additional paid-in capital 47,723 44,245
Retained earnings 45,089 29,402
Treasury stock (588,700 shares of common stock at 12/31/02 and
234,230 shares of common stock at 12/31/03), at cost (6,343) (2,515)
----------------------
Total stockholders' equity 86,603 71,266
----------------------
Total liabilities and stockholders' equity $ 295,085 $ 156,414
======================
MICROFINANCIAL INCORPORATED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
For the three months ended
December 31,
-----------------------------
2002 2003
---- ----
Revenues:
Income on financing leases and loans $ 11,167 $ 5,532
Income on service contracts 2,402 1,940
Rental income 8,859 8,539
Loss and damage waiver fees 1,567 1,254
Service fees and other 4,032 2,717
--------------------
Total revenues 28,027 19,982
--------------------
Expenses:
Selling general and administrative 11,246 8,179
Provision for credit losses 22,488 19,858
Depreciation and amortization 4,182 4,129
Interest 2,964 1,151
--------------------
Total expenses 40,880 33,317
--------------------
Income (loss) before provision (benefit) for income taxes (12,853) (13,335)
Provision (benefit) for income taxes (5,142) (5,335)
--------------------
Net income (loss) ($ 7,711) ($ 8,000)
====================
Net income (loss) per common share - basic ($ 0.60) ($ 0.61)
====================
Net income (loss) per common share - diluted ($ 0.60) ($ 0.61)
====================
MICROFINANCIAL INCORPORATED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
For the Years Ended
December 31,
-------------------------------
2002 2003
---- ----
Revenues:
Income on financing leases and loans $ 53,012 $ 30,904
Income on service contracts 9,734 8,593
Rental income 37,154 34,302
Loss and damage waiver fees 6,257 5,525
Service fees and other 20,665 12,250
----------------------
Total revenues 126,822 91,574
----------------------
Expenses:
Selling, general and administrative 45,535 33,856
Provision for credit losses 88,948 59,758
Depreciation and amortization 18,385 16,592
Interest 10,787 7,515
----------------------
Total expenses 163,655 117,721
----------------------
Income (loss) before provision for income taxes (36,833) (26,147)
Provision (benefit) for income taxes (14,735) (10,460)
----------------------
Net income (loss) ($ 22,098) ($ 15,687)
======================
Net income (loss) per common share - basic ($ 1.72) ($ 1.20)
======================
Net income (loss) per common share - diluted ($ 1.72) ($ 1.20)
======================
Dividends per common share $ 0.150 $ 0.000
======================
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.