Exhibit 99
For Release April 28, 2004 Contact:
4:01 pm Richard F. Latour
President and CEO
Tel: 781-994-4800
MicroFinancial Incorporated Announces
First Quarter 2004 Results
Woburn, MA-- April 28, 2004-- MicroFinancial Incorporated (NYSE-MFI) announced
today its financial results for the first quarter ended March 31, 2004.
First quarter revenues for the period ended March 31, 2004 were $18.0 million,
compared to $25.6 million during the same period in fiscal 2003. The net loss
for the quarter ending March 31, 2004 was $4.7 million, versus a net loss of
$0.8 million for the same period last year. Loss per share for the year was
($0.36) on 13,179,548 shares, versus ($0.06) on 12,854,642 shares for the same
period last year. The reduction in revenues is directly related to the Company's
suspension of virtually all new originations beyond October 2002.
On a sequential basis, the net loss for the first quarter of 2004 improved $3.3
million from a loss of $8.0 million last quarter. This increase was primarily
driven by a reduction in the provision for credit losses of $6.5 million.
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 $14.8 million to
$40.5 million.
Net cash provided by operating activities decreased 33.5% to $17.1 million,
compared to $25.7 million in the first quarter of 2003. The Company repaid debt
of $17.4 million on its senior credit facility and securitizations during the
quarter. Receivables due in installments, estimated residual values, loans
receivable, investment in service contracts and investment in rental equipment
at March 31, 2004 was $210.9 million, or a decreased of 41% from March 31, 2003.
Total operating expenses for the quarter decreased 3.7% to $25.8 million
compared to $26.8 million in 2003. Interest expense declined 69.2% to $0.8
million, as a result of lower average debt balances. Selling, general and
administrative expenses decreased $1.9 million to $7.3 million for the quarter
ended March 31, 2004, versus $9.2 million for the same period last year. The
decrease was driven in part by a reduction in personnel related expenses of
approximately $1.0 million, as management reduced headcount from 203 to 136, as
well as a reduction of $0.7 million in rent expenses resulting from the
consolidation of various office facilities. Depreciation and Amortization
expense remained flat at $4.3 million for the quarter ended March 31, 2004. The
provision for credit losses increased $2.6 million to $13.4 million for the
quarter ended March 31, 2004 from $10.8 million for the same period last year.
Gross charge-offs increased 29.9% to $21.2 million while recoveries decreased
38.5% to $1.6 million.
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 $17.4 million in the quarter ended March 31, 2004. The
Company has continued to outperform the financial expectations of our bank
agreement by accelerating its required repayments."
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 0.9 to 1.
MICROFINANCIAL INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, March 31,
-------------- --------------
2003 2004
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ASSETS
Net investment in leases and loans:
Receivables due in installments $ 175,788 $ 143,515
Estimated residual value 19,110 15,499
Initial direct costs 1,804 1,295
Less:
Advance lease payments and deposits (37) (34)
Unearned income (23,729) (17,034)
Allowance for credit losses (43,011) (36,814)
--------- ---------
Net investment in leases and loans $ 129,925 $ 106,427
Investment in service contracts 8,844 7,688
Cash and cash equivalents 6,533 6,196
Restricted cash 2,376 2,233
Property and equipment, net 5,844 5,364
Other assets 2,892 2,124
--------- ---------
Total assets $ 156,414 $ 130,032
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $ 58,843 $ 41,454
Subordinated notes payable 3,262 3,262
Capitalized lease obligations 209 165
Accounts payable 3,186 2,784
Other liabilities 4,104 3,324
Income taxes payable 7,789 7,826
Deferred income taxes payable 7,755 4,627
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Total liabilities
85,148 63,442
--------- ---------
Stockholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized;
no shares issued at 12/31/03 and 3/31/04 - -
Common stock, $.01 par value; 25,000,000 shares authorized;
13,410,646 shares issued at 12/31/03 and 3/31/04, respectively 134 134
Additional paid-in capital 44,245 44,324
Retained earnings 29,402 24,710
Treasury stock, at cost (234,230 shares at 12/31/03 and 3/31/04) (2,515) (2,515)
Unearned compensation 0 (63)
--------- ---------
Total stockholders' equity 71,266 66,590
--------- ---------
Total liabilities and stockholders' equity $ 156,414 $ 130,032
========= =========
MICROFINANCIAL INCORPORATED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except share and per
share data)
For the three months ended
March 31,
------------------------------
2003 2004
---- ----
Revenues:
Income on financing leases and loans $ 9,821 $ 4,167
Income on service contracts 2,251 1,731
Rental income 8,547 8,465
Loss and damage waiver fees 1,483 1,131
Service fees and other 3,469 2,514
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Total revenues 25,571 18,008
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Expenses:
Selling general and administrative 9,131 7,280
Provision for credit losses 10,799 13,408
Depreciation and amortization 4,270 4,294
Interest 2,629 846
------------ ------------
Total expenses 26,829 25,828
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Loss before provision for income taxes (1,258) (7,820)
Benefit for income taxes (503) (3,128)
------------ ------------
Net loss ($ 755) ($ 4,692)
============ ============
Net loss per common share - basic ($ 0.06) ($ 0.36)
============ ============
Net loss per common share - diluted ($ 0.06) ($ 0.36)
============ ============
Weighted-average shares used to compute:
Basic net loss per share 12,854,642 13,179,548
------------ ------------
Fully diluted net loss per share 12,854,642 13,179,548
------------ ------------
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.