EX-99 3 exh_99.txt EXHIBIT 99(A)--PRESS RELEASE 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.