8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (date of earliest event reported): February 3, 2010

MICROFINANCIAL INCORPORATED

(Exact name of registrant as specified in its charter)

MASSACHUSETTS

(State or other jurisdiction of incorporation)

1-14771	04-2962824
(Commission file number)	(IRS Employer Identification Number)

10-M Commerce Way, Woburn, MA 01801
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: 781-994-4800

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

     On February 3, 2010, the Registrant announced its results of operations for its fourth quarter and fiscal year ended December 31, 2009. Pursuant to Form 8-K, General Instruction F, the Registrant hereby incorporates by reference the press release attached hereto as Exhibit 99.

Item 9.01. Financial Statements and Exhibits.

Exhibit	Exhibit Title
Exhibit 99	Press Release dated February 3, 2010

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

MICROFINANCIAL INCORPORATED Registrant
By:	/s/ James R. Jackson, Jr.
	James R. Jackson, Jr.
	Vice President and Chief Financial Officer

Dated: February 4, 2010

EX-99.1

Exhibit 99.1

For Release February 3, 2010	Contact:
4:01 pm	Richard F. Latour President and CEO Tel: 781-994-4800

MICROFINANCIAL INCORPORATED ANNOUNCES
FOURTH QUARTER AND YEAR END 2009 RESULTS

Woburn, MA — February 3, 2010 — MicroFinancial Incorporated (Nasdaq-MFI), a financial intermediary specializing in vendor-based leasing and finance programs for microticket transactions, today announced financial results for the fourth quarter and the year ended December 31, 2009.

2009 Highlights Include:

• Increased finance lease originations by 11.3% or $7.8 million as compared to 2008 bringing the total 2009 lease originations to $76.9 million;

• Increased revenues on financed leases by 27.4% or $6.3 million and total revenues 16.8% or $6.6 million as compared to 2008;

• Increased total cash received from customers by 28.1% or $16.7 million as compared to 2008 bringing our total cash received to $76 million representing $5.33 per diluted share;

• Increased unearned income by 13.0% from $49.4 million in 2008 to $55.8 million;

• Increased total assets by 21.2% from $104.9 million in 2008 to $127.1 million;

• Increased the size of our revolving credit facility to $85 million with 5 banks; and

• Paid cash dividends of $2.8 million or $0.20 per share.

Fourth Quarter 2009 Results

Net income for the fourth quarter of 2009 was $1.3 million or $0.09 per diluted share based upon 14,320,617 shares, compared to net income of $0.9 million, or $0.07 per diluted share based upon 14,195,748 shares for the same period last year.

Revenue in the fourth quarter of 2009 was $12.2 million compared to $10.5 million in the fourth quarter of 2008 as expected declines in rental income and service contracts during the quarter were more than offset by growth in the leasing revenues associated with our new lease originations. Revenue from leases was $7.9 million, up $1.4 million from the same period last year and rental income was $2.1 million, down $0.2 million from December 31, 2008. Other revenue components contributed $2.2 million for the current quarter, up $0.5 million from the same period last year.

Total operating expenses for the current quarter increased 14.9% to $10.4 million from $9.1 million in the fourth quarter of 2008. Included in the fourth quarter increase of operating expenses was an increase of $1.0 million in the provision for credit losses as compared to the same period last year bringing the quarterly provision to $6.2 million. This increase was due primarily to increased delinquencies and higher charge off levels. Fourth quarter net charge-offs increased to $6.2 million from $3.8 million in the comparable period of 2008. Interest expense increased to $0.8 million for the quarter due to higher average outstanding debt balances and an increase in the interest rate on our revolving line of credit. These increases were slightly offset by a 12.0% or $0.4 million decrease in selling, general and administrative expenses. These decreases were primarily due to decreases in recruiting, legal, marketing and collection related expenses.

Cash received from customers in the fourth quarter was $20.6 million compared to $16.1 million during the same period in 2008. New originations in the quarter increased 10.2% to $19.5 million for the fourth quarter 2009, compared to $17.7 million in the fourth quarter 2008.

Full Year 2009 Results

For the year ended December 31, 2009, net income was $4.1 million versus net income of $6.0 million for the same period last year. Net income per diluted share for the year was $0.29 based on 14,261,644 shares versus $0.42 based on 14,204,105 shares for 2008.

Revenues for the year ended December 31, 2009 increased 16.8% to $46.2 million compared to $39.5 million during 2008. Revenue from leases was $29.4 million, up $6.3 million from the previous year and rental income was $8.6 million, down $1.2 million from 2008. Other revenue components contributed $8.2 million, up $1.6 million from the previous year. New contract originations for the year ended December 31, 2009 were $76.9 million versus $69.0 million during 2008.

Total operating expenses for the year ended December 31, 2009 increased 31.1% to $39.8 million versus $30.4 million for 2008. Included in these operating expenses were increases of $0.3 million in selling, general and administrative expenses which increased to $13.4 million, and an increase of $1.7 million in interest expense, which increased to $2.8 million. In addition, the provision for credit losses increased $6.7 million to $22.0 million compared to the prior year. Year to date net charge-offs increased to $19.9 million as compared to $9.3 million for 2008.

Headcount at December 31, 2009 was 111, up from 103 at the end of 2008. Cash from customers was $76.0 million during 2009 as compared to $59.3 million for the prior year.

Richard Latour, President and Chief Executive Officer said, “I am pleased with our financial performance in 2009 given the challenges faced by all financial services companies. We were able to deliver solid results in one of the most difficult economic environments we have seen. Throughout the year, the Company continued to focus on improvements to credit quality, marketing initiatives to drive new customer relationships, and stringent cost containment

measures. Despite the challenging economy, we added over 1,400 new vendors bringing the total vendor count to approximately 4,800, and processed over 54,400 lease applications. We were once again able to provide our shareholders with cash dividends of $0.20 per share in 2009 and were able to increase our originations to over $76 million while continuing to maintain a very conservative leverage ratio.”

MICROFINANCIAL INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

	December 31,			December 31,
	2009			2008
ASSETS
Cash and cash equivalents	$	391		$	5,047
Restricted cash		834			528
Net investment in leases:
Receivables due in installments		175,615			142,881
Estimated residual value		19,014			15,257
Initial direct costs		1,509			1,211
Less:
Advance lease payments and deposits		(2,411	)		(982	)
Unearned income		(55,821	)		(49,384	)
Allowance for credit losses		(13,856	)		(11,722	)
Net investment in leases		124,050			97,261
Investment in service contracts, net		—			32
Investment in rental contracts, net		379			240
Property and equipment, net		699			759
Other assets		744			983
Total assets	$	127,097		$	104,850

LIABILITIES AND STOCKHOLDERS’ EQUITY

	December 31,		December 31,
	2009		2008
Revolving line of credit	$	51,906	$	33,325
Capital lease obligation		93		125
Accounts payable		2,011		1,648
Dividends payable		—		702
Other liabilities		1,250		1,308
Income taxes payable		209		8
Deferred income taxes		4,863		3,396
Total liabilities		60,332		40,512
Stockholders’ equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized; no shares issued at December 31, 2009 and December 31, 2008		—		—
Common stock, $.01 par value; 25,000,000 shares authorized; 14,174,326 and 14,038,257 shares issued at December 31, 2009 and December 31, 2008, respectively		142		140
Additional paid-in capital		46,197		45,774
Retained earnings		20,426		18,424
Total stockholders’ equity		66,765		64,338
Total liabilities and stockholders’ equity	$	127,097	$	104,850

MICROFINANCIAL INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)

	Three Months Ended				Year Ended
	December 31,				December 31,
	2009		2008		2009		2008
Revenues:
Income on financing leases	$	7,893	$	6,529	$	29,415	$	23,095
Rental income		2,113		2,263		8,584		9,829
Income on service contracts		150		205		676		925
Loss and damage waiver fees		1,084		931		4,136		3,236
Service fees and other		969		587		3,340		2,300
Interest income		0		30		14		140
Total revenues		12,209		10,545		46,165		39,525
Expenses:
Selling, general and administrative		2,958		3,363		13,371		13,060
Provision for credit losses		6,156		5,114		22,039		15,313
Depreciation and amortization		470		271		1,628		976
Interest		841		324		2,769		1,020
Total expenses		10,425		9,072		39,807		30,369
Income before provision for income taxes		1,784		1,473		6,358		9,156
Provision for income taxes		470		535		2,231		3,206
Net income	$	1,314	$	938	$	4,127	$	5,950
Net income per common share:
Basic	$	0.09	$	0.07	$	0.29	$	0.42
Diluted	$	0.09	$	0.07	$	0.29	$	0.42
Weighted-average shares:
Basic		14,174,326		14,029,127		14,147,436		14,002,045
Diluted		14,320,617		14,195,748		14,261,644		14,204,105

About The Company

MicroFinancial Inc. (Nasdaq-MFI), is a financial intermediary specializing in microticket leasing and financing. MicroFinancial has been operating since 1986, and is headquartered in Woburn, Massachusetts.

Statements in this release that are not historical facts, including statements about future dividends or growth plans, 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,” “will” and similar expressions are intended to identify forward-looking statements. We caution that a number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf. Readers should not place undue reliance on forward-looking statements, which reflect our views only as of the date hereof. We undertake no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances. We cannot assure that we will be able to anticipate or respond timely to changes which could adversely affect our operating results. Results of operations in any past period should not be considered indicative of results to be expected in future periods. Fluctuations in operating results or other factors may result in fluctuations in the price of our common stock. For a more complete description of the prominent risks and uncertainties inherent in our business, see the risk factors described in documents that we file from time to time with the Securities and Exchange Commission.