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 2, 2011

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)

16 New England Executive Park, Suite 200, Burlington MA 01803
(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 2, 2011, the Registrant announced its results of operations for its fourth quarter and fiscal year ended December 31, 2010. 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 2, 2011

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 3, 2011

EX-99

Exhibit 99

For Release February 2, 2011	Contact:
4:01 pm	Richard F. Latour
	President and CEO
	Tel: 781-994-4800

MICROFINANCIAL INCORPORATED ANNOUNCES
FOURTH QUARTER AND YEAR END 2010 RESULTS

Burlington, MA — February 2, 2011 — 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, 2010.

2010 Full Year Highlights Include:

• Increased net income by 28.3% to a total net income of $5.3 million as compared to $4.1 million in 2009;

• Increased revenues on financed leases by 16.9% to $34.4 million and increased total revenues 10.3% to $50.9 million as compared to 2009;

• Increased total cash received from customers by 23.5% or $17.9 million as compared to 2009 bringing our total cash received to $93.9 million representing $6.49 per diluted share;

• Increased total assets by 13.0% from $127.1 million in 2009 to $143.6 million;

• Increased our revolving credit facility to $100 million under more favorable terms; and

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

Fourth Quarter 2010 Results:

Net income for the fourth quarter of 2010 was $1.5 million or $0.11 per diluted share based upon 14,494,654 shares, compared to net income of $1.3 million, or $0.09 per diluted share based upon 14,320,617 shares for the same period last year.

Revenue in the fourth quarter of 2010 was $13.1 million compared to $12.2 million in the fourth quarter of 2009 due primarily to the increase in leasing revenues associated with our new lease originations. Revenue from leases was $9.0 million, up $1.1 million from the same period last year and rental income was $2.0 million, down $0.1 million from the quarter ended December 31, 2009. Other revenue components contributed $2.1 million for the current quarter, down $0.1 million from the same period last year.

Total operating expenses for the current quarter increased 2.1% to $10.6 million from $10.4 million in the fourth quarter of 2009. Included in the fourth quarter increase of operating expenses was an increase of $0.7 million in selling, general and administrative expenses. These

increases were primarily due to increases in personnel related expenses. The provision for credit losses decreased by $0.5 million as compared to the same period last year bringing the quarterly provision to $5.7 million. This decrease was due primarily to lower delinquency levels and lower charge off levels. Fourth quarter net charge-offs decreased to $5.5 million from $6.2 million in the comparable period of 2009. Interest expense decreased to $0.7 million for the quarter due to higher average outstanding debt balances being offset by lower interest costs on our revolving line of credit.

Cash received from customers in the fourth quarter increased 20.6% to $24.8 million compared to $20.6 million during the same period in 2009. New originations increased to $19.8 million during the fourth quarter 2010, compared to $19.5 million in the fourth quarter 2009.

Full Year 2010 Results:

For the year ended December 31, 2010, net income was $5.3 million versus net income of $4.1 million for the prior year. Net income per diluted share for the year was $0.37 based on 14,466,266 shares versus $0.29 based on 14,261,644 shares for 2009.

Revenues for the year ended December 31, 2010 increased 10.3% to $50.9 million compared to $46.2 million during 2009. Revenue from leases was $34.4 million, up $5.0 million from the previous year and rental income was $7.8 million, down $0.8 million from 2009. Other revenue components contributed $8.8 million, up $0.6 million from the previous year. New contract originations for the year ended December 31, 2010 were $78.2 million versus $76.9 million during 2009.

Total operating expenses for the year ended December 31, 2010 increased 6.4% to $42.3 million versus $39.8 million for 2009. Included in these operating expenses were increases of $0.5 million in selling, general and administrative expenses which increased to $13.8 million primarily related to personnel related costs. In addition, the provision for credit losses increased $1.1 million to $23.1 million compared to the prior year. Net charge-offs increased to $23.9 million as compared to $19.9 million for 2009. Recoveries increased slightly to $4.6 million during 2010 as compared to $4.3 million in 2009. Depreciation and amortization expense increased $0.6 million to $2.2 million due in part to an increase in the number of lease contracts reaching maturity and converting to rentals.

Headcount at December 31, 2010 was 118, up from 111 at the end of 2009. Cash from customers was $93.9 million during 2010 as compared to $76.1 million for the prior year.

Richard Latour, President and Chief Executive Officer said, “We continued to improve the financial performance of the Company in 2010 by successfully executing on several strategic initiatives. The continued focus over the past couple of years on improvements to credit quality, increased marketing initiatives to drive new customer relationships, and stringent cost containment measures played a significant role in the 2010 results. We increased diluted earnings per share in 2010 to $0.37 or 28% over 2009 levels. Cash flow from operations

increased to just under $74 million or $5.10 per diluted share, an increase of 27% as compared to the same period in 2009. We were once again able to provide our shareholders with cash dividends of $0.20 per share for the year. We approved slightly over 1,500 new vendors during 2010 and increased originations to $78.2 million in 2010 versus $76.9 million during 2009.”

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

	December 31,			December 31,
	2010			2009
ASSETS
Cash and cash equivalents	$	1,528		$	391
Restricted cash		753			834
Net investment in leases:
Receivables due in installments		191,067			175,615
Estimated residual value		21,832			19,014
Initial direct costs		1,490			1,509
Less:
Advance lease payments and deposits		(3,479	)		(2,411	)
Unearned income		(59,245	)		(55,821	)
Allowance for credit losses		(13,132	)		(13,856	)
Net investment in leases		138,533			124,050
Investment in rental contracts, net		461			379
Property and equipment, net		800			699
Other assets		1,530			744
Total assets	$	143,605		$	127,097

LIABILITIES AND STOCKHOLDERS' EQUITY
	December 31,		December 31,
	2010		2009
Revolving line of credit	$	62,650	$	51,906
Capital lease obligation		26		93
Accounts payable		2,435		2,011
Dividends payable		5		—
Other liabilities		1,375		1,250
Income taxes payable		—		209
Deferred income taxes		7,627		4,863
Total liabilities		74,118		60,332
Stockholders’ equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized;
no shares issued at December 31, 2010 and December 31, 2009		—		—
Common stock, $.01 par value; 25,000,000 shares authorized;
14,231,933 and 14,174,326 shares issued at December 31, 2010 and
December 31, 2009, respectively		142		142
Additional paid-in capital		46,475		46,197
Retained earnings		22,870		20,426
Total stockholders’ equity		69,487		66,765
Total liabilities and stockholders’ equity	$	143,605	$	127,097

	Three Months Ended				Year Ended
	December 31,				December 31,
	2010		2009		2010		2009
Revenues:
Income on financing leases	$	8,977	$	7,893	$	34,398	$	29,415
Rental income		1,978		2,113		7,773		8,584
Income on service contracts		115		150		512		676
Loss and damage waiver fees		1,178		1,084		4,555		4,136
Service fees and other		845		969		3,690		3,340
Interest income		—		—		1		14
Total revenues		13,093		12,209		50,929		46,165
Expenses:
Selling, general and administrative		3,672		2,958		13,839		13,371
Provision for credit losses		5,686		6,156		23,148		22,039
Depreciation and amortization		579		470		2,212		1,628
Interest		711		841		3,150		2,769
Total expenses		10,648		10,425		42,349		39,807
Income before provision for income taxes		2,445		1,784		8,580		6,358
Provision for income taxes		921		470		3,284		2,231
Net income	$	1,524	$	1,314	$	5,296	$	4,127
Net income per common share:
Basic	$	0.11	$	0.09	$	0.37	$	0.29
Diluted	$	0.11	$	0.09	$	0.37	$	0.29
Weighted-average shares:
Basic		14,255,804		14,174,326		14,240,308		14,147,436
Diluted		14,494,654		14,320,617		14,466,266		14,261,644

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 Burlington, 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.