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): October 24, 2007

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))

TABLE OF CONTENTS

EX-99 Press Release dated 10-24-2007

Item 2.02. Results of Operations and Financial Condition.

          On October 24, 2007, the Registrant announced its results of operations for the fiscal quarter and nine month period ended September 30, 2007. 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 October 24, 2007

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: October 24, 2007

EX-99

Exhibit 99

For Release October 24, 2007	Contact:
4:01 pm	Richard F. Latour
	President and CEO
	Tel: 781-994-4800

MICROFINANCIAL INCORPORATED ANNOUNCES
THIRD QUARTER 2007 RESULTS

Woburn, MA – October 24, 2007 — MicroFinancial Incorporated (AMEX-MFI), a financial intermediary specializing in vendor-based leasing and finance programs for microticket transactions, today announced financial results for the third quarter and the nine months ended September 30, 2007.

Net income for the third quarter of 2007 was $1.8 million or $0.13 per diluted share based upon 14,180,213 shares, compared to net income of $0.9 million, or $0.06 per diluted share based upon 13,942,572 shares for the same period last year.

Revenue in the third quarter of 2007 was $8.1 million compared to $7.8 million in the third quarter of 2006 as expected declines in rental income and other revenue during the quarter were more than offset by growth in the leasing revenues associated with our new lease originations. Revenue from leases was $3.4 million, up $2.4 million from the same period last year and rental income was $3.3 million, down $1.9 million from September 30, 2006. Other revenue components contributed $1.4 million for the current quarter, down $0.3 million from the same period last year.

Total operating expenses for the current quarter declined 16.6% to $5.4 million from $6.4 million in the third quarter of 2006. Third quarter net charge-offs declined to $1.5 million from $3.2 million in the comparable period of 2006. However, the third quarter 2007 provision for credit losses remained relatively flat at $1.9 million as compared to the third quarter of 2006 primarily due to the increase in new lease originations. Sequentially, amounts billed greater than 31 days delinquent as of September 30, 2007 decreased to $2.9 million from $3.9 million as of June 30, 2007. Selling, general and administrative expenses decreased 5.4% to $3.1 million from $3.3 million in the third quarter of last year primarily due to reductions in collection related expenses. Depreciation and amortization expense declined 75.9% to $0.3 million for the quarter, due to a decline in the number of rental and service contracts as well as the fact that a greater percentage of these assets are fully depreciated.

Cash received from customers in the third quarter was $10.5 million compared to $9.0 million during the same period in 2006. New originations in the quarter increased by 20.6% to $14.9 million for the third quarter 2007, compared to the second quarter 2007.

Richard Latour, President and Chief Executive Officer said, ““I am pleased with our continued progress in growing the business. During the first nine months of 2007, we grew our vendor

pipeline and our sales team continued to gain traction. In the third quarter of 2007, new contract originations improved to $14.9 million, an increase of $8.5 million from the third quarter of 2006. In addition, we had our largest quarter for new vendor approvals at 249, bringing the total vendor count to approximately 1,800.  We also processed over 10,000 applications, an increase of over 5,100 applications as compared to the same period last year. Throughout the year, management and employees focused on executing our growth strategy and scaling our business. We believe our dual focus on growth and operational efficiency will continue to serve us well in the years ahead. Our priorities have remained consistent – growing our vendor base, expanding product offerings, and maintaining efficiencies. I am encouraged by the success we have achieved through these initiatives and look forward to continued progress on these objectives.”

For the nine months ended September 30, 2007, net income was $4.5 million versus net income of $2.2 million for the same period last year. Net income per diluted share year to date was $0.32 based on 14,146,696 shares versus $0.15 based on 13,928,399 shares for the same period in 2006.

Year to date revenues for the nine months ended September 30, 2007 decreased 7.2% to $23.1 million compared to $24.9 million during the same period in 2006. Revenue from leases was $8.1 million, up $5.7 million from the same period last year and rental income was $10.7 million, down $5.7 million from September 30, 2006. Other revenue components contributed $4.3 million, down $1.8 million from the same period last year. New contract originations year to date September 30, 2007 were $37.4 million versus $12.5 million through the same period last year.

Total operating expenses for the nine months ended September 30, 2007 declined 24.5% to $16.1 million versus $21.3 million for the same period last year. Selling, general and administrative expenses declined $1.6 million to $9.9 million and depreciation and amortization expenses declined 76.3% to $1.1 million. Significant factors in the decline of the SG&A expense include declines in legal expenses of $0.3 million and collection expenses of $1.0 million. The provision for credit losses remained flat at $5.1 million year to date, as compared to the same period last year. Year to date net charge-offs declined to $5.0 million as compared to $8.3 million for the same period last year. Headcount at September 30, 2007 was 72, up from 66 at the end of the same period last year. Year to date cash from customers was $30.1 million as compared to $30.8 million for the same period last year.

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

	December 31,			September 30,
	2006			2007
ASSETS
Cash and cash equivalents	$	28,737		$	9,437
Net investment in leases:
Receivables due in installments		40,455			76,660
Estimated residual value		3,859			7,987
Initial direct costs		302			605
Less:
Advance lease payments and deposits		(50	)		(93	)
Unearned income		(13,682	)		(29,033	)
Allowance for credit losses		(5,223	)		(5,306	)
Net investment in leases		25,661			50,820
Investment in service contracts, net		613			282
Investment in rental contracts, net		313			122
Property and equipment, net		655			749
Other assets		652			838
Deferred income taxes, net		3,090			649
Total assets	$	59,721		$	62,897

LIABILITIES AND STOCKHOLDERS’ EQUITY

	December 31,		September 30,
	2006		2007
Notes payable	$	5	$	0
Accounts payable		1,038		945
Dividends payable		691		698
Other liabilities		1,110		734
Income taxes payable		741		618
Total liabilities		3,585		2,995
Stockholders’ equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized; no shares issued at December 31, 2006 and September 30, 2007		—		—
Common stock, $.01 par value; 25,000,000 shares authorized; 13,811,442 and 13,958,278 shares issued at December 31, 2006 and September 30, 2007, respectively		138		140
Additional paid-in capital		44,136		45,520
Retained earnings		11,862		14,242
Total stockholders’ equity		56,136		59,902
Total liabilities and stockholders’ equity	$	59,721	$	62,897

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2006		2007		2006		2007
Revenues:
Income on financing leases	$	1,007	$	3,406	$	2,403	$	8,092
Rental income		5,121		3,268		16,436		10,706
Income on service contracts		435		303		1,478		993
Loss and damage waiver fees		431		524		1,475		1,442
Service fees and other		437		415		2,075		1,131
Interest income		411		182		1,049		752
Total revenues		7,842		8,098		24,916		23,116
Expenses:
Selling, general and administrative		3,312		3,134		11,445		9,861
Provision for credit losses		1,887		1,919		5,124		5,119
Depreciation and amortization		1,195		288		4,634		1,098
Interest		23		13		135		39
Total expenses		6,417		5,354		21,338		16,117
Income before provision for income taxes		1,425		2,744		3,578		6,999
Provision for income taxes		573		941		1,424		2,530
Net income	$	852	$	1,803	$	2,154	$	4,469
Net income per common share:
Basic	$	0.06	$	0.13	$	0.16	$	0.32
Diluted	$	0.06	$	0.13	$	0.15	$	0.32
Weighted-average shares:
Basic		13,803,996		13,956,881		13,784,650		13,910,234
Diluted		13,942,572		14,180,213		13,928,399		14,146,696

About The Company

MicroFinancial Inc. (AMEX: 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.