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 5, 2008

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-99.1 Press Release dated, February 6, 2008

Item 2.02. Results of Operations and Financial Condition.

     On February 6, 2008, the Registrant announced its results of operations for the fiscal quarter and full year ended December 31, 2007. Pursuant to Form 8-K, General Instruction F, the Registrant hereby incorporates by reference the press release attached hereto as Exhibit 99.1.

Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

     On February 5, 2008, the Registrant announced its intention to transfer the listing of its common stock, $0.01 par value per share (the “Common Stock”), from the American Stock Exchange to the NASDAQ Global Market. The final decision to transfer its listing was made on such date by the Registrant’s President and Chief Executive Officer, acting pursuant to the delegated authority of Registrant’s Board of Directors. The Registrant made this decision after careful consideration of capital market alternatives and analysis of NASDAQ’s electronic market model. The Registrant has received notice from the NASDAQ Stock Market, LLC, that it has approved the listing of the Common Stock on the NASDAQ Global Market. The Registrant expects that trading of its Common Stock will cease on the American Stock Exchange, and begin on the NASDAQ Global Market, at the opening of trading on February 19, 2008. On the NASDAQ Global Market, the Common Stock will continue to trade under the symbol “MFI”.

Item 9.01. Financial Statements and Exhibits.

Exhibit	Exhibit Title
Exhibit 99.1	Press Release dated February 6, 2008

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 7, 2008

EX-99.1

Exhibit 99.1

For Release February 6, 2008	Contact:
4:01 pm	Richard F. Latour
	President and CEO
	Tel: 781-994-4800

MICROFINANCIAL INCORPORATED ANNOUNCES
FOURTH QUARTER AND YEAR END 2007 RESULTS

Woburn, MA — February 6, 2008 — MicroFinancial Incorporated (AMEX-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, 2007.

2007 Accomplishments Include:

• Second consecutive full year of profitability with net income of $6.2 million, a 58.4% increase as compared to $3.9 million in 2006;

• Continued investment in sales and marketing efforts resulting in a 154% increase in originations from $21.5 million in 2006 to $54.6 million;

• An 11.6% or $1.7 million reduction in selling, general and administrative expenses compared to 2006;

• A 6.9% or $2.8 million increase in cash received from customers compared to 2006;

• Cash dividends paid of $2.8 million for a 3.2% dividend yield;

• The addition of 903 new vendors; and

• A return on average assets of 9.8% and return on average equity of 10.6% with a ratio of total liabilities to total equity of less than 0.2 times at December 31, 2007.

Fourth Quarter 2007 Results

Net income for the fourth quarter of 2007 was $1.7 million or $0.12 per diluted share based upon 14,154,862 shares, compared to net income of $1.8 million, or $0.13 per diluted share based upon 13,979,368 shares for the same period last year.

Revenue in the fourth quarter of 2007 was $8.6 million compared to $7.5 million in the fourth 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 $4.2 million, up $2.7 million from the same period last year and rental income was $2.9 million, down $1.6 million from December 31, 2006. Other revenue components contributed $1.5 million for the current quarter, down $0.1 million from the same period last year.

Total operating expenses for the current quarter increased 7.4% to $6.0 million from $5.6 million in the fourth quarter of 2006. Fourth quarter net charge-offs increased slightly to $2.3 million from $2.2 million in the comparable period of 2006. The fourth quarter 2007 provision for credit losses increased $0.9 million to $2.7 million as compared to the fourth quarter of 2006 primarily due to the growth in lease receivables associated with our new lease originations. Sequentially, amounts billed greater than 31 days delinquent as of December 31, 2007 decreased slightly to $2.8 million from $2.9 million as of September 30, 2007. Selling, general and administrative expenses decreased 3.0% to $3.0 million from $3.1 million in the fourth quarter of last year primarily due to reductions in collection related expenses. Depreciation and amortization expense declined 64.3% to $0.2 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 fourth quarter was $12.4 million compared to $9.0 million during the same period in 2006. New originations in the quarter increased by 14.9% to $17.1 million for the fourth quarter 2007, compared to the third quarter 2007.

Richard Latour, President and Chief Executive Officer said, “I am pleased with our continued progress in growing the business. In the fourth quarter of 2007, new contract originations improved to $17.1 million, an increase of $8.0 million from the fourth quarter of 2006. In addition, we had our largest quarter for new vendor approvals at 291, bringing the total vendor count to approximately 2,100. We also processed over 12,100 applications, an increase of over 5,200 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.”

Full Year 2007 Results

For the year ended December 31, 2007, net income was $6.2 million versus net income of $3.9 million for the same period last year. Net income per diluted share for the year was $0.44 based on 14,149,634 shares versus $0.28 based on 13,958,759 shares for 2006.

Revenues for the year ended December 31, 2007 decreased 2.4% to $31.7 million compared to $32.4 million during 2006. Revenue from leases was $12.3 million, up $8.4 million from the previous year and rental income was $13.6 million, down $7.3 million from 2006. Other revenue components contributed $5.8 million, down $1.9 million from the previous year. New contract originations for the year ended December 31, 2007 were $54.6 million versus $21.5 million during 2006.

Total operating expenses for the year ended December 31, 2007 declined 17.8% to $22.2 million versus $27.0 million for 2006. Selling, general and administrative expenses declined $1.7 million to $12.8 million and depreciation and amortization expenses declined 74.8% to $1.3

million. Significant factors in the decline of the SG&A expense include declines in legal expenses of $0.4 million and collection expenses of $1.1 million. The provision for credit losses increased $0.9 million to $7.9 million compared to the prior year. Year to date net charge-offs declined to $7.4 million as compared to $10.5 million for 2006.

Headcount at December 31, 2007 was 78, up from 67 at the end of 2006. Cash from customers was $42.6 million during 2007 as compared to $39.8 million for the prior year.

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

	December 31,			December 31,
	2006			2007
ASSETS
Cash and cash equivalents	$	28,737		$	7,080
Restricted Cash		0			561
Net investment in leases:
Receivables due in installments		40,455			92,314
Estimated residual value		3,859			9,814
Initial direct costs		302			729
Less:
Advance lease payments and deposits		(50	)		(219	)
Unearned income		(13,682	)		(35,369	)
Allowance for credit losses		(5,223	)		(5,722	)
Net investment in leases		25,661			61,547
Investment in service contracts, net		613			203
Investment in rental contracts, net		313			106
Property and equipment, net		655			782
Other assets		652			703
Deferred income taxes, net		3,090			0
Total assets	$	59,721		$	70,982

LIABILITIES AND STOCKHOLDERS’ EQUITY

	December 31,		December 31,
	2006		2007
Notes payable	$	5	$	6,531
Accounts payable		1,038		1,350
Dividends payable		691		698
Other liabilities		1,110		801
Income taxes payable		741		228
Deferred income taxes		0		546
Total liabilities		3,585		10,154
Stockholders’ equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized; no shares issued at December 31, 2006 and December 31, 2007		—		—
Common stock, $.01 par value; 25,000,000 shares authorized; 13,811,442 and 13,960,778 shares issued at December 31, 2006 and December 31, 2007, respectively		138		140
Additional paid-in capital		44,136		45,412
Retained earnings		11,862		15,276
Total stockholders’ equity		56,136		60,828
Total liabilities and stockholders’ equity	$	59,721	$	70,982

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

	Three Months Ended				Year Ended
	December 31,				December 31,
	2006		2007		2006		2007
Revenues:
Income on financing leases	$	1,514	$	4,210	$	3,917	$	12,302
Rental income		4,461		2,906		20,897		13,612
Income on service contracts		392		278		1,870		1,271
Loss and damage waiver fees		420		591		1,895		2,033
Service fees and other		373		446		2,448		1,576
Interest income		366		125		1,415		877
Total revenues		7,526		8,556		32,442		31,671
Expenses:
Selling, general and administrative		3,054		2,963		14,499		12,824
Provision for credit losses		1,861		2,736		6,985		7,855
Depreciation and amortization		692		247		5,326		1,344
Interest		27		104		162		143
Total expenses		5,634		6,050		26,972		22,166
Income before provision for income taxes		1,892		2,506		5,470		9,505
Provision for income taxes		131		773		1,555		3,303
Net income	$	1,761	$	1,733	$	3,915	$	6,202
Net income per common share:
Basic	$	0.13	$	0.12	$	0.28	$	0.45
Diluted	$	0.13	$	0.12	$	0.28	$	0.44
Weighted-average shares:
Basic		13,811,442		13,960,778		13,791,403		13,922,974
Diluted		13,979,368		14,154,862		13,958,759		14,149,634

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.