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MicroFinancial Incorporated, announced its financial results for
the third quarter and the nine months ended September 30, 2003. Third quarter revenue
for the period ended September 30, 2003, was $22.1 million compared
to $30.5 million for the same period last year. The reduction in revenues
is directly related to the Company's decision in October 2002 to cease
funding new originations as a result of its Lenders' decision not to
renew the revolving credit facility on September 30, 2002. The net loss for
the quarter was $3.2 million, or ($0.25) per share as compared with
a net loss of $19.6 million or a loss of $1.53 per share in the prior
year's third quarter. The improvement in net income for the quarter
is primarily due to a lower provision for credit losses as compared
to the same period last year. The reduction in revenues for the quarter
is primarily the result of a 44% decline in lease and loan revenues
to $7.2 million and a 35% decline in service fee and other revenues
to $2.9 million. Total operating expenses
for the quarter declined 56.6% to $27.4 million as compared to the same
period in 2002. Interest expense declined 35.4% to $1.6 million as a
result of lower debt balances of approximately $99.1 million offset
by an increase in the Company's average interest rates of 149 basis
points. Selling, general and administrative expenses decreased 24% to
$7.8 million for the third quarter ended September 30, 2003, versus
$10.3 million for the same period last year. The decrease was attributable
to reductions in personnel related expenses of approximately $1.7 million
as well as a $0.7 million reduction in collection related expenses.
The provision for credit losses decreased to $13.9 million for the quarter
ended September 30, 2003 from $44.7 million for the same period last
year, while net charge offs increased to $16.6 million. Past due balances
greater than 31 days delinquent at September 30, 2003 remained relatively
flat at 22.9% from 23% last quarter. Exclusive of a federal tax refund
in excess of $11 million received in the second quarter of 2003, net
cash provided by operating activities for the third quarter increased
slightly to $20.8 million compared to $20.5 million for the previous
quarter. The Company repaid debt of $24.6 million on its senior credit
facility and securitizations during the quarter. "I am pleased
that during the third quarter the Company was able to reduce our total
interest bearing debt by an additional $24.6 million which brings our
year to date reduction to over $83 million, commented Richard Latour,
President and Chief Executive Officer. "We remain ahead our required
repayments and other financial expectations of our bank agreement by
approximately $5 million through September 30, 2003." The Company remains
in full compliance with the terms and conditions of its securitizations
and senior credit facility. The Company has made or exceeded all scheduled
payments on these debt instruments in a timely manner. During the quarter,
MicroFinancial's successful collections efforts allowed the Company
to reduce its bank debt by $15.4 million to $73.5 million. For the nine-month
period ended September 30, 2003 revenues decreased 27.5% to $71.6 million
compared to $98.8 million during the same period in 2002. The reduction
in revenues is directly related to the Company's decision to cease funding
new originations since October 2002 as a result of its Lenders' decision
not to renew the revolving credit facility on September 30, 2002. The net loss year
to date ending September 30, 2003 was $7.7 million or ($0.59) per share
versus a net loss of $14.4 million or ($1.12) per share for the same
period last year. Total operating expenses for the nine months ended
September 30, 2003 were $84.4 million compared to $122.8 million in
2002. Interest expense declined 18.7% to $6.4 million as a result of
lower average debt balances of approximately $73.3 million. Selling,
general and administrative expenses decreased 25.1% to $25.7 million
for the first nine months of the year versus $34.3 million for the same
period last year. The decrease was driven by a reduction in personnel
related expenses of approximately $4.7 million, a $1.5 million reduction
in cost of goods sold, and a reduction in collection related expenses
of $2 million. The Company's headcount at September 30, 2003 was 144;
down from 300 from the same period last year while depreciation and
amortization decreased 12.3% to $12.5 million compared to $14.2 million
in 2002. The provision for credit losses decreased 40% to $39.9 million
for the nine-month period from $66.5 million for the same period last
year. Year to date net charge-offs increased to $52.7 million and the
Company repaid debt balances on its senior credit facility and securitizations
of $83.4 million for the nine months ended September 30, 2003. MicroFinancial Incorporated
continues to operate without the use of gain on sale accounting treatment
and a balance sheet with total liabilities less subordinated debt to
total equity plus subordinated debt of 1.4 to 1. Latour concluded,
"MicroFinancial continues its efforts to secure various financing,
restructuring and strategic alternatives that will enable the Company
to reenter the financing market." ( for other stories regarding MicroFinancial, please go here: http://www.leasingnews.org/Conscious-Top%20Stories/micro_leasecomm.htm
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