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Microfinancial/Leasecomm “Seeks Financial Partner” Net Loss Last Quarter $7.7 Million/Revenue-Originations
Down MicroFinancial Announces
a Final Amendment to Its Credit Agreement; All Existing Lenders Participate
in New Agreement WOBURN, Mass.----MicroFinancial Incorporated (NYSE-MFI),
a leader in Microticket leasing and finance, today announced that it
has secured an amendment to its Credit Agreement and received permanent
waivers under its securitization facility. The Company indicated that it has signed an agreement that
amends its credit facility and stabilizes the Company's relationship
with its lenders. The agreement also modifies the final maturity date
to January of 2005. The terms of the amended credit facility require the balance
of the approximately $110 million senior term loan be paid out over
the next 22 months. The loan will accrue interest at a rate of prime
plus 2%, which will be payable monthly. Certain financial covenants
such as fixed charge coverage, debt to net worth ratios, and minimum
allowance balance requirements were eliminated. The credit facility was originally entered into on August
2000. This amendment replaces the Forbearance and Modification Agreement
from the senior credit facility that expired on February 7, 2003. The Company also announced today that it has obtained a permanent
waiver for its securitization agreements that will waive each existing
event of default retroactively to the date the event of default occurred.
It will also waive specific future events of default under the terms
of the securitization agreements. This document will replace the temporary
waiver which expired on April 15, 2003. Richard Latour, President and Chief Operating Officer stated,
"We are pleased to have secured a long-term amendment of our credit
facility and securitzation from both our bank group and our securitzation
lenders. We believe that this provides a solid foundation that will
allow us to focus our attention on seeking a financial partner as we
actively consider various financing, restructuring and strategic alternatives." The Company filed its Form 10K with the Securities and Exchange
Commission on April 15, 2003. Financial results for the fourth quarter and the year ended
December 31, 2002. Fourth quarter revenue for the period ended December 31,
2002 decreased 24.0%, or $8.9 million to $28.0 million compared to $36.9
million last year. The net loss for the quarter was $7.7 million, or
($0.60) per diluted share as compared with net income of $2.1 million
or $0.16 per diluted share in the prior year's fourth quarter. The decline
in net income for the quarter is primarily the result of a 30.4% decline
in lease and loan revenues to $11.2 million, a 46.1% decline in service
fee and other revenues to $4.0 million, and a 32.7% increase in the
provision for credit losses to $22.5 million as compared with the fourth
quarter ended December 31, 2001. While revenue reductions were primarily
related to lower origination volume, the additional provision for credit
losses was required to maintain the Company's reserve policy requirements. Total operating expenses for the quarter, before the provision
for credit losses, remained relatively flat at $18.4 million compared
to the same period in 2001. Interest expense declined 1.0% to $3.0 million
as a result of lower debt balances of approximately $34.0 million offset
by increased interest costs. Selling, general and administrative expenses
decreased $200,000 to $11.2 million for the fourth quarter ended December
31, 2002 versus $11.4 million for the same period last year. The decrease
was attributable to reductions in personnel related expenses of approximately
$1.8 million, which was offset by increases in legal expenses. The provision
for credit losses increased to $22.5 million for the quarter ended December
31, 2002 from $16.9 million for the same period last year, while net
charge offs increased to $28.8 million. Past due balances greater than
31 days delinquent at December 31, 2002 increased to 22.9% from 17.2%
last quarter. Net cash provided by operating activities for the quarter
decreased 4.0% to $29.1 million compared to $30.2 million during the
same period in 2001. Revenues for the year ended December 31, 2002 decreased 18.0%
to $126.8 million compared to $154.0 million during the same period
in fiscal 2001. The net loss for the year ending December 31, 2002 was
$22.1 million versus net income of $16.3 million for the same period
last year. Fully diluted earnings per share for the year was a loss
of $1.72 on 12,862,834 shares. Total operating expenses for the year, before the provision
for credit losses, increased 2.0% to $74.7 million compared to $73.6
million in 2001. Interest expense declined 25.0% to $10.8 million as
a result of lower average debt balances of approximately $17.3 million
and lower interest costs of approximately 122 basis points. Selling,
general and administrative expenses increased $600,000 to $45.5 million
for the year ended December 31, 2002 versus $44.9 million for the same
period last year. The decrease was driven by a reduction in personnel
related expenses of approximately $2.1 million, as management reduced
headcount from 380 to 203, but this was offset by increases in legal
expenses. Depreciation and Amortization increased 28.0% to $18.3 million
compared to $14.4 million in 2001. The provision for credit losses,
including the additional provision of $35.0 million taken in the third
quarter of 2002, increased to $88.9 million for the year ended December
31, 2002 from $54.1 million for the same period last year. The additional
provision was required to reserve against dealer receivables and certain
portfolio assets. Net charge-offs increased 27.0% to $65.0 million and
gross lease investment was down 16.0% or $71.1 million from the same
period last year, primarily caused by lower origination volume activity
in 2002. Net cash provided by operating activities for the year ended
December 31, 2002 decreased 1.0% to $120.6 million compared to $122.3
million for the year ended December 31, 2001. About MicroFinancial MicroFinancial Inc. (NYSE:MFI), headquartered in Woburn,
MA, is a financial intermediary specializing in leasing and financing
for products in the $500 to $10,000 range. The company has been in operation
since 1986. CONTACT: MicroFinancial Incorporated Richard F. Latour, 781/994-4800 SOURCE: MicroFinancial Incorporated http://www.leasingnews.org/Conscious-Top%20Stories/micro_leasecomm.htm |
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