<PAGE> 1
==============================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Month of May 1999
MFC BANCORP LTD.
(Exact Name of Registrant as specified in its charter)
6 Rue Charles-Bonnet, 1206 Geneva, Switzerland
(41 22) 818 2999
(Address and telephone number of Registrant's executive office)
(Indicate by check mark whether the Registrant files or will file annual
reports under cover of Form 20-F or Form 40-F).
[ X ] Form 20-F [ ] Form 40-F
(Indicate by check mark whether the Registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934).
Yes No X
--------- ---------
(If "Yes" is marked, indicate below the file number assigned to the Registrant
in connection with Rule 12g3-2(b): 82- ).
---------------
==============================================================================
<PAGE> 2
MFC BANCORP LTD.
1999 FIRST QUARTER REPORT
TO SHAREHOLDERS
MARCH 31, 1999
FORWARD-LOOKING STATEMENTS
Statements in this report, to the extent that they are not based on historical
events, constitute forward-looking statements within the meaning of the United
States Private Securities Litigation Reform Act of 1995. These statements
appear in a number of different places in this report and include statements
regarding the intent, belief or current expectations of MFC Bancorp Ltd., and
its directors and officers, primarily with respect to the future market size
and future operating performance of MFC Bancorp Ltd. and its subsidiaries.
Forward-looking statements include, without limitation, statements regarding
the outlook for future operations, forecasts of future costs and expenditures,
evaluation of market conditions, the outcome of legal proceedings, the
adequacy of reserves, or other business plans. Investors are cautioned that
any such forward-looking statements are not guarantees and may involve risks
and uncertainties, and that actual results may differ from those in the
forward-looking statements as a result of various factors such as general
economic and business conditions, including changes in interest rates, prices
and other economic conditions; actions by competitors; natural phenomena;
actions by government authorities, including changes in government regulation;
uncertainties associated with legal proceedings; technological development;
future decisions by management in response to changing conditions; the ability
to execute prospective business plans; and misjudgments in the course of
preparing forward-looking statements.
<PAGE> 3
MFC BANCORP LTD.
1999 FIRST QUARTER REPORT
President's Letter to Shareholders:
We are pleased to enclose the Company's first quarter results for 1999. The
following table is a summary of selected financial information concerning the
Company for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, March 31,
-------------------------- --------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
(U.S. Dollars in thousands (Canadian Dollars in
except per share amounts) thousands except per
Information Only share amounts)
<S> <C> <C> <C> <C>
Revenue $ 15,524 $ 22,927 $ 23,461 $ 32,795
Net income 3,355 4,865 5,072 6,960
Net income per share:
Basic 0.28 0.39 0.42 0.56
Fully diluted 0.26 0.36 0.39 0.52
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
(U.S. Dollars in thousands) (Canadian Dollars in
Information Only thousands)
Cash and cash
equivalents $ 36,067 $ 25,398 $ 54,415 $ 38,871
Securities 53,498 50,309 80,712 76,998
Total assets 162,204 163,203 244,717 249,782
Debt 26,542 26,195 40,044 40,091
Shareholders' equity 101,894 100,878 153,726 154,396
</TABLE>
The Company is in the financial services business specializing in private and
investment banking internationally. The Company's banking business is
conducted by its wholly-owned subsidiary, MFC Merchant Bank S.A. (the "Bank"),
a licensed full-service Swiss bank based in Geneva Switzerland. The Bank does
not engage in commercial or real estate lending.
Private banking focuses on asset management, securities trading services and
servicing the Bank's worldwide base of clients, including corporations, small
to mid-sized institutions and high net-worth individuals. Investment banking
services include providing finance and advisory services to clients with
respect to corporate finance transactions and underwriting issuances of
securities. The Company's personalized approach to client development for both
its private and investment banking activities has continued to increase its
client base. The Company will continue to focus on providing its clients with
creative solutions through both its existing operations and strategic
acquisitions and alliances.
2
<PAGE> 4
The Bank requires substantially less regulatory capital than traditional North
American banks as the majority of its customer deposits are placed in the
European fiduciary market. Such placements are off-balance sheet items which
allow the Bank to generate fee income without tying up significant amounts of
its capital. On the other hand, the traditional method of placing deposits,
whereby income is generated on the spread between deposits and return on
investments, requires significant amounts of capital, which will hinder
growth.
The Company also conducts proprietary investing activities, which consist of
the Company using its own resources and expertise to invest for its own
account. These activities concentrate on the identification and acquisition
of control of undervalued assets and the development and realization of the
full potential thereof. The Company invests globally with the objective of
maximizing total return measured through both long-term appreciation and
recognized gains.
The Company has established a solid foundation for its financial services
business and looks forward to continued growth in 1999.
Respectfully submitted,
M.J. Smith
May 31, 1999 President
3
<PAGE> 5
MFC BANCORP LTD.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(Unaudited)
4
<PAGE> 6
MFC BANCORP LTD.
CONSOLIDATED BALANCE SHEETS
As at March 31, 1999 and 1998
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
1999 1999 1998
---------------- ---------- ----------
(U.S. Dollars) (Canadian Dollars)
Information Only
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 36,067 $ 54,415 $ 59,467
Securities 53,498 80,712 67,649
Loans 36,900 55,671 28,495
Receivables 14,941 22,541 37,061
Property held for sale 3,698 5,579 6,299
Notes receivable - - 8,777
Excess cost of net assets acquired 12,198 18,403 19,841
Premises and equipment 1,730 2,610 2,671
Prepaid and other 3,172 4,786 5,350
---------- ---------- ----------
$ 162,204 $ 244,717 $ 235,610
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $ 21,480 $ 32,407 $ 22,670
Accounts payable and accrued expenses 10,695 16,136 43,253
Debt 26,542 40,044 41,492
---------- ---------- ----------
58,717 88,587 107,415
Minority interest 1,593 2,404 2,782
Shareholders' equity
Common shares 43,551 65,706 71,623
Cumulative translation adjustment 3,139 4,733 (1,519)
Retained earnings 55,204 83,287 55,309
---------- ---------- ----------
101,894 153,726 125,413
---------- ---------- ----------
$ 162,204 $ 244,717 $ 235,610
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 7
MFC BANCORP LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1999 and 1998
(Unaudited)
(dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
1999 1999 1998
---------------- ---------- ----------
(U.S. Dollars) (Canadian Dollars)
Information Only
<S> <C> <C> <C>
Financial services revenue $ 15,524 $ 23,461 $ 32,795
Expenses
Financial services 8,339 12,603 18,819
General and administrative 3,001 4,535 5,700
Interest 758 1,145 1,234
---------- ---------- ----------
12,098 18,283 25,753
---------- ---------- ----------
Income before income taxes 3,426 5,178 7,042
Provision for income taxes (64) (96) (98)
---------- ---------- ----------
3,362 5,082 6,944
Minority interest (7) (10) 16
---------- ---------- ----------
Net income $ 3,355 $ 5,072 $ 6,960
========== ========== ==========
Earnings per share:
Basic $ 0.28 $ 0.42 $ 0.56
========== ========== ==========
Fully diluted $ 0.26 $ 0.39 $ 0.52
========== ========== ==========
Weighted average number of shares
outstanding (in thousands) 15,276 15,276 13,956
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 8
MFC BANCORP LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1999 and 1998
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Canadian Dollars
--------------------------
1999 1998
------------ ------------
<S> <C> <C>
Inflow (outflow) of cash and cash equivalents
related to the following activities:
Operating
Net income $ 5,072 $ 6,960
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Depreciation and amortization 509 357
Decrease (increase) in securities (5,500) 6,244
Decrease (increase) in receivables 7,978 (16,471)
Increase in properties held for sale (23) (17)
Increase in accounts payable and
accrued expenses 1,911 14,996
Other 1,765 35
------------ ------------
11,712 12,104
Investing
Net decrease (increase) in loans (2,682) 13,307
Purchases of subsidiaries, net of
cash acquired (267) (143)
Other (52) 64
------------ ------------
(3,001) 13,228
Financing
Net increase (decrease) in deposits 9,839 (6,801)
Issuance of shares, net - 1,255
------------ ------------
9,839 (5,546)
Exchange rate effect on cash and
cash equivalents (3,006) (2,541)
------------ ------------
Increase in cash and cash equivalents 15,544 17,245
Cash and cash equivalents:
Beginning of period 38,871 42,222
------------ ------------
End of period $ 54,415 $ 59,467
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 9
MFC BANCORP LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1999
(Unaudited)
NOTE 1. Basis of Presentation
---------------------
The consolidated financial statements contained herein include the accounts of
MFC Bancorp Ltd. and its subsidiaries (the "Company").
The interim period consolidated financial statements have been prepared by the
Company in accordance with Canadian generally accepted accounting principles.
All financial summaries included are presented on a comparative and
consistent basis showing the figures for the corresponding period in the
preceding year. The preparation of financial data is based on accounting
principles and practices consistent with those used in the preparation of
annual financial statements. Certain information and footnote disclosure
normally included in consolidated financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
These interim period statements should be read together with the audited
consolidated financial statements and the accompanying notes included in the
Company's latest annual report on Form 20-F. In the opinion of the Company,
its unaudited interim consolidated financial statements contain all
adjustments necessary in order to present a fair statement of the results of
the interim periods presented.
Certain reclassifications have been made to the prior period financial
statements to conform to the current period presentation.
NOTE 2. Nature of Business
------------------
The Company is in the financial services business and its principal activities
focus on private and investment banking.
NOTE 3. Earnings Per Share
------------------
Basic earnings per share are computed on the weighted average number of shares
outstanding during the period. For the calculation of fully diluted earnings
per share, under Canadian generally accepted accounting principles, options
are deemed to be exercised at the date of grant and convertible securities are
deemed to be converted at the date of issuance.
Under U.S. generally accepted accounting principles, options affect diluted
earnings per share when "in-the-money".
8
<PAGE> 10
NOTE 4. Reporting Currency
------------------
The Company reports its results in Canadian dollars. Certain amounts herein
have also been reported in U.S. dollars for reference purposes. Amounts
reported in U.S. dollars have been translated from Canadian dollars at a rate
of U.S.$1.00 = Canadian $1.5087 for period end purposes and U.S.$1.00 =
Canadian $1.5113 for the three months ended March 31, 1999.
9
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and results
of operations of the Company for the three months ended March 31, 1999 should
be read in conjunction with the consolidated financial statements and related
notes included elsewhere herein. In this document, unless the context
otherwise requires, the "Company" refers to MFC Bancorp Ltd. and its
subsidiaries and all references to monetary amounts are in Canadian dollars
unless otherwise indicated. Selected financial data has also been provided in
U.S. dollars for information purposes using an exchange rate of one U.S.
dollar being equal to Canadian $1.5087.
Certain reclassifications have been made to the prior period financial
statements to conform to the current period presentation.
RESULTS OF OPERATIONS - Three Months Ended March 31, 1999
---------------------------------
The Company operates in the financial services business, specializing in
private and investment banking internationally. It also engages in proprietary
investing for its own account. The Company conducts its banking activities
through its wholly-owned subsidiary, MFC Merchant Bank S.A., a licensed full-
service Swiss bank based in Geneva, Switzerland.
In the first quarter of 1999, the Company's revenues decreased to $23.5
million from $32.8 million in the comparable period of 1998, primarily due to
reduced sales of investments and reduced activities in investment banking.
Expenses decreased to $18.3 million in the three months ended March 31, 1999
from $25.8 million in the comparable period of 1998, primarily as a result of
lower revenues. General and administrative expenses decreased to $4.5 million
in the three months ended March 31, 1999 from $5.7 million in the comparable
period of 1998, primarily due to the consolidation and streamlining of
operations. Interest expense decreased to $1.1 million in the three months
ended March 31, 1999 from $1.2 million in the comparable period of 1998,
primarily due to a decrease in amounts borrowed during the current period.
In the three months ended March 31, 1999, net earnings were $5.1 million or
$0.42 per share on a basic basis ($0.39 per share on a fully diluted basis).
In the three months ended March 31, 1998, net earnings were $7.0 million or
$0.56 per share on a basic basis ($0.52 per share on a fully diluted basis).
10
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
The following table is a summary of selected financial information concerning
the Company for the periods indicated:
<TABLE>
<CAPTION>
U.S. Dollars Canadian Dollars
---------------- --------------------------
March 31, March 31,
1999 --------------------------
---------------- 1999 1998
(in thousands) ------------ ------------
Information Only (in thousands)
<S> <C> <C> <C>
Cash and cash equivalents $ 36,067 $ 54,415 $ 59,467
Securities 53,498 80,712 67,649
Total assets 162,204 244,717 235,610
Debt 26,542 40,044 41,492
Shareholders' equity 101,894 153,726 125,413
</TABLE>
The Company maintains a high level of liquidity, with a substantial amount of
assets held in cash and cash equivalents, highly liquid marketable securities
and customer loans collateralized by marketable securities. The highly liquid
nature of these assets provides the Company with flexibility in managing its
business and financing. This liquidity is used by the Company in client
related services where the Company acts as a financial intermediary for third
parties and in the Company's own proprietary investing activities.
In the period ended March 31, 1999, the Company's cash and cash equivalents
were $54.4 million, compared to $59.5 million in the comparable period of
1998. In the period ended March 31, 1999, the Company had securities of $80.7
million, compared to $67.6 million in the comparable period of 1998.
Operating Activities
- --------------------
Operating activities provided cash of $11.7 million in the three months ended
March 31, 1999, compared to $12.1 million in the comparable period of 1998.
In the three months ended March 31, 1999, a decrease in receivables provided
cash of $8.0 million, compared to an increase in receivables using cash of
$16.5 million in the comparable period of 1998, primarily as a result of
securities trading activities. An increase in accounts payable and accrued
expenses provided cash of $1.9 million in the three months ended March 31,
1999, compared to $15.0 million in the comparable period of 1998. Net
purchases of securities used cash of $5.5 million in the current period,
compared to net sales of securities providing cash of $6.2 million in the
comparable period of 1998. The Company expects to generate sufficient cash
flow from operations to meet its working capital requirements.
Investing Activities
- --------------------
Investing activities in the three months ended March 31, 1999 used cash of
$3.0 million, compared to providing cash of $13.2 million in the comparable
period of 1998, primarily as a result of an increase in loans during the
current period.
11
<PAGE> 13
Financing Activities
- --------------------
Financing activities provided cash of $9.8 million in the three months ended
March 31, 1999, compared to using cash of $5.5 million in the comparable
period of 1998, primarily as a result of an increase in deposits during the
current period.
The Company continues to explore potential acquisition opportunities as a
means of expanding its business. Such opportunities may involve acquisitions
which are material in size and may require the raising of additional capital.
12
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Registrant MFC BANCORP LTD.
------------------------------
By /s/ Michael J. Smith
------------------------------
MICHAEL J. SMITH, PRESIDENT
Date May 31, 1999
------------------------------
