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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 November 2000
MFC BANCORP LTD.
(Exact Name of Registrant as specified in its charter)
17 Dame Street, Dublin 2, Ireland
(35 31) 679 1688
(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- ).
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[LOGO]
MFC BANCORP LTD.
2000 THIRD QUARTER REPORT
TO SHAREHOLDERS
SEPTEMBER 30, 2000
FORWARD-LOOKING STATEMENTS
The statements in this report that are not based on historical facts are
called "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 can be
identified by words such as "estimates", "projects", "expects", "intends",
"believes", "plans", or their negatives or other comparable words. Also
look for discussions of strategy that involve risks and uncertainties.
Forward-looking statements include statements regarding the outlook for
our 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. You are cautioned that any
such forward-looking statements are not guarantees and may involve risks
and uncertainties. Our actual results may differ materially from those in
the forward-looking statements due to risks facing us or due to actual
facts differing from the assumptions underlying our predictions. Some of
these risks and assumptions include:
* general economic and business conditions, including changes in
interest rates;
* prices and other economic conditions;
* 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;
* our ability to execute prospective business plans; and
* misjudgments in the course of preparing forward-looking
statements.
We advise you that these cautionary remarks expressly qualify in their
entirety all forward-looking statements attributable to us or persons
acting on our behalf.
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MFC BANCORP LTD.
2000 THIRD QUARTER REPORT
President's Letter to Shareholders:
We are pleased to enclose our results for the third quarter of 2000. Our
net earnings in the third three months of 2000 increased by approximately
15.9% compared to the same period in 1999. The following table is a
summary of our selected financial information for the periods indicated:
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2000 1999 2000 1999
-------- -------- -------- --------
(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 $ 66,905 $ 49,186 $ 98,484 $ 73,286
Net income 17,932 15,275 26,397 22,759
Net income per share:
Basic 1.49 1.26 2.19 1.88
Fully diluted 1.28 1.11 1.90 1.65
</TABLE>
<TABLE>
<CAPTION>
September 30, December 31, September 30, December 31,
2000 1999 2000 1999
------------- ------------ ------------- ------------
(U.S. Dollars in thousands) (Canadian Dollars in
Information Only thousands)
<S> <C> <C> <C> <C>
Cash and cash
equivalents $ 44,482 $ 34,343 $ 67,035 $ 49,567
Securities 39,633 46,981 59,727 67,808
Total assets 202,287 187,145 304,846 270,107
Debt 22,744 21,421 34,275 30,917
Shareholders' equity 129,927 118,348 195,801 170,811
</TABLE>
MFC is a financial services company that focuses on merchant banking. We
provide specialized banking and corporate finance services
internationally. We advise clients on corporate strategy and structure,
including mergers and acquisitions and capital raising. These activities
are principally conducted through our wholly-owned subsidiary, MFC
Merchant Bank S.A., which is a licensed full-service Swiss bank based in
Geneva, Switzerland and with an office located in Zurich, Switzerland
which was opened in August 2000. We also commit our own capital to
promising enterprises and invest and trade to capture investment
opportunities for our own account. We seek to invest in businesses or
assets whose intrinsic value is not properly reflected in their share
price or value. Our proprietary investing is generally not passive and we
seek investments where our financial expertise and management can either
add or unlock value. Our operations are primarily conducted in Europe and
North America.
Our banking operations require 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 us to generate fee income without tying up
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significant amounts of capital. This is in contrast to most North
American banks, which generate revenue from the spread between the cost of
funds and the credit received.
In October 2000, we relocated our corporate office to Dublin, Ireland.
We have established a solid foundation for our financial services business
and look forward to continued growth during the remainder of 2000.
Respectfully submitted,
/s/ M.J. Smith
M.J. Smith
November 2000 President
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MFC BANCORP LTD.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(Unaudited)
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MFC BANCORP LTD.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
September 30, 2000 September 30,
------------------ ------------------
(U.S. Dollars) 2000 1999
-------- --------
Information Only (Canadian Dollars)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 44,482 $ 67,035 $ 49,942
Securities 39,633 59,727 83,749
Loans 68,892 103,820 68,044
Receivables 19,885 29,967 25,580
Due from investment dealers 8,457 12,744 17,411
Property held for sale 3,757 5,662 5,363
Excess cost of net assets acquired 11,521 17,362 18,080
Premises and equipment 952 1,434 2,654
Prepaid and other 4,708 7,095 2,546
-------- -------- --------
$202,287 $304,846 $273,369
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $ 39,443 $ 59,440 $ 51,167
Accounts payable and accrued expenses 7,792 11,742 12,154
Debt 22,744 34,275 39,847
-------- -------- --------
69,979 105,457 103,168
Minority interest 2,381 3,588 2,314
Shareholders' equity
Common stock 43,089 64,935 65,732
Cumulative translation adjustment (3,408) (5,135) 1,181
Retained earnings 90,246 136,001 100,974
-------- -------- --------
129,927 195,801 167,887
-------- -------- --------
$202,287 $304,846 $273,369
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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MFC BANCORP LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 2000 and 1999
(Unaudited)
(dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
2000
-------------
(U.S. Dollars) 2000 1999
-------- --------
Information Only (Canadian Dollars)
<S> <C> <C> <C>
Financial services revenue $ 66,905 $ 98,484 $ 73,286
Expenses
Financial services 36,996 54,458 33,720
General and administrative 9,196 13,537 13,362
Interest 2,240 3,298 3,186
-------- -------- --------
48,432 71,293 50,268
-------- -------- --------
Income before income taxes 18,473 27,191 23,018
Provision for income taxes (90) (132) (258)
-------- -------- --------
18,383 27,059 22,760
Minority interest (451) (662) (1)
-------- -------- --------
Net income $ 17,932 $ 26,397 $ 22,759
======== ======== ========
Earnings per share
Basic $ 1.49 $ 2.19 $ 1.88
======== ======== ========
Fully diluted $ 1.28 $ 1.90 $ 1.65
======== ======== ========
Weighted average number of shares
outstanding (in thousands) 15,223 15,223 15,276
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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MFC BANCORP LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 2000 and 1999
(Unaudited)
(dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
2000
-------------
(U.S. Dollars) 2000 1999
-------- --------
Information Only (Canadian Dollars)
<S> <C> <C> <C>
Financial services revenue $ 19,274 $ 28,614 $ 24,038
Expenses
Financial services 7,945 11,843 7,632
General and administrative 2,576 3,826 4,955
Interest 564 840 951
-------- -------- --------
11,085 16,509 13,538
-------- -------- --------
Income before income taxes 8,189 12,105 10,500
Provision for income taxes (42) (61) (66)
-------- -------- --------
8,147 12,044 10,434
Minority interest 28 41 (9)
-------- -------- --------
Net income $ 8,175 $ 12,085 $ 10,425
======== ======== ========
Earnings per share
Basic $ 0.68 $ 1.00 $ 0.86
======== ======== ========
Fully diluted $ 0.57 $ 0.85 $ 0.74
======== ======== ========
Weighted average number of shares
outstanding (in thousands) 15,257 15,257 15,277
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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MFC BANCORP LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2000 and 1999
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
September 30,
--------------------
2000 1999
-------- --------
<S> <C> <C>
Inflow (outflow) of cash and cash equivalents
related to the following activities:
Operating
Net income $ 26,397 $ 22,759
Adjustments to reconcile net income to net cash
provided by operating activities:
Items not affecting cash
Depreciation and amortization 1,222 1,573
Changes in current assets and liabilities
Securities 6,275 (11,506)
Receivables (8,384) 2,217
Due from investment dealers 3,676 (10,269)
Properties held for sale 2,362 48
Accounts payable and accrued expenses (6,090) (4,210)
Other (3,341) (915)
-------- --------
22,117 (303)
Financing
Net increase in deposits 14,489 32,767
Debt repayments (3,999) (116
Borrowings 7,271 -
Issuance of shares, net of repurchase (545) -
Other (36) (40)
-------- --------
17,180 32,611
Investing
Net increase in loans (21,578) (16,108)
Sale and purchases of subsidiaries, net of
cash acquired/disposed 1,179 (521)
Other (685) (725)
-------- --------
(21,084) (17,354)
Exchange rate effect on cash and cash equivalents (745) (3,883)
-------- --------
Increase in cash and cash equivalents 17,468 11,071
Cash and cash equivalents:
Beginning of period 49,567 38,871
-------- --------
End of period $ 67,035 $ 49,942
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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MFC BANCORP LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000
(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 investment banking.
Note 3. Earnings Per Share
Basic earnings per share is 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."
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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 $1.5070 for period end purposes
and U.S. $1.00 = Canadian $1.4720 for the nine months ended September 30,
2000.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In this document, please note the following:
* references to "we", "our", "us" or "MFC" mean MFC Bancorp
Ltd. and its subsidiaries unless the context of the sentence
clearly suggests otherwise;
* all references to monetary amounts are in Canadian dollars unless
otherwise indicated; and
* selected financial information has been provided in U.S. dollars
for informational purposes using an exchange rate of one Canadian
dollar being equal to U.S.$1.5070, being the Federal Reserve Bank
of New York rate of conversion for Canadian dollars to U.S.
dollars as at September 30, 2000.
The following discussion and analysis of the financial condition and
results of our operations for the nine months ended September 30, 2000
should be read in conjunction with the consolidated financial statements
and related notes included elsewhere herein. Certain reclassifications
have been made to our prior period financial statements to conform to the
current period presentation.
RESULTS OF OPERATIONS - Nine Months Ended September 30, 2000
In the nine months ended September 30, 2000, revenues increased to $98.5
million from $73.3 million in the comparable period of 1999, primarily due
to increased merchant banking activities. Expenses increased to $71.3
million in the nine months ended September 30, 2000 from $50.3 million in
the comparable period of 1999, primarily as a result of higher revenues.
General and administrative expenses increased slightly to $13.5 million in
the nine months ended September 30, 2000 from $13.4 million in the
comparable period of 1999. Interest expense increased marginally to $3.3
million in the nine months ended September 30, 2000 from $3.2 million in
the comparable period of 1999.
In the nine months ended September 30, 2000, our net earnings were $26.4
million or $2.19 per share on a basic basis ($1.90 per share on a fully
diluted basis). In the nine months ended September 30, 1999, net earnings
were $22.8 million or $1.88 per share on a basic basis ($1.65 per share on
a fully diluted basis).
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RESULTS OF OPERATIONS - Three Months Ended September 30, 2000
In the third quarter of 2000, revenues increased to $28.6 million from
$24.0 million in the comparable period of 1999, primarily due to increased
merchant banking activities. Expenses increased to $16.5 million in the
quarter ended September 30, 2000 from $13.5 million in the comparable
period of 1999, primarily as a result of higher revenues. General and
administrative expenses decreased to $3.8 million in the quarter ended
September 30, 2000 from $5.0 million in the comparable period of 1999.
Interest expense decreased slightly to $0.8 million in the quarter ended
September 30, 2000 from $1.0 million in the comparable period of 1999.
In the quarter ended September 30, 2000, our net earnings were $12.1
million or $1.00 per share on a basic basis ($0.85 per share on a fully
diluted basis). In the quarter ended September 30, 1999, our net earnings
were $10.4 million or $0.86 per share on a basic basis ($0.74 per share on
a fully diluted basis).
Liquidity and Capital Resources
The following table is a summary of selected financial information
concerning MFC for the periods indicated:
<TABLE>
<CAPTION>
U.S. Dollars Canadian Dollars
------------------ ------------------
September 30, September 30,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
(in thousands) (in thousands)
Information Only
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 44,482 $ 33,974 $ 67,035 $ 49,942
Securities 39,633 56,972 59,727 83,749
Total assets 202,287 185,964 304,846 273,369
Debt 22,274 27,107 34,275 39,847
Shareholders' equity 129,927 114,208 195,801 167,887
</TABLE>
We maintain 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 us with flexibility in managing our
business and financing. This liquidity is used by us in client related
services where we act as a financial intermediary for third parties and in
our own proprietary investing activities.
At September 30, 2000, our cash and cash equivalents were $67.0 million,
compared to $49.9 million at September 30, 1999. At September 30, 2000,
we had securities of $59.7 million, compared to $83.7 million at September
30, 1999.
Operating Activities
Operating activities provided cash of $22.1 million in the nine months
ended September 30, 2000, compared to using cash of $0.3 million in the
comparable period of 1999. In the nine months ended September 30, 2000,
an increase in receivables used cash of $8.4 million, compared to a
decrease in receivables providing cash of $2.2 million in the comparable
period of 1999. A decrease in
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amounts due from investment dealers as a result of securities trading
activities provided cash of $3.7 million in the nine months ended
September 30, 2000, compared to an increase which used cash of $10.3
million in the comparable period of 1999. A decrease in accounts payable
and accrued expenses used cash of $6.1 million in the nine months ended
September 30, 2000, compared to $4.2 million in the comparable period of
1999. Net sales of securities provided cash of $6.3 million in the
current period, compared to net purchases of securities using cash of
$11.5 million in the comparable period of 1999. We expect to generate
sufficient cash flow from operations to meet our working capital
requirements.
Investing Activities
Investing activities in the nine months ended September 30, 2000 used cash
of $21.1 million, compared to $17.4 million in the comparable period of
1999, primarily as a result of a larger net increase in loans
outstanding.
Financing Activities
Financing activities provided cash of $17.2 million in the nine months
ended September 30, 2000, compared to $32.6 million in the comparable
period of 1999, primarily as a result of a smaller increase in customer
deposits. During the current period, net borrowings increased by
approximately $3.3 million.
The depreciation of the Swiss franc relative to the Canadian dollar by
approximately 3.7% over the period resulted in an unrealized foreign
exchange translation loss of $0.7 million on cash and cash equivalents,
which is included as shareholder's equity in our balance sheet and does
not affect our net earnings.
We continue to explore potential acquisition opportunities as a means of
expanding our business. Such opportunities may involve acquisitions which
are material in size and may require the raising of additional capital.
Foreign Currency
Substantially all of our operations are conducted in international markets
and our consolidated financial results are subject to foreign currency
exchange rate fluctuations, in particular, those in Switzerland.
We translate foreign assets and liabilities into Canadian dollars at the
rate of exchange on the balance sheet date. Revenues and expenses are
translated at the average rate of exchange prevailing during the period.
Unrealized gains or losses from these translations are recorded as
shareholders' equity on the balance sheet and do not affect our net
earnings.
As a substantial amount of our revenues are received in Swiss francs, our
financial position for any given period, when reported in Canadian
dollars, can be significantly affected by the exchange rate for Swiss
francs prevailing during that period. In the period ended September 30,
2000, we reported
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an approximately net $0.8 million foreign exchange translation loss and,
as a result, our cumulative foreign exchange translation loss at September
30, 2000 was $5.1 million, compared to a cumulative foreign exchange
translation gain of $1.2 million at September 30, 1999.
Based upon the period average exchange rate in the third quarter of 2000,
the Canadian dollar increased by approximately 12.1% in value against the
Swiss franc, over the comparative period in 1999.
Certain Factors
Our results of operations may be materially affected by market
fluctuations and economic factors. In addition, our results of operations
have been and may continue to be affected by many factors of a global
nature, including economic and market conditions, the availability of
capital, the level and volatility of equity prices and interest rates,
currency values and other market indices, technological changes, the
availability of credit, inflation and legislative and regulatory
developments. Our results of operations may also be materially affected
by competitive factors. Competition includes firms traditionally engaged
in financial services such as banks, broker-dealers and investment
dealers, along with other sources such as insurance companies, mutual fund
groups, on-line service providers and other companies offering financial
services in Europe and globally.
Inflation
We do not believe that inflation has had a material impact on revenues or
income during the third quarter of 2000. Because our assets to a large
extent are liquid in nature, they are not significantly affected by
inflation. However, increases in inflation could result in increases in
our expenses, which may not be readily recoverable in the price of
services provided to our clients. To the extent inflation results in
rising interest rates and has other adverse effects on capital markets, it
could adversely affect our financial position and profitability.
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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 November 28, 2000
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