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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 May 2000
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- ).
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[LOGO]
MFC BANCORP LTD.
2000 FIRST QUARTER REPORT
TO SHAREHOLDERS
MARCH 31, 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 FIRST QUARTER REPORT
President's Letter to Shareholders:
We are pleased to enclose our results for the first quarter of 2000. Our
net earnings in the first three months of 2000 increased by approximately
22% compared to the same period in 1999. The following table is a summary
of selected financial information concerning MFC for the periods
indicated:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, March 31,
--------------------------- ------------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
(U.S. Dollars in thousands (Canadian Dollars in thousands
except per share amounts) except per share amounts)
Information Only
<S> <C> <C> <C> <C>
Revenue $ 19,031 $ 15,524 $ 27,661 $ 23,461
Net income 4,243 3,355 6,165 5,072
Net income
per share:
Basic 0.35 0.28 0.51 0.42
Fully
diluted 0.32 0.26 0.46 0.39
</TABLE>
<TABLE>
<CAPTION>
March 31, March 31, March 31, March 31,
2000 1999 2000 1999
---------- ---------- ---------- ----------
(U.S. Dollars in thousands) (Canadian Dollars in thousands)
Information Only
<S> <C> <C> <C> <C>
Cash and
cash equi-
valents $ 50,161 $ 36,067 $ 72,909 $ 54,415
Securities 46,315 53,498 67,319 80,712
Total assets 200,478 162,204 291,393 244,717
Debt 26,290 26,542 38,213 40,044
Shareholders'
equity 120,339 101,894 174,910 153,726
</TABLE>
We are 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. 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
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placements are off-balance sheet items which allow us to generate fee
income without tying up 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.
During the first quarter of 2000, we discontinued our internet banking
operations. This activity allowed customers to use the internet to
initiate banking transactions. Since this operation began during the
fourth quarter of 1999, restatement of prior years' operations was not
necessary.
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
May 2000 President
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MFC BANCORP LTD.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Unaudited)
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MFC BANCORP LTD.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
March 31, 2000 March 31,
------------------ ---------------------
(U.S. Dollars) 2000 1999
Information Only -------- --------
(Canadian Dollars)
<S> <C> <C> <C>
ASSETS
Cash and cash
equivalents $ 50,161 $ 72,909 $ 54,415
Securities 46,315 67,319 80,712
Loans 60,318 87,672 55,671
Receivables 14,228 20,681 13,364
Due from investment
dealers 7,986 11,607 9,177
Property held for
sale 5,437 7,902 5,579
Excess cost of net
assets acquired 12,118 17,613 18,403
Premises and equipment 748 1,087 2,610
Prepaid and other 3,167 4,603 4,786
---------- --------- ---------
$ 200,478 $ 291,393 $ 244,717
========== ========= =========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits $ 41,964 $ 60,995 $ 32,407
Accounts payable and
accrued expenses 9,838 14,300 16,136
Debt 26,290 38,213 40,044
----------- --------- ---------
78,092 113,508 88,587
Minority interests 2,047 2,975 2,404
Shareholders' equity
Common stock 45,068 65,507 65,706
Cumulative trans-
lation adjustment (4,377) (6,366) 4,733
Retained earnings 79,648 115,769 83,287
----------- --------- ---------
120,339 174,910 153,726
----------- --------- ---------
$ 200,478 $ 291,393 $ 244,717
=========== ========= =========
</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 March 31, 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 $ 19,031 $ 27,661 $ 23,461
Expenses
Financial
services 10,429 15,159 12,603
General and
administrative 3,362 4,887 4,535
Interest 978 1,422 1,145
---------- ---------- ----------
14,769 21,468 18,283
---------- ---------- ----------
Income before
income taxes 4,262 6,193 5,178
Provision for
income taxes (6) (9) (96)
---------- ---------- ----------
4,256 6,184 5,082
Minority interests (13) (19) (10)
---------- ---------- ----------
Net income $ 4,243 $ 6,165 $ 5,072
========== ========== ==========
Earnings per share
Basic $ 0.35 $ 0.51 $ 0.42
========== ========== ==========
Fully diluted $ 0.32 $ 0.46 $ 0.39
========== ========== ==========
Weighted average
number of shares
outstanding (in
thousands) 15,157 15,157 15,276
========== ========== ==========
</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 Three Months Ended March 31, 2000 and 1999
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
March 31,
-----------------------
2000 1999
---------- ----------
<S> <C> <C>
Inflow (outflow) of cash and cash equivalents
related to the following activities:
Operating
Net income $ 6,165 $ 5,072
Adjustments to reconcile net income to net
cash provided by operating activities:
Items not affecting cash
Depreciation and amortization 422 509
Changes in current assets and liabilities
Securities (613) (5,500)
Receivables 1,844 8,682
Due from investment dealers 4,896 (704)
Properties held for sale (23) (23)
Accounts payable and accrued expenses (3,335) 1,911
Other 322 1,765
---------- ----------
9,678 11,712
Financing
Net increase in deposits 16,269 9,839
Borrowings 7,271 -
Issuance of shares 9 -
---------- ----------
23,549 9,839
Investing
Net increase in loans (7,533) (2,682)
Purchases and sales of subsidiaries,
net of cash acquired (612) (267)
Other 7 (52)
---------- ----------
(8,138) (3,001)
Exchange rate effect on cash and cash
equivalents (1,747) (3,006)
---------- ----------
Increase in cash and cash equivalents 23,342 15,544
Cash and cash equivalents:
Beginning of period 49,567 38,871
---------- ----------
End of period $ 72,909 $ 54,415
========== ==========
</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 THREE MONTH PERIOD ENDED MARCH 31, 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 merchant 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 $1.4535 for period end purposes
and U.S.$1.00 =Canadian $1.4535 for the three months ended March 31, 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.$0.6880, being the Federal Reserve Bank
of New York rate of conversion for Canadian dollars to U.S.
dollars as at March 31, 2000.
The following discussion and analysis of the financial condition and
results of our operations for the three months ended March 31, 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 - Three Months Ended March 31, 2000
---------------------------------
In the three months ended March 31, 2000, revenues increased to $27.7
million from $23.5 million in the comparable period of 1999, primarily due
to increased merchant banking activities. Expenses increased to $21.5
million in the three months ended March 31, 2000 from $18.3 million in the
comparable period of 1999, primarily as a result of higher revenues.
General and administrative expenses increased slightly to $4.9 million in
the three months ended March 31, 2000 from $4.5 million in the comparable
period of 1999. Interest expense increased to $1.4 million in the three
months ended March 31, 2000 from $1.1 million in the comparable period of
1999.
In the three months ended March 31, 2000, our net earnings were $6.2
million or $0.51 per share on a basic basis ($0.46 per share on a fully
diluted basis). In the three months ended March 31, 1999, our net earnings
were $5.1 million or $0.42 per share on a basic basis ($0.39 per share on
a fully diluted basis).
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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
--------------------- --------------------
March 31, March 31,
--------------------- --------------------
2000 1999 2000 1999
--------- --------- -------- ---------
(in thousands) (in thousands)
Information Only
<S> <C> <C> <C> <C>
Cash and cash
equivalents $ 50,161 $ 36,067 $ 72,909 $ 54,415
Securities 46,315 53,498 67,319 80,712
Total assets 200,478 162,204 291,393 244,717
Debt 26,290 26,542 38,213 40,044
Shareholders' equity 120,339 101,894 174,910 153,726
</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 March 31, 2000, our cash and cash equivalents were $72.9 million,
compared to $54.4 million at March 31, 1999. At March 31, 2000, we had
securities of $67.3 million, compared to $80.7 million at March 31, 1999.
Operating Activities
--------------------
Operating activities provided cash of $9.7 million in the three months
ended March 31, 2000, compared to $11.7 million in the comparable period
of 1999. In the three months ended March 31, 2000, a decrease in
receivables provided cash of $1.8 million, compared to $8.7 million in the
comparable period of 1999. A decrease in amounts due from investment
dealers as a result of securities trading activities provided cash of $4.9
million in the three months ended March 31, 2000, compared to $0.7 million
used in the comparable period of 1999. A decrease in accounts payable and
accrued expenses used cash of $3.3 million in the three months ended March
31, 2000, compared to an increase in same providing cash of $1.9 million
in the comparable period of 1999. Net purchases of securities used cash of
$0.6 million in the current period, compared to $5.5 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 three months ended March 31, 2000 used cash of
$8.1 million, compared to $3.0 million in the comparable period of 1999,
primarily as a result of a net increase of approximately $7.5 million in
loans for our customers' securities trading accounts during the current
period. These are margin loans secured by securities deposited by
customers.
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Financing Activities
--------------------
Financing activities provided cash of $23.5 million in the three months
ended March 31, 2000, compared to $9.8 million in the comparable period of
1999, primarily as a result of a net increase of approximately $16.3
million in deposits for our customers' securities trading accounts during
the current period.
The devaluation of the Swiss franc relative to the Canadian dollar by
approximately 3.5% over the period resulted in an unrealized foreign
exchange translation loss of $1.7 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 March 31, 2000,
we reported an approximately net $2.1 million foreign exchange translation
loss and, as a result, our cumulative foreign exchange translation loss at
March 31, 2000 was $6.4 million, compared to a $4.7 million gain at March
31, 1999.
Since both our principal sources of revenues and expenses are in Swiss
francs, we use derivatives to protect our foreign exchange exposure.
Based upon the period average exchange rate in the first quarter of 2000,
the Canadian dollar increased by approximately 18.8% in value against the
Swiss franc, over the comparative period in 1999.
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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 first 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 May 29, 2000
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