SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 29, 1997
Mercury Finance Company
(Exact name of registrant as specified in charter)
Delaware 1-10176 36-3627010
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
100 Field Drive, Lake Forest, Illinois 60045
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 295-8600
N/A
(Former name or former address, if changed since last report)
Item 5. Other Events.
On August 29, 1997, the Registrant issued a press release, a copy of which
is attached as Exhibit 99.1 to this Form 8-K and incorporated herein by
reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Description of Document
99.1 Press release dated August 29, 1997 issued by the
Registrant.
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 hereunto duly authorized.
Mercury Finance Company
Date: September 2, 1997 By: /s/ Patrick O'Malley
Its: Assitant Secretary
Exhibit 99.1
MERCURY FINANCE REPORTS SECOND QUARTER RESULTS
Mercury Finance Company (NYSE: MFN) today reported a net loss of $8,369,000
or $0.05 per share for the second quarter of 1997, which ended June 30. Non-
operating expenses for the quarter were $5,453,000 on a pre-tax basis.
"Our year-to-date results are consistent with the targets and expectations
we developed soon after the initial management changes were implemented earlier
this year. At that time we envisioned the first quarter as a period in which
our efforts would be primarily devoted to stabilizing the situation," said
William A. Brandt, Jr., president and chief executive officer of Mercury. "We
believed the time afforded us in the second quarter would be ours to begin the
cleanup of the Company's problem areas. We are pleased to report that during
the second quarter, we took tough measures aimed at rebuilding the Company and
returning it to a solid operating foundation.
Competitive pressures on Mercury continue to be fierce and, as well, market
conditions are challenging the industry as a whole. An obvious indication of
these conditions is reflected in the latest government report showing record
second quarter personal bankruptcies.
"To respond to these conditions," Brandt said, "Mercury management has
moved vigorously to re-enforce adherence to existing policies, as well as to
introduce additional and more sophisticated internal control mechanisms during
the second quarter. However, the Company's financial results continue to be
measurably affected by the recording of interest expense, pursuant to the
Forbearance Agreement with its creditors, at default rates averaging over 9
percent per annum."
Management expects to issue complete second quarter financial statements,
accompanied by a review report from Arthur Andersen LLP, in the next two weeks.
Management does not expect these financial statements to differ materially from
information released today. In line with the Company's earlier disclosures,
Arthur Andersen LLP's review report will contain a going concern exception.
The company reported the following achievements since the end of the first
quarter:
-- The Company continues to pay interest on all of its indebtedness.
-- Cash flow is positive and the Company anticipates no need for
further borrowing to fund operations in the near future.
-- The Company closed on the sale of the Lyndon Insurance Group. A
portion of the proceeds were used to make a $70 million payment
on the principal of its outstanding debt. Additional principal
payments aggregating $21 million were made out of the Company's
excess cash balances.
-- The Company received a continuation of waivers from its creditors
allowing the Company to pledge assets if needed to collateralize
a line of credit from the Bank of America. The waivers next come
up for renewal on September 30.
-- A $50 million line of credit from the Bank of America was
renewed. No funds are currently outstanding against this line.
-- As part of a comprehensive program to improve operational
effectiveness, the Company consolidated operations and closed 30
branches during the second quarter.
-- The Company has instituted new credit rating protocols designed
to better evaluate credit risks and reduce credit losses.
-- The Company has made managerial and organizational changes to
focus more resources on the collection and recovery of delinquent
debts.
The non-operating expenses of $5,453,000 for the second quarter included a
$325,000 charge for the closing of 30 branch locations and $5,127,000 for a
variety of professional activities including the investigation into the
previously disclosed accounting irregularities, fees related to negotiations
with creditors, a portion of fees for the crisis management team hired to assist
in the turnaround of the business and the cost of re-examining and restating
previous financial statements.
MERCURY FINANCE COMPANY
Consolidated Statements of Income
(dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
3 months ended 6 months ended
June 30, 1997 June 30, 1997
<S> <C> <C>
Finance charges, fees and
other interest $62,505 $129,285
Interest expense (23,549) (44,265)
Net interest income 38,956 85,020
Provision for finance credit
losses (24,544) (55,006)
Net interest income after
provision for finance
credit losses 14,412 30,014
Other operating income 12,939 39,662
Other operating expenses 32,684 75,685
Operating income (loss) (5,333) (6,009)
Non-operating expenses (5,453) (10,582)
Loss on sale of Lyndon -- (29,528)
Income from Lyndon due to buyer (2,025) (2,025)
Income (loss) before
income taxes (12,811) (48,144)
Applicable income taxes
(benefit) (4,442) (6,607)
Net income (loss) $(8,369) $(41,537)
Net income (loss) per share $(0.05) $(0.24)
</TABLE>
MERCURY FINANCE COMPANY
Consolidated Balance Sheet
(dollars in thousands)
June 30, 1997
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and Investments $130,909
Finance receivables 1,095,779
Less: allowance for Credit
losses (123,604)
Less: nonrefundable dealer
reserves (71,365)
Finance receivables, net 900,810
Other assets 149,063
Total Assets $1,180,782
Liabilities and Shareholders'
Equity
Senior debt, commercial paper
and notes $493,619
Senior debt, term notes 488,625
Subordinated debt 22,500
Accounts payable and other
liabilities 60,682
Total Liabilities 1,065,426
Shareholders' Equity 115,356
Total Liabilities and
Shareholders' Equity $1,180,782
</TABLE>
CONTACT: Joe Kopec or Jim Fitzpatrick of The Dilenschneider Group,
312-553-0700, for Mercury Finance Company
