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) December 5, 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 December 5, 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 December 5, 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: December 8, 1997 By: /s/ Patrick J. O'Malley
Its: ASSISTANT SECRETARY
UDFOR IMMEDIATE RELEASE Contact:
Joe Kopec or Jim Fitzpatrick
The Dilenschneider Group
312-553-0700
MERCURY FINANCE REPORTS THIRD QUARTER RESULTS
CHICAGO, December 5, 1997 -- Mercury Finance Company (NYSE:MFN) today
reported a net loss of $27,567,000 or $0.16 per share for the third quarter of
1997, which ended September 30. Net non-operating expenses for the quarter were
$3,013,000 on a pre-tax basis. In addition, the results for the quarter
included a provision for income taxes of $13,018,000 as a result of the
$18,500,000 impact of recent changes in tax laws.
The third quarter income tax provision charge of $18,500,000 for the
financial impact of the Taxpayer Relief Act of 1997, signed into law in August,
reflects a provision of the Act that reduces the Net Operating Loss carryback
period from three years to two beginning after August 5, 1997. Under the
reduced carryback period, the Company will not be able to justify the carrying
value of its deferred tax assets as of January 1, 1998. The third quarter
provision reflects the reduction of the deferred tax assets to the amount that
is estimated to be realizable through December 31, 1997.
"We are pleased that by December 31, 1997, Mercury Finance will have made
significant progress in filing substantially all of its outstanding financial
statements, among these the audit of 1996 financial statements which has been
important to bringing order to the reporting process," said William A. Brandt,
Jr., president and chief executive officer. "Our other top priority right now
is the completion of Mercury's 1998 business plan in which we fully expect to
consider a number of options, among these, perhaps the possibility of
consolidating some offices and revising our approach to our marketing efforts."
Management expects to issue complete third 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.
In addition to the issuance of 1996, 1995 (restated) and 1994 financial
statements, the company reported the following accomplishments since the end of
the second 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 reached an agreement with its creditors to extend, until
March 2, 1998, the forbearance agreement that had been in effect since July
and which had expired on October 1. The agreement provides that Mercury
will continue to keep interest current on its funded debt and will make
periodic payments to reduce principal as cash flow permits. In
consideration of the payment of principal and interest, creditors have
pledged not to take action against the company under their debt agreements
prior to March 2, 1998 unless the agreement is breached or is otherwise
terminated. The agreement may be terminated after January 10, 1998, in the
event Mercury does not have a proposal meeting certain criteria for the
restructuring, refinancing or sale of the business.
- - The Company continues to make periodic payments to reduce principal out of
excess cash balances. Subsequent to June 30, 1997, and through
November 15, 1997, the Company has made principal reduction payments of
approximately $135 million.
- - Mercury continued to work with the investment banking firm of Salomon
Brothers to assist it in its ongoing exploration of strategic alternatives
including development of a business and restructuring plan.
- - Reported creditor waivers, which permit the company to continue to pledge
assets as collateral for its credit facility with Bank of America Business
Credit (BABC), extended to January 6, 1998, the date the facility currently
expires. No funds are outstanding to BABC under the facility and no funds
have been outstanding since the line was repaid in May 1997.
The net non-operating expenses of $3,013,000, include $4,115,000 in professional
fees including the investigation into the previously disclosed accounting
irregularities, fees related to negotiations with creditors, a portion of the
fees for the crisis management team hired to assist in the turnaround of the
business, the cost of reexamining and restating previous financial statements,
and the cost for the search for a permanent executive management. Also recorded
in the third quarter was a $1,102,000 gain on the proceeds from a life insurance
policy on a former executive officer.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
3 mos. ended 9 mos. ended
Sept. 30, 1997 Sept. 30, 1997
<C> <C>
<S>
Finance charges, fees and other interest 57,587 186,872
Interest expense (21,554) (65,819)
Net interest income 36,033 121,053
Provision for finance credit losses (27,080) (82,086)
Net interest income after provision for 8,953 38,967
finance credit losses
Other operating income 3,329 42,991
Other operating expenses (23,818) (99,503)
Operating income (loss) (11,536) (17,545)
Non-operating expenses (3,013) (13,595)
Loss on sale of Lyndon (29,528)
Income from Lyndon due to buyer (2,025)
Income (loss) before income taxes (14,549) (62,693)
Applicable income taxes (benefit) 13,018 6,411
Net income (loss) (27,567) (69,104)
Net income (loss) per share ($0.16) ($0.40)
</TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET
(IN DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Assets Sept. 30, 1997
<S> <C>
Cash and investments 50,528
Finance receivables 1,046,158
Less: allowance for credit losses (120,131)
Less: nonrefundable dealer reserves (61,306)
Finance receivables, net 864,721
Other assets 133,903
Total Assets 1,049,152
Liabilities and Shareholders' Equity
Senior debt, commercial paper and notes 445,878
Senior debt, term notes 441,364
Subordinated debt 22,500
Accounts payable and other liabilities 51,621
Total Liabilities 961,363
Shareholders' Equity 87,789
Total Liabilities and Shareholders' Equity 1,049,152
</TABLE>
