-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FK+DBSYeoPVPTkjJRlFywXjN8Leqk2SSf7nihBREe0JCTxYTR7hMqBjeuL3870BL v8DKO8GUAtOA9Oa9d+HDlg== 0000891020-98-001003.txt : 19980619 0000891020-98-001003.hdr.sgml : 19980619 ACCESSION NUMBER: 0000891020-98-001003 CONFORMED SUBMISSION TYPE: 6-K CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980618 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MFC BANCORP LTD CENTRAL INDEX KEY: 0000016859 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 131818111 STATE OF INCORPORATION: A1 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: SEC FILE NUMBER: 001-04192 FILM NUMBER: 00000000 BUSINESS ADDRESS: STREET 1: 6 RUE CHARLES BONNET STREET 2: GENEVA SWITZERLAND CITY: 1206 BUSINESS PHONE: 41228182999 MAIL ADDRESS: STREET 1: 6 RUE CHARLES BONNET STREET 2: GENEVA CITY: SWITZERLAND 1206 FORMER COMPANY: FORMER CONFORMED NAME: ARBATAX INTERNATIONAL INC DATE OF NAME CHANGE: 19960603 FORMER COMPANY: FORMER CONFORMED NAME: NALCAP HOLDINGS INC DATE OF NAME CHANGE: 19950725 6-K 1 FORM 6-K - 1998 FIRST QUARTER REPORT 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 June 1998 ------------------------------------ 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 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- ___________________ ). ================================================================================ 2 ================================================================================ MFC BANCORP LTD. 1998 FIRST QUARTER REPORT TO SHAREHOLDERS MARCH 31, 1998 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. ================================================================================ 3 MFC BANCORP LTD. 1998 FIRST QUARTER REPORT President's Letter to Shareholders: We are pleased to enclose the Company's first quarter results for 1998. 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 acquired in early February 1997. In the third quarter of 1997, the Company acquired Bank Rinderknecht AG ("BRA"), which was active in private banking and securities trading for Swiss and foreign customers since 1870. Following the acquisition, the Company merged BRA with the Bank. The Bank does not engage in commercial or real estate lending. Private banking focuses on asset management, "securities brokerage" 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 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 enhanced fee income without tying up significant amounts of its capital. The Company also conducts proprietary investing/merchant banking activities, which consist of the Company using its own resources and expertise to invest for it 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. In the first quarter of 1998, the Company continued to realize increases in revenues and earnings, primarily as a result of the growth in financial services fees and increased investing activities. 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. The Company has established a solid foundation for its financial services business and looks forward to continued growth in 1998. Respectfully submitted, (Signed) M.J. Smith President June 1998 2 4 MFC BANCORP LTD. CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED) 3 5 MFC BANCORP LTD. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DOLLARS IN THOUSANDS)
MARCH 31, 1998 MARCH 31, 1998 MARCH 31, 1997 -------------- -------------- -------------- (U.S. Dollars) (Canadian Dollars) Information Only ASSETS Cash and cash equivalents $ 41,979 $ 59,467 $ 22,381 Securities 47,754 67,649 57,188 Loans 20,115 28,495 23,074 Receivables 26,162 37,061 22,863 Property held for sale 4,447 6,299 8,296 Notes receivable 6,196 8,777 16,346 Excess cost of net assets acquired 14,006 19,841 18,239 Premises and equipment 1,886 2,671 1,023 Prepaid and other 3,777 5,350 725 -------------- -------------- -------------- $ 166,322 $ 235,610 $ 170,135 ============== ============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits $ 16,003 $ 22,670 $ 9,556 Accounts payable and accrued expenses 26,823 37,997 16,629 Debt 29,290 41,492 39,451 Accrued losses, claims and settlement expenses 3,710 5,256 8,968 -------------- -------------- -------------- 75,826 107,415 74,604 Minority interest 1,964 2,782 2,705 Shareholders' equity Preferred stock -- -- 12,832 Common stock 50,560 71,623 53,449 Cumulative translation adjustment (1,071) (1,519) 490 Retained earnings 39,043 55,309 26,055 -------------- -------------- -------------- 88,532 125,413 92,826 -------------- -------------- -------------- $ 166,322 $ 235,610 $ 170,135 ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 4 6 MFC BANCORP LTD. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
MARCH 31, 1998 MARCH 31, 1998 MARCH 31, 1997 -------------- -------------- -------------- (U.S. Dollars) (Canadian Dollars) Information Only Revenues Banking and financial services fees $ 7,546 $ 10,794 $ 2,293 Investments 15,157 21,680 11,584 Other 224 321 260 -------------- -------------- -------------- 22,927 32,795 14,137 Expenses Investments 13,156 18,819 8,610 General and administrative 3,985 5,700 3,454 Interest 863 1,234 1,246 -------------- -------------- -------------- 18,004 25,753 13,310 -------------- -------------- -------------- Income before income taxes 4,923 7,042 827 Provision for income taxes (69) (98) (20) -------------- -------------- -------------- 4,854 6,944 807 Minority interest 11 16 14 -------------- -------------- -------------- Net income $ 4,865 $ 6,960 $ 821 ============== ============== ============== Earnings per share Basic $ 0.39 $ 0.56 $ 0.06 ============== ============== ============== Fully diluted $ 0.36 $ 0.52 $ 0.06 ============== ============== ============== Weighted average number of shares outstanding (in thousands) 13,956 13,956 12,518 ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 5 7 MFC BANCORP LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED) (DOLLARS IN THOUSANDS)
MARCH 31, 1998 MARCH 31, 1997 -------------- -------------- Inflow (outflow) of cash and cash equivalents related to the following activities: Operating Net income $ 6,960 $ 821 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Items not affecting cash Depreciation and amortization 357 313 Loss (Gain) on sales of investments 397 (149) Gain on debt extinguishment -- (1,137) Minority interest (16) (14) Other 74 41 -------------- -------------- 7,772 (125) Changes in current assets and liabilities Investments 5,847 (1,170) Receivables (16,471) (1,141) Properties held for sale (17) (19) Accounts payable and accrued expenses 16,202 (2,408) Accrued losses, claims and unearned premiums (1,206) (1,912) Other (23) 25 -------------- -------------- 12,104 (6,750) Financing Increase (decrease) in deposits (6,801) 2,918 Debt repayments -- (1,018) Issuance of shares 1,255 -- Other -- 254 -------------- -------------- (5,546) 2,154 Investing Decrease (increase) in loans 13,307 (2,178) Purchase of subsidiaries, net of cash acquired (143) 11,592 Other 64 -- -------------- -------------- 13,228 9,414 Exchange rate effect on cash and cash equivalents (2,541) -- -------------- -------------- Increase in cash and cash equivalents 17,245 4,818 Cash and cash equivalents Beginning of period 42,222 17,563 -------------- -------------- End of period $ 59,467 $ 22,381 ============== ==============
The accompanying notes are an integral part of these financial statements. 6 8 MFC BANCORP LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998 (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 with 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 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". 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 $1.4166 for period end purposes and U.S. $1.00 = Canadian $1.4304 for the three months ended March 31, 1997. 7 9 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of the results of operations and the financial condition of the Company for the three months ended March 31, 1998 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 information has also been provided in U.S. dollars for information purposes. RESULTS OF OPERATIONS -- THREE MONTHS ENDED MARCH 31, 1998 The Company operates in the financial services business, specializing in private and investment banking internationally. It also engages in proprietary investing/merchant banking activities for its own account. The Company conducts its banking activities through its wholly-owned subsidiary, MFC Merchant Bank S.A., which was acquired in February 1997. In addition, the Company acquired the MFC Securities group of companies and Bank Rinderknecht AG in the second and third quarters of 1997, respectively. As a result, the Company had new sources of revenue in the first quarter of 1998 as compared to the first quarter of 1997, which have had a substantial effect on the Company's operating results and financial position in the first quarter of 1998. Revenues in the first quarter of 1998 increased by approximately 132% to $32.8 million from $14.1 million in the comparative quarter of 1997. In the current quarter, revenues from purchases and sales of investment securities increased to $21.7 million from $11.6 million in the comparative period. In the first quarter of 1998, revenues from banking and financial services fees increased to $10.8 million from $2.3 million in the comparative period of 1997. Costs and expenses increased to $25.8 million in the three months ended March 31, 1998 from $13.3 million in the three months ended March 31, 1997. In the current quarter, costs from sales of investment securities increased to $18.8 million from $8.6 million in the comparative period. General and administrative expenses increased to $5.7 million in the current period from $3.5 million in the same period of 1997. Interest expense was $1.2 million during the three months ended March 31, 1998 and 1997, respectively. Net earnings in the quarter ended March 31, 1998 increased to $7.0 million or $0.56 per share on a basic basis ($0.52 per share on a fully diluted basis) from $0.8 million or $0.06 per share on a basic and fully diluted basis in the same period of 1997. Increased revenues from investment securities and banking and financial services fees contributed to improved earnings in the current quarter, which were partially offset by increased expenses related to investment securities. 8 10 LIQUIDITY AND CAPITAL RESOURCES The following table is a summary of selected financial information concerning the Company for the periods indicated:
MARCH 31, MARCH 31, ------------------------- ------------------------- 1998 1997 1998 1997 ----------- ----------- ----------- ----------- (U.S. Dollars (Canadian Dollars in thousands, except cash in thousands, except cash flow per share) flow per share) Information Only Cash and cash equivalents $ 41,979 $ 16,168 $ 59,467 $ 22,381 Securities 47,754 41,312 67,649 57,188 Total assets 166,322 122,903 235,610 170,135 Accrued losses, claims and settlement expenses 3,710 6,478 5,256 8,968 Debt 29,290 28,499 41,492 39,451 Shareholders' equity 88,532 67,056 125,413 92,826 Cash flow(1) 5,433 (92) 7,772 (125) Cash flow per share 0.39 (0.01) 0.56 (0.01)
- --------------- (1) From operating activities before changes in current assets and liabilities. At March 31, 1998, the Company's cash and cash equivalents were $59.5 million, compared to $22.4 million at March 31, 1997. At March 31, 1998, the Company had securities of $67.6 million, compared to $57.2 million at March 31, 1997. Operating Activities Operating activities provided cash of $12.1 million in the three months ended March 31, 1998, compared to using cash of $6.8 million for the same period in 1997, primarily as a result of the increase in net income, a decrease in investments and an increase in accounts payable and accrued expenses. A decrease in investments provided cash of $5.8 million in the three months ended March 31, 1998, compared to an increase in investments using cash of $1.2 million in the three months ended March 31, 1997. An increase in accounts payable and accrued expenses provided cash of $16.2 million in the three months ended March 31, 1998, compared to a decrease in same using cash of $2.4 million in the three months ended March 31, 1997. An increase in receivables used cash of $16.5 million in the current period of 1998, compared to $1.1 million in the comparative period of 1997. During the first quarter of 1997, the Company recognized earnings of $1.1 million on the extinguishment of debt. The Company expects to generate sufficient cash flow from operations to meet its working capital requirements. Financing Activities Financing activities used cash of $5.5 million in the three months ended March 31, 1998, compared to providing cash of $2.2 million in the same period in 1997. In the first quarter of 1997, the Company used $1.0 million to reduce indebtedness. A decrease in deposits used cash of $6.8 million during the current period, compared to an increase in deposits providing cash of $2.9 million in the comparative period of 1997. Cash provided from the issuance of shares was $1.3 million in the three months ended March 31, 1998, as a result of shares issued under the Company's stock option plan. 9 11 Investing Activities Investing activities provided cash of $13.2 million in the first quarter of 1998, compared to $9.4 million in the comparative period of 1997. The purchase of subsidiaries, net of cash acquired, used cash of $0.1 million in the current period, compared to providing cash of $11.6 million in the same period of 1997. During the first quarter of 1998, a decrease in loans provided cash of $13.3 million, compared to an increase in loans using cash of $2.2 million in the comparative period of 1997. The Company anticipates that there will be further purchases of businesses or commitments to projects during 1998. To achieve its long-term goals of expanding its asset-base and earnings, both with respect to client services and proprietary investments, the Company may require substantial capital resources. The necessary resources will be generated from cash flow from operations, cash on hand, borrowing against its assets and/or the sale of assets. 10 12 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: June 1, 1998 ------------------------------------
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