-----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, LQNRYPqlhJycB5OHbSK/XweS9yRIVmit/FsGpExaBfrNRjhHADPHglFpWVidfjpe TT+6KT/Y/7ZFSLbaFq4X/g== 0000950129-02-005698.txt : 20021216 0000950129-02-005698.hdr.sgml : 20021216 20021114173801 ACCESSION NUMBER: 0000950129-02-005698 CONFORMED SUBMISSION TYPE: 425 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20021114 DATE AS OF CHANGE: 20021216 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: FIRSTCITY FINANCIAL CORP CENTRAL INDEX KEY: 0000828678 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 760243729 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 SEC ACT: 1934 Act SEC FILE NUMBER: 033-19694 FILM NUMBER: 02826592 BUSINESS ADDRESS: STREET 1: 6400 IMPERIAL DRIVE CITY: WACO STATE: TX ZIP: 76712 BUSINESS PHONE: 2547511750 MAIL ADDRESS: STREET 1: 6400 IMPERIAL DRIVE CITY: WACO STATE: TX ZIP: 76712 FORMER COMPANY: FORMER CONFORMED NAME: FIRST CITY ACQUISITION CORP DATE OF NAME CHANGE: 19880523 FORMER COMPANY: FORMER CONFORMED NAME: FIRST CITY BANCORPORATION OF TEXAS INC/ DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FIRSTCITY FINANCIAL CORP CENTRAL INDEX KEY: 0000828678 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 760243729 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 BUSINESS ADDRESS: STREET 1: 6400 IMPERIAL DRIVE CITY: WACO STATE: TX ZIP: 76712 BUSINESS PHONE: 2547511750 MAIL ADDRESS: STREET 1: 6400 IMPERIAL DRIVE CITY: WACO STATE: TX ZIP: 76712 FORMER COMPANY: FORMER CONFORMED NAME: FIRST CITY ACQUISITION CORP DATE OF NAME CHANGE: 19880523 FORMER COMPANY: FORMER CONFORMED NAME: FIRST CITY BANCORPORATION OF TEXAS INC/ DATE OF NAME CHANGE: 19920703 425 1 h01381e425.txt FIRST CITY FINANCIAL CORPORATION Filed by FirstCity Financial Corporation Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 13e-4(c) under the Securities Exchange Act of 1934. Subject Company: FirstCity Financial Corporation Commission File No. 033-19694 On November 14, 2002, FirstCity Financial Corporation issued the following press release: contact: Suzy W. Taylor (866) 652-1810 FIRSTCITY FINANCIAL ANNOUNCES THIRD QUARTER 2002 RESULTS WACO, TEXAS NOVEMBER 14, 2002... FirstCity Financial Corporation (Nasdaq FCFC) today announced a loss from continuing operations for the quarter ended September 30, 2002 of $1.1 million, or $.21 per share. The net loss to common shareholders was $7.5 million, or $ .89 per share on a diluted basis, after subtracting $5.7 million for a provision for impairment in the discontinued mortgage operations and accrued and unpaid dividends of $642,000 on the Company's preferred stock. Components of the results for the three months and nine months ended September 30, 2002 and 2001, respectively, are detailed below:
THREE MONTHS NINE MONTHS ENDED ENDED ($ THOUSANDS) SEPTEMBER 30, SEPTEMBER 30, ------------------- ------------------- 2002 2001 2002 2001 ------------------- ------------------- Portfolio Asset Acquisition and Resolution $ 787 $ 153 $ 9,100 $ 7,230 Consumer 280 (1,367) (406) 2,532 Corporate interest (939) (1,102) (2,608) (3,745) Corporate overhead (1,265) (1,289) (3,855) (3,829) Cumulative effect of accounting change -- -- -- (304) ------- ------- ------- ------- Earnings (loss) from continuing operations (1,137) (3,605) 2,231 1,884 Accrued preferred dividends (642) (642) (1,926) (1,926) Loss from discontinued operations (5,700) (2,000) (7,700) (3,000) ------- ------- ------- ------- Net loss to common shareholders $(7,479) $(6,247) $(7,395) $(3,042) ======= ======= ======= =======
DISCONTINUED OPERATIONS The Company recorded a provision for impairment of discontinued operations of $5.7 million during the quarter. This provision is a result of a reduction in the anticipated future cash flows expected from assets held in discontinued operations, consisting of the following: Increase in expected prepayments $2.0 million Decline in value of other assets 2.0 million Increase in expected losses 1.5 million Increase in reserves for expenses .2 million.
As of September 30, 2002, the anticipated net realizable value of the Company's investment in discontinued operations is $9.8 million, which is net of reserves of $.6 million. The remaining reserves represent estimates of the anticipated liquidation costs associated with the cash flows from the securitization trusts. PORTFOLIO ASSET ACQUISITION The Company purchased two portfolios during the quarter, a domestic portfolio of $5 million consisting of primarily non-performing commercial loans, and a $39 million portfolio in France. The Company invested equity of $1.9 million in the French portfolio, consisting primarily of performing and nonperforming loans to small- and medium-sized companies. Operating contribution of $787,000 was comprised of $6.1 million in revenues, net of $5.2 million of expenses and a provision for impairment of $157,000. The business generated 55% of the revenues from domestic investments, 39% from investments in Mexico and 7% from investments in France. The major components of revenue for the quarter include servicing fees of $3.3 million, interest income of $1.2 million, and equity earnings in acquisition partnerships of $.9 million. FirstCity continues to believe that significant opportunities in distressed assets remain. FirstCity believes that its proposed recapitalization of the Company, if successfully completed, will allow it to pursue these opportunities. 31% Interest in Drive Financial Drive acquired $100 million of receivables during the quarter and also completed a securitization of $200 million in receivables. This transaction was treated as a financing and, therefore, no gain was recorded on the sale from the securitization. Defaults, losses and delinquencies were 18.73%, 9.30% and 7.53%, respectively, at the end of the quarter, compared to 15.98%, 7.59% and 7.27%, respectively, for the same period last year. These relatively high levels reflect continued weakness in the economy. Corporate Matters On October 28, 2002 the Company commenced an exchange offer for its shares of new preferred stock. The Company is offering to exchange each share of its New Preferred Stock for, at the holder's election, either: (1) $10.00 cash and 2 shares of FirstCity's common stock, or (2) $ 8.00 cash and 3 shares of FirstCity's common stock. The exchange offer is conditioned on, among other things, the tender of at least 80% of the outstanding shares of New Preferred Stock and is set to expire at 12:00 midnight, New York City time, on Monday, November 25, 2002. Materials regarding the exchange offer were mailed to shareholders in early November. FirstCity has filed a tender offer statement and other related documents with the Securities and Exchange Commission concerning the exchange offer. Copies of the exchange offer materials may be obtained from Suzy Taylor by calling her toll free at (866) 652-1810 or at the SEC's website, www.sec.gov. HOLDERS OF NEW PREFERRED STOCK ARE STRONGLY ADVISED TO READ THESE DOCUMENTS BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Forward Looking Statements Certain statements in this press release, which are not historical in fact, including, but not limited to, statements relating to the proposed recapitalization and future performance, may be deemed to be forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may project, indicate or imply future results, performance or achievements, and may contain the words "expect", "intend", "plan", "estimate", "believe", "will be", "will continue", "will likely result", and similar expressions. Such statements inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. There are many important factors that could cause FirstCity's actual results to differ materially from those indicated in the forward-looking statements. These factors include, but are not limited to, the consummation and the effect of the proposed recapitalization, the performance of FirstCity's subsidiaries and affiliates; availability of portfolio assets; assumptions underlying portfolio asset performance, the degree to which the FirstCity is leveraged; FirstCity's continued need for financing; availability of FirstCity's credit facilities; the impact of certain covenants in loan agreements of FirstCity and its subsidiaries, general economic conditions; interest rate risk; changes (legislative and otherwise) in the asset securitization industry; fluctuation in residential and commercial real estate values; capital markets conditions, including the markets for asset-backed securities; risks of declining value of loans, collateral or assets; risks associated with foreign operations; currency exchange rate fluctuations and foreign social and economic conditions; the ability of FirstCity to utilize net operating loss carryforwards; uncertainties of any litigation arising from discontinued operations; factors more fully discussed and identified under Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations," risk factors and other risks identified in FirstCity's Annual Report on Form 10-K/A, filed with the SEC on August 21, 2002, as well as in FirstCity's other filings with the SEC. Many of these factors are beyond FirstCity's control. In addition, it should be noted that past financial and operational performance of FirstCity is not necessarily indicative of future financial and operational performance. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements. The forward-looking statements in this release speak only as of the date of this release. FirstCity expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in FirstCity's expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based. FirstCity is a diversified financial services company with operations dedicated to portfolio asset acquisition and resolution and consumer lending with offices in the U.S. and with affiliate organizations in France and Mexico. Its common (FCFC) and preferred (FCFCO) stocks are listed on the Nasdaq National Market System. FIRSTCITY FINANCIAL CORPORATION SUMMARY OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------- --------------------------- 2002 2001 2002 2001 ------- --------- --------- --------- Revenues: Servicing fees from affiliates $ 3,263 $ 2,177 $ 9,655 $ 7,846 Gain on resolution of Portfolio Assets 225 443 925 875 Equity in earnings (loss) of investments 1,277 (519) 6,691 11,967 Interest income from affiliates 962 1,258 3,063 2,838 Interest income - other 280 481 841 1,554 Gain on sale of interest in equity investments - 182 1,779 3,316 Other income 534 267 1,710 1,097 ------- --------- --------- --------- Total revenues 6,541 4,289 24,664 29,493 Expenses: Interest and fees on notes payable to affiliates 1,503 2,028 4,439 6,243 Interest and fees on notes payable - other 64 252 301 791 Salaries and benefits 3,545 2,464 9,705 7,456 Provision for loan and impairment losses 157 1,000 278 3,128 Occupancy, data processing, communication and other 2,219 2,500 6,589 8,249 ------- --------- --------- --------- Total expenses 7,488 8,244 21,312 25,867 Earnings (loss) from continuing operations before income taxes and minority interest (947) (3,955) 3,352 3,626 Provision for income taxes (28) (27) (35) (19) ------- --------- --------- --------- Earnings (loss) from continuing operations before minority interest (975) (3,982) 3,317 3,607 Minority interest (162) 377 (1,086) (1,419) Cumulative effect of accounting change - - - (304) ------- --------- --------- --------- Earnings (loss) from continuing operations (1,137) (3,605) 2,231 1,884 Loss from discontinued operations (5,700) (2,000) (7,700) (3,000) ------- --------- --------- --------- Net loss (6,837) (5,605) (5,469) (1,116) Accumulated preferred dividends in arrears (642) (642) (1,926) (1,926) ------- --------- --------- --------- Net loss to common shareholders $ (7,479) $ (6,247) $ (7,395) $ (3,042) ======== ========= ========= ========= Basic and diluted earnings (loss) per common share are as follows: Earnings (loss) from continuing operations $ (0.21) $ (0.51) $ 0.04 $ 0.03 Accounting change - - - (0.03) Discontinued operations (0.68) (0.24) (0.92) (0.36) Net loss per common share $ (0.89) $ (0.75) $ (0.88) $ (0.36) Wtd. avg. common shares outstanding 8,376 8,376 8,376 8,374
SELECTED UNAUDITED BALANCE SHEET DATA
SEPTEMBER 30, DECEMBER 31, 2002 2001 ------------- ------------ Portfolio acquisition and resolution assets $ 75,636 $ 79,335 Consumer assets 10,168 10,205 Deferred tax asset 20,101 20,101 Net assets of discontinued operations 9,793 16,657 Total assets 132,636 138,893 Notes payable 86,470 91,209 Preferred stock 34,027 32,101 Total common shareholders' equity (deficit) (1,739) 3,877
FIRSTCITY FINANCIAL CORPORATION Supplemental Information (Dollars in thousands) (Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------- ----------------------- 2002 2001 2002 2001 --------- --------- --------- --------- Summary Operating Statement Data for Each Business Portfolio Asset Acquisition and Resolution: Revenues $ 6,143 $ 5,985 $ 25,032 $ 26,325 Expenses 5,199 4,832 15,654 15,967 --------- --------- --------- --------- Operating contribution before provision for loan and impairment losses 944 1,153 9,378 10,358 Provision for loan and impairment losses 157 1,000 278 3,128 --------- --------- --------- --------- Operating contribution, net of direct taxes $ 787 $ 153 $ 9,100 $ 7,230 ========= ========= ========= ========= Consumer Lending: Revenues, net of equity in loss of investment $ 353 $ (1,701) $ (495) $ 3,138 Expenses, net of minority interest 73 (334) (89) 606 --------- --------- --------- --------- Operating contribution (loss), net of direct taxes $ 280 $ (1,367) $ (406) $ 2,532 ========= ========= ========= ========= PORTFOLIO ASSET ACQUISITION AND RESOLUTION: OVERVIEW AGGREGATE PURCHASE PRICE OF PORTFOLIOS ACQUIRED: Acquisition partnerships Domestic $ 5,028 $ -- $ 25,522 $ 89,225 Mexico -- 52,478 11,709 82,060 France 39,163 -- 66,665 1,613 Italy -- -- 16,943 -- --------- --------- --------- --------- Total $ 44,191 $ 52,478 $ 120,839 $ 172,898 ========= ========= ========= ========= PURCHASE FIRSTCITY'S HISTORICAL ACQUISITIONS - ANNUAL PRICE INVESTMENT --------- ----------- 2002 year to date $ 120,839 $ 11,684 2001 224,927 24,319 2000 394,927 22,140 1999 210,799 11,203 1998 139,691 28,478 1997 183,229 37,109 PORTFOLIO ACQUISITION AND RESOLUTION ASSETS BY REGION: Domestic $ 42,142 $ 48,976 Mexico 19,093 19,984 France and Italy 14,401 9,150 --------- --------- Total $ 75,636 $ 78,110 ========= ========= REVENUES BY REGION: Domestic $ 3,361 $ 3,232 $ 15,322 $ 15,969 Mexico 2,379 2,047 5,746 7,040 France and Italy 401 706 3,957 3,296 Other foreign 2 -- 7 20 --------- --------- --------- --------- Total $ 6,143 $ 5,985 $ 25,032 $ 26,325 ========= ========= ========= ========= REVENUES BY SOURCE: Equity earnings $ 924 $ 1,183 $ 7,186 $ 8,836 Servicing fees 3,263 2,177 9,655 7,846 Interest income - loans 1,207 1,656 3,797 4,174 Gain on sale of interest in equity investment -- 182 1,779 3,316 Gain on resolution of Portfolio Assets 225 443 925 875 Other 524 344 1,690 1,278 --------- --------- --------- --------- Total $ 6,143 $ 5,985 $ 25,032 $ 26,325 ========= ========= ========= =========
FIRSTCITY FINANCIAL CORPORATION SUPPLEMENTAL INFORMATION (DOLLARS IN THOUSANDS) (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------ ------------------------------ 2002 2001 2002 2001 ----------- ----------- ----------- ----------- ANALYSIS OF EQUITY INVESTMENTS IN ACQUISITION PARTNERSHIPS: FIRSTCITY'S AVERAGE INVESTMENT IN ACQUISITION PARTNERSHIPS Domestic $ 31,579 $ 30,586 $ 32,753 $ 29,438 Mexico (2,048) 1,026 (717) 1,107 France and Italy 10,484 7,111 9,356 7,212 France-Servicing subsidiaries 2,931 2,084 2,558 1,850 ----------- ----------- ----------- ----------- Total $ 42,946 $ 40,807 $ 43,950 $ 39,607 =========== =========== =========== =========== FIRSTCITY SHARE OF EQUITY EARNINGS (LOSS): Domestic $ 1,310 $ 1,174 $ 7,812 $ 6,668 Mexico (812) (653) (2,726) (995) France and Italy 415 652 1,409 2,166 France-Servicing subsidiaries 11 10 691 997 ----------- ----------- ----------- ----------- Total $ 924 $ 1,183 $ 7,186 $ 8,836 =========== =========== =========== =========== SELECTED OTHER DATA: AVERAGE INVESTMENT IN WHOLLY OWNED PORTFOLIO ASSETS AND LOANS RECEIVABLE: Domestic $ 12,347 $ 20,650 $ 13,564 $ 25,793 Mexico 20,106 20,272 20,006 16,773 ----------- ----------- ----------- ----------- Total $ 32,453 $ 40,922 $ 33,570 $ 42,566 =========== =========== =========== =========== INCOME FROM WHOLLY OWNED PORTFOLIO ASSETS AND LOANS RECEIVABLE: Domestic $ 485 $ 882 $ 1,769 $ 2,351 Mexico 947 1,217 2,953 2,698 ----------- ----------- ----------- ----------- Total $ 1,432 $ 2,099 $ 4,722 $ 5,049 =========== =========== =========== =========== SERVICING FEE REVENUES: Domestic partnerships: $ Collected $ 26,653 $ 26,407 $ 162,864 $ 94,300 Servicing fee revenue 1,249 711 4,399 2,550 Average servicing fee % 4.69% 2.69% 2.70% 2.70% Mexico partnerships: $ Collected $ 20,895 $ 36,924 $ 69,245 $ 101,345 Servicing fee revenue 1,792 1,466 4,778 4,887 Average servicing fee % 8.58% 3.97% 6.90% 4.82% Incentive service fees $ 222 $ -- $ 478 $ 409 Total Service Fees: $ Collected $ 47,548 $ 63,331 $ 232,109 $ 195,645 Servicing fee revenue 3,263 2,177 9,655 7,846 Average servicing fee % 6.86% 3.44% 4.16% 4.01% SERVICING PORTFOLIO (FACE VALUE) Domestic $ 382,610 $ 478,309 Mexico 1,307,198 1,562,197 France and Italy 803,140 388,129 ----------- ----------- Total $ 2,492,948 $ 2,428,635 =========== =========== NUMBER OF PERSONNEL AT PERIOD END: Production 26 25 Servicing Domestic 58 53 Mexico 88 46 ----------- ----------- Total personnel 172 124 =========== ===========
FIRSTCITY FINANCIAL CORPORATION SUPPLEMENTAL INFORMATION (DOLLARS IN THOUSANDS) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------ -------------------------- 2002 2001 2002 2001 ----------- ----------- --------- --------- Consumer Lending: Retail installment contracts acquired (1) $ 100,430 $ 100,187 $ 314,611 $ 330,631 Origination characteristics: Face value to wholesale value 98.07% 97.99% 99.69% 99.80% Weighted average coupon 20.93% 20.68% 21.02% 20.61% Purchase discount (% of face value) 15.02% 14.98% 15.41% 15.15% Servicing portfolio (face value in $) 663,758 537,500 Defaults (% of original balance at time of default) 18.73% 15.98% Net loss on defaults after recovery 9.30% 7.59% Delinquencies (% of total serviced portfolio) 7.53% 7.27% Equity in earnings (loss) of Drive $ 353 $ (1,702) $ (495) $ 3,131 Cumulative effect of accounting change -- -- -- (304) Minority interest (71) 340 99 (565) ----------- ----------- --------- --------- Net equity in earnings (loss) of Drive $ 282 $ (1,362) $ (396) $ 2,262 =========== =========== ========= =========
(1) Auto lending business formerly conducted by FirstCity Funding (FirstCity now owns 31% of Drive Financial Services and accounts for its investment using the equity method of accounting). -----END PRIVACY-ENHANCED MESSAGE-----