MicroFinancial Incorporated is a specialized commercial finance company that leases and rents `microticket` equipment and provides other financing services. MicroFinancial Inc. formerly Boyle Leasing Technologies through subsidiary TimePayment provides leasing and financing services through vendors to small businesses. TimePayment leases and rents commercial equipment automated teller machines espresso machines credit card terminals computers vending machines water purification equipment wireless communications devices and more. The company's services are provided through a network of independent vendors; these equipment vendors submit their clients' financing applications to TimePayment via the Internet telephone fax or e-mail. MicroFinancial Inc has a market cap of $32.9 million; its shares were traded at around $2.35 with a P/E ratio of 6.8 and P/S ratio of 0.8. The dividend yield of MicroFinancial Inc stocks is 8.5%.
Highlight of Business Operations:Total revenues for the three months ended March 31, 2009 were $10.9 million, an increase of $1.6 million, or 17.4%, from the three months ended March 31, 2008. The overall increase was due to an increase of $1.9 million in income on financing leases and a $0.4 million increase in fees and other income partially offset by a decrease of $0.6 million in rental income, a decrease of $70,000 in income on service contacts and a decrease of $47,000 in interest income. The decline in rental income is the result of the attrition of LeaseComm rental contracts which is offset in part by TimePayment lease contracts coming to term and converting to rentals. Service contact revenue continues to decline since we have not funded any new service contracts. The decrease in interest income is a direct result of the decrease in invested cash as well as lower rates of return.
As of December 31, 2008, we had a liability of $293,000 for unrecognized tax benefits and a liability of $152,000 for accrued interest and penalties related to various state income tax matters. As of March 31, 2009 we had a liability of $293,000 for unrecognized tax benefits and a liability of $160,000 for accrued interest and
penalties. Of these amounts, approximately $295,000 would impact our effective tax rate after a $158,000 federal tax benefit for state income taxes. The increase in the unrecognized tax benefit relates to $8,000 in additional accrued interest expense. It is reasonably possible that the total amount of unrecognized tax benefits may change significantly within the next 12 months; however at this time we are unable to estimate the change.
Dealer funding was $17.1 million for the three months ended March 31, 2009, a decrease of $300,000 or 1.7%, compared to the three months ended March 31, 2008. We continue to concentrate on our business development efforts, which include increasing the size of our vendor base and sourcing a larger number of applications from those vendors. Receivables due in installments, estimated residual values, net investment in service contracts and investment in rental contracts increased from $162.1 million at December 31, 2008 to $170.3 million at March 31, 2009. Net cash provided by operating activities increased by $3.9 million, or 43.9%, to $12.8 million during the three months ended March 31, 2009 as compared to the three months ended March 31, 2008.
For the three months ended March 31, 2009 and 2008, our primary sources of liquidity were cash provided by operating activities and borrowings on our revolving line of credit. We generated cash flow from operations of $12.8 million for the three months ended March 31, 2009 compared to $8.9 million for the three months ended March 31, 2008. At March 31, 2009, we had approximately $35,768,000 outstanding under our revolving credit facility and had available borrowing capacity of approximately $49,232,000 as described below.
We have entered into various agreements, such as debt and operating lease agreements that require future payments. For the three months ended March 31, 2009 we had borrowed $18.4 million against our lines of credit and had repaid $15.9 million. The $35.8 million of outstanding borrowings as of March 31, 2009 will be repaid by the daily application of TimePayment receipts to our outstanding balance. Our future minimum lease payments under non-cancelable operating leases are $237,000 annually for the years 2009 and 2010.
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