UNITED STATES
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): March 8, 2005
MARLIN BUSINESS SERVICES CORP.
(Exact Name of Registrant Specified in Charter)
Pennsylvania 000-50448 38-3686388
(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification No.)
Incorporation)
300 Fellowship Road
Mount Laurel, NJ 08054
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (888) 479-9111
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
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The Registrant issued a press release on March 10, 2005 regarding the
matters discussed under Item 4.02(a) below, which include adjustments to
previously issued financial statements. The press release is attached as Exhibit
99.1 hereto. The information under this Item 2.02 in this Current Report,
including Exhibit 99.1, is being furnished and shall not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise
subject to the liabilities of that Section. The information in this Current
Report shall not be incorporated by reference into any registration statement or
other document filed with the Securities and Exchange Commission.
Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
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(a) This filing describes certain corrections which the Registrant will be
making in the course of restating certain of its prior period financial
statements. Following a review of its lease-related accounting policies, the
Registrant is changing the timing of the recognition and classification of
"interim rent", which represents rental payments paid by certain customers to
cover the period between the installation of equipment and the commencement of
the lease contract. As a result, on March 8, 2005, the Registrant's Board of
Directors, including its Audit Committee, concluded that the Registrant's
previously filed financial statements should be restated. The Registrant will
report the effects of this change on prior periods in its Form 10-K for the year
ended December 31, 2004, including restated financial statements for the years
ended December 31, 2003 and December 31, 2002 and for the four quarters of
fiscal years 2004 and 2003, and corrected information in the selected financial
data table. The Registrant anticipates it will file its Form 10-K for the year
ended December 31, 2004 on or before March 16, 2005.
Since its inception in 1997, the Registrant has recognized interim rent
in fee income at the time it was invoiced, and it has described this practice in
its financial statements. The Registrant, in consultation with its independent
accountants, KPMG LLP, has now determined that interim rent payments should be
treated in the same manner as other fixed non-cancelable contractual minimum
lease payments due from lessees in determining the Registrant's investment in
direct financing leases. This treatment will defer the recognition of income for
financial statement purposes while increasing the amount of unearned income for
balance sheet purposes at the inception of the lease. The unearned income, net
of initial direct origination costs, will be recognized over the lease term
based on a constant periodic rate of return as interest income. This change
lowered earnings for 2004 from the previously reported $13.8 million or $1.18
per diluted share to $13.5 million or $1.15 per diluted share. The impact on
2005 is estimated to lower earnings by approximately $0.02 to $0.03 per diluted
share.
This change relates principally to the timing of income recognition for
financial statement purposes. It is a non-cash adjustment and will not have any
impact on historical or future cash flows or any other aspect of the
Registrant's business. It will also not affect compliance with covenants under
the Registrant's existing credit facilities.
The Registrant estimates that the cumulative effect of this restatement
from 1997 through the year ended December 31, 2004 will be to reduce retained
earnings by approximately $1.9 million, and book value per common share by
$0.17. Net investment in leases will decrease approximately $3.2 million related
to the additional recorded unearned income that will be earned over the
remaining term of the leases.
As a result of the restatement, the financial statements contained in
the Registrant's prior filings with the SEC should no longer be relied upon. The
Registrant's Audit Committee discussed the matters disclosed in this Current
Report on Form 8-K pursuant to this Item 4.02(a) with the Registrant's
independent registered public accounting firm.
The Registrant will host a conference call on Friday, March 11, 2005 at
9:00 a.m. ET to discuss the restatement. Participants can dial (877) 407-9210
(international participants should use (201)-689-8049) to listen to the call.
The call will also be webcast on the Investor Relations page of the Registrant's
website, www.marlincorp.com. An audio replay will also be available on the
Investor Relations section of the Registrant's website for approximately 90
days.
Item 9.01. Financial Statements and Exhibits.
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(c) Exhibits.
99.1 Press Release issued by Marlin Business Services Corp. on March 10, 2005.
SIGNATURE
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.
MARLIN BUSINESS SERVICES CORP.
Date: March 10, 2005 By: /s/ Bruce E. Sickel
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Name: Bruce E. Sickel
Title: Chief Financial Officer
INDEX TO EXHIBITS
99.1 Press Release issued by Marlin Business Services Corp. on March 10, 2005.