**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington,DC 20549**

 

**Form 10-K/A**

**(Amendment No. 3)**

** **

| **(Mark One)** |
|----------------|
| **x**          | **ANNUAL REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|           |   |
|           | **For the fiscal year ended  December 31, 2007** |
|           |   |
| **or**         |
|           |   |
| **o**          | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|           |   |
|           | **For the transition period from           to           ** |

 

**Commissionfile number 033-19694**

 

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**FirstCity Financial Corporation**

(Exact name of registrant as specified in itscharter)

* *

| **Delaware**

(State or other jurisdiction of

incorporation or organization) | ** ** | **76-0243729**

(I.R.S. Employer

Identification No.) |
|-------------------------------------------------------------------------------|------------|-------------------------------------------------------|
| ** **                                                                    | ** ** | ** **                                            |
| **6400  Imperial Drive, Waco, TX**

(Address of Principal Executive Offices)  | ** ** | **76712**

(Zip Code)                                 |

 

**(254)761-2800**

(Registrant’sTelephone Number, Including Area Code)

 

**Securitiesregistered pursuant to Section 12(b) of the Act:**

 
| **Title of Each Class** | ** ** | **Name of Each Exchange on Which Registered** |
|----------------------------------------|------------|-----------------------------------------------------------------------------|
| **Common  Stock, par value $.01**      |       | **The  NASDAQ Stock Market LLC**                                            |

 

**Securitiesregistered pursuant to Section 12(g) of the Act:**

**None**

 

Indicate by check mark if the registrant is awell-known seasoned issuer, as defined in Rule 405 of the SecuritiesAct.  Yes o     No x

 

Indicate by check mark if the registrant is notrequired to file reports pursuant to Section 13 or Section 15(d) ofthe Act.  Yes £     No x

 

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days.  Yes x   No £

 

Indicate by check mark if disclosure of delinquentfilers pursuant to Item 405 of Regulation S-K is not contained herein, and willnot be contained, to the best of registrant’s knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form 10-Kor any amendment to this Form 10-K. £

 

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, a non-accelerated filer, or asmaller reporting company. See definition of “large accelerated filer,”“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of theExchange Act. (Check one):

 

| Large accelerated filer  o                     |   | Accelerated filer x          |
|------------------------------------------------|--------|-----------------------------------|
|                                           |   |                              |
| Non-accelerated filer o                        |   | Smaller reporting  company o |
| (Do not check if a  smaller reporting company) |   |                              |

 

Indicate by check mark whetherthe registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).  Yes £   No x

 

The aggregate market value of the voting andnon-voting common equity held by non-affiliates, based upon the closing priceof the common stock on the NASDAQ Stock Market as of June 30, 2007, was$95,343,164.

 

The number of shares of common stock outstanding at June 23,2008, was 10,270,707.

 

 

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**EXPLANATORYNOTE**

 

FirstCity FinancialCorporation (the “Company”) is filing this Amendment No. 3 on Form 10-K/A(“Amendment No. 3 Filing”) to amend its Annual Report on Form 10-Kfor the fiscal year ended December 31, 2007, as originally filed with theSecurities and Exchange Commission (“SEC”) on March 17, 2008 (“OriginalFiling”), and subsequently amended by Amendment No. 1 on Form 10-K/Aas filed with the SEC on April 29, 2008 and Amendment No. 2 on Form 10-K/Aas filed with the SEC on May 12, 2008, for the sole purpose of includingthe financial statements of PRL Developpement, S.A.S. (“PRL”) in this AmendmentNo. 3 Filing due to PRL meeting certain tests as a significant subsidiaryof the Company under SEC Rule 3-09 under Regulation S-X (“Rule 3-09”).Rule 3-09 requires the Company to file separate company financialstatements for its significant subsidiaries that are not consolidated with theCompany’s accounts.

 

Except for the additionsdescribed above, this Amendment No. 3 Filing speaks as of the filing dateof the Original Filing and does not update or discuss any other Companydevelopments after the date of the Original Filing.  Accordingly, this Amendment No. 3 Filingshould be read in conjunction with the Company’s filings made with the SECafter the filing of the Original Filing on March 17, 2008.

 

In addition, as requiredby Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), new certifications by our principal executive officer and principalfinancial officer are filed as exhibits to the Amendment No. 3 Filingunder Item 15 of Part IV hereof.

 

**PART II**

 

**Item 8.*  Financial Statements andSupplementary Data.***

 

Included as Exhibit 99 to this Amendment No. 3 Filing are theconsolidated financial statements and related footnotes of PRL, anon-controlled affiliate of the Company, as of and for the years ended December 31,2007, 2006 and 2005 (collectively, “the financial statements”). The Company isrequired to include the PRL financial statements in this Amendment No. 3Filing due to PRL meeting certain tests as a significant subsidiary under Rule 3-09.

 

The financial statements are prepared by PRL in accordance withaccounting principles applicable in France. Amounts in the PRL financialstatements are expressed in Euros, which is the functional currency of theentity. The management of PRL issolely responsible for the form and content of the PRL financial statements.The Company has no responsibility for the form or content of the PRL financialstatements since the Company does not control PRL and is not involved in themanagement of PRL. The accounting and reporting requirements of the SEC and theSarbanes-Oxley Act of 2002 do not apply to the PRL financial statements or toPRL’s system of internal accounting controls and control over financialreporting.

 

PRL’s financial statements are prepared in accordance withaccounting principles applicable in France, which differ in some instances fromthe accounting principles used in the United States of America. Following arethe primary differences between general accounting principles applicable inFrance and U.S. generally accepted accounting principles (“U.S. GAAP”):

 

a.               Equityin earnings of investments.  PRLrecognizes income from MCS et Associes (“MCS”), a French servicing company inwhich the Company holds a 19.63% investment, to the extent dividends arereceived from MCS. Under U.S. GAAP, as required by APB Opinion No. 18, PRL’sinvestment in MCS would be recorded using the equity method of accounting, inwhich PRL’s investment in MCS would be increased to reflect PRL’s share ofincome of MCS and would be reduced to reflect PRL’s share of losses of MCS ordividends received from MCS.

 

b.              Incomerecognition on non-performing portfolio assets.  MCS, a French servicing company in which theCompany holds a 19.63% investment, owns a pool of non-performing loans andrecognizes income to the extent that proceeds collected exceed a pro rataportion of allocated cost from the pool. Cost allocation is determined by MCSbased on a proration of actual proceeds divided by total estimated proceeds ofthe pool. Under U.S. GAAP, as required by SOP 03-3, the excess cash flows expectedto be collected over the initial investment in the pool is generally recordedas interest income over the life of the pool. This difference between generalaccounting principles applicable in France and U.S. GAAP impacts the amount ofequity in earnings of investments recognized by PRL for MCS under U.S. GAAP asdiscussed in item a. above.

 

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** **

**PART IV**

 

**Item 15.*  Exhibits and FinancialStatement Schedules.***

 

Item 15 on pages 134 to 137 of the Annual Reporton Form 10-K for the fiscal year ended December 31, 2007, filed on March 17,2008, as amended, is amended by the addition of the following exhibits:

 

3.  *Exhibits*

 
| **Exhibit********Number** | ** ** | ** ** | ** ** | **Description of Exhibit**                                                                                                                             |
|---------------------------|------------|------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 23.1*                     |       | —     |       | Consent of CAPROGEC AUDIT, SA                                                                                                                                    |
|                      |       |       |       |                                                                                                                                                             |
| 31.1*                     |       | —     |       | Certification of Chief Executive Officer pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002.                                                        |
|                      |       |       |       |                                                                                                                                                             |
| 31.2*                     |       | —     |       | Certification of Chief Financial Officer pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002.                                                        |
|                      |       |       |       |                                                                                                                                                             |
| 32.1*                     |       | —     |       | Certification of the Chief Executive Officer  pursuant to 18 U.S.C Section 1350 as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002. |
|                      |       |       |       |                                                                                                                                                             |
| 32.2*                     |       | —     |       | Certification of the Chief Financial Officer  pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906  of the Sarbanes-Oxley Act of 2002. |
|                      |       |       |       |                                                                                                                                                             |
| 99.1*                     |       | —     |       | Financial statements of PRL Developpement, S.A.S. as  of and for the years ended December 31, 2007, 2006 and 2005.                                          |

 

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*                 Filed herewith.

 

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**SIGNATURES**

 

Pursuant to the requirements of Section 13 or 15(d) ofthe Securities Exchange Act of 1934, the registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.

 
|                                | FIRSTCITY FINANCIAL CORPORATION |
|-------------------------------------|---------------------------------|
|                                |                            |
| Date:  July 31, 2008 | By:                             | /s/   JAMES T. SARTAIN |
|                                |                            | James T. Sartain |
|                                |                            | President and Chief Executive Officer |
|                                |                            | (Duly  authorized officer and |
|                                |                            |   Principal  Executive Officer) |
|                                |                            |   |
|                                |                            |   |
|                                |                            | /s/   J. BRYAN BAKER |
|                                |                            | J.  Bryan Baker |
|                                |                            | Senior Vice President and Chief Financial Officer |
|                                |                            | (Duly authorized officer and |
|                                |                            |   Principal Financial Officer) |

 

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