Cash America Reports Second Quarter Net Income Increase Of 12% And Declares Dividend

Cash America International, Inc. (NYSE: CSH) reported today that its net income for the second quarter ended June 30, 2012 was up 12% to $29,820,000 (94 cents per share), which compares to the second quarter 2011 net income of $26,981,000 (84 cents per share). Earnings per share for the second quarter of 2012 were slightly below analysts’ consensus estimates of 96 cents per share, as reported by ThomsonReuters First Call. The Company’s outlook for earnings expectations has not been updated since July 21, 2011 due to the filing of a Registration Statement on Form S-1 with the Securities and Exchange Commission by the Company’s wholly-owned subsidiary that comprises its e-commerce segment, Enova International, Inc. (“Enova”), on September 15, 2011 for the proposed offering of Enova’s common stock in an initial public offering. However, in a separate press release today the Company announced that its Board of Directors unanimously approved the withdrawal of Enova’s Registration Statement, and the Company filed an application for withdrawal of the Registration Statement on July 25, 2012.

Total revenue during the second quarter of 2012 was $411.6 million, up 19% from $345.9 million in the second quarter of 2011. Contributing to the increase in total revenue was a 37% increase in revenue on consumer loan balances and an 8% increase in fees and service charges on pawn loans during the second quarter of 2012 as compared to the second quarter of 2011. Consolidated net revenue increased 11%, to $233.6 million, which led to a 9% increase in income from operations in the second quarter of 2012 compared to the same period in 2011. Consolidated income from operations for the second quarter of 2012 was $54.2 million and included approximately $1.1 million of expenses in the second quarter of 2012 associated with due diligence conducted on an abandoned acquisition opportunity and expenses directly related to the proposed Enova initial public offering, which equated to approximately 2 cents per share after taxes.

Commenting on the results of the quarter, Daniel R. Feehan, President and Chief Executive Officer of Cash America said, “The success of our e-commerce segment’s prior expansion into foreign markets led to a 33% growth in operating income related to e-commerce activities in the second quarter of 2012 compared to the second quarter of 2011. We are excited about the diversification of earnings between international and domestic sources within our e-commerce segment and the long term prospects for continued growth of this segment. We ended the second quarter of 2012 with a healthy year-over-year increase of 7% in pawn loan balances in our U.S. locations; however, our pawn lending business did not experience the growth in pawn loan balances that we expected in the second quarter. Consequently, the rate of revenue and operating income growth of our retail services segment fell short of our expectations for the quarter. Overall however, we are pleased with our consolidated revenue and earnings increases in the second quarter.”

For the first six months of fiscal year 2012, total revenue increased 22%, to $869.1 million compared to $710.8 million for the same period in 2011. Income from operations through the first six months of fiscal year 2012 increased 12% to $126.2 million, and the Company posted a 13% increase in net income to $71,287,000 ($2.24 per share) for the first six months of fiscal year 2012 compared to $63,359,000 ($1.99 per share) for the same period in 2011.

Cash America will host a conference call to discuss the second quarter results on Thursday, July 26, at 7:00 AM CDT. A live webcast of the call will be available on the Investor Relations section of the Company’s corporate website ( http://www.cashamerica.com). To listen to the live call, please go to the website at least fifteen minutes early to register, download, and install any necessary audio software. A replay will be available on the Company’s website following the call.

Additionally, the Company announced that the Board of Directors, at its regularly scheduled quarterly meeting, declared a $0.035 (3.5 cents) per share cash dividend on common stock outstanding. The dividend will be paid at the close of business on August 22, 2012 to shareholders of record on August 8, 2012.

Outlook for the Third Quarter of 2012 and Related Fiscal Year

Management believes that the opportunities for growth in revenue and earnings will be largely associated with the customer demand for the credit products provided by the Company, which take the form of pawn loans and consumer loans and the disposition of unredeemed collateral by way of consumer spending on retail sales and the commercial sale of refined gold and diamonds. Other elements which could affect the growth in revenue include the regulatory governance of consumer loan products and the development and growth of new markets for the Company’s e-commerce distribution platform for consumer lending products, as well as developments related to its pawn operations in Mexico. As the Company enters the third quarter of 2012, management anticipates that demand for the Company’s consumer loan products will continue on a similar pace to the one we have experienced in the second quarter of 2012 with a continued heavier weighting to the international portfolio. Demand for the Company’s pawn lending products has proven more challenging in the second quarter and management expects growth in its pawn lending business but is more reserved about expectations for the remainder of 2012.

Based on its views and on the preceding factors, management expects the third quarter 2012 net income per share to be between 95 cents and $1.05 per share compared to $1.08 per share in the third quarter of 2011. This estimated range for the third quarter of 2012 does not include deferred costs of approximately $3.0 million related to Enova’s proposed initial public offering that was withdrawn. These costs will be recognized during the third quarter and are estimated to be approximately 6 cents per share after taxes. Based on the Company’s growth through the first half of 2012, which produced earnings per share of $2.24, and factors noted above for the remainder of 2012, management expects its fiscal year 2012 earnings per share to be in a range of between $4.35 and $4.60 per share, compared to $4.25 per share in fiscal 2011, excluding the unusual expenses noted above of approximately 6 cents per share.

About the Company

As of June 30, 2012, Cash America International, Inc. had 1,086 total locations offering specialty financial services to consumers, which include 790 lending locations (including one unconsolidated franchised location) operating in 23 states in the United States under the names “Cash America Pawn,” “SuperPawn,” “Pawn X-Change,” “Cash America Payday Advance,” and “Cashland,” and 195 pawn lending locations, of which the Company is a majority owner, operating in 21 jurisdictions in central and southern Mexico under the name “Prenda Fácil.” The Company also operated 95 unconsolidated franchised and six Company-owned check cashing centers operating in 16 states in the United States under the name “Mr. Payroll” as of June 30, 2012. Additionally, as of June 30, 2012, the Company offered consumer loans over the Internet to customers in 32 states in the United States at http://www.cashnetusa.com and http://www.netcredit.com, in the United Kingdom at http://www.quickquid.co.uk and http://www.poundstopocket.co.uk, in Australia at http://www.dollarsdirect.com.au, and in Canada at http://www.dollarsdirect.ca.

For additional information regarding the Company and the services it provides, visit the Company’s websites located at:

http://www.cashamerica.com
         

http://www.poundstopocket.co.uk

http://www.enova.com

http://www.dollarsdirect.com.au

http://www.cashnetusa.com

http://www.dollarsdirect.ca

http://www.netcredit.com

http://www.goldpromise.com

http://www.cashlandloans.com

http://www.mrpayroll.com

http://www.quickquid.co.uk

http://www.primaryinnovations.net

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This release contains forward-looking statements about the business, financial condition and prospects of the Company. The actual results of the Company could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties including, without limitation: changes in domestic and foreign pawn, consumer credit, tax and other laws and governmental rules and regulations applicable to the Company's business or changes in the interpretation or enforcement thereof; the anticipated regulation of consumer financial products and services by the Consumer Financial Protection Bureau; acceptance by consumers, legislators or regulators of the negative characterization by the media and consumer activists with respect to certain of the Company’s loan products; risks related to the Company’s previously-announced proposed initial public offering of Enova; the deterioration of the political, regulatory or economic environment in foreign countries where the Company operates or in the future may operate; the actions of third parties who provide, acquire or offer products and services to, from or for the Company; changes in demand for the Company's services and the continued acceptance of the online distribution channel by the Company’s online loan customers; fluctuations in the price of gold or a deterioration in economic conditions; changes in competition; the ability of the Company to open new locations in accordance with its plans or to successfully integrate newly acquired businesses into the Company’s operations; interest rate and foreign currency exchange rate fluctuations; the effect of any current or future litigation proceedings or any judicial decisions or rule-making that affect the Company’s arbitration agreements; changes in the capital markets; changes in the Company’s ability to satisfy its debt obligations or to refinance existing debt obligations or obtain new capital to finance growth; a prolonged interruption in the Company’s operations of its facilities, systems and business functions, including its information technology and other business systems; security breaches, cyber attacks or fraudulent activity; the implementation of new, or changes in the interpretation of existing, accounting principles or financial reporting requirements; acts of God, war or terrorism, pandemics and other events; the effect of any of such changes on the Company’s business or the markets in which it operates; and other risks and uncertainties indicated in the Company's filings with the Securities and Exchange Commission. These risks and uncertainties are beyond the ability of the Company to control, nor can the Company predict, in many cases, all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this release, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “anticipates,” “may,” “forecasts,” “projects” and similar expressions and variations as they relate to the Company or its management are intended to identify forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements to reflect events or circumstances occurring after the date of this release.

 
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
HIGHLIGHTS OF CONSOLIDATED RESULTS OF OPERATIONS
(dollars in thousands, except per share data)
(Unaudited)
 
Three Months Ended   Six Months Ended
June 30, June 30,
2012   2011 2012   2011
 
 
Consolidated Operations:
Total revenue $ 411,644 $ 345,939 $ 869,132 $ 710,803
Net revenue 233,608 209,848 490,392 425,976
Total expenses     179,377     160,024     364,153     312,924
 
Income from Operations $ 54,231 $ 49,824 $ 126,239 $ 113,052
 
Income before income taxes     47,283     43,796     112,114     101,335
 
Net Income   $ 29,220   $ 27,245   $ 69,743   $ 63,032
 
Net loss (income) attributable to the noncontrolling interest     600     (264)     1,544     327
 
Net Income Attributable to Cash America International, Inc.   $ 29,820   $ 26,981   $ 71,287   $ 63,359
 
Earnings per share:

Net Income attributable to Cash America International, Inc. common shareholders:
Basic $ 1.01 $ 0.91 $ 2.41 $ 2.14
Diluted $ 0.94 $ 0.84 $ 2.24 $ 1.99
 
Weighted average common shares outstanding:
Basic 29,645 29,593 29,631 29,673
Diluted 31,822 31,994 31,867 31,828

 
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
(Unaudited)
  June 30,   December 31,
2012   2011 2011
 
Assets
Current assets:
Cash and cash equivalents $ 68,939 $ 48,375 $ 62,542
Pawn loans 232,909 229,343 253,519
Consumer loans, net 226,364 160,371 222,778
Merchandise held for disposition, net 144,814 132,192 161,884
Pawn loan fees and service charges receivable 44,606 41,757 48,003
Income taxes receivable - 3,598 -
Prepaid expenses and other assets 34,578 33,835 31,301
Deferred tax assets     37,846       32,560       35,065  
Total current assets 790,056 682,031 815,092
Property and equipment, net 255,685 232,715 246,429
Goodwill 564,313 546,674 562,721
Intangible assets, net 32,819 28,638 34,771
Other assets     15,503       14,179       15,236  
Total assets   $ 1,658,376     $ 1,504,237     $ 1,674,249  
 
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses $ 93,569 $ 86,565 $ 113,113
Customer deposits 11,537 10,440 9,935
Income taxes currently payable 2,135 - 12,880
Current portion of long-term debt     35,939       19,773       34,273  
Total current liabilities 143,180 116,778 170,201
Deferred tax liabilities 93,930 92,979 89,712
Noncurrent income tax payable 2,449 2,638 2,315
Other liabilities 1,137 1,711 1,413
Long-term debt     438,462       431,734       503,018  
Total liabilities   $ 679,158     $ 645,840     $ 766,659  
 
Equity:
Cash America International, Inc. equity:

Common stock, $0.10 par value per share, 80,000,000 shares authorized, 30,235,164 shares issued and outstanding
3,024 3,024 3,024
Additional paid-in capital 166,135 165,840 167,683
Retained earnings 845,292 705,502 776,060
Accumulated other comprehensive (loss) income (3,988 ) 11,195 (6,896 )

Treasury shares, at cost (929,223 shares, 942,722 shares and 1,011,356 shares at June 30, 2012 and 2011, and at December 31, 2011, respectively)
    (34,861 )     (33,492 )     (37,419 )
Total Cash America International, Inc. shareholders' equity 975,602 852,069 902,452
Noncontrolling interest     3,616       6,328       5,138  
Total equity     979,218       858,397       907,590  
Total liabilities and equity   $ 1,658,376     $ 1,504,237     $ 1,674,249  

   

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(Unaudited)
 
Three Months Ended Six Months Ended
June 30, June 30,
2012   2011 2012   2011
 
Revenue
Pawn loan fees and service charges $ 72,051 $ 66,453 $ 144,950 $ 131,735
Proceeds from disposition of merchandise 155,956 143,875 364,339 315,802
Consumer loan fees 180,722 132,414 353,562 255,541
Other     2,915     3,197     6,281     7,725
Total Revenue     411,644     345,939     869,132     710,803
Cost of Revenue
Disposed merchandise 105,639 90,962 243,960 200,198
Consumer loan loss provision     72,397     45,129     134,780     84,629
Total Cost of Revenue     178,036     136,091     378,740     284,827
 
Net Revenue     233,608     209,848     490,392     425,976
Expenses
Operations and administration 164,190 147,716 334,345 288,174
Depreciation and amortization     15,187     12,308     29,808     24,750
Total Expenses     179,377     160,024     364,153     312,924
Income from Operations 54,231 49,824 126,239 113,052
Interest expense (6,693) (5,831) (13,869) (11,442)
Interest income 28 20 57 42
Foreign currency transaction loss (252) (185) (165) (281)
Equity in loss of unconsolidated subsidiary     (31)     (32)     (148)     (36)
Income before Income Taxes 47,283 43,796 112,114 101,335
Provision for income taxes     18,063     16,551     42,371     38,303
Net Income 29,220 27,245 69,743 63,032
Net loss (income) attributable to the noncontrolling interest     600     (264)     1,544     327
Net Income Attributable to Cash America International, Inc.   $ 29,820   $ 26,981   $ 71,287   $ 63,359
Earnings Per Share:
Net Income attributable to Cash America International, Inc. common shareholders:
Basic $ 1.01 $ 0.91 $ 2.41 $ 2.14
Diluted $ 0.94 $ 0.84 $ 2.24 $ 1.99
Weighted average common shares outstanding:
Basic 29,645 29,593 29,631 29,673
Diluted 31,822 31,994 31,867 31,828
Dividends declared per common share $ 0.035 $ 0.035 $ 0.070 $ 0.070

   

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

PAWN LENDING ACTIVITIES – FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)
 

The following table outlines certain data related to the Company’s pawn loan activities as of and for the three and six months ended June 30, 2012 and 2011 (dollars in thousands).
 
2012 2011
Domestic   Foreign   Total Domestic   Foreign   Total

As of June 30,
Ending pawn loan balances $ 221,572 $ 11,337 $ 232,909 $ 207,330 $ 22,013 $ 229,343
Ending merchandise balance, net $ 132,758 $ 12,056 $ 144,814 $ 124,054 $ 8,138 $ 132,192
 

Three Months Ended June 30,
Pawn loan fees and service charges $ 68,185 $ 3,866 $ 72,051 $ 61,158 $ 5,295 $ 66,453
Average pawn loan balance outstanding $ 207,195 $ 13,661 $ 220,856 $ 187,148 $ 21,910 $ 209,058
Amount of pawn loans written and renewed $ 231,354 $ 15,186 $ 246,540 $ 221,658 $ 25,515 $ 247,173
Annualized yield on pawn loans 132.4% 113.8% 131.2% 131.1% 96.9% 127.5%
Average amount per pawn loan (in ones) $ 129 $ 84 $ 121 $ 123 $ 105 $ 121
Gross profit margin on disposition of merchandise 34.0% 10.3% 32.3% 39.2% 14.0% 36.8%
Merchandise turnover 2.9 3.5 3.0 2.7 6.1 2.9
 
2012 2011

Six Months Ended June 30,
Domestic Foreign Total Domestic Foreign Total
Pawn loan fees and service charges $ 137,598 $ 7,352 $ 144,950 $ 121,384 $ 10,351 $ 131,735
Average pawn loan balance outstanding $ 214,058 $ 14,613 $ 228,671 $ 186,580 $ 21,184 $ 207,764
Amount of pawn loans written and renewed $ 436,809 $ 33,823 $ 470,632 $ 401,197 $ 46,400 $ 447,597
Annualized yield on pawn loans 129.3% 101.2% 127.5% 131.2% 98.5% 127.9%
Average amount per pawn loan (in ones) $ 130 $ 92 $ 123 $ 122 $ 107 $ 120
Gross profit margin on disposition of merchandise 34.7% 10.0% 33.0% 38.5% 14.1% 36.6%
Merchandise turnover 3.2 3.8 3.3 3.0 5.8 3.2

 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

MERCHANDISE DISPOSITION, GROSS PROFIT AND OPERATING DATA

(dollars in thousands)
 

Profit from the disposition of merchandise represents the proceeds received from the disposition of merchandise in excess of the cost of disposed merchandise, which is the Company’s cost basis in the loan or the amount paid for purchased merchandise. Retail sales include the sale of jewelry and general merchandise direct to consumers through the Company’s domestic and foreign retail services locations or over the Internet. Commercial sales include the sale of refined gold, platinum, silver, and diamonds to brokers or manufacturers. The following table summarizes the proceeds from the disposition of merchandise and the related profit for the three and six months ended June 30, 2012 and 2011 (dollars in thousands).
 
 
  Three Months Ended June 30,
2012   2011
       
Retail Commercial Total Retail Commercial Total
Proceeds from disposition $ 83,623 $ 72,333 $ 155,956 $ 76,792 $ 67,083 $ 143,875
Gross profit on disposition $ 31,701 $ 18,616 $ 50,317 $ 30,641 $ 22,272 $ 52,913
Gross profit margin 37.9 % 25.7 % 32.3 % 39.9 % 33.2 % 36.8 %
Percentage of total gross profit 63.0 % 37.0 % 100.0 % 57.9 % 42.1 % 100.0 %
 
 
Six Months Ended June 30,
2012 2011
 
Retail Commercial Total Retail Commercial Total
Proceeds from disposition $ 195,655 $ 168,684 $ 364,339 $ 174,232 $ 141,570 $ 315,802
Gross profit on disposition $ 73,447 $ 46,932 $ 120,379 $ 69,126 $ 46,478 $ 115,604
Gross profit margin 37.5 % 27.8 % 33.0 % 39.7 % 32.8 % 36.6 %
Percentage of total gross profit 61.0 % 39.0 % 100.0 % 59.8 % 40.2 % 100.0 %

 

The table below summarizes the age of merchandise held for disposition before valuation allowance of $0.7 million at June 30, 2012 and 2011 (dollars in thousands).
 
    As of June 30,
2012     2011
Amount   % Amount   %
 
Jewelry - held for one year or less $ 89,125 61.3 $ 85,062 64.0
Other merchandise - held for one year or less     49,666   34.1       43,222   32.5
Total merchandise held for one year or less     138,791   95.4       128,284   96.5
Jewelry - held for more than one year 2,562 1.8 1,840 1.4
Other merchandise - held for more than one year     4,161   2.8       2,768   2.1
Total merchandise held for more than one year     6,723   4.6       4,608   3.5
Total merchandise held for disposition   $ 145,514   100.0     $ 132,892   100.0
 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)
 

The following table sets forth consumer loan fees by segment, adjusted for the deduction of the loan loss provision for the three and six months ended June 30, 2012 and 2011 (dollars in thousands).
 

 
  Three Months Ended June 30,
2012   2011

Retail Services
  E-Commerce   Total

RetailServices
  E-Commerce   Total
Interest and fees on short-term loans $ 25,894 $ 126,316 $ 152,210 $ 25,031 $ 96,806 $ 121,837
Interest and fees on installment loans     2,685       25,827       28,512       2,289       8,288       10,577  
Consumer loan fees $ 28,579 $ 152,143 $ 180,722 $ 27,320 $ 105,094 $ 132,414
Consumer loan loss provision     6,603       65,794       72,397       4,756       40,373       45,129  
Consumer loan fees, net of loss provision   $ 21,976     $ 86,349     $ 108,325     $ 22,564     $ 64,721     $ 87,285  
 
Year-over-year change - $ $ (588) $ 21,628 $ 21,040 $ 801 $ 15,553 $ 16,354
Year-over-year change - % (2.6) % 33.4 % 24.1 % 3.7 % 31.6 % 23.1 %

Consumer loan loss provision as a % of consumer loan fees
    23.1 %     43.2 %     40.1 %     17.4 %     38.4 %     34.1 %
 
 
Six Months Ended June 30,
2012 2011

Retail Services
E-Commerce Total

RetailServices
E-Commerce Total
Interest and fees on short-term loans $ 52,805 $ 247,698 $ 300,503 $ 49,760 $ 187,070 $ 236,830
Interest and fees on installment loans     5,146       47,913       53,059       3,395       15,316       18,711  
Consumer loan fees $ 57,951 $ 295,611 $ 353,562 $ 53,155 $ 202,386 $ 255,541
Consumer loan loss provision     11,069       123,711       134,780       7,939       76,690       84,629  
Consumer loan fees, net of loss provision   $ 46,882     $ 171,900     $ 218,782     $ 45,216     $ 125,696     $ 170,912  
 
Year-over-year change - $ $ 1,666 $ 46,204 $ 47,870 $ (1,105) $ 26,537 $ 25,432
Year-over-year change - % 3.7 % 36.8 % 28.0 % (2.4) % 26.8 % 17.5 %

Consumer loan loss provision as a % of consumer loan fees
    19.1 %     41.8 %     38.1 %     14.9 %     37.9 %     33.1 %
 

In addition to providing consumer loans owned by the Company and consumer loans guaranteed by the Company, which are either generally accepted accounting principles (“GAAP”) items or disclosures required by GAAP, the Company has provided combined consumer loans, which is a non-GAAP measure. In addition, the Company has provided disclosure regarding consumer loans written, which is statistical data that is not included in the Company’s financial statements. The Company also provides allowances and liabilities for losses on consumer loans on a combined basis, which are GAAP measures.

Management believes these measures provide investors with important information needed to evaluate the magnitude of potential loan losses and the opportunity for revenue performance of the consumer loan portfolio on an aggregate basis. The comparison of the aggregate amounts from period to period is more meaningful than comparing only the residual amount on the Company’s balance sheet since both revenue and the loss provision for loans are impacted by the aggregate amount of loans owned by the Company and those guaranteed by the Company as reflected in its financial statements.

   

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)
 

The following tables summarize selected data related to the Company’s consumer loan activities as of June 30, 2012 and 2011 and for the three and six months ended June 30, 2012 and 2011.
 
Three Months Ended Six Months Ended
June 30, June 30,
2012     2011 2012   2011

Combined consumer loan loss provision as a % of combined consumer loans written (a)
8.8% 6.4% 8.4% 6.3%

Charge-offs (net of recoveries) as a % of combined consumer loans written (a)
7.2% 6.0% 8.0% 6.5%

Combined consumer loan loss provision as a % of consumer loan fees
    40.1%     34.1%     38.1%     33.1%
 
 

(a)

The disclosure regarding the amount and number of consumer loans written is statistical data that is not included in the Company’s financial statements.
 
  As of June 30,
2012 2011

Company Owned (a)
 

Guaranteed by the Company (a)
  Combined (b)

CompanyOwned (a)

Guaranteedby theCompany (a)
Combined (b)
Ending consumer loan balances:

Retail Services
Short-term loans $ 46,700 $ 7,055 $ 53,755 $ 48,500 $ 8,432 $ 56,932
Installment loans     9,146     6,296     15,442     6,980     4,754     11,734
Total Retail Services, gross     55,846     13,351     69,197     55,480     13,186     68,666

E-Commerce
Domestic
Short-term loans 66,239 37,093 103,332 43,156 31,127 74,283
Installment loans     25,795     -     25,795     10,132     -     10,132
Total Domestic, gross     92,034     37,093     129,127     53,288     31,127     84,415
 
Foreign
Short-term loans 94,411 3,541 97,952 72,655 2,946 75,601
Installment loans     54,644     -     54,644     16,159     -     16,159
Total Foreign, gross     149,055     3,541     152,596     88,814     2,946     91,760
Total E-Commerce, gross     241,089     40,634     281,723     142,102     34,073     176,175
 
Total ending loan balance, gross 296,935 53,985 350,920 197,582 47,259 244,841
Less: Allowance and liabilities for losses (a)     (70,571)     (2,795)     (73,366)     (37,211)     (2,137)     (39,348)
Total ending loan balance, net   $ 226,364   $ 51,190   $ 277,554   $ 160,371   $ 45,122   $ 205,493
Allowance and liability for losses as a % of combined consumer loans and fees receivable, gross (b)     23.8%     5.2%     20.9%     18.8%     4.5%     16.1%
 

(a)

GAAP measure. The consumer loan balances guaranteed by the Company represent loans originated by third-party lenders through the Company's credit services organization programs (the "CSO programs"), so these balances are not recorded in the Company’s financial statements. However, the Company has established a liability for estimated losses in support of its guarantee of these loans, which is reflected in the table above and included in its financial statements.

(b)

Except for allowance and liability for estimated losses, amounts represent non-GAAP measures.

 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)
 

The following tables summarize consumer loans written for the three and six months ended June 30, 2012 and 2011 (dollars in thousands).
 
Three Months Ended June 30,
2012   2011

Company Owned (a)
 

Guaranteed by the Company (a)(b)
  Combined (a)

CompanyOwned (a)
 

Guaranteedby theCompany (a)(b)
  Combined (a)
Amount of consumer loans written:

Retail Services
Short-term loans $ 177,924 $ 35,295 $ 213,219 $ 179,193 $ 41,283 $ 220,476
Installment loans     2,153     4,296     6,449     2,142     3,578     5,720
Total Retail Services     180,077     39,591     219,668     181,335     44,861     226,196

E-Commerce
Domestic
Short-term loans 114,143 181,120 295,263 102,774 155,189 257,963
Installment loans     16,101     -     16,101     7,410     -     7,410
Total Domestic     130,244     181,120     311,364     110,184     155,189     265,373
 
Foreign
Short-term loans 246,373 17,251 263,624 185,814 14,170 199,984
Installment loans     31,728     -     31,728     11,999     -     11,999
Total Foreign     278,101     17,251     295,352     197,813     14,170     211,983
Total E-Commerce     408,345     198,371     606,716     307,997     169,359     477,356
 
Total amount of consumer loans written   $ 588,422   $ 237,962   $ 826,384   $ 489,332   $ 214,220   $ 703,552
 
Number of consumer loans written:

Retail Services
Short-term loans 381,179 64,945 446,124 381,208 73,121 454,329
Installment loans     1,943     567     2,510     1,632     754     2,386
Total Retail Services     383,122     65,512     448,634     382,840     73,875     456,715

E-Commerce
Domestic
Short-term loans 370,193 250,776 620,969 310,842 220,090 530,932
Installment loans     15,796     -     15,796     6,281     -     6,281
Total Domestic     385,989     250,776     636,765     317,123     220,090     537,213
 
Foreign
Short-term loans 473,060 23,144 496,204 348,236 20,968 369,204
Installment loans     28,421     -     28,421     10,074     -     10,074
Total Foreign     501,481     23,144     524,625     358,310     20,968     379,278
Total E-Commerce     887,470     273,920     1,161,390     675,433     241,058     916,491
 
Total number of consumer loans written     1,270,592     339,432     1,610,024     1,058,273     314,933     1,373,206
 

(a)

The disclosure regarding the amount and number of consumer loans written is statistical data that is not included in the Company’s financial statements.

(b)

Loans guaranteed by the Company represent loans originated by third-party lenders through the CSO programs.

 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)
 
Six Months Ended June 30,
2012   2011

Company Owned (a)
 

Guaranteed by the Company (a)(b)
  Combined (a)

CompanyOwned (a)
 

Guaranteedby theCompany (a)(b)
  Combined (a)
Amount of consumer loans written:

Retail Services
Short-term loans $ 353,598 $ 72,662 $ 426,260 $ 337,411 $ 82,516 $ 419,927
Installment loans     3,664     6,156     9,820     4,979     5,067     10,046
Total Retail Services     357,262     78,818     436,080     342,390     87,583     429,973

E-Commerce
Domestic
Short-term loans 214,201 343,402 557,603 205,563 310,534 516,097
Installment loans     27,367     -     27,367     13,039     -     13,039
Total Domestic     241,568     343,402     584,970     218,602     310,534     529,136
 
Foreign
Short-term loans 486,895 35,048 521,943 337,197 25,066 362,263
Installment loans     56,410     -     56,410     20,953     -     20,953
Total Foreign     543,305     35,048     578,353     358,150     25,066     383,216
Total E-Commerce     784,873     378,450     1,163,323     576,752     335,600     912,352
 
Total amount of consumer loans written   $ 1,142,135   $ 457,268   $ 1,599,403   $ 919,142   $ 423,183   $ 1,342,325
 
Number of consumer loans written:

Retail Services
Short-term loans 750,563 131,676 882,239 732,479 144,297 876,776
Installment loans     3,480     844     4,324     3,547     1,062     4,609
Total Retail Services     754,043     132,520     886,563     736,026     145,359     881,385

E-Commerce
Domestic
Short-term loans 686,578 469,902 1,156,480 614,594 435,109 1,049,703
Installment loans     25,811     -     25,811     12,831     -     12,831
Total Domestic     712,389     469,902     1,182,291     627,425     435,109     1,062,534
 
Foreign
Short-term loans 925,263 46,499 971,762 644,764 39,089 683,853
Installment loans     50,203     -     50,203     18,218     -     18,218
Total Foreign     975,466     46,499     1,021,965     662,982     39,089     702,071
Total E-Commerce     1,687,855     516,401     2,204,256     1,290,407     474,198     1,764,605
 
Total number of consumer loans written     2,441,898     648,921     3,090,819     2,026,433     619,557     2,645,990
 

(a)

The disclosure regarding the amount and number of consumer loans written is statistical data that is not included in the Company’s financial statements.

(b)

Loans guaranteed by the Company represent loans originated by third-party lenders through the CSO programs.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES INCOME FROM OPERATIONS BY OPERATING SEGMENT (dollars in thousands)

The following tables contain operating segment data for the three and six months ended June 30, 2012 and 2011 (dollars in thousands).

Corporate operations primarily include corporate expenses, such as personnel, legal, occupancy, and other costs related to corporate service functions, such as executive oversight, insurance and risk management, public and government relations, internal audit, treasury, payroll, compliance and licensing, finance, accounting, tax, collections support, and information systems (except for online lending systems, which are included in the e-commerce segment). Corporate income includes miscellaneous income not directly attributable to the Company’s segments. Corporate assets primarily include: corporate property and equipment, non-qualified savings plan assets, marketable securities, foreign exchange forward contracts and prepaid insurance.
       
Retail Services E-Commerce
Domestic   Foreign   Total Domestic   Foreign   Total Corporate Consolidated
 

Three Months Ended June 30, 2012
Revenue
Pawn loan fees and service charges $ 68,185 $ 3,866 $ 72,051 $ - $ - $ - $ - $ 72,051
Proceeds from disposition of merchandise 144,484 11,472 155,956 - - - - 155,956
Consumer loan fees 28,579 - 28,579 73,802 78,341 152,143 - 180,722
Other     2,185     211       2,396     288     11     299     220       2,915
Total revenue     243,433     15,549       258,982     74,090     78,352     152,442     220       411,644
Disposed merchandise 95,345 10,294 105,639 - - - - 105,639
Consumer loan loss provision     6,603     -       6,603     30,643     35,151     65,794     -       72,397
Total cost of revenue     101,948     10,294       112,242     30,643     35,151     65,794     -       178,036
 
Net revenue     141,485     5,255       146,740     43,447     43,201     86,648     220       233,608
Expenses
Operations and administration 88,204 7,822 96,026 25,773 27,778 53,551 14,613 164,190
Depreciation and amortization     7,514     1,121       8,635     2,727     300     3,027     3,525       15,187
Total expenses     95,718     8,943       104,661     28,500     28,078     56,578     18,138       179,377
Income (loss) from operations   $ 45,767   $ (3,688 )   $ 42,079   $ 14,947   $ 15,123   $ 30,070   $ (17,918 )   $ 54,231

As of June 30, 2012
Total assets $ 900,302 $ 113,498 $ 1,013,800 $ 360,912 $ 152,888 $ 513,800 $ 130,776 $ 1,658,376
Goodwill $ 353,945 $ 210,368 $ 564,313
 
 
Retail Services E-Commerce  
Domestic Foreign Total Domestic   Foreign Total   Corporate Consolidated
 

Three Months Ended June 30, 2011
Revenue
Pawn loan fees and service charges $ 61,158 $ 5,295 $ 66,453 $ - $ - $ - $ - $ 66,453
Proceeds from disposition of merchandise 130,264 13,582 143,846 29 - 29 - 143,875
Consumer loan fees 27,320 - 27,320 55,212 49,882 105,094 - 132,414
Other     2,522     174       2,696     110     229     339     162       3,197
Total revenue     221,264     19,051       240,315     55,351     50,111     105,462     162       345,939
Disposed merchandise 79,252 11,687 90,939 23 - 23 - 90,962
Consumer loan loss provision     4,756     -       4,756     16,504     23,869     40,373     -       45,129
Total cost of revenue     84,008     11,687       95,695     16,527     23,869     40,396     -       136,091
Net revenue     137,256     7,364       144,620     38,824     26,242     65,066     162       209,848
Expenses
Operations and administration 81,772 7,936 89,708 19,463 20,176 39,639 18,369 147,716
Depreciation and amortization     6,224     1,460       7,684     2,574     208     2,782     1,842       12,308
Total expenses     87,996     9,396       97,392     22,037     20,384     42,421     20,211       160,024
Income (loss) from operations   $ 49,260   $ (2,032 )   $ 47,228   $ 16,787   $ 5,858   $ 22,645   $ (20,049 )   $ 49,824

As of June 30, 2011
Total assets $ 836,555 $ 135,852 $ 972,407 $ 304,586 $ 92,342 $ 396,928 $ 134,902 $ 1,504,237
Goodwill $ 336,392 $ 210,282 $ 546,674

     

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

INCOME FROM OPERATIONS BY OPERATING SEGMENT

(in thousands)
 
  Retail Services   E-Commerce
Domestic   Foreign   Total Domestic   Foreign Total Corporate Consolidated
 

Six Months Ended June 30, 2012
Revenue
Pawn loan fees and service charges $ 137,598 $ 7,352 $ 144,950 $ - $ - $ - $ - $ 144,950
Proceeds from disposition of merchandise 340,470 23,869 364,339 - - - - 364,339
Consumer loan fees 57,951 - 57,951 142,926 152,685 295,611 - 353,562
Other     5,147     260       5,407     453     5     458     416       6,281
Total revenue     541,166     31,481       572,647     143,379     152,690     296,069     416       869,132
Disposed merchandise 222,473 21,487 243,960 - - - - 243,960
Consumer loan loss provision     11,069     -       11,069     52,597     71,114     123,711     -       134,780
Total cost of revenue     233,542     21,487       255,029     52,597     71,114     123,711     -       378,740
 
Net revenue     307,624     9,994       317,618     90,782     81,576     172,358     416       490,392
Expenses
Operations and administration 179,463 16,016 195,479 49,589 54,501 104,090 34,776 334,345
Depreciation and amortization     14,646     2,249       16,895     5,339     563     5,902     7,011       29,808
Total expenses     194,109     18,265       212,374     54,928     55,064     109,992     41,787       364,153
Income (loss) from operations   $ 113,515   $ (8,271 )   $ 105,244   $ 35,854   $ 26,512   $ 62,366   $ (41,371 )   $ 126,239
 
 
Retail Services E-Commerce
Domestic Foreign Total Domestic Foreign Total Corporate Consolidated
 

Six Months Ended June 30, 2011
Revenue
Pawn loan fees and service charges $ 121,384 $ 10,351 $ 131,735 $ - $ - $ - $ - $ 131,735
Proceeds from disposition of merchandise 290,925 24,848 315,773 29 - 29 - 315,802
Consumer loan fees 53,155 - 53,155 113,923 88,463 202,386 - 255,541
Other     6,247     276       6,523     343     537     880     322       7,725
Total revenue     471,711     35,475       507,186     114,295     89,000     203,295     322       710,803
Disposed merchandise 178,829 21,346 200,175 23 - 23 - 200,198
Consumer loan loss provision     7,939     -       7,939     33,662     43,028     76,690     -       84,629
Total cost of revenue     186,768     21,346       208,114     33,685     43,028     76,713     -       284,827
 
Net revenue     284,943     14,129       299,072     80,610     45,972     126,582     322       425,976
Expenses
Operations and administration 164,333 17,197 181,530 38,367 35,491 73,858 32,786 288,174
Depreciation and amortization     12,269     2,971       15,240     5,322     400     5,722     3,788       24,750
Total expenses     176,602     20,168       196,770     43,689     35,891     79,580     36,574       312,924
Income (loss) from operations   $ 108,341   $ (6,039 )   $ 102,302   $ 36,921   $ 10,081   $ 47,002   $ (36,252 )   $ 113,052
 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES LOCATION INFORMATION

Retail Services Segment

The following table sets forth the number of domestic and foreign Company-owned and franchised locations in the Company’s retail services segment offering pawn lending, consumer lending, and other services as of June 30, 2012 and 2011. The Company’s domestic retail services locations operate under the names “Cash America Pawn,” “SuperPawn,” “Cash America Payday Advance,” “Cashland,” “Pawn X-Change” and “Mr. Payroll.” The Company’s foreign retail services locations (of which the Company is a majority owner) operate under the name “Prenda Fácil.”
   
As of June 30,
2012   2011
Domestic (a)(b)   Foreign (a)   Total Domestic (a)(b)   Foreign (a)   Total
Retail services locations offering:
Both pawn and consumer lending 577 - 577 572 - 572
Pawn lending only 130 195 325 125 184 309
Consumer lending only 83 - 83 85 - 85
Other (c)   101   -   101   118   -   118
Total retail services   891   195   1,086   900   184   1,084
 
(a) Except as described in (c) below, includes locations that operate in 23 states in the United States as of both June 30, 2012 and 2011, respectively, and 21 jurisdictions in Mexico, as of both June 30, 2012 and 2011, respectively.
(b) Includes unconsolidated franchised locations as follows: one location operating under the name “Cash America Pawn” as of June 30, 2012 and nine locations operating under the names “Cash America Pawn” and “SuperPawn” as of June 30, 2011.
(c) As of June 30, 2012 and 2011, includes six and six consolidated Company-owned check cashing locations, respectively, and 95 and 112 unconsolidated franchised check cashing locations, respectively. As of June 30, 2012 and 2011, includes locations that operate in 16 and 18 states in the United States, respectively.

E-Commerce Segment

As of June 30, 2012, the Company’s e-commerce operating segment offered consumer loans to customers over the Internet:

The following table includes, as of June 30, 2012 and 2011, the number of states in the United States and other foreign countries where the Company’s e-commerce segment operates.
    June 30, 2012     June 30, 2011
United States 32 30
United Kingdom Y Y
Australia Y Y
Canada Y Y
 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES NON-GAAP DISCLOSURE

Non-GAAP Disclosure

In addition to the financial information prepared in conformity with GAAP the Company provides historical non-GAAP financial information. Management believes that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of the Company’s operations. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s business that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.

Management provides non-GAAP financial information for informational purposes and to enhance understanding of the Company’s GAAP consolidated financial statements. Readers should consider the information in addition to, but not instead of, its financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.
   

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES ADJUSTED EARNINGS PER SHARE
 

Adjusted Earnings Per Share

 

In addition to reporting financial results in accordance with GAAP, the Company has provided adjusted earnings and adjusted earnings per share, which are non-GAAP measures. Management believes that the presentation of these measures provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments and amortization methods, which provides a more complete understanding of the Company’s financial performance, competitive position and prospects for the future. Management also believes that investors regularly rely on non-GAAP financial measures, such as adjusted earnings and adjusted earnings per share, to assess operating performance and that such measures may highlight trends in the Company’s business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. The following table provides a reconciliation between net income attributable to the Company and diluted earnings per share calculated in accordance with GAAP to adjusted earnings and adjusted earnings per share, respectively (dollars in thousands, except per share data):
 
Three Months Ended Six Months Ended
June 30, June 30,
2012   2011 2012   2011
$  

Per Diluted Share
$  

PerDilutedShare
$  

Per Diluted Share
$  

PerDilutedShare
 

Net income attributable to Cash America International, Inc.
$ 29,820 $ 0.94 $ 26,981 $ 0.84 $ 71,287 $ 2.24 $ 63,359 $ 1.99
 
Adjustments:
Intangible asset amortization, net of tax 664 0.02 981 0.03 1,403 0.04 2,085 0.07
Non-cash equity-based compensation, net of tax 942 0.03 838 0.03 1,915 0.06 1,607 0.05

Convertible debt non-cash interest and issuance cost amortization, net of tax
583 0.02 550 0.02 1,166 0.04 1,090 0.03
Foreign currency transaction loss, net of tax     156     -     115     -     103     -     175     0.01
Adjusted earnings   $ 32,165   $ 1.01   $ 29,465   $ 0.92   $ 75,874   $ 2.38   $ 68,316   $ 2.15
 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES ADJUSTED EBITDA

Adjusted EBITDA

The table below shows adjusted EBITDA, a non-GAAP measure that the Company defines as earnings excluding depreciation, amortization, interest, foreign currency transaction gains or losses, equity in earnings or loss of unconsolidated subsidiary, taxes and including the net income or loss attributable to noncontrolling interests. Management believes adjusted EBITDA is used by investors to analyze operating performance and evaluate the Company’s ability to incur and service debt and its capacity for making capital expenditures. Adjusted EBITDA is also useful to investors to help assess the Company’s liquidity and estimated enterprise value. The computation of adjusted EBITDA as presented below may differ from the computation of similarly-titled measures provided by other companies (dollars in thousands):
 
Trailing 12 Months Ended
June 30,
2012   2011
Net income attributable to Cash America

International, Inc.
  $ 143,891   $ 125,972
 
Adjustments:
Depreciation and amortization expenses 59,207 47,744
Interest expense, net 27,859 22,713
Foreign currency transaction loss 1,149 570
Equity in loss of unconsolidated subsidiary 216 172
Provision for income taxes 86,428 75,835
Net loss attributable to the noncontrolling interest       (2,014)       (661)
Adjusted EBITDA     $ 316,736     $ 272,345
 
Adjusted EBITDA margin calculated as follows:
Total revenue $ 1,741,393 $ 1,420,088
Adjusted EBITDA       316,736       272,345
Adjusted EBITDA as a percentage of total revenue       18.2%       19.2%

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