Cash America Announces Fourth Quarter And Fiscal Year-End Earnings And Declares Dividend

Cash America International, Inc. (NYSE: CSH) reported today that its fourth quarter ended December 31, 2012 net income attributable to the Company was $24,480,000 (79 cents per share), which included previously announced charges related to the closure of 115 locations during the quarter in its Mexico based pawn operations of $7.0 million (23 cents per share) and the after tax impact of the Company’s voluntary refund to certain Ohio customers of $8.4 million (27 cents per share) in the period. The combined amount of the Mexico charges and the refund expense amounted to $15.4 million after taxes (50 cents per share). Adding these amounts back to reported net income would result in adjusted earnings, a non-GAAP measure, for the fourth quarter of 2012 of $39,887,000 ($1.29 per share), compared to $37,827,000 ($1.18 per share) for the fourth quarter of 2011. This amount is greater than management’s publicly released earnings per share guidance of between $1.15 per share and $1.25 per share as reported in the Company’s press release dated October 25, 2012 and above analysts’ consensus estimates of $1.20 per share as reported by Thomson Reuters.

Consolidated total revenue of the Company increased 4% in the fourth quarter of 2012 to $491.6 million, up from $474.0 million for the same period in 2011. Revenue from the Company’s loan products, driven by higher loan balances outstanding, contributed the largest portion of the increase for the period. Comparing the ending balance at December 31, 2012 to the same date in 2011, total combined consumer loan balances, a non-GAAP measure, which includes loans extended by the Company directly and loans offered by third parties that the Company guarantees, which are both GAAP measures, were up 27% to $439.8 million, which led to a 24% increase in revenue from consumer loan fees and was the primary driver of the increase in total revenue during the fourth quarter. Aggregate pawn service fees rose 5% in the fourth quarter of 2012 compared to the same period in 2011, adding to the top line revenue growth for the period. Consumer loan fees increased 24%, to $222.9 million, in the fourth quarter of 2012 compared to the same period in 2011, as the Company’s E-commerce segment recorded a 30% increase in revenue, led by a 38% increase in revenue from its domestic online lending business and a 22% increase in revenue from its foreign lending business.

Commenting on the results of the quarter, Daniel R. Feehan, President and Chief Executive Officer of Cash America, said, “We continued to see strong performance out of our E-commerce business in the fourth quarter of 2012 as the higher levels of assets observed in the second and third quarters contributed to earnings growth that exceeded our expectations this period.”

Net income attributable to the Company for the twelve months ended December 31, 2012 was $107,470,000 (3.42 per share) compared to $135,963,000 ($4.25 per share) for the same twelve-month period of 2011. When adding back the unusual items for the full year, which includes $25.4 million (81 cents per share) related to Mexico charges, $8.4 million (27 cents per share) related to the refund expense plus $2.5 million (7 cents per share) related to expenses associated with the July 2012 withdrawal of the Enova International, Inc. proposed initial public offering, adjusted earnings, a non-GAAP measure, would have been $143.8 million and adjusted earnings per share, a non-GAAP measure, would have been $4.57 per share for the twelve-month period ended December 31, 2012, up 8% for the period. Total revenue for the fiscal year ended December 31, 2012 increased 14% to $1.80 billion, up from $1.58 billion during the same twelve-month period in 2011.

Cash America will conduct a conference call to discuss its fourth quarter earnings on Thursday, January 24, 2013, at 7:00 AM CST. A live web cast of the call will be available on the Company’s corporate web site in the Investor Relations section ( www.cashamerica.com). To listen to the live call, please go to the web site at least fifteen minutes early to register, download, and install any necessary audio software.

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 February 20, 2013 to shareholders of record on February 6, 2013.

Outlook for the First Quarter of 2013 and the 2013 Fiscal Year

Management believes that the opportunities for sustained growth in revenue and earnings will be largely associated with the customer demand for the credit products provided by the Company, which primarily take the form of pawn loans and consumer loans. Other elements expected to affect the growth in revenue include the potential impact of the regulatory governance of loan products, the reorganization and continued development of the Mexican pawn operations and the development and expansion of the Company’s online distribution channel. First quarter 2013 results could be influenced by the timing of Federal income tax refunds to the Company’s customers. Based on the preceding factors management estimates that the first quarter of fiscal 2013 will be between $1.35 and $1.42 in earnings per share compared to $1.30 in the first quarter of 2012. At this time management confirms its previously reported expectations for its fiscal year 2013 earnings per share to a range of between $4.75 to $5.15 which compares to actual adjusted full year 2012 earnings per share of $4.57 that excludes the after tax impact of unusual items of $35.3 million ($1.15 per share).

About the Company

As of December 31, 2012, Cash America International, Inc. operated 969 total locations offering specialty financial services to consumers, which included the following:
  • 831 lending locations in 22 states in the United States primarily under the names “Cash America Pawn,” “SuperPawn,” “Cash America Payday Advance,” and “Cashland;”
  • 47 pawn lending locations in central and southern Mexico under the name “Cash America casa de empeño” (previously operated under the name “Prenda Fácil”); and
  • 91 check cashing centers (all of which are unconsolidated franchised check cashing centers) operating in 15 states in the United States under the name “Mr. Payroll.”

Additionally, as of December 31, 2012, the Company offered consumer loans over the Internet to customers:

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

Non-GAAP Measures

A reconciliation of adjusted earnings and adjusted earnings per share, which are non-GAAP measures, for the three- and twelve-month periods ended December 31, 2012 discussed above is included in the attachments to this press release. In addition, details regarding combined consumer loan balances as of December 31, 2012 and December 31, 2011 discussed above, which are non-GAAP measures that are comprised of loans extended by the Company directly and loans offered by third parties that the Company guarantees that are both GAAP measures, are included in the attachments to this press release.

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

This release contains forward-looking statements about the business, financial condition, operations 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; the reorganization of the Company’s Mexico-based pawn operations; 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, its products or its 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   Year Ended
December 31, December 31,
2012   2011 2012   2011
Consolidated Operations:
Total revenue $ 491,604 $ 473,957 $ 1,800,430 $ 1,583,064
Net revenue 267,088 248,329 1,005,957 909,759
Total expenses     217,600     180,204     790,042     665,417
 
Income from Operations $ 49,488 $ 68,125 $ 215,915 $ 244,342
 
Income before income taxes     41,160     60,688     186,320     217,526
 
Net Income   $ 23,991   $ 37,605   $ 101,664   $ 135,166
 
Net loss attributable to the noncontrolling interest   $ 489   $ 222   $ 5,806   $ 797
 
Net Income Attributable to Cash America International, Inc.   $ 24,480   $ 37,827   $ 107,470   $ 135,963
 
Earnings per share:
Net Income attributable to Cash America International, Inc.

common shareholders:
Basic $ 0.84 $ 1.28 $ 3.64 $ 4.59
Diluted $ 0.79 $ 1.18 $ 3.42 $ 4.25
 
Weighted average common shares outstanding:  
Basic 29,262 29,528 29,514 29,602
Diluted 30,884 32,059 31,452 31,991

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
(Unaudited)
 
December 31,
  2012   2011
 
Assets
Current assets:
Cash and cash equivalents $ 63,134 $ 62,542
Pawn loans 244,640 253,519
Consumer loans, net 289,418 222,778
Merchandise held for disposition, net 167,409 161,884
Pawn loan fees and service charges receivable 48,991 48,003
Prepaid expenses and other assets 35,605 31,301
Deferred tax assets   48,992     35,065
Total current assets 898,189 815,092
Property and equipment, net 261,771 246,429
Goodwill 608,216 562,721
Intangible assets, net 36,473 34,771
Other assets   13,609     15,236
Total assets $ 1,818,258   $ 1,674,249
 
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses $ 126,664 $ 113,113
Customer deposits 11,420 9,935
Income taxes currently payable 5,922 12,880
Current portion of long-term debt   43,617     34,273
Total current liabilities 187,623 170,201
Deferred tax liabilities 101,711 89,712
Noncurrent income tax payable 2,703 2,315
Other liabilities 888 1,413
Long-term debt   534,713     503,018
Total liabilities $ 827,638   $ 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
Additional paid-in capital 157,613 167,683
Retained earnings 879,434 776,060
Accumulated other comprehensive income (loss) 3,128 (6,896)
Treasury shares, at cost (1,351,712 shares and 1,011,356 shares
at December 31, 2012 and 2011, respectively)   (51,304)     (37,419)
Total Cash America International, Inc. shareholders' equity 991,895 902,452
Noncontrolling interest   (1,275)     5,138
Total equity   990,620     907,590
Total liabilities and equity $ 1,818,258   $ 1,674,249

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)
 
Three Months Ended Year Ended
December 31, December 31,
2012   2011 2012   2011
(Unaudited)
 
Revenue
Pawn loan fees and service charges $ 79,479 $ 76,063 $ 300,929 $ 282,197
Proceeds from disposition of merchandise 185,935 215,196 703,767 688,884
Consumer loan fees 222,864 180,124 781,520 598,646
Other   3,326     2,574     14,214     13,337
Total Revenue   491,604     473,957     1,800,430     1,583,064
Cost of Revenue
Disposed merchandise 127,301 145,145 478,179 447,617
Consumer loan loss provision   97,215     80,483     316,294     225,688
Total Cost of Revenue   224,516     225,628     794,473     673,305
 
Net Revenue   267,088     248,329     1,005,957     909,759
Expenses
Operations and administration 199,054 165,655 714,614 611,268
Depreciation and amortization   18,546     14,549     75,428     54,149
Total Expenses   217,600     180,204     790,042     665,417
Income from Operations 49,488 68,125 215,915 244,342
Interest expense (8,066) (7,221) (29,131) (25,528)
Interest income 65 25 144 81
Foreign currency transaction gain (loss) (241) (207) (313) (1,265)
Equity in loss of unconsolidated subsidiary   (86)     (34)     (295)     (104)
Income before Income Taxes 41,160 60,688 186,320 217,526
Provision for income taxes   17,169     23,083     84,656     82,360
Net Income 23,991 37,605 101,664 135,166
Net loss attributable to the noncontrolling interest   489     222     5,806     797
Net Income Attributable to Cash America International, Inc. $ 24,480   $ 37,827   $ 107,470   $ 135,963
Earnings Per Share:
Net Income attributable to Cash America International, Inc. common shareholders:
Basic $ 0.84 $ 1.28 $ 3.64 $ 4.59
Diluted $ 0.79 $ 1.18 $ 3.42 $ 4.25
Weighted average common shares outstanding:
Basic 29,262 29,528 29,514 29,602
Diluted 30,884 32,059 31,452 31,991
Dividends declared per common share $ 0.035 $ 0.035 $ 0.140 $ 0.140

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

PAWN LENDING ACTIVITIES – FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)

 
 

The following tables outline certain data related to pawn loan activities of Cash America International, Inc. (the “Company”) as of and for the three months and years ended December 31, 2012 and 2011 (dollars in thousands).
   
2012 2011
Domestic   Foreign   Total Domestic   Foreign   Total
As of December 31,
Ending pawn loan balances $ 240,573 $ 4,067 $ 244,640 $ 238,399 $ 15,120 $ 253,519
Ending merchandise balance, net $ 161,655 $ 5,754 $ 167,409 $ 151,274 $ 10,610 $ 161,884
 
Three Months Ended December 31,
 
Pawn loan fees and service charges $ 77,354 $ 2,125 $ 79,479 $ 71,420 $ 4,643 $ 76,063
Average pawn loan balance outstanding $ 240,545 $ 7,775 $ 248,320 $ 231,424 $ 17,561 $ 248,985
Amount of pawn loans written and renewed $ 241,215 $ 8,998 $ 250,213 $ 227,944 $ 37,266 $ 265,210
Annualized yield on pawn loans 127.9% 108.7% 127.3% 122.4% 104.9% 121.2%
Average amount per pawn loan (in ones) $ 133 $ 84 $ 127 $ 134 $ 99 $ 128
Gross profit margin on disposition of merchandise 32.6% 13.5% 31.5% 33.1% 24.8% 32.6%
Merchandise turnover 2.8 4.3 2.9 3.3 4.1 3.4
 
2012 2011
Year Ended December 31, Domestic Foreign Total Domestic Foreign Total
Pawn loan fees and service charges $ 288,161 $ 12,768 $ 300,929 $ 261,829 $ 20,368 $ 282,197
Average pawn loan balance outstanding $ 225,066 $ 12,055 $ 237,121 $ 205,610 $ 20,037 $ 225,647
Amount of pawn loans written and renewed $ 916,215 $ 60,476 $ 976,691 $ 869,203 $ 118,126 $ 987,329
Annualized yield on pawn loans 128.0% 105.9% 126.9% 127.3% 101.7% 125.1%
Average amount per pawn loan (in ones) $ 131 $ 88 $ 124 $ 127 $ 103 $ 124
Gross profit margin on disposition of merchandise 33.5% 12.0% 32.1% 36.4% 18.6% 35.0%
Merchandise turnover 2.9 3.9 3.0 3.0 5.0 3.1

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

MERCHANDISE DISPOSITION, GROSS PROFIT AND INVENTORY 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. The following tables summarize the proceeds from the disposition of merchandise and the related profit for the three months and years ended December 31, 2012 and 2011 (dollars in thousands).
  Three Months Ended December 31,
2012   2011
Retail   Commercial   Total Retail   Commercial   Total
Proceeds from disposition $ 113,964 $ 71,971 $ 185,935 $ 105,423 $ 109,773 $ 215,196
Gross profit on disposition $ 40,625 $ 18,009 $ 58,634 $ 37,712 $ 32,339 $ 70,051
Gross profit margin 35.6 % 25.0 % 31.5 % 35.8 % 29.5 % 32.6 %
Percentage of total gross profit 69.3 % 30.7 % 100.0 % 53.8 % 46.2 % 100.0 %
Year Ended December 31,
2012   2011
Retail   Commercial   Total Retail   Commercial   Total
Proceeds from disposition $ 391,566 $ 312,201 $ 703,767 $ 358,695 $ 330,189 $ 688,884
Gross profit on disposition $ 144,095 $ 81,493 $ 225,588 $ 137,620 $ 103,647 $ 241,267
Gross profit margin 36.8 % 26.1 % 32.1 % 38.4 % 31.4 % 35.0 %
Percentage of total gross profit 63.9 % 36.1 % 100.0 % 57.0 % 43.0 % 100.0 %

The table below summarizes the age of merchandise held for disposition before valuation allowance of $0.8 million and $0.7 million as of December 31, 2012 and 2011 (dollars in thousands).
  As of December 31,
2012     2011
Amount   % Amount   %
Jewelry – held for one year or less $ 99,489 59.0 $ 99,683 61.3
Other merchandise – held for one year or less   60,344   35.8       56,483   34.8
Total merchandise held for one year or less   159,833   94.8       156,166   96.1
Jewelry – held for more than one year 3,283 1.9 2,626 1.6
Other merchandise – held for more than one year   5,597   3.3       3,792   2.3
Total merchandise held for more than one year   8,880   5.2       6,418   3.9
Total merchandise held for disposition $ 168,713   100.0     $ 162,584   100.0

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)

 
 

The following tables set forth consumer loan fees by segment, adjusted for the deduction of the loan loss provision for the three months and years ended December 31, 2012 and 2011 (dollars in thousands).
 
Three Months Ended December 31,
2012   2011
Retail Services   E-Commerce   Total Retail Services   E-Commerce   Total
Interest and fees on short-term loans $ 28,803 $ 120,539 $ 149,342 $ 30,570 $ 117,449 $ 148,019
Interest and fees on line of credit - 27,558 27,558 - 9,797 9,797
Interest and fees on installment loans   3,693       42,271       45,964       2,790       19,518       22,308  
Consumer loan fees $ 32,496 $ 190,368 $ 222,864 $ 33,360 $ 146,764 $ 180,124
Consumer loan loss provision   10,095       87,120       97,215       8,549       71,934       80,483  
Consumer loan fees, net of loss provision $ 22,401     $ 103,248     $ 125,649     $ 24,811     $ 74,830     $ 99,641  
 
Year-over-year change - $ $ (2,410) $ 28,418 $ 26,008 $ (1,120) $ 21,419 $ 20,299
Year-over-year change - % (9.7) % 38.0 % 26.1 % (4.3) % 40.1 % 25.6 %
Consumer loan loss provision as a % of

consumer loan fees
  31.1 %     45.8 %     43.6 %     25.6 %     49.0 %     44.7 %
 
Year Ended December 31,
2012 2011
Retail Services E-Commerce Total Retail Services E-Commerce Total
Interest and fees on short-term loans $ 109,972 $ 459,793 $ 569,765 $ 110,071 $ 400,810 $ 510,881
Interest and fees on line of credit - 73,572 73,572 - 30,590 30,590
Interest and fees on installment loans   11,920       126,263       138,183       9,121       48,054       57,175  
Consumer loan fees $ 121,892 $ 659,628 $ 781,520 $ 119,192 $ 479,454 $ 598,646
Consumer loan loss provision   29,225       287,069       316,294       24,001       201,687       225,688  
Consumer loan fees, net of loss provision $ 92,667     $ 372,559     $ 465,226     $ 95,191     $ 277,767     $ 372,958  
 
Year-over-year change - $ $ (2,524) $ 94,792 $ 92,268 $ (1,345) $ 65,745 $ 64,400
Year-over-year change - % (2.7) % 34.1 % 24.7 % (1.4) % 31.0 % 20.9 %

Consumer loan loss provision as a % of consumer loan fees

 
  24.0 %     43.5 %     40.5 %     20.1 %     42.1 %     37.7 %

In addition to reporting 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 reported consumer loans written and renewed, which is statistical data that is not included in the Company’s financial statements. The Company also reports allowances and liabilities for estimated losses on consumer loans and on a combined basis, which are GAAP measures that are included in the Company’s financial statements.

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 and for the three months and years ended December 31, 2012 and 2011.
 
Three Months Ended Year Ended
December 31, December 31,
2012     2011 2012     2011

Combined consumer loan loss provision as a % of combined consumer loans written and renewed(a)
10.4% 9.2% 9.3% 7.4%

Charge-offs (net of recoveries) as a % of combined consumer loans written and renewed(a)
9.7% 7.4% 8.6% 6.6%

Combined consumer loan loss provision as a % of consumer loan fees
    43.6%     44.7%     40.5%     37.7%
   

(a)   The disclosure regarding the amount and number of consumer loans written and renewed is        statistical data that is not included in the Company’s financial statements.
As of December 31,
2012   2011

CompanyOwned(a)
 

Guaranteedby theCompany(a)
  Combined(b)

CompanyOwned(a)
 

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

Retail Services
Short-term loans $ 52,171 $ 7,134 $ 59,305 $ 53,601 $ 9,237 $ 62,838
Installment loans   11,246     9,395     20,641     9,262     7,425     16,687
Total Retail Services, gross   63,417     16,529     79,946     62,863     16,662     79,525

E-Commerce
Domestic
Short-term loans 38,227 44,261 82,488 39,232 39,341 78,573
Line of credit 42,700 - 42,700 21,648 - 21,648
Installment loans   45,996     -     45,996     24,582     -     24,582
Total Domestic, gross   126,923     44,261     171,184     85,462     39,341     124,803
 
Foreign
Short-term loans 108,899 3,946 112,845 101,723 3,420 105,143
Installment loans   75,882     -     75,882     35,802     -     35,802
Total Foreign, gross   184,781     3,946     188,727     137,525     3,420     140,945
Total E-Commerce, gross   311,704     48,207     359,911     222,987     42,761     265,748
 
Total ending loan balance, gross 375,121 64,736 439,857 285,850 59,423 345,273
Less: Allowance and liabilities for losses   (85,703)     (3,498)     (89,201)     (63,072)     (3,062)     (66,134)
Total ending loan balance, net $ 289,418   $ 61,238   $ 350,656   $ 222,778   $ 56,361   $ 279,139
Allowance and liability for losses as a % of combined consumer loan balances, gross(b)   22.8%     5.4%     20.3%     22.1%     5.2%     19.2%
 
(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 the consumer loans written and renewed for the three months and years ended December 31, 2012 and 2011 (dollars in thousands).
 
Three Months Ended December 31,
2012   2011

CompanyOwned(a)
 

Guaranteedby theCompany(a)(b)
  Combined(a)

CompanyOwned(a)
 

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

and renewed:

Retail Services
Short-term loans $ 198,645 $ 36,216 $ 234,861 $ 202,782 $ 46,079 $ 248,861
Installment loans     2,033     7,289     9,322     1,676     5,588     7,264
Total Retail Services     200,678     43,505     244,183     204,458     51,667     256,125

E-Commerce
Domestic
Short-term loans 83,447 206,169 289,616 97,552 189,585 287,137
Line of credit 33,681 - 33,681 20,029 - 20,029
Installment loans     32,244     -     32,244     14,270     -     14,270
Total Domestic     149,372     206,169     355,541     131,851     189,585     321,436
 
Foreign
Short-term loans 271,652 19,868 291,520 252,334 16,441 268,775
Installment loans     41,319     -     41,319     24,510     -     24,510
Total Foreign     312,971     19,868     332,839     276,844     16,441     293,285
Total E-Commerce     462,343     226,037     688,380     408,695     206,026     614,721
 

Total amount of consumer loans written and renewed
  $ 663,021   $ 269,542   $ 932,563   $ 613,153   $ 257,693   $ 870,846
Number of consumer loans written

and renewed:

Retail Services
Short-term loans 414,714 68,508 483,222 430,692 82,935 513,627
Installment loans     1,836     1,339     3,175     1,757     824     2,581
Total Retail Services     416,550     69,847     486,397     432,449     83,759     516,208

E-Commerce
Domestic
Short-term loans 277,756 279,905 557,661 288,098 265,007 553,105
Line of credit 126,292 - 126,292 72,157 - 72,157
Installment loans     30,017     -     30,017     11,521     -     11,521
Total Domestic     434,065     279,905     713,970     371,776     265,007     636,783
 
Foreign
Short-term loans 455,579 25,985 481,564 465,473 23,557 489,030
Installment loans     34,711     -     34,711     21,382     -     21,382
Total Foreign     490,290     25,985     516,275     486,855     23,557     510,412
Total E-Commerce     924,355     305,890     1,230,245     858,631     288,564     1,147,195
 

Total number of consumer loans written and renewed
    1,340,905     375,737     1,716,642     1,291,080     372,323     1,663,403

(a)  The disclosure regarding the amount and number of consumer loans written and renewed 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)
 
Year Ended December 31,
2012   2011

CompanyOwned(a)
 

Guaranteedby theCompany(a)(b)
  Combined(a)

CompanyOwned(a)
 

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

and renewed:

Retail Services
Short-term loans $ 743,575 $ 145,221 $ 888,796 $ 736,964 $ 174,510 $ 911,474
Installment loans     7,723     17,902     25,625     8,256     15,781     24,037
Total Retail Services     751,298     163,123     914,421     745,220     190,291     935,511

E-Commerce
Domestic
Short-term loans 331,754 747,533 1,079,287 376,041 681,009 1,057,050
Line of credit 116,360 - 116,360 57,012 - 57,012
Installment loans     89,598     -     89,598     42,532     -     42,532
Total Domestic     537,712     747,533     1,285,245     475,585     681,009     1,156,594
 
Foreign
Short-term loans 1,010,334 72,592 1,082,926 820,841 56,917 877,758
Installment loans     133,109     -     133,109     61,307     -     61,307
Total Foreign     1,143,443     72,592     1,216,035     882,148     56,917     939,065
Total E-Commerce     1,681,155     820,125     2,501,280     1,357,733     737,926     2,095,659
 

Total amount of consumer loans written and renewed
  $ 2,432,453   $ 983,248   $ 3,415,701   $ 2,102,953   $ 928,217   $ 3,031,170
Number of consumer loans written

and renewed:

Retail Services
Short-term loans 1,574,163 269,144 1,843,307 1,586,551 309,003 1,895,554
Installment loans     7,088     2,845     9,933     6,858     2,863     9,721
Total Retail Services     1,581,251     271,989     1,853,240     1,593,409     311,866     1,905,275

E-Commerce
Domestic
Short-term loans 1,062,105 1,021,057 2,083,162 1,115,549 958,821 2,074,370
Line of credit 417,171 - 417,171 201,934 - 201,934
Installment loans     87,272     -     87,272     36,151     -     36,151
Total Domestic     1,566,548     1,021,057     2,587,605     1,353,634     958,821     2,312,455
 
Foreign
Short-term loans 1,815,420 95,630 1,911,050 1,543,453 84,897 1,628,350
Installment loans     115,250     -     115,250     53,567     -     53,567
Total Foreign     1,930,670     95,630     2,026,300     1,597,020     84,897     1,681,917
Total E-Commerce     3,497,218     1,116,687     4,613,905     2,950,654     1,043,718     3,994,372
 

Total number of consumer loans written and renewed
    5,078,469     1,388,676     6,467,145     4,544,063     1,355,584     5,899,647
   

(a)   The disclosure regarding the amount and number of consumer loans written and renewed 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 months and years ended December 31, 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 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, nonqualified 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 December 31, 2012
Revenue
Pawn loan fees and service charges $ 77,354 $ 2,125 $ 79,479 $ - $ - $ - $ - $ 79,479
Proceeds from disposition of merchandise 175,546 10,389 185,935 - - - - 185,935
Consumer loan fees 32,496 - 32,496 100,484 89,884 190,368 - 222,864
Other   1,943     697     2,640     499     14     513     173     3,326
Total revenue   287,339     13,211     300,550     100,983     89,898     190,881     173     491,604
Cost of revenue
Disposed merchandise 118,311 8,990 127,301 - - - - 127,301
Consumer loan loss provision   10,095     -     10,095     47,532     39,588     87,120     -     97,215
Total cost of revenue   128,406     8,990     137,396     47,532     39,588     87,120     -     224,516
 
Net revenue   158,933     4,221     163,154     53,451     50,310     103,761     173     267,088
Expenses
Operations and administration 104,837 14,066 118,903 33,216 32,604 65,820 14,331 199,054
Depreciation and amortization   8,524     2,121     10,645     3,611     380     3,991     3,910     18,546
Total expenses   113,361     16,187     129,548     36,827     32,984     69,811     18,241     217,600
Income (loss) from operations $ 45,572   $ (11,966)   $ 33,606   $ 16,624   $ 17,326   $ 33,950   $ (18,068)   $ 49,488

As of December 31, 2012
Total assets $ 1,031,431 $ 85,607 $ 1,117,038 $ 391,068 $ 179,554 $ 570,622 $ 130,598 $ 1,818,258
Goodwill $ 397,845 $ 210,371 $ 608,216
  Retail Services   E-Commerce    
Domestic   Foreign   Total Domestic   Foreign   Total Corporate Consolidated
 
Three Months Ended December 31, 2011
Revenue
Pawn loan fees and service charges $ 71,420 $ 4,643 $ 76,063 $ - $ - $ - $ - $ 76,063
Proceeds from disposition of merchandise 200,953 14,243 215,196 - - - - 215,196
Consumer loan fees 33,360 - 33,360 72,909 73,855 146,764 - 180,124
Other   2,402     253     2,655     201     (545)     (344)     263     2,574
Total revenue   308,135     19,139     327,274     73,110     73,310     146,420     263     473,957
Cost of revenue
Disposed merchandise 134,440 10,705 145,145 - - - - 145,145
Consumer loan loss provision   8,549     -     8,549     31,401     40,533     71,934     -     80,483
Total cost of revenue   142,989     10,705     153,694     31,401     40,533     71,934     -     225,628
Net revenue   165,146     8,434     173,580     41,709     32,777     74,486     263     248,329
Expenses
Operations and administration 89,495 8,269 97,764 26,095 25,545 51,640 16,251 165,655
Depreciation and amortization   6,806     1,412     8,218     2,457     232     2,689     3,642     14,549
Total expenses   96,301     9,681     105,982     28,552     25,777     54,329     19,893     180,204
Income (loss) from operations $ 68,845   $ (1,247)   $ 67,598   $ 13,157   $ 7,000   $ 20,157   $ (19,630)   $ 68,125

As of December 31, 2011
Total assets $ 941,801 $ 117,470 $ 1,059,271 $ 352,244 $ 135,774 $ 488,018 $ 126,960 $ 1,674,249
Goodwill $ 352,439 $ 210,282 $ 562,721

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

INCOME FROM OPERATIONS BY OPERATING SEGMENT

(dollars in thousands)
       
Retail Services E-Commerce
Domestic   Foreign   Total Domestic   Foreign   Total Corporate Consolidated
 
Year Ended December 31, 2012
Revenue
Pawn loan fees and service charges $ 288,161 $ 12,768 $ 300,929 $ - $ - $ - $ - $ 300,929
Proceeds from disposition of merchandise 657,104 46,663 703,767 - - - - 703,767
Consumer loan fees 121,892 - 121,892 332,752 326,876 659,628 - 781,520
Other   9,028     1,209     10,237     1,326     33     1,359     2,618     14,214
Total revenue   1,076,185     60,640     1,136,825     334,078     326,909     660,987     2,618     1,800,430
Cost of revenue
Disposed merchandise 437,099 41,080 478,179 - - - - 478,179
Consumer loan loss provision   29,225     -     29,225     143,006     144,063     287,069     -     316,294
Total cost of revenue   466,324     41,080     507,404     143,006     144,063     287,069     -     794,473
 
Net revenue   609,861     19,560     629,421     191,072     182,846     373,918     2,618     1,005,957
Expenses
Operations and administration 369,174 44,287 413,461 116,202 118,156 234,358 66,795 714,614
Depreciation and amortization   30,978     16,634     47,612     11,987     1,285     13,272     14,544     75,428
Total expenses   400,152     60,921     461,073     128,189     119,441     247,630     81,339     790,042
Income (loss) from operations $ 209,709   $ (41,361)   $ 168,348   $ 62,883   $ 63,405   $ 126,288   $ (78,721)   $ 215,915
  Retail Services   E-Commerce    
Domestic   Foreign   Total Domestic   Foreign   Total Corporate Consolidated
 
Year Ended December 31, 2011
Revenue
Pawn loan fees and service charges $ 261,829 $ 20,368 $ 282,197 $ - $ - $ - $ - $ 282,197
Proceeds from disposition of merchandise 636,698 52,156 688,854 30 - 30 - 688,884
Consumer loan fees 119,192 - 119,192 254,152 225,302 479,454 - 598,646
Other   11,170     545     11,715     593     286     879     743     13,337
Total revenue   1,028,889     73,069     1,101,958     254,775     225,588     480,363     743     1,583,064
Cost of revenue
Disposed merchandise 405,132 42,462 447,594 23 - 23 - 447,617
Consumer loan loss provision   24,001     -     24,001     90,535     111,152     201,687     -     225,688
Total cost of revenue   429,133     42,462     471,595     90,558     111,152     201,710     -     673,305
 
Net revenue   599,756     30,607     630,363     164,217     114,436     278,653     743     909,759
Expenses
Operations and administration 339,247 33,604 372,851 88,577 84,544 173,121 65,296 611,268
Depreciation and amortization   26,165     5,871     32,036     10,413     850     11,263     10,850     54,149
Total expenses   365,412     39,475     404,887     98,990     85,394     184,384     76,146     665,417
Income (loss) from operations $ 234,344   $ (8,868)   $ 225,476   $ 65,227   $ 29,042   $ 94,269   $ (75,403)   $ 244,342

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 December 31, 2012 and 2011. The Company’s domestic retail services locations operate under the names “Cash America Pawn,” “SuperPawn,” “Cash America Payday Advance,” “Cashland” and “Mr. Payroll.” In addition, certain recently acquired domestic retail services locations operate under various names that are expected be changed to “Cash America Pawn” during 2013. The Company’s foreign retail services locations operate under the name “Cash America casa de empeño” (previously operated under the name “Prenda Fácil”).
  As of December 31,
2012   2011
Domestic(a)   Foreign   Total   Domestic(a)(b)   Foreign   Total
Retail services locations offering:        
Both pawn and consumer

lending
581 - 581 572 - 572
Pawn lending only 167 47 214 126 190 316
Consumer lending only 83 - 83 86 - 86
Other (c)   91   -   91   110   -   110
Total retail services   922   47   969   894   190   1,084
(a) Except as described in (c) below, includes locations that operate in 22 and 23 states in the United States as of December 31, 2012 and 2011, respectively.
(b) Includes one unconsolidated franchised location operating under the name “Cash America Pawn” at December 31, 2011.
(c) As of December 31, 2012 and 2011, includes zero and six consolidated Company-owned check cashing locations, respectively, and 91 and 104 unconsolidated franchised check cashing locations, respectively. As of December 31, 2012 and 2011, includes locations that operate in 15 and 18 states in the United States, respectively.

E-Commerce Segment

As of December 31, 2012 and 2011, the Company’s e-commerce segment operated in 32 states in the United States and in three other foreign countries:

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NON-GAAP DISCLOSURE

ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE

Adjusted Earnings and 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. In addition, management believes that the adjustments shown below, especially the adjustments for events that occurred during the three months and year ended December 31, 2012, such as the reorganization of the Company's Mexico-based pawn operations (“Mexico Reorganization”), the withdrawal of the proposed initial public offering of the Company's wholly-owned subsidiary, Enova International, Inc. (“Proposed Enova IPO”), and the charges related to the Company's voluntary reimbursements to Ohio customers (“Ohio Reimbursements”) are useful to investors in order to allow them to compare the Company’s financial results for the current quarter with the previous periods shown.

The following table provides a reconciliation between net income and diluted earnings per share attributable to the Company calculated in accordance with GAAP to adjusted earnings and adjusted earnings per share, respectively, which are shown net of tax (dollars in thousands, except per share data):

  Three Months Ended     Year Ended
December 31, December 31,
2012     2011 2012     2011
               
Net income and diluted earnings per share attributable

to Cash America International, Inc.
$ 24,480 $ 0.79 $ 37,827 $ 1.18 $ 107,470 $ 3.42 $ 135,963 $ 4.25
Charges related to withdrawn Proposed Enova IPO(a) - - - - 2,424 0.07 - -
Charges related to Mexico Reorganization,

net of noncontrolling interest(b)
6,965 0.23 - - 25,421 0.81 - -
Charges related to Ohio Reimbursements(c)     8,442       0.27       -       -       8,442       0.27       -       -
Subtotal     39,887       1.29       37,827       1.18       143,757       4.57       135,963       4.25
Intangible asset amortization 740 0.03 885 0.03 2,791 0.09 3,905 0.12
Non-cash equity-based compensation 515 0.02 619 0.02 3,007 0.10 3,064 0.10
Convertible debt non-cash interest and issuance

cost amortization
612 0.02 566 0.02 2,386 0.07 2,214 0.07
Foreign currency transaction (gain) loss     151       -       128       -       196       0.01       786       0.02
Adjusted earnings and adjusted earnings per share   $ 41,905       1.36     $ 40,025     $ 1.25     $ 152,137     $ 4.84     $ 145,932     $ 4.56
(a)  

Represents charges directly related to the Proposed Enova IPO that was withdrawn in July 2012. For the year ended December 31, 2012, represents $3.9 million of charges, net tax benefit of $1.5 million.
(b)

Represents charges related to the Mexico Reorganization. For the three months ended December 31, 2012, represents $7.0 million of charges. For the year ended December 31, 2012, represents $28.9 million of charges, net tax benefit of $1.2 million and noncontrolling interest of $2.3 million.
(c)

Represents charges related to the Ohio Reimbursements. For the three months and year ended December 31, 2012, represents $13.4 million of charges, net tax benefit of $5.0 million.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NON-GAAP DISCLOSURE

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):
  Year Ended December 31,
2012   2011
Net income attributable to Cash America International, Inc.   $ 107,470   $ 135,963
 
Adjustments:
Depreciation and amortization expenses 75,428 54,149
Interest expense, net 28,987 25,447
Foreign currency transaction loss 313 1,265
Equity in loss of unconsolidated subsidiary 295 104
Provision for income taxes 84,656 82,360
Net loss attributable to the noncontrolling interest       (5,806)       (797)
Adjusted EBITDA     $ 291,343     $ 298,491
 
Adjusted EBITDA margin calculated as follows:
Total revenue $ 1,800,430 $ 1,583,064
Adjusted EBITDA       291,343       298,491
Adjusted EBITDA as a percentage of total revenue       16.2%       18.9%

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 or superior to, 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.

Copyright Business Wire 2010

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