Cash America Announces Third Quarter Results And Dividend Declared

Cash America International, Inc. (NYSE: CSH) announced today that reported net income attributable to the Company for the third quarter ended September 30, 2013 was $46,186,000 ($1.52 per share) compared to the third quarter of 2012 net income of $11,703,000 (37 cents per share). Both the current period third quarter financial results and the prior year third quarter financial results include significant unusual items. In the third quarter of 2013, the Company recognized a tax benefit of $33.2 million ($1.09 per share) related to the reorganization of its Mexico-based pawn operations, which was completed in the first quarter of 2013. In addition, the Company incurred an $18 million pre-tax expense (37 cents per share after taxes) associated with a negotiated settlement of a class-action lawsuit. These two items combined to create a net benefit to after tax income of $21.9 million (72 cents per share) for the period ended September 30, 2013. The third quarter of 2012 included unusual items of $18.5 million in after-tax costs (59 cents per share) associated with the Company’s reorganization of its Mexico-based pawn operations and $1.9 million after taxes (6 cents per share) related to the write-off of deferred costs and transition expenses associated with the withdrawal of the proposed initial public offering of its wholly-owned subsidiary, Enova International, Inc., during that period. These two items combined to create a total expense after taxes of $20.4 million (65 cents per share) for the period ended September 30, 2012.

Excluding the impact of the 2013 unusual items mentioned above, third quarter 2013 adjusted earnings, a non-GAAP measure, would have been $24.3 million (80 cents per share), which is in line with management’s publicly released earnings per share guidance of between 75 cents per share and 85 cents per share as reported in the Company’s press release dated July 25, 2013. Excluding the impact of the 2012 unusual expenses mentioned above, third quarter 2012 adjusted earnings, a non-GAAP measure, would have been $32.1 million ($1.02 per share).

Consolidated total revenue during the third quarter of 2013 was $437.8 million compared to $439.7 million during the same period in 2012. The Company’s E-Commerce segment reported a 14% increase in total revenue, which reached $198.4 million for the three months ended September 30, 2013. Commenting on the results for the third quarter, Daniel R. Feehan, President and Chief Executive Officer said, “The growth in our consumer loan products during the third quarter provided revenue growth to our E-Commerce business to compensate for the challenges in our retail services business, which continued to experience soft growth in pawn loans and lower levels of profit from the disposition of merchandise.”

For the nine-month period ended September 30, 2013, the Company reported net income of $115,244,000 ($3.73 per share) compared to $82,990,000 ($2.62 per share) for the same period in 2012. Excluding the unusual items discussed above, adjusted net earnings, a non-GAAP measure, would have been $93.4 million ($3.02 per share) for the nine-month period ended September 30, 2013. This compares to adjusted net earnings, a non-GAAP measure, of $103.9 million ($3.28 per share) for the nine-month period ended September 30, 2012, when adding back the unusual items discussed above for the 2012 period. Total revenue was $1.3 billion for both the nine-month periods ended September 30, 2013 and 2012.

Cash America will host a conference call to discuss the third quarter results on Thursday, October 24, 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 November 20, 2013 to shareholders of record on November 6, 2013.

Outlook for the Fourth Quarter of 2013 and 2014 Fiscal Year

Management believes that the opportunities for growth in revenue and earnings will be largely associated with 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. The fourth quarter, during the seasonally important holiday selling season, represents an important period of retail sales for the Company, and results will be affected by consumer sentiments during the period. There are various other elements that could affect the growth in revenue, such as the regulation of consumer loan products, the development and growth of additional markets for the Company’s e-commerce segment for consumer lending products, and the development and growth of the Company’s Mexico-based pawn operations. As the Company enters the fourth quarter of 2013, management anticipates that demand for the Company’s consumer loan products will continue on a similar pace to the one it has experienced during the first nine months of 2013, with a continued heavier weighting to the consumer loan portfolio and longer term installment and line of credit products. Demand for the Company’s pawn lending products continued to prove challenging in the second and third quarters of 2013, and management expects growth in the Company’s pawn lending business, but its expectations for the balance of 2013 and into 2014 remain below historical growth rates in the pawn lending business.

Based on management’s views and on the preceding factors, management expects the fourth quarter 2013 net income per share to be between 95 cents and $1.05 per share compared to $1.29 per share in the fourth quarter of 2012, which does not include the unusual costs and other charges incurred in the fourth quarter of 2012 associated with the Company’s reorganization of its Mexico-based pawn operations of $7.0 million after taxes (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) in the fourth quarter of 2012.

Based on the Company’s results through the first nine months of 2013, management expects its fiscal year 2013 earnings per share to be in a range of between $4.68 and $4.78 per share ($3.96 and $4.06 per share on a non-GAAP adjusted basis, adjusted for the third quarter unusual items discussed above of 72 cents per share) compared to $3.42 per share ($4.57 per share on a non-GAAP adjusted basis when adding back the unusual items for the full year in 2012 of 81 cents per share related to Mexico reorganization charges, 27 cents per share related to the Ohio refund expense and 7 cents per share related to expenses associated with the withdrawal of the proposed initial public offering of Enova International, Inc.) for the twelve-month period of 2012.

In addition, management is initiating its expectations for fiscal year 2014. Based on its current views of the coming year, management establishes its initial anticipated range of earnings per share of between $4.20 to $4.40 for fiscal 2014.

About the Company

As of September 30, 2013, Cash America International, Inc. operated 995 total locations offering specialty financial services to consumers, which included the following:
  • 860 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;” and
  • 88 check cashing centers (all of which are unconsolidated franchised check cashing centers) operating in 13 states in the United States under the name “Mr. Payroll.”

Additionally, as of September 30, 2013, 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

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: the effect of or 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 regulatory and examination authority of the Consumer Financial Protection Bureau in the U.S. and the Financial Conduct Authority in the UK; public perception of the Company’s business, including its consumer loan business and its business practices; changes in the political, regulatory or economic environment in foreign countries where the Company operates or in the future may operate; fluctuations, including a sustained decrease, in the price of gold or deterioration in economic conditions; 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; 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, the Company’s ability to attract and retain qualified executive officers; a prolonged interruption in the Company’s operations of its facilities, systems and business functions, including its information technology and other business systems; 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; changes in competition; interest rate and foreign currency exchange rate fluctuations; 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; security breaches, cyber attacks or fraudulent activity; compliance with laws and regulations applicable to international operations; 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   Nine Months Ended
September 30, September 30,
2013   2012 2013   2012
 
Consolidated Operations:
Total revenue $ 437,801 $ 439,694 $ 1,316,880 $ 1,308,826
Net revenue 247,007 248,477 763,709 738,869
Total expenses     218,488     208,289     608,356       572,442
 
Income from Operations $ 28,519 $ 40,188 $ 155,353 $ 166,427
 
Income before income taxes     18,173     33,046     128,279       145,160
 
Net Income   $ 46,186   $ 7,930   $ 115,552     $ 77,673
 
Net (income) loss attributable to the noncontrolling interest     -     3,773     (308 )     5,317
 
Net Income Attributable to Cash America International, Inc.   $ 46,186   $ 11,703   $ 115,244     $ 82,990
 
Earnings per share:
Net Income attributable to Cash America International, Inc.

common shareholders:
Basic $ 1.62 $ 0.40 $ 4.01 $ 2.80
Diluted $ 1.52 $ 0.37 $ 3.73 $ 2.62
 
Weighted average common shares outstanding:
Basic 28,426 29,536 28,747 29,599
Diluted 30,379 31,375 30,857 31,643
 

 
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
(Unaudited)
  September 30,   December 31,
2013   2012 2012
 
Assets
Current assets:
Cash and cash equivalents $ 84,096 $ 78,663 $ 63,134
Pawn loans 253,678 254,077 244,640
Consumer loans, net 328,281 256,825 289,418
Merchandise held for disposition, net 193,115 171,285 167,409
Pawn loan fees and service charges receivable 50,090 48,771 48,991
Income taxes receivable 10,931 684 -
Prepaid expenses and other assets 28,840 36,912 35,605
Deferred tax assets     46,429       39,826       48,992  
Total current assets 995,460 887,043 898,189
Property and equipment, net 257,787 258,214 261,771
Goodwill 670,037 599,337 608,216
Intangible assets, net 46,860 34,877 36,473
Other assets     21,185       12,936       13,609  
Total assets   $ 1,991,329     $ 1,792,407     $ 1,818,258  
 
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses $ 137,473 $ 109,986 $ 126,664
Customer deposits 15,123 12,944 11,420
Income taxes currently payable - - 5,922
Current portion of long-term debt     22,606       44,205       43,617  
Total current liabilities 175,202 167,135 187,623
Deferred tax liabilities 96,286 102,048 101,711
Noncurrent income tax payable - 2,697 2,703
Other liabilities 1,287 1,007 888
Long-term debt     660,243       545,258       534,713  
Total liabilities   $ 933,018     $ 818,145     $ 827,638  
 
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 152,872 157,874 157,613
Retained earnings 991,682 855,972 879,434
Accumulated other comprehensive income 2,614 4,366 3,128

Treasury shares, at cost (2,164,873 shares, 1,214,646 shares and 1,351,712 shares as of September 30, 2013 and 2012, and as of December 31, 2012, respectively)
    (91,881 )     (46,175 )     (51,304 )
Total Cash America International, Inc. shareholders' equity 1,058,311 975,061 991,895
Noncontrolling interest     -       (799 )     (1,275 )
Total equity     1,058,311       974,262       990,620  
Total liabilities and equity   $ 1,991,329     $ 1,792,407     $ 1,818,258  
 

   

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)
 
Three Months Ended Nine Months Ended
September 30, September 30,
2013   2012 2013   2012
 
Revenue
Pawn loan fees and service charges $ 79,298 $ 76,500 $ 227,940 $ 221,450
Proceeds from disposition of merchandise 128,660 153,493 438,909 517,832
Consumer loan fees 227,563 205,094 640,199 558,656
Other     2,280       4,607       9,832       10,888  
Total Revenue     437,801       439,694       1,316,880       1,308,826  
Cost of Revenue
Disposed merchandise 91,101 106,918 301,397 350,878
Consumer loan loss provision     99,693       84,299       251,774       219,079  
Total Cost of Revenue     190,794       191,217       553,171       569,957  
 
Net Revenue     247,007       248,477       763,709       738,869  
Expenses
Operations and administration 199,705 181,215 554,042 515,560
Depreciation and amortization     18,783       27,074       54,314       56,882  
Total Expenses     218,488       208,289       608,356       572,442  
Income from Operations 28,519 40,188 155,353 166,427
Interest expense (9,260 ) (7,196 ) (25,608 ) (21,065 )
Interest income 1 22 69 79
Foreign currency transaction (loss) gain (741 ) 93 (1,053 ) (72 )
Loss on extinguishment of debt (346 ) - (346 ) -
Equity in loss of unconsolidated subsidiary     -       (61 )     (136 )     (209 )
Income before Income Taxes 18,173 33,046 128,279 145,160
(Benefit) provision for income taxes     (28,013 )     25,116       12,727       67,487  
Net Income 46,186 7,930 115,552 77,673
Net loss (income) attributable to the noncontrolling interest     -       3,773       (308 )     5,317  
Net Income Attributable to Cash America International, Inc.   $ 46,186     $ 11,703     $ 115,244     $ 82,990  
Earnings Per Share:
Net Income attributable to Cash America International, Inc. common shareholders:
Basic $ 1.62 $ 0.40 $ 4.01 $ 2.80
Diluted $ 1.52 $ 0.37 $ 3.73 $ 2.62
Weighted average common shares outstanding:
Basic 28,426 29,536 28,747 29,599
Diluted 30,379 31,375 30,857 31,643
Dividends declared per common share $ 0.035 $ 0.035 $ 0.105 $ 0.105
 

 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

PAWN LENDING ACTIVITIES – FINANCIAL AND OPERATING DATA
 

The following tables outline certain data related to the pawn loan activities of Cash America International, Inc. and its subsidiaries (the “Company”) as of and for the three and nine months ended September 30, 2013 and 2012 (dollars in thousands).
 
As of September 30,
2013   2012   Change   % Change
Ending pawn loan balances
Domestic retail services $ 248,427 $ 241,261 $ 7,166 3.0 %
Foreign retail services     5,251       12,816       (7,565 )   (59.0 ) %
Consolidated pawn loan balances   $ 253,678     $ 254,077     $ (399 )   (0.2 ) %
 
Ending merchandise balance, net
Domestic retail services $ 186,878 $ 160,075 $ 26,803 16.7 %
Foreign retail services     6,237       11,210       (4,973 )   (44.4 ) %
Consolidated merchandise balance, net   $ 193,115     $ 171,285     $ 21,830     12.7   %
 
Three Months Ended September 30,
2013 2012 Change % Change
Pawn loan fees and service charges
Domestic retail services $ 77,532 $ 73,209 $ 4,323 5.9 %
Foreign retail services     1,766       3,291       (1,525 )   (46.3 ) %
Consolidated pawn loan fees and service charges   $ 79,298     $ 76,500     $ 2,798     3.7   %
 
Average pawn loan balance outstanding
Domestic retail services $ 241,785 $ 232,027 $ 9,758 4.2 %
Foreign retail services     5,012       11,870       (6,858 )   (57.8 ) %
Consolidated average pawn loans outstanding   $ 246,797     $ 243,897     $ 2,900     1.2   %
 
Amount of pawn loans written and renewed
Domestic retail services $ 258,055 $ 238,191 $ 19,864 8.3 %
Foreign retail services     14,043       35,240       (21,197 )   (60.2 ) %
Consolidated amount of pawn loans written and renewed   $ 272,098     $ 273,431     $ (1,333 )   (0.5 ) %
 
Average amount per pawn loan (in ones)
Domestic retail services $ 125 $ 131 $ (6 ) (4.6 ) %
Foreign retail services $ 86 $ 84 $ 2 2.4 %
Consolidated average amount per pawn loan (in ones)   $ 122     $ 122     $ -     -   %
 
Annualized yield on pawn loans
Domestic retail services 127.2 % 125.5 %
Foreign retail services 139.8 % 110.3 %
Consolidated annualized yield on pawn loans     127.5 %     124.8 %            
 
Gross profit margin on disposition of merchandise
Domestic retail services 29.6 % 31.7 %
Foreign retail services 17.1 % 14.5 %
Gross profit margin on disposition of merchandise     29.2 %     30.3 %            
 
Merchandise turnover
Domestic retail services 2.1 2.6
Foreign retail services 2.3 3.7
Consolidated merchandise turnover     2.1       2.7              
 

 
       

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

PAWN LENDING ACTIVITIES – FINANCIAL AND OPERATING DATA
 
Nine Months Ended September 30,
2013 2012 Change % Change
Pawn loan fees and service charges
Domestic retail services $ 222,508 $ 210,807 $ 11,701 5.6 %
Foreign retail services     5,432       10,643       (5,211 )   (49.0 ) %
Consolidated pawn loan fees and service charges   $ 227,940     $ 221,450     $ 6,490     2.9   %
 
Average pawn loan balance outstanding
Domestic retail services $ 228,048 $ 220,494 $ 7,554 3.4 %
Foreign retail services     4,910       13,843       (8,933 )   (64.5 ) %
Consolidated average pawn loans outstanding   $ 232,958     $ 234,337     $ (1,379 )   (0.6 ) %
 
Amount of pawn loans written and renewed
Domestic retail services $ 707,758 $ 675,000 $ 32,758 4.9 %
Foreign retail services     42,303       104,877       (62,574 )   (59.7 ) %
Consolidated amount of pawn loans written and renewed   $ 750,061     $ 779,877     $ (29,816 )   (3.8 ) %
 
Average amount per pawn loan (in ones)
Domestic retail services $ 127 $ 130 $ (3 ) (2.3 ) %
Foreign retail services $ 87 $ 89 $ (2 ) (2.2 ) %
Consolidated average amount per pawn loan (in ones)   $ 124     $ 122     $ 2     1.6   %
 
Annualized yield on pawn loans
Domestic retail services 130.5 % 127.7 %
Foreign retail services 147.9 % 102.7 %
Consolidated annualized yield on pawn loans     130.8 %     126.2 %            
 
Gross profit margin on disposition of merchandise
Domestic retail services 31.7 % 33.8 %
Foreign retail services 17.9 % 11.5 %
Gross profit margin on disposition of merchandise     31.3 %     32.2 %            
 
Merchandise turnover
Domestic retail services 2.5 3.0
Foreign retail services 2.5 3.8
Consolidated merchandise turnover     2.5       3.0              
 

 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

MERCHANDISE DISPOSITION, GROSS PROFIT AND OPERATING DATA
 

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 pawn 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 and nine months ended September 30, 2013 and 2012 (dollars in thousands).
 
Three Months Ended September 30,
2013   2012
Retail   Commercial   Total Retail   Commercial   Total
Proceeds from disposition $ 94,169 $ 34,491 $ 128,660 $ 81,947 $ 71,546 $ 153,493
Gross profit on disposition $ 33,452 $ 4,107 $ 37,559 $ 30,023 $ 16,552 $ 46,575
Gross profit margin 35.5 % 11.9 % 29.2 % 36.6 % 23.1 % 30.3 %
Percentage of total gross profit 89.1 % 10.9 % 100.0 % 64.5 % 35.5 % 100.0 %
 
Nine Months Ended September 30,
2013 2012
Retail Commercial Total Retail Commercial Total
Proceeds from disposition $ 296,415 $ 142,494 $ 438,909 $ 277,602 $ 240,230 $ 517,832
Gross profit on disposition $ 108,827 $ 28,685 $ 137,512 $ 103,470 $ 63,484 $ 166,954
Gross profit margin 36.7 % 20.1 % 31.3 % 37.3 % 26.4 % 32.2 %
Percentage of total gross profit 79.1 % 20.9 % 100.0 % 62.0 % 38.0 % 100.0 %
 
 

The following table summarizes the age of merchandise held for disposition before valuation allowance of $0.9 million and $0.7 million as of September 30, 2013 and 2012, respectively (dollars in thousands).
 
As of September 30,
2013   2012
Amount   % Amount   %
Jewelry - held for one year or less $ 105,583 54.4 $ 101,464 59.0
Other merchandise - held for one year or less     76,235   39.3     62,268   36.2
Total merchandise held for one year or less     181,818   93.7     163,732   95.2
Jewelry - held for more than one year 5,701 2.9 2,827 1.6
Other merchandise - held for more than one year     6,544   3.4     5,437   3.2
Total merchandise held for more than one year     12,245   6.3     8,264   4.8
Total merchandise held for disposition   $ 194,063   100.0   $ 171,996   100.0
 

 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA
 

The following tables set forth consumer loan fees by segment, adjusted for the deduction of the loan loss provision for the three and nine months ended September 30, 2013 and 2012 (dollars in thousands, except where otherwise noted).
 
Three Months Ended September 30,
2013   2012

RetailServices
  E-Commerce   Total

RetailServices
  E-Commerce   Total
Interest and fees on short-term loans $ 26,265 $ 92,510 $ 118,775 $ 28,364 $ 117,493 $ 145,857
Interest and fees on line of credit accounts - 50,504 50,504 - 20,077 20,077

Interest and fees on installment loans
    3,239         55,045       58,284       3,081         36,079       39,160  
Consumer loan fees $ 29,504 $ 198,059 $ 227,563 $ 31,445 $ 173,649 $ 205,094
Consumer loan loss provision     10,037         89,656       99,693       8,061         76,238       84,299  
Consumer loan fees, net of loss provision   $ 19,467       $ 108,403     $ 127,870     $ 23,384       $ 97,411     $ 120,795  
 
Year-over-year change - $ $ (3,917 ) $ 10,992 $ 7,075 $ (1,780 ) $ 20,170 $ 18,390
Year-over-year change - % (16.8 ) % 11.3 % 5.9 % (7.1 ) % 26.1 % 18.0 %

Consumer loan loss provision as a % of consumer loan fees
    34.0   %     45.3 %     43.8 %     25.6   %     43.9 %     41.1 %
 
Nine Months Ended September 30,
2013 2012

RetailServices
E-Commerce Total

RetailServices
E-Commerce Total
Interest and fees on short-term loans $ 74,999 $ 310,549 $ 385,548 $ 81,169 $ 339,270 $ 420,439
Interest and fees on line of credit accounts - 102,021 102,021 - 45,998 45,998
Interest and fees on installment loans     9,474         143,156       152,630       8,227         83,992       92,219  
Consumer loan fees $ 84,473 $ 555,726 $ 640,199 $ 89,396 $ 469,260 $ 558,656
Consumer loan loss provision     23,927         227,847       251,774       19,130         199,949       219,079  
Consumer loan fees, net of loss provision   $ 60,546       $ 327,879     $ 388,425     $ 70,266       $ 269,311     $ 339,577  
 
Year-over-year change - $ $ (9,720 ) $ 58,568 $ 48,848 $ (114 ) $ 66,374 $ 66,260
Year-over-year change - % (13.8 ) % 21.7 % 14.4 % (0.2 ) % 32.7 % 24.2 %

Consumer loan loss provision as a % of consumer loan fees
    28.3   %     41.0 %     39.3 %     21.4   %     42.6 %     39.2 %
 

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 individually and on a combined basis, which are GAAP measures that are included in the Company’s financial statements.

Management believes these measures, including ratios calculated using 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. Management believes 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 consumer loan loss provision 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
 

The following tables summarize selected data related to the Company’s consumer loan activities as of and for the three and nine months ended September 30, 2013 and 2012 (dollars in thousands, except where otherwise noted).
 

The following table shows short-term loans and related loan loss activity, which is based on the volume of loans written and renewed, for the three months ended September 30, 2013 and 2012.
 
Three Months Ended
September 30,
2013   2012
Short-term loans:

Combined consumer loan loss provision as a % of combined consumer loans written and renewed(a)
6.5 % 6.6 %

Charge-offs (net of recoveries) as a % of combined consumer loans written and renewed(a)
7.6 % 6.7 %

Combined consumer loan loss provision as a % of consumer loan fees
35.2 % 35.3 %

Allowance and liability for losses as a % of combined consumer loans and fees receivable, gross(b)
  18.8 %   19.0 %
 

(a) The disclosure regarding the amount of consumer loans written and renewed is statistical data that is not included in the Company's financial statements.

(b) Non-GAAP measure.
 
 

The following table shows line of credit accounts and installment loans and related loan loss activity, which is based on the average amount of consumer loan balances, for the three months ended September 30, 2013 and 2012.
 
Three Months Ended
September 30,
2013   2012
Line of credit accounts:

Combined consumer loan loss provision as a % of combined average consumer loan balance(a)(b)
31.9 % 27.9 %

Charge-offs (net of recoveries) as a % of combined average consumer loan balance(a)(b)
17.6 % 19.5 %

Combined consumer loan loss provision as a % of consumer loan fees
49.8 % 48.1 %

Allowance and liability for losses as a % of combined average consumer loan balance(a)
  22.0 %   21.1 %
 
Installment loans:

Combined consumer loan loss provision as a % of combined average consumer loan balance(a)(b)
20.8 % 22.7 %

Charge-offs (net of recoveries) as a % of combined average consumer loan balance(a)(b)
17.0 % 15.5 %

Combined consumer loan loss provision as a % of consumer loan fees
56.2 % 59.2 %

Allowance and liability for losses as a % of combined average consumer loan balance(a)
  20.3 %   25.1 %

(a) Non-GAAP measure.

(b) The average consumer loan balance is a simple average of the beginning and ending consumer loan balance.
 

 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA
 

The following table summarizes consumer loan balances outstanding as of September 30, 2013 and 2012 (dollars in thousands):
 
As of September 30,
2013   2012

CompanyOwned(a)
 

Guaranteedby theCompany(a)
  Combined(b)

CompanyOwned(a)
 

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

Retail Services
Short-term loans $ 47,824 $ 4,681 $ 52,505 $ 49,079 $ 6,904 $ 55,983
Installment loans     9,945       10,275       20,220       9,899       6,707       16,606  
Total Retail Services, gross     57,769       14,956       72,725       58,978       13,611       72,589  

E-Commerce
Domestic
Short-term loans 33,926 35,107 69,033 36,832 37,952 74,784
Line of credit accounts 59,341 - 59,341 38,603 - 38,603
Installment loans     62,460       -       62,460       38,986       -       38,986  
Total Domestic, gross     155,727       35,107       190,834       114,421       37,952       152,373  
 
Foreign
Short-term loans 63,276 22 63,298 96,561 3,708 100,269
Line of credit accounts 40,265 - 40,265 - - -
Installment loans     101,200       -       101,200       66,111       -       66,111  
Total Foreign, gross     204,741       22       204,763       162,672       3,708       166,380  
Total E-Commerce, gross     360,468       35,129       395,597       277,093       41,660       318,753  
 
Total ending loan balance, gross 418,237 50,085 468,322 336,071 55,271 391,342
Less: Allowance and liabilities for losses     (89,956 )     (2,830 )     (92,786 )     (79,246 )     (3,437 )     (82,683 )
Total ending loan balance, net   $ 328,281     $ 47,255     $ 375,536     $ 256,825     $ 51,834     $ 308,659  
Allowance and liability for losses as a % of consumer loan balances, gross(c)     21.5 %     5.7 %     19.8 %     23.6 %     6.2 %     21.1 %
 

(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.

(c) Non-GAAP measure.
 

 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA
 

The following tables summarize the consumer loans written and renewed for the three and nine months ended September 30, 2013 and 2012 (dollars in thousands, except where otherwise noted).
 
Three Months Ended September 30,
2013   2012

CompanyOwned(a)
 

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

CompanyOwned(a)
 

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

Amount of consumer loans written and renewed (dollars in thousands):

Retail Services
Short-term loans $ 185,238 $ 28,127 $ 213,365 $ 191,332 $ 36,343 $ 227,675
Installment loans     2,025     4,885     6,910     2,026     4,457     6,483
Total Retail Services     187,263     33,012     220,275     193,358     40,800     234,158

E-Commerce
Domestic
Short-term loans 78,771 182,698 261,469 81,619 197,962 279,581
Line of credit accounts 47,088 - 47,088 35,166 - 35,166

Installment loans
    48,243     -     48,243     29,987     -     29,987
Total Domestic     174,102     182,698     356,800     146,772     197,962     344,734
 
Foreign
Short-term loans 171,828 601 172,429 251,787 17,676 269,463
Line of credit accounts 58,746 - 58,746 - - -
Installment loans     90,448     -     90,448     35,380     -     35,380
Total Foreign     321,022     601     321,623     287,167     17,676     304,843
Total E-Commerce     495,124     183,299     678,423     433,939     215,638     649,577
 

Total amount of consumer loans written and renewed
  $ 682,387   $ 216,311   $ 898,698   $ 627,297   $ 256,438   $ 883,735
 

Number of consumer loans written and renewed (in ones):

Retail Services
Short-term loans 390,393 54,997 445,390 408,886 68,960 477,846
Installment loans     1,828     983     2,811     1,772     662     2,434
Total Retail Services     392,221     55,980     448,201     410,658     69,622     480,280

E-Commerce
Domestic
Short-term loans 251,404 263,650 515,054 268,856 271,250 540,106
Line of credit accounts 171,910 - 171,910 119,794 - 119,794
Installment loans     40,092     -     40,092     31,444     -     31,444
Total Domestic     463,406     263,650     727,056     420,094     271,250     691,344
 
Foreign
Short-term loans 325,899 871 326,770 434,578 23,146 457,724
Line of credit accounts 164,200 - 164,200 - - -
Installment loans     76,498     -     76,498     30,336     -     30,336
Total Foreign     566,597     871     567,468     464,914     23,146     488,060
Total E-Commerce     1,030,003     264,521     1,294,524     885,008     294,396     1,179,404
 

Total number of consumer loans written and renewed
    1,422,224     320,501     1,742,725     1,295,666     364,018     1,659,684
 
(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
 
Nine Months Ended September 30,
2013   2012

CompanyOwned(a)
 

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

CompanyOwned(a)
 

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

Amount of consumer loans written and renewed (dollars in thousands):

Retail Services
Short-term loans $ 525,054 $ 82,899 $ 607,953 $ 544,930 $ 109,005 $ 653,935
Installment loans     5,522     13,871     19,393     5,690     10,613     16,303
Total Retail Services     530,576     96,770     627,346     550,620     119,618     670,238

E-Commerce
Domestic
Short-term loans 222,906 520,200 743,106 248,307 541,364 789,671
Line of credit accounts 113,543 - 113,543 82,679 - 82,679
Installment loans     104,299     -     104,299     57,354     -     57,354
Total Domestic     440,748     520,200     960,948     388,340     541,364     929,704
 
Foreign
Short-term loans 688,108 14,572 702,680 738,682 52,724 791,406
Line of credit accounts 72,230 - 72,230 - - -
Installment loans     195,698     -     195,698     91,790     -     91,790
Total Foreign     956,036     14,572     970,608     830,472     52,724     883,196
Total E-Commerce     1,396,784     534,772     1,931,556     1,218,812     594,088     1,812,900
 

Total amount of consumer loans written and renewed:
  $ 1,927,360   $ 631,542   $ 2,558,902   $ 1,769,432   $ 713,706   $ 2,483,138
 

Number of consumer loans written and renewed (in ones):

Retail Services
Short-term loans 1,100,252 160,749 1,261,001 1,159,449 200,636 1,360,085
Installment loans     5,022     2,545     7,567     5,252     1,506     6,758
Total Retail Services     1,105,274     163,294     1,268,568     1,164,701     202,142     1,366,843

E-Commerce
Domestic
Short-term loans 737,269 726,828 1,464,097 784,349 741,152 1,525,501
Line of credit accounts 423,111 - 423,111 290,879 - 290,879
Installment loans     93,506     -     93,506     57,255     -     57,255
Total Domestic     1,253,886     726,828     1,980,714     1,132,483     741,152     1,873,635
 
Foreign
Short-term loans 1,247,096 19,106 1,266,202 1,359,841 69,645 1,429,486
Line of credit accounts 194,948 - 194,948 - - -
Installment loans     166,252     -     166,252     80,539     -     80,539
Total Foreign     1,608,296     19,106     1,627,402     1,440,380     69,645     1,510,025
Total E-Commerce     2,862,182     745,934     3,608,116     2,572,863     810,797     3,383,660
 

Total number of consumer loans written and renewed
    3,967,456     909,228     4,876,684     3,737,564     1,012,939     4,750,503
 
(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
 

The following tables contain operating segment data for the three and nine months ended September 30, 2013 and 2012 by segment, for the Company’s corporate operations and on a consolidated basis (dollars in thousands).
 
Retail Services E-Commerce
Domestic Foreign   Total Domestic Foreign Total Corporate Consolidated
 

Three Months Ended September 30, 2013
Revenue
Pawn loan fees and service charges $ 77,532 $ 1,766 $ 79,298 $ - $ - $ - $ - $ 79,298
Proceeds from disposition of merchandise 124,352 4,308 128,660 - - - - 128,660
Consumer loan fees 29,504 - 29,504 104,954 93,105 198,059 - 227,563
Other     1,731     66       1,797     249     69     318     165       2,280
Total revenue     233,119     6,140       239,259     105,203     93,174     198,377     165       437,801
Cost of revenue
Disposed merchandise 87,530 3,571 91,101 - - - - 91,101
Consumer loan loss provision     10,037     -       10,037     49,225     40,431     89,656     -       99,693
Total cost of revenue     97,567     3,571       101,138     49,225     40,431     89,656     -       190,794
 
Net revenue     135,552     2,569       138,121     55,978     52,743     108,721     165       247,007
Expenses
Operations and administration 111,220 2,831 114,051 38,662 31,755 70,417 15,237 199,705
Depreciation and amortization     9,878     764       10,642     3,252     706     3,958     4,183       18,783
Total expenses     121,098     3,595       124,693     41,914     32,461     74,375     19,420       218,488
Income (loss) from operations   $ 14,454   $ (1,026 )   $ 13,428   $ 14,064   $ 20,282   $ 34,346   $ (19,255 )   $ 28,519

As of September 30, 2013
Total assets $ 1,102,152 $ 120,131 $ 1,222,283 $ 420,914 $ 216,341 $ 637,255 $ 131,791 $ 1,991,329
Goodwill $ 459,669 $ 210,368 $ 670,037
 
 
Retail Services E-Commerce
Domestic Foreign Total Domestic Foreign Total Corporate Consolidated
 

Three Months Ended September 30, 2012
Revenue
Pawn loan fees and service charges $ 73,209 $ 3,291 $ 76,500 $ - $ - $ - $ - $ 76,500
Proceeds from disposition of merchandise 141,088 12,405 153,493 - - - - 153,493
Consumer loan fees 31,445 - 31,445 89,342 84,307 173,649 - 205,094
Other     1,938     252       2,190     374     14     388     2,029       4,607
Total revenue     247,680     15,948       263,628     89,716     84,321     174,037     2,029       439,694
Cost of revenue
Disposed merchandise 96,315 10,603 106,918 - - - - 106,918
Consumer loan loss provision     8,061     -       8,061     42,877     33,361     76,238     -       84,299
Total cost of revenue     104,376     10,603       114,979     42,877     33,361     76,238     -       191,217
Net revenue     143,304     5,345       148,649     46,839     50,960     97,799     2,029       248,477
Expenses
Operations and administration 84,874 14,205 99,079 33,397 31,051 64,448 17,688 181,215
Depreciation and amortization     7,808     12,264       20,072     3,037     342     3,379     3,623       27,074
Total expenses     92,682     26,469       119,151     36,434     31,393     67,827     21,311       208,289
Income (loss) from operations   $ 50,622   $ (21,124 )   $ 29,498   $ 10,405   $ 19,567   $ 29,972   $ (19,282 )   $ 40,188

As of September 30, 2012
Total assets $ 993,598 $ 111,610 $ 1,105,208 $ 382,459 $ 174,665 $ 557,124 $ 130,075 $ 1,792,407
Goodwill $ 388,965 $ 210,372 $ 599,337
 

       

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
 

Nine Months Ended September 30, 2013
Revenue
Pawn loan fees and service charges $ 222,508 $ 5,432 $ 227,940 $ - $ - $ - $ - $ 227,940
Proceeds from disposition of merchandise 425,716 13,193 438,909 - - - - 438,909
Consumer loan fees 84,473 - 84,473 283,097 272,629 555,726 - 640,199
Other     6,149     988       7,137     1,051     92     1,143     1,552       9,832
Total revenue     738,846     19,613       758,459     284,148     272,721     556,869     1,552       1,316,880
Cost of revenue
Disposed merchandise 290,569 10,828 301,397 - - - - 301,397
Consumer loan loss provision     23,927     -       23,927     112,391     115,456     227,847     -       251,774
Total cost of revenue     314,496     10,828       325,324     112,391     115,456     227,847     -       553,171
 
Net revenue     424,350     8,785       433,135     171,757     157,265     329,022     1,552       763,709
Expenses
Operations and administration 291,409 10,003 301,412 99,906 101,200 201,106 51,524 554,042
Depreciation and amortization     27,579     1,593       29,172     10,885     2,101     12,986     12,156       54,314
Total expenses     318,988     11,596       330,584     110,791     103,301     214,092     63,680       608,356
Income (loss) from operations   $ 105,362   $ (2,811 )   $ 102,551   $ 60,966   $ 53,964   $ 114,930   $ (62,128 )   $ 155,353
 
 
Retail Services E-Commerce
Domestic Foreign Total Domestic Foreign Total Corporate Consolidated
 

Nine Months Ended September 30, 2012
Revenue
Pawn loan fees and service charges $ 210,807 $ 10,643 $ 221,450 $ - $ - $ - $ - $ 221,450
Proceeds from disposition of merchandise 481,558 36,274 517,832 - - - - 517,832
Consumer loan fees 89,396 - 89,396 232,268 236,992 469,260 - 558,656
Other     7,085     512       7,597     827     19     846     2,445       10,888
Total revenue     788,846     47,429       836,275     233,095     237,011     470,106     2,445       1,308,826
Cost of revenue
Disposed merchandise 318,788 32,090 350,878 - - - - 350,878
Consumer loan loss provision     19,130     -       19,130     95,474     104,475     199,949     -       219,079
Total cost of revenue     337,918     32,090       370,008     95,474     104,475     199,949     -       569,957
 
Net revenue     450,928     15,339       466,267     137,621     132,536     270,157     2,445       738,869
Expenses
Operations and administration 264,337 30,221 294,558 82,986 85,552 168,538 52,464 515,560
Depreciation and amortization     22,454     14,513       36,967     8,376     905     9,281     10,634       56,882
Total expenses     286,791     44,734       331,525     91,362     86,457     177,819     63,098       572,442
Income (loss) from operations   $ 164,137   $ (29,395 )   $ 134,742   $ 46,259   $ 46,079   $ 92,338   $ (60,653 )   $ 166,427
 

Corporate operations primarily include corporate expenses, such as legal, occupancy, 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.
 

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 ancillary services as of September 30, 2013 and 2012. 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 domestic retail services locations acquired in late 2012 and 2013 that operate under various names that are expected to be changed to “Cash America Pawn” during 2013. The Company’s foreign retail services locations operate under the name “Cash America casa de empeño.”
 
As of September 30,
2013   2012
Domestic(a)   Foreign   Total Domestic(a)(b)   Foreign   Total
Retail services locations offering:        
Both pawn and consumer lending 581 - 581 577 - 577
Pawn lending only 211 47 258 155 160 315
Consumer lending only 68 - 68 83 - 83
Other (c)   88   -   88   99   -   99
Total retail services   948   47   995   914   160   1,074
 
(a) Except as described in (c) below, includes locations operating in 22 and 23 states in the United States as of September 30, 2013 and 2012, respectively.
(b) Includes one unconsolidated franchised location operating under the name “Cash America Pawn” as of September 30, 2012.
(c) As of September 30, 2013 and 2012, includes 88 and 93 unconsolidated franchised check cashing locations, respectively, and as of September 30, 2012, includes six consolidated Company-owned check cashing locations. As of September 30, 2013 and 2012, includes locations operating in 13 and 15 states in the United States, respectively.
 

E-Commerce Segment

As of September 30, 2013 and 2012, the Company’s e-commerce segment operated in 32 states in the United States and in three 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 related to the Company’s deduction for its tax basis in the stock of one of its subsidiaries in connection with the Mexico Reorganization (as defined below) (the “Creazione Deduction”), the settlement of litigation in 2013 that remains subject to court approval (the “2013 Litigation Settlement”), the withdrawal in July 2012 of the proposed initial public offering of common stock of the Company’s wholly-owned subsidiary, Enova International, Inc., (the “Enova IPO”) and the reorganization of the Company's Mexico-based pawn lending operations during 2012 (the “Mexico Reorganization”), are useful to investors in order to allow them to compare the Company's financial results for the current quarter and current nine-month period with the prior year quarter and the prior year nine-month period, respectively.

     

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NON-GAAP DISCLOSURE

ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE
 

The following table provides a reconciliation for the three and nine months ended September 30, 2013 and 2012 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, which are shown net of tax (dollars in thousands, except per share data):
 
Three Months Ended September 30, Nine Months Ended September 30,
2013   2012 2013   2012
$    

PerDilutedShare(a)

$
   

PerDilutedShare(a)
$    

PerDiluted Share(a)
$  

PerDilutedShare(a)

Net income and diluted earnings per share attributable to Cash America International, Inc.
$ 46,186 $ 1.52 $ 11,703 $ 0.37 $ 115,244 $ 3.73 $ 82,990 $ 2.62
Adjustments (net of tax):

Tax benefit related to Creazione Deduction(b)
(33,201 ) (1.09 ) - - (33,201 ) (1.08 ) - -
2013 Litigation Settlement(c) 11,340 0.37 - - 11,340 0.37 - -

Charges related to withdrawn proposed Enova IPO(d)
- - 1,941 0.06 - - 2,461 0.08

Charges related to the Mexico Reorganization(e)
    -       -       18,456       0.59     -       -       18,456     0.58
Subtotal     24,325       0.80       32,100       1.02     93,383       3.02       103,907     3.28
Other adjustments (net of tax):
Intangible asset amortization 1,014 0.03 639 0.02 2,675 0.10 2,042 0.06
Non-cash equity-based compensation 698 0.02 564 0.02 2,456 0.08 2,481 0.08

Convertible debt non-cash interest and issuance cost amortization
634 0.02 601 0.02 1,897 0.06 1,766 0.06
Foreign currency transaction loss (gain)     467       0.02       (58 )     -     663       0.02       45     -
Adjusted earnings and adjusted earnings per share   $ 27,138     $ 0.89     $ 33,846     $ 1.08   $ 101,074     $ 3.28     $ 110,241   $ 3.48
 

(a) Diluted shares are calculated by giving effect to the potential dilution that could occur if securities or other contracts to issue common shares were exercised and converted into common shares during the period.

(b) Represents income benefit related to the Creazione Deduction.

(c) Represents charges related to the 2013 Litigation Settlement of $18.0 million, net of tax benefit of $6.7 million.

(d) Represents charges directly related to the withdrawn Enova IPO. For the three months ended September 30, 2012, represents $3.1 million of charges, net of tax benefit of $1.2 million. For the nine months ended September 30, 2012, represents $3.9 million of charges, net of tax benefit of $1.5 million.

(e) Represents charges related to the Mexico Reorganization. For the three and nine months ended September 30, 2012, represents $21.9 million of charges, net of tax benefit of $1.2 million and noncontrolling interest of $2.2 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 and provision for income 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. In addition, management believes that the adjustments shown below, especially the adjustments for charges related to events that occurred during the third quarter of 2013 and the third and fourth quarters of 2012, such as the 2013 Litigation Settlement, the withdrawn Enova IPO, the Mexico Reorganization, and the voluntary reimbursements to Ohio customers (the “Ohio Reimbursements”) are useful to investors in order to allow them to compare the Company’s financial results for the current and prior year trailing 12 months. 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
September 30,
2013   2012

Net income attributable to Cash America International, Inc.

 
$ 139,724   $ 120,817
Adjustments:
2013 Litigation settlement(a) 18,000 -
Charges related to withdrawn proposed Enova IPO(b) - 3,879
Charges related to Mexico Reorganization(c) 6,965 21,908
Charges related to Ohio Reimbursements(d) 13,400 -
Depreciation and amortization expenses(e) 71,377 60,350
Interest expense, net 33,540 28,182
Foreign currency transaction loss 1,294 279
Loss on extinguishment of debt 346 -
Equity in loss of unconsolidated subsidiary 222 243
Provision for income taxes(f) 29,896 83,409
Net loss attributable to the noncontrolling interest     (181 )     (5,539 ) (g)
Adjusted EBITDA   $ 314,583     $ 313,528  
 
Adjusted EBITDA margin calculated as follows:
Total revenue $ 1,808,484 $ 1,782,783
Adjusted EBITDA   $ 314,583     $ 313,528  
Adjusted EBITDA as a percentage of total revenue     17.4 %     17.6 %
 

(a) Represents charges related to the 2013 Litigation Settlement of $18.0 million, before tax benefit of $6.7 million.

(b) Represents charges directly related to the withdrawn Enova IPO, before tax benefit of $1.5 million

(c) For the trailing twelve months ended September 30, 2013, represents charges related to the Mexico Reorganization, and includes $1.5 million of depreciation and amortization expense as noted in (e) below. For the trailing twelve months ended September 30, 2012, represents charges related to the Mexico Reorganization, before tax benefit of $1.2 million and noncontrolling interest of $2.3 million.( )Includes $11.1 million and $7.2 million of depreciation and amortization expenses and charges for the recognition of a deferred tax asset valuation allowance, respectively, as noted in (e) and (f) below.

(d) Represents charges related to the Ohio Reimbursements, before tax benefit of $5.0 million.

(e) Excludes $1.5 million and $11.1 million of depreciation and amortization expenses for the trailing twelve months ended September 30, 2013 and 2012, respectively, which are included in “Charges related to the Mexico Reorganization” in the table above.

(f) For the trailing twelve months ended September 30, 2013, includes income benefit of $33.2 million related to the Creazione Deduction. For the trailing twelve months ended September 30, 2012, excludes a $7.2 million charge for the recognition of a deferred tax asset valuation allowance which is included in “Charges related to the Mexico Reorganization” in the table above and includes an income tax benefit related to the Mexico Reorganization of $1.2 million.

(g) Includes $2.3 million of noncontrolling interests related to the Mexico Reorganization.
 

 

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.

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