Cash America International, Inc. (NYSE: CSH) announced today that net income from continuing operations for the second quarter of 2015 was $2,071,000 (8 cents per share) compared to a net loss from continuing operations of $11,746,000 (loss of 41 cents per share) for the second quarter of 2014. After adjusting for non-operating items in both the current and the prior year second quarter, adjusted net income from continuing operations, a non-GAAP measure, was $1,761,000 (6 cents per share) for the second quarter of 2015 compared to a net loss of $2,050,000 (loss of 8 cents per share) for the second quarter of 2014.

Included in the reported net income from continuing operations for the second quarter of 2015 is a gain on the disposition of equity securities of $1.1 million before taxes (3 cents per share after taxes) and a loss on the early extinguishment of debt of $0.6 million before taxes (1 cent per share after taxes), which in aggregate increased income by $0.5 million before taxes (2 cents per share after taxes). When excluding this additional income, adjusted net income from continuing operations, a non-GAAP measure, was $1.8 million (6 cents per share) for the second quarter of 2015, which exceeded the high end of the Company's published guidance of expected net income per share from continuing operations of between 1 cent and 5 cents per share provided in its press release dated April 30, 2015. Included in the results for the second quarter of 2014 was a loss on the early extinguishment of debt and a loss related to a litigation settlement, which in aggregate reduced net income by $15.4 million before taxes (33 cents per share after taxes). Excluding these expenses, adjusted net loss from continuing operations, a non-GAAP measure, would have been $2.1 million, representing a loss of 8 cents per share, in the second quarter of 2014.

Consolidated total revenue was $236.5 million for the second quarter of 2015 compared to $253.6 million for the second quarter of 2014. Consolidated net revenue was $134.0 million for the second quarter of 2015, compared to $141.2 million for the second quarter of 2014. Included in the second quarter of 2014 were the results of the Company's Mexico-based pawn business, which was sold in the third quarter of 2014. The Company's net revenue from domestic operations was $134.0 million for the second quarter of 2015 compared to $138.1 million for the second quarter of 2014, with the $4.1 million decrease primarily due to lower pawn loan fees and service charges as a result of lower average pawn loan balances, as well as decreased consumer loan net revenue as a result of the Company's strategic decision to de-emphasize and eliminate its unsecured short-term consumer loan activities in many of its locations. Consumer loan fees represented only 8% of the Company's consolidated total revenue for the second quarter of 2015.

While net revenue from the Company's domestic operations was 3% below the prior year's second quarter results, the domestic business produced a 58% increase in income from operations, which reached $6.4 million for the three months ended June 30, 2015 compared to $4.0 million for the three months ended June 30, 2014. Commenting on the second quarter results, Daniel R. Feehan, Chief Executive Officer of Cash America, said, "The first half of 2015 has shaped up much as we expected as our efforts to emphasize improved marginal profitability through expense management allowed us to report a significant increase in earnings compared to the prior year. As we enter the second half of 2015, we are well positioned to leverage our focus on business fundamentals and execution to expand net revenue and continue to report year-over-year increases in earnings and marginal profitability."

The Company announced a four million share repurchase authorization on January 29, 2015. As a part of that authorization, the Company repurchased 1,184,230 shares during the second quarter of 2015. In aggregate, these shares were purchased at an approximate average price of $26.77 per share and represented approximately 4% of the fully diluted shares as of the end of the first quarter of 2015. Through the six-month period ended June 30, 2015, the Company has purchased 2,332,230 shares under this repurchase authorization at an average price of approximately $24.44 per share, representing approximately 8% of the fully diluted shares as of the end of December 31, 2014. The Company ended the second quarter with $44 million in cash and no borrowings outstanding under its $280 million line of credit.

For the six months ended June 30, 2015, the Company reported net income from continuing operations of $9.9 million (35 cents per share) compared to a net loss of $8.5 million (a loss of 30 cents per share) for the same period in 2014. Included in the reported net income for the six months ended June 30, 2015 is a gain on the disposition of equity securities, a loss on early extinguishment of debt and severance expenses related to administrative and operations staff reductions, which in aggregate reduced net income from continuing operations by $0.2 million before taxes (1 cent per share after taxes). When excluding these items, adjusted net income from continuing operations, a non-GAAP measure, was $10.1 million (36 cents per share) for the six months ended June 30, 2015. This compares to adjusted net income from continuing operations, a non-GAAP measure, of $2.3 million (7 cents per share) for the six-months ended June 30, 2014, which adds back to the reported results the expense for the early extinguishment of debt of $10.4 million after taxes and litigation settlement expenses of $0.4 million after taxes, for a total of $10.8 million (37 cents per share) for the six months ended June 30, 2014.

Consolidated total revenue was $508.2 million for the six months ended June 30, 2015 compared to $538.2 million for the same period in 2014, which included the Company's Mexico-based pawn lending business in 2014. The Company's domestic business posted total revenue of $508.2 million compared to $525.7 million for the six months ended June 30, 2015 and 2014, respectively. Consistent with the second quarter of 2015, the domestic business produced an increase in operating income while overcoming lower total and net revenue. The Company's domestic operations generated a 21% increase in income from operations, which reached $22.9 million for the six months ended June 30, 2015 compared to $18.8 million for the six months ended June 30, 2014.

Cash America will host a conference call to discuss the second quarter results on Thursday, July 30, 2015, at 7:00 AM CDT. A live web cast of the call will be available on the Investor Relations section of the Company's corporate web site http://www.cashamerica.com. To listen to the live call, please go to the web site at least fifteen minutes prior to the call 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 $0.05 (5 cents) per share cash dividend on common stock outstanding. The dividend will be paid at the close of business on August 26, 2015 to shareholders of record on August 12, 2015.

Outlook for the Third Quarter of 2015 and the 2015 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 predominantly take the form of pawn loans, the disposition of unredeemed collateral by way of consumer spending on retail sales, the commercial sale of refined gold and diamonds and, to a lesser extent, consumer loans. During the second quarter, pawn loan balances increased sequentially from the first quarter in-line with traditional seasonal growth. Management expects traditional sequential pawn loan balance growth in the third quarter and believes that the rate and timing of this growth will have a significant influence on the third and fourth quarter results.

Based on its views on the preceding factors, management expects net income per share for the third quarter of 2015 to be between 17 cents and 20 cents per share compared to a net loss from continuing operations of 32 cents per share in the third quarter of 2014. During the third quarter of 2014, management implemented actions that generated $14.1 million in after-tax expenses (48 cents per share) related to the sale of non-strategic operations in Mexico and Colorado, the early extinguishment of long-term debt and a corporate reorganization to create expense efficiencies. Excluding the $14.1 million in expenses related to these items incurred in the third quarter of 2014, adjusted net income from continuing operations, a non-GAAP measure, would have been $4.7 million (16 cents per share) for the third quarter of 2014.

At this time, management modifies and increases its previously reported expectations for its fiscal year 2015 adjusted EBITDA to an anticipated range of between $117 million to $125 million, which management estimates will generate between $0.95 and $1.10 in adjusted net income per share from continuing operations, a non-GAAP measure, which excludes the disposition of equity securities, a loss on early extinguishment of debt and severance expenses related to administrative and operations staff reductions, which in aggregate reduced income for the six months ended June 30, 2015 by 1 cent per share. This compares to a reported net loss from continuing operations of 36 cents per share for fiscal year 2014, which included expense items totaling 87 cents per share related to the early extinguishment of debt, a loss on divestitures and the severance expenses related to administrative and operations staff reductions. Adding back the expense per share of 87 cents incurred during 2014, adjusted net income from continuing operations, a non-GAAP measure, for the year ended December 31, 2014 would have been 51 cents per share.

About the Company

As of June 30, 2015 Cash America International, Inc. (the "Company") operated 904 total locations offering specialty financial services to consumers, which included the following:
  • 826 lending locations in 20 states in the United States primarily under the names "Cash America Pawn," "SuperPawn," "Cash America Payday Advance," and "Cashland;" and
  • 78 check cashing centers (all of which are unconsolidated franchised check cashing centers) operating in 12 states in the United States under the name "Mr. Payroll."

For additional information regarding the Company and the services it provides, visit the Company's website located at: http://www.cashamerica.com or its mobile app, which may be downloaded without cost from the App Store SM and on Google Play™. *App Store is a service mark of Apple Inc. and Google Play is a trademark of Google Inc.

Non-GAAP Measures

The Non-GAAP Disclosure section included in the attachments to this press release contain a reconciliation of non-GAAP information and a discussion of the reasons why the Company's management believes that presentation of the non-GAAP financial measures discussed above provide useful information to investors regarding the Company's financial condition and results of operations.

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

This press 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, compliance with or changes in laws, 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, including the effect of and compliance with a consent order the Company entered into with the Consumer Financial Protection Bureau in November 2013; accounting and income tax risks related to goodwill and other intangible asset impairment, certain tax positions taken by the Company and other accounting matters that require the judgment of management; the Company's ability to attract and retain qualified executive officers, including a new Chief Executive Officer upon the retirement of the Company's current Chief Executive Officer; the effect of any current or future litigation proceedings, including an unfavorable outcome in an outstanding lawsuit relating to the Company's 5.75% Senior Notes due 2018 even though the Company believes the lawsuit is without merit and will vigorously defend its position, and any judicial decisions or rule-making that affects the Company, its products or the legality or enforceability of its arbitration agreements; decreased demand for the Company's products and services and changes in competition; fluctuations in the price of gold and changes in economic conditions; public perception of the Company's business and the Company's business practices; risks related to the Company's financing, such as compliance with financial covenants in the Company's debt agreements, the Company's ability to satisfy its outstanding debt obligations, to refinance existing debt obligations or to obtain new capital; risks related to interruptions to the Company's business operations, such as a prolonged interruption in the Company's operations of its facilities, systems or business functions, cyber-attacks or security breaches or the actions of third parties who provide, acquire or offer products and services to, from or for the Company; risks related to the expansion and growth of the Company's business, including the Company's ability to open new locations in accordance with plans or to successfully integrate newly acquired businesses into its operations; risks related to the 2014 spin-off of the Company's former E-Commerce Division that comprised its e-commerce segment, Enova International, Inc.; fluctuations in the price of the Company's common stock; the effect of any of the above changes on the Company's business or the markets in which the Company 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 press release, terms such as "believes," "estimates," "should," "could," "would," "plans," "expects," "intends," "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 press release.
 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

HIGHLIGHTS OF CONSOLIDATED RESULTS OF OPERATIONS

(dollars in thousands, except per share data)

(Unaudited)
 
 
      Three Months Ended     Six Months Ended
June 30, June 30,
2015     2014 2015     2014
Consolidated Operations:
Total Revenue $ 236,464 $ 253,608 $ 508,226 $ 538,243
Net Revenue 133,991 141,249 281,082 293,722
Total Expenses       127,664       137,892       258,521       276,454  
 
Income from Operations $ 6,327 $ 3,357 $ 22,561 $ 17,268

Income (Loss) from Continuing Operations before Income Taxes
3,260 (17,049 ) 16,017 (9,990 )
 
Net Income (Loss) from Continuing Operations 2,071 (11,746 ) 9,916 (8,509 )
 
Net Income from Discontinued Operations, Net of Tax (a)             32,717             75,217  
 
Net Income Attributable to Cash America International, Inc.       $ 2,071       $ 20,971       $ 9,916       $ 66,708  
 
Earnings Per Share:
Basic Earnings Per Share
Net Income (Loss) from Continuing Operations $ 0.08 $ (0.41 ) $ 0.35 $ (0.30 )
Net Income from Discontinued Operations (a) $ $ 1.14 $ $ 2.63
Net Income Attributable to Cash America International, Inc. (b) $ 0.08 $ 0.73 $ 0.35 $ 2.33
Diluted Earnings Per Share
Net Income (Loss) from Continuing Operations $ 0.08 $ (0.41 ) $ 0.35 $ (0.30 )
Net Income from Discontinued Operations (a) $ $ 1.12 $ $ 2.56
Net Income Attributable to Cash America International, Inc. (b) $ 0.08 $ 0.72 $ 0.35 $ 2.27
 
Weighted average common shares outstanding:
Basic 27,326 28,823 28,005 28,616
Diluted 27,508 29,256 28,124 29,365
 

(a) Includes the operations of Enova International, Inc. ("Enova"), the wholly-owned subsidiary of Cash America International, Inc. (the "Company") that the Company spun-off on November 13, 2014. Prior to the spin-off, Enova comprised the e-commerce segment of the Company.

(b) Earnings per share amounts included in this information may not sum due to rounding difference.
 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share information)
(Unaudited)
      June 30,     December 31,
2015     2014 2014
Assets
Current assets:
Cash and cash equivalents $ 43,986 $ 113,130 $ 53,042
Restricted cash 27 60 60
Pawn loans 247,381 263,668 252,168
Merchandise held for disposition, net 203,006 198,919 212,849
Pawn loan fees and service charges receivable 50,317 51,986 53,648
Consumer loans, net 30,393 45,994 44,853
Income taxes receivable 4,084 9 8,881
Prepaid expenses and other assets 25,287 40,207 21,317
Deferred tax assets 8,981
Investment in equity securities 109,140 131,584
Current assets of discontinued operations             411,347        
Total current assets 713,621 1,134,301 778,402
Property and equipment, net 182,051 217,407 201,054
Goodwill 487,569 495,672 487,569
Intangible assets, net 42,562 49,121 45,828
Other assets 9,044 13,116 9,594
Noncurrent assets of discontinued operations             270,720        
Total assets       $ 1,434,847       $ 2,180,337       $ 1,522,447  
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses $ 71,586 $ 69,055 $ 74,331
Customer deposits 20,350 18,295 17,314
Current deferred tax liabilities 20,366 27,820
Current liabilities of discontinued operations             62,813        
Total current liabilities 112,302 150,163 119,465
Deferred tax liabilities 70,323 64,398 72,432
Other liabilities 838 1,161 878
Noncurrent liabilities of discontinued operations 542,729
Long-term debt       184,450       300,000       196,470  
Total liabilities       $ 367,913       $ 1,058,451       $ 389,245  
Cash America International, Inc. equity:
Common stock, $0.10 par value per share, 80,000,000 shares authorized, 30,235,164 shares issued 3,024 3,024 3,024
Additional paid-in capital 80,702 86,184 86,388
Retained earnings 1,037,505 1,082,725 1,030,387
Accumulated other comprehensive income 57,649 7,998 71,959
Treasury shares, at cost (3,678,936 shares, 1,382,602 shares and 1,428,495 shares as of June 30, 2015 and 2014, and as of December 31, 2014, respectively)       (111,946 )     (58,045 )     (58,556 )
Total equity       1,066,934       1,121,886       1,133,202  
Total liabilities and equity       $ 1,434,847       $ 2,180,337       $ 1,522,447  
 

 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)
 
      Three Months Ended     Six Months Ended
June 30, June 30,
2015     2014 2015     2014
Revenue
Pawn loan fees and service charges $ 76,899 $ 80,990 $ 154,212 $ 161,177
Proceeds from disposition of merchandise 138,703 146,772 310,916 323,227
Consumer loan fees 19,311 23,900 39,630 49,659
Other       1,551       1,946       3,468       4,180  
Total Revenue       236,464       253,608       508,226       538,243  
Cost of Revenue
Disposed merchandise 98,060 104,510 217,944 229,074
Consumer loan loss provision       4,413       7,849       9,200       15,447  
Total Cost of Revenue       102,473       112,359       227,144       244,521  
Net Revenue       133,991       141,249       281,082       293,722  
Expenses
Operations and administration 113,306 122,711 229,644 246,130
Depreciation and amortization 14,559 15,181 29,078 30,324
Gain on divestitures       (201 )           (201 )      
Total Expenses       127,664       137,892       258,521       276,454  
Income from Operations 6,327 3,357 22,561 17,268
Interest expense (3,557 ) (8,389 ) (7,201 ) (18,457 )
Interest income 5 2,880 7 7,644
Foreign currency transaction (loss) gain (7 ) 119 32 117
Loss on early extinguishment of debt (607 ) (15,016 ) (607 ) (16,562 )
Gain on disposition of equity securities       1,099             1,225        
Income (Loss) from Continuing Operations before Income Taxes 3,260 (17,049 ) 16,017 (9,990 )
Provision (benefit) for income taxes       1,189       (5,303 )     6,101       (1,481 )
Net Income (Loss) from Continuing Operations 2,071 (11,746 ) 9,916 (8,509 )
Net Income from Discontinued Operations, Net of Tax             32,717             75,217  
Net Income Attributable to Cash America International, Inc.       $ 2,071       $ 20,971       $ 9,916       $ 66,708  
Earnings Per Share:
Basic Earnings Per Share
Net Income (Loss) from Continuing Operations $ 0.08 $ (0.41 ) $ 0.35 $ (0.30 )
Net Income from Discontinued Operations $ $ 1.14 $ $ 2.63
Net Income Attributable to Cash America International, Inc. $ 0.08 $ 0.73 $ 0.35 $ 2.33
Diluted Earnings Per Share
Net Income (Loss) from Continuing Operations $ 0.08 $ (0.41 ) $ 0.35 $ (0.30 )
Net Income from Discontinued Operations $ $ 1.12 $ $ 2.56
Net Income Attributable to Cash America International, Inc. $ 0.08 $ 0.72 $ 0.35 $ 2.27
Weighted average common shares outstanding:
Basic 27,326 28,823 28,005 28,616
Diluted 27,508 29,256 28,124 29,365
Dividends declared per common share $ 0.050 $ 0.035 $ 0.100 $ 0.070
 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES PAWN LOAN METRICS

The following tables outline certain data related to domestic pawn loan activities for the continuing operations of the Company as of and for the three and six months ended June 30, 2015 and 2014 (dollars in thousands except where otherwise noted):
     

Domestic Pawn Loan Metrics:
As of June 30,
2015    

2014 (a)
   

$ Change
    % Change
Ending pawn loan balances $ 247,381 $ 257,647 $ (10,266 )

(4.0

)%
Ending merchandise balance, net $ 203,006 $ 192,745 $ 10,261 5.3 %
Three Months Ended June 30,
Domestic pawn operations 2015

2014 (a)

$ Change
% Change
Pawn loan fees and service charges $ 76,899 $ 78,911 $ (2,012 ) (2.5 )%
Average pawn loan balance outstanding $ 228,140 $ 235,187 $ (7,047 ) (3.0 )%
Amount of pawn loans written and renewed $ 257,430 $ 271,226 $ (13,796 ) (5.1 )%
Average amount per pawn loan (in ones) $ 124 $ 123 $ 1 0.8 %
Annualized yield on pawn loans 135.2 % 134.6 %

(a) Excludes amounts related to the Company's Mexico-based pawn operations, which were sold in August 2014. For the three months ended June 30, 2014, Mexico-based pawn operations had an ending pawn loan balance of $6,021, an ending merchandise balance, net, of $6,174, pawn loan fees and services charges of $2,079, an average pawn loan balance outstanding of $5,683, pawn loans written and renewed of $15,909, an average amount per pawn loan of $88 and an annualized yield on pawn loans of 146.7%.
 
      Six Months Ended June 30,
Domestic pawn operations 2015    

2014 (a)
    $ Change     % Change
Pawn loan fees and service charges $ 154,212 $ 157,378 $ (3,166 ) (2.0 )%
Average pawn loan balance outstanding $ 231,748 $ 239,089 $ (7,341 ) (3.1 )%
Amount of pawn loans written and renewed $ 479,606 $ 503,786 $ (24,180 ) (4.8 )%
Average amount per pawn loan (in ones) $ 126 $ 124 $ 2 1.6 %
Annualized yield on pawn loans 134.2 % 132.7 %

(a) Excludes amounts related to the Company's Mexico-based pawn operations, which were sold in August 2014. For the six months ended June 30, 2014, Mexico-based pawn operations had pawn loan fees and service charges of $3,799, an average pawn loan balance outstanding of $5,175, pawn loans written and renewed of $28,895, an average amount per pawn loan of $88, and an annualized yield on pawn loans of 148.0%.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES MERCHANDISE DISPOSITION, GROSS PROFIT AND INVENTORY 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 generally the principal amount loaned on an item or the amount paid for purchased merchandise. The following table summarizes the proceeds from the disposition of merchandise and the related profit for domestic operations for the three and six months ended June 30, 2015 and 2014 (dollars in thousands):
     
Three Months Ended June 30,
2015    

2014 (a)
Domestic pawn operations Retail     Commercial     Total Retail     Commercial     Total
Proceeds from disposition $ 119,323 $ 19,380 $ 138,703 $ 113,626 $ 28,821 $ 142,447
Gross profit on disposition $ 38,798 $ 1,845 $ 40,643 $ 37,689 $ 3,581 $ 41,270
Gross profit margin 32.5 % 9.5 % 29.3 % 33.2 % 12.4 % 29.0 %
Percentage of total gross profit       95.5 % 4.5 % 100.0 % 91.3 % 8.7 % 100.0 %

(a) Excludes amounts related to the Company's Mexico-based pawn operations, which were sold in August 2014. For the three months ended June 30, 2014, Mexico-based pawn operations had proceeds from disposition of $4,325, gross profit on disposition of $992, and gross profit margin of 22.9%.
     
Six Months Ended June 30,
2015    

2014 (a)
Domestic pawn operations Retail     Commercial     Total Retail     Commercial     Total
Proceeds from disposition $ 267,472   $ 43,444 $ 310,916 $ 251,952 $ 62,665 $ 314,617
Gross profit on disposition $ 85,754 $ 7,218 $ 92,972 $ 86,131 $ 6,051 $ 92,182
Gross profit margin 32.1 % 16.6 % 29.9 % 34.2 % 9.7 % 29.3 %
Percentage of total gross profit       92.2 % 7.8 % 100.0 % 93.4 % 6.6 % 100.0 %

(a) Excludes amounts related to the Company's Mexico-based pawn operations, which were sold in August 2014. For the six months ended June 30, 2014, Mexico-based pawn operations had proceeds from disposition of $8,610, gross profit on disposition of $1,971, and gross profit margin of 22.9%.

The table below summarizes the age of merchandise held for disposition related to the Company's domestic pawn lending operations before valuation allowance of $2.6 million, $2.0 million and $2.4 million as of June 30, 2015 and 2014, and December 31, 2014, respectively (dollars in thousands):
         
As of June 30,     As of December 31,
2015    

2014 (a)
2014
Domestic pawn operations Amount     % Amount     % Amount     %
Jewelry - held for one year or less $ 130,265 63.4 % $ 106,722 54.8 % $ 111,963 52.0 %
Other merchandise - held for one year or less 64,648       31.4 %     75,394       38.7 %       90,642       42.1 %
Total merchandise held for one year or less 194,913       94.8 %     182,116       93.5 %       202,605       94.1 %
Jewelry - held for more than one year 5,233 2.5 % 5,361 2.8 % 3,494 1.6 %
Other merchandise - held for more than one year 5,460       2.7 %     7,268       3.7 %       9,150       4.3 %
Total merchandise held for more than one year 10,693       5.2 %     12,629       6.5 %       12,644       5.9 %
Merchandise held for disposition, gross $ 205,606       100.0 %     $ 194,745       100.0 %       $ 215,249       100.0 %
Merchandise held for disposition, net of allowance $ 203,006             $ 192,745             $ 212,849        

(a) Excludes amounts related to the Company's Mexico-based pawn operations, which were sold in August 2014. As of June 30, 2014, Mexico-based pawn operations had gross merchandise held for disposition of $6,282 and merchandise held for disposition, net of allowance, of $6,174.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES CONSUMER LOAN METRICS AND BALANCES

The following tables set forth interest and fees on consumer loans, loan loss provision and consumer loan fees, net of the loss provision, related to domestic consumer loan activities for the continuing operations of the Company for the three and six months ended June 30, 2015 and 2014 (dollars in thousands except where otherwise noted):
     
Three Months Ended June 30,
2015     2014

Short-term loans
   

Installment loans
    Total

Short-termloans
   

Installmentloans
    Total
Consumer loan fees $ 13,362 $ 5,949 $ 19,311 $ 20,440 $ 3,460 $ 23,900
Less: consumer loan loss provision       1,711       2,702       4,413       5,952       1,897       7,849  
Consumer loan fees, net loss provision       $ 11,651       $ 3,247       $ 14,898       $ 14,488       $ 1,563       $ 16,051  
Year-over-year change - $ $ (2,837 ) $ 1,684 $ (1,153 ) $ (3,163 ) $ (321 ) $ (3,484 )
Year-over-year change - % (19.6 )% 107.7 % (7.2 )% (17.9 )% (17.0 )% (17.8 )%

Consumer loan loss provision as a % of consumer loan fees
      12.8 %     45.4 %     22.9 %     29.1 %     54.8 %     32.8 %
 
Six Months Ended June 30,
2015 2014

Short-term loans

Installment loans
Total

Short-termloans

Installmentloans
Total
Consumer loan fees $ 30,425 $ 9,205 $ 39,630 $ 42,437 $ 7,222 $ 49,659
Less: consumer loan loss provision       4,830       4,370       9,200       11,397       4,050       15,447  
Consumer loan fees, net loss provision       $ 25,595       $ 4,835       $ 30,430       $ 31,040       $ 3,172       $ 34,212  
Year-over-year change - $ $ (5,445 ) $ 1,663 $ (3,782 ) $ (6,274 ) $ (593 ) $ (6,867 )
Year-over-year change - % (17.5 )% 52.4 % (11.1 )% (16.8 )% (15.8 )% (16.7 )%

Consumer loan loss provision as a % of consumer loan fees
      15.9 %     47.5 %     23.2 %     26.9 %     56.1 %     31.1 %
 

In addition to reporting consumer loans owned by the Company and consumer loans guaranteed by the Company, which are either GAAP items or disclosures required by GAAP, the Company has provided combined consumer loans, which is a non-GAAP measure.

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 METRICS AND BALANCES

Management evaluates consumer loan loss rates for all of its consumer loan products to determine credit quality and evaluate trends. The following tables provide additional information related to each of the Company's consumer loan products as of and for the three and six months ended June 30, 2015 and 2014 (dollars in thousands).
     
Three Months Ended June 30,
2015     2014

Short-term loans
   

Installment loans
    Total

Short-termloans
   

Installmentloans
    Total
Consumer loans written and renewed (a)
Company owned $ 107,026 $ 1,501 $ 108,527 $ 157,268 $ 2,526 $ 159,794
Guaranteed by the Company (b)       6,811       23,783       30,594       16,878       6,763       23,641  
Combined consumer loans written and renewed       $ 113,837       $ 25,284       $ 139,121       $ 174,146       $ 9,289       $ 183,435  
Ending consumer loan balances, gross
Company owned $ 29,092 $ 4,834 $ 33,926 $ 42,744 $ 7,643 $ 50,387
Guaranteed by the Company (b)       1,659       11,223       12,882       3,976       8,565       12,541  

Combined ending consumer loan balances, gross (c)
      $ 30,751       $ 16,057       $ 46,808       $ 46,720       $ 16,208       $ 62,928  
Allowance and liability for losses
Company owned $ 2,106 $ 1,427 $ 3,533 $ 3,431 $ 962 $ 4,393
Guaranteed by the Company (b)       159       1,763       1,922       440       1,155       1,595  
Combined allowance and liability for losses       $ 2,265       $ 3,190       $ 5,455       $ 3,871       $ 2,117       $ 5,988  
Ending consumer loan balances, net
Company owned $ 26,986 $ 3,407 $ 30,393 $ 39,313 $ 6,681 $ 45,994
Guaranteed by the Company (b)       1,500       9,460       10,960       3,536       7,410       10,946  

Combined ending consumer loan balances, net (c)
      $ 28,486       $ 12,867       $ 41,353       $ 42,849       $ 14,091       $ 56,940  

Consumer loan ratios:

Allowance and liability for losses as a % of combined ending consumer loan balance, gross (c)
      7.4 %     19.9 %     11.7 %     8.3 %     13.1 %     9.5 %
 
Six Months Ended June 30,
2015 2014

Short-term loans

Installment loans
Total

Short-termloans

Installmentloans
Total
Consumer loans written and renewed (a)
Company owned $ 241,503 $ 2,949 $ 244,452 $ 316,728 $ 4,351 $ 321,079
Guaranteed by the Company (b)       14,868       37,786       52,654       35,242       11,201       46,443
Combined consumer loans written and renewed       $ 256,371       $ 40,735       $ 297,106       $ 351,970       $ 15,552       $ 367,522

(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) The consumer loan balances guaranteed by the Company represent loans originated by third-party lenders through 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 the Company's consolidated balance sheets.

(c) Non-GAAP measure.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES LOCATION INFORMATION

Locations

The following table sets forth the number of locations through which the Company offered pawn lending, consumer lending, and other services and franchised locations offering check cashing services as of June 30, 2015 and 2014. The Company provides these services in the United States primarily under the names "Cash America Pawn," "SuperPawn," "Cash America Payday Advance," "Cashland" and "Mr. Payroll." The Company's domestic pawn and consumer lending locations operated in 20 and 22 states in the United States as of June 30, 2015 and 2014, respectively. As of both June 30, 2015 and 2014, the franchised check cashing centers operated in 12 states.
     
As of June 30,
2015     2014
Company-operated locations offering:    
Pawn lending only 549 303
Both pawn and consumer lending 255 576
Consumer lending only       22     37
Total Company-operated locations 826 916
Franchised check cashing       78     88
Total       904     1,004
 

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 has provided certain historical non-GAAP measures in the tables below, including (i) adjusted net income from continuing operations, adjusted diluted net income per share from continuing operations, adjusted earnings from continuing operations and adjusted earnings per share from continuing operations (collectively, the "Adjusted Earnings Measures"), and (ii) adjusted EBITDA, which the Company defines as earnings excluding depreciation, amortization, interest, foreign currency transaction gains or losses, loss on early extinguishment of debt, gain on disposition of equity securities and provision or benefit for income taxes. Management also provides estimated adjusted EBITDA, estimated adjusted earnings per share from continuing operations, and estimated free cash flow per share, which are non-GAAP measures. Management defines estimated free cash flow per share as estimated adjusted earnings per share from continuing operations excluding estimated depreciation and amortization, less estimated cash paid for capital expenditures.

Management believes that the presentation of these measures provides users of the financial statements with greater transparency and facilitates a more meaningful comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments and amortization methods. In addition, management believes this information provides a more in-depth and complete view of the Company's financial performance, competitive position and prospects for the future and may highlight trends in the Company's business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. Management also believes that non-GAAP measures are frequently used by investors to analyze operating performance, evaluate the Company's ability to incur and service debt and its capacity for making capital investments, and to help assess the Company's estimated enterprise value.

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

For adjusted earnings from continuing operations and adjusted earnings per share from continuing operations, management excludes intangible asset amortization, non-cash equity-based compensation, convertible debt non-cash interest and issuance cost amortization, and foreign currency transaction gains or losses. In addition, management has determined that the adjustments to the Adjusted Earnings Measures and adjusted EBITDA, as applicable, included in the tables below are useful to investors in order to allow them to compare the Company's financial results for the current quarter with the prior year quarter without the effect of the below items, which management believes are less frequent in nature:
  • the expenses related to the Company's reorganization to better align the corporate and operating cost structure with its remaining storefront operations after the Enova Spin-off (the "Reorganization");
  • the gain on disposition of equity securities;
  • the gain or loss on significant divestitures;
  • the loss on early extinguishment of debt;
  • the charges related to the closure of 36 locations in Texas in 2013 that offered consumer loans as their primary source of revenue (the "Texas Consumer Loan Store Closures");
  • the adjustments for a penalty paid to the Consumer Financial Protection Bureau (the "CFPB") in connection with the issuance of a consent order by the CFPB in November 2013 (the "Regulatory Penalty");
  • charges related to a significant litigation settlement in 2013 (the "2013 Litigation Settlement");
  • an adjustment made in 2013 (the "Ohio Adjustment for the Ohio Reimbursement Program") to decrease the Company's remaining liability following an assessment of the claims made under a voluntary program initiated in 2012 to reimburse Ohio customers in connection with certain legal collections proceedings initiated by the Company in Ohio; and
  • a recognized income tax benefit related to a tax deduction included on the Company's 2013 federal income tax return for its tax basis in the stock of its subsidiary that previously owned its Mexico-based pawn operations, Creazione Estilo, S.A. de C.V., a Mexican sociedad anónima de capital variable (the "Creazione Deduction").

Adjusted EBITDA is presented for the trailing twelve months ended June 30, 2015 and 2014. Therefore, certain adjusting items that occurred in the third and fourth quarters of 2014 and 2013 are presented in the adjusted EBITDA table.

Management believes the non-GAAP measures, including these adjustments, provide more meaningful information regarding the ongoing operating performance, provide more useful period-to-period comparisons of operating results, both internally and in relation to operating results of competitors, enhance investors' understanding of the core operating results of the business and provide a more accurate indication of the Company's ability to generate cash flows from operations.

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.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES NON-GAAP DISCLOSURE ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE

Adjusted Earnings and Adjusted Earnings Per Share

The following table provides a reconciliation for the three and six months ended June 30, 2015 and 2014, between net income (loss) from continuing operations and diluted net income (loss) per share from continuing operations calculated in accordance with GAAP to the Adjusted Earnings Measures, which are shown net of tax (dollars in thousands, except per share data). Amounts for the three and six months ended June 30, 2014 include the Company's Mexico-based pawn operations, which were sold in August 2014.
         
Three Months Ended June 30, Six Months Ended June 30,
2015     2014 2015     2014
$    

Per Diluted Share (a)
$    

PerDilutedShare (a)
$    

Per Diluted Share (a)
$    

PerDilutedShare (a)

Net income (loss) and diluted net income (loss) per share from continuing operations
$ 2,071 $ 0.08 $ (11,746 ) $ (0.41 ) $ 9,916 $ 0.35 $ (8,509 ) $ (0.30 )
Adjustments (net of tax):
Loss on early extinguishment of debt 382 0.01 9,460 0.32 382 0.01 10,434 0.36
Gain on disposition of equity securities (692 ) (0.03 ) (771 ) (0.02 )
Reorganization 537 0.02
2013 Litigation Settlement                   236       0.01                   400       0.01  

Adjusted net income (loss) and adjusted diluted net income (loss) per share from continuing operations
      1,761       0.06       (2,050 )     (0.08 )     10,064       0.36       2,325       0.07  
Other adjustments (net of tax):
Intangible asset amortization 1,028 0.04 1,038 0.04 2,057 0.07 2,071 0.07
Non-cash equity-based compensation 1,039 0.04 1,040 0.04 2,046 0.07 1,982 0.07

Convertible debt non-cash interest and issuance cost amortization
144 518 0.02
Foreign currency transaction loss (gain)       4             (75 )           (20 )           (74 )      

Adjusted earnings and adjusted earnings per share from continuing operations
      $ 3,832       $ 0.14       $ 97       $       $ 14,147       $ 0.50       $ 6,822       $ 0.23  

(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. Per-share values may not calculate correctly using the weighted average common shares outstanding value as the denominator due to rounding differences.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES NON-GAAP DISCLOSURE ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE

The tables below reconcile the gross amounts, the impact of income taxes and the net amounts for each of the adjustments included in the table above.
     
Three Months Ended June 30,
2015     2014
Pre-tax     Tax     After-tax Pre-tax     Tax     After-tax
Loss on early extinguishment of debt $ 607     $ 225     $ 382 $ 15,016     $ 5,556     $ 9,460
Gain on disposition of equity securities (1,099 ) (407 ) (692 )
2013 Litigation Settlement                         375       139       236
Total Adjustments       $ (492 )     $ (182 )     $ (310 )     $ 15,391       $ 5,695       $ 9,696
 
Six Months Ended June 30,
2015 2014
Pre-tax Tax After-tax Pre-tax Tax After-tax
Loss on early extinguishment of debt $ 607 $ 225 $ 382 $ 16,562 $ 6,128 $ 10,434
Gain on disposition of equity securities (1,225 ) (454 ) (771 )
Reorganization 853 316 537
2013 Litigation Settlement                         635       235       400
Total Adjustments       $ 235       $ 87       $ 148       $ 17,197       $ 6,363       $ 10,834
 

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

Adjusted EBITDA

The following table provides a reconciliation between net income from continuing operations, which is the nearest GAAP measure presented in the Company's financial statements, to adjusted EBITDA from continuing operations (dollars in thousands):
     
Trailing 12 Months Ended
June 30,
2015     2014
Net income from continuing operations $ 8,038 $ 26,367
Provision (benefit) for income taxes (a) 9,623 (32,096 )
Gain on disposition of equity securities (1,225 )
Loss on early extinguishment of debt 6,598 17,169
Foreign currency transaction gain (28 ) (73 )
Interest expense, net 15,254 20,819
Depreciation and amortization expenses (b) 59,696 59,770
Adjustments:
Reorganization 8,391
Loss on divestitures 5,176
Texas Consumer Loan Store Closures 1,373
Regulatory Penalty 2,500
2013 Litigation settlement 18,635
Ohio Adjustment for the Ohio Reimbursement Program             (5,000 )
Adjusted EBITDA from continuing operations       $ 111,523       $ 109,464  
Adjusted EBITDA margin from continuing operations calculated as follows:
Total revenue $ 1,064,679 $ 1,048,713
Adjusted EBITDA       $ 111,523       $ 109,464  
Adjusted EBITDA as a percentage of total revenue       10.5 %     10.4 %

(a) For the trailing 12 months ended June 30, 2014, includes income tax benefit of $33.2 million related to the Creazione Deduction.

(b) For the trailing 12 months ended June 30, 2014, excludes $0.2 million of depreciation and amortization expenses, which are included in the "Texas Consumer Loan Store Closures."

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

The table below reconciles the gross amounts, the impact of income taxes and the net amounts for each of the adjustments included in the table above.
     
Trailing 12 Months Ended June 30,
2015     2014
Pre-tax     Tax    

After Tax
Pre-tax     Tax     After Tax
Reorganization $ 8,391 $ 3,105 $ 5,286 $ $ $
Loss on divestitures 5,176 (1,268 ) 6,444
Gain on disposition of equity securities (1,225 ) (454 ) (771 )
Loss on early extinguishment of debt 6,598 2,442 4,156 17,169 6,353 10,816
Texas Consumer Loan Store Closures 1,373 508 865
Regulatory Penalty 2,500 2,500
2013 Litigation Settlement 18,635 6,895 11,740
Ohio Adjustment for the Ohio Reimbursement Program (5,000 ) (1,791 ) (3,209 )
Tax benefit related to Creazione Deduction (a)                               33,201       (33,201 )
Total Adjustments       $ 18,940       $ 3,825       $ 15,115       $ 34,677       $ 45,166       $ (10,489 )

(a) For the trailing 12 months ended June 30, 2014, the tax benefit related to the Creazione Deduction of $33.2 million is included in the provision (benefit) for income taxes.

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

The following table reconciles estimated income from operations to estimated Adjusted EBITDA, a non-GAAP measure (dollars in thousands):
     
Estimated Results
For Year Ended December 31, 2015
Low     High

 

(Unaudited)
Estimated income from operations $ 57,000 $ 65,000
Depreciation and amortization       60,000       60,000
Estimated Adjusted EBITDA       $ 117,000       $ 125,000
 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES NON-GAAP DISCLOSURE ESTIMATED ADJUSTED EARNINGS PER SHARE AND FREE CASH FLOW PER SHARE

The table below shows an estimated range of adjusted earnings per share from continuing operations, in addition to an estimated range of free cash flow per share. The financial measure of free cash flow per share has limitations as it does not represent the residual cash flow available for discretionary expenditures as certain components of the Company's consolidated statement of cash flows are omitted. Therefore, estimated free cash flow per share should be evaluated in conjunction with the Company's consolidated statement of cash flows.

A reconciliation is shown for the year ended December 31, 2015, between estimated net income from continuing operations, which is the nearest GAAP measure presented in the Company's financial statements, to estimated adjusted earnings per share and estimated free cash flow per share (all amounts shown are per-share based on diluted weighted average common shares outstanding for the quarter ended June 30, 2015):

     
Estimated Results
For the year ended December 31, 2015
Low     High
(Unaudited)
Estimated net income from continuing operations $ 0.94     $ 1.09
Adjustments (net of tax):
Loss on early extinguishment of debt 0.01 0.01
Gain on disposition of equity securities (0.02 ) (0.02 )
Reorganization       0.02       0.02  
Estimated adjusted earnings per share from continuing operations $ 0.95 $ 1.10
Depreciation and amortization expenses (a) 2.18 2.18
Capital expenditures (b)       (0.85 )     (0.85 )
Estimated free cash flow per share       $ 2.28       $ 2.43  
 

(a) Assumes approximately $60.0 million of depreciation and amortization for the year ended December 31, 2015.

(b) Assumes approximately $23.4 million of capital expenditures for the year ended December 31, 2015.

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