Market Overview

Cash America Announces Third Quarter Net Income and Dividend Declared

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FORT WORTH, Texas--(BUSINESS WIRE)--

Cash America International, Inc. (NYSE: CSH) announced today that net income attributable to the Company for the third quarter of 2012 was $11,703,000 (37 cents per share), compared to the third quarter of 2011 net income of $34,777,000 ($1.08 per share). The third quarter results included unusual items which reduced net income and earnings per share by $20.4 million and 65 cents per share, respectively. Excluding the impact of these unusual expenses, third quarter adjusted earnings, a non-GAAP measure, would have been $32.1 million ($1.02 per share), which is at the high end of management's publicly released earnings per share guidance of between 95 cents per share and $1.05 per share as reported in the Company's press release dated July 26, 2012 and above analysts' consensus estimates of 95 cents per share as reported by Thomson Reuters. The unusual items included $18.5 million (59 cents per share) in after tax costs associated with the Company's previously announced reorganization of its Mexico-based pawn operations that operate under the name Prenda Fácil and $1.9 million (6 cents per share) after taxes related to the write off of deferred costs and transition expenses associated with the announced withdrawal of the proposed initial public offering of Enova International, Inc. in late July of 2012.

Consolidated total revenue increased 10% during the third quarter of 2012 to $439.7 million, up from $398.3 million during the same period in 2011. Contributing to the increase in total revenue was an increase in consumer loan fees from the Company's E-Commerce segment. Revenue from online consumer loan fees rose 33% during the third quarter of 2012, to $173.6 million, due to higher demand in the United States and continued growth in foreign markets during the quarter.

For the nine-month period ended September 30, 2012, the Company reported net income of $82,990,000 ($2.62 per share) compared to $98,136,000 ($3.07 per share) for the same period in 2011. When adding back the unusual items discussed above, adjusted earnings, a non-GAAP measure, would have been $103.4 million and adjusted earnings per share, a non-GAAP measure, would have been $3.27 per share for the nine-month period ended September 30, 2012, up 7% for the period. Total revenue increased 18% to $1.3 billion for the nine-month period ended September 30, 2012, up from $1.1 billion for the same period in 2011.

Commenting on the results for the third quarter, Daniel R. Feehan, President and Chief Executive Officer said, “We entered the third quarter keenly aware of the challenging environment but determined to make advances on a variety of important initiatives to position the Company for next year. We recently announced that the Company has entered into agreements to add 34 pawn lending locations in the United States through two independent transactions, one of which was substantially completed during the quarter, and we began implementing a new strategy for our Mexico-based pawn lending locations to focus on full-format pawn locations and place more emphasis on lending activities secured by general merchandise. We believe these developments plus the continued growth of our E-Commerce segment will set the stage for fiscal 2013.”

Cash America will host a conference call to discuss the third quarter results on Thursday, October 25, 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 21, 2012 to shareholders of record on November 7, 2012.

Outlook for the Fourth Quarter of 2012 and 2013 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 regulatory governance of consumer loan products and the development and growth of new and foreign markets for the Company's e-commerce distribution platform for consumer lending products, as well as developments related to the reorganization of the Company's Mexico-based pawn operations. As the Company enters the fourth quarter of 2012, 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 2012 with a continued heavier weighting to the international portfolio. Demand for the Company's pawn lending products has proven more challenging in the second and third quarters of 2012, and management expects growth in the Company's pawn lending business, but remains conservative in its expectations for the balance of 2012.

Based on management's views and on the preceding factors, management expects the fourth quarter 2012 net income per share to be between $1.15 and $1.25 per share compared to $1.18 per share in the fourth quarter of 2011, which does not include costs and other charges expected to be incurred in the fourth quarter associated with the Company's previously announced reorganization of its Mexico-based pawn operations (estimated to be between 19 cents and 32 cents per share). Based on the Company's growth through the first nine months of 2012, which produced earnings per share of $2.62 ($3.27 per share on a non-GAAP adjusted basis, adding back the unusual items discussed above of 65 cents per share in the third quarter), and factors noted above, management expects its fiscal year 2012 earnings per share to be in a range of between $3.77 and $3.87 per share ($4.42 and $4.52 per share on a non-GAAP adjusted basis, adjusted for the third quarter unusual items but excluding the unusual items expected to be incurred in the fourth quarter, as noted above), compared to $4.25 per share in fiscal 2011.

In addition, management is initiating its expectations for fiscal year 2013. Based on its current views of the coming year, management establishes its initial anticipated range of earnings per share of between $4.75 to $5.15 for fiscal 2013.

About the Company

As of September 30, 2012, Cash America International, Inc. operated 1,074 total locations offering specialty financial services to consumers, which included the following:

  • 815 lending locations (including one unconsolidated franchised location) in 23 states in the United States under the names “Cash America Pawn,” “SuperPawn,” “Cash America Payday Advance,” and “Cashland;”
  • 160 pawn lending locations in central and southern Mexico under the name “Prenda Fácil;”
  • 99 check cashing centers (including 93 unconsolidated franchised and six Company-owned check cashing centers) operating in 15 states in the United States under the name “Mr. Payroll.”

Additionally, as of September 30, 2012, the Company offered consumer loans over the Internet to customers:

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

http://www.cashamerica.com

 

http://www.poundstopocket.co.uk

http://www.enova.com

http://www.dollarsdirect.com.au

http://www.cashnetusa.com

http://www.dollarsdirect.ca

http://www.netcredit.com

http://www.goldpromise.com

http://www.cashlandloans.com

http://www.mrpayroll.com

http://www.quickquid.co.uk

http://www.primaryinnovations.net

A reconciliation of adjusted earnings and adjusted earnings per share, which are non-GAAP measures, for the three- and nine-month periods ended September 30, 2012 discussed above is included in the attachments to this press release.

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

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

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
HIGHLIGHTS OF CONSOLIDATED RESULTS OF OPERATIONS
(dollars in thousands, except per share data)
(Unaudited)
Three Months Ended   Nine Months Ended
September 30, September 30,
2012   2011 2012   2011
 
Consolidated Operations:
Total revenue $ 439,694 $ 398,304 $ 1,308,826 $ 1,109,107
Net revenue 248,477 235,454 738,869 661,430
Total expenses   208,289     172,289     572,442     485,213
 
Income from Operations $ 40,188 $ 63,165 $ 166,427 $ 176,217
 
Income before income taxes   33,046     55,503     145,160     156,838
 
Net Income $ 7,930   $ 34,529   $ 77,673   $ 97,561
 
Net loss attributable to the noncontrolling interest   3,773     248     5,317     575
 
Net Income Attributable to Cash America International, Inc. $ 11,703   $ 34,777   $ 82,990   $ 98,136
 
Earnings per share:
Net Income attributable to Cash America International, Inc.

common shareholders:

Basic $ 0.40 $ 1.18 $ 2.80 $ 3.31
Diluted $ 0.37 $ 1.08 $ 2.62 $ 3.07
 
Weighted average common shares outstanding:
Basic 29,536 29,535 29,599 29,626
Diluted 31,375 32,248 31,643 31,969

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)
(Unaudited)
  September 30,   December 31,
  2012     2011 2011
 
Assets
Current assets:
Cash and cash equivalents $ 78,663 $ 54,364 $ 62,542
Pawn loans 254,077 244,441 253,519
Consumer loans, net 256,825 191,642 222,778
Merchandise held for disposition, net 171,285 166,365 161,884
Pawn loan fees and service charges receivable 48,771 45,066 48,003
Income taxes receivable 684 - -
Prepaid expenses and other assets 36,912 32,095 31,301
Deferred tax assets   39,826     29,070     35,065
Total current assets 887,043 763,043 815,092
Property and equipment, net 258,214 236,325 246,429
Goodwill 599,337 538,169 562,721
Intangible assets, net 34,877 26,668 34,771
Other assets   12,936     13,948     15,236
Total assets $ 1,792,407   $ 1,578,153   $ 1,674,249
 
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses $ 109,986 $ 95,574 $ 113,113
Customer deposits 12,944 10,588 9,935
Income taxes currently payable - 10,520 12,880
Current portion of long-term debt   44,205     21,856     34,273
Total current liabilities 167,135 138,538 170,201
Deferred tax liabilities 102,048 88,980 89,712
Noncurrent income tax payable 2,697 2,343 2,315
Other liabilities 1,007 1,522 1,413
Long-term debt   545,258     470,124     503,018
Total liabilities $ 818,145   $ 701,507   $ 766,659
 
Equity:
Cash America International, Inc. equity:
Common stock, $0.10 par value per share, 80,000,000 shares
authorized, 30,235,164 shares issued and outstanding 3,024 3,024 3,024
Additional paid-in capital 157,874 167,193 167,683
Retained earnings 855,972 739,256 776,060
Accumulated other comprehensive income (loss) 4,366 (2,352) (6,896)
Treasury shares, at cost (1,214,646 shares, 982,735 shares and
1,011,356 shares at September 30, 2012 and 2011,
and at December 31, 2011, respectively)   (46,175)     (35,752)     (37,419)
Total Cash America International, Inc. shareholders' equity 975,061 871,369 902,452
Noncontrolling interest   (799)     5,277     5,138
Total equity   974,262     876,646     907,590
Total liabilities and equity $ 1,792,407   $ 1,578,153   $ 1,674,249

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(Unaudited)

 
Three Months Ended Nine Months Ended
September 30, September 30,
2012   2011 2012   2011
 
Revenue
Pawn loan fees and service charges $ 76,500 $ 74,399 $ 221,450 $ 206,134
Proceeds from disposition of merchandise 153,493 157,886 517,832 473,688
Consumer loan fees 205,094 162,981 558,656 418,522
Other   4,607     3,038     10,888     10,763
Total Revenue   439,694     398,304     1,308,826     1,109,107
Cost of Revenue
Disposed merchandise 106,918 102,274 350,878 302,472
Consumer loan loss provision   84,299     60,576     219,079     145,205
Total Cost of Revenue   191,217     162,850     569,957     447,677
 
Net Revenue   248,477     235,454     738,869     661,430
Expenses
Operations and administration 181,215 157,439 515,560 445,613
Depreciation and amortization   27,074     14,850     56,882     39,600
Total Expenses   208,289     172,289     572,442     485,213
Income from Operations 40,188 63,165 166,427 176,217
Interest expense (7,196) (6,865) (21,065) (18,307)
Interest income 22 14 79 56
Foreign currency transaction gain (loss) 93 (777) (72) (1,058)
Equity in loss of unconsolidated subsidiary   (61)     (34)     (209)     (70)
Income before Income Taxes 33,046 55,503 145,160 156,838
Provision for income taxes   25,116     20,974     67,487     59,277
Net Income 7,930 34,529 77,673 97,561
Net loss attributable to the noncontrolling interest   3,773     248     5,317     575
Net Income Attributable to Cash America International, Inc. $ 11,703   $ 34,777   $ 82,990   $ 98,136
Earnings Per Share:
Net Income attributable to Cash America International, Inc. common shareholders:
Basic $ 0.40 $ 1.18 $ 2.80 $ 3.31
Diluted $ 0.37 $ 1.08 $ 2.62 $ 3.07
Weighted average common shares outstanding:
Basic 29,536 29,535 29,599 29,626
Diluted 31,375 32,248 31,643 31,969
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

(dollars in thousands, except where otherwise noted)

 

 

The following tables outline certain data related to the Company's pawn loan activities as of and for the three and nine months ended September 30, 2012 and 2011 (dollars in thousands).

 
  2012   2011
Domestic   Foreign   Total Domestic   Foreign   Total
As of September 30,
Ending pawn loan balances $ 241,261 $ 12,816 $ 254,077 $ 225,921 $ 18,520 $ 244,441
Ending merchandise balance, net $ 160,075 $ 11,210 $ 171,285 $ 156,806 $ 9,559 $ 166,365
 
Three Months Ended September 30,
 
Pawn loan fees and service charges $ 73,209 $ 3,291 $ 76,500 $ 69,025 $ 5,374 $ 74,399
Average pawn loan balance outstanding $ 232,027 $ 11,870 $ 243,897 $ 218,607 $ 20,619 $ 239,226
Amount of pawn loans written and renewed $ 238,191 $ 17,655 $ 255,846 $ 240,062 $ 34,084 $ 274,146
Annualized yield on pawn loans 125.5% 110.3% 124.8% 125.3% 103.4% 123.4%
Average amount per pawn loan (in ones) $ 131 $ 84 $ 122 $ 130 $ 100 $ 125
Gross profit margin on disposition of merchandise 31.7% 14.5% 30.3% 36.6% 20.3% 35.2%
Merchandise turnover 2.6 3.7 2.7 2.6 4.6 2.7
 
2012 2011
Nine Months Ended September 30, Domestic Foreign Total Domestic Foreign Total
Pawn loan fees and service charges $ 210,807 $ 10,643 $ 221,450 $ 190,409 $ 15,725 $ 206,134
Average pawn loan balance outstanding $ 220,494 $ 13,843 $ 234,337 $ 197,316 $ 20,875 $ 218,191
Amount of pawn loans written and renewed $ 675,000 $ 51,478 $ 726,478 $ 641,260 $ 80,483 $ 721,743
Annualized yield on pawn loans 127.7% 102.7% 126.2% 129.0% 100.7% 126.3%
Average amount per pawn loan (in ones) $ 130 $ 89 $ 122 $ 125 $ 104 $ 122
Gross profit margin on disposition of merchandise 33.8% 11.5% 32.2% 37.9% 16.2% 36.1%
Merchandise turnover 3.0 3.8 3.0 2.8 5.3 3.0

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

MERCHANDISE DISPOSITION, GROSS PROFIT AND OPERATING DATA

(dollars in thousands)

Profit from the disposition of merchandise represents the proceeds received from the disposition of merchandise in excess of the cost of disposed merchandise, which is the Company's cost basis in the loan or the amount paid for purchased merchandise. Retail sales include the sale of jewelry and general merchandise direct to consumers through the Company's domestic and foreign retail services locations or over the Internet. Commercial sales include the sale of refined gold, platinum, silver, and diamonds to brokers or manufacturers. The following tables summarize the proceeds from the disposition of merchandise and the related profit for the three and nine months ended September 30, 2012 and 2011 (dollars in thousands).

 
Three Months Ended September 30,
2012   2011
Retail   Commercial   Total Retail   Commercial   Total
Proceeds from disposition $ 81,947 $ 71,546 $ 153,493 $ 79,040 $ 78,846 $ 157,886
Gross profit on disposition $ 30,023 $ 16,552 $ 46,575 $ 30,782 $ 24,830 $ 55,612
Gross profit margin 36.6 % 23.1 % 30.3 % 38.9 % 31.5 % 35.2 %
Percentage of total gross profit 64.5 % 35.5 % 100.0 % 55.4 % 44.6 % 100.0 %
Nine Months Ended September 30,
2012   2011
Retail   Commercial   Total Retail   Commercial   Total
Proceeds from disposition $ 277,602 $ 240,230 $ 517,832 $ 253,272 $ 220,416 $ 473,688
Gross profit on disposition $ 103,470 $ 63,484 $ 166,954 $ 99,908 $ 71,308 $ 171,216
Gross profit margin 37.3 % 26.4 % 32.2 % 39.4 % 32.4 % 36.1 %
Percentage of total gross profit 62.0 % 38.0 % 100.0 % 58.4 % 41.6 % 100.0 %

The table below summarizes the age of merchandise held for disposition before valuation allowance of $0.7 million at September 30, 2012 and 2011 (dollars in thousands).

  As of September 30,
2012     2011
Amount   % Amount   %
Jewelry - held for one year or less $ 101,464 59.0 $ 104,004 62.2
Other merchandise - held for one year or less   62,268   36.2       57,625   34.5
Total merchandise held for one year or less   163,732   95.2       161,629   96.7
Jewelry - held for more than one year 2,827 1.6 2,091 1.3
Other merchandise - held for more than one year   5,437   3.2       3,345   2.0
Total merchandise held for more than one year   8,264   4.8       5,436   3.3
Total merchandise held for disposition $ 171,996   100.0     $ 167,065   100.0

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)

The following tables set forth consumer loan fees by segment, adjusted for the deduction of the loan loss provision for the three and nine months ended September 30, 2012 and 2011 (dollars in thousands).

  Three Months Ended September 30,
2012   2011
Retail Services   E-Commerce   Total Retail Services   E-Commerce   Total
Interest and fees on short-term loans $ 28,364 $ 137,570 $ 165,934 $ 29,741 $ 117,084 $ 146,825
Interest and fees on installment loans   3,081       36,079       39,160       2,936       13,220       16,156  
Consumer loan fees $ 31,445 $ 173,649 $ 205,094 $ 32,677 $ 130,304 $ 162,981
Consumer loan loss provision   8,061       76,238       84,299       7,513       53,063       60,576  
Consumer loan fees, net of loss provision $ 23,384     $ 97,411     $ 120,795     $ 25,164     $ 77,241     $ 102,405  
 
Year-over-year change - $ $ (1,780) $ 20,170 $ 18,390 $ 880 $ 17,792 $ 18,672
Year-over-year change - % (7.1) % 26.1 % 18.0 % 3.6 % 29.9 % 22.3 %

Consumer loan loss provision as a % of consumer loan fees

 

  25.6 %     43.9 %     41.1 %     23.0 %     40.7 %     37.2 %
 
Nine Months Ended September 30,
2012 2011
Retail Services E-Commerce Total Retail Services E-Commerce Total
Interest and fees on short-term loans $ 81,169 $ 385,268 $ 466,437 $ 79,503 $ 304,153 $ 383,656
Interest and fees on installment loans   8,227       83,992       92,219       6,329       28,537       34,866  
Consumer loan fees $ 89,396 $ 469,260 $ 558,656 $ 85,832 $ 332,690 $ 418,522
Consumer loan loss provision   19,130       199,949       219,079       15,452       129,753       145,205  
Consumer loan fees, net of loss provision $ 70,266     $ 269,311     $ 339,577     $ 70,380     $ 202,937     $ 273,317  
 
Year-over-year change - $ $ (114) $ 66,374 $ 66,260 $ (225) $ 44,329 $ 44,104
Year-over-year change - % (0.2) % 32.7 % 24.2 % (0.3) % 27.9 % 19.2 %

Consumer loan loss provision as a % of consumer loan fees

  21.4 %     42.6 %     39.2 %     18.0 %     39.0 %     34.7 %

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

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

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)

The following tables summarize selected data related to the Company's consumer loan activities as of September 30, 2012 and 2011 and for the three and nine months ended September 30, 2012 and 2011.

  Three Months Ended     Nine Months Ended
September 30, September 30,
2012     2011 2012     2011

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

9.5% 7.4% 8.8% 6.7%

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

8.5% 6.1% 8.2% 6.3%

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

  41.1%     37.2%     39.2%     34.7%
 

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

 
  As of September 30,
2012   2011
Company Owned(a)   Guaranteed by the Company(a)   Combined(b) Company Owned(a)   Guaranteed by the Company(a)   Combined(b)
Ending consumer loan balances:
Retail Services
Short-term loans $ 49,079 $ 6,904 $ 55,983 $ 48,891 $ 8,644 $ 57,535
Installment loans     9,899     6,707     16,606     8,484     6,218     14,702
Total Retail Services, gross     58,978     13,611     72,589     57,375     14,862     72,237
E-Commerce
Domestic
Short-term loans 75,435 37,952 113,387 51,829 33,514 85,343
Installment loans     38,986     -     38,986     19,856     -     19,856
Total Domestic, gross     114,421     37,952     152,373     71,685     33,514     105,199
 
Foreign
Short-term loans 96,561 3,708 100,269 86,987 2,842 89,829
Installment loans     66,111     -     66,111     22,930     -     22,930
Total Foreign, gross     162,672     3,708     166,380     109,917     2,842     112,759
Total E-Commerce, gross     277,093     41,660     318,753     181,602     36,356     217,958
 
Total ending loan balance, gross 336,071 55,271 391,342 238,977 51,218 290,195
Less: Allowance and liabilities for losses(a)     (79,246)     (3,437)     (82,683)     (47,335)     (2,487)     (49,822)
Total ending loan balance, net   $ 256,825   $ 51,834   $ 308,659   $ 191,642   $ 48,731   $ 240,373
Allowance and liability for losses as a % of combined consumer loan balances, gross(b)     23.6%     6.2%     21.1%     19.8%     4.9%     17.2%
 
(a) GAAP measure. The consumer loan balances guaranteed by the Company represent loans originated by third-party lenders through the Company's credit services organization programs (the "CSO programs"), so these balances are not recorded in the Company's financial statements. However, the Company has established a liability for estimated losses in support of its guarantee of these loans, which is reflected in the table above and included in its financial statements.
(b) Except for allowance and liability for estimated losses, amounts represent non-GAAP measures.
 
 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)

The following tables summarize consumer loans written or renewed for the three and nine months ended September 30, 2012 and 2011 (dollars in thousands).

  Three Months Ended September 30,
2012   2011
Company Owned(a)  

Guaranteed by the Company(a)(b)

  Combined(a) Company Owned(a)  

Guaranteed by the Company(a)(b)

  Combined(a)

Amount of consumer loans written and renewed:

 

Retail Services
Short-term loans $ 191,332 $ 36,343 $ 227,675 $ 196,771 $ 45,915 $ 242,686
Installment loans     2,026     4,457     6,483     1,601     5,126     6,727
Total Retail Services     193,358     40,800     234,158     198,372     51,041     249,413
E-Commerce
Domestic
Short-term loans 116,785 197,962 314,747 109,909 180,890 290,799
Installment loans     29,987     -     29,987     15,223     -     15,223
Total Domestic     146,772     197,962     344,734     125,132     180,890     306,022
 
Foreign
Short-term loans 251,787 17,676 269,463 231,310 15,410 246,720
Installment loans     35,380     -     35,380     15,844     -     15,844
Total Foreign     287,167     17,676     304,843     247,154     15,410     262,564
Total E-Commerce     433,939     215,638     649,577     372,286     196,300     568,586
 
Total amount of consumer loans

written and renewed:

  $ 627,297   $ 256,438   $ 883,735   $ 570,658   $ 247,341   $ 817,999
 

Number of consumer loans written and renewed:

 

Retail Services
Short-term loans 408,886 68,960 477,846 423,380 81,771 505,151
Installment loans     1,772     662     2,434     1,554     977     2,531
Total Retail Services     410,658     69,622     480,280     424,934     82,748     507,682
E-Commerce
Domestic
Short-term loans 388,650 271,250 659,900 342,634 258,705 601,339
Installment loans     31,444     -     31,444     11,799     -     11,799
Total Domestic     420,094     271,250     691,344     354,433     258,705     613,138
 
Foreign
Short-term loans 434,578 23,146 457,724 433,216 22,251 455,467
Installment loans     30,336     -     30,336     13,967     -     13,967
Total Foreign     464,914     23,146     488,060     447,183     22,251     469,434
Total E-Commerce     885,008     294,396     1,179,404     801,616     280,956     1,082,572
 
Total number of consumer loans

written and renewed

    1,295,666     364,018     1,659,684     1,226,550     363,704     1,590,254
 
(a) The disclosure regarding the amount and number of consumer loans written and renewed is statistical data that is not included in the Company's financial statements.
(b) Loans guaranteed by the Company represent loans originated by third-party lenders through the CSO programs.
 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)
    Nine Months Ended September 30,
2012   2011
Company Owned(a)     Guaranteed by the Company(a)(b)   Combined(a) Company Owned(a)     Guaranteed by the Company(a)(b)   Combined(a)

Amount of consumer loans written and renewed:

 

Retail Services
Short-term loans $ 544,930 $ 109,005 $ 653,935 $ 534,182 $ 128,431 $ 662,613
Installment loans     5,690     10,613     16,303     6,580     10,193     16,773
Total Retail Services     550,620     119,618     670,238     540,762     138,624     679,386
E-Commerce
Domestic
Short-term loans 330,986 541,364 872,350 315,472 491,424 806,896
Installment loans     57,354     -     57,354     28,262     -     28,262
Total Domestic     388,340     541,364     929,704     343,734     491,424     835,158
 
Foreign
Short-term loans 738,682 52,724 791,406 568,507 40,476 608,983
Installment loans     91,790     -     91,790     36,797     -     36,797
Total Foreign     830,472     52,724     883,196     605,304     40,476     645,780
Total E-Commerce     1,218,812     594,088     1,812,900     949,038     531,900     1,480,938
 
Total amount of consumer loans

written and renewed:

  $ 1,769,432   $ 713,706   $ 2,483,138   $ 1,489,800   $ 670,524   $ 2,160,324
 

Number of consumer loans written and renewed:

 

Retail Services
Short-term loans 1,159,449 200,636 1,360,085 1,155,859 226,068 1,381,927
Installment loans     5,252     1,506     6,758     5,101     2,039     7,140
Total Retail Services     1,164,701     202,142     1,366,843     1,160,960     228,107     1,389,067
E-Commerce
Domestic
Short-term loans 1,075,228 741,152 1,816,380 957,228 693,814 1,651,042
Installment loans     57,255     -     57,255     24,630     -     24,630
Total Domestic     1,132,483     741,152     1,873,635     981,858     693,814     1,675,672
 
Foreign
Short-term loans 1,359,841 69,645 1,429,486 1,077,980 61,340 1,139,320
Installment loans     80,539     -     80,539     32,185     -     32,185
Total Foreign     1,440,380     69,645     1,510,025     1,110,165     61,340     1,171,505
Total E-Commerce     2,572,863     810,797     3,383,660     2,092,023     755,154     2,847,177
 
Total number of consumer loans

written and renewed

    3,737,564     1,012,939     4,750,503     3,252,983     983,261     4,236,244
 

(a)

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

(b)

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

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

INCOME FROM OPERATIONS BY OPERATING SEGMENT

(dollars in thousands)

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

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

  Retail Services   E-Commerce    
Domestic   Foreign   Total Domestic   Foreign   Total Corporate Consolidated
 
Three Months Ended 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
  Retail Services   E-Commerce    
Domestic   Foreign   Total Domestic   Foreign   Total Corporate Consolidated
 
Three Months Ended September 30, 2011
Revenue
Pawn loan fees and service charges $ 69,025 $ 5,374 $ 74,399 $ - $ - $ - $ - $ 74,399
Proceeds from disposition of merchandise 144,820 13,065 157,885 1 - 1 - 157,886
Consumer loan fees 32,677 - 32,677 67,320 62,984 130,304 - 162,981
Other   2,521     16     2,537     49     294     343     158     3,038
Total revenue   249,043     18,455     267,498     67,370     63,278     130,648     158     398,304
Cost of revenue
Disposed merchandise 91,863 10,411 102,274 - - - - 102,274
Consumer loan loss provision   7,513     -     7,513     25,472     27,591     53,063     -     60,576
Total cost of revenue   99,376     10,411     109,787     25,472     27,591     53,063     -     162,850
Net revenue   149,667     8,044     157,711     41,898     35,687     77,585     158     235,454
Expenses
Operations and administration 85,419 8,138 93,557 24,115 23,508 47,623 16,259 157,439
Depreciation and amortization   7,090     1,488     8,578     2,634     218     2,852     3,420     14,850
Total expenses   92,509     9,626     102,135     26,749     23,726     50,475     19,679     172,289
Income (loss) from operations $ 57,158   $ (1,582)   $ 55,576   $ 15,149   $ 11,961   $ 27,110   $ (19,521)   $ 63,165
As of September 30, 2011
Total assets $ 885,572 $ 121,326 $ 1,006,898 $ 323,699 $ 115,905 $ 439,604 $ 131,651 $ 1,578,153
Goodwill $ 327,887 $ 210,282 $ 538,169

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

INCOME FROM OPERATIONS BY OPERATING SEGMENT

(in thousands)
    Retail Services   E-Commerce    
Domestic   Foreign   Total Domestic   Foreign   Total Corporate Consolidated
 
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
    Retail Services   E-Commerce    
Domestic   Foreign   Total Domestic   Foreign   Total Corporate Consolidated
 
Nine Months Ended September 30, 2011
Revenue
Pawn loan fees and service charges $ 190,409 $ 15,725 $ 206,134 $ - $ - $ - $ - $ 206,134
Proceeds from disposition of merchandise 435,745 37,913 473,658 30 - 30 - 473,688
Consumer loan fees 85,832 - 85,832 181,243 151,447 332,690 - 418,522
Other   8,768     292     9,060     392     831     1,223     480     10,763
Total revenue   720,754     53,930     774,684     181,665     152,278     333,943     480     1,109,107
Cost of revenue
Disposed merchandise 270,692 31,757 302,449 23 - 23 - 302,472
Consumer loan loss provision   15,452     -     15,452     59,134     70,619     129,753     -     145,205
Total cost of revenue   286,144     31,757     317,901     59,157     70,619     129,776     -     447,677
 
Net revenue   434,610     22,173     456,783     122,508     81,659     204,167     480     661,430
Expenses
Operations and administration 249,752 25,335 275,087 62,482 58,999 121,481 49,045 445,613
Depreciation and amortization   19,359     4,459     23,818     7,956     618     8,574     7,208     39,600
Total expenses   269,111     29,794     298,905     70,438     59,617     130,055     56,253     485,213
Income (loss) from operations $ 165,499   $ (7,621)   $ 157,878   $ 52,070   $ 22,042   $ 74,112   $ (55,773)   $ 176,217

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

LOCATION INFORMATION

Retail Services Segment

The following table sets forth the number of domestic and foreign Company-owned and franchised locations in the Company's retail services segment offering pawn lending, consumer lending, and other services as of September 30, 2012 and 2011. The Company's domestic retail services locations operate under the names “Cash America Pawn,” “SuperPawn,” “Cash America Payday Advance,” “Cashland” and “Mr. Payroll.” The Company's foreign retail services locations operate under the name “Prenda Fácil.”

  As of September 30,
2012     2011
Domestic(a)(b)   Foreign(a)   Total Domestic(a)(b)   Foreign(a)   Total
Retail services locations offering:
Both pawn and consumer lending 577 - 577 571 - 571
Pawn lending only 155 160 315 125 186 311
Consumer lending only 83 - 83 86 - 86
Other (c) 99 - 99   115 - 115
Total retail services 914 160 1,074   897 186 1,083
(a) Except as described in (c) below, includes locations that operate in 23 states in the United States as of both September 30, 2012 and 2011, respectively.
(b) Includes unconsolidated franchised locations as follows: one location operating under the name “Cash America Pawn” as of September 30, 2012 and eight locations operating under the names “Cash America Pawn” and “SuperPawn” as of September 30, 2011.
(c) As of September 30, 2012 and 2011, includes six and six consolidated Company-owned check cashing locations, respectively, and 93 and 109 unconsolidated franchised check cashing locations, respectively. As of September 30, 2012 and 2011, includes locations that operate in 15 and 18 states in the United States, respectively.

E-Commerce Segment

As of September 30, 2012 and 2011, the Company's e-commerce segment operated in 32 states in the United States and in three other foreign countries.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NON-GAAP DISCLOSURE

Non-GAAP Disclosure

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

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

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NON-GAAP DISCLOSURE

ADJUSTED EARNINGS PER SHARE

Adjusted Earnings Per Share

In addition to reporting financial results in accordance with GAAP, the Company has provided adjusted earnings and adjusted earnings per share, which are non-GAAP measures. Management believes that the presentation of these measures provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments and amortization methods, which provides a more complete understanding of the Company's financial performance, competitive position and prospects for the future. Management also believes that investors regularly rely on non-GAAP financial measures, such as adjusted earnings and adjusted earnings per share, to assess operating performance and that such measures may highlight trends in the Company's business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. In addition, management believes that the adjustments shown below, especially the adjustments for events that occurred during the three months ended September 30, 2012, such as the reorganization of the Mexico-based pawn operations and the withdrawal of the proposed initial public offering of the Company's wholly-owned subsidiary, Enova International, Inc. (the "proposed Enova IPO"), are useful to investors in order to allow them to compare the Company's financial results for the quarter with the previous periods shown.

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

  Three Months Ended   Nine Months Ended
September 30, September 30,
  2012   2011 2012   2011
$   Per Diluted

Share

$   Per Diluted

Share

$   Per Diluted

Share

$   Per Diluted

Share

 

Net income attributable to Cash America International, Inc.

$

11,703

$ 0.37 $ 34,777 $ 1.08 $ 82,990 $ 2.62 $ 98,136 $ 3.07

 

Adjustments:
Charges related to withdrawn Enova IPO(a) 1,941 0.06 - - 2,461 0.08 - -

Charges related to Mexico Reorganization, net of noncontrolling interest(b)

    18,456     0.59     -    

-

    18,456     0.58     -     -
Subtotal     32,100     1.02     34,777     1.08     103,907     3.28     98,136     3.07
Other adjustments:
Intangible asset amortization 639 0.02 939 0.03 2,042 0.06 3,024 0.09
Non-cash equity-based compensation 564 0.02 842 0.03 2,481 0.08 2,448 0.08

Convertible debt non-cash interest and issuance cost amortization

601 0.02 559 0.02 1,766 0.06 1,650 0.05
Foreign currency transaction (gain) loss     (58)     -     483     0.01     45     -     658     0.02
Adjusted earnings   $ 33,846   $ 1.08   $ 37,600   $ 1.17   $ 110,241   $ 3.48   $ 105,916   $ 3.31
 

(a)

Represents charges directly related to the proposed Enova IPO that was withdrawn in July 2012. For the three months ended September 30, 2012, represents $3.1 million of charges, net tax benefit of $1.2 million. For the nine months ended September 30, 2012, represents $3.9 million of charges, net tax benefit of $1.2 million.

 

(b)

Represents charges related to the reorganization of the Company's Mexico-based pawn operations. For the three and nine months ended September 30, 2012, represents $21.9 million of charges, net 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, taxes and including the net income or loss attributable to noncontrolling interests. Management believes adjusted EBITDA is used by investors to analyze operating performance and evaluate the Company's ability to incur and service debt and its capacity for making capital expenditures. Adjusted EBITDA is also useful to investors to help assess the Company's liquidity and estimated enterprise value. The computation of adjusted EBITDA as presented below may differ from the computation of similarly-titled measures provided by other companies (dollars in thousands):

  Trailing 12 Months Ended
September 30,
2012     2011  
Net income attributable to Cash America

International, Inc.

  $ 120,817   $ 132,841
 
Adjustments:
Depreciation and amortization expenses 71,431 52,172
Interest expense, net 28,182 24,078
Foreign currency transaction loss 279 1,421
Equity in loss of unconsolidated subsidiary 243 145
Provision for income taxes 90,570 79,401
Net loss attributable to the noncontrolling interest       (5,539 )       (479 )
Adjusted EBITDA     $ 305,983       $ 289,579  
 
Adjusted EBITDA margin calculated as follows:
Total revenue $ 1,782,783 $ 1,489,105
Adjusted EBITDA       305,983         289,579  
Adjusted EBITDA as a percentage of total revenue       17.2 %       19.4 %

Cash America International, Inc.
Thomas A. Bessant, Jr., 817-335-1100

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