Cash America Announces Fourth Quarter Results and Declares Dividend

January 23, 2014 6:34 AM | 236 min read | Make a Comment
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FORT WORTH, Texas--(BUSINESS WIRE)--

Cash America International, Inc. CSH reported today that its fourth quarter ended December 31, 2013 net income attributable to the Company was $27,284,000 (91 cents per share), which included the after-tax impact of unusual expense items of $2.8 million (10 cents per share). This compares to $24,480,000 (79 cents per share) for the fourth quarter ended 2012, which included the after-tax impact of unusual expense items of $15.4 million (50 cents per share).

The $2.8 million of after-tax expenses for unusual items in the 2013 fourth quarter included costs related to the closure of 28 locations in Texas, which offered unsecured consumer loans as the primary source of revenue, a regulatory penalty incurred during the period, an adjustment to the remaining expected liability for the voluntary refund to customers in Ohio and expenses related to the early extinguishment of debt. Excluding the effect of these expenses, fourth quarter 2013 adjusted net income attributable to the Company, a non-GAAP measure, would have been $30.1 million ($1.01 per share). During the prior year fourth quarter of 2012, the Company incurred unusual expense items related to a voluntary refund to customers in Ohio and the reorganization of its Mexico-based pawn lending business, including the closure of 115 locations in Mexico, which totaled $15.4 million after taxes (50 cents per share). Excluding these expenses, adjusted net income attributable to the Company, a non-GAAP measure, for the fourth quarter of 2012 would have been $39,887,000 ($1.29 per share).

Consolidated net revenue of the Company in the fourth quarter of 2013 was up 2% to $271.6 million compared to $267.1 million in the fourth quarter of 2012. The increase in net revenue was due to a 10% increase in net consumer loan fees after loan loss provision expense and a 6% increase in revenue from secured loans during the quarter, the combination of which offset the anticipated decrease in net proceeds from the sale of merchandise.

Commenting on the results of the quarter, Daniel R. Feehan, President and Chief Executive Officer of Cash America, said, “As we expected, the retail selling environment during the fourth quarter was very competitive, but we were able to move merchandise during the period while benefiting from increased revenue from our loan products. We also completed the previously announced acquisition of a 34-store chain of pawn lending locations during the fourth quarter, which helped us achieve adjusted earnings that were in line with our expectations as we entered the quarter.”

Total revenue for the fiscal year ended December 31, 2013 was $1.8 billion, which compares to $1.8 billion during the twelve-month period in 2012. Net income attributable to the Company for the twelve months ended December 31, 2013 was $142,528,000 ($4.66 per share), which includes a net benefit from unusual items during the year of $18.8 million (a benefit of 62 cents per share). In 2013, the Company recorded a tax benefit related to the disposition of assets and reorganization of its Mexico-based pawn lending business of $33.2 million ($1.09 per share), which was partially offset by unusual expense items of $14.4 million (47 cents per share) related to a litigation settlement during the third quarter of 2013, the closure of consumer lending locations mentioned above, a regulatory penalty, an adjustment to the remaining expected liability for the voluntary refund to customers in Ohio and expenses for the early extinguishment of debt. Combining these amounts generates the net benefit of unusual items in 2013 of $18.8 million. Adjusting for the full year effects of the net benefit in 2013 would result in adjusted net income attributable to the Company, a non-GAAP measure, of $123.7 million ($4.04 per share).

In 2012, the Company reported full year net income of $107,470,000 ($3.42 per share), which included unusual expense items totaling $36.3 million ($1.15 per share) related to the reorganization of its Mexico-based pawn lending business, a voluntary refund to customers in Ohio and the withdrawal of a proposed securities offering. Excluding these unusual items in 2012, adjusted net income attributable to the Company, a non-GAAP measure, would have been $143.8 million ($4.57 per share) for the twelve-month period ended December 31, 2012.

Cash America will conduct a conference call to discuss its fourth quarter earnings on Thursday, January 23, 2014, at 7:00 AM CST. A live web cast of the call will be available on the Company's corporate web site in the Investor Relations section (www.cashamerica.com). To listen to the live call, please go to the web site at least fifteen minutes early to register, download, and install any necessary audio software.

Additionally, the Company announced that the Board of Directors, at its regularly scheduled quarterly meeting, declared a $0.035 (3.5 cents) per share cash dividend on common stock outstanding. The dividend will be paid at the close of business on February 19, 2014 to shareholders of record on February 5, 2014.

Outlook for the First Quarter of 2014 and the 2014 Fiscal Year

Management believes that the opportunities for sustained growth in revenue and earnings will be largely associated with the customer demand for the credit products provided by the Company, which primarily take the form of pawn loans and consumer loans. Other elements expected to affect the growth in revenue include the potential impact of the regulatory governance of consumer loan products, the ability to profitably liquidate merchandise primarily from unredeemed pawn loans, the continued development of the Mexican pawn operations and the rate of growth of the Company's e-commerce segment. Based on the preceding factors management estimates that the first quarter of fiscal 2014 will be between $1.15 and $1.25 in earnings per share compared to $1.40 in the first quarter of 2013. At this time management leaves its previously reported expectations for its fiscal year 2014 earnings per share unchanged at between $4.20 to $4.40 per share, which compares to actual full year 2013 earnings per share of $4.66 that includes the after-tax net benefit of unusual items discussed above of $18.8 million (a net benefit of 62 cents per share). Excluding the net benefit for unusual items in 2013, adjusted net income attributable to the Company per share, a non-GAAP measure, for the full year was $4.04, for the comparison period.

About the Company

As of December 31, 2013, Cash America International, Inc. (the “Company”) operated 1,006 total locations offering specialty financial services to consumers, which included the following:

  • 869 lending locations in 22 states in the United States primarily under the names “Cash America Pawn,” “SuperPawn,” “Cash America Payday Advance,” and “Cashland;”
  • 47 pawn lending locations in central and southern Mexico under the name “Cash America casa de empeño;” and
  • 90 check cashing centers (all of which are unconsolidated franchised check cashing centers) operating in 14 states in the United States under the name “Mr. Payroll.”

Additionally, as of December 31, 2013, the Company offered consumer loans over the Internet to customers:

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

     

http://www.cashamerica.com

http://www.poundstopocket.co.uk

http://www.enova.com

http://www.dollarsdirect.com.au

http://www.cashnetusa.com

http://www.dollarsdirect.ca

http://www.netcredit.com

http://www.goldpromise.com

http://www.cashlandloans.com

http://www.mrpayroll.com

http://www.quickquid.co.uk

 

Non-GAAP Measures

A reconciliation of adjusted net income attributable to the Company and adjusted net income attributable to the Company on a per share basis, which are non-GAAP measures, for the three- and twelve-month periods ended December 31, 2013 and December 31, 2012 discussed above is included in the attachments for this press release in the “Adjusted Earnings and Adjusted Earnings Per Share” table.

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

This release contains forward-looking statements about the business, financial condition, operations and prospects of the Company. The actual results of the Company could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties including, without limitation: the effect of or changes in domestic and foreign pawn, consumer credit, tax and other laws and governmental rules and regulations applicable to the Company's business or changes in the interpretation or enforcement thereof; the regulatory and examination authority of the Consumer Financial Protection Bureau in the U.S. and the UK Financial Conduct Authority, which will become the Company's primary regulator in the UK in 2014; public perception of the Company's business, including its consumer loan business and its business practices; changes in the political, regulatory or economic environment in foreign countries where the Company operates or in the future may operate; the Company's ability to process or collect consumer loans through the Automated Clearing House system; fluctuations, including a sustained decrease, in the price of gold or deterioration in economic conditions; the effect of any current or future litigation proceedings or any judicial decisions or rule-making that affect the Company, its products or its arbitration agreements; the actions of third parties who provide, acquire or offer products and services to, from or for the Company; changes in demand for the Company's services, the Company's ability to attract and retain qualified executive officers; a prolonged interruption in the Company's operations of its facilities, systems and business functions, including its information technology and other business systems; the ability of the Company to open new locations in accordance with its plans or to successfully integrate newly acquired businesses into the Company's operations; changes in competition; interest rate and foreign currency exchange rate fluctuations; changes in the capital markets; changes in the Company's ability to satisfy its debt obligations or to refinance existing debt obligations or obtain new capital to finance growth; security breaches, cyber attacks or fraudulent activity; compliance with laws and regulations applicable to international operations; the implementation of new, or changes in the interpretation of existing, accounting principles or financial reporting requirements; acts of God, war or terrorism, pandemics and other events; the effect of any of such changes on the Company's business or the markets in which it operates; and other risks and uncertainties indicated in the Company's filings with the Securities and Exchange Commission. These risks and uncertainties are beyond the ability of the Company to control, nor can the Company predict, in many cases, all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this release, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “anticipates,” “may,” “forecasts,” “projects” and similar expressions and variations as they relate to the Company or its management are intended to identify forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements to reflect events or circumstances occurring after the date of this release.

   
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
HIGHLIGHTS OF CONSOLIDATED RESULTS OF OPERATIONS
(dollars in thousands, except per share data)
(Unaudited)
Three Months Ended   Year Ended
December 31, December 31,
2013     2012 2013   2012
Consolidated Operations:
Total revenue $ 480,346 $ 491,604 $ 1,797,226 $ 1,800,430
Net revenue 271,649 267,088 1,035,358 1,005,957
Total expenses       215,219       217,600     823,575     790,042
 
Income from Operations $ 56,430 $ 49,488 $ 211,783 $ 215,915
 
Income before income taxes       45,311       41,160     173,590     186,320
 
Net Income     $ 27,284     $ 23,991   $ 142,836   $ 101,664
 

Net loss (income) attributable to the noncontrolling interest

    $ -     $ 489   $ (308)   $ 5,806
 
Net Income Attributable to Cash America International, Inc.     $ 27,284     $ 24,480   $ 142,528   $ 107,470
 
Earnings per share:

Net Income attributable to Cash America International, Inc. common shareholders:

Basic $ 0.96 $ 0.84 $ 4.97 $ 3.64
Diluted $ 0.91 $ 0.79 $ 4.66 $ 3.42
 
Weighted average common shares outstanding:
Basic 28,391 29,262 28,657 29,514
Diluted 29,968 30,884 30,613 31,452

 
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)
(Unaudited)
   
December 31,
  2013   2012
 
Assets
Current assets:
Cash and cash equivalents $ 69,238 $ 63,134
Restricted cash 8,000 -
Pawn loans 261,148 244,640
Consumer loans, net 358,841 289,418
Merchandise held for disposition, net 208,899 167,409
Pawn loan fees and service charges receivable 53,438 48,991
Income taxes receivable 9,535 -
Prepaid expenses and other assets 33,655 35,605
Deferred tax assets     38,800     48,992
Total current assets 1,041,554 898,189
Property and equipment, net 261,223 261,771
Goodwill 705,579 608,216
Intangible assets, net 52,256 36,473
Other assets     21,129     13,609
Total assets   $ 2,081,741   $ 1,818,258
 
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses $ 142,078 $ 126,664
Customer deposits 14,803 11,420
Income taxes currently payable - 5,922
Current portion of long-term debt     22,606     43,617
Total current liabilities 179,487 187,623
Deferred tax liabilities 101,417 101,711
Noncurrent income tax payable - 2,703
Other liabilities 1,031 888
Long-term debt     717,383     534,713
Total liabilities   $ 999,318   $ 827,638
 
Equity:
Cash America International, Inc. equity:

Common stock, $0.10 par value per share, 80,000,000 shares authorized, 30,235,164 shares issued and outstanding

3,024 3,024
Additional paid-in capital 150,833 157,613
Retained earnings 1,017,981 879,434
Accumulated other comprehensive income 4,649 3,128

Treasury shares, at cost (2,224,902 shares and 1,351,712 shares at December 31, 2013 and 2012, respectively)

    (94,064)     (51,304)
Total Cash America International, Inc. shareholders' equity 1,082,423 991,895
Noncontrolling interest     -     (1,275)
Total equity     1,082,423     990,620
Total liabilities and equity   $ 2,081,741   $ 1,818,258

   

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)

 
Three Months Ended Year Ended
December 31, December 31,
2013   2012 2013   2012
Revenue
Pawn loan fees and service charges $ 83,859 $ 79,479 $ 311,799 $ 300,929
Proceeds from disposition of merchandise 156,530 185,935 595,439 703,767
Consumer loan fees 237,984 222,864 878,183 781,520
Other     1,973     3,326     11,805     14,214
Total Revenue     480,346     491,604     1,797,226     1,800,430
Cost of Revenue
Disposed merchandise 109,216 127,301 410,613 478,179
Consumer loan loss provision     99,481     97,215     351,255     316,294
Total Cost of Revenue     208,697     224,516     761,868     794,473
 
Net Revenue     271,649     267,088     1,035,358     1,005,957
Expenses
Operations and administration 196,262 199,054 750,304 714,614
Depreciation and amortization     18,957     18,546     73,271     75,428
Total Expenses     215,219     217,600     823,575     790,042
Income from Operations 56,430 49,488 211,783 215,915
Interest expense (10,709) (8,066) (36,317) (29,131)
Interest income 3 65 72 144
Foreign currency transaction loss (152) (241) (1,205) (313)
Loss on extinguishment of debt (261) - (607) -
Equity in loss of unconsolidated subsidiary     -     (86)     (136)     (295)
Income before Income Taxes 45,311 41,160 173,590 186,320
Provision for income taxes     18,027     17,169     30,754     84,656
Net Income 27,284 23,991 142,836 101,664
Net loss (income) attributable to the noncontrolling interest     -     489     (308)     5,806
Net Income Attributable to Cash America International, Inc.   $ 27,284   $ 24,480   $ 142,528   $ 107,470
Earnings Per Share:
Net Income attributable to Cash America International, Inc. common shareholders:
Basic $ 0.96 $ 0.84 $ 4.97 $ 3.64
Diluted $ 0.91 $ 0.79 $ 4.66 $ 3.42
Weighted average common shares outstanding:
Basic 28,391 29,262 28,657 29,514
Diluted 29,968 30,884 30,613 31,452
Dividends declared per common share $ 0.035 $ 0.035 $ 0.140 $ 0.140

   

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

PAWN LENDING ACTIVITIES – FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)

 

The following tables outline certain data related to pawn loan activities of Cash America International, Inc. (the “Company”) as of and for the three months and years ended December 31, 2013 and 2012 (dollars in thousands).

 
As of December 31,
2013   2012   Change   % Change
Ending pawn loan balances
Domestic retail services $ 256,772 $ 240,573 $ 16,199 6.7 %
Foreign retail services       4,376     4,067     309   7.6 %
Consolidated pawn loan balances     $ 261,148   $ 244,640   $ 16,508   6.7 %
 
Ending merchandise balance, net
Domestic retail services $ 203,823 $ 161,655 $ 42,168 26.1 %
Foreign retail services       5,076     5,754     (678)   (11.8) %
Consolidated merchandise balance, net     $ 208,899   $ 167,409   $ 41,490   24.8 %
 
Three Months Ended December 31,
2013 2012 Change % Change
Pawn loan fees and service charges
Domestic retail services $ 82,003 $ 77,354 $ 4,649 6.0 %
Foreign retail services       1,856     2,125     (269)   (12.7) %
Consolidated pawn loan fees and service charges     $ 83,859   $ 79,479   $ 4,380   5.5 %
 
Average pawn loan balance outstanding
Domestic retail services $ 249,777 $ 240,545 $ 9,232 3.8 %
Foreign retail services       5,100     7,775     (2,675)   (34.4) %
Consolidated average pawn loans outstanding     $ 254,877   $ 248,320   $ 6,557   2.6 %
 
Amount of pawn loans written and renewed
Domestic retail services $ 250,783 $ 241,215 $ 9,568 4.0 %
Foreign retail services       13,817     19,386     (5,569)   (28.7) %
Consolidated amount of pawn loans written and renewed     $ 264,600   $ 260,601   $ 3,999   1.5 %
 
Average amount per pawn loan (in ones)
Domestic retail services $ 127 $ 133 $ (6) (4.5) %
Foreign retail services $ 89 $ 84 $ 5 6.0 %
Consolidated average amount per pawn loan (in ones)     $ 124   $ 127   $ (3)   (2.4) %
 
Annualized yield on pawn loans
Domestic retail services 130.3% 127.9%
Foreign retail services 144.4% 108.7%
Consolidated annualized yield on pawn loans       130.5%     127.3%            
 
Gross profit margin on disposition of merchandise
Domestic retail services 31.3% 32.6%
Foreign retail services 2.2% 13.5%
Gross profit margin on disposition of merchandise       30.2%     31.5%            
 
Merchandise turnover
Domestic retail services 2.1 2.8
Foreign retail services 3.5 4.3
Consolidated merchandise turnover       2.1     2.9            

         

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

PAWN LENDING ACTIVITIES – FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)

 
Year Ended December 31,
2013 2012 Change % Change
Pawn loan fees and service charges
Domestic retail services $ 304,511 $ 288,161 $ 16,350 5.7 %
Foreign retail services       7,288     12,768     (5,480)   (42.9) %
Consolidated pawn loan fees and service charges     $ 311,799   $ 300,929   $ 10,870   3.6 %
 
Average pawn loan balance outstanding
Domestic retail services $ 233,166 $ 225,066 $ 8,100 3.6 %
Foreign retail services       4,943     12,055     (7,112)   (59.0) %
Consolidated average pawn loans outstanding     $ 238,109   $ 237,121   $ 988   0.4 %
 
Amount of pawn loans written and renewed
Domestic retail services $ 958,542 $ 916,215 $ 42,327 4.6 %
Foreign retail services       56,120     124,263     (68,143)   (54.8) %
Consolidated amount of pawn loans written and renewed     $ 1,014,662   $ 1,040,478   $ (25,816)   (2.5) %
 
Average amount per pawn loan (in ones)
Domestic retail services $ 127 $ 131 $ (4) (3.1) %
Foreign retail services $ 87 $ 88 $ (1) (1.1) %
Consolidated average amount per pawn loan (in ones)     $ 124   $ 124   $ -   - %
 
Annualized yield on pawn loans
Domestic retail services 130.6% 128.0%
Foreign retail services 147.4% 105.9%
Consolidated annualized yield on pawn loans       130.9%     126.9%            
 
Gross profit margin on disposition of merchandise
Domestic retail services 31.6% 33.5%
Foreign retail services 13.3% 12.0%
Gross profit margin on disposition of merchandise       31.0%     32.1%            
 
Merchandise turnover
Domestic retail services 2.3 2.9
Foreign retail services 2.8 3.9
Consolidated merchandise turnover       2.4     3.0            

   

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

MERCHANDISE DISPOSITION, GROSS PROFIT AND INVENTORY OPERATING DATA

(dollars in thousands)

 

Profit from the disposition of merchandise represents the proceeds received from the disposition of merchandise in excess of the cost of disposed merchandise, which is the Company's cost basis in the pawn loan or the amount paid for purchased merchandise. The following tables summarize the proceeds from the disposition of merchandise and the related profit for the three months and years ended December 31, 2013 and 2012 (dollars in thousands).

 
Three Months Ended December 31,
2013   2012
Retail   Commercial   Total Retail   Commercial   Total
Proceeds from disposition $ 131,229 $ 25,301 $ 156,530 $ 113,964 $ 71,971 $ 185,935
Gross profit on disposition $ 42,930 $ 4,384 $ 47,314 $ 40,625 $ 18,009 $ 58,634
Gross profit margin 32.7 % 17.3 % 30.2 % 35.6 % 25.0 % 31.5 %
Percentage of total gross profit 90.7 % 9.3 % 100.0 % 69.3 % 30.7 % 100.0 %
 
Year Ended December 31,
2013 2012
Retail Commercial Total Retail Commercial Total
Proceeds from disposition $ 427,644 $ 167,795 $ 595,439 $ 391,566 $ 312,201 $ 703,767
Gross profit on disposition $ 151,757 $ 33,069 $ 184,826 $ 144,095 $ 81,493 $ 225,588
Gross profit margin 35.5 % 19.7 % 31.0 % 36.8 % 26.1 % 32.1 %
Percentage of total gross profit 82.1 % 17.9 % 100.0 % 63.9 % 36.1 % 100.0 %
     

           The table below summarizes the age of merchandise held for disposition before valuation allowance of $0.9 million as of both December 31, 2013 and 2012 (dollars in thousands).

 
As of December 31,
2013     2012
Amount   % Amount   %
Jewelry – held for one year or less $ 116,256 55.4 $ 99,466 59.1
Other merchandise – held for one year or less       79,851   38.1       59,914   35.6
Total merchandise held for one year or less       196,107   93.5       159,380   94.7
Jewelry – held for more than one year 6,734 3.2 3,283 2.0
Other merchandise – held for more than one year       7,007   3.3       5,597   3.3
Total merchandise held for more than one year       13,741   6.5       8,880   5.3
Total merchandise held for disposition     $ 209,848   100.0     $ 168,260   100.0

   

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)

 

The following tables set forth consumer loan fees by segment, adjusted for the deduction of the loan loss provision for the three months and years ended December 31, 2013 and 2012 (dollars in thousands).

 
Three Months Ended December 31,
2013   2012
Retail Services   E-Commerce   Total Retail Services   E-Commerce   Total
Interest and fees on short-term loans $ 25,145 $ 79,157 $ 104,302 $ 28,803 $ 120,539 $ 149,342
Interest and fees on line of credit accounts - 68,475 68,475 - 27,558 27,558
Interest and fees on installment loans       3,593       61,614       65,207       3,693       42,271       45,964  
Consumer loan fees $ 28,738 $ 209,246 $ 237,984 $ 32,496 $ 190,368 $ 222,864
Consumer loan loss provision       9,432       90,049       99,481       10,095       87,120       97,215  
Consumer loan fees, net of loss provision     $ 19,306     $ 119,197     $ 138,503     $ 22,401     $ 103,248     $ 125,649  
 
Year-over-year change - $ $ (3,095) $ 15,949 $ 12,854 $ (2,410) $ 28,418 $ 26,008
Year-over-year change - % (13.8) % 15.4 % 10.2 % (9.7) % 38.0 % 26.1 %

Consumer loan loss provision as a % of consumer loan fees

      32.8 %     43.0 %     41.8 %     31.1 %     45.8 %     43.6 %
 
Year Ended December 31,
2013 2012
Retail Services E-Commerce Total Retail Services E-Commerce Total
Interest and fees on short-term loans $ 100,146 $ 389,706 $ 489,852 $ 109,972 $ 459,793 $ 569,765
Interest and fees on line of credit accounts - 170,496 170,496 - 73,572 73,572
Interest and fees on installment loans       13,065       204,770       217,835       11,920       126,263       138,183  
Consumer loan fees $ 113,211 $ 764,972 $ 878,183 $ 121,892 $ 659,628 $ 781,520
Consumer loan loss provision       33,359       317,896       351,255       29,225       287,069       316,294  
Consumer loan fees, net of loss provision     $ 79,852     $ 447,076     $ 526,928     $ 92,667     $ 372,559     $ 465,226  
 
Year-over-year change - $ $ (12,815) $ 74,517 $ 61,702 $ (2,524) $ 94,792 $ 92,268
Year-over-year change - % (13.8) % 20.0 % 13.3 % (2.7) % 34.1 % 24.7 %

Consumer loan loss provision as a % of consumer loan fees

      29.5 %     41.6 %     40.0 %     24.0 %     43.5 %     40.5 %
 

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

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

   

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)

 

The following tables summarize selected data related to the Company's consumer loan activities as of and for the three months and years ended December 31, 2013 and 2012.

 

The following table shows short-term loans and related loan loss activity, which is based on the volume of loans written and renewed, for the three months ended December 31, 2013 and 2012.

 
Three Months Ended
December 31,
2013   2012

Short-term loans:

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

5.5% 6.8%

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

7.2% 6.6%

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

32.2% 37.3%

Allowance and liability for losses as a % of combined

consumer loans and fees receivable, gross(b)

    15.1%   19.2%
 

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

(b) Non-GAAP measure.

 
 

The following table shows line of credit accounts and installment loans and related loan loss activity, which is based on average amount of consumer loan balance, for the three months ended December 31, 2013 and 2012.

 
Three Months Ended
December 31,
2013   2012

Line of credit accounts:

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

29.0% 40.7%

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

22.0% 33.4%

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

47.7% 60.0%

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

  26.4%  

27.3%

 

Installment loans:

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

17.2% 18.9%

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

16.9% 17.7%

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

50.9% 54.2%

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

  17.8%   22.1%

 

(a)Non-GAAP measure.

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

 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)

 
Three Months Ended
December 31,
2013   2012

Short-term loans:

Combined consumer loan loss provision $ 33,567 $ 55,751
Charge-offs (net of recoveries) 43,862 53,722
Allowance and liability for losses 26,747 48,916
 

Line of credit accounts:

Combined consumer loan loss provision $ 32,694 $ 16,534
Charge-offs (net of recoveries) 24,844 13,590
Allowance and liability for losses 29,784 11,107
Company owned average consumer loan balance 112,704 40,652
 

Installment loans:

Combined consumer loan loss provision $ 33,220 $ 24,930
Charge-offs (net of recoveries) 32,615 23,385
Allowance and liability for losses 34,415 29,178
 
Average consumer loan balance:
Company owned $ 181,637 $ 124,060
Guaranteed by the Company     11,457     8,051
Combined average consumer loan balance(a)   $ 193,094   $ 132,111

(a)Non-GAAP measure.

   
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSUMER LOAN FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)

 

The following table summarizes consumer loan balances outstanding as of December 31, 2013 and 2012 (dollars in thousands):

 
As of December 31,
2013     2012
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 $ 49,856 $ 4,900 $ 54,756 $ 52,171 $ 7,134 $ 59,305
Installment loans       9,787       12,639       22,426       11,246       9,395       20,641
Total Retail Services, gross       59,643       17,539       77,182       63,417       16,529       79,946

E-Commerce

Domestic
Short-term loans 33,494 41,411 74,905 38,227 44,261 82,488
Line of credit accounts 66,247 - 66,247 42,700 - 42,700
Installment loans       76,770       -       76,770       45,996       -       45,996
Total Domestic, gross       176,511       41,411       217,922       126,923       44,261       171,184
 
Foreign
Short-term loans 47,886 - 47,886 108,899 3,946 112,845
Line of credit accounts 59,555 - 59,555 - - -
Installment loans       103,112       -       103,112       75,882       -       75,882
Total Foreign, gross       210,553       -       210,553       184,781       3,946       188,727
Total E-Commerce, gross       387,064       41,411       428,475       311,704       48,207       359,911
 
Total ending loan balance, gross 446,707 58,950 505,657 375,121 64,736 439,857
Less: Allowance and liabilities for losses       (87,866)       (3,080)       (90,946)       (85,703)       (3,498)       (89,201)
Total ending loan balance, net     $ 358,841     $ 55,870     $ 414,711     $ 289,418     $ 61,238     $ 350,656
Allowance and liability for losses as a % of consumer loan balances, gross       19.7%       5.2%       18.0%       22.8%       5.4%       20.3%
 

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

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

   
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSUMER LOAN FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)

 

The following tables summarize the consumer loans written and renewed for the three months and years ended December 31, 2013 and 2012 (dollars in thousands, except where otherwise noted).

 
Three Months Ended December 31,
2013     2012
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 (dollars in thousands):

Retail Services

Short-term loans $ 187,199 $ 21,337 $ 208,536 $ 198,645 $ 36,216 $ 234,861
Installment loans       1,966       7,863       9,829       2,033       7,289       9,322
Total Retail Services       189,165       29,200       218,365       200,678       43,505       244,183

E-Commerce

Domestic
Short-term loans 79,447 188,628 268,075 83,447 206,169 289,616
Line of credit accounts 50,262 - 50,262 33,681 - 33,681
Installment loans       50,769       -       50,769       32,244       -       32,244
Total Domestic       180,478       188,628       369,106       149,372       206,169       355,541
 
Foreign
Short-term loans 132,135 - 132,135 271,652 19,868 291,520
Line of credit accounts 75,614 - 75,614 - - -
Installment loans       87,917       -       87,917       41,319       -       41,319
Total Foreign       295,666       -       295,666       312,971       19,868       332,839
Total E-Commerce       476,144       188,628       664,772       462,343       226,037       688,380
 

Total amount of consumer loans written and renewed

    $ 665,309     $ 217,828     $ 883,137     $ 663,021     $ 269,542     $ 932,563
Number of consumer loans written

and renewed (in ones):

 

Retail Services

Short-term loans 390,255 40,651 430,906 414,714 68,508 483,222
Installment loans       1,713       4,515       6,228       1,836       1,339       3,175
Total Retail Services       391,968       45,166       437,134       416,550       69,847       486,397

E-Commerce

Domestic
Short-term loans 242,621 271,392 514,013 277,756 279,905 557,661
Line of credit accounts 195,868 - 195,868 126,292 - 126,292
Installment loans       40,844       -       40,844       30,017       -       30,017
Total Domestic       479,333       271,392       750,725       434,065       279,905       713,970
 
Foreign
Short-term loans 244,835 - 244,835 455,579 25,985 481,564
Line of credit accounts 228,744 - 228,744 - - -
Installment loans       73,379       -       73,379       34,711       -       34,711
Total Foreign       546,958       -       546,958       490,290       25,985       516,275
Total E-Commerce       1,026,291       271,392       1,297,683       924,355       305,890       1,230,245
 
Total number of consumer loans written

and renewed

      1,418,259       316,558       1,734,817       1,340,905       375,737       1,716,642
(a)The disclosure regarding the amount and number of consumer loans written and renewed is statistical data that is not included in the Company's financial statements.
(b)Loans guaranteed by the Company represent loans originated by third-party lenders through the CSO programs.

 
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSUMER LOAN FINANCIAL AND OPERATING DATA

(dollars in thousands, except where otherwise noted)

 
Year Ended December 31,
2013     2012
Company Owned(a)     Guaranteed by the Company(a)(b)     Combined(a) Guaranteed by the Company(a)     Guaranteed by the Company(a)(b)     Guaranteed by the Company(a)
Amount of consumer loans written

and renewed (dollars in thousands):

Retail Services

Short-term loans $ 712,253 $ 104,236 $ 816,489 $ 743,575 $ 145,221 $ 888,796
Installment loans     7,488       21,734       29,222       7,723       17,902       25,625
Total Retail Services     719,741       125,970       845,711       751,298       163,123       914,421

E-Commerce

Domestic
Short-term loans 302,353 708,828 1,011,181 331,754 747,533 1,079,287
Line of credit accounts 163,805 - 163,805 116,360 - 116,360
Installment loans     155,068       -       155,068       89,598       -       89,598
Total Domestic     621,226       708,828       1,330,054       537,712       747,533       1,285,245
 
Foreign
Short-term loans 820,243 14,572 834,815 1,010,334 72,592 1,082,926
Line of credit accounts 147,844 - 147,844 - - -
Installment loans     283,615       -       283,615       133,109       -       133,109
Total Foreign     1,251,702       14,572       1,266,274       1,143,443       72,592       1,216,035
Total E-Commerce     1,872,928      

723,400

      2,596,328       1,681,155       820,125       2,501,280
 

Total amount of consumer loans written and renewed

  $ 2,592,669   $ 849,370   $ 3,442,039   $ 2,432,453   $ 983,248   $ 3,415,701
Number of consumer loans written

and renewed (in ones):

Retail Services

Short-term loans 1,490,507 201,400 1,691,907 1,574,163 269,144 1,843,307
Installment loans     6,735       7,060       13,795       7,088       2,845       9,933
Total Retail Services     1,497,242       208,460       1,705,702       1,581,251       271,989       1,853,240

E-Commerce

Domestic
Short-term loans 979,890 998,220 1,978,110 1,062,105 1,021,057 2,083,162
Line of credit accounts 618,979 - 618,979 417,171 - 417,171
Installment loans     134,350       -       134,350       87,272       -       87,272
Total Domestic     1,733,219       998,220       2,731,439       1,566,548       1,021,057       2,587,605
 
Foreign
Short-term loans 1,491,931 19,106 1,511,037 1,815,420 95,630 1,911,050
Line of credit accounts 423,692 - 423,692 - - -
Installment loans     239,631       -       239,631       115,250       -       115,250
Total Foreign     2,155,254       19,106       2,174,360       1,930,670       95,630       2,026,300
Total E-Commerce     3,888,473       1,017,326       4,905,799       3,497,218       1,116,687       4,613,905
 
Total number of consumer loans written

and renewed

    5,385,715       1,225,786       6,611,501       5,078,469       1,388,676       6,467,145
 
(a)The disclosure regarding the amount and number of consumer loans written and renewed is statistical data that is not included in the Company's financial statements.
(b)Loans guaranteed by the Company represent loans originated by third-party lenders through the CSO programs.

               
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
INCOME FROM OPERATIONS BY OPERATING SEGMENT

(dollars in thousands)

 
 

The following tables contain operating segment data for the three months and years ended December 31, 2013 and 2012 (dollars in thousands).

 
Retail Services E-Commerce
Domestic   Foreign   Total Domestic     Foreign     Total Corporate Consolidated
 

Three Months Ended December 31, 2013

Revenue
Pawn loan fees and service charges $ 82,003 $ 1,856 $ 83,859 $ - $ - $ - $ - $ 83,859
Proceeds from disposition of merchandise 150,991 5,539 156,530 - - - - 156,530
Consumer loan fees 28,738 - 28,738 111,375 97,871 209,246 - 237,984
Other     1,669       88       1,757       44       10       54       162       1,973
Total revenue     263,401       7,483       270,884       111,419       97,881       209,300       162       480,346
Cost of revenue
Disposed merchandise 103,801 5,415 109,216 - - - - 109,216
Consumer loan loss provision     9,432       -       9,432       46,900       43,149       90,049       -       99,481
Total cost of revenue     113,233       5,415       118,648       46,900       43,149       90,049       -       208,697
 
Net revenue     150,168       2,068       152,236       64,519       54,732       119,251       162       271,649
Expenses
Operations and administration 96,620 3,445 100,065 43,720 33,679 77,399 18,798 196,262
Depreciation and amortization     10,064       404       10,468       3,650       507       4,157       4,332       18,957
Total expenses     106,684       3,849       110,533       47,370       34,186       81,556       23,130       215,219
Income (loss) from operations   $ 43,484     $ (1,781)     $ 41,703     $ 17,149     $ 20,546     $ 37,695     $ (22,968)     $ 56,430

As of December 31, 2013

Total assets $ 1,177,684 $ 119,448 $ 1,297,132 $ 431,285 $ 217,415 $ 648,700 $ 135,909 $ 2,081,741
Goodwill $ 495,214 $ 210,365 $ 705,579
 
Retail Services E-Commerce
Domestic Foreign Total Domestic Foreign Total Corporate Consolidated
 

Three Months Ended December 31, 2012

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

As of December 31, 2012

Total assets $ 1,031,431 $ 85,607 $ 1,117,038 $ 391,068 $ 179,554 $ 570,622 $ 130,598 $ 1,818,258
Goodwill $ 397,845 $ 210,371 $ 608,216

           
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
INCOME FROM OPERATIONS BY OPERATING SEGMENT

(dollars in thousands)

 
Retail Services E-Commerce
Domestic   Foreign   Total Domestic   Foreign   Total Corporate Consolidated
 

Year Ended December 31, 2013

Revenue

Pawn loan fees and service charges

$ 304,511 $ 7,288 $ 311,799 $ - $ - $ - $ - $ 311,799
Proceeds from disposition of merchandise 576,707 18,732 595,439 - - - - 595,439
Consumer loan fees 113,211 - 113,211 394,472 370,500 764,972 - 878,183
Other       7,818     1,076     8,894     1,095     102     1,197     1,714     11,805
Total revenue       1,002,247     27,096     1,029,343     395,567     370,602     766,169     1,714     1,797,226
Cost of revenue
Disposed merchandise 394,370 16,243 410,613 - - - - 410,613
Consumer loan loss provision       33,359     -     33,359     159,291     158,605     317,896     -     351,255
Total cost of revenue       427,729     16,243     443,972     159,291     158,605     317,896     -     761,868
 
Net revenue       574,518     10,853     585,371     236,276     211,997     448,273     1,714     1,035,358
Expenses
Operations and administration 388,029 13,448 401,477 143,626 134,879 278,505 70,322 750,304
Depreciation and amortization       37,643     1,997     39,640     14,535     2,608     17,143     16,488     73,271
Total expenses       425,672     15,445     441,117     158,161     137,487     295,648     86,810     823,575
Income (loss) from operations     $ 148,846   $ (4,592)   $ 144,254   $ 78,115   $ 74,510   $ 152,625   $ (85,096)   $ 211,783
 
Retail Services E-Commerce
Domestic Foreign Total Domestic Foreign Total Corporate Consolidated
 

Year Ended December 31, 2012

Revenue
Pawn loan fees and service charges $ 288,161 $ 12,768 $ 300,929 $ - $ - $ - $ - $ 300,929
Proceeds from disposition of merchandise 657,104 46,663 703,767 - - - - 703,767
Consumer loan fees 121,892 - 121,892 332,752 326,876 659,628 - 781,520
Other       9,028     1,209     10,237     1,326     33     1,359     2,618     14,214
Total revenue       1,076,185     60,640     1,136,825     334,078     326,909     660,987     2,618     1,800,430
Cost of revenue
Disposed merchandise 437,099 41,080 478,179 - - - - 478,179
Consumer loan loss provision       29,225     -     29,225     143,006     144,063     287,069     -     316,294
Total cost of revenue       466,324     41,080     507,404     143,006     144,063     287,069     -     794,473
 
Net revenue       609,861     19,560     629,421     191,072     182,846     373,918     2,618     1,005,957
Expenses
Operations and administration 369,174 44,287 413,461 116,202 118,156 234,358 66,795 714,614

Depreciation and amortization

      30,978     16,634     47,612     11,987     1,285     13,272     14,544     75,428
Total expenses       400,152     60,921     461,073     128,189     119,441     247,630     81,339     790,042
Income (loss) from operations     $ 209,709   $ (41,361)   $ 168,348   $ 62,883   $ 63,405   $ 126,288   $ (78,721)   $ 215,915
 

Corporate operations primarily include corporate expenses, such as 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.

 
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
LOCATION INFORMATION
Retail Services Segment
 

The following table sets forth the number of domestic and foreign Company-owned and franchised locations in the Company's retail services segment offering pawn lending, consumer lending, and other services as of December 31, 2013 and 2012. The Company's domestic retail services locations operate under the names “Cash America Pawn,” “SuperPawn,” “Cash America Payday Advance,” “Cashland” and “Mr. Payroll.” In addition, some recently acquired domestic retail services locations operate under various names that are expected to be changed to “Cash America Pawn” during 2014. The Company's foreign retail services locations operate under the name “Cash America casa de empeño”.

 
 
 
 
 
 
 
 
 

As of December 31,

2013       2012
Domestic(a)   Foreign   Total Domestic(a)   Foreign   Total
Retail services locations offering:        

Both pawn and consumer lending

582 - 582 581 - 581
Pawn lending only 247 47 294 167 47 214
Consumer lending only 40 - 40 83 - 83
Other (b)   90   -   90       91   -   91
Total retail services   959   47   1,006       922   47   969
(a)Except as described in (b) below, includes locations that operate in 22 states in the United States as of December 31, 2013 and 2012, respectively.
(b)As of December 31, 2013 and 2012, includes 90 and 91 unconsolidated franchised check cashing locations, respectively. As of December 31, 2013 and 2012, includes locations that operate in 14 and 15 states in the United States, respectively.
 

E-Commerce Segment

As of December 31, 2013 and 2012, the Company's e-commerce segment operated in 32 states in the United States and in three other foreign countries:

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

Non-GAAP Disclosure

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

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

Adjusted Earnings and Adjusted Earnings Per Share

In addition to reporting financial results in accordance with GAAP, the Company has provided adjusted net income and diluted earnings per share attributable to the Company, adjusted earnings and adjusted earnings per share (collectively, the “Adjusted Earnings Measures”), 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 the Adjusted Earnings Measures, to assess operating performance and that such measures may highlight trends in the Company's business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. In addition, management believes that the adjustments shown below, especially the adjustments for events that occurred during the three months and years ended December 31, 2013 and 2012, such as the closure of 36 consumer lending-only retail services locations in Texas during the second half of 2013 (“Texas Consumer Loan Store Closures”), charges related to extinguishment of a portion of the Company's convertible senior notes (“Debt Extinguishment”), the penalty paid to the Consumer Financial Protection Bureau (“CFPB”) in connection with the issuance of a consent order by the CFPB (“Regulatory Penalty”), the charges related to the Company's settlement of litigation matter in 2013 (“2013 Litigation Settlement”), an income tax benefit related to the change of tax basis in the stock of one of its subsidiaries in connection with the Mexico Reorganization (as defined below) (“Creazione Deduction”), the withdrawal in July 2012 of the proposed initial public offering of the Company's wholly-owned subsidiary, Enova International, Inc. (“Enova IPO”), the reorganization of the Company's Mexico-based pawn operations during 2012 (“Mexico Reorganization”) and the voluntary reimbursements to Ohio customers during 2012 (“Ohio Reimbursements”) are useful to investors in order to allow them to compare the Company's financial results for the current quarter with the previous periods shown.

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

ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE

 

The following table provides a reconciliation for the three months and years ended December 31, 2013 and 2012, respectively, between net income attributable to the Company and diluted earnings per share calculated in accordance with GAAP to the Adjusted Earnings Measures, which are shown net of tax (dollars in thousands, except per share data):

 
Three Months Ended Year Ended
December 31, December 31,
2013     2012   2013       2012
$     Per Diluted

Share(a)

$     Per Diluted

Share(a)

$     Per Diluted

Share(a)

$     Per Diluted

Share(a)

 

Net income and diluted earnings per share attributable to Cash America International, Inc.

$ 27,284 $ 0.91 $ 24,480 $ 0.79 $ 142,528 $ 4.66 $ 107,470 $ 3.42
Adjustments (net of tax):
Texas Consumer Loan Store Closures(b) 865 0.03 - - 865 0.03 - -
Loss on Debt Extinguishment(c) 164 0.01 - - 382 0.01 - -
Regulatory Penalty(d) 5,000 0.17 - - 5,000 0.16 - -

2013 Litigation Settlement(e)

- - - - 11,340 0.37 - -
Tax benefit related to Creazione Deduction(f) - - - - (33,201) (1.09) - -
Charges related to withdrawn proposed Enova IPO(g) - - - - - - 2,424 0.07
Charges related to the Mexico Reorganization(h) - - 6,965 0.23 - - 25,421 0.81
Charges related to Ohio Reimbursements(i)       (3,209)       (0.11)       8,442       0.27       (3,209)       (0.10)       8,442       0.27

Adjusted net income and diluted earnings per share attributable to the Company

      30,104       1.01       39,887       1.29       123,705       4.04       143,757       4.57
Other adjustments (net of tax):
Intangible asset amortization 907 0.03 740 0.03 3,582 0.12 2,791 0.09
Non-cash equity-based compensation 636 0.02 515 0.02 3,092 0.10 3,007 0.10

Convertible debt non-cash interest and issuance cost amortization

596 0.02 612 0.02 2,493 0.09 2,386 0.07
Foreign currency transaction loss       96       -       151       -       759       0.02       196       0.01
Adjusted earnings and adjusted earnings per share     $ 32,339     $ 1.08     $ 41,905     $ 1.36     $ 133,631     $ 4.37     $ 152,137     $ 4.84
 
 

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

(b) Represents charges related to the Texas Consumer Loan Store Closures of $1.4 million, net of tax benefit of $0.5 million.

(c) Represents charges related to the Debt Extinguishment. For the three months ended December 31, 2013, represents $0.3 million of charges, net of tax benefit of $0.1 million. For the year ended December 31, 2013, represents $0.6 million of charges, net of tax benefit of $0.2 million.

(d) Represents the amount paid in connection with the Regulatory Penalty, which is nondeductible for tax purposes.

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

(f) Represents an income tax benefit related to the Creazione Deduction.

(g) Represents charges directly related to the withdrawn proposed Enova IPO. For the year ended December 31, 2012, represents $3.9 million of charges, net of tax benefit of $1.5 million.

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

(i) Represents charges related to the Ohio Reimbursements. For the three months and year ended December 31, 2012, represents $13.4 million of charges, net of tax benefit of $5.0 million. For the three months and year ended December 31, 2013, the Company adjusted its estimate of the expected remaining liability by $5.0 million, net of tax provision of $1.8 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, loss on extinguishment of debt, 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. In addition, management believes that the adjustments shown below, especially the adjustments for the Texas Consumer Loan Store Closures, the 2013 Litigation Settlement, the Creazione Deduction, and the charges related to events that occurred during 2012, such as the Mexico Reorganization, the withdrawal of the proposed Enova IPO, and the charges related to the Ohio Reimbursements, are useful to investors in order to allow them to compare the Company's financial results across the periods shown. The computation of adjusted EBITDA as presented below may differ from the computation of similarly-titled measures provided by other companies (dollars in thousands):

Year Ended December 31,
2013   2012
Net income attributable to Cash America International, Inc.   $ 142,528   $ 107,470
Adjustments:
Texas Consumer Loan Store Closures(a) 1,373
Regulatory Penalty(b) 5,000
2013 Litigation Settlement(c) 18,000
Charges related to withdrawn proposed Enova IPO(d) - 3,879
Charges related to Mexico Reorganization(e) - 28,873
Charges related to Ohio Reimbursements(f) (5,000) 13,400
Depreciation and amortization expenses(g) 73,092 62,864
Interest expense, net 36,245 28,987
Foreign currency transaction loss 1,205 313
Loss on extinguishment of debt 607 -
Equity in loss of unconsolidated subsidiary 136 295
Provision for income taxes(h) 30,754 77,495
Net income (loss) attributable to the noncontrolling interest     308       (5,806) (i)
Adjusted EBITDA   $ 304,248     $ 317,770  
 
Adjusted EBITDA margin calculated as follows:
Total revenue $ 1,797,226 $ 1,800,430
Adjusted EBITDA     304,248       317,770  
Adjusted EBITDA as a percentage of total revenue     16.9%       17.6%  
 

(a) Represents charges related to the Texas Consumer Loan Store Closures of $1.4 million, before tax benefit of $0.5 million.

(b) Represents the amount paid in connection with the Regulatory Penalty, which is nondeductible for tax purposes.

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

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

(e) Represents charges related to the Mexico Reorganization, before a tax benefit of $1.2 million and noncontrolling interest of $2.3 million. Includes $12.6 million and $7.2 million of depreciation and amortization expenses and charges for the recognition of a deferred tax asset valuation allowance, respectively, as noted in (g) and (h) below.

(f) For the year ended December 31, 2012, represents charges related to the Ohio Reimbursements, before tax benefit of $5.0 million. For the year ended December 31, 2013, the Company adjusted its estimate of the expected remaining liability by $5.0 million, before tax provision of $1.8 million.

(g) Excludes $0.2 million and $12.6 million of depreciation and amortization expenses for the years ended December 31, 2013 and 2012, respectively, which are included in “Texas Consumer Loan Store Closures” and “Charges related to the Mexico Reorganization” for the respective periods.

(h) For the year ended December 31, 2013, includes an income tax benefit of $33.2 million related to the Creazione Deduction and an income tax provision of $1.8 million related to the change in estimate for the Ohio Reimbursements. For the year ended December 31, 2012, excludes a $7.2 million charge for the recognition of a deferred tax asset valuation allowance which is included in “Charges related to the Mexico Reorganization” in the table above and includes an income tax benefit related to the Mexico Reorganization of $1.2 million.

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

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

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