Cash America Announces Fourth Quarter Earnings and Declares Dividend

FORT WORTH, Texas--()--Cash America International, Inc. (NYSE: CSH) reported today that its fourth quarter ended December 31, 2010 net income attributable to the Company increased to $34,705,000 ($1.10 per share) compared to $33,683,000 ($1.09 per share) for the fourth quarter of 2009. Included in the results for the fourth quarter are approximately $3.2 million ($2.0 million net of tax), of expense items from the closing of locations and related costs at the Company’s Mexico subsidiary, Prenda Fácil, and unusual expenses associated with the abrupt interruption of the MLOC loan product early in the fourth quarter. Excluding these unusual expense items would increase fourth quarter 2010 non-GAAP net earnings of the Company to $36,704,000 ($1.17 per share).

Consolidated total revenue of the Company increased 14% in the fourth quarter of 2010 to $368.8 million, up from $323.7 million in the same period in 2009. Revenue from the Company’s loan products driven by higher balances outstanding contributed the largest portion of the increase. Pawn loan balances ended the period up 16% and the consolidated balances from consumer loans ended the period up 28% contributing to the growth in total revenue during the fourth quarter. Merchandise sales rose 10% in the fourth quarter of 2010 compared to the same period in 2009 adding to the top line revenue growth for the period. Consumer loan fees increased 21%, to $131.8 million in the fourth quarter of 2010 compared to the prior year, as the Company’s E-commerce segment recorded a 33% increase in revenues led by a doubling of revenue in its foreign online lending business.

The Company completed the acquisition of substantially all of the assets of Maxit Financial, LLC (“Maxit”), a 39 store chain of pawn lending locations based in Seattle, Washington, during the fourth quarter of 2010. Expenses associated with the acquisition of approximately $1.3 million ($0.9 million net of tax) were incurred during the fourth quarter, which limited the incremental contribution of these stores to the consolidated results of the Company. These additional expense items are not included in the $3.2 million of charges mentioned in the first paragraph.

Commenting on the results of the quarter, Daniel R. Feehan, President and Chief Executive Officer of Cash America said, “While we incurred some unusual expense items during the quarter which restrained the growth in earnings, these items were overshadowed by the significant growth in lending assets during the period. The Company continues to experience success in our foreign online lending activities as loan growth is contributing to revenue expansion. Also, we view the addition of the large chain of pawn lending locations in the Pacific Northwest to be an important strategic asset for many years to come. Both of these items and the growth from our core lending businesses position us well as we enter 2011.”

Cash America finished fiscal year 2010 with a 20% increase in net income, to $115,538,000 ($3.67 per share), compared to $96,678,000 ($3.17 per share) for the same twelve month period of 2009. Total revenue for the fiscal year ended December 31, 2010, increased 15% to $1.29 billion, up from $1.12 billion during the same period in 2009.

Cash America will conduct a conference call to discuss its fourth quarter earnings on Thursday, January 27, 2011, 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 23, 2011 to shareholders of record on February 9, 2011.

Outlook for the First Quarter of 2011 and the 2011 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 short-term consumer loans. Other elements expected to affect the growth in revenue include the potential impact of the regulatory governance of loan products, the continued growth and development of the Mexican pawn operations and the development and expansion of the Company’s online distribution channel. Management believes that demand for its credit products will continue to expand during 2011. First quarter 2011 results could be influenced by the timing of Federal income tax refunds to the Company’s customers. At this point management assumes that refunds will differ from fiscal 2010, when tax refunds were higher from Federal stimulus programs. Based on the preceding factors management believes that the first quarter of 2011 could produce less earnings growth but that the second quarter would then be positioned with higher levels of earning assets to compensate for this event. In addition, the Company will begin 2011 without certain consumer loan markets and the MLOC program which both added incremental profitability in the first quarter of 2010. Therefore, management estimates that the first quarter of fiscal 2011 will be between $1.05 and $1.10 in earnings per share compared to $1.01 in the first quarter of 2010. At this time management confirms its previously reported expectations for its fiscal year 2011 earnings per share to a range of between $4.11 to $4.22 which compares to actual full year 2010 earnings per share of $3.67.

About the Company

As of December 31, 2010, Cash America International, Inc. had 1,081 total locations offering specialty financial services to consumers, which include 779 lending locations (including nine unconsolidated franchised locations) operating in 28 states in the United States under the names “Cash America Pawn,” “SuperPawn,” “Maxit,” “Pawn X-Change,” “Cash America Payday Advance,” and “Cashland,” and 180 pawn lending locations, of which the Company is a majority owner, operating in 21 jurisdictions in central and southern Mexico under the name “Prenda Fácil.” The Company also operated 116 unconsolidated franchised and six Company-owned check cashing centers operating in 17 states in the United States under the name “Mr. Payroll” as of December 31, 2010. Additionally, as of December 31, 2010, the Company offered short-term loans over the Internet to customers in 33 states in the United States at http://www.cashnetusa.com, in the United Kingdom at http://www.quickquid.co.uk, in Australia at http://www.dollarsdirect.com.au, and in Canada at http://www.dollarsdirect.ca.

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

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 Cash America International, Inc. and its subsidiaries (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 pawn, consumer loan, tax and other domestic and foreign laws and governmental rules and regulations applicable to the Company's business, changes in demand for the Company's services, the continued acceptance of the online distribution channel by the Company’s online loan customers, the actions of third parties who provide, acquire or offer products and services to, from or for the Company, fluctuations in the price of gold, changes in competition, the ability of the Company to open new locations in accordance with its plans, changes in economic conditions, real estate market fluctuations, interest rate fluctuations, changes in foreign currency exchange rates, changes in the capital markets, the ability to successfully integrate newly acquired businesses into the Company’s operations, the loss of services of any of the Company’s executive officers, the effect of any current or future litigation proceedings on the Company, 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
(in thousands, except per share data)
(Unaudited)
Three Months Ended   Year Ended
December 31, December 31,
2010     2009   2010   2009  
 
 
Consolidated Operations:
Total revenue $ 368,831 $ 323,697 $ 1,293,339 $ 1,120,390
Net revenue 264,233 228,998 954,583 796,113
Total operating expenses   203,043       170,454     747,451   620,461  
 
Income from operations $ 61,190 $ 58,544 $ 207,132 $ 175,652
 
Income before income taxes   54,925       53,192     184,513   154,716  
 
Net Income $ 34,801     $ 34,144   $ 115,244 $ 97,936  
 
Net (income) loss attributable to the noncontrolling interest   (96 )     (461 ) $ 294 $ (1,258 )
 
Net Income Attributable to Cash America International, Inc. $ 34,705     $ 33,683   $ 115,538 $ 96,678  
 
Earnings per share:
 
Net Income attributable to Cash America International, Inc. common shareholders:
 
Basic $ 1.17 $ 1.14 $ 3.90 $ 3.26
Diluted $ 1.10 $ 1.09 $ 3.67 $ 3.17
 
Weighted average shares:
Basic 29,759 29,475 29,640 29,639
Diluted 31,655 31,013 31,521 30,503

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)
(Unaudited)
 
December 31,
  2010   2009  
 
Assets
Current assets:
Cash and cash equivalents $ 38,324 $ 46,004
Pawn loans 218,408 188,312
Consumer loans, net 139,377 108,789
Merchandise held for disposition, net 124,399 113,824
Pawn loan fees and service charges receivable 41,216 36,544
Prepaid expenses and other assets 31,717 32,129
Deferred tax assets   28,016       21,536  
Total current assets 621,457 547,138
Property and equipment, net 222,320 193,737
Goodwill 543,324 493,492
Intangible assets, net 31,188 27,793
Other assets   8,124       7,495  
Total assets $ 1,426,413     $ 1,269,655  
 
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses $ 89,126 $ 87,368
Accrued supplemental acquisition payment - 2,291
Customer deposits 9,146 8,837
Income taxes currently payable 888 8,699
Current portion of long-term debt   24,433       25,493  
Total current liabilities 123,593 132,688
Deferred tax liabilities 56,792 42,590
Noncurrent income tax payable 2,408 2,009
Other liabilities 8,618 5,479
Long-term debt   432,271       403,690  
Total liabilities $ 623,682     $ 586,456  
 
Equity:
Cash America International, Inc. equity:

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

3,024 3,024
Additional paid-in capital 165,658 166,761
Retained earnings 644,208 532,805
Accumulated other comprehensive income 4,797 1,181

Treasury shares, at cost (685,315 shares and 933,082 shares at December 31, 2010 and 2009, respectively)

  (21,283 )     (26,836 )
Total Cash America International, Inc. shareholders' equity 796,404 676,935
Noncontrolling interest   6,327       6,264  
Total equity   802,731       683,199  
Total liabilities and equity $ 1,426,413     $ 1,269,655  

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(Unaudited)

   
Three Months Ended Year Ended
December 31, December 31,
  2010       2009       2010       2009  
 
Revenue    
Pawn loan fees and service charges $ 71,558 $ 64,019 $ 253,314 $ 231,178
Proceeds from disposition of merchandise 162,147 148,017 534,878 502,736
Consumer loan fees 131,773 108,737 490,952 371,856
Other   3,353       2,924       14,195       14,620  
Total Revenue   368,831       323,697       1,293,339       1,120,390  
Cost of Revenue
Disposed merchandise   104,598       94,699       338,756       324,277  
Net Revenue   264,233       228,998       954,583       796,113  
Expenses
Operations 115,355 98,843 419,616 360,127
Consumer loan loss provision 52,431 39,174 182,394 130,816
Administration 22,685 21,801 101,518 87,929
Depreciation and amortization   12,572       10,636       43,923       41,589  
Total Expenses   203,043       170,454       747,451       620,461  
Income from Operations 61,190 58,544 207,132 175,652
Interest expense (5,835 ) (5,216 ) (22,345 ) (20,807 )
Interest income 8 3 325 29
Foreign currency transaction loss (363 ) (139 ) (463 ) (158 )
Equity in loss of unconsolidated subsidiary   (75 )     -       (136 )     -  
Income before Income Taxes 54,925 53,192 184,513 154,716
Provision for income taxes   20,124       19,048       69,269       56,780  
Net Income 34,801 34,144 115,244 97,936
Less: Net (income) loss attributable to the noncontrolling interest   (96 )     (461 )     294       (1,258 )
Net Income Attributable to Cash America International, Inc. $ 34,705     $ 33,683     $ 115,538     $ 96,678  
Earnings Per Share:
Net Income attributable to Cash America International, Inc. common shareholders:
Basic $ 1.17 $ 1.14 $ 3.90 $ 3.26
Diluted $ 1.10 $ 1.09 $ 3.67 $ 3.17
Weighted average common shares outstanding:
Basic 29,759 29,475 29,640 29,639
Diluted 31,655 31,013 31,521 30,503
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

(in thousands, except where otherwise noted)

 

         The following table outlines certain data related to the Company’s pawn loan activities as of and for the three months and years ended December 31, 2010 and 2009.

 
As of December 31,
2010       2009  
Domestic   Foreign     Total Domestic     Foreign   Total
Ending pawn loan balances $ 197,301 $ 21,107 $ 218,408 $ 164,327 $ 23,985 $ 188,312
Ending merchandise balance, net $ 124,399 $ - (a) $ 124,399 $ 113,824 $ - (a) $ 113,824
 
Three Months Ended December 31,
2010   2009  
Domestic Foreign Total Domestic Foreign Total
Pawn loan fees and service charges $ 62,755 $ 8,803 $ 71,558 $ 54,607 $ 9,412 $ 64,019
Average pawn loan balance outstanding $ 190,642 $ 21,246 $ 211,888 $ 165,030 $ 24,187 $ 189,217
Amount of pawn loans written and renewed $ 197,874 $ 23,348 $ 221,222 $ 161,363 $ 33,794 $ 195,157
Annualized yield on pawn loans 130.6 % 164.4 % 134.0 % 131.3 % 154.4 % 134.2 %
Gross profit margin on disposition of merchandise 35.5 % - (a) 35.5 % 36.0 % - (a) 36.0 %
Merchandise turnover 3.2 - (a) 3.2 3.2 - (a) 3.2
 
Year Ended December 31,
2010   2009  
Domestic Foreign Total Domestic Foreign Total
Pawn loan fees and service charges $ 221,335 $ 31,979 $ 253,314 $ 200,904 $ 30,274 $ 231,178
Average pawn loan balance outstanding $ 166,163 $ 22,111 $ 188,274 $ 152,800 $ 20,250 $ 173,050
Amount of pawn loans written and renewed $ 689,476 $ 89,746 $ 779,222 $ 629,196 $ 106,569 $ 735,765
Annualized yield on pawn loans 133.2 % 144.6 % 134.5 % 131.5 % 149.6 % 133.6 %
Gross profit margin on disposition of merchandise 36.7 % - (a) 36.7 % 35.5 % - (a) 35.5 %
Merchandise turnover 3.0 - (a) 3.0 2.9 - (a) 2.9
   
(a) With respect to the Company’s foreign pawn lending activities, collateral underlying unredeemed pawn loans is not owned by the Company; therefore, proceeds from disposition are recorded as pawn loan fees and service charges in the Company’s consolidated statements of operations.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

MERCHANDISE DISPOSITION, GROSS PROFIT AND INVENTORY OPERATING DATA

(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.   Retail sales include the sale of jewelry and general merchandise direct to consumers through any of the Company’s retail services locations or the internet. Commercial sales include the sale of refined gold, platinum and diamonds to refiners, brokers or manufacturers.  The following table summarizes the proceeds from the disposition of merchandise and the related profit for the three months and years ended December 31, 2010 and 2009.

 
Three Months Ended December 31,
2010   2009
       
Retail Commercial Total Retail Commercial Total
Proceeds from disposition $ 91,548 $ 70,599 $ 162,147 $ 80,625 $ 67,392 $ 148,017
Gross profit on disposition $ 35,710 $ 21,839 $ 57,549 $ 31,408 $ 21,910 $ 53,318
Gross profit margin 39.0 % 30.9 % 35.5 % 39.0 % 32.5 % 36.0 %
Percentage of total gross profit 62.1 % 37.9 % 100.0 % 58.9 % 41.1 % 100.0 %
Year Ended December 31,
2010 2009
 
Retail Commercial Total Retail Commercial Total
Proceeds from disposition $ 306,300 $ 228,578 $ 534,878 $ 283,208 $ 219,528 $ 502,736
Gross profit on disposition $ 121,819 $ 74,303 $ 196,122 $ 112,417 $ 66,042 $ 178,459
Gross profit margin 39.8 % 32.5 % 36.7 % 39.7 % 30.1 % 35.5 %
Percentage of total gross profit 62.1 % 37.9 % 100.0 % 63.0 % 37.0 % 100.0 %

 The table below summarizes the age of merchandise held for disposition before valuation allowance of $0.7 million at December 31, 2010 and 2009 (dollars in thousands).

 
Balance at December 31,
2010     2009
Amount   % Amount   %
 
Merchandise held for one year or less –
Jewelry $ 79,566 63.6 $ 70,834 61.9
Other merchandise   39,809   31.8       35,328   30.8
 
Total merchandise held for one year or less   119,375   95.4       106,162   92.7
Merchandise held for more than one year –
Jewelry 2,685 2.2 4,938 4.3
Other merchandise   3,039   2.4       3,424   3.0
 
Total merchandise held for more than one year   5,724   4.6       8,362   7.3
 
Total merchandise held for disposition $ 125,099   100.0     $ 114,524   100.0

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(in thousands, except where otherwise noted)

 

The following table sets forth consumer loan fees by channel and segment, adjusted for the deduction of the loan loss provision for the three months and years ended December 31, 2010 and 2009 (dollars in thousands):

 
  Three Months Ended December 31,
2010       2009  
  Retail Services Segment   Internet Lending   MLOC   Total E-Commerce Segment     Total Company   Retail Services Segment     Internet Lending   MLOC   Total E-Commerce Segment     Total Company
Consumer Loan Fees $ 30,397   $ 99,302 $ 2,074 $ 101,376   $ 131,773 $ 32,336   $ 70,907 $ 5,494 $ 76,401   $ 108,737
Loan Loss Provision   4,466       45,368     2,597     47,965       52,431     6,010       31,389     1,775     33,164       39,174  
Loss Adjusted Consumer

Loan Fees

$ 25,931     $ 53,934   $ (523 ) $ 53,411     $ 79,342   $ 26,326     $ 39,518   $ 3,719   $ 43,237     $ 69,563  
Year over year change - $ $ (395 ) $ 14,416 $ (4,242 ) $ 10,174 $ 9,779 $ 3,150 $ 11,277 $ 3,049 $ 14,326 $ 17,476
Year over year change - % (1.5 )% 36.5 % (114.1 )% 23.5 % 14.1 % 13.6 % 39.9 % 455.1 % 49.6 % 33.6 %
Loan loss provision as %

of consumer loan fees

  14.7 %     45.7 %   125.2 %   47.3 %     39.8 %     18.6 %     44.3 %   32.3 %   43.4 %     36.0 %
 
  Year Ended December 31,
2010     2009  
  Retail Services Segment   Internet Lending MLOC Total E-Commerce Segment   Total Company   Retail Services Segment   Internet Lending MLOC Total E-Commerce Segment   Total Company
Consumer Loan Fees $ 113,973 $ 349,336 $ 27,643 $ 376,979 $ 490,952 $ 117,997 $ 241,268 $ 12,591 $ 253,859 $ 371,856
Loan Loss Provision   17,437       151,716     13,241     164,957       182,394     21,642       104,454     4,720     109,174       130,816  
Loss Adjusted Consumer

Loan Fees

$ 96,536     $ 197,620   $ 14,402   $ 212,022     $ 308,558   $ 96,355     $ 136,814   $ 7,871   $ 144,685     $ 241,040  
Year over year change - $ $ 181 $ 60,806 $ 6,531 $ 67,337 $ 67,518 $ (11,226 ) $ 21,684 $ 6,702 $ 28,386 $ 17,160
Year over year change - % 0.2 % 44.4 % 83.0 % 46.5 % 28.0 % (10.4 )% 18.8 % 573.3 % 24.4 % 7.7 %
Loan loss provision as %

of consumer loan fees

  15.3 %     43.4 %   47.9 %   43.8 %     37.2 %     18.3 %     43.3 %   37.5 %   43.0 %     35.2 %

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(in thousands, except where otherwise noted)

 

  In addition to reporting financial results in accordance with generally accepted accounting principles (“GAAP”) in the United States, the Company has provided combined consumer loans and combined consumer loans written, which are non-GAAP measures.  Combined consumer loans and combined consumer loans written include (i) consumer loans written by the Company, which are GAAP measures, (ii) consumer loans written by third-party lenders through the CSO program, which are non-GAAP measures and (iii) the Company's participation interests in consumer loans written by a third-party lender’s micro line of credit (“ MLOC”) product, which are GAAP measures.

 

 Management believes these measures are useful in evaluating the consumer loan portfolio on an aggregate basis, including its evaluation of the loss provision for the Company-owned portfolio and third-party lender-owned portfolios that the Company guarantees.  The following table summarizes selected data related to the Company’s consumer loan activities as of December 31, 2010 and 2009 and for the three months and years ended December 31, 2010 and 2009.

  As of December 31,
2010     2009  
Company Owned(a)   Guaranteed by the Company(b)   Combined(b) Company Owned(a)   Guaranteed by the Company(b)   Combined(b)
Ending consumer loan balances:
Retail Services $ 51,953 $ 9,819 $ 61,772 $ 51,986 $ 11,688 $ 63,674
Internet Lending 124,867 38,949 163,816 72,600 38,174 110,774
MLOC     1,510       -       1,510       11,553       -       11,553  
Total ending loan balance, gross $ 178,330 $ 48,768 $ 227,098 $ 136,139 $ 49,862 $ 186,001
Less: Allowance for losses     (38,953 )     (2,838 )     (41,791 )     (27,350 )     (2,944 )     (30,294 )
Total ending loan balance, net   $ 139,377     $ 45,930     $ 185,307     $ 108,789     $ 46,918     $ 155,707  
 
Three Months Ended December 31,
2010   2009  
Company Owned(a) Guaranteed by the Company(b) Total(b) Company Owned(a) Guaranteed by the Company(b) Total(b)
Amount of consumer loans written:
Retail Services $ 192,135 $ 51,067 $ 243,202 $ 202,127 $ 60,351 $ 262,478
Internet Lending 273,189 193,223 466,412 186,783 195,940 382,723
MLOC     14,636       -       14,636       57,947       -       57,947  
Total consumer loans written   $ 479,960     $ 244,290     $ 724,250     $ 446,857     $ 256,291     $ 703,148  
 
Average amount per consumer loan:
Retail Services $ 445 $ 567 $ 466 $ 436 $ 565 $ 460
Internet Lending 434 673 509 405 686 513
MLOC     198       -       198       170       -       170  
Combined   $ 423     $ 648     $ 479     $ 353     $ 653     $ 424  
 

(a) GAAP measure.

 

(b) Non-GAAP measure.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(in thousands, except where otherwise noted)

 
Year Ended December 31,
2010 2009
Company Owned(a)   Guaranteed by the Company(b)   Combined(b) Company Owned(a)   Guaranteed by the Company(b)   Combined(b)
Amount of consumer loans written:
Retail Services $ 703,161 $ 199,155 $ 902,316 $ 706,066 $ 220,650 $ 926,716
Internet Lending 911,002 806,749 1,717,751 696,821 581,740 1,278,561
MLOC     289,009     -     289,009     126,457     -       126,457
Total consumer loans written   $ 1,903,172   $ 1,005,904   $ 2,909,076   $ 1,529,344   $ 802,390     $ 2,331,734
 
Average amount per consumer loan:
Retail Services $ 438 $ 574 $ 462 $ 431 $ 560 $ 456
Internet Lending 418 679 510 403 704 500
MLOC     197     -     197     157     -       157
Combined   $ 363   $ 655   $ 429   $ 366   $ 658     $ 432
(a) GAAP measure.
(b) Non-GAAP measure.
Three Months Ended   Year Ended
December 31, December 31,  
2010     2009   2010     2009    
 
Allowance for losses for Company-owned

consumer loans:

 
Balance at beginning of period $ 45,586 $ 24,688 $ 27,350 $ 21,495
Consumer loan loss provision 52,383 39,046 182,500 130,007
Charge-offs (65,843 ) (42,405 ) (197,611 ) (144,295 )
Recoveries   6,827       6,021       26,714       20,143    
Balance at end of period $ 38,953     $ 27,350     $ 38,953     $ 27,350    
 
Accrual for third-party lender-owned consumer

loans:

 
Balance at beginning of period $ 2,790 $ 2,816 $ 2,944 $ 2,135
Increase (decrease) in loss provision   48       128       (106 )     809    
 
Balance at end of period $ 2,838     $ 2,944     $ 2,838     $ 2,944    
Consumer loan loss provision as a % of

combined consumer loans written (a)

7.2 % 5.6 % 6.3 % 5.6 %

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

 

8.1 % 5.2 % 5.9 % 5.3 %

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

 

39.8 % 36.0 % 37.2 % 35.2 %
 

(a) Non-GAAP measure.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

INCOME FROM OPERATIONS BY OPERATING SEGMENT

(in thousands)

 

 

  The following tables set forth income from operations for the Company’s operating segments, which are retail services and e-commerce, as of and for the three months and years ended December 31, 2010 and 2009.

               
 
Retail Services(a) E-Commerce(b)
Domestic   Foreign   Total Domestic   Foreign   Total Consolidated
 
Three Months Ended December 31, 2010
Revenue
Pawn loan fees and service charges $ 62,755 $ 8,803 $ 71,558 $ - $ - $ - $ 71,558
Proceeds from disposition of merchandise 162,147 - 162,147 - - - 162,147
Consumer loan fees 30,397 - 30,397 67,402 33,974 101,376 131,773
Other   2,647   162   2,809   465   79   544   3,353
Total revenue 257,946 8,965 266,911 67,867 34,053 101,920 368,831
Cost of revenue – disposed merchandise   104,598   -   104,598   -   -   -   104,598
Net revenue   153,348   8,965   162,313   67,867   34,053   101,920   264,233
Expenses
Operations 81,829 4,709 86,538 18,421 10,396 28,817 115,355
Consumer loan loss provision 4,466 - 4,466 30,934 17,031 47,965 52,431
Administration 9,437 1,795 11,232 8,144 3,309 11,453 22,685
Depreciation and amortization   8,301   1,847   10,148   2,348   76   2,424   12,572
Total expenses   104,033   8,351   112,384   59,847   30,812   90,659   203,043
Income from operations $ 49,315 $ 614 $ 49,929 $ 8,020 $ 3,241 $ 11,261 $ 61,190
As of December 31, 2010
Total assets $ 928,923 $ 123,044 $ 1,051,967 $ 312,642 $ 61,804 $ 374,446 $ 1,426,413
Goodwill $ 333,042 $ 210,282 $ 543,324
 
Retail Services(a) E-Commerce(b)
Domestic   Foreign   Total Domestic   Foreign   Total Consolidated
 
Three Months Ended December 31, 2009
Revenue
Pawn loan fees and service charges $ 54,607 $ 9,412 $ 64,019 $ - $ - $ - $ 64,019
Proceeds from disposition of merchandise 148,017 - 148,017 - - - 148,017
Consumer loan fees 32,336 - 32,336 60,909 15,492 76,401 108,737
Other   2,622   80   2,702   222   -   222   2,924
Total revenue 237,582 9,492 247,074 61,131 15,492 76,623 323,697
Cost of revenue – disposed merchandise   94,699   -   94,699   -   -   -   94,699
Net revenue   142,883   9,492   152,375   61,131   15,492   76,623   228,998
Expenses
Operations 74,111 3,975 78,086 15,961 4,796 20,757 98,843
Consumer loan loss provision 6,010 - 6,010 25,748 7,416 33,164 39,174
Administration 10,382 1,945 12,327 8,329 1,145 9,474 21,801
Depreciation and amortization   7,701   1,134   8,835   1,781   20   1,801   10,636
Total expenses   98,204   7,054   105,258   51,819   13,377   65,196   170,454
Income from operations $ 44,679 $ 2,438 $ 47,117 $ 9,312 $ 2,115 $ 11,427 $ 58,544
As of December 31, 2009
Total assets $ 815,518 $ 118,478 $ 933,996 $ 307,336 $ 28,323 $ 335,659 $ 1,269,655
Goodwill $ 296,409 $ 197,083 $ 493,492

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

INCOME FROM OPERATIONS BY OPERATING SEGMENT

(in thousands)

 
    Retail Services(a)   E-Commerce(b)  
Domestic     Foreign     Total Domestic     Foreign     Total Consolidated
 
Year Ended December 31, 2010
Revenue
Pawn loan fees and service charges $ 221,335 $ 31,979 $ 253,314 $ - $ - $ - $ 253,314
Proceeds from disposition of merchandise 534,878 - 534,878 - - - 534,878
Consumer loan fees 113,973 - 113,973 275,036 101,943 376,979 490,952
Other   12,554   303   12,857   1,259   79   1,338   14,195
Total revenue 882,740 32,282 915,022 276,295 102,022 378,317 1,293,339
Cost of revenue – disposed merchandise   338,756   -   338,756   -   -   -   338,756
Net revenue   543,984   32,282   576,266   276,295   102,022   378,317   954,583
Expenses
Operations 301,399 17,195 318,594 68,541 32,481 101,022 419,616
Consumer loan loss provision 17,437 - 17,437 116,246 48,711 164,957 182,394
Administration 44,008 8,100 52,108 37,077 12,333 49,410 101,518
Depreciation and amortization   29,839   5,525   35,364   8,283   276   8,559   43,923
Total expenses   392,683   30,820   423,503   230,147   93,801   323,948   747,451
Income from operations $ 151,301 $ 1,462 $ 152,763 $ 46,148 $ 8,221 $ 54,369 $ 207,132
As of December 31, 2010
Total assets $ 928,923 $ 123,044 $ 1,051,967 $ 312,642 $ 61,804 $ 374,446 $ 1,426,413
Goodwill $ 333,042 $ 210,282 $ 543,324
 
Retail Services(a) E-Commerce(b)
Domestic   Foreign   Total Domestic   Foreign   Total Consolidated
 
Year Ended December 31, 2009
Revenue
Pawn loan fees and service charges $ 200,904 $ 30,274 $ 231,178 $ - $ - $ - $ 231,178
Proceeds from disposition of merchandise 502,736 - 502,736 - - - 502,736
Consumer loan fees 117,997 - 117,997 213,361 40,498 253,859 371,856
Other   13,093   409   13,502   1,118   -   1,118   14,620
Total revenue 834,730 30,683 865,413 214,479 40,498 254,977 1,120,390
Cost of revenue – disposed merchandise   324,277   -   324,277   -   -   -   324,277
Net revenue   510,453   30,683   541,136   214,479   40,498   254,977   796,113
Expenses
Operations 283,903 12,644 296,547 49,410 14,170 63,580 360,127
Consumer loan loss provision 21,642 - 21,642 89,577 19,597 109,174 130,816
Administration 45,847 6,878 52,725 31,386 3,818 35,204 87,929
Depreciation and amortization   30,461   3,831   34,292   7,250   47   7,297   41,589
Total expenses   381,853   23,353   405,206   177,623   37,632   215,255   620,461
Income from operations $ 128,600 $ 7,330 $ 135,930 $ 36,856 $ 2,866 $ 39,722 $ 175,652
As of December 31, 2009
Total assets $ 815,518 $ 118,478 $ 933,996 $ 307,336 $ 28,323 $ 335,659 $ 1,269,655
Goodwill $ 296,409 $ 197,083 $ 493,492
 

(a) The retail services segment is composed of the Company’s domestic and foreign storefront operations.

(b) The e-commerce segment is composed of the Company’s online channel, which has domestic and foreign operations, and the Company’s MLOC services channel.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

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 these measures are useful to help investors better understand the Company’s financial performance, competitive position and prospects for the future.  These non-GAAP measures are used by management in evaluating the Company’s results of operations.   The following table provides 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 (dollars in thousands except per share data):

   
Three Months Ended December 31, Year Ended December 31,
  2010     2009 2010     2009
       
As reported net income(a) $ 34,705 $ 1.10 $ 33,683 $ 1.09 $ 115,538 $ 3.67 $ 96,678 $ 3.17
 
Adjustments:
Intangible asset amortization, net of tax 933 0.03 850 0.03 2,993 0.09 3,805 0.12
Non-cash equity-based compensation, net of tax 608 0.02 551 0.02 2,384 0.08 2,032 0.07

Convertible debt non-cash interest and amortization of issuance costs, net of tax

 

542 0.01 514 0.02 2,088 0.06 1,238 0.04
Foreign exchange loss, net of tax   230       0.01       89       -     289       0.01       100       -
Adjusted earnings $ 37,018     $ 1.17     $ 35,687     $ 1.16   $ 123,292     $ 3.91     $ 103,853     $ 3.40

(a) Includes certain expenses related to the interruption of the MLOC loan product and the closure of retail services locations in Mexico incurred by the Company during the three months and year ended December 31, 2010. The table below provides a reconciliation of as reported net income attributable to the Company (in the table above) by line item as reported in the consolidated statements of income, to Non-GAAP net earnings of the Company.

 
Three Months Ended Year Ended
December 31, 2010 December 31, 2010
  MLOC Foreign Retail Services   Total MLOC Foreign Retail Services   Total
As reported net income $ 34,705 $ 115,538
 
Operating expenses $ 250 $ 300 550 $ 250 $ 422 672
Consumer loan loss provision 2,100 - 2,100 2,100 - 2,100
Depreciation expense - 503 503 - 503 503
Income tax provision   (860 )     (294 )     (1,154 )   (881 )     (347 )     (1,228 )
Total adjustments $ 1,490     $ 509     $ 1,999   $ 1,469     $ 578     $ 2,047  
Non-GAAP net earnings of the Company             $ 36,704               $ 117,585  
 
Earnings per share, as reported $ 1.10 $ 3.67
Non-GAAP Adjustments $ 0.05     $ 0.02     $ 0.07   $ 0.05     $ 0.02     $ 0.07  
Non-GAAP earnings per share of the Company             $ 1.17               $ 3.74  

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

LOCATION INFORMATION

 

Retail Services Segment

  The following table sets forth the number of domestic and foreign locations in the Company’s retail services segment offering pawn lending, consumer lending, and other services as of December 31, 2010 and 2009.

 
As of December 31,
2010   2009
Domestic(a)(b)   Foreign(c)(d)   Total Domestic(a)   Foreign(c)   Total
Retail services locations offering:
Both pawn and consumer lending (e) 567 - 567 584 - 584
Pawn lending only 124 180 304 66 176 242
Consumer lending only 88 - 88 96 - 96
Other (f) 122 - 122   126 - 126
Total retail services 901 180 1,081   872 176 1,048
(a)   Except as noted in footnote (f) below, includes locations that operate under the names “Cash America Pawn,” “SuperPawn,” “Cash America Payday Advance,” “Cashland,” “Maxit” and “Pawn X-Change.”
(b) Except as noted in footnote (f) below, includes locations that operate in 28 states in the United States.
(c) Includes locations that operate in central and southern Mexico under the name “Prenda Fácil,” of which the Company is a majority owner.
(d) Includes locations that operate in 21 jurisdictions in Mexico.
(e) As of December 31, 2010 and 2009, includes 425 and 434 locations, respectively, that primarily engage in pawn lending activities (of which nine are unconsolidated franchised pawn lending locations) and 142 and 150 locations, respectively, that primarily engage in consumer loan activities.
(f) Includes check cashing locations operating in the United States under the name “Mr. Payroll.” As of December 31, 2010, includes six consolidated Company-owned check cashing locations operating in one state and 116 unconsolidated franchised locations operating in 17 states.

E-Commerce Segment

As of December 31, 2010, the Company’s e-commerce operating segment offered consumer loans over the internet to customers in:

  • 33 states in the United States at http://www.cashnetusa.com,
  • in the United Kingdom at http://www.quickquid.co.uk,
  • in Australia at http://www.dollarsdirect.com.au,
  • in Canada at http://www.dollarsdirect.ca, and
  • MLOC - The e-commerce segment also includes the Company’s MLOC services channel, which processed MLOC advances on behalf of a third-party lender during 2010 and had a participation interest in MLOC receivables that were outstanding in all 50 states and two other U.S. jurisdictions during the year ended December 31, 2010. The MLOC services channel has most recently generated its earnings through loan processing services the Company provided for MetaBank related to the iAdvance MLOC product the bank made available on certain stored-value debit cards the bank issues, as well as from fees generated from participation interests the Company acquired in the receivables originated by the bank in connection with the iAdvance program. MetaBank has announced that it discontinued offering its iAdvance program as of October 13, 2010.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

OTHER FINANCIAL DATA

 

 

 

 Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is a non-GAAP measure that is commonly used by investors to assess a company's leverage capacity, liquidity and financial performance. The following table provides a reconciliation of net income attributable to the Company calculated in accordance with GAAP to EBITDA (dollars in thousands):

 
Year Ended
December 31,
2010   2009
Net Income attributable to Cash America

International Inc.

  $ 115,538   $ 96,678
 
Adjustments:
Provision for income taxes 69,269 56,780
Depreciation expenses 39,134 35,578
Amortization expenses 4,789 6,011
Interest expense, net       22,020       20,778

Earnings from continuing operations before interest, taxes, depreciation and amortization

 

    $ 250,750     $ 215,825
 
EBITDA margin calculated as follows:
 
Net revenue $ 954,583 $ 796,113
 

Earnings from continuing operations before interest, taxes, depreciation and amortization

 

250,750 215,825
                 
EBITDA as a percentage of net revenue       26.3%       27.1%

Non-GAAP Disclosure

In addition to the financial information prepared in conformity with GAAP, the Company provides historical non-GAAP financial information. Management uses the non-GAAP financial measures for internal managerial purposes and 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 the Company’s GAAP results, provide a more complete understanding of factors and trends affecting the Company’s 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, the Company’s 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.

Contacts

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

Contacts

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