Cash America Raises Fiscal 2011 Earnings Guidance, Reports Second Quarter Net Income Increase of 29% and Declares Dividend

FORT WORTH, Texas--()--Cash America International, Inc. (NYSE: CSH) reported today that its net income for the second quarter ended June 30, 2011 was up 29% to $26,981,000 (84 cents per share), which compares to the second quarter 2010 net income of $20,889,000 (66 cents per share). Earnings per share for the second quarter of 2011 exceeded the high end of management’s publicly released earnings per share guidance of 80 cents, as reported in the Company’s press release dated April 21, 2011. Earnings levels exceeded the top end of estimates due to higher growth in revenue from both U.S. pawn lending activities and the Company’s E-Commerce business outside the U.S., which combined with lower losses on consumer loans to increase earnings above expectations for the second quarter.

Total revenue during the second quarter of 2011 was $334.3 million, up 14% from $292.1 million in the second quarter of 2010. Contributing to the increase in total revenue was a 15% increase in pawn loan fees and service charges and a 14% increase in merchandise sales during the second quarter of 2011 as compared to the same period in 2010. The increase in merchandise sales was achieved with higher gross profit margins, leading to a 18% increase in profit from the disposition of merchandise, which contributed to the stronger than expected earnings.

Revenue from consumer loan fees was $132.4 million in the second quarter of 2011, up 14% when compared to the same period in 2010. Net revenue from the Company’s consumer loan portfolio, which is total revenue reduced by the loan loss provision, increased 23%, to $87.3 million in the second quarter of 2011 compared to $70.9 million during the prior year. This increase combined with the increase in gross profit on the disposition of merchandise and increased revenue from pawn loans combined to increase consolidated net revenue 19%, to $209.8 million, which generated a 27% increase in income from operations in the second quarter of 2011 compared to the same period in 2010.

Commenting on the results of the quarter, Daniel R. Feehan, President and Chief Executive Officer of Cash America said, “We experienced strong growth in both our secured and unsecured loan products this quarter as certain macro-economic factors continue to drive consumer demand for short-term credit. This growth combined with lower loss rates and higher retail margins provided a real boost to revenues and earnings. Additionally, we remain encouraged with the progress we are making in diversifying both the geography and product mix of our business.”

For the first six months of fiscal year 2011, total revenue increased 14% to $689.5 million compared to $605.1 million for the same period in 2010. Income from operations through the first six months of fiscal 2011 increased 18% to $113.1 million, and the Company posted a 20% increase in net income to $63,359,000 ($1.99 per share) for the first six months of fiscal year 2011 compared to $52,922,000 ($1.67 per share) for the same period in 2010.

Cash America will host a conference call to discuss the second quarter results on Thursday, July 21, at 7:00 AM CDT. A live webcast of the call will be available on the Investor Relations section of the Company’s corporate website (http://www.cashamerica.com). To listen to the live call, please go to the website at least fifteen minutes early to register, download, and install any necessary audio software. A replay will be available on the Company’s website following the call.

Additionally, the Company announced that the Board of Directors, at its regularly scheduled quarterly meeting, declared a $0.035 (3.5 cents) per share cash dividend on common stock outstanding. The dividend will be paid at the close of business on August 17, 2011 to shareholders of record on August 3, 2011.

Outlook for the Third Quarter of 2011 and Related Fiscal Year

Management believes that the opportunities for growth in revenue and earnings will be largely associated with the customer demand for the credit products provided by the Company, which take the form of pawn loans and consumer loans and the disposition of unredeemed collateral by way of consumer spending on retail sales and the commercial sale of refined gold and diamonds. Other elements that could affect the Company’s growth in revenue include the regulatory governance of consumer loan products, the development and growth of new markets for the Company’s E-Commerce distribution platform for consumer lending products, and the continued growth and development of the Company’s pawn operations in Mexico. As the Company enters the third quarter of 2011, management anticipates that demand for the Company’s lending products will continue to be similar to the demand experienced in the second quarter of 2011. Based on its views and on the preceding factors management expects the third quarter 2011 net income per share to be between $1.05 and $1.10 per share compared to 90 cents per share in the third quarter of 2010. In addition, because of the success in the current quarter and the higher than originally expected balances of lending assets, management increases its previously reported expectations for its fiscal year 2011 to a range of between $4.28 and $4.48 per share, compared to $3.67 per share in fiscal 2010.

About the Company

As of June 30, 2011, Cash America International, Inc. had 1,084 total locations offering specialty financial services to consumers, which include 782 lending locations (including nine unconsolidated franchised locations) operating in 23 states in the United States under the names “Cash America Pawn,” “SuperPawn,” “Maxit,” “Pawn X-Change,” “Cash America Payday Advance,” and “Cashland,” and 184 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 112 unconsolidated franchised and six Company-owned check cashing centers operating in 18 states in the United States under the name “Mr. Payroll” as of June 30, 2011. Additionally, as of June 30, 2011, the Company offered consumer loans over the Internet to customers in 30 states in the United States at http://www.cashnetusa.com, in the United Kingdom at http://www.quickquid.co.uk and http://www.poundstopocket.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, acceptance by consumers, legislators or regulators of the negative characterization by the media and consumer activists with respect to certain of the Company’s loan products, the 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, changes in the Company’s ability to satisfy its debt obligations or to refinance existing debt obligations or obtain new capital to finance growth, 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, a prolonged interruption in the Company’s operations of its facilities, systems and business functions, including its information technology and other business systems, the effect of any current or future litigation proceedings on the Company, 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
(in thousands, except per share data)
(Unaudited)
 
  Three Months Ended   Six Months Ended
June 30, June 30,
2011   2010 2011   2010
 
 
Consolidated Operations:
Total revenue $ 334,252 $ 292,081 $ 689,457 $ 605,143
Net revenue 209,848 176,730 425,976 365,954
Total operating expenses     160,024       137,592       312,924     270,377  
 
Income from operations $ 49,824 $ 39,138 $ 113,052 $ 95,577
 
Income before income taxes     43,796       33,846       101,335     84,699  
 
Net Income   $ 27,245     $ 20,911     $ 63,032   $ 52,962  
 
Net loss (income) attributable to the noncontrolling interest     (264 )     (22 )   $ 327   $ (40 )
 
Net Income Attributable to Cash America International, Inc.   $ 26,981     $ 20,889     $ 63,359   $ 52,922  
 
Earnings per share:
 
Net Income attributable to Cash America International, Inc. common shareholders:
 
Basic $ 0.91 $ 0.70 $ 2.14 $ 1.78
Diluted $ 0.84 $ 0.66 $ 1.99 $ 1.67
 
Weighted average shares:
Basic 29,593 29,655 29,673 29,671
Diluted 31,994 31,665 31,828 31,701

 
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)
(Unaudited)
 
  June 30,   December 31,
2011   2010 2010
 
Assets
Current assets:
Cash and cash equivalents $ 48,375 $ 46,708 $ 38,324
Pawn loans 229,343 184,104 218,408
Consumer loans, net 160,371 115,295 139,377
Merchandise held for disposition, net 124,054 100,215 124,399
Pawn loan fees and service charges receivable 41,757 35,077 41,216
Income taxes receivable 3,598 - -
Prepaid expenses and other assets 41,973 50,639 32,490
Deferred tax assets     32,560       25,035       28,016  
Total current assets 682,031 557,073 622,230
Property and equipment, net 232,715 196,559 222,320
Goodwill 546,674 513,758 543,324
Intangible assets, net 28,638 25,853 31,188
Other assets     14,179       7,244       8,124  
Total assets   $ 1,504,237     $ 1,300,487     $ 1,427,186  
 
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses $ 86,565 $ 75,058 $ 96,465
Accrued supplemental acquisition payment - 18,858 -
Customer deposits 10,440 9,535 9,146
Income taxes currently payable - 9,150 888
Current portion of long-term debt     19,773       25,493       24,433  
Total current liabilities 116,778 138,094 130,932
Deferred tax liabilities 92,979 46,016 56,792
Noncurrent income tax payable 2,638 2,166 2,408
Other liabilities 1,711 7,591 2,052
Long-term debt     431,734       374,044       432,271  
Total liabilities   $ 645,840     $ 567,911     $ 624,455  
 
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 3,024
Additional paid-in capital 165,840 164,770 165,658
Retained earnings 705,502 583,660 644,208
Accumulated other comprehensive income 11,195 1,785 4,797

Treasury shares, at cost (942,722 shares, 881,003 shares and 685,315 shares at June 30, 2011 and 2010, and at December 31, 2010, respectively)

    (33,492 )     (27,031 )     (21,283 )
Total Cash America International, Inc. shareholders' equity 852,069 726,208 796,404
Noncontrolling interest     6,328       6,368       6,327  
Total equity     858,397       732,576       802,731  
Total liabilities and equity   $ 1,504,237     $ 1,300,487     $ 1,427,186  

   

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(Unaudited)

 
Three Months Ended Six Months Ended
June 30, June 30,
2011   2010 2011   2010
 
Revenue
Pawn loan fees and service charges $ 68,348 $ 59,507 $ 135,237 $ 117,788
Proceeds from disposition of merchandise 130,293 113,850 290,954 255,733
Consumer loan fees 132,414 115,865 255,541 224,307
Other     3,197       2,859       7,725       7,315  
Total Revenue     334,252       292,081       689,457       605,143  
Cost of Revenue
Disposed merchandise 79,275 70,417 178,852 160,362
Consumer loan loss provision     45,129       44,934       84,629       78,827  
Total Cost of Revenue     124,404       115,351       263,481       239,189  
 
Net Revenue     209,848       176,730       425,976       365,954  
Expenses
Operations 115,076 101,931 228,477 198,450
Administration 32,640 25,446 59,697 50,994
Depreciation and amortization     12,308       10,215       24,750       20,933  
Total Expenses     160,024       137,592       312,924       270,377  
Income from Operations 49,824 39,138 113,052 95,577
Interest expense (5,831 ) (5,406 ) (11,442 ) (10,863 )
Interest income 20 151 42 159
Foreign currency transaction loss (185 ) (37 ) (281 ) (174 )
Equity in loss of unconsolidated subsidiary     (32 )     -       (36 )     -  
Income before Income Taxes 43,796 33,846 101,335 84,699
Provision for income taxes     16,551       12,935       38,303       31,737  
Net Income 27,245 20,911 63,032 52,962
Net (income) loss attributable to the noncontrolling interest     (264 )     (22 )     327       (40 )
Net Income Attributable to Cash America International, Inc.   $ 26,981     $ 20,889     $ 63,359     $ 52,922  
Earnings Per Share:
Net Income attributable to Cash America International, Inc. common shareholders:
Basic $ 0.91 $ 0.70 $ 2.14 $ 1.78
Diluted $ 0.84 $ 0.66 $ 1.99 $ 1.67
Weighted average common shares outstanding:
Basic 29,593 29,655 29,673 29,671
Diluted 31,994 31,665 31,828 31,701
Dividends declared per common share $ 0.035 $ 0.035 $ 0.070 $ 0.070

   

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

PAWN OPERATIONS – 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 and six months ended June 30, 2011 and 2010.

 
2011 2010
Domestic   Foreign   Total Domestic   Foreign   Total

As of June 30,

Ending pawn loan balances $ 207,330 $ 22,013 $ 229,343 $ 162,104 $ 22,000 $ 184,104
Ending merchandise balance, net $ 124,054 $ - (a) $ 124,054 $ 100,215 $ - (a) $ 100,215
 

Three Months Ended June 30,

Pawn loan fees and service charges $ 61,158 $ 7,190 $ 68,348 $ 51,080 $ 8,427 $ 59,507
Average pawn loan balance outstanding $ 187,148 $ 23,063 $ 210,211 $ 148,998 $ 23,039 $ 172,037
Amount of pawn loans written and renewed $ 221,658 $ 25,514 $ 247,172 $ 167,939 $ 24,950 $ 192,889
Annualized yield on pawn loans 131.1% 125.0% 130.4% 137.5% 146.7% 138.7%
Gross profit margin on disposition of merchandise 39.2% -

(a)

39.2% 38.1% - (a) 38.1%
Merchandise turnover 2.7 - (a) 2.7 2.9 - (a) 2.9
 
2011 2010

Six Months Ended June 30,

Domestic Foreign Total Domestic Foreign Total
Pawn loan fees and service charges $ 121,384 $ 13,853 $ 135,237 $ 101,942 $ 15,846 $ 117,788
Average pawn loan balance outstanding $ 186,580 $ 22,284 $ 208,864 $ 150,389 $ 22,973 $ 173,362
Amount of pawn loans written and renewed $ 401,197 $ 46,400 $ 447,597 $ 309,974 $ 45,979 $ 355,953
Annualized yield on pawn loans 131.2% 125.4% 130.6% 136.7% 139.1% 137.0%
Gross profit margin on disposition of merchandise 38.5% - (a) 38.5% 37.3% - (a) 37.3%
Merchandise turnover 3.0 - (a) 3.0 3.1 - (a) 3.1
   

(a)

With respect to the Company’s foreign pawn operations, 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 and six months ended June 30, 2011 and 2010.
  Three Months Ended June 30,
2011     2010
       
Retail Commercial Total Retail Commercial Total
Proceeds from disposition $ 74,548 $ 55,745 $ 130,293 $ 64,029 $ 49,821 $ 113,850
Gross profit on disposition $ 30,088 $ 20,930 $ 51,018 $ 26,413 $ 17,020 $ 43,433
Gross profit margin 40.4 % 37.5 % 39.2 % 41.3 % 34.2 % 38.1 %
Percentage of total gross profit 59.0 % 41.0 % 100.0 % 60.8 % 39.2 % 100.0 %
  Six Months Ended June 30,
2011     2010
       
Retail Commercial Total Retail Commercial Total
Proceeds from disposition $ 169,931 $ 121,023 $ 290,954 $ 150,172 $ 105,561 $ 255,733
Gross profit on disposition $ 67,926 $ 44,176 $ 112,102 $ 59,903 $ 35,468 $ 95,371
Gross profit margin 40.0 % 36.5 % 38.5 % 39.9 % 33.6 % 37.3 %
Percentage of total gross profit 60.6 % 39.4 % 100.0 % 62.8 % 37.2 % 100.0 %
     

The table below summarizes the age of merchandise held for disposition before valuation allowance of $0.7 million at June 30, 2011 and 2010 (dollars in thousands).

 
2011 2010
Balance at June 30,   Amount   %     Amount   %
   
Jewelry - held for one year or less $ 79,884 64.0 $ 65,112 64.5
Other merchandise - held for one year or less     40,262   32.3       28,525   28.3
 
Total merchandise held for one year or less     120,146   96.3       93,637   92.8
 
Jewelry - held for more than one year 1,840 1.5 4,294 4.3
Other merchandise - held for more than one year     2,768   2.2       2,984   2.9
 
Total merchandise held for more than one year     4,608   3.7       7,278   7.2
 
Total merchandise held for disposition   $ 124,754   100.0     $ 100,915   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 ended June 30, 2011 and 2010 (dollars in thousands):

 
Three Months Ended June 30,
2011   2010

Retail
Services
Segment

 

E-Commerce
Segment

 

Total
Company

Retail
Services
Segment

 

E-Commerce
Segment

 

Total
Company

Consumer loan fees $ 27,320 $ 105,094 $ 132,414 $ 26,782 $ 89,083 $ 115,865
Consumer loan loss provision     4,756       40,373       45,129       5,019       39,915       44,934  
Consumer loan fees, net of loan loss provision   $ 22,564     $ 64,721     $ 87,285     $ 21,763     $ 49,168     $ 70,931  
 
Year over year change - $ $ 801 $ 15,553 $ 16,354 $ (1,009) $ 16,516 $ 15,507
Year over year change - % 3.7 % 31.6 % 23.1 % (4.4) % 50.6 % 28.0 %

Consumer loan loss provision as % of consumer loan fees

    17.4 %     38.4 %     34.1 %     18.7 %     44.8 %     38.8 %
 
Six Months Ended June 30,
2011 2010

Retail
Services
Segment

E-Commerce
Segment

Total
Company

Retail
Services
Segment

E-Commerce
Segment

Total
Company

Consumer loan fees $ 53,155 $ 202,386 $ 255,541 $ 54,326 $ 169,981 $ 224,307
Consumer loan loss provision     7,939       76,690       84,629       8,005       70,822       78,827  
Consumer loan fees, net of loan loss provision   $ 45,216     $ 125,696     $ 170,912     $ 46,321     $ 99,159     $ 145,480  
 
Year over year change - $ $ (1,105) $ 26,537 $ 25,432 $ 721 $ 33,801 $ 34,522
Year over year change - % (2.4) % 26.8 % 17.5 % 1.6 % 51.7 % 31.1 %

Consumer loan loss provision as a % of consumer loan fees

   

14.9

%     37.9 %     33.1 %     14.7 %     41.7 %     35.1 %

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 June 30, 2011 and 2010 and for the three and six months ended June 30, 2011 and 2010.

 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(in thousands, except where otherwise noted)

 
As of June 30,
2011   2010

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 $ 55,480 $ 13,186 $ 68,666 $ 45,008 $ 9,536 $ 54,544
E-Commerce
Online Lending - Domestic 53,288 31,127 84,415 50,342 40,407 90,749
Online Lending - Foreign 88,814 2,946 91,760 38,476 1,070 39,546
MLOC     -     -     -     18,192     -     18,192
Total ending loan balance, gross $ 197,582 $ 47,259 $ 244,841 $ 152,018 $ 51,013 $ 203,031
Less: Allowance and accrual for losses(a)     (37,211)     (2,137)     (39,348)     (36,723)     (3,325)     (40,048)
Total ending loan balance, net   $ 160,371   $ 45,122   $ 205,493   $ 115,295   $ 47,688   $ 162,983
 

(a)

GAAP measure.

(b)

Except for allowance and accrual for losses, amounts represent non-GAAP measures.

 
Three Months Ended June 30,
2011   2010

Company
Owned(a)

 

Guaranteed
by the
Company(a)

  Total(b)

Company
Owned(a)

 

Guaranteed
by the
Company(a)

  Total(b)
Amount of consumer loans written:
Retail Services $ 181,337 $ 45,177 $ 226,514 $ 168,919 $ 48,147 $ 217,066
E-Commerce
Online Lending - Domestic 109,209 155,185 264,394 117,505 194,757 312,262
Online Lending - Foreign 181,863 14,169 196,032 91,344 5,482 96,826
MLOC     -     -     -     92,309     -     92,309
Total consumer loans written   $ 472,409   $ 214,531   $ 686,940   $ 470,077   $ 248,386   $ 718,463
 
Average amount per consumer loan:
Retail Services $ 473 $ 619 $ 497 $ 434 $ 569 $ 458
E-Commerce
Online Lending - Domestic 348 705 495 369 683 519
Online Lending - Foreign 551 644 557 471 422 468
MLOC     -     -     -     198     -     198
Combined   $ 460   $ 681   $ 512   $ 344   $ 650   $ 411

 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

(in thousands, except where otherwise noted)

 
 
Six Months Ended June 30,
2011   2010

Company
Owned(a)

 

Guaranteed
by the
Company(a)

  Combined(b)

Company
Owned(a)

 

Guaranteed
by the
Company(a)

  Combined(b)
Amount of consumer loans written:
Retail Services $ 342,392 $ 86,409 $ 428,801 $ 329,375 $ 96,217 $ 425,592
E-Commerce
Online Lending - Domestic 217,627 310,518 528,145 224,749 368,162 592,911
Online Lending - Foreign 342,200 25,066 367,266 168,754 9,558 178,312
MLOC     -     -     -     166,898     -     166,898
Total consumer loans written   $ 902,219   $ 421,993   $ 1,324,212   $ 889,776   $ 473,937   $ 1,363,713
 
Average amount per consumer loan:
Retail Services $ 465 $ 600 $ 487 $ 437 $ 574 $ 462
E-Commerce
Online Lending - Domestic 349 714 499 371 700 524
Online Lending - Foreign 539 627 544 474 416 470
MLOC     -     -     -     197     -     197
Combined   $ 452   $ 681   $ 506   $ 347   $ 661   $ 416

(a)

GAAP measure.

(b)

Non-GAAP measure.

  Three Months Ended   Six Months Ended
June 30, June 30,
2011   2010 2011   2010
 

Allowance for losses for Company-owned consumer loans:

 
Balance at beginning of period $ 35,010 $ 25,823 $ 38,953 $ 27,350
Consumer loan loss provision 44,703 43,902 85,330 78,446
Charge-offs (49,952 ) (38,591 ) (102,628 ) (82,833 )
Recoveries     7,450       5,589       15,556       13,760  
 
Balance at end of period   $ 37,211     $ 36,723     $ 37,211     $ 36,723  
 

Accrual for third-party lender-owned consumer loans:

 
Balance at beginning of period $ 1,711 $ 2,293 $ 2,838 $ 2,944
Consumer loan loss provision     426       1,032       (701 )     381  
 
Balance at end of period   $ 2,137     $ 3,325     $ 2,137     $ 3,325  
 

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

6.6 % 6.3 % 6.4 % 5.8 %

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

6.2 % 4.6 % 6.6 % 5.1 %

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

34.1 % 38.8 % 33.1 % 35.1 %
 

(a)

Non-GAAP measure.

                 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

INCOME FROM OPERATIONS BY OPERATING SEGMENT

(in thousands)

 

The Company allocates corporate administrative expenses to each operating segment based on personnel expenses at each segment. In the e-commerce segment, certain administrative expenses are allocated between the domestic and foreign components based on the amount of loans written for each geographic location. For comparison purposes, all prior periods in the tables below reflect the current classification of administrative and operating expenses.

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

Three Months Ended June 30, 2011

Revenue
Pawn loan fees and service charges $ 61,158 $ 7,190 $ 68,348 $ - $ - $ - $ 68,348
Proceeds from disposition of merchandise 130,264 - 130,264 29 - 29 130,293
Consumer loan fees 27,320 - 27,320 55,212 49,882 105,094 132,414
Other     2,684     174       2,858       110     229     339     3,197
Total revenue     221,426     7,364       228,790       55,351     50,111     105,462     334,252
Disposed merchandise 79,252 - 79,252 23 - 23 79,275
Consumer loan loss provision     4,756     -       4,756       16,504     23,869     40,373     45,129
Total cost of revenue     84,008     -       84,008       16,527     23,869     40,396     124,404
 
Net revenue     137,418     7,364       144,782       38,824     26,242     65,066     209,848
Expenses
Operations 81,013 5,458 86,471 13,363 15,242 28,605 115,076
Administration 14,793 2,478 17,271 9,368 6,001 15,369 32,640
Depreciation and amortization     8,066     1,460       9,526       2,574     208     2,782     12,308
Total expenses     103,872     9,396       113,268       25,305     21,451     46,756     160,024
Income (loss) from operations   $ 33,546   $ (2,032 )   $ 31,514     $ 13,519   $ 4,791   $ 18,310   $ 49,824

As of June 30, 2011

Total assets $ 971,457 $ 135,852 $ 1,107,309 $ 304,586 $ 92,342 $ 396,928 $ 1,504,237
Goodwill $ 336,392 $ 210,282 $ 546,674
 
Retail Services E-Commerce
Domestic   Foreign   Total Domestic   Foreign   Total Consolidated
 

Three Months Ended June 30, 2010

Revenue

Pawn loan fees and service charges

$ 51,080 $ 8,427 $

59,507

$

-

 

$

-

 

$

-

$

59,507

Proceeds from disposition of merchandise 113,850 - 113,850 - - - 113,850
Consumer loan fees 26,782 - 26,782 67,277 21,806 89,083 115,865
Other     2,616     41       2,657       202     -     202     2,859
Total revenue     194,328     8,468       202,796       67,479     21,806     89,285     292,081
Disposed merchandise 70,417 - 70,417 - - - 70,417
Consumer loan loss provision     5,019     -       5,019       29,466     10,449     39,915     44,934
Total cost of revenue     75,436     -       75,436       29,466     10,449     39,915     115,351
 
Net revenue     118,892     8,468       127,360       38,013     11,357     49,370     176,730
Expenses
Operations 72,955 4,665 77,620 16,634 7,677 24,311 101,931
Administration 10,926 2,194 13,120 8,948 3,378 12,326 25,446
Depreciation and amortization     6,954     1,231       8,185       1,959     71     2,030     10,215
Total expenses     90,835     8,090       98,925       27,541     11,126     38,667     137,592
Income from operations   $ 28,057   $ 378     $

28,435

   

$

10,472

 

$

231

 

$

10,703

 

$

39,138

As of June 30, 2010

Total assets $ 800,774 $ 119,137 $

919,911

$

332,809

 

$

47,767

 

$

380,576

$

1,300,487
Goodwill $ 303,476

 

$

210,282

$

513,758

                 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

INCOME FROM OPERATIONS BY OPERATING SEGMENT

(in thousands)

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

Six Months Ended June 30, 2011

Revenue
Pawn loan fees and service charges $ 121,384 $ 13,853 $ 135,237 $ - $ - $ - $ 135,237
Proceeds from disposition of merchandise 290,925 - 290,925 29 - 29 290,954
Consumer loan fees 53,155 - 53,155 113,923 88,463 202,386 255,541
Other     6,569     276       6,845       343     537     880     7,725
Total revenue     472,033     14,129       486,162       114,295     89,000     203,295     689,457
Disposed merchandise 178,829 - 178,829 23 - 23 178,852
Consumer loan loss provision     7,939     -       7,939       33,662     43,028     76,690     84,629
Total cost of revenue     186,768     -       186,768       33,685     43,028     76,713     263,481
 
Net revenue     285,265     14,129       299,394       80,610     45,972     126,582     425,976
Expenses
Operations 162,744 12,243 174,987 27,211 26,279 53,490 228,477
Administration 25,994 4,954 30,948 17,681 11,068 28,749 59,697
Depreciation and amortization     16,057     2,971       19,028       5,322     400     5,722     24,750
Total expenses     204,795     20,168       224,963       50,214     37,747     87,961     312,924
Income (loss) from operations   $ 80,470   $ (6,039 )   $ 74,431     $ 30,396   $ 8,225   $ 38,621   $ 113,052
 
Retail Services E-Commerce
Domestic   Foreign   Total Domestic   Foreign   Total Consolidated
 

Six Months Ended June 30, 2010

Revenue
Pawn loan fees and service charges $ 101,942 $ 15,846 $ 117,788 $ - $ - $ - $ 117,788
Proceeds from disposition of merchandise 255,733 - 255,733 - - - 255,733
Consumer loan fees 54,326 - 54,326 129,911 40,070 169,981 224,307
Other     6,723     74       6,797       518     -     518     7,315
Total revenue     418,724     15,920       434,644       130,429     40,070     170,499     605,143
Disposed merchandise 160,362 - 160,362 - - - 160,362
Consumer loan loss provision     8,005     -       8,005       52,879     17,943     70,822     78,827
Total cost of revenue     168,367     -       168,367       52,879     17,943     70,822     239,189
 
Net revenue     250,357     15,920       266,277       77,550     22,127     99,677     365,954
Expenses
Operations 146,053 8,408 154,461 30,413 13,576 43,989 198,450
Administration 23,382 4,173 27,555 17,200 6,239 23,439 50,994
Depreciation and amortization     14,498     2,374       16,872       3,931     130     4,061     20,933
Total expenses     183,933     14,955       198,888       51,544     19,945     71,489     270,377
Income from operations   $ 66,424   $ 965     $ 67,389     $ 26,006   $ 2,182   $ 28,188   $ 95,577

 

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 June 30, 2011 and 2010. The Company’s domestic retail services locations operate under the names “Cash America Pawn,” “SuperPawn,” “Cash America Payday Advance,” “Cashland,” “Maxit,” “Pawn X-Change” and “Mr. Payroll.” (Maxit and Pawn X-Change were acquired in October 2010.) The Company’s foreign retail services locations (of which the Company is a majority owner) operate under the name “Prenda Fácil.”

 
As of June 30,
2011   2010
Domestic(a)(b)   Foreign(a)   Total Domestic   Foreign   Total
Retail services locations offering:        
Both pawn and consumer lending 572 - 572 573 - 573
Pawn lending only 125 184 309 76 200 276
Consumer lending only 85 - 85 88 - 88
Other (c)   118   -   118   125   -   125
Total retail services   900   184   1,084   862   200   1,062
 

(a)

Except as described in (c) below, includes locations that operate in 23 and 21 states in the United States and Mexico, respectively.

(b)

Includes nine unconsolidated franchised locations operating under the name “Cash America Pawn” as of both June 30, 2011 and 2010.

(c)

As of June 30, 2011 and 2010, includes six and five consolidated Company-owned check cashing locations, respectively, and 112 and 120 unconsolidated franchised check cashing locations, respectively. As of June 30, 2011, includes locations that operate in 18 states in the United States.

E-Commerce Segment

As of June 30, 2011, the Company’s e-commerce operating segment offers consumer loans to customers over the Internet:

The e-commerce segment also includes the Company’s MLOC services channel, which processed MLOC advances on behalf of a third-party lender and had a participation interest in MLOC receivables during most of 2010. In the past, the MLOC services channel generated its earnings through loan processing services the Company provided for a third-party lender, as well as from fees generated from participation interests in receivables the Company acquired. This program ended in October 2010 because the third-party lender discontinued offering MLOC advances. The Company intends to continue pursuing the development of new MLOC opportunities during the remainder of 2011.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NON-GAAP DISCLOSURE

Non-GAAP Disclosure

In addition to the financial information prepared in conformity with Generally Accepted Accounting Principles in the United States of America (“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 non-GAAP 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.

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 that the presentation of these measures provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments and amortization methods, which provides a more complete understanding of the Company’s financial performance, competitive position and prospects for the future. Management also believes that investors regularly rely on non-GAAP financial measures, such as adjusted earnings and adjusted earnings per share, to assess operating performance and that such measures may highlight trends in the Company’s business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. 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 Six Months Ended
June 30, June 30,
2011   2010 2011   2010
$   Per

Share

$   Per

Share

$   Per

Share

$   Per

Share

 

Net income attributable to Cash America International, Inc.

$ 26,981 $ 0.84 $ 20,889 $ 0.66 $ 63,359 $ 1.99 $ 52,922 $ 1.67
 
Adjustments:
Intangible asset amortization, net of tax 981 0.03 664 0.02 2,085 0.07 1,417 0.04
Non-cash equity-based compensation, net of tax 838 0.03 602 0.02 1,607 0.05 1,178 0.04

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

550 0.02 512 0.02 1,090 0.03 1,027 0.04
Foreign exchange loss, net of tax     115     -     23     -     175     0.01     109     -
Adjusted earnings   $ 29,465   $ 0.92   $ 22,690   $ 0.72   $ 68,316   $ 2.15   $ 56,653   $ 1.79
 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

ADJUSTED EBITDA

Adjusted EBITDA

The table below shows adjusted EBITDA, a non-GAAP measure that is defined as earnings before depreciation, amortization, interest, foreign currency transaction gains or losses, equity in earnings or loss of unconsolidated subsidiary, taxes and net income or loss attributable to the noncontrolling interest. 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. In addition, adjusted EBITDA is also useful to investors to help assess the Company’s liquidity and estimated enterprise value. The computation of adjusted EBITDA as presented below may differ from the computation of similarly-titled measures provided by other companies (dollars in thousands):

 
Trailing 12 Months Ended
June 30,
2011   2010
Net Income attributable to Cash America

International Inc.

  $ 125,972   $ 109,083
 
Adjustments:
Depreciation and amortization expenses 47,744 41,788
Interest expense, net 22,713 21,346
Foreign currency transaction loss 570 463
Equity in loss of unconsolidated subsidiary 172 -
Provision for income taxes 75,835 63,888
Net (loss) income attributable to the noncontrolling interest       (661 )       771  
Adjusted EBITDA     $ 272,345       $ 237,339  
 
Adjusted EBITDA margin calculated as follows:
 
Total revenue $ 1,377,648 $ 1,205,061
 
Adjusted EBITDA 272,345 237,339
                 
Adjusted EBITDA as a percentage of total revenue       19.8 %       19.7 %

Contacts

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

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Contacts

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