Advance America, Cash Advance Centers, Inc. - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended March 31, 2005
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to

COMMISSION FILE NUMBER 001-32363

ADVANCE AMERICA, CASH ADVANCE CENTERS, INC.

(Exact name of registrant as specified in its charter)

Delaware	58-2332639
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

135 North Church Street
Spartanburg, South Carolina 29306

(Address of principal executive offices)

(Zip Code)

864-342-5600

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding as of May 11, 2005
Common Stock, par value $.01 per share		83,958,270 shares

FORWARD-LOOKING STATEMENTS

The matters discussed in this Quarterly Report on Form 10-Q that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties, which could cause actual results to differ materially from the results expressed in, or implied by these forward-looking statements. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “may,” “will,” “should,” “would,” “could,” “estimate,” “continue,” and other words and terms of similar meaning in conjunction with a discussion of future operating or financial performance. You should read statements that contain these words carefully, because they discuss our future expectations, contain projections of our future results of operations or of our financial position or state other “forward-looking” information.

The factors listed in “Part I—Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Factors,” as well as any cautionary language in this Quarterly Report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Although we believe that our expectations are based on reasonable assumptions, actual results may differ materially from those in the forward-looking statements as a result of various factors, including, but not limited to, those described under the heading “Risk Factors” in “Part I—Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report.

Forward-looking statements speak only as of the date of this Quarterly Report. Except as required under federal securities laws and the rules and regulations of the U.S. Securities and Exchange Commission, we do not have any intention, and do not undertake, to update any forward-looking statements to reflect events or circumstances arising after the date of this Quarterly Report, whether as a result of new information, future events or otherwise. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on the forward-looking statements included in this Quarterly Report or that may be made elsewhere from time to time by, or on behalf of, us. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Advance America, Cash Advance Centers, Inc.

Unaudited Consolidated Balance Sheets

December 31, 2004 and March 31, 2005

(in thousands, except per share data)

	December 31, 2004				March 31, 2005
Assets
Current assets
Cash and cash equivalents		$	18,224		$	13,690
Advances and fees receivable, net		155,009			131,901
Deferred income taxes		3,141			2,444
Other current assets		9,887			10,156
Total current assets		186,261			158,191
Restricted cash		9,110			9,149
Property and equipment, net		72,247			71,456
Goodwill, net		122,324			122,324
Other assets		7,597			7,381
Total assets		$	397,539		$	368,501
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$	13,911		$	7,102
Accrued liabilities		23,027			27,457
Income taxes payable		2,169			3,105
Accrual for excess bank losses		3,219			2,330
Current portion of long-term debt		471			478
Total current liabilities		42,797			40,472
Revolving credit facility		39,506			—
Long-term debt		6,660			6,543
Deferred income taxes		12,286			12,878
Other liabilities		—			14
Total liabilities		101,249			59,907
Commitments and contingencies (Note 7)
Stockholders’ equity
Preferred stock, par value $.01 per share, 25,000 shares authorized; no shares issued and outstanding		—			—
Common stock, par value $.01 per share, 250,000 shares authorized; 96,821 shares issued and 83,958 outstanding as of December 31, 2004 and March 31, 2005		968			968
Paid in capital		284,004			283,835
Paid in capital—unearned compensation		(3,451		)	(3,160		)
Retained earnings		52,492			64,674
Common stock in treasury (12,863 shares at cost)		(37,723		)	(37,723		)
Total stockholders’ equity		296,290			308,594
Total liabilities and stockholders’ equity		$	397,539		$	368,501

The accompanying notes are an integral part of these consolidated financial statements.

Advance America, Cash Advance Centers, Inc.

Interim Unaudited Consolidated Statements of Income

Three Months Ended March 31, 2004 and 2005

(in thousands, except per share data)

	2004		2005
Revenues
Fees and interest charged to customers	$	95,315	$

		Page
FORWARD-LOOKING STATEMENTS		3
PART I—FINANCIAL INFORMATION		4
Item 1.	Financial Statements	4
	Unaudited Consolidated Balance Sheets December 31, 2004 and March 31, 2005	4
	Interim Unaudited Consolidated Statements of Income Three Months Ended March 31, 2004 and 2005	5
	Interim Unaudited Consolidated Statements of Cash Flows Three Months Ended March 31, 2004 and 2005	6
	Notes to Interim Unaudited Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	55
PART II—OTHER INFORMATION		56
Item 1.	Legal Proceedings	56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Submission of Matters to a Vote of Security Holders	56
Item 5.	Other Information	56
Item 6.	Exhibits	56
SIGNATURES		57
INDEX TO EXHIBITS		58