UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2004
OR
| ¨ | 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 000-50840
QC HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
| Kansas | 48-1209939 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 2812 West 47th Avenue, Kansas City, Kansas | 66103 | |
| (Address of principal executive offices) | (Zip Code) | |
(913) 439-1100
(Registrant’s telephone number, including area code)
Not applicable
(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 Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x
Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act). Yes ¨ No x
The number of shares outstanding of the registrant’s common stock, as of August 6, 2004:
Common Stock $0.01 per share par value - 20,371,000 Shares
QC HOLDINGS, INC.
Form 10-Q
June 30, 2004
| Page | ||
| Item 1. Financial Statements |
||
| 1 | ||
| Consolidated Balance Sheets - December 31, 2003 and June 30, 2004 |
2 | |
| Consolidated Statements of Income - Three and Six Months Ended June 30, 2003 and 2004 |
3 | |
| Consolidated Statements of Cash Flows - Six Months Ended June 30, 2003 and 2004 |
4 | |
| 5 | ||
| 6 | ||
| Computation of Basic and Diluted Earnings per Share |
8 | |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 | |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk |
23 | |
| Item 4. Controls and Procedures |
23 | |
| Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
24 | |
| 24 | ||
| Item 6. Exhibits and Reports on Form 8-K |
24 | |
| 25 | ||
FORM 10-Q
JUNE 30, 2004
PART I - FINANCIAL INFORMATION
The Consolidated Financial Statements included herein have been prepared by QC Holdings, Inc. (the “Company” or “QC”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to enable a reasonable understanding of the information presented. These Consolidated Financial Statements should be read in conjunction with the financial statements and the notes thereto, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the Company’s Registration Statement on Form S-1, as amended, Registration No. 333-115297, filed on July 9, 2004. Results for the three and six months ended June 30, 2004 are not necessarily indicative of the results expected for the full year 2004.
QC HOLDINGS, INC.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
| December 31, 2003 |
June 30, 2004 |
|||||||
| Unaudited | ||||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 9,497 | $ | 8,536 | ||||
| Loans receivable, less allowance for losses of $1,090 at December 31, 2003 and $960 at June 30, 2004 |
35,933 | 36,137 | ||||||
| Prepaid expenses and other assets |
1,352 | 2,222 | ||||||
| Total current assets |
46,782 | 46,895 | ||||||
| Property and equipment, net |
11,852 | 15,130 | ||||||
| Goodwill |
5,431 | 5,431 | ||||||
| Other assets, net |
864 | 862 | ||||||
| Total assets |
$ | 64,929 | $ | 68,318 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 276 | $ | 97 | ||||
| Accrued expenses and other liabilities |
1,235 | 2,532 | ||||||
| Deferred revenue |
2,188 | 2,141 | ||||||
| Income taxes payable |
1,051 | |||||||
| Deferred income taxes |
2,517 | 2,765 | ||||||
| Revolving credit facility |
6,256 | 6,206 | ||||||
| Current portion of long-term debt |
4,718 | 4,340 | ||||||
| Total current liabilities |
18,241 | 18,081 | ||||||
| Deferred income taxes |
1,475 | 1,695 | ||||||
| Liability for mandatory stock redemption |
17,000 | |||||||
| Long-term debt, less current portion |
18,880 | 15,654 | ||||||
| Total liabilities |
55,596 | 35,430 | ||||||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Common stock, $0.01 par value: 75,000,000 shares authorized; 19,087,600 shares issued |
191 | 191 | ||||||
| Retained earnings |
21,292 | 27,237 | ||||||
| Additional paid-in capital |
5,248 | 22,394 | ||||||
| Treasury stock, at cost |
(17,165 | ) | (16,934 | ) | ||||
| Notes received for equity |
(233 | ) | ||||||
| Total stockholders’ equity |
9,333 | 32,888 | ||||||
| Total liabilities and stockholders’ equity |
$ | 64,929 | $ | 68,318 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
Page 2
Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, | |||||||||||
| 2003 |
2004 |
2003 |
2004 | |||||||||
| Revenues |
||||||||||||
| Payday loan fees |
$ | 20,238 | $ | 26,040 | $ | 37,797 | $ | 50,556 | ||||
| Other |
2,962 | 2,811 | 6,666 | 6,478 | ||||||||
| Total revenues |
23,200 | 28,851 | 44,463 | 57,034 | ||||||||
| Store expenses |
||||||||||||
| Salaries and benefits |
5,196 | 6,202 | 10,136 | 12,319 | ||||||||
| Provision for losses |
5,510 | 6,043 | 9,383 | 9,840 | ||||||||
| Occupancy |
2,764 | 2,968 | 5,460 | 5,982 | ||||||||
| Depreciation and amortization |
299 | 393 | 565 | 759 | ||||||||
| Other |
1,791 | 2,267 | 3,693 | 4,220 | ||||||||
| Total store expenses |
15,560 | 17,873 | 29,237 | 33,120 | ||||||||
| Store gross profit |
7,640 | 10,978 | 15,226 | 23,914 | ||||||||
| Regional expenses |
1,375 | 1,850 | 2,774 | 3,670 | ||||||||
| Corporate expenses |
1,568 | 2,208 | 2,941 | 3,999 | ||||||||
| Depreciation and amortization |
92 | 151 | 173 | 283 | ||||||||
| Interest expense |
188 | 326 | 404 | 682 | ||||||||
| Other, net |
31 | 11 | 56 | 41 | ||||||||
| Income before taxes |
4,386 | 6,432 | 8,878 | 15,239 | ||||||||
| Provision for income taxes |
1,700 | 2,638 | 3,426 | 6,194 | ||||||||
| Net income |
$ | 2,686 | $ | 3,794 | $ | 5,452 | $ | 9,045 | ||||
| Weighted average number of common shares outstanding: |
||||||||||||
| Basic |
18,915 | 11,751 | 18,915 | 11,720 | ||||||||
| Diluted |
19,399 | 12,924 | 19,390 | 12,636 | ||||||||
| Earnings per share: |
||||||||||||
| Basic |
$ | 0.14 | $ | 0.25 | $ | 0.01 | $ | 0.59 | ||||
| Diluted |
$ | 0.14 | $ | 0.22 | $ | 0.01 | $ | 0.55 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
Page 3
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
| Six Months Ended June 30, |
||||||||
| 2003 |
2004 |
|||||||
| Cash flows from operating activities |
||||||||
| Net income |
$ | 5,452 | $ | 9,045 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
738 | 1,042 | ||||||
| Deferred income taxes |
458 | 468 | ||||||
| Other, net |
56 | 42 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Prepaid expenses and other assets |
(321 | ) | (1,052 | ) | ||||
| Other assets |
332 | (80 | ) | |||||
| Accounts payable |
(641 | ) | (179 | ) | ||||
| Accrued expenses, other liabilities and deferred revenue |
(900 | ) | 1,250 | |||||
| Income taxes payable |
1,140 | (1,051 | ) | |||||
| Net operating |
6,314 | 9,485 | ||||||
| Cash flows from investing activities |
||||||||
| Loans receivable, net |
(1,717 | ) | (204 | ) | ||||
| Purchase of property and equipment |
(3,112 | ) | (4,282 | ) | ||||
| Proceeds from sale of property and equipment |
3 | 2 | ||||||
| Other, net |
182 | |||||||
| Net investing |
(4,826 | ) | (4,302 | ) | ||||
| Cash flows from financing activities |
||||||||
| Net repayments under credit facility |
(725 | ) | (50 | ) | ||||
| Payments on long-term debt |
(1,312 | ) | (4,604 | ) | ||||
| Proceeds from long-term debt |
1,000 | |||||||
| Dividends to stockholders |
(3,100 | ) | ||||||
| Exercise of stock options |
377 | |||||||
| Other, net |
(40 | ) | 233 | |||||
| Net financing |
(2,077 | ) | (6,144 | ) | ||||
| Cash and cash equivalents |
||||||||
| Net decrease |
(589 | ) | (961 | ) | ||||
| At beginning of year |
7,991 | 9,497 | ||||||
| At end of period |
$ | 7,402 | $ | 8,536 | ||||
| Supplementary schedule of cash flow information |
||||||||
| Cash paid during the period for |
||||||||
| Interest |
$ | 421 | $ | 686 | ||||
| Income taxes |
1,827 | 6,804 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
Page 4
Consolidated Statements of Changes in Stockholders’ Equity
(in thousands, except share amounts)
| Outstanding Shares |
Common stock |
Retained earnings |
Additional capital |
Treasury stock |
Notes received |
Total stockholders’ equity |
||||||||||||||||||||
| Balance, December 31, 2002 |
18,915,000 | |||||||||||||||||||||||||