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8-K - LIVE FILING - DFC GLOBAL CORP. | htm_38859.htm |
EX 99.1
NEWS RELEASE
Contact: Dollar Financial Corp
Financial Dynamics
Julie Prozeller
(212) 850-5600
FOR IMMEDIATE RELEASE
DOLLAR FINANCIAL CORP ANNOUNCES RECORD FISCAL 2010 RESULTS
RECORD FISCAL 2010 FULLY-DILUTED OPERATING EARNINGS PER SHARE OF $2.01 TOPS COMPANYS GUIDANCE
RANGE;
ADJUSTED EBITDA INCREASES 31.6% TO A RECORD $182.2 MILLION;
COMPANY FURTHER DIVERSIFIES GLOBAL FOOTPRINT WITH ACQUISITION OF INTERNET LENDING BUSINESS IN
SCANDINAVIA
BERWYN, Pennsylvania, August 26, 2010 Dollar Financial Corp (NASDAQ:DLLR News), a leading international diversified financial services company serving primarily unbanked and under-banked consumers for over 30 years, today announced its results for the fiscal fourth quarter and fiscal year ended June 30, 2010.
Fiscal 2010 Financial Highlights
| Consolidated total revenue grew to a record $610.9 million for the 2010 fiscal year, an increase of $83.1 million or 15.7% compared to the prior fiscal year, even as the Company employed a more conservative approach to consumer lending and cashing third-party checks amid the weakened global economy. On a constant currency basis, total consolidated revenue increased by $60.6 million or 11.5%. |
| The consolidated loan loss provision, expressed as a percentage of gross consumer lending revenue, improved to 14.4% for the fiscal year compared to 19.6% for fiscal 2009. The significant improvement reflects the Companys continued conservative approach to extending consumer credit in the midst of the weakened economy, as well as the benefit from the implementation of proprietary credit scoring models for the Companys large array of global loan products. |
| Consolidated operating margin increased by $64.5 million or 35.5% compared to the prior fiscal year, driven by the Companys strong organic revenue growth, contribution from acquisitions and the implementation of store operating efficiency improvements throughout the Companys international store network. |
| Consolidated adjusted EBITDA was a record $182.2 million for fiscal 2010, representing an increase of $43.7 million or 31.6% compared to the prior fiscal year, while also increasing by $39.2 million or 28.3% on a constant currency basis. |
| Pro forma income before income taxes, which includes approximately $29.4 million of increased interest expense and cash payments on the cross-currency interest rate swap agreements following the Companys December 2009 refinancing activities, was $87.8 million for the fiscal year ended June 30, 2010 compared to $80.5 million for the prior fiscal year, while pro forma net income, considering a pro forma effective income tax rate of 43.0%, was $50.0 million for the 2010 fiscal year compared to $45.9 million for the prior fiscal year. |
| Fully-diluted operating earnings per share was $2.01 for fiscal 2010 compared to $1.90 for the prior fiscal year. The fiscal 2010 reported fully-diluted loss per share on a GAAP basis, including $58.4 million of net one-time charges, was $0.20 compared to a loss of $0.28 for the previous fiscal year. |
Discussion on Presentation of Information
The U.S. Dollar weakened in relation to the Canadian Dollar during the fiscal year ended June 30,
2010, as compared to the prior year period, with the average value of the Canadian Dollar
increasing approximately 10% relative to the U.S. Dollar; however, the average value of the British
Pound Sterling declined by nearly 2% as measured against the U.S. Dollar over the same period.
Furthermore, during the fiscal 2010 fourth quarter, the average value of the Canadian Dollar
increased approximately 13% compared to the U.S. Dollar, while the average value of the British
Pound Sterling decreased by nearly 4% to the U.S. currency when compared to the fourth quarter of
the prior fiscal year. Consequently, fluctuations in currency rates affect year-over-year
comparisons of the Companys financial results and as such, the Company is providing some
comparisons on a constant currency basis.
Fiscal 2010 Overview
Commenting on the fiscal year ended June 30, 2010, Jeff Weiss, the Companys Chairman and Chief
Executive Officer, stated, I am excited to announce another year of record performance for our
Company with consolidated total revenue growing by 15.7% to a record $610.9 million for the fiscal
year, while consolidated adjusted EBITDA increased to a record $182.2 million, a 31.6% increase
over the prior fiscal year. This record performance was achieved despite a challenging global
economy still suffering with high unemployment and a significantly reduced average work week for
hourly wage based workers. During the economic downturn we continued to position the Company for
future growth while fine tuning the fundamentals of our business. As a result, we achieved the
strongest credit performance in the Companys history for our loan products, while at the same time
continuing to improve the labor efficiency of our global store network; which together drove record
fiscal 2010 operating margins.
Jeff Weiss continued, Moreover, we completed a number of key acquisitions during the fiscal year that further diversified our global geographic footprint, product set and sales channel strategies, which we expect will provide the next generation of growth engines for our Company. Most recently, today we announced that we have entered into an agreement to acquire Folkia Group AS, a leading internet lending business based in Stockholm, Sweden. The company, which was founded in 2006, currently originates loans through both internet and SMS text cell phone technology in four countries including: Sweden; Finland; Denmark; and Estonia. This acquisition provides us with an internet and cell phone based lending platform that was designed to handle the specific requirements for expansion within Northern Europe and Scandinavia, while also providing the added benefit of a portable credit and finance license for future expansion into additional countries in the European Union. We continue to have a full pipeline of acquisition candidates in a number of countries, which we are currently in the process of evaluating, prioritizing, and pursuing based on the future value and strategic importance of each opportunity to the Company.
To support our long-term growth strategies, in fiscal 2010 we continued to bolster our global management team with the expansion of our global credit analytics group. This group is expected to provide a strong backbone to the business as we expand into new countries, continue the development of our global internet consumer lending platform, and test other new consumer loan products. Furthermore, we hired an experienced senior executive with responsibility for the development and expansion of our new Polish market and other potential markets in Eastern Europe. We also recently announced the hiring of a Chief Information Officer and a V.P. of eCommerce, who are both well accomplished in a number of large multi-national companies. Their collective knowledge and expertise will be invaluable with respect to leveraging new technologies in the deployment of our many products and services through existing and yet evolving e-channel strategies.
Jeff Weiss continued, Revenue generated from new products and geographies acquired or developed over the last two years accounted for approximately 17.0% of our total consolidated revenue in the fiscal 2010 fourth quarter and 22.0% of our total adjusted EBITDA. In addition, revenue from secured pawn lending and fee based products, such as the military lending services business, check cashing, money transfer, foreign exchange, gold purchasing and other products, collectively accounted for nearly 50.0% of our consolidated total revenue for the three months ended June 30, 2010. This significantly reduces any potential risk to our business from a degradation in the overall credit landscape of our customer base or unfavorable regulatory developments in the countries in which we operate.
Mr. Weiss concluded, Our goal is to be the leading provider of diversified financial services to unbanked and under-banked consumers around the world and to deliver these services through whatever means are most preferred and convenient to our customers. Considering the strength of our core businesses, the significant opportunities in the new businesses we recently added to our global enterprise, and accompanied by an active pipeline of current acquisition candidates we are currently evaluating around the world, as well as approximately $200.0 million of investible cash to spend on these opportunities and the strongest liquidity position in the Companys history, we believe the future outlook for our Company is the brightest it has ever been.
Fiscal 2010 Fourth Quarter Results
For the fiscal 2010 fourth quarter, total consolidated revenue was $159.0 million, representing an
increase of 27.8% or $34.6 million over the three months ended June 30, 2009. On a constant
currency basis, total consolidated revenue for the three months ended June 30, 2010 increased by
$28.1 million or 22.6% compared to the prior year period. Similarly, total adjusted EBITDA
increased by 58.5% to $50.0 million for the quarter ended June 30, 2010, while increasing by $15.5
million or 49.1% on a constant currency basis compared to the fourth quarter of the prior fiscal
year.
In Canada, the Company opened 5 de novo stores during the fourth quarter. As the Company resumed its de novo store program, consumer lending revenue in Canada increased by C$6.1 million or 18.5% for the fiscal fourth quarter compared to the prior year period reflecting results under the new post-regulatory platform and the renewed Canadian television advertising campaigns. Furthermore, the Companys recently introduced gold purchase product added C$4.3 million of additional revenue from Canada in the fourth quarter, while also serving to continue to bring new customers into its stores. Additionally, the regulatory environment has substantially been clarified with the passage of provincial regulations in provinces that now account for more than 95% of the Companys company-operated store base. All of the provinces thus far have implemented maximum lending rates in excess of the Companys current loan rate structure. To capitalize on this result, the Company is focusing on growth and the expansion of its Canadian business in fiscal 2011 with the resumption of its mass media advertising campaigns and its de novo store build program, which should also serve to further enhance the Companys strong brand awareness in the country. The Company intends to leverage its multi-product store platform and its position as a low cost provider in the industry by offering products and services at prices below many of its Canadian competitors, to facilitate growth in revenue and enhance its current leading share of the Canadian market. In addition, the Company is piloting an internet lending product in selected Canadian provinces, which it expects to expand to additional provinces and territories during fiscal 2011. The Company presently expects to open 20 to 30 de novo stores in Canada in fiscal 2011, and expects the evolution of the countrys post regulatory business environment will provide the additional opportunity to acquire smaller store chains looking to sell their businesses in light of the rigor of the new provincial regulations.
In the United Kingdom, the Company continued to widen its store footprint in the fiscal fourth quarter and bolster its strong Money Shop brand with the opening of 18 additional de novo stores. The U.K. has the fewest number of retail financial services stores in relation to the under-banked population when compared to the United States and Canada, which the Company believes will provide the opportunity to continue to expand its U.K. store network for a number of years to come. The Company expects to open approximately 75 de novo stores in the United Kingdom in fiscal 2011, up from 50 store openings in fiscal 2010. Total revenue in the U.K. for the quarter on a year-over-year basis increased by £9.7 million or 42.4%. Consumer lending revenue grew by £6.1 million or 52.6% for the quarter compared to the fourth quarter of the prior fiscal year, reflecting strong performance from the internet lending business acquired in April 2009 and the continued robust performance of the bricks and mortar store based business. The internet lending business in the United Kingdom continues to perform better than expected, contributing £6.1 million of total revenue for the three months ended June 30, 2010. The planned expansion of the internet lending platform within the United Kingdom and other countries is another key element of the Companys growth strategy for the future. Additionally, the U.K. pawn lending business and gold purchase product also continued to grow at a rapid pace, combining to contribute £5.6 million of revenue for the quarter, more than doubling the prior years amount.
With respect to the U.S. financial services business, the Company continued to implement its store rationalization program, with the intention to close underperforming stores while concentrating its domestic store footprint in states with more favorable and stable regulatory environments. As part of this plan, as previously announced, the Company closed 23 U.S. financial services stores in the fiscal fourth quarter, 16 of which were located in Arizona with 7 store closures in the State of Washington, which represents approximately one-half of the Companys store network in those two states. The operating margin for the Companys domestic retail financial services business increased by $0.8 million for the quarter compared to the three months ended June 30, 2009, despite fewer stores and $3.8 million of lower revenue, reflecting the positive impact of the aforementioned U.S. store rationalization program.
The recently acquired Dealers Financial Services (DFS) business in the United States, which provides fee based auto lending and insurance services to military personnel in the United States, contributed $4.9 million of incremental EBITDA for the fiscal fourth quarter. This contribution was achieved despite additional expenditures to bolster the technology platform and management infrastructure of the business unit to support future growth within the core DFS customer segments, and the potential expansion beyond the currently served military grade levels. The recently acquired Polish lending business contributed $1.8 million of incremental revenue during the fiscal 2010 fourth quarter. The Companys focus in Poland in fiscal 2010 has been to develop and invest in the technology and management infrastructure necessary to position the Polish business for further geographic expansion in fiscal 2011. The Company believes this platform can be extended throughout Poland into areas with higher population densities, and also into Eastern Europe in the future. Furthermore, the Company is about to open its first gold buying store in Gdansk, Poland.
For the fiscal fourth quarter ended June 30, 2010, the Company incurred $10.2 million of net one-time charges, principally related to an $8.5 million net unrealized, non-cash mark-to-market valuation loss on the Companys debt and cross-currency interest rate swap agreements. Including these one-time charges, income before income taxes on a GAAP basis was $4.6 million for the fiscal fourth quarter compared to a loss before income taxes of $42.3 million for the fourth quarter of the previous fiscal year. The prior years loss before income taxes included $56.5 million of net one-time charges principally related to a $57.4 million litigation reserve primarily associated with the settlement of long-standing Canadian class action litigation.
The financial results for the quarter, as compared to the prior years quarter, include additional interest expense associated with the $600.0 million senior note offering in December 2009, which resulted in the Company maintaining approximately $200.0 million of investible cash on its balance sheet during the quarter ending June 30, 2010. The Company intends to follow its historical practices and deploy this excess cash principally in accretive acquisitions, which it expects will progressively mitigate, in future periods, the current earnings dilution of the incremental interest costs.
Excluding the non-recurring charges, non-cash interest expense emanating from the adoption of ASC 470-20, and the non-cash amortization associated with the legacy cross-currency interest rate swap agreements, pro forma income before income taxes increased by 10.9% to $18.5 million for the fiscal fourth quarter, compared to $16.7 million for the three months ended June 30, 2009. Likewise, pro forma net income, considering a pro forma effective income tax rate of 43.0%, was $10.6 million for the fiscal 2010 fourth quarter representing an increase of 10.9% compared to the prior year period. Similarly, fully-diluted operating earnings per share was $0.42 for the quarter compared to $0.39 for the fourth quarter of the prior fiscal year. A table reconciling pro forma income before income taxes to the GAAP basis income before income taxes is included on page 12 of this News Release.
Company Liquidity
On June 23, 2010, the Company retired its remaining $18.3 million of legacy senior secured term
loans in Canada and the United Kingdom. Following this transaction, the Companys debt structure
consists of a $44.8 million tranche of 2.875% U.S. senior convertible notes due 2027 and a $120.0
million tranche of 3.0% U.S. senior convertible notes due 2028. In addition, the Company has
$600.0 million of senior unsecured notes which are not due until December, 2016. Thus, the Company
has no debt principal repayment obligations between now and the first potential put date of
December, 2012 for the $44.8 million tranche of 2.875% U.S. senior convertible notes.
In addition to having no debt repayment obligations until December 2012, the Company has approximately $200.0 million of excess cash on its balance sheet and continues to benefit from its ongoing strong cash flow from operations, which it expects will be collectively deployed in accretive opportunities that it believes will enhance future earnings as well as further expand and grow the business on a global basis. In addition, the Company continues to maintain its undrawn global revolving credit facilities, which include a $75.0 million U.S. facility, a C$28.5 million Canadian facility, and a £5.0 million overdraft credit facility in the U.K.
Fiscal 2011 Outlook
Looking forward to fiscal 2011, Randy Underwood, the Companys Executive Vice President and CFO
stated, We continue to be excited about the considerable growth opportunities ahead of us, from
both our existing businesses and the new businesses we have recently acquired. Part of our
long-term strategy continues to include key investments in our business. As a result, we expect to
continue to acquire new businesses, invest in new stores and new technologies, and enhance the
management infrastructure in both our core businesses and also our recently acquired businesses, in
order to fund future years growth. Additionally, as currency exchange rates continue to fluctuate
on a daily basis due to the evolving world economies, which naturally affects the translation of
our international financial results into U.S. Dollars per GAAP, we will initially be providing a
relatively wide guidance range for fiscal 2011. This range should balance the significant growth
opportunities we believe exist in our present businesses with the unpredictable fluctuations in
future currency exchange rates, which could be either net favorable or unfavorable over the coming
fiscal year.
For fiscal 2011, we are projecting adjusted EBITDA of between $205.0 million and $215.0 million. Operating fully-diluted earnings per share, which would exclude any one-time charges that may occur, the non-cash impact of adopting ASC-470-20 associated with the convertible securities and the non-cash amortization associated with the legacy cross-currency interest rate swap agreements, is anticipated to be between $2.05 and $2.30 for fiscal 2011; this considers an expected effective income tax rate from operations of 37%. The anticipated improvement in the expected effective income tax rate from operations for fiscal 2011 reflects the improved profitability of our combined U.S. business operations following the DFS acquisition in December 2009, and excludes the tax effect of the non-cash charges associated with the Companys convertible securities and the cross-currency interest rate swap agreements. The Companys fiscal 2011 guidance does not include the potential earnings contribution of the Folkia acquisition announced today, which is pending local regulatory approval.
Investors Conference Call
Dollar Financial Corp will be holding an investors conference call on August 26, 2010 at 5:00 pm
ET to discuss the Companys results for the fiscal fourth quarter and fiscal year ended June 30,
2010, and the Companys fiscal 2011 outlook. Investors can participate in the conference by
dialing (888) 200-2794 (U.S. and Canada) or (973) 935-8766 (International); use the confirmation
code Dollar. Hosting the call will be Jeff Weiss, Chairman and CEO and Randy Underwood,
Executive Vice President and CFO. For your convenience, the conference call can be replayed in its
entirety beginning from two hours after the end of the call through September 5, 2010. If you wish
to listen to the replay of this conference call, please dial (800) 642-1687 (U.S. and Canada) or
(706) 645-9291 (International) and enter passcode 92540393.
The conference call will also be broadcast live through a link on the Investor Relations page on the Dollar Financial web site at http://www.dfg.com. Please go to the web site at least 15 minutes prior to the call to register, download and install any necessary audio software.
About Dollar Financial Corp
Dollar Financial Corp is a leading international diversified financial services company primarily
serving unbanked and under-banked consumers for over 30 years. Through its retail storefront
locations as well as by other means, such as via the Internet, the Company provides a range of
consumer financial products and services in five countries, Canada, the United Kingdom, the United
States, the Republic of Ireland and Poland, to consumers who, for reasons of convenience and
accessibility, purchase some or all of their financial services from the Company rather than from
banks and other financial institutions. The Companys products, principally its short-term consumer
loans, check cashing services, secured pawn loans and gold buying services, provide customers with
immediate access to cash for living expenses or other episodic needs. The Company also offers
high-value ancillary services, including Western Union money order and money transfer products,
electronic tax filing, reloadable VISA® and MasterCard® debit cards, foreign currency exchange, and
other services. In addition, through its branded Military Installment Loan and Education Services,
or MILES® program, the Company provides fee based services to enlisted military personnel applying
for loans to purchase new and used vehicles that are funded and serviced under an exclusive
agreement with a major third-party national bank.
At June 30, 2010, the Companys global retail operations consisted of 1,180 locations, including 1,058 company-operated financial services stores and 122 franchised and agent locations, conducting business primarily under the names Money Mart®, Money Shop®, Loan Mart®, Money Corner®, Insta-Cheques® and The Check Cashing Store® in Canada, the United Kingdom, the United States and the Republic of Ireland, and Poland. For more information, please visit the Companys website at www.dfg.com.
Forward Looking Statement
This news release contains forward looking statements, including, among other things, statements
regarding the following: recent acquisitions; the Companys future results, growth, guidance and
operating strategy; the global economy; the effects of currency exchange rates on reported
operating results; the developing regulatory environment in Canada, the U.K., the United States,
and other countries; the impact of future development strategy, new stores and acquisitions;
litigation matters; and the performance of new products and services. These forward looking
statements involve risks and uncertainties, including risks related to: the regulatory
environments; current and potential future litigation; the identification of acquisition targets;
the integration and performance of acquired stores and businesses; the performance of new stores;
the impact of debt financing transactions; the results of certain ongoing income tax appeals; and
the effects of new products and services on the Companys business, results of operations,
financial condition, prospects and guidance; and uncertainties related to the effects of changes in
the value of the U.S. dollar compared to foreign currencies. There can be no assurance that the
Company will attain its expected results, successfully integrate any of its acquisitions, or attain
its published guidance metrics, or that ongoing and potential future litigation or the various
FDIC, Federal, state, Canadian or foreign legislative or regulatory activities affecting the
Company or the banks with which the Company does business will not negatively impact the Companys
operations. A more complete description of these and other risks, uncertainties and assumptions is
included in the Companys filings with the Securities and Exchange Commission, the Companys annual
reports and Forms 10-Q and 10-K. You should not place any undue reliance on any forward-looking
statements. We disclaim any obligation to update any such factors or to publicly announce results
of any revisions to any of the forward-looking statements contained herein to reflect future events
or developments.
Presentation of Information in this Press Release
In an effort to provide investors with additional information regarding the Companys results, the
Company has also disclosed in this press release the following information which management
believes provides useful information to investors:
| Local currency results (the reported results for each country in their respective native currencies). |
| Constant currency results (the Company calculates constant currency operating results by comparing current period operating results with prior period operating results, with both periods converted at the currency exchange rates for the prior period). |
| Pro forma operating results excluding non-recurring and non-cash charges and adjusted for pro forma effective income tax rates. |
DOLLAR FINANCIAL CORP
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, | June 30, | |||||||
2009 | 2010 | |||||||
Assets: |
||||||||
Cash and cash equivalents |
$ | 209,602 | $ | 291,294 | ||||
Loans receivable, net: |
||||||||
Loans receivable |
126,826 | 155,158 | ||||||
Less: Allowance for loan losses |
(12,132 | ) | (16,846 | ) | ||||
Loans receivable, net |
114,694 | 138,312 | ||||||
Loans in default, net |
6,436 | 7,260 | ||||||
Prepaid expenses and other current assets |
30,093 | 43,029 | ||||||
Deferred tax assets, net |
27,101 | 23,563 | ||||||
Property and equipment, net |
58,614 | 67,537 | ||||||
Goodwill and other intangibles, net |
454,347 | 608,986 | ||||||
Debt issuance costs, net and other assets |
20,578 | 34,640 | ||||||
Total Assets |
$ | 921,465 | $ | 1,214,621 | ||||
Liabilities: |
||||||||
Accounts payable and income taxes payable |
$ | 51,132 | $ | 51,077 | ||||
Accrued expenses and other liabilities |
95,780 | 144,887 | ||||||
Fair value of derivatives |
10,223 | 47,381 | ||||||
Deferred tax liabilities |
18,947 | 24,341 | ||||||
Total debt |
536,305 | 728,592 | ||||||
Total Liabilities |
712,387 | 996,278 | ||||||
Shareholders Equity: |
||||||||
Common stock |
24 | 24 | ||||||
Additional paid-in-capital |
311,301 | 331,090 | ||||||
Accumulated deficit |
(110,581 | ) | (115,480 | ) | ||||
Accumulated other comprehensive income |
8,018 | 2,686 | ||||||
Total Dollar Financial Corp. Stockholders Equity |
208,762 | 218,320 | ||||||
Non-controlling interest |
316 | 23 | ||||||
Total Stockholders Equity |
209,078 | 218,343 | ||||||
Total Liabilities and Shareholders Equity |
$ | 921,465 | $ | 1,214,621 | ||||
DOLLAR FINANCIAL CORP
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except share and per share amounts)
Three Months Ended | Twelve Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2009 | 2010 | 2009 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Check cashing |
$ | 37,179 | $ | 35,899 | $ | 164,598 | $ | 149,474 | ||||||||
Fees from consumer lending |
63,245 | 81,215 | 266,506 | 319,464 | ||||||||||||
Money transfer fees |
6,472 | 6,941 | 26,823 | 27,464 | ||||||||||||
Pawn service fees and sales |
3,328 | 6,597 | 13,794 | 19,899 | ||||||||||||
Other |
14,216 | 28,378 | 56,132 | 94,625 | ||||||||||||
Total revenues |
124,440 | 159,030 | 527,853 | 610,927 | ||||||||||||
Operating expenses: |
||||||||||||||||
Salaries and benefits |
34,209 | 39,635 | 145,716 | 153,976 | ||||||||||||
Provision for loan losses |
11,744 | 11,298 | 52,136 | 45,876 | ||||||||||||
Occupancy costs |
10,309 | 10,621 | 41,812 | 43,280 | ||||||||||||
Advertising |
1,700 | 4,694 | 8,359 | 16,692 | ||||||||||||
Depreciation |
3,256 | 3,465 | 13,075 | 14,334 | ||||||||||||
Bank charges and armored carrier services |
3,420 | 3,492 | 13,357 | 13,892 | ||||||||||||
Maintenance and repairs |
2,768 | 3,075 | 11,836 | 11,867 | ||||||||||||
Returned checks, net and cash shortages |
2,793 | 1,856 | 16,021 | 9,038 | ||||||||||||
Other |
11,116 | 15,020 | 43,737 | 55,632 | ||||||||||||
Total operating expenses |
81,315 | 93,156 | 346,049 | 364,587 | ||||||||||||
Operating margin |
43,125 | 65,874 | 181,804 | 246,340 | ||||||||||||
Corporate and other expenses: |
||||||||||||||||
Corporate expenses |
15,651 | 21,456 | 68,217 | 86,824 | ||||||||||||
Interest expense, net |
11,136 | 22,520 | 43,696 | 68,932 | ||||||||||||
Other depreciation and amortization |
924 | 2,673 | 3,827 | 7,325 | ||||||||||||
Unrealized foreign exchange (gain) loss |
(5,499 | ) | 21,914 | (5,499 | ) | 10,145 | ||||||||||
Loss on derivatives not designated as hedges |
(45 | ) | (8,961 | ) | (45 | ) | 12,948 | |||||||||
Loss on extinguishment of debt |
| | | 9,531 | ||||||||||||
Reserve for litigation settlements |
57,366 | 1,180 | 57,920 | 29,074 | ||||||||||||
Loss on store closings |
4,203 | 157 | 10,340 | 3,314 | ||||||||||||
Other (income) expense, net |
1,693 | 385 | (4,853 | ) | 2,070 | |||||||||||
Income (loss) before income taxes |
(42,304 | ) | 4,550 | 8,201 | 16,177 | |||||||||||
Income tax provision (benefit) |
(8,947 | ) | 9,831 | 15,023 | 21,369 | |||||||||||
Net income (loss) |
($33,357 | ) | ($5,281 | ) | ($6,822 | ) | ($5,192 | ) | ||||||||
Less loss attributable to non-controlling
interest |
$ | 0 | ($220 | ) | $ | 0 | ($293 | ) | ||||||||
Net income (loss) attributable to Dollar
Financial Corp. |
($33,357 | ) | ($5,061 | ) | ($6,822 | ) | ($4,899 | ) | ||||||||
Net income (loss) per share |
||||||||||||||||
Basic |
($1.39 | ) | ($0.21 | ) | ($0.28 | ) | ($0.20 | ) | ||||||||
Diluted |
($1.39 | ) | ($0.21 | ) | ($0.28 | ) | ($0.20 | ) | ||||||||
Weighted average shares outstanding |
||||||||||||||||
Basic |
23,976,743 | 24,233,905 | 24,012,705 | 24,106,565 | ||||||||||||
Diluted |
23,976,743 | 24,233,905 | 24,012,705 | 24,106,565 |
Pro forma Net Income Reconciliation
Pro forma net income is not an item prepared in accordance with GAAP. Pro forma net income is net income adjusted to exclude one-time and non-cash charges and credits as described below. The Company presents pro forma net income as an indication of its financial performance excluding one-time and other net non-cash charges and to show comparative results of its operations. Not all companies calculate pro forma net income in the same fashion, and therefore these amounts as presented may not be comparable to other similarly titled measures of other companies. The table below reconciles income before income taxes as reported on Dollars Unaudited Consolidated Statements of Operations to pro forma net income (dollars in thousands):
DOLLAR FINANCIAL CORP
PRO FORMA NET INCOME
(EXCLUDING ONE-TIME CHARGES AND CREDITS & EFFECTS OF ASC 470-20)
(In thousands except share and per share amounts)
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||
2009 | 2010 | 2009 | 2010 | |||||||||||||||||
Income (loss) before income taxes as reported |
$ | (42,304 | ) | $ | 4,550 | $ | 8,201 | $ | 16,177 | |||||||||||
Pro forma adjustments: |
||||||||||||||||||||
Non-cash interest on convertible debt ( ASC
470-20) |
2,285 | 1,982 | 8,934 | 8,946 | ||||||||||||||||
Unrealized foreign exchange (gain) loss |
(5,499 | ) | 21,914 | (5,499 | ) | 10,145 | ||||||||||||||
Non-cash impact of hedge ineffectiveness |
(45 | ) | (13,458 | ) | (45 | ) | 3,596 | |||||||||||||
Cross-currency swap amortization |
211 | 1,767 | 211 | 4,206 | ||||||||||||||||
Loss on extinguishment of debt |
- | | | 9,531 | ||||||||||||||||
Reserve for litigation settlements |
57,366 | 1,180 | 57,920 | 29,074 | ||||||||||||||||
Loss on store closings |
4,203 | 157 | 10,340 | 3,314 | ||||||||||||||||
Acquisition costs expensed |
481 | 433 | 481 | 2,782 | ||||||||||||||||
Pro forma income before income taxes |
16,698 | 18,525 | 80,543 | 87,771 | ||||||||||||||||
Pro forma income taxes |
7,180 | 7,966 | 34,633 | 37,742 | ||||||||||||||||
Pro forma net income |
$ | 9,518 | $ | 10,559 | $ | 45,910 | $ | 50,029 | ||||||||||||
Pro forma effective income tax rate |
43.0 | % | 43.0 | % | 43.0 | % | 43.0 | % | ||||||||||||
Weighted average fully-diluted shares outstanding |
24,183,918 | 25,043,586 | 24,136,235 | 24,829,626 | ||||||||||||||||
Fully-diluted earnings per share |
$ | 0.39 | $ | 0.42 | $ | 1.90 | $ | 2.01 | ||||||||||||
GAAP fully-diluted earnings (loss) per share |
$ | (1.39 | ) | $ | (0.21 | ) | $ | (0.28 | ) | $ | (0.20 | ) | ||||||||
Adjusted EBITDA Reconciliation
Adjusted EBITDA is not an item prepared in accordance with GAAP. Adjusted EBITDA includes earnings before interest expense, income tax provision, depreciation, amortization, charges related to non-qualified stock options and restricted shares, reserves for loss on store closings, litigation settlements, and other items described below. The Company presents Adjusted EBITDA as an indication of operating performance, as well as its ability to service its future debt and capital expenditure requirements. Adjusted EBITDA does not indicate whether Dollars cash flow will be sufficient to fund all of its cash needs. Adjusted EBITDA should not be considered in isolation or as a substitute for net income, cash flows from operating activities, or other measures of operating performance or liquidity determined in accordance with GAAP. Not all companies calculate Adjusted EBITDA in the same fashion, and therefore these amounts as presented may not be comparable to other similarly titled measures of other companies. The table below reconciles income before income taxes as reported on Dollars Unaudited Consolidated Statements of Operations to Adjusted EBITDA (dollars in thousands):
Three Months Ended | Twelve Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2009 | 2010 | 2009 | 2010 | |||||||||||||
Income (loss) before income taxes as reported |
$ | (42,304 | ) | $ | 4,550 | $ | 8,201 | $ | 16,177 | |||||||
Add: |
||||||||||||||||
Depreciation and amortization |
4,180 | 6,138 | 16,902 | 21,659 | ||||||||||||
Interest expense, net |
11,136 | 22,520 | 43,696 | 68,932 | ||||||||||||
Stock based compensation expense |
1,746 | 1,889 | 6,236 | 7,598 | ||||||||||||
Unrealized foreign exchange (gain) loss |
(5,499 | ) | 21,914 | (5,499 | ) | 10,145 | ||||||||||
(Gain) loss on derivatives not designated as
hedges |
(45 | ) | (8,961 | ) | (45 | ) | 12,948 | |||||||||
Loss on extinguishment of debt |
| | | 9,531 | ||||||||||||
Reserve for litigation settlements |
57,366 | 1,180 | 57,920 | 29,074 | ||||||||||||
Loss on store closings |
4,203 | 157 | 10,340 | 3,314 | ||||||||||||
Acquisition costs expensed |
481 | 433 | 481 | 2,782 | ||||||||||||
Other |
303 | 204 | 274 | 66 | ||||||||||||
Adjusted EBITDA |
$ | 31,567 | $ | 50,024 | $ | 138,506 | $ | 182,226 | ||||||||
Dollar Financial Corp
Unaudited Store Data
Three Months Ended | Twelve Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2009 | 2010 | 2009 | 2010 | |||||||||||||
Beginning Company-Operated Stores |
||||||||||||||||
U.S. |
418 | 348 | 467 | 358 | ||||||||||||
Canada |
400 | 398 | 419 | 399 | ||||||||||||
U.K. |
260 | 308 | 236 | 274 | ||||||||||||
Total Beginning Company-Operated Stores |
1,078 | 1,054 | 1,122 | 1,031 | ||||||||||||
De novo Store Builds |
||||||||||||||||
U.S. |
0 | 0 | 3 | 0 | ||||||||||||
Canada |
1 | 5 | 1 | 6 | ||||||||||||
U.K. |
7 | 18 | 24 | 50 | ||||||||||||
Total |
8 | 23 | 28 | 56 | ||||||||||||
Acquired Stores |
||||||||||||||||
U.S. |
0 | 0 | 2 | 0 | ||||||||||||
Canada |
0 | 0 | 0 | 0 | ||||||||||||
U.K. |
7 | 4 | 15 | 7 | ||||||||||||
Total |
7 | 4 | 17 | 7 | ||||||||||||
Closed Stores |
||||||||||||||||
U.S. |
60 | 23 | 114 | 33 | ||||||||||||
Canada |
2 | 0 | 21 | 2 | ||||||||||||
U.K. |
0 | 0 | 1 | 1 | ||||||||||||
Total |
62 | 23 | 136 | 36 | ||||||||||||
Ending Company-Operated Stores |
||||||||||||||||
U.S. |
358 | 325 | 358 | 325 | ||||||||||||
Canada |
399 | 403 | 399 | 403 | ||||||||||||
U.K. |
274 | 330 | 274 | 330 | ||||||||||||
Total Ending Company-Operated Stores |
1,031 | 1,058 | 1,031 | 1,058 | ||||||||||||
Ending Franchise/Agent Stores |
||||||||||||||||
U.S. |
49 | 7 | 49 | 7 | ||||||||||||
Canada |
62 | 62 | 62 | 62 | ||||||||||||
U.K. |
64 | 53 | 64 | 53 | ||||||||||||
Total Ending Franchise/Agent Stores |
175 | 122 | 175 | 122 | ||||||||||||
Total Ending Store Count |
1,206 | 1,180 | 1,206 | 1,180 | ||||||||||||