FIRSTCASH, INC - FORM 10-Q - May 9, 2016

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EX-32.1 - CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION - FIRSTCASH, INCfcfs03312016exhibit321.htm
EX-31.2 - CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT - FIRSTCASH, INCfcfs03312016exhibit312.htm
EX-31.1 - CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT - FIRSTCASH, INCfcfs03312016exhibit311.htm
EX-32.2 - CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION - FIRSTCASH, INCfcfs03312016exhibit322.htm

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 March 31, 2016
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 0-19133

FIRST CASH FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware
75-2237318
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
690 East Lamar Blvd., Suite 400
76011
Arlington, Texas
(Zip Code)
(Address of principal executive offices)
 
(817) 460-3947
(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.     xYes   o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     xYes   o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
x  Large accelerated filer
o  Accelerated filer
o  Non-accelerated filer (Do not check if a smaller reporting company)
o  Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     oYes   x No
As of May 3, 2016, there were 28,243,229 shares of common stock outstanding.


FIRST CASH FINANCIAL SERVICES, INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2016

INDEX

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



CAUTIONARY STATEMENT REGARDING RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS

Forward-Looking Information
This quarterly report contains forward-looking statements about the business, financial condition and prospects of First Cash Financial Services, Inc. and its wholly owned subsidiaries (together, the “Company”) and the Company’s previously announced all-stock merger of equals transaction with Cash America International, Inc. (“Cash America”). Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of forward-looking terminology such as “believes,” “projects,” “expects,” “may,” “estimates,” “should,” “plans,” “targets,” “intends,” “could,” or “anticipates,” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy or objectives. Forward-looking statements can also be identified by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties.
Forward-looking statements in this quarterly report include, without limitation, the Company’s expectations of earnings per share, earnings growth, expansion strategies, the impact of new or existing regulations, store openings, liquidity (including the availability of capital under existing credit facilities), cash flow, consumer demand for the Company’s products and services, income tax rates, currency exchange rates, future share repurchases and anticipated dividend payments, the price of gold and the impacts thereof, future earnings accretion and related transaction expenses from acquisitions and mergers, the successful completion of expected acquisitions, anticipated debt repayments, the ability to successfully integrate acquisitions and other performance results. These forward-looking statements with respect to the proposed transaction with Cash America include, without limitation, the benefits of the proposed transaction and the expected completion of the transaction. These statements are made to provide the public with management’s current assessment of the Company’s business. Although the Company believes the expectations reflected in forward-looking statements are reasonable, there can be no assurances such expectations will prove to be accurate. Security holders are cautioned such forward-looking statements involve risks and uncertainties. Certain factors may cause results to differ materially from those anticipated by the forward-looking statements made in this quarterly report. Such factors are difficult to predict and many are beyond the control of the Company and may include, without limitation, the following:
•
changes in foreign currency exchange rates and the U.S. dollar to the Mexican peso and Guatemalan quetzal exchange rates in particular;
•
new federal, state or local legislative initiatives or governmental regulations (or changes to existing laws and regulations) affecting pawn businesses, consumer loan businesses and credit services organizations (in the United States, Mexico, Guatemala and El Salvador), including administrative or legal interpretations thereto;
•
changes in consumer demand, including purchasing, borrowing and repayment behaviors;
•
changes in regional, national or international economic conditions, including inflation rates, unemployment rates and energy prices;
•
changes in pawn forfeiture rates and credit loss provisions;
•
changes in the market value of pawn collateral and merchandise inventories, including gold prices and the value of consumer electronics and other products;
•
changes or increases in competition;
•
the ability to locate, open and staff new stores and successfully integrate acquisitions;
•
the availability or access to sources of used merchandise inventory;
•
changes in credit markets, interest rates and the ability to establish, renew and/or extend the Company’s debt financing;
•
the ability to maintain banking relationships for treasury services and processing of certain consumer lending transactions;
•
the ability to hire and retain key management personnel;
•
risks and uncertainties related to foreign operations in Mexico, Guatemala and El Salvador;
•
changes in import/export regulations and tariffs or duties;
•
changes in banking, anti-money laundering or gun control regulations;
•
unforeseen litigation;
•
changes in tax rates or policies in the U.S., Mexico, Guatemala and El Salvador;
•
inclement weather, natural disasters and public health issues;
•
security breaches, cyber attacks or fraudulent activity;
•
a prolonged interruption in the Company’s operations of its facilities, systems, and business functions, including its information technology and other business systems;


•
the implementation of new, or changes in the interpretation of existing, accounting principles or financial reporting requirements;
•
future business decisions;
•
the risk that the required stockholder approvals to approve the proposed transaction with Cash America may not be obtained;
•
the risks that the other condition(s) to closing of the proposed transaction may not be satisfied;
•
the length of time necessary to consummate the proposed transaction;
•
the risk that the Company and the Cash America businesses will not be integrated successfully;
•
the risk that the cost savings, synergies, growth and cash flows from the proposed transaction may not be fully realized or may take longer to realize than expected;
•
the diversion of management time on transaction-related issues;
•
the risk that costs associated with the integration of the Company and Cash America are higher than anticipated; and
•
litigation risk related to the proposed transaction.

These and other risks, uncertainties and regulatory developments are further and more completely described in the Company’s 2015 annual report on Form 10-K filed with the Securities and Exchange Commission on February 17, 2016, including the risks described in Part 1, Item 1A, “Risk Factors” of the Company’s annual report, and in Part II, Item 1A, “Risk Factors” of this quarterly report. Many of 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. The forward-looking statements contained in this quarterly report speak only as of the date of this quarterly report, and the Company expressly disclaims any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
 
 
 
 
 
 
 
March 31,
 
December 31,
 
 
2016
 
2015
 
2015
ASSETS
 
 
 
 
 
 
Cash and cash equivalents
 
$
54,150

 
$
75,803

 
$
86,954

Pawn loan fees and service charges receivable
 
17,070

 
16,232

 
16,406

Pawn loans
 
126,620

 
114,306

 
117,601

Consumer loans, net
 
985

 
977

 
1,118

Inventories
 
90,714

 
82,554

 
93,458

Prepaid expenses and other current assets
 
6,911

 
3,302

 
9,897

Total current assets
 
296,450

 
293,174

 
325,434

 
 
 
 
 
 
 
Property and equipment, net
 
120,712

 
112,587

 
112,447

Goodwill
 
315,439

 
276,545

 
295,609

Other non-current assets
 
10,291

 
10,887

 
10,084

Deferred tax assets
 
10,993

 
8,845

 
9,321

Total assets
 
$
753,885

 
$
702,038

 
$
752,895

 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
$
54,496

 
$
41,704

 
$
42,252

Income taxes payable
 
1,433

 
50

 
3,923

Total current liabilities
 
55,929

 
41,754

 
46,175

 
 
 
 
 
 
 
Revolving unsecured credit facilities
 
40,000

 
14,500

 
58,000

Senior unsecured notes
 
196,037

 
195,409

 
195,874

Deferred tax liabilities
 
22,632

 
17,901

 
21,464

Total liabilities
 
314,598

 
269,564

 
321,513

 
 
 
 
 
 
 
Stockholders’ equity:
 
 
 
 
 
 
Preferred stock
 
—

 
—

 
—

Common stock
 
403

 
399

 
403

Additional paid-in capital
 
203,143

 
193,278

 
202,393

Retained earnings
 
653,248

 
599,682

 
643,604

Accumulated other comprehensive loss from
 
 
 
 
 
 
cumulative foreign currency translation adjustments
 
(80,899
)
 
(47,277
)
 
(78,410
)
Common stock held in treasury, at cost
 
(336,608
)
 
(313,608
)
 
(336,608
)
Total stockholders’ equity
 
439,287

 
432,474

 
431,382

Total liabilities and stockholders’ equity
 
$
753,885

 
$
702,038

 
$
752,895

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

1

FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share amounts)
 
 
 
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
Revenue:
 
 
 
 
Retail merchandise sales
 
$
118,776

 
$
110,454

Pawn loan fees
 
51,433

 
48,654

Consumer loan and credit services fees
 
5,686

 
7,595

Wholesale scrap jewelry revenue
 
7,308

 
9,320

Total revenue
 
183,203

 
176,023

 
 
 
 
 
Cost of revenue:
 
 
 
 
Cost of retail merchandise sold
 
74,422

 
68,246

Consumer loan and credit services loss provision
 
1,047

 
997

Cost of wholesale scrap jewelry sold
 
5,871

 
8,009

Total cost of revenue
 
81,340

 
77,252

 
 
 
 
 
Net revenue
 
101,863

 
98,771

 
 
 
 
 
Expenses and other income:
 
 
 
 
Store operating expenses
 
55,411

 
52,321

Administrative expenses
 
17,668

 
13,838

Depreciation and amortization
 
4,937

 
4,547

Interest expense
 
4,460

 
4,020

Interest income
 
(274
)
 
(344
)
Total expenses and other income
 
82,202

 
74,382

 
 
 
 
 
Income before income taxes
 
19,661

 
24,389

 
 
 
 
 
Provision for income taxes
 
6,487

 
7,601

 
 
 
 
 
 
 
 
 
 
Net income
 
$
13,174

 
$
16,788

 
 
 
 
 
Net income per share:
 
 
 
 
Basic
 
$
0.47

 
$
0.59

Diluted
 
$
0.47

 
$
0.59

 
 
 
 
 
Dividends declared per common share
 
$
0.125

 
$
—

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

2

FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in thousands)
 
 
 
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
Net income
 
$
13,174

 
$
16,788

Other comprehensive income (loss):
 
 
 
 
Currency translation adjustment
 
(2,489
)
 
(6,999
)
Comprehensive income
 
$
10,685

 
$
9,789

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

FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred
Stock
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accum-
ulated
Other
Compre-
hensive
Loss
 
Common Stock
Held in Treasury
 
Total
Stock-
holders’
Equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
 
 
Shares
 
Amount
 
 
Balance at 12/31/2015
 
—

 
$
—

 
40,288

 
$
403

 
$
202,393

 
$
643,604

 
$
(78,410
)
 
12,052

 
$
(336,608
)
 
$
431,382

Shares issued under share-based com-pensation plan
 
—

 
—

 
7

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Share-based compensation expense
 
—

 
—

 
—

 
—

 
750

 
—

 
—

 
—

 
—

 
750

Net income
 
—

 
—

 
—

 
—

 
—

 
13,174

 
—

 
—

 
—

 
13,174

Dividends paid
 
—

 
—

 
—

 
—

 
—

 
(3,530
)
 
—

 
—

 
—

 
(3,530
)
Currency translation adjustment
 
—

 
—

 
—

 
—

 
—

 
—

 
(2,489
)
 
—

 
—

 
(2,489
)
Balance at 3/31/2016
 
—

 
$
—

 
40,295

 
$
403

 
$
203,143

 
$
653,248

 
$
(80,899
)
 
12,052

 
$
(336,608
)
 
$
439,287

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




3

FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
CONTINUED
(unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred
Stock
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accum-
ulated
Other
Compre-
hensive
Loss
 
Common Stock
Held in Treasury
 
Total
Stock-
holders’
Equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
 
 
Shares
 
Amount
 
 
Balance at 12/31/2014
 
—

 
$
—

 
39,708

 
$
397

 
$
188,062

 
$
582,894

 
$
(40,278
)
 
11,200

 
$
(296,634
)
 
$
434,441

Shares issued under share-based com-pensation plan
 
—

 
—

 
5

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Exercise of stock options
 
—

 
—

 
145

 
2

 
2,899

 
—

 
—

 
—

 
—

 
2,901

Income tax benefit from exercise of stock options
 
—

 
—

 
—

 
—

 
1,617

 
—

 
—

 
—

 
—

 
1,617

Share-based compensation expense
 
—

 
—

 
—

 
—

 
700

 
—

 
—

 
—

 
—

 
700

Net income
 
—

 
—

 
—

 
—

 
—

 
16,788

 
—

 
—

 
—

 
16,788

Currency translation adjustment
 
—

 
—

 
—

 
—

 
—

 
—

 
(6,999
)
 
—

 
—

 
(6,999
)
Repurchases of treasury stock
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
336

 
(16,974
)
 
(16,974
)
Balance at 3/31/2015
 
—

 
$
—

 
39,858

 
$
399

 
$
193,278

 
$
599,682

 
$
(47,277
)
 
11,536

 
$
(313,608
)
 
$
432,474

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

4

FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
Cash flow from operating activities:
 
 
 
 
Net income
 
$
13,174

 
$
16,788

Adjustments to reconcile net income to net cash flow provided by operating activities:
 
 
 
 
Non-cash portion of credit loss provision
 
222

 
79

Share-based compensation expense
 
750

 
700

Depreciation and amortization expense
 
4,937

 
4,547

Amortization of debt issuance costs
 
230

 
256

Deferred income taxes
 
1,678

 
640

Changes in operating assets and liabilities, net of business combinations:
 
 
 
 
Pawn fees and service charges receivable
 
173

 
480

Merchandise inventories
 
1,812

 
2,354

Prepaid expenses and other assets
 
3,281

 
1,070

Accounts payable and accrued expenses
 
(645
)
 
(10
)
Income taxes payable
 
(536
)
 
526

Net cash flow provided by operating activities
 
25,076

 
27,430

Cash flow from investing activities:
 
 
 
 
Loan receivables, net of cash repayments
 
5,293

 
8,312

Purchases of property and equipment
 
(6,343
)
 
(4,386
)
Acquisitions of pawn stores, net of cash acquired
 
(26,045
)
 
(1,550
)
Net cash flow provided by (used in) investing activities
 
(27,095
)
 
2,376

Cash flow from financing activities:
 
 
 
 
Borrowings from revolving credit facilities
 
11,500

 
21,555

Repayments of revolving credit facilities
 
(29,500
)
 
(29,455
)
Repayments of notes payable
 
(6,532
)
 
—

Purchases of treasury stock
 
—

 
(16,974
)
Proceeds from exercise of share-based compensation awards
 
—

 
2,901

Income tax benefit from exercise of stock options
 
—

 
1,617

Dividends paid
 
(3,530
)
 
—

Net cash flow used in financing activities
 
(28,062
)
 
(20,356
)
Effect of exchange rates on cash
 
(2,723
)
 
(1,639
)
Change in cash and cash equivalents
 
(32,804
)
 
7,811

Cash and cash equivalents at beginning of the period
 
86,954

 
67,992

Cash and cash equivalents at end of the period
 
$
54,150

 
$
75,803

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

5

FIRST CASH FINANCIAL SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 1 - Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated balance sheet at December 31, 2015, which is derived from audited financial statements, and the unaudited condensed consolidated financial statements, including the notes thereto, include the accounts of First Cash Financial Services, Inc. and its wholly-owned subsidiaries (together, the “Company”). All significant intercompany accounts and transactions have been eliminated.

These unaudited consolidated financial statements are condensed and do not include all disclosures and footnotes required by generally accepted accounting principles in the United States of America for complete financial statements. These interim period financial statements should be read in conjunction with the Company’s consolidated financial statements, which are included in the Company’s annual report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission (the “SEC”) on February 17, 2016. The condensed consolidated financial statements as of March 31, 2016 and 2015, and for the three month periods ended March 31, 2016 and 2015, are unaudited, but in management’s opinion include all adjustments (consisting of only normal recurring adjustments) considered necessary to present fairly the financial position, results of operations and cash flow for such interim periods. Operating results for the period ended March 31, 2016 are not necessarily indicative of the results that may be expected for the full fiscal year.

The Company manages its pawn and consumer loan operations under three operating segments: U.S. pawn operations, U.S. consumer loan operations and Latin America pawn and consumer loan operations. The three operating segments have been aggregated into one reportable segment because they have similar economic characteristics and similar long-term financial performance metrics. Additionally, all three segments offer similar and overlapping products and services to a similar customer demographic and are supported by a single, centralized administrative support platform.

The Company has significant operations in Mexico and Guatemala, to a lesser extent, where the functional currency is the Mexican peso and Guatemalan quetzal, respectively. Accordingly, the assets and liabilities of these subsidiaries are translated into U.S. dollars at the exchange rate in effect at each balance sheet date, and the resulting adjustments are accumulated in other comprehensive income (loss) as a separate component of stockholders’ equity. Revenue and expenses are translated at the average exchange rates occurring during the three month period ended March 31, 2016. The Company also has operations in El Salvador where the reporting and functional currency is the U.S. dollar.

Revisions and Reclassifications

Certain amounts for the periods ended March 31, 2015 and December 31, 2015 have been reclassified in order to conform to the 2016 presentation. See “—Recent accounting pronouncements” below regarding the impact of the Company’s adoption of ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”) on the classification of debt issuance costs in the Company’s consolidated balance sheets. In addition, after the impact of the revision to deferred tax assets described below, the Company’s adoption of ASU No. 2015-17 “Balance Sheet Classification of Deferred Taxes” at December 31, 2015 resulted in a $7,056,000 decrease in current deferred tax assets, a $24,957,000 increase in non-current deferred tax assets and a $17,901,000 increase in non-current deferred tax liabilities in the accompanying condensed consolidated balance sheets as of March 31, 2015.

The Company revised certain previously reported amounts for the three months ended March 31, 2015 for the correction of prior period errors. ASC 740 “Income Taxes,” provides an exception to recording deferred tax attributes associated with foreign currency translation adjustments, which are recorded in comprehensive income. In July 2013, the Company terminated an election to include foreign subsidiaries in its consolidated U.S. federal income tax return and it is the Company’s intent to indefinitely reinvest the earnings of these subsidiaries outside the U.S. The Company had incorrectly recorded a deferred tax asset on these accumulated foreign currency translation adjustments in prior periods. The correction of the error resulted in a reduction in comprehensive income of $2,450,000 for the three months ended March 31, 2015 and a decrease in deferred tax assets with a corresponding increase in accumulated other comprehensive loss from cumulative foreign currency translation adjustments of $16,560,000 as of March 31, 2015, but had no impact on the Company’s condensed consolidated statements of income or cash flows. In addition, see Note 6 for a description of revisions made to the condensed consolidating guarantor financial statements. The Company has

6

evaluated the effects of these errors, both qualitatively and quantitatively, and concluded that they did not have a material impact on any previously issued financial statements.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In March 2016, the Financial Accounting Standards Board issued ASU No. 2016-08, “Revenue from Contracts with Customers - Principal versus Agent Considerations (Reporting revenue gross versus net)” (“ASU 2016-08”), which clarifies gross versus net revenue reporting when another party is involved in the transaction. In April 2016, the Financial Accounting Standards Board issued ASU No. 2016-10, “Identifying Performance Obligations and Licensing” (“ASU 2016-10”), which amends the revenue guidance on identifying performance obligations and accounting for licenses of intellectual property. In August 2015, the Financial Accounting Standards Board issued ASU No. 2015-14, which delayed the effective date of ASU 2014-09 by one year resulting in it becoming effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2017 for public companies. Early adoption is permitted but not before annual reporting periods beginning after December 15, 2016. There are two transition methods available under ASU 2014-09, either cumulative effect or retrospective. The effective date and transition requirements for ASU 2016-08 and ASU 2016-10 are the same as the effective date and transition requirements for ASU 2014-09. The Company is currently assessing the potential impact of ASU 2014-09, ASU 2016-08 and ASU 2016-10 on its consolidated financial statements.

In April 2015, the Financial Accounting Standards Board issued ASU No. 2015-03, which requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. In August 2015, the Financial Accounting Standards Board issued ASU No. 2015-15, which clarified the guidance in ASU 2015-03 regarding presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. The SEC Staff announced they would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line of credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. ASU 2015-03 requires retrospective application and represents a change in accounting principle. ASU 2015-03 became effective for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. The adoption of ASU 2015-03 resulted in a $3,963,000, $4,591,000 and $4,126,000 decrease in other non-current assets and senior unsecured notes in the accompanying condensed consolidated balance sheets as of March 31, 2016, 2015 and December 31, 2015, respectively. The Company elected to present debt issuance costs related to the Company’s revolving unsecured credit facilities as an asset as allowed in ASU 2015-15.

In July 2015, the Financial Accounting Standards Board issued ASU No. 2015-11, “Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 requires inventory be measured at the lower of cost or net realizable value. ASU 2015-11 defines net realizable value as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Inventory measured using last-in, first-out (“LIFO”) or the retail inventory method are excluded from the scope of this update. ASU 2015-11 requires prospective application and is effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years, with early adoption permitted. The Company does not expect ASU 2015-11 to have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In February 2016, the Financial Accounting Standards Board issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 requires a lessee to recognize, in the statement of financial position, a liability to make lease payments (the lease liability) and a right-to-use asset representing its right to use the underlying asset for the lease term. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. Lessor accounting remains largely unchanged. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods, with early adoption permitted. An entity will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently assessing the potential impact of ASU 2016-02 on its consolidated financial statements.

In March 2016, the Financial Accounting Standards Board issued No. 2016-09 “Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). Under ASU 2016-09, companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital (“APIC”). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement and the APIC pools will be eliminated. In addition, ASU 2016-09 eliminates the requirement that excess tax benefits be realized before companies can recognize them.

7

ASU 2016-09 also requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. Furthermore, ASU 2016-09 will increase the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer’s statutory income tax withholding obligation. An employer with a statutory income tax withholding obligation will now be allowed to withhold shares with a fair value up to the amount of taxes owed using the maximum statutory tax rate in the employee’s applicable jurisdiction(s). ASU 2016-09 requires a company to classify the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing activity on the statement of cash flows. Under current GAAP, it was not specified how these cash flows should be classified. In addition, companies will now have to elect whether to account for forfeitures on share-based payments by (1) recognizing forfeitures of awards as they occur or (2) estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change, as is currently required. ASU 2016-09 is effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The Company is currently assessing the potential impact of ASU 2016-09 on its consolidated financial statements.

Note 2 - Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (unaudited, in thousands, except per share data):
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
Numerator:
 
 
 
 
Net income
 
$
13,174

 
$
16,788

 
 
 
 
 
Denominator:
 
 
 
 
Weighted-average common shares for calculating basic earnings per share
 
28,241

 
28,402

Effect of dilutive securities:
 
 
 
 
Stock options and nonvested awards
 
—

 
218

Weighted-average common shares for calculating diluted earnings per share
 
28,241

 
28,620

 
 
 
 
 
Net income per share:
 
 
 
 
Basic
 
$
0.47

 
$
0.59

Diluted
 
$
0.47

 
$
0.59


Note 3 - Acquisitions

The Company completed acquisitions during the three months ended March 31, 2016, as described below, consistent with its strategy to continue its expansion of pawn stores in selected markets. The purchase price of each acquisition was allocated to assets and liabilities acquired based upon their estimated fair market values at the date of acquisition. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill. The goodwill arising from these acquisitions consists largely of the synergies and economies of scale expected from combining the operations of the Company and the pawn stores acquired.

Consistent with the Company’s strategy to continue its expansion of pawn stores in Latin America, the Company acquired the operating entity owning the pawn loans, inventory, layaways and other operating assets and liabilities of 166 pawn stores located in Mexico on January 6, 2016 and the assets of 13 pawn stores located in El Salvador on February 2, 2016 in related transactions (collectively the “Latin America Acquisition”). The combined purchase price for the all-cash transaction was $30,123,000, net of cash acquired before certain post-closing adjustments, and was composed of $25,271,000 in cash paid during the three months ended March 31, 2016 and payables to the sellers of $4,852,000. In addition, the Company assumed approximately $6,630,000 in peso-denominated debt from these acquisitions which was repaid in full by the Company in January 2016. The estimated fair values of the assets acquired and liabilities assumed are preliminary, as the Company is gathering information to finalize the valuation of these assets and liabilities. The assets, liabilities and results of operations of the locations are included in the Company’s consolidated results as of the acquisition dates.


8

During the three months ended March 31, 2016, one pawn store located in the U.S. was acquired by the Company (“U.S. Acquisition”) for an aggregate purchase price of $824,000, net of cash acquired, and was composed of $774,000 in cash paid during the three months ended March 31, 2016 and payables to the sellers of $50,000.

The preliminary allocations of the purchase prices for the Company’s acquisitions during the three months ended March 31, 2016 (the “2016 acquisitions”) are as follows (in thousands):
 
Latin America Acquisition
 
U.S. Acquisition
 
Total
Pawn loans
$
10,586

 
$
138

 
$
10,724

Pawn loan fees and service charges receivable
885

 
6

 
891

Inventory
3,351

 
169

 
3,520

Other current assets
2,039

 
—

 
2,039

Property and equipment
6,950

 
10

 
6,960

Goodwill (1)
19,730

 
509

 
20,239

Intangible assets (2)
405

 
16

 
421

Other non-current assets
512

 
—

 
512

Deferred tax assets
2,296

 
—

 
2,296

Current liabilities
(10,001
)
 
(24
)
 
(10,025
)
Notes payable
(6,630
)
 
—

 
(6,630
)
Purchase price
$
30,123

 
$
824

 
$
30,947


(1)
Substantially all of the goodwill for the U.S. Acquisition is expected to be deductible for U.S. income tax purposes. However, the goodwill for the Latin America Acquisition is not expected to be deductible for Mexico and El Salvador income tax purposes.

(2)
Intangible assets primarily consist of customer relationships, which are included in other non-current assets in the accompanying condensed consolidated balance sheets. Customer relationships are generally amortized over five years.

During the three months ended March 31, 2016, revenue from the 2016 acquisitions since the acquisition dates was $11,330,000. During the three months ended March 31, 2016, the net earnings from the 2016 acquisitions since the acquisition dates (including acquisition and integration costs) was $203,000. Combined transaction and integration costs related to the 2016 acquisitions were approximately $400,000, which are primarily included in administrative expenses in the accompanying condensed consolidated statements of income.

The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if all the above acquisitions had occurred on January 1, 2015. The unaudited pro forma financial information has been prepared for informational purposes only and does not purport to be indicative of what would have resulted had the acquisition occurred on the date indicated or what may result in the future (in thousands, except per share data):
 
 
Three Months Ended
 
Three Months Ended
 
 
March 31, 2016
 
March 31, 2015
 
 
As Reported
 
Pro Forma
 
As Reported
 
Pro Forma
Total revenue
 
$
183,203

 
$
184,484

 
$
176,023

 
$
189,436

Net income
 
13,174

 
13,221

 
16,788

 
17,057

 
 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
 
Basic
 
$
0.47

 
$
0.47

 
$
0.59

 
$
0.60

Diluted
 
0.47

 
0.47

 
0.59

 
0.60



9

Note 4 - Long-Term Debt

Senior Unsecured Notes

On March 24, 2014, the Company issued $200,000,000 of 6.75% senior notes due on April 1, 2021 (the “Notes”). Interest on the Notes is payable semi-annually in arrears on April 1 and October 1. The Notes are fully and unconditionally guaranteed on a senior unsecured basis jointly and severally by all of the Company's existing and future domestic subsidiaries that guarantee the 2015 Credit Facility. The Notes permit the Company to make certain restricted payments, such as repurchasing shares of its stock and paying cash dividends, within certain parameters, the most restrictive of which generally limits such restricted payments to 50% of adjusted net income. As of March 31, 2016, 2015 and December 31, 2015, deferred debt issuance costs of $3,963,000, $4,591,000 and $4,126,000, respectively, are included as a direct deduction from the carrying amount of the Notes in the accompanying condensed consolidated balance sheets.

Revolving Credit Facilities

At March 31, 2016, the Company maintained a line of credit with a group of U.S. based commercial lenders (the “2015 Credit Facility”) in the amount of $210,000,000, which matures in October 2020. At March 31, 2016, the Company had $40,000,000 outstanding under the 2015 Credit Facility and $170,000,000 was available for borrowings. The 2015 Credit Facility bears interest, at the Company’s option, at either (i) the prevailing London Interbank Offered Rate (“LIBOR”) (with interest periods of 1, 2, 3 or 6 months at the Company’s option) plus a fixed spread of 2.5% or (ii) the prevailing prime or base rate plus a fixed spread of 1.5%. The 2015 Credit Facility requires a minimum LIBOR rate of 0%. The weighted-average interest rate on amounts outstanding under the 2015 Credit Facility at March 31, 2016 was 3.00% based on the prevailing 30-day LIBOR rate. The 2015 Credit Facility requires the Company to maintain certain financial ratios and comply with certain financial covenants and allows the Company to make certain restricted payments, such as repurchasing shares of its stock and paying cash dividends, within certain parameters, provided the Company maintains compliance with those financial ratios and covenants after giving effect to such restricted payments. The Company was in compliance with the requirements and covenants of the 2015 Credit Facility as of March 31, 2016. During the three months ended March 31, 2016, the Company made net payments of $18,000,000 pursuant to the 2015 Credit Facility.

At March 31, 2016, the Company maintained a line of credit with a bank in Mexico (the “Mexico Credit Facility”) in the amount of $10,000,000. The Mexico Credit Facility bears interest at the prevailing 30-day LIBOR rate plus a fixed spread of 2.0% and matures in December 2017. Under the terms of the Mexico Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Company is required to pay a one-time commitment fee of $25,000 due when the first amount is drawn/borrowed. At March 31, 2016, the Company had no amount outstanding under the Mexico Credit Facility and $10,000,000 was available for borrowings.

Note 5 - Fair Value of Financial Instruments

The fair value of financial instruments is determined by reference to various market data and other valuation techniques, as appropriate. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The three fair value levels are (from highest to lowest):

Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.

As cash and cash equivalents have maturities of less than three months, the carrying values of cash and cash equivalents approximate fair value (Level 1 of the fair value hierarchy). Due to their short-term maturities, pawn loans, consumer loans (net) and pawn loan fees and service charges receivable approximate fair value (Level 3 of the fair value hierarchy).

The carrying value of the Company’s prior credit facility approximated fair value as of March 31, 2015. The carrying value of the Company’s current credit facilities (the 2015 Credit Facility and the Mexico Credit Facility) approximated fair value as of March 31, 2016 and December 31, 2015. The fair value of the Notes was approximately $193,000,000, $206,000,000 and $199,000,000 as of March 31, 2016, 2015 and December 31, 2015, respectively, compared to a carrying value of $196,037,000, $195,409,000 and $195,874,000, respectively. These fair values have been estimated based on a discounted cash flow analysis using a discount rate

10

representing the Company’s estimate of the rate that would be used by market participants (Level 2 of the fair value hierarchy). Changes in assumptions or estimation methodologies may have a material effect on these estimated fair values.

Note 6 - Condensed Consolidating Guarantor Financial Statements

In connection with the issuance of the Notes, certain of the Company’s domestic subsidiaries (collectively, “Guarantor Subsidiaries”), fully, unconditionally, jointly and severally guaranteed the payment obligations under the Notes. Each of the Guarantor Subsidiaries is 100% owned, directly or indirectly, by the Company. The following supplemental financial information sets forth, on a consolidating basis, the balance sheets, statements of comprehensive income (loss) and statements of cash flows of First Cash Financial Services, Inc. (the “Parent Company”), the Guarantor Subsidiaries and the Parent Company’s other subsidiaries (the “Non-Guarantor Subsidiaries”).

The supplemental condensed consolidating financial information has been prepared pursuant to SEC rules and regulations for interim condensed financial information and does not include the more complete disclosures included in annual financial statements. Investments in consolidated subsidiaries have been presented under the equity method of accounting. The principal eliminating entries eliminate investments in subsidiaries, intercompany balances and intercompany revenues and expenses. The condensed financial information may not necessarily be indicative of the results of operations or financial position had the Guarantor Subsidiaries or Non-Guarantor Subsidiaries operated as independent entities.

11

Condensed Consolidating Balance Sheet
March 31, 2016
(unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent
Company
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
8,216

 
$
2,838

 
$
43,096

 
$
—

 
$
54,150

Pawn loan fees and service charges receivable
 
—

 
6,511

 
10,559

 
—

 
17,070

Pawn loans
 
—

 
52,809

 
73,811

 
—

 
126,620

Consumer loans, net
 
—

 
497

 
488

 
—

 
985

Inventories
 
—

 
41,163

 
49,551

 
—

 
90,714

Prepaid expenses and other current assets
 
4,300

 
—

 
2,611

 
—

 
6,911

Intercompany receivable
 
10,570

 
—

 
1,601

 
(12,171
)
 
—

Total current assets
 
23,086

 
103,818

 
181,717

 
(12,171
)
 
296,450

 
 
 
 
 
 
 
 
 
 
 
Property and equipment, net
 
3,856

 
57,101

 
59,755

 
—

 
120,712

Goodwill
 
—

 
196,733

 
118,706

 
—

 
315,439

Other non-current assets
 
1,222

 
4,631

 
4,438

 
—

 
10,291

Deferred tax assets
 
—

 
—

 
10,993

 
—

 
10,993

Investments in subsidiaries
 
665,322

 
—

 
—

 
(665,322
)
 
—

Total assets
 
$
693,486

 
$
362,283

 
$
375,609

 
$
(677,493
)
 
$
753,885

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
$
17,975

 
$
7,681

 
$
28,840

 
$
—

 
$
54,496

Income taxes payable
 
—

 
—

 
1,433

 
—

 
1,433

Intercompany payable
 
—

 
—

 
12,171

 
(12,171
)
 
—

Total current liabilities
 
17,975

 
7,681

 
42,444

 
(12,171
)
 
55,929

 
 
 
 
 
 
 
 
 
 
 
Revolving unsecured credit facilities
 
40,000

 
—

 
—

 
—

 
40,000

Senior unsecured notes
 
196,037

 
—

 
—

 
—

 
196,037

Deferred tax liabilities
 
186

 
19,964

 
2,482

 
—

 
22,632

Total liabilities
 
254,198

 
27,645

 
44,926

 
(12,171
)
 
314,598

 
 
 
 
 
 
 
 
 
 
 
Total stockholders’ equity
 
439,288

 
334,638

 
330,683

 
(665,322
)
 
439,287

Total liabilities and stockholders’ equity
 
$
693,486

 
$
362,283

 
$
375,609

 
$
(677,493
)
 
$
753,885



12

Condensed Consolidating Balance Sheet
March 31, 2015
(unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent
Company
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
13,136

 
$
2,697

 
$
59,970

 
$
—

 
$
75,803

Pawn loan fees and service charges receivable
 
—

 
6,667

 
9,565

 
—

 
16,232

Pawn loans
 
—

 
52,461

 
61,845

 
—

 
114,306

Consumer loans, net
 
—

 
461

 
516

 
—

 
977

Inventories
 
—

 
34,802

 
47,752

 
—

 
82,554

Prepaid expenses and other current assets
 
1,647

 
—

 
2,145

 
(490
)
 
3,302

Intercompany receivable
 
6,526

 
—

 
—

 
(6,526
)
 
—

Total current assets
 
21,309

 
97,088

 
181,793

 
(7,016
)
 
293,174

 
 
 
 
 
 
 
 
 
 
 
Property and equipment, net
 
3,916

 
53,807

 
54,864

 
—

 
112,587

Goodwill
 
—

 
181,752

 
94,793

 
—

 
276,545

Other non-current assets
 
1,120

 
5,364

 
4,403

 
—

 
10,887

Deferred tax assets
 
1,600

 
—

 
8,845

 
(1,600
)
 
8,845

Investments in subsidiaries
 
630,832

 
—

 
—

 
(630,832
)
 
—

Total assets
 
$
658,777

 
$
338,011

 
$
344,698

 
$
(639,448
)
 
$
702,038

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
$
15,854

 
$
7,604

 
$
18,246

 
$
—

 
$
41,704

Income taxes payable
 
540

 
—

 
—

 
(490
)
 
50

Intercompany payable
 
—

 
—

 
6,526

 
(6,526
)
 
—

Total current liabilities
 
16,394

 
7,604

 
24,772

 
(7,016
)
 
41,754

 
 
 
 
 
 
 
 
 
 
 
Revolving unsecured credit facilities
 
14,500

 
—

 
—

 
—

 
14,500

Senior unsecured notes
 
195,409

 
—

 
—

 
—

 
195,409

Deferred tax liabilities
 
—

 
17,370

 
2,131

 
(1,600
)
 
17,901

Total liabilities
 
226,303

 
24,974

 
26,903

 
(8,616
)
 
269,564

 
 
 
 
 
 
 
 
 
 
 
Total stockholders’ equity
 
432,474

 
313,037

 
317,795

 
(630,832
)
 
432,474

Total liabilities and stockholders’ equity
 
$
658,777

 
$
338,011

 
$
344,698

 
$
(639,448
)
 
$
702,038


13

Condensed Consolidating Balance Sheet
December 31, 2015
(unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent
Company
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
5,460

 
$
3,765

 
$
77,729

 
$
—

 
$
86,954

Pawn loan fees and service charges receivable
 
—

 
7,596

 
8,810

 
—

 
16,406

Pawn loans
 
—

 
61,204

 
56,397

 
—

 
117,601

Consumer loans, net
 
—

 
624

 
494

 
—

 
1,118

Inventories
 
—

 
46,349

 
47,109

 
—

 
93,458

Prepaid expenses and other current assets
 
6,477

 
—

 
3,420

 
—

 
9,897

Intercompany receivable
 
7,382

 
—

 
—

 
(7,382
)
 
—

Total current assets
 
19,319

 
119,538

 
193,959

 
(7,382
)
 
325,434

 
 
 
 
 
 
 
 
 
 
 
Property and equipment, net
 
3,568

 
55,585

 
53,294

 
—

 
112,447

Goodwill
 
—

 
196,224

 
99,385

 
—

 
295,609

Other non-current assets
 
1,290

 
4,893

 
3,901

 
—

 
10,084

Deferred tax assets
 
—

 
—

 
9,321

 
—

 
9,321

Investments in subsidiaries
 
675,574

 
—

 
—

 
(675,574
)
 
—

Total assets
 
$
699,751

 
$
376,240

 
$
359,860

 
$
(682,956
)
 
$
752,895

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
$
14,308

 
$
7,929

 
$
20,015

 
$
—

 
$
42,252

Income taxes payable
 
—

 
—

 
3,923

 
—

 
3,923

Intercompany payable
 
—

 
—

 
7,382

 
(7,382
)
 
—

Total current liabilities
 
14,308

 
7,929

 
31,320

 
(7,382
)
 
46,175

 
 
 
 
 
 
 
 
 
 
 
Revolving unsecured credit facilities
 
58,000

 
—

 
—

 
—

 
58,000

Senior unsecured notes
 
195,874

 
—

 
—

 
—

 
195,874

Deferred tax liabilities
 
187

 
18,880

 
2,397

 
—

 
21,464

Total liabilities
 
268,369

 
26,809

 
33,717

 
(7,382
)
 
321,513

 
 
 
 
 
 
 
 
 
 
 
Total stockholders’ equity
 
431,382

 
349,431

 
326,143

 
(675,574
)
 
431,382

Total liabilities and stockholders’ equity
 
$
699,751

 
$
376,240

 
$
359,860

 
$
(682,956
)
 
$
752,895


14

Condensed Consolidating Statement of Comprehensive Income (Loss)
Three Months Ended March 31, 2016
(unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent
Company
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Eliminations
 
Consolidated
Revenue:
 
 
 
 
 
 
 
 
 
 
Retail merchandise sales
 
$
—

 
$
45,825

 
$
72,951

 
$
—

 
$
118,776

Pawn loan fees
 
—

 
21,329

 
30,104

 
—

 
51,433

Consumer loan and credit services fees
 
—

 
5,127

 
559

 
—

 
5,686

Wholesale scrap jewelry
revenue
 
—

 
4,243

 
3,065

 
—

 
7,308

Total revenue
 
—

 
76,524

 
106,679

 
—

 
183,203

 
 
 
 
 
 
 
 
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
 
 
 
Cost of retail merchandise sold
 
—

 
27,601

 
46,821

 
—

 
74,422

Consumer loan and credit services loss provision
 
—

 
907

 
140

 
—

 
1,047

Cost of wholesale scrap jewelry sold
 
—

 
3,443

 
2,428

 
—

 
5,871

Total cost of revenue
 
—

 
31,951

 
49,389

 
—

 
81,340

 
 
 
 
 
 
 
 
 
 
 
Net revenue
 
—

 
44,573

 
57,290

 
—

 
101,863

 
 
 
 
 
 
 
 
 
 
 
Expenses and other income:
 
 
 
 
 
 
 
 
 
 
Store operating expenses
 
—

 
23,935

 
31,476

 
—

 
55,411

Administrative expenses (1)
 
9,609

 
—

 
8,059

 
—

 
17,668

Depreciation and amortization
 
174

 
1,696

 
3,067

 
—

 
4,937

Interest expense
 
4,394

 
—

 
66

 
—

 
4,460