Dollar Financial Corp (NASDAQ:DLLR), 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 Company’s
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
Company’s 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 Company’s strong organic revenue growth,
contribution from acquisitions and the implementation of store
operating efficiency improvements throughout the Company’s
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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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
Company’s 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 Company’s
company-operated store base. All of the provinces thus far have
implemented maximum lending rates in excess of the Company’s
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 Company’s 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 country’s 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 Company’s
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 year’s 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
Company’s store network in those two states. The operating margin
for the Company’s 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 Company’s 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 Company’s 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 year’s 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
year’s 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 Company’s 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 Company’s
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 year’s 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 Company’s convertible
securities and the cross-currency interest rate swap agreements.
The Company’s 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 investor’s conference
call on August 26, 2010 at 5:00 pm ET to discuss the Company’s
results for the fiscal fourth quarter and fiscal year ended June
30, 2010, and the Company’s 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
Company’s 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 Company’s 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 Company's 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 Company’s 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 Company’s 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 Company’s operations. A more complete description of
these and other risks, uncertainties and assumptions is included in
the Company’s filings with the Securities and Exchange Commission,
the Company’s 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 Company’s 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 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 liability 18,947
24,341 Total debt 536,305 728,592
Total Liabilities 712,387 996,278
Stockholders' 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 Stockholders' 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 81,215 266,506 319,465 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 (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 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 Dollar’s
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 operating 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 Dollar’s 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 Dollar’s 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
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