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 third quarter ended March 31, 2011.
Fiscal 2011 Third Quarter Highlights
- Consolidated total revenue grew to a
record $197.8 million for the quarter, an increase of $34.5
million, or 21.1%, compared to the prior year period. On a constant
currency basis, total consolidated revenue increased by $28.0
million, or 17.1%.
- Total consolidated operating margin
increased by $13.1 million, or 20.5%, for the quarter on total
revenue growth of 21.1%, representing continued strong flow through
of incremental revenue to earnings and profitable accretion from
the Company’s recent acquisitions.
- Consolidated adjusted EBITDA was a
record $58.9 million for the three months ended March 31, 2011,
representing an increase of $10.7 million, or 22.2%, compared to
the prior year’s quarter, while also increasing by $8.1 million or
16.7% on a constant currency basis during the same period.
- Diluted operating earnings per share
was $0.42 for the fiscal 2011 third quarter compared $0.27 for the
third quarter of the prior fiscal year, representing an increase of
55.6%.
- On April 13, 2011, the Company closed
on a public offering of 6,000,000 shares of its common stock,
followed by the sale on April 25, 2011 of an additional 672,142
common shares issued for over-allotments, the aggregate net
proceeds from which was approximately $130.1 million.
Discussion on Presentation of Information
During the three months ended March 31, 2011, the average value
of the Canadian Dollar increased approximately 6%, while the
average value of the British Pound Sterling increased by
approximately 3%, relative to the U.S. currency, as compared to the
third quarter of the previous fiscal year. Consequently,
fluctuations in currency rates had a moderate affect on a net basis
on year-over-year comparisons of the Company’s consolidated
financial results. Therefore, the Company is providing some country
comparisons on a constant currency basis.
Fiscal 2011 Third Quarter Overview
Commenting on the third quarter, Jeff Weiss, the Company’s
Chairman and Chief Executive Officer, stated, “We are pleased to
announce another quarter of record results, driven by the continued
strong performance of our core business units and the successful
execution of our business diversification strategy, as a number of
our new products, geographies, and sales channels substantially
contributed to the Company’s financial results. We achieved record
total consolidated revenue for the three months ended March 31,
2011 of $197.8 million, representing growth of $34.5 million or
21.1% over the prior year’s quarter, while total adjusted EBITDA
was a record $58.9 million, increasing by $10.7 million or 22.2%
over the third quarter of the prior fiscal year.
During the quarter, we continued to execute on our strategy to
diversify and expand our multi-country, multi-product, and
multi-platform business through accretive acquisitions. On April 1,
2011 we announced the consummation of the acquisition of Purpose
U.K. Holdings Limited, the parent company of Month End Money (MEM).
MEM, which was established in 2003, operates under the brand name
“PaydayUK” and is the market leader in the region, providing loans
through both internet and telephony-based technologies throughout
the United Kingdom. The expansion of our internet lending platform
through the acquisition of MEM, in concert with our 428 retail
store footprint, further strengthens and secures our position as
the leading provider of financial services to the unbanked and
under-banked consumers in the United Kingdom. We look forward to
leveraging the strong business acumen and industry expertise of the
MEM management team and their scalable technology platform in the
future expansion of our global internet lending platform both
within the United Kingdom and Canada, as well as to other countries
in Europe. As we have thus far experienced little cannibalization
of our store based business from our existing internet sales
channel in both the U.K. and Canada, we anticipate that a further
expansion of our internet platform will allow us to reach new
customer segments in the market place.”
Jeff Weiss continued “It is our mission to be the leading global
provider of financial services to the under-banked and unbanked
consumer, which we refer to as the ALICE demographic (or asset
limited, income constrained, employed). A significant percentage of
workers around the world are being continually challenged by
stagnant and declining wages and the seemingly ever rising cost of
life’s basic necessities such as food, healthcare, and
transportation. It’s hard to envision this trend reversing course,
as global population growth will most likely continue to place a
strain on the supply of natural resources, causing prices to
continue to be elevated, while manufacturing and other exportable
higher paying jobs are off-shored from some of our markets to
developing countries with lower labor costs. We currently estimate
that there are approximately 150 million ALICE people residing in
our current markets of Canada, the U.K., United States, Northern
and Eastern Europe. Furthermore, as prices for basic necessities
and services continue to rise against stagnant wages, we expect
that people in higher income brackets will continue to migrate into
the ALICE demographic. We believe one of the most efficient and
cost-effective ways to meet the growing needs of the ALICE
population both within our existing and new markets is through an
internet-based product delivery platform. This platform allows us
to enter new markets and territories more quickly, and without
having to construct a more expensive “bricks and mortar” store base
in order to test and launch our products. The acquisition of MEM
provides another model for the Company to leverage and build a
global internet sales platform.
We intend to continue to invest in new technologies and sales
channel strategies through both internal development, as well as
through the acquisition of new businesses. We believe these
investments will help us deliver our suite of products and services
around the world through the most convenient means our consumers
are accustomed to, and comfortable with, in each market. This
collectively may include a “bricks and mortar” store based model, a
global internet platform, the in-home loan servicing model widely
used throughout Poland and Eastern Europe, and other new
technologies and platforms that we are either in the process of
developing internally or are considering acquiring. We intend to
leverage our multi-product and multi-channel diversification
strategy to be the first choice financial services provider of the
ALICE consumer group.”
Third Quarter Business Update
In the United Kingdom, total consumer lending revenue grew by
£10.2 million or 64.6% for the current quarter, as compared to the
third quarter of the prior fiscal year, reflecting strong
performance from the existing internet lending business, and the
continued strong performance of the “bricks and mortar” store based
business. Same store sales for the United Kingdom with respect to
consumer lending, which considers stores that were open for at
least fifteen months, increased by 38.6% during the quarter. The
existing Express Finance internet lending business in the United
Kingdom continues to grow robustly, contributing £9.5 million of
total revenue during the three months ended March 31, 2011 compared
to £4.7 million for the prior year’s quarter. We anticipate that
revenue and profit contribution from internet lending in the U.K.
will increase significantly in future quarters, given the
acquisition of MEM completed earlier this month. Furthermore, the
U.K. pawn lending business contributed £5.1 million of total
revenue for the fiscal third quarter, representing growth of 66.4%
over the prior year’s quarter. Collectively, total consolidated
revenue in the United Kingdom increased by £12.2 million, or 37.8%,
to £44.3 million for the three months ended March 31, 2011, while
total adjusted EBITDA increased by 41.2% to £13.7 million for the
fiscal 2011 third quarter compared to £9.7 million for the third
quarter of the prior fiscal year. During the first nine months of
the current fiscal year, the Company opened 48 de novo stores in
the United Kingdom which now aggregates to a total of 379
company-operated stores in that market.
In Canada, total consumer lending revenue increased by C$3.5
million or 9.2% for the fiscal third quarter, reflecting new
customer growth from the recent television advertising campaigns
the Company has rolled out in that market. The Company also
continues to progressively test and expand the roll-out of an
internet lending product in the provinces of Ontario and Alberta,
and expects to introduce this product into additional territories
in Canada following the successful launch in these markets. Total
consolidated revenue in Canada grew to C$76.7 million for the
quarter and adjusted EBITDA was C$32.6 million.
Sefina, the Scandinavian pawn lending business the Company
acquired on December 31, 2010, contributed $8.4 million of total
revenue and $3.7 million of EBITDA for the fiscal 2011 third
quarter. The total pawn pledge book for the 28 stores in Sweden and
Finland, which is primarily composed of loans on gold and high
value jewelry, was $78.1 million as of March 31, 2011. As a result
of the recent acquisition of Sefina, which maintains the largest
pawn lending book in Scandinavia, combined with the Company’s
previous acquisitions of the “Suttons and Robertsons” and the
“Robert Biggar” pawn store chains in England and Scotland, and the
significant growth in the Company’s pawn lending book in its
existing retail stores in the United Kingdom, the Company believes
it now manages the largest pawn loan book in Europe and the third
largest pawn loan book worldwide. Looking to fiscal 2012, the
Company expects to build additional pawn stores in Scandinavia and
pursue acquisition candidates in Scandinavia and Europe, thereby
leveraging the Sefina operating platform and management team.
The Polish business unit contributed $2.8 million of total
revenue during the quarter, as the Company continues to invest in
the technology and management infrastructure necessary to position
the in-home lending business for further geographic expansion and
growth within Poland in the next fiscal year. On April 14, 2011,
the Company announced the opening of its third company-operated
financial services store in Poland. The newest store, located on
the high street in the town of Gdynia, follows the successful
launch of the Company’s first multi-product pilot store in Gdansk
in September 2010. The three pilot stores currently offer a product
suite of short term loans, pawn lending, gold buying, and foreign
exchange and money transfer services, with the potential to
supplement additional products and services in the near future. The
Company plans on promoting consumer awareness of these pilot stores
with focused local area marketing strategies targeting the
significant unbanked and under-banked population in proximity to
these stores, and presently expects to build additional pilot
stores in fiscal 2012 in other geographical regions of Poland.
Given the evolving diversification of the global operating
platform, and the resulting change in the global mix of the
Company’s lending portfolio to include a growing proportion of
internet originated short term consumer loans, the Company’s
consolidated loan loss provision, expressed as a percentage of
gross consumer lending revenue, was 18.4% for the quarter ended
March 31, 2011 compared to 16.6% for the three months ended
December 31, 2010. The loan loss provision for the quarter includes
a different blend of loan products and countries, including a
rapidly growing proportion of internet-based loans in Canada and
the United Kingdom which typically carry higher loan losses, but
with significantly lower fixed operating costs than the existing
store based businesses in those countries. Looking to the future
and considering the recent addition of the leading internet lending
platform in the United Kingdom (MEM), the Company expects that the
consolidated loan loss provision, expressed as a percentage of
lending revenue, will continue to increase moderately on a
quarterly basis as the global internet lending portfolio grows,
with overall profit margins for the internet lending business
comparable to the existing store based businesses.
Third Quarter Financial Results
For the three months ended March 31, 2011, the Company incurred
$3.5 million of net one-time gains, principally related to a $5.3
million net unrealized, non-cash mark-to-market valuation gain on
the Company’s debt and cross-currency interest rate swap
agreements. Including these net one-time gains, income before
income taxes on a GAAP basis was $25.4 million for the quarter
compared to a loss before income taxes of $14.5 million for the
third quarter of the previous fiscal year. Also reflecting the net
one-time gains, the effective income tax rate for the three months
ended March 31, 2011 was 38.2%, resulting in reported net income of
$15.7 million compared to a net loss of $12.2 million for the third
quarter of the previous fiscal year. Diluted earnings per share on
a GAAP basis was $0.41 for the fiscal 2011 third quarter, compared
to a loss per share of $0.34 for the third quarter of the previous
fiscal year.
Excluding the net non-recurring gain for the quarter, the
non-cash interest expense resulting 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 was $25.7 million for the quarter, an increase
of 44.4% compared to $17.8 million for the three months ended March
31, 2010. Pro forma net income, assuming a pro forma effective
income tax rate from operations of 37.0% for the fiscal 2011 third
quarter, was $16.2 million compared to $10.1 million for the prior
year period. Diluted operating earnings per share was $0.42 for the
fiscal 2011 third quarter compared to $0.27 for the third quarter
of the previous fiscal year, representing an increase of 55.6%. A
table reconciling pro forma income before income taxes to GAAP
basis income before income taxes is included on page 11 of this
News Release.
Company Liquidity
On March 3, 2011, the Company announced a new four-year $200.0
million global revolving credit facility that matures March 1,
2015, with the potential to increase availability under the
facility to $250.0 million. The new global revolving credit
facility replaces the Company’s previous $75.0 million revolving
credit facility in the United States and C$28.5 million facility in
Canada. As compared to the Company’s previous credit agreement,
this new larger facility will now allow for multiple tranches of
multi-currency borrowings. This should enable the Company to deploy
funds around the world in a more efficient and expeditious manner
to facilitate the continued execution of its multi-country,
multi-product, and multi-channel business expansion and
diversification strategy.
As of March 31, 2011, the Company’s debt structure consisted of
a $44.8 million tranche of U.S. senior convertible notes due 2027
and a $120.0 million tranche of U.S. senior convertible notes due
2028. In addition, the Company has a $600.0 million tranche of
senior unsecured notes that are not due until December 2016. Thus,
there are presently no mandatory debt principal payment obligations
for the Company until potentially the first put date of December
2012 for the $44.8 million tranche of U.S. senior convertible
notes.
As of March 31, 2011, the Company had drawn $152.5 million of
its $200.0 million global revolving credit facility primarily to
initially fund a portion of the acquisition price of MEM.
Furthermore, as of March 31, 2011, the Company had drawn £5.6
million of its £7.0 million credit facility in the United Kingdom,
and had drawn SEK 273.7 million and EUR 16.5 million of its total
SEK 325.0 million and EUR 17.5 million credit facilities in
Scandinavia, in order to fund the working capital needs of the U.K.
business and growth of the pawn pledge book in Scandinavia,
respectively.
Fiscal Year 2011 Outlook
Considering the expected earnings contribution from the recent
acquisition of MEM, net of the related incurrence of acquisition
expenses and transition costs, as well as the additional
investments the Company is making in management infrastructure to
support its continuing global business expansion and
diversification strategy, the integration of recent acquisitions,
and the development of its global eCommerce platform, the Company
is updating its earnings guidance for the fiscal year ending June
30, 2011. The Company is increasing its adjusted EBITDA guidance to
between $226.0 million and $229.0 million compared to its
previously issued guidance of between $215.0 million and $220.0
million. Prior to giving effect to the Company’s recent equity
offering, pro forma operating diluted earnings per share for the
fiscal year ending June 30, 2011, which excludes any one-time
charges or gains that may occur, the non-cash impact of adopting
ASC 470-20, and the non-cash amortization associated with the
legacy cross-currency interest rate swap agreements, would be
between $1.54 and $1.57 per diluted share versus previously issued
guidance of between $1.47 and $1.55. After giving effect to the
additional 6,672,142 common shares issued in April 2011, the
Company’s revised operating earnings per share guidance equates to
between $1.47 and $1.50 per diluted share. As previously disclosed,
this guidance range reflects an expected effective income tax rate
from operations for the fiscal year ended June 30, 2011 of 37%;
this 37% rate is expected to further reduce in fiscal 2012 with the
inclusion of Sefina and MEM in the Company’s consolidated financial
results for an entire fiscal year.
Investors Conference Call
Dollar Financial Corp will be holding an investor’s conference
call on April 28, 2011 at 5:00 pm ET to discuss the Company’s
results for the fiscal third quarter ended March 31, 2011.
Investors can participate in the conference call by dialing (888)
200 - 2794 (U.S. and Canada) or (973) 935 - 8766 (International);
use the confirmation code "Dollar." Hosting the call will be
Jeffrey A. 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 May 12, 2011. 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
"58460074”.
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 and small business owners 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 seven countries (Canada, the
United Kingdom, the United States, the Republic of Ireland, Sweden,
Finland 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 March 31, 2011, the Company’s global retail operations
consisted of 1,236 locations, including 1,144 company-operated
financial services stores and 92 franchised and agent locations,
conducting business primarily under the names Money Mart®, Money
Shop®, Insta-Cheques®, The Check Cashing Store®, Sefina and
MoneyNow® in Canada, the United Kingdom, the United States, the
Republic of Ireland, Sweden, Finland 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:
pending or recent acquisitions and their expected benefits; 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 United Kingdom, the United States, and other
countries; the impact of future development strategy, new stores
and acquisitions; litigation matters; expected financing
initiatives; 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 consummation of announced pending acquisitions, 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 consummate announced pending acquisitions,
successfully integrate any of its acquisitions, obtain acceptable
financing, or attain its published guidance metrics, or that
ongoing and potential future litigation or the various FDIC,
Federal, state, Canadian, U.K. 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. The Company disclaims
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 millions)
June 30, March 31, 2010 2011
Assets: Cash and cash equivalents $ 291.3 $ 361.3 Consumer
loans, net: Consumer loans 111.3 131.6 Less: Allowance for loan
losses (10.4 ) (13.4 ) Consumer loans, net 100.9
118.2 Pawn loans 35.5 128.5 Loans in default, net 9.3 10.7 Prepaid
expenses and other current assets 42.9 64.5 Deferred tax assets,
net 23.6 17.5 Property and equipment, net 67.5 88.7 Goodwill and
other intangibles, net 609.0 728.2 Debt issuance costs, net and
other assets 34.6 38.4
Total
Assets $ 1,214.6 $ 1,556.0
Liabilities: Accounts and income taxes payable $ 51.0 $ 42.0
Accrued expenses and other liabilities 145.0 178.5 Fair value of
derivatives 47.4 73.1 Deferred tax liability 24.3 30.8 Revolving
credit facilities and other short-term debt 3.3 158.6 Total
long-term debt 725.3 796.2
Total
Liabilities 996.3 1,279.2
Stockholders' Equity: Additional paid-in capital 331.1 335.3
Accumulated deficit (115.5 ) (67.5 ) Accumulated other
comprehensive income 2.7 9.5 Total
Dollar Financial Corp. Stockholders' Equity 218.3 277.3
Non-controlling interest - (0.5 ) Total
Stockholders' Equity 218.3 276.8
Total Liabilities and Stockholders' Equity $ 1,214.6
$ 1,556.0
DOLLAR FINANCIAL CORP UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS (In millions except
per share amounts)
Three Months Ended Nine Months
Ended March 31, March 31, 2010 2011
2010 2011 Revenues: Fees from consumer lending $ 78.1
$ 100.7 $ 238.3 $ 292.0 Check cashing 37.2 36.7 113.6 108.7 Pawn
service fees and sales 4.8 16.6 13.3 30.1 Purchased gold sales 13.0
12.3 32.0 34.7 Money transfer fees 6.6 7.4 20.5 22.5 Other
23.6 24.1 51.8 66.5
Total revenues 163.3 197.8
469.5 554.5 Operating expenses:
Salaries and benefits 39.9 46.2 114.3 129.7 Provision for loan
losses 10.2 18.5 34.6 48.9 Occupancy costs 11.0 13.3 32.7 36.9
Advertising 3.9 5.4 12.0 17.1 Depreciation 3.4 4.3 10.9 11.8 Bank
charges and armored carrier services 3.5 4.1 10.4 11.8 Maintenance
and repairs 3.1 4.1 8.8 10.6 COGS - purchased gold 9.3 7.5 22.6
22.4 Other 15.0 17.3 42.7
49.9 Total operating expenses 99.3
120.7 289.0 339.1
Operating margin 64.0 77.1 180.5
215.4 Corporate and other expenses:
Corporate expenses 22.1 25.2 65.4 74.6 Interest expense, net 21.9
23.0 46.4 66.5 Other depreciation and amortization 2.5 3.1 4.7 8.6
Unrealized foreign exchange gain (15.7 ) (10.1 ) (11.8 ) (42.5 )
Loss on derivatives not designated as hedges 18.6 9.6 21.9 34.2
Loss on extinguishment of debt 0.7 - 9.5 - Reserve for (proceeds
from) litigation settlements 26.6 0.1 27.9 (3.8 ) Loss on store
closings and other 1.8 0.8 4.8
3.5 Income (loss) before income taxes (incl.
non-controlling interest) (14.5 ) 25.4 11.7 74.3 Income tax
provision (2.3 ) 9.7 11.5
26.3 Net income (loss) $ (12.2 ) $ 15.7 $ 0.2
$ 48.0 Net income per share Basic
($0.34 ) $ 0.43 $ 0.00 $ 1.31 Diluted ($0.34 ) $ 0.41 $ 0.00 $ 1.26
Weighted average shares outstanding Basic 36.2 36.6 36.1
36.5 Diluted 36.2 38.7 37.2 38.0
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 the Company’s
Unaudited Consolidated Statements of Operations to pro forma net
income (dollars in millions):
DOLLAR FINANCIAL CORP PRO FORMA NET INCOME
(excluding one-time items & effects of ASC 470-20) (In
millions except per share amounts)
Three Months Ended
Nine Months Ended March 31, March 31,
2010 2011 2010 2011 Income
before income taxes (incl. non-controlling interest) $ (14.5 ) $
25.4 $ 11.7 $ 74.3 Pro forma adjustments: Non-cash interest
on convertible debt (ASC 470-20) 2.1 2.1 7.0 6.2 Unrealized foreign
exchange gain (15.7 ) (10.1 ) (11.8 ) (42.5 ) Non-cash impact of
hedge ineffectiveness 14.2 4.8 17.1 20.5 Cross-currency swap
amortization 1.6 1.7 2.4 4.8 Loss on extinguishment of debt 0.7 -
9.5 - Reserve for (proceeds from) litigation settlements 26.6 0.1
27.9 (3.8 ) Acquisition costs expensed 1.3 1.3 2.3 5.0 Loss on
store closings and other 1.5 0.4
3.2 1.1 Pro forma income before income taxes
17.8 25.7 69.3 65.6 Pro forma income taxes (43% for 2010; 37% for
2011) 7.7 9.5 29.8
24.3 Pro forma net income $ 10.1 $ 16.2 $ 39.5
$ 41.3 Weighted average diluted shares
outstanding 37.5 38.7 37.2
38.0 Diluted operating earnings per
share $ 0.27 $ 0.42 $ 1.06 $ 1.09
Diluted GAAP earnings per share $ (0.34 ) $ 0.41 $
0.00 $ 1.26
Adjusted EBITDA Reconciliation
Adjusted EBITDA is not a financial measure prepared in
accordance with GAAP. Adjusted EBITDA includes earnings before
interest expense, income tax provision, depreciation and
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 the
Company’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 the Company’s Unaudited Consolidated
Statements of Operations to Adjusted EBITDA (dollars in
millions):
Three Months Ended Nine
Months Ended March 31, March 31, 2010
2011 2010 2011
Income (loss) before income taxes (incl. non-controlling
interest) $ (14.5 ) $ 25.4 $ 11.7 $ 74.3 Add: Depreciation
and amortization 5.9 7.4 15.6 20.4 Interest expense, net 21.9 23.0
46.4 66.5 Stock based compensation expense 1.9 2.0 5.7 6.0
Unrealized foreign exchange gain (15.7 ) (10.1 ) (11.8 ) (42.5 )
Loss on derivatives not designated as hedges 18.6 9.6 21.9 34.2
Loss on extinguishment of debt 0.7 - 9.5 - Reserve for (proceeds
from) litigation settlements 26.6 0.1 27.9 (3.8 ) Acquisition costs
expensed 1.3 1.3 2.3 5.0 Loss on store closings and other
1.5 0.2 3.1 0.7
Adjusted EBITDA $ 48.2 $ 58.9 $ 132.3 $ 160.8
DOLLAR FINANCIAL CORP UNAUDITED STORE
DATA
Three Months Ended Nine Months
Ended March 31, March 31, 2010 2011
2010 2011 Beginning Company-Operated Stores
United States 350 319 358 325 Canada 398 421 399 403 United Kingdom
295 359 274 330 Poland 0 1 0 0 Sweden 0 16 0 0 Finland 0 12 0 0
Total Beginning Company-Operated Stores 1,043 1,128 1,031 1,058
De novo Store Builds United States 0 0 0 0 Canada 0 0
1 0 United Kingdom 13 18 32 48 Poland 0 0 0 1 Sweden 0 0 0 0
Finland 0 0 0 0 Total 13 18 33 49
Acquired Stores
United States 0 0 0 0 Canada 0 0 0 19 United Kingdom 0 2 3 3 Poland
0 0 0 0 Sweden 0 0 0 16 Finland 0 0 0 12 Total 0 2 3 50
Closed Stores United States 2 2 10 8 Canada 0 2 2 3 United
Kingdom 0 0 1 2 Poland 0 0 0 0 Sweden 0 0 0 0 Finland 0 0 0 0 Total
2 4 13 13
Ending Company-Operated Stores United
States 348 317 348 317 Canada 398 419 398 419 United Kingdom 308
379 308 379 Poland 0 1 0 1 Sweden 0 16 0 16 Finland 0 12 0 12
Total Ending Company-Operated Stores 1,054
1,144 1,054 1,144 Ending
Franchise/Agent Stores U.S. 8 0 8 0 Canada 62 43 62 43 U.K. 54
49 54 49
Total Ending Franchise/Agent Stores 124
92 124 92 Total Ending Store
Count 1,178 1,236 1,178 1,236
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