DFC Global Corp. (formerly 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, 2011.
Yesterday, the Company announced that it had changed its corporate
name to DFC Global Corp. to more accurately reflect its
international focus. The Company will continue to trade on the
NASDAQ stock exchange under the ticker symbol “DLLR”.
Fiscal Year 2011 Financial Highlights
- Consolidated total revenue grew to a
record $788.4 million for the fiscal year, an increase of $155.1
million, or 24.5%, compared to the twelve months ended June 30,
2010. On a constant currency basis, total consolidated revenue
increased by $131.9 million, or 20.8%.
- Total consumer lending revenue
increased to $429.2 million for the fiscal year, representing an
increase of $109.7 million, or 34.3%, compared to the prior year
period. Revenue from internet-based loans grew to $86.8 million for
fiscal year 2011 compared to $26.9 million for the twelve months
ended June 30, 2010.
- Total revenue from pawn lending grew to
$48.0 million during the twelve months ended June 30, 2011 compared
to $19.9 million for the prior year period. Pawn lending
represented 7.7% of total consolidated revenue for the three months
ended June 30, 2011.
- Total consolidated operating margin
increased by $60.9 million, or 24.7%, year-over-year on total
revenue growth of 24.5%, 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 $230.2 million for the twelve months ended June 30, 2011,
representing an increase of $48.0 million, or 26.3%, compared to
the prior fiscal year, while also increasing by $38.1 million, or
20.9%, on a constant currency basis during the same period.
- Diluted operating earnings per share
was $1.59 for the fiscal year, exceeding the Company’s guidance
range of between $1.47 and $1.50, and represents an increase of
17.8% compared to the prior 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, 2011, as compared to the
prior fiscal year, with the average value of the Canadian Dollar
increasing by approximately 5% relative to the U.S. Dollar. In
addition, the average value of the British Pound Sterling increased
by approximately 1% when measured against the U.S. Dollar during
the same period. Furthermore, during the fourth quarter of fiscal
2011 compared to the fourth quarter of the previous fiscal year,
the average value of the Canadian Dollar increased approximately
6%, and the average value of the British Pound Sterling increased
by about 9%, relative to the U.S. currency. Consequently,
fluctuations in currency rates had a moderate effect on a net basis
on year-over-year U.S. Dollar comparisons of the Company’s
consolidated financial results; and as a result, the Company is
providing some country comparisons on a constant currency
basis.
Fiscal 2011 Overview
Commenting on the fiscal year ended June 30, 2011, Jeff Weiss,
the Company’s Chairman and Chief Executive Officer, stated, “I am
pleased to announce another year of record performance by our
Company. Total consolidated revenue for the fiscal year increased
by 24.5% to a record $788.4 million, while total adjusted EBITDA
increased by 26.3% to a record $230.2 million. Over the past five
years, total revenue and adjusted EBITDA have grown at a compound
annual rate of 17.0% and 22.4%, respectively, despite the great
recession. This consistently strong performance is a testament to
our business diversification strategy, the growing ALICE
(asset-limited, income-constrained, employed) customer demographic
we serve, and also the successful investments we have made in our
de novo store expansion and global acquisition strategies.
In the current economic environment, in addition to stagnant and
sometimes declining wages, consumers also have to contend with
significantly higher prices for goods and services fueled by higher
energy costs. Furthermore, many economists are forecasting that
global population growth will continue to drive up prices of
natural resources; including food, clothing, and oil, well into the
foreseeable future. We believe this reduction in disposable income
is causing people in higher income brackets to migrate into our
customer demographic in increasing numbers to satisfy their
short-term credit needs, expanding our addressable market.
Additionally, in many parts of the world, the ALICE demographic is
either being inadequately served, or if they are being served, it
is through less sophisticated “mom and pop” type establishments.
Our global business strategy and inherent opportunity is to seek
out these underserved markets, acquire small store chains or
internet-based businesses where available, and leverage the cash
flow in the more developed areas of our business to fund the future
growth of these newer entities. This model has worked well for us
in the past, as we initially used cash generated by our U.S. and
Canadian business units to fund the expansion of our United Kingdom
business, and we believe it will continue to work well for us in
the future.”
Jeff Weiss continued, “Fiscal 2011 was another significant year
for our Company, as we completed strategic acquisitions that
position us for sustained long-term growth within our existing and
also new markets. Last month, we announced the acquisition of
Risicum, the leading provider of internet loans in Finland with
headquarters in Helsinki, Finland. Risicum, which was established
in 2005, provides loans predominantly in Finland through both
internet and mobile phone technology, utilizing multiple brands to
target specific customer demographics. Risicum also provides
internet and telephony-based loans in Sweden and the acquired
technology and collections platform is scalable for growth and
exportable to other countries in Northern Europe. This acquisition
further expands our global footprint and product portfolio to
originating unsecured short-term loans in Finland and Sweden, which
nicely dovetails with our market position as the leading pawn
lender in Scandinavia. Scandinavia continues to be a strategic
market for our products and services given its long-standing
product regulations and fragmented competitive landscape.
In April 2011, we completed 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 significant
financial services store footprint, further strengthens and secures
our position as the leading provider of financial services to
unbanked and under-banked consumers in the United Kingdom.”
Mr. Weiss concluded, “As a result of the improvements we have
made in our capital structure this fiscal year, continued
investments in our management infrastructure and information
technology platforms, and the scalability of our recent strategic
acquisitions, I believe we are well positioned to take advantage of
the significant growth opportunities in front of us. We have a
strong blend of core businesses that generate substantial cash flow
and a number of new businesses where we can invest that cash flow
for near-term and long-term growth. In addition, we have an active
and robust acquisition pipeline as we continue to evaluate future
development and growth prospects. With an expanding and
significantly underserved global market for our products and
services, I believe we are very well positioned for the
future.”
Fiscal 2011 Fourth Quarter Business Update
Total consolidated revenue in the U.K. increased by £30.6
million, or 85.5% for the three months ended June 30, 2011,
compared to the three months ended June 30, 2010. Consumer lending
revenue grew by £28.6 million, or 161.1%, for the quarter compared
to the fourth quarter of the prior fiscal year, reflecting
additional revenue from the Company’s internet lending businesses,
as well as continued strong performance and growth of the “bricks
and mortar” store-based business. Same store sales for the U.K.
with respect to consumer lending, which considers stores that were
open for at least fifteen months, increased by 43.0% this quarter.
Revenue from internet lending in the United Kingdom, which was
bolstered by the acquisition of MEM in April 2011, increased to
£28.3 million for the quarter ended June 30, 2011, compared to £6.1
million for the prior year’s fiscal fourth quarter. The U.K. pawn
lending business contributed £5.7 million of total revenue for the
quarter, representing growth of 29.3% over the prior year’s
quarter. The Company opened 69 de novo stores during the fiscal
year ended June 30, 2011, ending the year with 400 company-operated
stores, and plans to open an additional 75 to 100 de novo stores in
the United Kingdom during the next fiscal year ending June 30,
2012.
In Canada, total consolidated revenue increased by C$3.9
million, or 5.3%, over the prior year’s quarter. Consumer lending
revenue increased by C$3.7 million, or 9.4%, for the fiscal fourth
quarter, reflecting new customer growth from television advertising
campaigns in that market designed to highlight the Company’s
competitive pricing advantage to customers. Debit card sales in
Canada increased by 10.1% for the quarter, reflecting a renewed
focus on customer loyalty programs. The Company also restarted its
de novo store expansion program in Canada, opening 16 stores during
the fiscal fourth quarter ending June 30, 2011, and is planning to
open between 20 and 25 or more Canadian de novo stores in fiscal
year 2012. The Company operated 455 stores in Canada at June 30,
2011, and had another 22 franchised locations.
Sefina, the Scandinavian secured pawn lending business acquired
in December 2010, contributed $8.6 million of total revenue and
$3.5 million of adjusted EBITDA for the three months ended June 30,
2011. The pawn loan book for the 28 stores in Sweden and Finland,
which is primarily composed of loans on high carat weight gold and
high value jewelry, was $79.4 million at the end of the fiscal
fourth quarter. The Company expects to open eight additional pawn
lending stores in Sweden and Finland in fiscal 2012, which should
increase customer reach into new towns and territories, and also
enhance Sefina’s already strong brand awareness in the Scandinavian
market, which outside of Sefina is relegated to a few small pawn
store chains.
The Company’s consolidated loan loss provision, expressed as a
percentage of gross consumer lending revenue, was 18.0% for the
quarter ended June 30, 2011 compared to 18.4% for the three months
ended March 31, 2011. The loan loss provision includes a rapidly
growing proportion of internet-based loans in the United Kingdom
and Canada 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,
considering the recent addition of the leading internet lending
platforms in the United Kingdom (MEM) and Scandinavia (Risicum),
the Company expects that the consolidated loan loss provision,
expressed as a percentage of lending revenue, will increase
moderately on a quarterly basis as the global internet lending
portfolio grows, but with overall profit margins for the internet
lending business comparable to the existing store based businesses.
As a percentage of loan originations or loans written, the loan
loss provision for the quarter ended June 30, 2011 was 3.7%.
Fiscal 2011 Fourth Quarter Financial Results
For the three months ended June 30, 2011, the Company incurred
$1.1 million of net one-time gains, principally related to a $4.3
million net unrealized, non-cash mark-to-market valuation gain on
the Company’s debt and cross-currency interest rate swap agreements
partially offset by acquisition related expenditures. Including
these net one-time gains, income before income taxes on a GAAP
basis was $28.7 million for the quarter compared to income before
income taxes of $4.8 million for the fourth quarter of the previous
fiscal year. Also reflecting the net one-time gains, the effective
income tax rate for the three months ended June 30, 2011 was 37.6%,
resulting in reported net income of $17.9 million compared to a net
loss of $5.1 million for the fourth quarter of the previous fiscal
year. Diluted earnings per share on a GAAP basis was $0.40 for the
fiscal 2011 fourth quarter, compared to a loss per share of $0.14
for the fourth 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 $31.5 million for the quarter, an increase
of 67.6% compared to $18.8 million for the three months ended June
30, 2010. Considering the recent acquisition of the MEM business,
the effective income tax rate from operations for fiscal year 2011
was reduced to 35.0% resulting in pro forma net income of $20.5
million for the three months ended June 30, 2011 compared to $10.7
million for the prior year period. Diluted operating earnings per
share was $0.46 for the fiscal 2011 fourth quarter compared to
$0.28 for the fourth quarter of the previous fiscal year,
representing an increase of 64.3%. A table reconciling pro forma
income before income taxes and diluted operating earnings per share
to GAAP basis income before income taxes and GAAP basis diluted
earnings per share is included on page 12 of this News Release.
Company Liquidity
As of June 30, 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 June 30, 2011, the Company had drawn $65.9 million of its
$200.0 million global revolving credit facility. On April 13, 2011,
the Company closed on a public offering of 6,000,000 shares of
common stock, and including an additional 672,142 common shares
subsequently issued for over-allotments, yielded net proceeds of
approximately $130.2 million. The Company used the proceeds from
the equity offering to pay down a portion of the outstanding
borrowings on its global revolving credit facility, which was
initially used to fund a portion of the acquisition price of MEM.
Furthermore, as of June 30, 2011, the Company had drawn £5.4
million of its £7.0 million credit facility in the United Kingdom,
and had drawn SEK 274.0 million and EUR 16.6 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 2012 Outlook
Looking forward to fiscal 2012, Randy Underwood, the Company’s
Executive Vice President and CFO stated, “We continue to be excited
about the considerable growth opportunities we foresee for our
Company, from both our existing businesses and our recent
acquisitions. We expect to continue to acquire new businesses in
fiscal 2012, invest in new stores and new technologies, and enhance
the management infrastructure and technology platforms in both our
core businesses and 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 substantial
international financial results into U.S. Dollars per GAAP, as in
prior years we are initially providing a relatively wide guidance
range for fiscal 2012. This range should balance the significant
growth opportunities we believe exist in our current businesses
with the generally unpredictable fluctuations in currency exchange
rates, which could be either net favorable or unfavorable over the
remaining ten months of the current fiscal year.
For fiscal 2012, we are projecting revenue in excess of $1.0
billion and adjusted EBITDA of between $295.0 million and $310.0
million. Operating diluted earnings per share, which excludes any
one-time charges or gains that may occur, the non-cash impact of
ASC-470-20, and the non-cash amortization associated with the
legacy cross-currency interest rate swap agreements, is anticipated
to be between $2.00 and $2.15 per diluted share for fiscal 2012;
this considers an expected effective income tax rate from
operations of 34.0%. The anticipated improvement in the effective
income tax rate from operations for fiscal 2012 reflects a greater
mix of earnings outside the U.S. at lower statutory tax rates, as a
result of the recent acquisitions we have made in the United
Kingdom and Scandinavia.”
Investors Conference Call
The Company will be holding an investor’s conference call on
August 25, 2011 at 5:00 pm ET to discuss its results for the fiscal
fourth quarter and fiscal year ended June 30, 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
September 8, 2011. If you wish to listen to the replay of this
conference call, please dial (855) 859-2056 (U.S. and Canada) or
(404) 537-3406 (International) and enter passcode "87580352”.
The conference call will also be broadcast live through a link
on the Investor Relations page on the Company’s web site at
http://www.dfcglobalcorp.com or through the Company’s previous web
address 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 DFC Global Corp.
DFC Global Corp. is a leading international diversified
financial services company serving primarily unbanked and
under-banked consumers and small business owners 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. Through its nearly 1,300 retail
storefront locations, multiple Internet websites and mobile phone
and other remote platforms, the Company provides a variety of
consumer financial products and services in seven countries across
North America and Europe—Canada, the United Kingdom, the United
States, Sweden, Finland, Poland and the Republic of Ireland. The
Company believes that its customers, many of whom receive income on
an irregular basis or from multiple employers, are drawn to the
range of financial services it offers, the convenience of its
products, the multiple ways in which they may conduct business with
the Company and its high-quality customer service.
The Company’s products and services, principally its short-term
single-payment consumer loans, secured pawn loans, check cashing
services and gold buying services, provide customers with immediate
access to cash for living expenses or other needs. The Company
strives to offer its customers additional high-value ancillary
services, including Western Union® money order and money transfer
products, foreign currency exchange, reloadable VISA® and
MasterCard® prepaid debit cards and electronic tax filing. In
addition to its core retail products, the Company also provides
fee-based services in the United States 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 through the Company’s branded Military
Installment Loan and Education Services, or MILES®, program.
The Company’s networks of retail locations in Canada and the
United Kingdom are the largest of their kind by revenue in each of
those countries. The Company believes it is also the largest pawn
lender in Europe by revenue. At June 30, 2011, the Company’s global
retail operations consisted of 1,269 retail storefront locations,
of which 1,198 are company-owned financial services stores,
conducting business primarily under the names Money Mart®, The
Money Shop®, Insta-Cheques®, mce®, Suttons and Robertson®, The
Check Cashing Store®, Sefina®, Helsingin PanttiSM, Optima® and
MoneyNow!®. In addition to its retail stores, the Company also
offers Internet-based short-term single-payment consumer loans in
the United Kingdom primarily under the brand names Payday Express®
and PaydayUK®, in Canada under the Money Mart name, and Finland and
Sweden primarily under the Risicum® and OK Money® brand names. For
more information, please visit the Company's website at
www.dfcglobalcorp.com or through the Company’s previous web address
at www.dfg.com.
Forward-Looking Statements
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 regulatory environment in Canada,
the United Kingdom, the United States, Scandinavia 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 and equity financing
transactions; the results of certain ongoing income tax appeals;
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 and achieve anticipated synergies from 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.,
Scandinavia or other 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
one-time and non-cash charges and credits and adjusted for pro
forma effective income tax rates.
DFC GLOBAL CORP. UNAUDITED
CONSOLIDATED BALANCE SHEETS (In millions) June
30, June 30, 2010
2011 Assets: Cash and cash equivalents $ 291.3
$ 189.0 Consumer loans, net: Consumer loans 111.3 176.8 Less:
Allowance for loan losses (10.4 ) (14.9 ) Consumer
loans, net 100.9 161.9 Pawn loans 35.5 136.2 Loans in default, net
9.3 13.8 Prepaid expenses and other current assets 42.9 69.7
Deferred tax assets, net 23.6 21.3 Property and equipment, net 67.5
100.0 Goodwill and other intangibles, net 609.0 932.0 Debt issuance
costs, net and other assets 34.6 38.9
Total Assets $ 1,214.6 $ 1,662.8
Liabilities: Accounts and income taxes payable $ 51.0 $ 74.8
Accrued expenses and other liabilities 145.0 162.8 Fair value of
derivatives 47.4 73.9 Deferred tax liability 24.3 53.8 Revolving
credit facilities and other short-term debt 3.3 95.7 Total
long-term debt 725.3 775.2
Total
Liabilities 996.3 1,236.2
Stockholders' Equity: Additional paid-in capital 331.1 469.2
Accumulated deficit (115.5 ) (49.7 ) Accumulated other
comprehensive income 2.7 7.6 Total DFC
Global Corp. Stockholders' Equity 218.3 427.1 Non-controlling
interest - (0.5 ) Total Stockholders' Equity
218.3 426.6
Total Liabilities and
Stockholders' Equity $ 1,214.6 $ 1,662.8
DFC GLOBAL CORP. UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS (In millions except per share
amounts)
Three Months Ended Twelve Months Ended June
30, June 30, 2010
2011 2010 2011
Revenues: Fees from consumer lending $ 81.2 $ 137.2 $ 319.5
$ 429.2 Check cashing fees 35.9 35.4 149.5 144.1 Pawn service fees
and sales 6.6 17.9 19.9 48.0 Purchased gold sales 11.0 11.8 43.0
46.5 Money transfer fees 7.0 9.6 27.5 32.1 Other 22.1
22.0 73.9 88.5 Total
revenues 163.8 233.9 633.3
788.4 Operating expenses: Salaries and
benefits 39.7 50.2 154.0 179.9 Provision for loan losses 11.3 24.7
45.9 73.6 Occupancy costs 10.6 14.1 43.3 51.0 Advertising 4.7 10.0
16.7 27.1 Depreciation 3.4 5.0 14.3 16.8 Bank charges and armored
carrier services 3.5 4.8 13.9 16.6 Maintenance and repairs 3.1 3.9
11.9 14.5 COGS - purchased gold 7.8 8.6 30.4 31.0 Other 13.9
20.8 56.6 70.7
Total operating expenses 98.0 142.1
387.0 481.2 Operating margin
65.8 91.8 246.3 307.2
Corporate and other expenses: Corporate expenses 21.4
29.5 86.8 104.1 Interest expense, net 22.5 24.3 68.9 90.8 Other
depreciation and amortization 2.6 6.0 7.3 14.6 Unrealized foreign
exchange (gain) loss 21.9 (4.5 ) 10.1 (47.0 ) (Gain) loss on
derivatives not designated as hedges (9.0 ) 5.1 12.9 39.3 Loss on
extinguishment of debt - - 9.5 - Reserve for (proceeds from)
litigation settlements 1.2 0.1 29.1 (3.7 ) Loss on store closings
and other 0.4 2.6 5.2
6.2 Income (loss) before income taxes (incl.
non-controlling interest) 4.8 28.7 16.5 102.9 Income tax provision
9.9 10.8 21.4 37.1
Net income (loss) $ (5.1 ) $ 17.9 $ (4.9 ) $ 65.8
Net income per share Basic ($0.14 ) $ 0.42
($0.14 ) $ 1.73 Diluted ($0.14 ) $ 0.40 ($0.14 ) $ 1.66
Weighted average shares outstanding Basic 36.4 42.5 36.2 38.0
Diluted 36.4 44.9 36.2 39.8
Pro forma Net Income Reconciliation
Pro forma net income is not an item prepared in accordance with
GAAP. The Company defines pro forma net income as net income
adjusted to exclude one-time and non-cash charges and credits as
described below, and diluted operating earnings per share as pro
forma net income divided by weighted average diluted shares
outstanding. The Company presents pro forma net income and diluted
operating earnings per share as indications 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 or diluted operating earnings per
share 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) and
diluted operating earnings per share:
DFC GLOBAL CORP. PRO FORMA NET INCOME (excluding
one-time items & effects of ASC 470-20) (In millions
except per share amounts)
Three Months Ended Twelve Months Ended June
30, June 30, 2010
2011 2010 2011
Income before income taxes (incl. non-controlling
interest) $ 4.8 $ 28.7 $ 16.5 $ 102.9 Pro forma adjustments:
Non-cash interest on convertible debt (ASC 470-20) 2.0 2.2 8.9 8.4
Unrealized foreign exchange (gain) loss 21.9 (4.5 ) 10.1 (47.0 )
Non-cash impact of hedge ineffectiveness (13.5 ) 0.2 3.6 20.7
Cross-currency swap amortization 1.8 1.7 4.2 6.5 Loss on
extinguishment of debt - - 9.5 - Reserve for (proceeds from)
litigation settlements 1.2 0.1 29.1 (3.7 ) Acquisition costs
expensed 0.4 3.7 2.8 8.7 Loss on store closings and other
0.2 (0.6 ) 3.4 0.5 Pro
forma income before income taxes 18.8 31.5 88.1 97.0 Pro forma
income taxes (43% for 2010; 35% for 2011) 8.1
11.0 37.9 33.9 Pro forma net
income $ 10.7 $ 20.5 $ 50.2 $ 63.1
Weighted average diluted shares outstanding
37.6 44.9 37.2 39.8
Diluted operating earnings per share $ 0.28 $
0.46 $ 1.35 $ 1.59 Diluted GAAP
earnings per share $ (0.14 ) $ 0.40 $ (0.14 ) $ 1.66
Adjusted EBITDA Reconciliation
Adjusted EBITDA is not a financial measure prepared in
accordance with GAAP. The Company defines Adjusted EBITDA as
earnings before interest expense, income tax provision,
depreciation and amortization, stock-based compensation expense,
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 Twelve
Months Ended June 30, June 30, 2010
2011 2010
2011 Income (loss) before income taxes
(incl. non-controlling interest) $ 4.8 $ 28.7 $ 16.5 $ 102.9
Add: Depreciation and amortization 6.0 11.0 21.6 31.4 Interest
expense, net 22.5 24.3 68.9 90.8 Stock based compensation expense
1.9 1.8 7.6 7.7 Unrealized foreign exchange (gain) loss 21.9 (4.5 )
10.1 (47.0 ) (Gain) loss on derivatives not designated as hedges
(9.0 ) 5.1 12.9 39.3 Loss on extinguishment of debt - - 9.5 -
Reserve for (proceeds from) litigation settlements 1.2 0.1 29.1
(3.7 ) Acquisition costs expensed 0.4 3.7 2.8 8.7 Loss on store
closings and other 0.3 (0.8 ) 3.2
0.1 Adjusted EBITDA $ 50.0 $ 69.4 $
182.2 $ 230.2
DFC GLOBAL CORP.
UNAUDITED STORE DATA
Three Months Ended Twelve Months Ended June
30, June 30, 2010 2011 2010
2011 Beginning Company-Operated Stores United States
348 317 358 325 Canada 398 419 399 403 United Kingdom 308 379 274
330 Poland 0 1 0 0 Sweden 0 16 0 0 Finland 0 12 0 0 Total Beginning
Company-Operated Stores 1,054 1,144 1,031 1,058
De novo
Store Builds United States 0 0 0 0 Canada 5 16 6 16 United
Kingdom 18 19 50 69 Poland 0 2 0 3 Sweden 0 0 0 0 Finland 0 0 0 0
Total 23 37 56 88
Acquired Stores United States 0 0 0
0 Canada 0 21 0 40 United Kingdom 4 2 7 3 Poland 0 0 0 0 Sweden 0 0
0 16 Finland 0 0 0 12 Total 4 23 7 71
Closed Stores
United States 23 5 33 13 Canada 0 1 2 4 United Kingdom 0 0 1 2
Poland 0 0 0 0 Sweden 0 0 0 0 Finland 0 0 0 0 Total 23 6 36 19
Ending Company-Operated Stores United States 325 312
325 312 Canada 403 455 403 455 United Kingdom 330 400 330 400
Poland 0 3 0 3 Sweden 0 16 0 16 Finland 0 12 0 12
Total Ending
Company-Operated Stores 1,058 1,198 1,058
1,198 Ending Franchise/Agent Stores U.S. 7 0 7
0 Canada 62 22 62 22 U.K. 53 49 53 49
Total Ending
Franchise/Agent Stores 122 71 122
71 Total Ending Store Count 1,180
1,269 1,180 1,269
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