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 second quarter ended December 31, 2010.
Fiscal 2011 Second Quarter Highlights
- Consolidated total revenue grew to a
record $182.5 million for the quarter, an increase of $21.8
million, or 13.6%, compared to the prior year period. On a constant
currency basis, total consolidated revenue increased by $21.0
million, or 13.1%.
- Total consolidated operating margin
increased by $9.3 million, or 15.3%, for the quarter on total
revenue growth of 13.6%, 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 $52.9 million for the three months ended December 31, 2010,
representing an increase of $9.8 million, or 22.7%, compared to the
prior year’s quarter, while also increasing by $9.0 million or
20.9% on a constant currency basis for the same period.
- The consolidated loan loss provision,
expressed as a percentage of gross consumer lending revenue,
increased moderately to 16.6% for the quarter compared to 15.4% for
the second quarter of the previous fiscal year, as expected due to
a growing mix of internet-based loans.
- Fully-diluted operating earnings per
share was $0.53 for the fiscal 2011 second quarter compared to the
consensus estimate of $0.51 per fully-diluted share. These per
share amounts are prior to giving effect to the Company’s
three-for-two stock split (in the form of a stock dividend) to be
effected on February 4, 2011.
Discussion on Presentation of Information
During the three months ended December 31, 2010, the average
value of the Canadian Dollar increased approximately 4%, while the
average value of the British Pound Sterling decreased by about 3%,
relative to the U.S. currency, as compared to the second quarter of
the previous fiscal year. Consequently, fluctuations in currency
rates had only a slight affect on a net basis on year-over-year
comparisons of the Company’s consolidated financial results;
nevertheless, the Company is providing some country comparisons on
a constant currency basis.
Fiscal 2011 Second Quarter Overview
Commenting on the second quarter, Jeff Weiss, the Company’s
Chairman and Chief Executive Officer, stated, “We are pleased to
report another record quarter driven by strong revenue growth in
all of our core markets, and the successful execution of our
business diversification strategy, as a number of new products,
geographies, and sales channels continue to substantially
contribute to our financial results. Total consolidated revenue for
the three months ended December 31, 2010 was a record $182.5
million, representing growth of $21.8 million or 13.6% over the
prior year’s quarter, while total adjusted EBITDA was a record
$52.9 million, increasing by $9.8 million, or 22.7%, over the
second 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. On December 31, 2010, we announced the
completion of the acquisition of Sefina Finance AB, a leading
Scandinavian pawn lending business with headquarters in Stockholm,
Sweden. Sefina, which has more than a 125 year operating history,
is the market leader in the region providing pawn loans primarily
secured by gold jewelry, diamonds and watches, through its 16 store
locations in Sweden and 12 stores in Finland. Sweden and Finland
are two markets which have long-standing and highly developed
regulations for the pawn lending industry. Secured pawn lending
continues to be a rapidly growing segment of our diversified global
enterprise as it is a widely accepted vehicle for providing loans
to the ever increasing numbers of unbanked and under-banked
consumers around the world. In concert with our recent acquisitions
of the “Suttons and Robertsons” and “Robert Biggar” pawn store
chains in England and Scotland, and the significant growth of the
pawn lending business in our company-operated financial services
stores in the United Kingdom, the acquisition of Sefina is an
important step towards achieving the Company’s strategy to be the
leading secured pawn lender in Europe.
“On December 31, 2010, we also announced an agreement to acquire
Purpose U.K. Holdings Limited, the parent company of Month End
Money (MEM), a leading provider of online short-term loans in the
United Kingdom. MEM, which was established in 2003, operates under
the brand name PaydayUK and is a market leader in the region,
providing loans through both internet and telephony-based
technologies throughout the United Kingdom. The completion of the
acquisition, which is contingent upon several closing conditions,
including regulatory approvals and obtaining sufficient financing
for the transaction, will solidify our position as a leading
provider of internet loans in the United Kingdom. The acquisition
of MEM is a great fit for our Company, with a scalable technology
platform, and a solid management team with strong business acumen
and industry expertise, combined with the strength of our existing
corporate credit analytics group. We look forward to leveraging
this acquisition for the future expansion of our global internet
lending platform within the United Kingdom, as well as other
countries in Europe, and in Canada. Furthermore, we have
experienced very little cannibalization of our store-based business
from our existing internet sales channel in both the U.K. and
Canada. We believe this signifies that the expansion of our
internet platform is also allowing us to reach a new customer
demographic in the market place.
“We believe that one of the most efficient and cost-effective
ways to expand our global reach to additional countries is through
an internet-based product delivery platform. This will allow us to
enter new markets without having to construct an expensive “bricks
and mortar” store foundation to test and launch our products in
these new markets. Furthermore, we believe the ever growing
consumer awareness and advancement of eCommerce technology
throughout the world will result in a continual migration of our
customers towards a preference for quick and easy web or
telephony-based financial transactions. As such, in order to
maintain our position as a leading global provider of financial
services to the unbanked and under-banked consumers, we need to be
on the leading edge of this technological revolution. Therefore,
for the last year, we have been making additional investments in
our information technology and eCommerce departments to construct a
global internet platform to launch our products into additional
countries and meet the growing demand from our customers for this
type of service. I believe this is one of the most compelling
long-term opportunities benefitting our Company, and the
acquisition of MEM and its Payday UK brand provides an additional
framework to leverage and build this global platform.”
Jeff Weiss concluded, “There appears to be a significant
on-going shift within the more developed economies of the world
towards service sector employment and lower paying jobs, as
manufacturing and some other higher paying occupations are
off-shored to developing countries where labor is less expensive.
As a result, the average wage rate for what we call the ALICE
(Asset Limited Income Constrained Employed) demographic is
shrinking against the rising tide of higher costs for food,
gasoline, health care and other basic necessities. In such an
economy, where the margin between personal income and the cost of
living is continually narrowing, our products and services can
provide a real benefit for consumers and small business owners who
may be confronted from time-to-time by an unexpected auto repair
bill or medical expense, or the need to replace broken or obsolete
equipment in order to keep their small businesses operating. The
number of ALICE people are increasing all around the globe, and we
are squarely focused on expanding our set of products and services
in existing and new markets to meet their growing financial
services needs.”
Second Quarter Business Update
In Canada, total consolidated revenue increased by C$5.7
million, or 7.8%, over the prior year’s quarter. Consumer lending
revenue increased by C$3.3 million, or 8.2%, for the fiscal second
quarter, reflecting in part new customer growth from renewed
television advertising campaigns in that market. The Company
continues to gradually test and expand its internet based lending
product in the provinces of Ontario and Alberta, and expects to
expand this product into additional territories in Canada in the
future following the successful launch in these markets.
Furthermore, the Company’s gold purchase product in Canada, which
it launched last fiscal year, contributed C$4.3 million of total
revenue during the quarter. As the newly established regulatory
environment provides the needed clarity for a more rapid expansion
of the Canadian market, the Company is embarking on a program that
it believes will ensure that all attractive urban and rural markets
in Canada will be fully developed over the next several years
through a combination of de novo store openings and the acquisition
of customer lists, competitor and franchisee stores. Accordingly,
the Company acquired nineteen franchise stores in the provinces of
Alberta and Quebec during the quarter.
Total consolidated revenue in the U.K. increased by £7.8
million, or 22.9%, compared to the three months ended December 31,
2009. Consumer lending revenue grew by £8.5 million for the quarter
compared to the second quarter of the prior fiscal year, reflecting
strong performance from the internet lending business and also the
continued robust performance of the “bricks and mortar” store based
business. U.K. consumer lending same store sales, which considers
stores that were open for at least fifteen months, increased by
24.7% for the quarter. The internet lending business in the U.K.
also continued to grow robustly, contributing £8.5 million of total
revenue during the quarter ended December 31, 2010 compared to £4.0
million for the prior year’s quarter. The credit performance of the
internet lending portfolio continues to be in line with
expectations and is being continually bolstered by the
implementation of new credit decisioning models currently being
refined by the Company’s global credit analytics group. The U.K.
pawn lending business contributed £4.6 million of total revenue for
the quarter, representing growth of 64.3% over the prior year’s
quarter. Through the first six months of the fiscal year, the
Company has opened 30 de novo stores in the United Kingdom, and now
operates 359 company-operated stores in that market. The Company
expects to open an additional 40 - 45 de novo stores in the U. K.
during the second half of its fiscal year ending June 30, 2011.
The Polish business unit contributed $2.4 million of total
revenue during the quarter as the Company continued to invest in
the technology and management infrastructure necessary to position
the Polish business for further geographic expansion within Poland.
In addition, the Company recently opened its first gold buying
pilot store in Gdansk in September 2010, which also offers pawn
lending, foreign exchange and money transfer services. The
multi-product retail financial services store concept is relatively
new to the Polish market, and the Company believes it can grow
consumer awareness of this store concept with focused local area
marketing strategies. The Company expects to open additional
company-operated stores in Poland following the successful test of
this pilot store.
Second Quarter Financial Results
On January 10, 2011, the Company announced that it had approved
a three-for-two split of its common stock. The Company’s Board of
Directors authorized the stock split principally to obtain wider
distribution and greater liquidity for the Company’s common stock.
Stockholders of record as of the close of business on January 20,
2011 will be issued one-half additional share for each share of
common stock held on the record date. It is expected that these
additional shares will be distributed on February 4, 2011. For
comparative purposes, the Company has included in this news release
earnings per share and share amounts both before and after giving
effect to the stock split.
For the three months ended December 31, 2010, the Company
incurred $12.8 million of net one-time gains, principally related
to a $11.7 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 $30.5 million for the
quarter compared to $13.0 million for the second quarter of the
previous fiscal year. Also reflecting the net one-time gains, the
effective income tax rate for the three months ended December 31,
2010 was 34.4%, resulting in reported net income of $20.0 million
compared to $7.1 million for the second quarter of the previous
fiscal year. Prior to giving effect to the three-for-two stock
split, fully-diluted earnings per share on a GAAP basis was $0.79
for the fiscal 2011 second quarter compared to $0.29 for the second
quarter of the previous fiscal year. Fully-diluted earnings per
share on a GAAP basis, retroactively adjusted to give effect to the
stock split, was $0.53 and $0.19 for the second quarters of fiscal
2011 and fiscal 2010, respectively.
The financial results for the quarter, as compared to the prior
year’s quarter, include additional interest expense associated with
the Company’s $600.0 million senior note offering completed in
December 2009. The Company expects that this interest expense will
be mitigated in future quarters by the expected accretion of the
recently completed acquisition of Sefina and the pending
acquisition of MEM. Including the pending acquisition of MEM, all
of the net proceeds from the December 2009 senior note offering
will have been deployed, either in the pay-down of outstanding debt
earlier this year, or in the execution of the Company’s acquisition
strategy.
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 $21.4 million for the quarter, compared to
$25.7 million for the three months ended December 31, 2009. Pro
forma net income, assuming a pro forma effective income tax rate
from operations of 37.0% for the fiscal 2011 quarter, was $13.5
million compared to $14.6 million for the prior year period.
Correspondingly, prior to giving effect to the three-for-two stock
split, fully-diluted operating earnings per share was $0.53 for the
fiscal 2011 second quarter compared to $0.59 for the second quarter
of the previous fiscal year. Fully-diluted operating earnings per
share, retroactively adjusted to give effect to the stock split was
$0.36 and $0.39 for the second quarter of fiscal 2011 and fiscal
2010, respectively. A table reconciling pro forma income before
income taxes to the GAAP basis income before income taxes, both
before and after giving effect to the stock split, is included on
page 11 of this News Release.
Company Liquidity
As of December 31, 2010, 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 issued $600.0 million of
senior unsecured notes which are not due until December 2016. Thus,
the Company has no mandatory debt principal repayment obligations
until the first potential put date of December 2012 for the $44.8
million tranche of U.S. senior convertible notes. Furthermore, as
of December 31, 2010, the Company had not drawn on its $75.0
million U.S. revolving credit facility and its C$28.5 million
Canadian revolving credit facility. The Company had drawn £5.8
million of its £7.0 million of total credit facilities in the
United Kingdom, as of December 31, 2010, in order to fund the
working capital needs of the business. As a result of the recent
acquisition of Sefina, the Company assumed $61.8 million of
borrowings under Sefina’s revolving credit facilities as of
December 31, 2010, which are provided by several Scandinavian banks
and are secured by the value of Sefina’s pawn pledge stock. In
addition, the closing of the MEM acquisition is contingent upon
several closing conditions, including obtaining sufficient
financing for the transaction.
Fiscal Year 2011 Outlook
Considering the expected earnings contribution from the recent
acquisition of Sefina, and the costs incurred for the additional
investments the Company is making in its business this fiscal year
to support its rapid global business expansion, integration of
recent acquisitions, and development of a global eCommerce
platform, the Company is increasing its earnings guidance for the
fiscal year ending June 30, 2011, and now anticipates adjusted
EBITDA of between $215.0 million and $220.0 million versus
previously issued guidance of between $205.0 million and $215.0
million. Operating fully-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, is now projected to
be between $2.20 and $2.32 per fully-diluted share versus
previously issued guidance of between $2.05 and $2.30 per fully
diluted share, prior to giving effect to the Company’s pending
three-for-two stock split. After giving effect to the stock split,
the Company’s revised operating earnings per share guidance equates
to between $1.47 and $1.55 per fully-diluted share. As previously
disclosed by the Company, this guidance range reflects an expected
effective income tax rate from operations of 37%. The Company’s
fiscal 2011 guidance does not currently include the expected
earnings contribution of the pending MEM acquisition.
Investors Conference Call
Dollar Financial Corp will be holding an investor’s conference
call on January 27, 2011 at 5:00 pm ET to discuss the Company’s
results for the fiscal second quarter ended December 31, 2010.
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 February 10, 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 "36425943.”
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 December 31, 2010, the Company’s global retail operations
consisted of 1,226 locations, including 1,126 company-operated
financial services stores and 100 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; 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; expected financing initiatives; stock splits; 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, December 31, 2010 2010
Assets: Cash and cash equivalents $ 291.3 $ 170.4 Consumer
loans, net: Consumer loans 111.3 133.4 Less: Allowance for loan
losses (10.4 ) (11.4 ) Consumer loans, net 100.9
122.0 Pawn loans 35.5 113.4 Loans in default, net 9.3 12.0 Prepaid
expenses and other current assets 42.9 67.7 Deferred tax assets,
net 23.6 19.2 Property and equipment, net 67.5 81.5 Goodwill and
other intangibles, net 609.0 716.8 Debt issuance costs, net and
other assets 34.6 36.7
Total
Assets $ 1,214.6 $ 1,339.7
Liabilities: Accounts and income taxes payable $ 51.0 $ 39.5
Accrued expenses and other liabilities 145.0 157.3 Fair value of
derivatives 47.4 66.8 Deferred tax liability 24.3 29.2 Revolving
credit facilities and other short-term debt 3.3 7.8 Total long-term
debt 725.3 787.2
Total
Liabilities 996.3 1,087.8
Stockholders' Equity: Additional paid-in capital 331.1 334.6
Accumulated deficit (115.5 ) (83.2 ) Accumulated other
comprehensive income 2.7 0.9 Total
Dollar Financial Corp. Stockholders' Equity 218.3 252.3
Non-controlling interest - (0.4 ) Total
Stockholders' Equity 218.3 251.9
Total Liabilities and Stockholders' Equity $ 1,214.6
$ 1,339.7
DOLLAR FINANCIAL CORP UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS (In millions except
per share amounts) Three Months Ended
Six Months Ended December 31,
December 31, 2009 2010 2009
2010 Revenues: Fees from consumer lending $ 82.7 $
99.3 $ 160.2 $ 191.3 Check cashing 38.5 36.8 76.3 72.0 Money
transfer fees 7.1 7.9 13.9 15.1 Pawn service fees and sales 4.7 7.3
8.5 13.5 Purchased gold sales 13.2 11.3 19.0 22.4 Other 14.5
19.9 28.3 42.4
Total revenues 160.7 182.5 306.2
356.7 Operating expenses: Salaries and
benefits 37.7 42.8 74.5 83.5 Provision for loan losses 12.7 16.5
24.4 30.4 Occupancy costs 10.8 12.0 21.7 23.6 Advertising 4.7 5.9
8.1 11.7 Depreciation 4.1 3.9 7.4 7.5 Bank charges and armored
carrier services 3.5 3.9 6.9 7.7 Maintenance and repairs 2.9 3.2
5.7 6.5 COGS - purchased gold 9.2 7.2 13.4 14.9 Other 14.5
17.2 27.6 32.6
Total operating expenses 100.1 112.6
189.7 218.4 Operating margin
60.6 69.9 116.5 138.3
Corporate and other expenses: Corporate expenses 22.9
23.9 43.3 49.4 Interest expense, net 12.8 21.9 24.5 43.5 Other
depreciation and amortization 1.1 2.8 2.2 5.5 Unrealized foreign
exchange (gain) loss (3.9 ) (17.8 ) 3.9 (32.4 ) (Gain) loss on
derivatives not designated as hedges 3.3 10.8 3.3 24.6 Loss on
extinguishment of debt 8.8 - 8.8 - Reserve for (proceeds from)
litigation settlements - (4.1 ) 1.3 (3.9 ) Loss on store closings
and other 2.6 1.9 2.9
2.7 Income before income taxes (incl. non-controlling
interest) 13.0 30.5 26.3 48.9 Income tax provision 5.9
10.5 13.9 16.6 Net
income $ 7.1 $ 20.0 $ 12.4 $ 32.3
Per share and share amounts prior to retroactive
adjustment for three-for-two stock split: Net income per share
Basic $ 0.30 $ 0.82 $ 0.52 $ 1.33 Diluted $ 0.29 $ 0.79 $ 0.50 $
1.29 Weighted average shares outstanding Basic 24.0 24.3
24.0 24.3 Diluted 24.8 25.3 24.7 25.1
Per share
and share amounts retroactively adjusted for three-for-two stock
split: Net income per share Basic $ 0.20 $ 0.55 $ 0.34 $ 0.89
Diluted $ 0.19 $ 0.53 $ 0.34 $ 0.86 Weighted average shares
outstanding Basic 36.1 36.5 36.0 36.4 Diluted 37.3 37.9 37.0 37.6
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 Six Months Ended December
31, December 31, 2009 2010
2009 2010 Income before income taxes
(incl. non-controlling interest) $ 13.0 $ 30.5 $ 26.3 $ 48.9
Pro forma adjustments: Non-cash interest on convertible debt (ASC
470-20) 2.4 2.1 4.8 4.1 Unrealized foreign exchange (gain) loss
(3.9 ) (17.8 ) 3.9 (32.4 ) Non-cash impact of hedge ineffectiveness
2.9 6.1 2.9 15.6 Cross-currency swap amortization 0.5 1.6 0.9 3.2
Loss on extinguishment of debt 8.8 - 8.8 - Reserve for (proceeds
from) litigation settlements - (4.1 ) 1.3 (3.9 ) Acquisition costs
expensed 0.7 2.7 1.0 3.7 Loss on store closings and other
1.3 0.3 1.6 0.6
Pro forma income before income taxes 25.7 21.4 51.5 39.8 Pro forma
income taxes (43% for 2009; 37% for 2010) 11.1
7.9 22.1 14.7 Pro forma net
income $ 14.6 $ 13.5 $ 29.4 $ 25.1
Per share and share amounts prior to retroactive
adjustment for three-for-two stock split: Weighted
average fully-diluted shares outstanding 24.8
25.3 24.7 25.1
Fully-diluted operating earnings per share $ 0.59 $ 0.53
$ 1.19 $ 1.00 Fully-diluted GAAP
earnings per share $ 0.29 $ 0.79 $ 0.50 $ 1.29
Per share and share amounts retroactively
adjusted for three-for-two stock split: Weighted
average fully-diluted shares outstanding 37.3
37.9 37.0 37.6
Fully-diluted operating earnings per share $ 0.39 $ 0.36
$ 0.79 $ 0.67 Fully-diluted GAAP
earnings per share $ 0.19 $ 0.53 $ 0.34 $ 0.86
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 Six Months
Ended December 31, December 31, 2009
2010 2009 2010 Income
before income taxes (incl. non-controlling interest) $ 13.0 $ 30.5
$ 26.3 $ 48.9 Add: Depreciation and amortization 5.2 6.7 9.6
13.0 Interest expense, net 12.8 21.9 24.5 43.5 Stock based
compensation expense 1.9 1.9 3.8 4.0 Unrealized foreign exchange
(gain) loss (3.9 ) (17.8 ) 3.9 (32.4 ) (Gain) loss on derivatives
not designated as hedges 3.3 10.8 3.3 24.6 Loss on extinguishment
of debt 8.8 - 8.8 - Reserve for (proceeds from) litigation
settlements - (4.1 ) 1.3 (3.9 ) Acquisition costs expensed 0.7 2.7
1.0 3.7 Loss on store closings and other 1.3
0.3 1.6 0.6 Adjusted EBITDA $
43.1 $ 52.9 $ 84.1 $ 102.0
DOLLAR FINANCIAL CORP UNAUDITED STORE DATA
Three Months Ended Six Months
Ended December 31, December 31, 2009
2010 2009 2010 Beginning
Company-Operated Stores United States 352 321 358 325 Canada
399 403 399 403 United Kingdom 281 342 274 330 Poland 0 1 0 0
Sweden 0 0 0 0 Finland 0 0 0 0 Total
Beginning Company-Operated Stores 1,032 1,067 1,031
1,058
De novo Store Builds United
States 0 0 0 0 Canada 0 0 1 0 United Kingdom 11 16 19 30 Poland 0 0
0 1 Sweden 0 0 0 0 Finland 0 0 0 0
Total 11 16 20 31
Acquired
Stores United States 0 0 0 0 Canada 0 19 0 19 United Kingdom 3
1 3 1 Poland 0 0 0 0 Sweden 0 16 0 16 Finland 0 12 0
12 Total 3 48 3 48
Closed Stores United States 2 2 8 6 Canada 1 3 2 3 United
Kingdom 0 0 1 2 Poland 0 0 0 0 Sweden 0 0 0 0 Finland 0 0
0 0 Total 3 5 11 11
Ending Company-Operated Stores United States
350 319 350 319 Canada 398 419 398 419 United Kingdom 295 359 295
359 Poland 0 1 0 1 Sweden 0 16 0 16 Finland 0 12 0
12
Total Ending Company-Operated Stores
1,043 1,126 1,043
1,126 Ending Franchise/Agent Stores
U.S. 14 0 14 0 Canada 62 43 62 43 U.K. 53 57 53
57
Total Ending Franchise/Agent Stores
129 100 129 100
Total Ending Store Count 1,172
1,226 1,172 1,226
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