DFC Global 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, 2012.
Fiscal 2012 Third Quarter Highlights
- Total consolidated revenue grew to a
record $270.0 million for the quarter, an increase of $72.2
million, or 36.5%, compared to the three months ended March 31,
2011. On a constant currency basis, total consolidated revenue
increased by $77.3 million, or 39.1%.
- Total consumer lending revenue
increased to $163.0 million for the quarter, representing an
increase of $62.3 million, or 61.9%, compared to the prior year’s
quarter. Revenue from internet-based loans grew to $67.2 million
for the quarter compared to $15.2 million for the three months
ended March 31, 2011.
- Total revenue from pawn lending
increased to $21.0 million for the three months ended March 31,
2012 compared to $16.6 million for the prior year’s quarter. Pawn
lending represented 7.8% of total consolidated revenue for the
three months ended March 31, 2012.
- Consolidated adjusted EBITDA was a
record $76.7 million for the three months ended March 31, 2012,
representing an increase of $17.8 million, or 30.2%, compared to
the prior year’s quarter, while also increasing by $19.3 million,
or 32.7%, on a constant currency basis during the same period.
- Diluted operating earnings per share
was a record $0.53 for the fiscal 2012 third quarter compared to
$0.43 for the third quarter of the prior fiscal year, representing
an increase of 23.3%.
Discussion on Presentation of Information
The average value of the U.S. Dollar strengthened in relation to
the Canadian Dollar and British Pound Sterling during the quarter,
as compared to the prior year period, with the average values of
both the Canadian and British currencies decreasing approximately
2% relative to the U.S. Dollar. Consequently, fluctuations in
currency rates had an unfavorable impact on year-over-year
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 2012 Third Quarter Overview
Commenting on the third quarter, Jeff Weiss, the Company’s
Chairman and Chief Executive Officer, stated, “I am pleased to
announce another quarter of record results for our Company driven
by the solid execution of our long-term strategy to diversify and
expand our multi-country, multi-product and multi-platform
business. Total consolidated revenue for the quarter increased by
36.5% to a record $270.0 million, while total adjusted EBITDA
increased by 30.2% to a record $76.7 million. As a result of our
successful diversification strategy, revenue derived from new
products and geographies accounted for approximately 40.0% of our
total consolidated revenue this quarter. Internet lending, which is
our fastest growing product, generated a combined $67.2 million of
revenue for the quarter compared to $15.2 million for the three
months ended March 31, 2011. Secured pawn lending, another primary
area of focus for us, contributed $21.0 million of revenue during
the quarter growing by 26.5% when compared to the three months
ended March 31, 2011.”
Jeff Weiss continued, “Consistent with our global growth and
diversification strategy, we recently completed a number of product
launches and acquisitions over the past several months. In February
2012, we launched an internet loan product in Poland, which
leverages the scalable technology platform and back-office support
capabilities of Risicum, our Scandinavian internet lending business
based in Helsinki, Finland. Poland represents a market of
approximately 40 million people, many of whom are employed in
service sector and manufacturing industries, which fall squarely in
our target ALICE (Asset Limited, Income Constrained, Employed)
customer demographic. The internet lending product nicely
complements the in-home lending and multi-product store-based
businesses we are simultaneously expanding in Poland. We expect to
further extend the Risicum internet platform to other countries in
Europe in the near future.
On March 19th, we announced the acquisition of Super Efectivo, a
Spanish pawn lending business. Super Efectivo S.L., founded in
2006, operates a chain of eight stores predominantly in Madrid. The
acquired stores principally offer pawn lending on gold jewelry and
also gold buying services. With a population of 47 million people,
the majority of which work in the service sector, the Spanish
market nicely fits with our target ALICE and ARTI (Asset Rich,
Temporarily Illiquid) demographics. Pawn lending has a very long
tradition in Spain as a primary source of credit for a variety of
socio-economic groups, where it is fairly typical for people to
pawn their gold jewelry, diamonds, and watches in order to
supplement short-term credit needs, and then redeem the pawned
items when the line of credit is no longer needed. The pawn lending
industry in Spain and much of Europe is very fragmented and mainly
composed of small store chain establishments, and this acquisition
provides an initial entry point into the Spanish market with the
opportunity to further expand our presence through additional store
acquisitions supplemented with de novo store development.”
Jeff Weiss concluded, “It continues to be our mission to be the
leading global provider of diversified financial services to the
ALICE and ARTI demographics. As a growth company, we are focused on
expanding our set of products and services and investing in new
markets, while continuing to expand the breadth and capabilities of
our management team and information systems to support this
long-term strategy. Over the near term, our growth strategy will be
driven by three principal components. First, we intend to continue
opening de novo stores in the United Kingdom, which has the least
number of retail financial services stores in relation to the
under-banked population as compared to the U.S. and Canada. Second,
we look to further extend our two existing internet lending
platforms into new countries, in order to access the growing ALICE
demographic in those markets. Lastly, we plan to continue acquiring
small pawn lending chains in select European countries augmented by
de novo stores, to bolster our position as the leading pawn lender
to the ALICE and ARTI populations in Europe. The Company’s recent
$230.0 million convertible note offering provides additional
capital to continue executing on this strategy and to act on
opportunities in our robust acquisition pipeline.”
Fiscal 2012 Third Quarter Business Update
Total consolidated revenue in the United Kingdom increased by
£39.1 million, or 88.3%, for the quarter compared to the three
months ended March 31, 2011. Consumer lending revenue grew by £32.3
million, or 124.4%, for the three months ended March 31, 2012,
compared to the third 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 its
store-based business. Same store sales in the United Kingdom with
respect to consumer lending, which considers stores that were open
for at least fifteen months, increased by 22.7% in the third
quarter. Revenue from internet lending in the United Kingdom, which
includes the acquisition of the MEM internet lending business in
April 2011, increased to £36.2 million for the quarter ended March
31, 2012, compared to £9.4 million for the prior year’s fiscal
third quarter. The U.K. pawn lending business contributed £7.3
million of total revenue for the quarter, representing growth of
42.4% over the prior year period. During the quarter, the Company
opened 24 new stores in the United Kingdom, which amounts to 81 new
store openings over the past twelve months.
Total consolidated revenue in Canada increased by C$3.6 million,
or 4.7%, over the prior year’s quarter. Total consumer lending
revenue increased by C$2.6 million, or 6.3%, during the fiscal
third quarter. The newly developed internet lending channel in
Canada generated C$1.4 million of total revenue for the quarter,
which the Company anticipates will increase each successive quarter
as it further expands this product into additional provinces.
With respect to Scandinavia, the Sefina pawn lending business
contributed $9.5 million of total revenue for the three months
ended March 31, 2012 compared to $8.4 million for the third quarter
of the prior fiscal year. Risicum, the internet and telephony based
lending business operating in Sweden and Finland, which the Company
acquired in July 2011, contributed $8.9 million of revenue during
the quarter.
The consolidated loan loss provision, expressed as a percentage
of gross consumer lending revenue, was 20.6% for the quarter ended
March 31, 2012 compared to 19.7% for the three months ended
December 31, 2011, and represents an aggregation of both
store-based loans and a rapidly growing proportion of internet
loans in the United Kingdom, Scandinavia, Canada and Poland.
Looking to the future, and considering the anticipated continued
growth of the Company’s global internet lending business in
relation to its store-based businesses, the Company expects the
consolidated loan loss provision, expressed as a percentage of
lending revenue, to increase moderately on a quarterly basis, but
with overall profit margins for the internet lending business
comparable to the existing store-based businesses. As a percentage
of loan originations or principal lent, the consolidated loan loss
provision for the quarter ended March 31, 2012 was 4.6%. As always,
the Company is prepared to tighten or moderately loosen its lending
criteria if the global economies deteriorate or expand,
respectively, as it has successfully done in previous years.
Fiscal 2012 Third Quarter Financial Results
For the three months ended March 31, 2012, the Company incurred
$8.6 million of net one-time gains principally related to a $9.8
million net unrealized, non-cash mark-to-market valuation gain on
the Company’s debt and legacy cross-currency interest rate swap
agreements, offset in part by $0.8 million of acquisition related
costs. Including these net one-time gains, income before income
taxes on a GAAP basis was $40.7 million for the quarter compared to
income before income taxes of $25.4 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, 2012 was 22.6%, resulting in reported net income of $31.5
million compared to net income of $15.7 million for the third
quarter of the previous fiscal year. Likewise, diluted earnings per
share on a GAAP basis was $0.70 for the fiscal 2012 third quarter,
compared to $0.41 for the third quarter of the previous fiscal
year.
With respect to operating earnings for the third quarter,
excluding the net non-recurring gains 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
increased 40.1% to $36.0 million for the quarter, compared to $25.7
million for the three months ended March 31, 2011. Considering a
pro forma effective income tax rate from operations of 34.0%,
diluted operating earnings per share was $0.53 for the fiscal 2012
third quarter compared to $0.43 for the third quarter of the
previous fiscal year, representing an increase of 23.3%. 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 March 31, 2012, the Company had drawn $141.8 million of
its $235.0 million global revolving credit facility. Furthermore,
as of March 31, 2012, the Company had drawn £5.3 million of its
£7.0 million credit facility in the United Kingdom, and had drawn
SEK 250.3 million and EUR 16.1 million of its total SEK 325.0
million and EUR 18.8 million credit facilities in Scandinavia, in
order to fund the growth of the pawn pledge book in the U.K. and
Scandinavia, respectively.
Summary of the Company’s Recent Financing Activities
Commenting on the Company’s recent financing activities, Randy
Underwood, the Company’s Executive Vice President and Chief
Financial Officer, stated, “The Company’s recent convertible note
offering provides enhanced liquidity and financial flexibility to
support the continuing execution of our global expansion and
diversification strategy. We continue to be pleased with our strong
relationship with the investment community and our ability to raise
capital to support the continuing growth of our business.”
- On April 16, 2012, the Company
announced the completion of the offering of $230.0 million
aggregate principal amount of senior convertible notes due 2017.
The notes will pay interest semi-annually at a rate of 3.25% per
annum and will be convertible at an initial conversion rate of
46.8962 shares of common stock per $1,000 principal amount of
notes, which is equal to an initial conversion price of $21.32 per
share. The notes are initially convertible into common stock
beginning after June 30, 2012, depending on the closing price of
the Company’s common stock. In connection with the offering, the
Company entered into convertible note hedge transactions in respect
of its common stock with affiliates of the initial purchasers of
the notes, and separate warrant transactions with the option
counter parties, which effectively increase the conversion price of
the convertible notes to $26.45 per share.
- On April 27, 2012, the Company retired
all of its remaining legacy cross-currency interest rate swap
agreements originally put in place to hedge the currency and
interest rate fluctuations of its previously retired term bank
loans. The legacy swaps had become ineffective when the bank debt
they were purchased to hedge was paid off with a portion of the
proceeds of the $600.0 million tranche of senior unsecured notes
issued by the Company’s Canadian subsidiary in December 2009. The
net one-time cash payment to retire the swaps was $55.7 million.
Prior to the termination of the swaps, the Company had been
incurring cash expense of approximately $1.5 million per month to
the relevant counter parties to fix the variable interest rate and
foreign exchange components of the retired term loans.
- On April 27, 2012, the Company entered
into new swap agreements to hedge the U.S. Dollar exposure
associated with the Company’s $600.0 million tranche of senior
unsecured notes. The Company anticipates the new swaps will
eliminate the non-cash mark-to-market volatility that had
historically been impacting the income statement as a result of the
previous ineffective swap instruments, and will lock in the
Canadian Dollar and U.S. Dollar exchange value of the notes at
maturity. In addition, on April 20, 2012, the Company entered into
swap agreements to hedge currency exchange risk related to
intercompany transactions stemming from the convertible notes
issued in April 2012. The Company expects to incur recurring cash
charges of approximately $1.2 million per month related to the new
swap agreements.
- Considering $8.0 million of convertible
note transaction fees and $20.0 million of one-time net cash
payments to enter into the call spread hedge agreements, the
Company received $202.0 million of net proceeds from the
convertible note offering. The Company subsequently used $55.7
million of the net proceeds to retire the legacy cross-currency
interest rate swap agreements, while a portion of the remaining
$146.3 million of proceeds was used to pay down all outstanding
borrowings on the global revolving credit facility, which was
principally drawn to fund the MEM and Risicum acquisitions, with
the residual amount being available for general corporate
purposes.
Following these transactions, the Company has the full
availability of its $235.0 million global revolving credit facility
in addition to excess cash on its balance sheet. The Company’s
long-term debt structure principally consists of a $230.0 million
tranche of senior convertible notes due 2017, a $44.8 million
tranche of senior convertible notes due 2027, and a $120.0 million
tranche of senior convertible notes due 2028. The Company also has
a $600.0 million tranche of senior unsecured notes that are not due
until December 2016. In addition, there is a SEK 185 million
(~$27.9 million) term loan in Sweden due July 2013, which the
Company is currently working to extend.
Fiscal Year 2012 Outlook
Reflecting the strong performance of its global business
operations and recent favorable trends in currency exchange rates,
the Company is increasing its earnings guidance range for fiscal
year 2012 to adjusted EBITDA of between $303.0 million and $306.0
million from its previous estimate of between $300.0 and $305.0
million. Furthermore, considering the nominal impact of the
combined convertible note offering and derivative transactions on
the Company’s consolidated financial results for the remainder of
fiscal 2012, the Company is increasing its guidance with respect to
operating diluted earnings per share to between $2.08 to $2.11 per
share from the previous estimate of between $2.05 and $2.10 per
share, which excludes one-time charges or gains that may occur, the
non-cash impact of ASC-470-20, and the non-cash amortization
associated with the now retired legacy cross-currency interest rate
swap agreements.
Investors Conference Call
The Company will be holding an investor’s conference call on
April 30, 2012 at 5:00 pm ET to discuss its results for the fiscal
third quarter ended March 31, 2012. 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 14,
2012. 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 "70470299.”
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. 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 approximately 1,400
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 eight countries across
North America and Europe—Canada, the United Kingdom, the United
States, Sweden, Finland, Poland, Spain 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 March 31, 2012, the Company’s
global retail operations consisted of 1,361 retail storefront
locations, of which 1,302 are company-owned stores, conducting
business primarily under the names Money Mart®, The Money Shop®,
Insta-Cheques®, Suttons and Robertson®, The Check Cashing Store®,
Sefina®, Helsingin PanttiSM, Optima®, MoneyNow!®, and Super
Efectivo®. 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 in Finland,
Sweden and Poland primarily under the Risicum® and OK Money® brand
names. For more information, please visit the Company's website at
www.dfcglobalcorp.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; 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 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 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,
European Union, 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, including those
described under the heading “Risk Factors” attached as an exhibit
to the Company’s Current Report on Form 8-K filed with the
Securities and Exchange Commission on April 9, 2012 and its Annual
Report on Form 10-K for the Company’s fiscal year ended June 30,
2011. 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:
- Selected 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,
March 31, 2011 2012
Assets: Cash and cash equivalents $ 189.0 $ 208.0
Consumer loans, net: Consumer loans 176.8 203.5 Less: Allowance for
loan losses (14.9 ) (22.9 ) Consumer loans, net 161.9
180.6 Pawn loans 136.2 153.1 Loans in default, net 13.8 28.0
Prepaid expenses and other current assets 69.7 81.3 Deferred tax
assets, net 21.3 15.4 Property and equipment, net 100.0 117.6
Goodwill and other intangibles, net 932.0 946.4 Debt issuance
costs, net and other assets 38.9 38.5
Total Assets $ 1,662.8 $ 1,768.9
Liabilities: Accounts and income taxes payable $ 74.8 $ 67.8
Accrued expenses and other liabilities 162.8 165.5 Fair value of
derivatives 73.9 51.5 Deferred tax liability 53.8 51.0 Revolving
credit facilities and other short-term debt 95.7 151.9 Total
long-term debt 775.2 793.4
Total
Liabilities 1,236.2 1,281.1
Stockholders' Equity: Additional paid-in capital 469.2 477.1
Accumulated deficit (49.7 ) 5.9 Accumulated other comprehensive
income 7.6 5.9 Total DFC Global Corp.
Stockholders' Equity 427.1 488.9 Non-controlling interest
(0.5 ) (1.1 ) Total Stockholders' Equity 426.6
487.8
Total Liabilities and Stockholders'
Equity $ 1,662.8 $ 1,768.9
DFC GLOBAL
CORP. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions except per share amounts)
Three Months Ended Nine Months Ended
March 31, March 31, 2011
2012 2011 2012
Revenues: Fees from consumer lending $ 100.7 $ 163.0
$ 292.0 $ 479.7 Check cashing fees 36.7 35.3 108.7 106.2 Pawn
service fees and sales 16.6 21.0 30.1 62.3 Purchased gold sales
12.3 18.6 34.7 52.5 Money transfer fees 7.4 9.4 22.5 28.8 Other
24.1 22.7 66.5
65.5 Total revenues 197.8 270.0
554.5 795.0 Operating expenses:
Salaries and benefits 46.2 56.9 129.7 164.9 Provision for loan
losses 18.5 33.6 48.9 96.9 Occupancy costs 13.3 15.8 36.9 45.6
Advertising 5.4 12.2 17.1 40.2 Depreciation 4.3 6.1 11.8 17.5 Bank
charges and armored carrier services 4.1 5.5 11.8 16.2 Maintenance
and repairs 4.1 4.4 10.6 12.5 COGS - purchased gold 7.5 15.4 22.4
41.8 Other 17.3 24.8 49.9
72.2 Total operating expenses 120.7
174.7 339.1 507.8
Operating margin 77.1 95.3 215.4
287.2 Corporate and other expenses:
Corporate expenses 25.2 30.4 74.6 91.1 Interest expense, net 23.0
25.0 66.5 73.7 Other depreciation and amortization 3.1 6.5 8.6 19.5
Unrealized foreign exchange (gain) loss (10.1 ) (11.8 ) (42.5 )
18.3 (Gain) loss on derivatives not designated as hedges 9.6 6.4
34.2 (6.3 ) Reserve for (proceeds from) litigation settlements 0.1
- (3.8 ) 4.0 Loss on store closings and other 0.8
(1.9 ) 3.5 (0.8 ) Income before income
taxes (incl. non-controlling interest) 25.4 40.7 74.3 87.7 Income
tax provision 9.7 9.2 26.3
32.1 Net income $ 15.7 $ 31.5 $
48.0 $ 55.6 Net income per share Basic $ 0.43
$ 0.71 $ 1.31 $ 1.27 Diluted $ 0.41 $ 0.70 $ 1.26 $ 1.22
Weighted average shares outstanding Basic 36.6 44.1 36.5 43.9
Diluted 38.7 45.2 38.0 45.5
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 Nine Months Ended March 31, March
31, 2011 2012
2011 2012 Income before
income taxes (incl. non-controlling interest) $ 25.4 $ 40.7 $ 74.3
$ 87.7 Pro forma adjustments: Non-cash interest on
convertible debt (ASC 470-20) 2.1 2.3 6.2 6.9 Unrealized foreign
exchange (gain) loss (10.1 ) (11.8 ) (42.5 ) 18.3 Non-cash impact
of hedge ineffectiveness 4.8 2.0 20.5 (19.8 ) Cross-currency swap
amortization 1.7 1.6 4.8 4.9 Reserve for (proceeds from) litigation
settlements 0.1 - (3.8 ) 4.0 Acquisition costs expensed 1.3 0.8 5.0
2.9 Other items, net 0.4 0.4 1.1
0.8 Pro forma income before income taxes 25.7
36.0 65.6 105.7 Pro forma income taxes (35% for 2011; 34% for 2012)
9.0 12.2 23.0 35.9
Pro forma net income $ 16.7 $ 23.8 $ 42.6
$ 69.8 Weighted average diluted shares
outstanding 38.7 45.2 38.0
45.5 Diluted operating earnings per
share $ 0.43 $ 0.53 $ 1.12 $ 1.53
Diluted GAAP earnings per share $ 0.41 $ 0.70
$ 1.26 $ 1.22
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 Nine Months Ended
March 31, March 31, 2011
2012 2011
2012 Income before income taxes (incl.
non-controlling interest) $ 25.4 $ 40.7 $ 74.3 $ 87.7 Add:
Depreciation and amortization 7.4 12.6 20.4 37.0 Interest expense,
net 23.0 25.0 66.5 73.7 Stock based compensation expense 2.0 2.8
6.0 7.8 Unrealized foreign exchange (gain) loss (10.1 ) (11.8 )
(42.5 ) 18.3 (Gain) loss on derivatives not designated as hedges
9.6 6.4 34.2 (6.3 ) Reserve for (proceeds from) litigation
settlements 0.1 - (3.8 ) 4.0 Acquisition costs expensed 1.3 0.8 5.0
2.9 Other items, net 0.2 0.2 0.7
0.1 Adjusted EBITDA $ 58.9 $ 76.7
$ 160.8 $ 225.2
DFC GLOBAL CORP.
UNAUDITED STORE DATA
Three Months Ended Nine Months Ended March 31,
March 31, 2011 2012 2011 2012
De novo Store Builds United States 0 1 0 1 Canada 0 4
0 10 United Kingdom 20 24 50 62 Poland 0 0 1 4 Spain 0 0 0 0 Sweden
0 0 0 2 Finland 0 0 0 1
Total 20 29 51
80 Acquired Stores United States 0 0 0 0
Canada 0 6 19 8 United Kingdom 0 1 1 16 Poland 0 0 0 0 Spain 0 8 0
8 Sweden 0 0 16 0 Finland 0 0 12 0
Total 0 15
48 32 Closed Stores United States 2 1 8
7 Canada 0 0 3 0 United Kingdom 0 0 2 1 Poland 0 0 0 0 Spain 0 0 0
0 Sweden 0 0 0 0 Finland 0 0 0 0
Total 2 1
13 8 Ending Company-Operated Stores
United States 317 306 317 306 Canada 419 473 419 473 United Kingdom
379 477 379 477 Poland 1 7 1 7 Spain 0 8 0 8 Sweden 16 18 16 18
Finland 12 13 12 13
Total Ending Company-Operated Stores
1,144 1,302 1,144 1,302
Ending Franchise/Agent Stores Canada 43 14 43 14 U.K. 49 45
49 45
Total Ending Franchise/Agent Stores 92
59 92 59 Total Ending Store
Count 1,236 1,361 1,236 1,361
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