EX-99.1 2 a5000391ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Cash America Reports Third Quarter Earnings up 33% and Declares Dividend FORT WORTH, Texas--(BUSINESS WIRE)--Oct. 20, 2005--Cash America International, Inc. (NYSE:CSH) announced today that income from continuing operations rose 33% in the third quarter ended September 30, 2005, compared to the same period last year. Income from continuing operations was $9,563,000 (32 cents per share) for the three-month period in 2005 compared to $7,181,000 (24 cents per share) for the same period in 2004. Included in the 2005 period is a gain from the settlement of an insurance claim filed in 2004 of $265,000 after taxes, about 1 cent per share. The third quarter results of income from continuing operations exceeded the Company's published earnings per share guidance of 27 to 30 cents per share as well as analysts' published estimates for the quarter. Prior year net income for the third quarter of 2004 was $23,664,000, which included an after-tax gain from the sale of the Company's European lending business in 2004 of $14,689,000 and income attributable to those businesses of $1,794,000 which added 56 cents per share in the third quarter of 2004. Total revenue for the third quarter of 2005 increased 31% to $144.8 million from $110.5 million in the same period last year, as all components of the Company's revenue were higher in the period. Fees and service charges from combined lending activities were up 39% to $76.4 million as higher pawn loan and cash advance balances produced improved revenue levels. Merchandise sales rose 23% to $66.0 million in the quarter and increased gross profit margins on merchandise sales drove the Company's total net revenue up 35% to $103.9 million in the 2005 quarter compared to $76.9 million in 2004. While the current quarter's increase in net revenue is partly due to the late year 2004 acquisition of a 41 store lending business, same store net revenue increased 14% in the current year third quarter compared to the prior year quarter. Commenting on the results of the quarter, Daniel R. Feehan, President and Chief Executive Officer of Cash America said, "We continued to experience strong demand for our loan products in the third quarter which allowed us to build on the positive momentum initiated during the second quarter. As a result, we were successful posting results above our expectations in the current quarter and we are positioned well for the final three months of fiscal 2005." For the first nine months of fiscal 2005, Cash America reported a 33% increase in income from continuing operations to $28,365,000 (94 cents per share) compared to $21,249,000 (72 cents per share) in the prior year. Total revenue for the year to date period ended September 30, 2005 was up 29% to $423.3 million compared to $328.7 million for the same period last year. Cash America will host a conference call to discuss the third quarter results on Thursday, October 20 at 3:45 p.m. CDT. A live webcast of the call will be available on the Investor Relations section of the Company's corporate web site (www.cashamerica.com). To listen to the live call, please go to the web site at least fifteen minutes early to register, download, and install any necessary audio software. A replay will be available on the Company's web site for 90 days following the conference call. Additionally, the Company announced that the Board of Directors, at its regularly scheduled quarterly meeting, declared a $0.025 (2.5 cents) per share cash dividend on common stock outstanding. The dividend will be paid to shareholders of record on November 2, 2005, and will be paid at the close of business on November 16, 2005. Outlook for the Fourth Quarter and 2006 As management approaches the final three months of fiscal year 2005 it expects the growth in revenue to be largely governed by the growth in lending assets. Demand for the loan products and credit services offered by the Company is influenced by economic factors which impact customer needs to satisfy immediate capital requirements. In the current economic environment the demand for the products and services has been strong and management assumes that these trends will continue through the end of the year. Another factor influencing revenue is regulatory requirements that could restrict customers from qualifying for short-term cash advances. Management began offering alternative services in the third quarter to assist customers who are unable to qualify for loans from certain lenders due to more restrictive regulatory requirements. In addition, the Company transitioned to new regulatory oversight in other markets where the alternative products could not be provided. In management's opinion, these changes will cause revenue levels in some markets to fall and cause loss rates to rise but management anticipates that this will mostly be mitigated by continued demand in unaffected markets and the development of new units added over the last twelve months. Based on the preceding factors, management expects that the fourth quarter income from continuing operations will be between 51 cents and 56 cents per share in 2005 compared to 46 cents per share last year. Full year 2005 earnings per share from income from continuing operations is expected to range between $1.45 and $1.50 compared to $1.18 per share in fiscal 2004. Expectations for fiscal 2006 are largely a function of anticipated 2005 year-end levels of lending assets and the outlook for the magnitude of personal income tax refunds for many of the Company's customers. Tax refund proceeds may be used to pay current and past due cash advance obligations, redeem pawned merchandise and purchase merchandise at the Company's pawn locations. As many of these factors are difficult to estimate at this time, management places its initial estimated range of earnings from continuing operations for the full fiscal year of 2006 at between $1.70 and $1.80. Cash America International, Inc. is a provider of specialty financial services to individuals in the United States with 880 total locations. Cash America is the largest provider of secured non-recourse loans to individuals, commonly referred to as pawn loans, through 464 locations in 21 states under the brand names Cash America Pawn and SuperPawn. The Company also offers short-term cash advances in many of its U.S. locations including 279 locations that offer this service under the brand names Cash America Payday Advance and Cashland. In addition, check cashing services are provided through its 137 franchised and Company-owned "Mr. Payroll" check cashing centers. Save Harbor Statement under the Private Securities Litigation Reform Act of 1995 This release contains forward-looking statements about the business, financial condition and prospects of Cash America International, Inc. and its subsidiaries ("the Company"). The actual results of the Company could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties including, without limitation, changes in demand for the Company's services, the actions of third parties who offer products and services at the Company's locations, changes in competition, the ability of the Company to open new operating units in accordance with its plans, economic conditions, real estate market fluctuations, interest rate fluctuations, changes in the capital markets, changes in tax and other laws and governmental rules and regulations applicable to the Company's business, and other risks indicated in the Company's filings with the Securities and Exchange Commission. These risks and uncertainties are beyond the ability of the Company to control, nor can the Company predict, in many cases, all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this release, terms such as "believes," "estimates," "plans," "expects," "anticipates" and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements to reflect events or circumstances occurring after the date of this release. CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES HIGHLIGHTS OF CONSOLIDATED RESULTS OF OPERATIONS (in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------- 2005 2004 2005 2004 --------- --------- --------- --------- Consolidated Operations: Total revenue $144,773 $110,536 $423,331 $328,697 Net revenue $103,910 $76,948 $295,574 $222,942 Total operating expenses $86,356 $63,897 $243,212 $183,454 Income from operations $17,554 $13,051 $52,362 $39,488 Income from continuing operations before income taxes $15,216 $11,328 $45,107 $33,659 Income from Continuing Operations $9,563 $7,181 $28,365 $21,249 Income from Discontinued Operations (1) $-- $16,483 $-- $21,144 Net Income $9,563 $23,664 $28,365 $42,393 Earnings per share: Basic - Income from continuing operations $0.33 $0.25 $0.97 $0.75 Net income $0.33 $0.83 $0.97 $1.50 Diluted - Income from continuing operations $0.32 $0.24 $0.94 $0.72 Net income $0.32 $0.80 $0.94 $1.44 Weighted average shares: Basic 29,247 28,347 29,266 28,281 Diluted 30,142 29,522 30,218 29,473 (1) For periods through September 7, 2004 (the date of sale) and results include a gain on disposition of $14,689, net of applicable taxes of $4,213, for both periods. CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share data) September 30, December ------------------- 31, 2005 2004 2004 --------- --------- --------- (Unaudited) Assets Current assets: Cash and cash equivalents $19,492 $13,712 $15,103 Pawn loans 122,916 88,243 109,353 Cash advances, net 39,712 34,334 36,490 Merchandise held for disposition, net 73,827 57,554 67,050 Finance and service charges receivable 21,305 16,399 20,458 Other receivables and prepaid expenses 11,923 9,990 10,547 Deferred taxes assets 13,364 8,226 9,293 --------- --------- --------- Total current assets 302,539 228,458 268,294 Property and equipment, net 93,184 75,776 87,612 Goodwill 173,313 115,469 164,073 Intangible assets, net 24,119 4,623 24,361 Other assets 10,816 10,540 10,825 --------- --------- --------- Total assets $603,971 $434,866 $555,165 ========= ========= ========= Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $32,401 $28,880 $33,854 Customer deposits 6,579 5,215 5,686 Dividends payable -- 8,582 -- Income taxes currently payable 885 5,709 2,505 Current portion of long-term debt 16,786 16,786 16,786 --------- --------- --------- Total current liabilities 56,651 65,172 58,831 Deferred tax liabilities 10,757 5,602 10,999 Other liabilities 1,445 1,510 1,559 Long-term debt 177,219 57,357 149,840 --------- --------- --------- Total liabilities 246,072 129,641 221,229 --------- --------- --------- Stockholders' equity: Common stock, $.10 par value per share, 80,000,000 shares authorized, 30,235,164 shares issued 3,024 3,024 3,024 Additional paid-in capital 156,022 144,948 154,294 Retained earnings 214,052 173,969 187,860 Notes receivable secured by common stock (2,488) (2,488) (2,488) Treasury shares, at cost (1,045,639 shares, 1,695,392 shares and 938,386 shares at September 30, 2005 and 2004, and December 31, 2004, respectively) (12,711) (14,228) (8,754) --------- --------- --------- Total stockholders' equity 357,899 305,225 333,936 --------- --------- --------- Total liabilities and stockholders' equity $603,971 $434,866 $555,165 ========= ========= ========= CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------ 2005 2004 2005 2004 ---------- -------- --------- -------- (Unaudited) Revenue Finance and service charges $35,980 $28,070 $102,476 $80,297 Proceeds from disposition of merchandise 66,027 53,814 210,101 172,557 Cash advance fees 40,428 26,723 102,114 68,440 Check cashing royalties and fees 2,338 1,929 8,640 7,403 ---------- -------- --------- -------- Total Revenue 144,773 110,536 423,331 328,697 Cost of Revenue Disposed merchandise 40,863 33,588 127,757 105,755 ---------- -------- --------- -------- Net Revenue 103,910 76,948 295,574 222,942 ---------- -------- --------- -------- Expenses Operations 54,596 42,700 162,296 125,160 Cash advance loss provision 15,502 7,021 31,905 15,440 Administration 10,411 9,849 31,924 30,539 Depreciation and amortization 5,847 4,327 17,087 12,315 ---------- -------- --------- -------- Total Expenses 86,356 63,897 243,212 183,454 ---------- -------- --------- -------- Income from Operations 17,554 13,051 52,362 39,488 Interest expense 2,787 2,082 7,614 6,264 Interest income (402) (127) (1,227) (203) Foreign currency transaction (gains) losses (47) (232) 868 (232) ---------- -------- --------- -------- Income from Continuing Operations before Income Taxes 15,216 11,328 45,107 33,659 Provision for income taxes 5,653 4,147 16,742 12,410 ---------- -------- --------- -------- Income from Continuing Operations 9,563 7,181 28,365 21,249 ---------- -------- --------- -------- Income from discontinued operations before income taxes -- 21,475 -- 28,163 Provision for income taxes -- 4,992 -- 7,019 ---------- -------- --------- -------- Income from discontinued operations -- 16,483 -- 21,144 ---------- -------- --------- -------- Net Income $9,563 $23,664 $28,365 $42,393 ========== ======== ========= ======== Earnings Per Share: Basic - Income from continuing operations $0.33 $0.25 $0.97 $0.75 Income from discontinued operations $-- $0.58 $-- $0.75 Net income $0.33 $0.83 $0.97 $1.50 Diluted - Income from continuing operations $0.32 $0.24 $0.94 $0.72 Income from discontinued operations $-- $0.56 $-- $0.72 Net income $0.32 $0.80 $0.94 $1.44 Weighted average common shares outstanding: Basic 29,247 28,347 29,266 28,281 Diluted 30,142 29,522 30,218 29,473 Dividends declared per common share $0.025 $0.3175 $0.075 $0.3525 CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES FINANCIAL AND OPERATING DATA - CONTINUING OPERATIONS ($ in thousands, unless noted otherwise) Three Months Ended Nine Months Ended September 30, September 30, ------------------- -------------------- 2005 2004 2005 2004 --------- --------- ---------- --------- PAWN LENDING OPERATIONS: Pawn loans Annualized yield on pawn loans 118.7% 125.9% 124.5% 131.3% Total amount of pawn loans written and renewed $118,353 $86,853 $330,531 $250,766 Average pawn loan balance outstanding $120,230 $88,693 $110,070 $81,716 Average pawn loan balance per average location in operation $268 $223 $248 $206 Ending pawn loan balance per location in operation $271 $222 $271 $222 Average pawn loan amount at end of period (not in thousands) $92 $85 $92 $85 Profit margin on disposition of merchandise as a percentage of proceeds from disposition of merchandise 38.1% 37.6% 39.2% 38.7% Average annualized merchandise turnover 2.4x 2.5x 2.6x 2.9x Average balance of merchandise held for disposition per average location in operation $153 $133 $146 $123 Ending balance of merchandise held for disposition per location in operation $163 $145 $163 $145 Pawnshop locations in operation - Beginning of period, owned 445 396 441 398 Acquired 4 -- 6 -- Start-ups 4 2 7 2 Combined or closed -- -- (1) (2) --------- --------- ---------- --------- End of period, owned 453 398 453 398 Franchise locations at end of period 11 6 11 6 --------- --------- ---------- --------- Total pawnshop locations at end of period 464 404 464 404 ========= ========= ========== ========= Average number of owned pawnshop locations 448 397 444 396 ========= ========= ========== ========= Cash advances Total amount of cash advances written (a) $76,543 $59,486 $201,474 $154,594 Number of cash advances written (not in thousands) (a) 218,594 180,552 598,514 476,292 Average amount per cash advance (not in thousands) (a) $350 $329 $337 $325 Combined cash advances outstanding (a) $20,217 $16,062 $20,217 $16,062 Cash advances outstanding per location at end of period (a) $47 $41 $47 $41 Cash advances outstanding before allowance for losses (b) $11,024 $10,820 $11,024 $10,820 Locations offering cash advances at end of period 434 390 434 390 ========= ========= ========== ========= Average number of locations offering cash advances 431 389 429 388 ========= ========= ========== ========= CASH ADVANCE OPERATIONS (c): Total amount of cash advances written (a) $189,127 $114,477 $467,362 $286,028 Number of cash advances written (not in thousands) (a) 504,999 338,755 1,290,460 844,696 Average amount per cash advance (not in thousands) (a) $375 $338 $362 $339 Combined cash advances outstanding (a) $44,148 $29,551 $44,148 $29,551 Cash advances outstanding per location at end of period (a) $158 $128 $158 $128 Cash advances outstanding before allowance for losses (b) $38,690 $28,106 $38,690 $28,106 Cash advance locations in operation - Beginning of period 271 181 253 154 Acquired -- 32 1 32 Start-ups 8 20 27 49 Combined or closed -- (3) (2) (5) --------- --------- ---------- --------- End of period 279 230 279 230 ========= ========= ========== ========= Average number of cash advance locations 275 198 267 177 ========= ========= ========== ========= CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES FINANCIAL AND OPERATING DATA - CONTINUING OPERATIONS (Continued) ($ in thousands, unless noted otherwise) Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------- 2005 2004 2005 2004 --------- --------- --------- --------- CHECK CASHING OPERATIONS (Mr. Payroll Corp.) (d) Face amount of checks cashed $294,868 $275,930 $909,491 $859,797 Gross fees collected $3,950 $3,615 $12,720 $11,975 Fees as a percentage of checks cashed 1.3% 1.3% 1.4% 1.4% Average check cashed (not in thousands) $375 $364 $387 $378 Centers in operation at end of period 137 130 137 130 ========= ========= ========= ========= Average check cashing centers 136 135 135 136 ========= ========= ========= ========= (a) Includes cash advances made by the Company and cash advances made by third-party lenders offered at the Company's locations (b) Amounts recorded in the Company's consolidated financial statements. (c) Includes only cash advance locations. (d) Includes franchised and company-owned locations. CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED CASH ADVANCES OUTSTANDING (in thousands) September 30, ----------------- 2005 2004 -------- -------- Originated by the Company Active cash advances and fees receivable $31,372 $23,553 Cash advances and fees in collection 10,680 5,651 -------- -------- Total originated by the Company 42,052 29,204 -------- -------- Originated by third-party lenders Active cash advances and fees receivable 16,116 12,522 Cash advances and fees in collection 6,197 3,887 -------- -------- Total originated by third-party lenders 22,313 16,409 -------- -------- Combined gross portfolio 64,365 45,613 Less: Elimination of cash advances owned by third- party lenders 14,177 6,134 Less: Discount on cash advances assigned by third- party banks 474 553 -------- -------- Company-owned cash advances and fees receivable, gross 49,714 38,926 Less: Allowance for losses 10,002 4,592 -------- -------- Cash advances and fees receivable, net $39,712 $34,334 ======== ======== ALLOWANCE FOR LOSSES ON CASH ADVANCES ($ in thousands) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2005 2004 2005 2004 ---------- ------- -------- -------- Company-owned cash advances Balance at beginning of period $7,720 $4,656 $4,358 $3,393 Cash advance loss provision 15,282 7,046 31,420 15,211 Charge-offs (14,990) (8,937) (32,691) (19,696) Recoveries 1,990 1,827 6,915 5,684 ---------- ------- -------- -------- Balance at end of period $10,002 $4,592 $10,002 $4,592 ========== ======= ======== ======== Accrual for third-party lender- owned cash advances Balance at beginning of period $607 $309 $342 $55 Increase (decrease) in loss provision 220 (25) 485 229 ---------- ------- -------- -------- Balance at end of period $827 $284 $827 $284 ========== ======= ======== ======== Combined statistics Combined cash advance loss provision $15,502 $7,021 $31,905 $15,440 ========== ======= ======== ======== Combined cash advance loss provision as a % of combined cash advances written 5.8% 4.0% 4.8% 3.5% ========== ======= ======== ======== Charge-offs (net of recoveries) as a % of combined cash advances written 4.9% 4.1% 3.9% 3.2% ========== ======= ======== ======== Combined allowance for losses and accrued third-party lenders losses as a % of combined gross portfolio 16.8% 10.7% 16.8% 10.7% ========== ======= ======== ======== CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES INCOME FROM CONTINUING OPERATIONS BY OPERATING SEGMENT THREE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004 (in thousands) Pawn Cash Check Lending Advance Cashing Consolidated --------- --------- ------- ------------ Three Months Ended September 30, 2005: ----------------------------- Revenue Finance and service charges $35,980 $-- $-- $35,980 Proceeds from disposition of merchandise 66,027 -- -- 66,027 Cash advance fees 11,341 29,087 -- 40,428 Check cashing royalties and fees -- 1,393 945 2,338 -------- --------- ------- ------------ Total revenue 113,348 30,480 945 144,773 Cost of revenue - disposed merchandise 40,863 -- -- 40,863 -------- --------- ------- ------------ Net revenue 72,485 30,480 945 103,910 -------- --------- ------- ------------ Expenses Operations 41,130 13,123 343 54,596 Cash advance loss provision 5,201 10,301 -- 15,502 Administration 7,836 2,346 229 10,411 Depreciation and amortization 3,957 1,811 79 5,847 -------- --------- ------- ------------ Total expenses 58,124 27,581 651 86,356 -------- --------- ------- ------------ Income from continuing operations $14,361 $2,899 $294 $17,554 ======== ========= ======= ============ As of September 30, 2005: ----------------------------- Total assets $482,134 $114,835 $7,002 $603,971 ========= ========= ======= ============ Three Months Ended September 30, 2004: ----------------------------- Revenue Finance and service charges $28,070 $-- $-- $28,070 Proceeds from disposition of merchandise 53,814 -- -- 53,814 Cash advance fees 8,822 17,901 -- 26,723 Check cashing royalties and fees -- 1,143 786 1,929 -------- --------- ------- ------------ Total revenue 90,706 19,044 786 110,536 Cost of revenue - disposed merchandise 33,588 -- -- 33,588 -------- --------- ------- ------------ Net revenue 57,118 19,044 786 76,948 -------- --------- ------- ------------ Expenses Operations 32,971 9,397 332 42,700 Cash advance loss provision 2,601 4,420 -- 7,021 Administration 7,194 2,426 229 9,849 Depreciation and amortization 2,978 1,226 123 4,327 -------- --------- ------- ------------ Total expenses 45,744 17,469 684 63,897 --------- --------- ------- ------------ Income from continuing operations $11,374 $1,575 $102 $13,051 ======== ========= ======= ============ As of September 30, 2004: ----------------------------- Total assets $329,279 $98,216 $7,371 $434,866 ========= ========= ======= ============ CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES INCOME FROM CONTINUING OPERATIONS BY OPERATING SEGMENT NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004 (in thousands) Pawn Cash Check Lending Advance Cashing Consolidated --------- -------- ------- ------------ Nine Months Ended September 30, 2005: ----------------------------- Revenue Finance and service charges $102,476 $-- $-- $102,476 Proceeds from disposition of merchandise 210,101 -- -- 210,101 Cash advance fees 30,371 71,743 -- 102,114 Check cashing royalties and fees -- 5,721 2,919 8,640 --------- -------- ------- ------------ Total revenue 342,948 77,464 2,919 423,331 Cost of revenue - disposed merchandise 127,757 -- -- 127,757 --------- -------- ------- ------------ Net revenue 215,191 77,464 2,919 295,574 --------- -------- ------- ------------ Expenses Operations 123,046 38,199 1,051 162,296 Cash advance loss provision 11,469 20,436 -- 31,905 Administration 24,214 7,007 703 31,924 Depreciation and amortization 11,566 5,279 242 17,087 --------- -------- ------- ------------ Total expenses 170,295 70,921 1,996 243,212 --------- -------- ------- ------------ Income from continuing operations $44,896 $6,543 $923 $52,362 ========= ======== ======= ============ Nine Months Ended September 30, 2004: ----------------------------- Revenue Finance and service charges $80,297 $-- $-- $80,297 Proceeds from disposition of merchandise 172,557 -- -- 172,557 Cash advance fees 23,450 44,990 -- 68,440 Check cashing royalties and fees -- 4,635 2,768 7,403 --------- -------- ------- ------------ Total revenue 276,304 49,625 2,768 328,697 Cost of revenue - disposed merchandise 105,755 -- -- 105,755 --------- -------- ------- ------------ Net revenue 170,549 49,625 2,768 222,942 --------- -------- ------- ------------ Expenses Operations 99,283 24,824 1,053 125,160 Cash advance loss provision 6,021 9,419 -- 15,440 Administration 23,545 6,270 724 30,539 Depreciation and amortization 8,727 3,227 361 12,315 --------- -------- ------- ------------ Total expenses 137,576 43,740 2,138 183,454 --------- -------- ------- ------------ Income from continuing operations $32,973 $5,885 $630 $39,488 ========= ======== ======= ============ CONTACT: Cash America International, Inc., Fort Worth Thomas A. Bessant, Jr., 817-335-1100