EX-99.1 7 d821829dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

UNADUITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

Spin-off of Enova International, Inc.

On November 13, 2014 (the “Distribution Date”), Cash America International, Inc. (“Cash America” or the “Company”) completed the distribution of 80% of the outstanding shares of Enova International, Inc. (“Enova”), which previously comprised Cash America’s e-commerce segment, to its shareholders (the “Spin-off”). On the Distribution Date, each of the Company’s shareholders of record as of the close of business on November 3, 2014 (the “Record Date”) received 0.915 shares of Enova for every one Cash America share held as of the Record Date. Enova is now an independent public company trading under the symbol “ENVA” on the New York Stock Exchange, and Cash America continues to trade on the New York Stock Exchange under the symbol “CSH.”

Unaudited Pro Forma Consolidated Financial Information

The following unaudited pro forma consolidated financial statements were derived from the Company’s historical consolidated financial statements, which were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).

The unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2014 and 2013, and for the fiscal years ended December 31, 2013, 2012 and 2011, give effect to the Spin-off and related transactions, as if they had occurred on January 1, 2011, the first day of fiscal year 2011. The unaudited pro forma consolidated balance sheet as of September 30, 2014 gives effect to the Spin-off and related transactions, as if they had occurred on that date.

The unaudited pro forma consolidated financial statements include pro forma adjustments that reflect transactions and events that (a) are directly attributable to the Spin-off, (b) are factually supportable, and (c) with respect to the statements of operations, have a continuing impact on consolidated results. Included is an adjustment for the tax-free distribution to shareholders of approximately 80.0% of Enova’s common stock and the Company’s retention of approximately 20.0% of Enova’s common stock.

The assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma consolidated financial statements. The assumptions used and pro forma adjustments derived from such assumptions are based on currently available information, and the Company believes such assumptions are reasonable under the circumstances.

The following unaudited pro forma consolidated financial statements should be read in conjunction with the Company’s historical consolidated financial statements, the accompanying notes to those financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 filed with the Securities and Exchange Commission. The unaudited pro forma consolidated financial statements have been presented for informational purposes only. The unaudited pro forma consolidated financial statements do not purport to represent what the Company’s results of operations or financial condition would have been had the transactions to which the pro forma adjustments relate actually occurred on the dates indicated, and they do not purport to project the Company’s results of operations or financial condition for any future period or as of any future date.

 

1

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

As of September 30, 2014

(dollars in thousands, except per share data)

 

     As
Reported		      Distribution
of Enova (a)		     Pro Forma
Adjustments		      Note   Pro Forma  

Assets

             

Current assets:

             

Cash and cash equivalents

    $ 123,532       $ (90,872 )    $ —           $ 32,660   

Restricted cash

      60         —          —             60   

Pawn loans

      264,612         —          —             264,612   

Consumer loans, net

      348,225         (303,694 )      —             44,531   

Merchandise held for disposition, net

      215,263         —          —             215,263   

Pawn loan fees and service charges receivable

      54,501         —          —             54,501   

Prepaid expenses and other assets

      33,871         (12,738 )      —             21,133   

Deferred tax assets

      36,076         (26,514 )      —             9,562   

Investment in Enova International, Inc.

      —           —          194,898       (b)     194,898   
  

 

 

     

 

 

    

 

 

       

 

 

  

Total current assets

      1,076,140         (433,818 )      194,898           837,220   

Property and equipment, net

      245,382         (35,598 )      —             209,784   

Goodwill

      699,061         (255,865 )      —             443,196   

Intangible assets, net

      47,490         (18 )      —             47,472   

Other assets

      32,272         (21,712 )      —             10,560   
  

 

 

     

 

 

    

 

 

       

 

 

  

Total assets

    $ 2,100,345       $ (747,011 )    $ 194,898         $ 1,548,232   
  

 

 

     

 

 

    

 

 

       

 

 

  

Liabilities and Equity

             

Current liabilities:

             

Accounts payable and accrued expenses

      141,351         (71,941 )      —             69,410   

Customer deposits

      19,271         —          —             19,271   

Income taxes currently payable

      1,399         15        —             1,414   
  

 

 

     

 

 

    

 

 

       

 

 

  

Total current liabilities

      162,021         (71,926 )      —             90,095   

Deferred tax liabilities

      110,624         (45,656 )      —             64,968   

Other liabilities

      1,124         (105 )      —             1,019   

Long-term debt

      700,043         (494,021 )      —             206,022   
  

 

 

     

 

 

    

 

 

       

 

 

  

Total liabilities

    $ 973,812       $ (611,708 )    $ —           $ 362,104   

Equity:

             

Total equity

      1,126,533         (135,303 )      194,898       (b)     1,186,128   
  

 

 

     

 

 

    

 

 

       

 

 

  

Total liabilities and equity

    $ 2,100,345       $ (747,011 )    $ 194,898         $ 1,548,232   
  

 

 

     

 

 

    

 

 

       

 

 

  

See Notes to Unaudited Pro Forma Consolidated Financial Statements

 

2

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

For the Nine Months Ended September 30, 2014

(dollars in thousands, except per share data)

 

     As
Reported		     Distribution
of Enova (a)		     Pro Forma  

Revenue

       

Pawn loan fees and service charges

    $ 246,490      $ —        $ 246,490   

Proceeds from disposition of merchandise

      478,314        —          478,314   

Consumer loan fees

      688,956        (614,466 )      74,490   

Other

      6,608        (649 )      5,959   
  

 

 

    

 

 

    

 

 

  

Total Revenue

      1,420,368        (615,115 )      805,253   
  

 

 

    

 

 

    

 

 

  

Cost of Revenue

       

Disposed merchandise

      343,367        —          343,367   

Consumer loan loss provision

      229,722        (205,661 )      24,061   
  

 

 

    

 

 

    

 

 

  

Total Cost of Revenue

      573,089        (205,661 )      367,428   
  

 

 

    

 

 

    

 

 

  

Net Revenue

      847,279        (409,454 )      437,825   
  

 

 

    

 

 

    

 

 

  

Expenses

       

Operations and administration

      592,292        (221,727 )      370,565   

Loss on divestitures

      5,176        —          5,176   

Depreciation and amortization

      59,202        (13,772 )      45,430   
  

 

 

    

 

 

    

 

 

  

Total Expenses

      656,670        (235,499 )      421,171   
  

 

 

    

 

 

    

 

 

  

Income from Operations

      190,609        (173,955 )      16,654   

Interest expense

      (40,363 )      25,212        (15,151 ) 

Interest income

      28        (11 )      17   

Foreign currency transaction (loss) gain

      (439 )      552        113   

Loss on early extinguishment of debt

      (22,553 )      —          (22,553 ) 
  

 

 

    

 

 

    

 

 

  

Income before Income Taxes

      127,282        (148,202 )      (20,920 ) 

Provision for income taxes

      50,658        (53,701 )      (3,043 ) 
  

 

 

    

 

 

    

 

 

  

Net Income Attributable to Cash America International, Inc.

    $ 76,624      $ (94,501 )    $ (17,877 ) 
  

 

 

    

 

 

    

 

 

  

Earnings Per Share:

       

Net Income attributable to Cash America International, Inc. common shareholders

       

Basic

    $ 2.66        $ (0.62 ) 

Diluted

    $ 2.61        $ (0.62 ) 

Weighted average common shares outstanding:

       

Basic

      28,808          28,808   

Diluted

      29,371          28,808   

See Notes to Unaudited Pro Forma Consolidated Financial Statements

 

3

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

For the Nine Months Ended September 30, 2013

(dollars in thousands, except per share data)

 

     As
Reported		     Distribution
of Enova (a)		     Pro Forma  

Revenue

       

Pawn loan fees and service charges

    $ 227,940      $ —        $ 227,940   

Proceeds from disposition of merchandise

      438,909        —          438,909   

Consumer loan fees

      640,199        (555,726 )      84,473   

Other

      9,261        (1,143 )      8,118   
  

 

 

    

 

 

    

 

 

  

Total Revenue

      1,316,309        (556,869 )      759,440   
  

 

 

    

 

 

    

 

 

  

Cost of Revenue

       

Disposed merchandise

      301,397        —          301,397   

Consumer loan loss provision

      251,774        (227,847 )      23,927   
  

 

 

    

 

 

    

 

 

  

Total Cost of Revenue

      553,171        (227,847 )      325,324   
  

 

 

    

 

 

    

 

 

  

Net Revenue

      763,138        (329,022 )      434,116   
  

 

 

    

 

 

    

 

 

  

Expenses

       

Operations and administration

      553,471        (201,935 )      351,536   

Depreciation and amortization

      54,314        (12,986 )      41,328   
  

 

 

    

 

 

    

 

 

  

Total Expenses

      607,785        (214,921 )      392,864   
  

 

 

    

 

 

    

 

 

  

Income from Operations

      155,353        (114,101 )      41,252   

Interest expense

      (25,608 )      14,790        (10,818 ) 

Interest income

      69        (52 )      17   

Foreign currency transaction (loss) gain

      (1,053 )      1,111        58   

Loss on early extinguishment of debt

      (346 )      —          (346 ) 

Equity in loss of unconsolidated subsidiary

      (136 )      —          (136 ) 
  

 

 

    

 

 

    

 

 

  

Income before Income Taxes

      128,279        (98,252 )      30,027   

Provision for income taxes

      12,727        (34,889 )      (22,162 ) 
  

 

 

    

 

 

    

 

 

  

Net income

      115,552        (63,363 )      52,189   

Net Income attributable to the noncontrolling interest

      (308 )      —          (308 ) 
  

 

 

    

 

 

    

 

 

  

Net Income Attributable to Cash America International, Inc.

    $ 115,244      $ (63,363 )    $ 51,881   
  

 

 

    

 

 

    

 

 

  

Earnings Per Share:

       

Net Income attributable to Cash America International, Inc. common shareholders

       

Basic

    $ 4.01        $ 1.80   

Diluted

    $ 3.73        $ 1.68   

Weighted average common shares outstanding:

       

Basic

      28,747          28,747   

Diluted

      30,857          30,857   

See Notes to Unaudited Pro Forma Consolidated Financial Statements

 

4

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

For the Year Ended December 31, 2013

(dollars in thousands, except per share data)

 

     As
Reported		     Distribution
of Enova (a)		     Pro Forma  

Revenue

       

Pawn loan fees and service charges

    $ 311,799      $ —          311,799   

Proceeds from disposition of merchandise

      595,439        —          595,439   

Consumer loan fees

      878,183        (764,972 )      113,211   

Other

      11,234        (1,197 )      10,037   
  

 

 

    

 

 

    

 

 

  

Total Revenue

      1,796,655        (766,169 )      1,030,486   
  

 

 

    

 

 

    

 

 

  

Cost of Revenue

       

Disposed merchandise

      410,613        —          410,613   

Consumer loan loss provision

      351,255        (317,896 )      33,359   
  

 

 

    

 

 

    

 

 

  

Total Cost of Revenue

      761,868        (317,896 )      443,972   
  

 

 

    

 

 

    

 

 

  

Net Revenue

      1,034,787        (448,273 )      586,514   
  

 

 

    

 

 

    

 

 

  

Expenses

       

Operations and administration

      749,733        (280,515 )      469,218   

Depreciation and amortization

      73,271        (17,143 )      56,128   
  

 

 

    

 

 

    

 

 

  

Total Expenses

      823,004        (297,658 )      525,346   
  

 

 

    

 

 

    

 

 

  

Income from Operations

      211,783        (150,615 )      61,168   

Interest expense

      (36,317 )      19,842        (16,475 ) 

Interest income

      72        (54 )      18   

Foreign currency transaction (loss) gain

      (1,205 )      1,222        17   

Loss on early extinguishment of debt

      (607 )      —          (607 ) 

Equity in loss of unconsolidated subsidiary

      (136 )      —          (136 ) 
  

 

 

    

 

 

    

 

 

  

Income before Income Taxes

      173,590        (129,605 )      43,985   

Provision for income taxes

      30,754        (46,267 )      (15,513 ) 
  

 

 

    

 

 

    

 

 

  

Net income

      142,836        (83,338 )      59,498   

Net income attributable to the noncontrolling interest

      (308 )      —          (308 ) 
  

 

 

    

 

 

    

 

 

  

Net Income Attributable to Cash America International, Inc.

    $ 142,528      $ (83,338 )    $ 59,190   
  

 

 

    

 

 

    

 

 

  

Earnings Per Share:

       

Net Income attributable to Cash America International, Inc. common shareholders

       

Basic

    $ 4.97        $ 2.07   

Diluted

    $ 4.66        $ 1.93   

Weighted average common shares outstanding:

       

Basic

      28,657          28,657   

Diluted

      30,613          30,613   

See Notes to Unaudited Pro Forma Consolidated Financial Statements

 

5

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

For the Year Ended December 31, 2012

(dollars in thousands, except per share data)

 

     As
Reported		     Distribution
of Enova (a)		     Pro Forma  

Revenue

       

Pawn loan fees and service charges

    $ 300,929      $ —        $ 300,929   

Proceeds from disposition of merchandise

      703,767        —          703,767   

Consumer loan fees

      781,520        (659,628 )      121,892   

Other

      14,214        (1,359 )      12,855   
  

 

 

    

 

 

    

 

 

  

Total Revenue

      1,800,430        (660,987 )      1,139,443   
  

 

 

    

 

 

    

 

 

  

Cost of Revenue

       

Disposed merchandise

      478,179        —          478,179   

Consumer loan loss provision

      316,294        (287,069 )      29,225   
  

 

 

    

 

 

    

 

 

  

Total Cost of Revenue

      794,473        (287,069 )      507,404   
  

 

 

    

 

 

    

 

 

  

Net Revenue

      1,005,957        (373,918 )      632,039   
  

 

 

    

 

 

    

 

 

  

Expenses

       

Operations and administration

      714,614        (234,358 )      480,256   

Depreciation and amortization

      75,428        (13,272 )      62,156   
  

 

 

    

 

 

    

 

 

  

Total Expenses

      790,042        (247,630 )      542,412   
  

 

 

    

 

 

    

 

 

  

Income from Operations

      215,915        (126,288 )      89,627   

Interest expense

      (29,131 )      20,996        (8,135 ) 

Interest income

      144        —          144   

Foreign currency transaction (loss) gain

      (313 )      342        29   

Equity in loss of unconsolidated subsidiary

      (295 )      —          (295 ) 
  

 

 

    

 

 

    

 

 

  

Income before Income Taxes

      186,320        (104,950 )      81,370   

Provision for income taxes

      84,656        (38,384 )      46,272   
  

 

 

    

 

 

    

 

 

  

Net income

      101,664        (66,566 )      35,098   

Net Income attributable to the noncontrolling interest

      5,806        —          5,806   
  

 

 

    

 

 

    

 

 

  

Net Income Attributable to Cash America International, Inc.

    $ 107,470      $ (66,566 )    $ 40,904   
  

 

 

    

 

 

    

 

 

  

Earnings Per Share:

       

Net Income attributable to Cash America International, Inc. common shareholders

       

Basic

    $ 3.64        $ 1.39   

Diluted

    $ 3.42        $ 1.30   

Weighted average common shares outstanding:

       

Basic

      29,514          29,514   

Diluted

      31,452          31,452   

See Notes to Unaudited Pro Forma Consolidated Financial Statements

 

6

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

For the Year Ended December 31, 2011

(dollars in thousands, except per share data)

 

     As
Reported		     Distribution
of Enova (a)		     Pro Forma  

Revenue

       

Pawn loan fees and service charges

    $ 282,197      $ —        $ 282,197   

Proceeds from disposition of merchandise

      688,884        (30 )      688,854   

Consumer loan fees

      598,646        (479,454 )      119,192   

Other

      13,337        (879 )      12,458   
  

 

 

    

 

 

    

 

 

  

Total Revenue

      1,583,064        (480,363 )      1,102,701   
  

 

 

    

 

 

    

 

 

  

Cost of Revenue

       

Disposed merchandise

      447,617        (23 )      447,594   

Consumer loan loss provision

      225,688        (201,687 )      24,001   
  

 

 

    

 

 

    

 

 

  

Total Cost of Revenue

      673,305        (201,710 )      471,595   
  

 

 

    

 

 

    

 

 

  

Net Revenue

      909,759        (278,653 )      631,106   
  

 

 

    

 

 

    

 

 

  

Expenses

       

Operations and administration

      611,268        (173,121 )      438,147   

Depreciation and amortization

      54,149        (11,263 )      42,886   
  

 

 

    

 

 

    

 

 

  

Total Expenses

      665,417        (184,384 )      481,033   
  

 

 

    

 

 

    

 

 

  

Income from Operations

      244,342        (94,269 )      150,073   

Interest expense

      (25,528 )      17,420        (8,108 ) 

Interest income

      81        —          81   

Foreign currency transaction (loss) gain

      (1,265 )      967        (298 ) 

Equity in loss of unconsolidated subsidiary

      (104 )      —          (104 ) 
  

 

 

    

 

 

    

 

 

  

Income before Income Taxes

      217,526        (75,882 )      141,644   

Provision for income taxes

      82,360        (27,747 )      54,613   
  

 

 

    

 

 

    

 

 

  

Net income

      135,166        (48,135 )      87,031   

Net Income attributable to the noncontrolling interest

      797        —          797   
  

 

 

    

 

 

    

 

 

  

Net Income Attributable to Cash America International, Inc.

    $ 135,963      $ (48,135 )    $ 87,828   
  

 

 

    

 

 

    

 

 

  

Earnings Per Share:

       

Net Income attributable to Cash America International, Inc. common shareholders

       

Basic

    $ 4.59        $ 2.97   

Diluted

    $ 4.25        $ 2.75   

Weighted average common shares outstanding:

       

Basic

      29,602          29,602   

Diluted

      31,991          31,991   

See Notes to Unaudited Pro Forma Consolidated Financial Statements

 

7

Cash America International, Inc. and Subsidiaries

Notes to Unaudited Pro Forma Consolidated Financial Statements

 

(a) The “Distribution of Enova” column amounts represent the revenue, expenses, assets, liabilities and equity attributable to Enova, which were included in the Company’s historical financial statements. Goodwill shown in this column represents the goodwill that is directly attributable to Enova, including $45.5 million of goodwill that was previously re-allocated to the Company’s retail services segment as a result of the Company’s 2010 segment realignment. The balance sheet also assumes settlement of a $13.4 million intercompany debt owed by Enova to the Company. Operations and administration expense includes $2.3 million directly related to the Spin-off for the nine months ended September 30, 2014. The Company did not allocate corporate overhead costs to Enova for purposes of pro forma financial statement presentation.

 

(b) The Company retained approximately 6.6 million, or approximately 20.0%, of Enova’s outstanding common shares that it will record at fair value. For purposes of the pro forma financial statements, the value of the Company’s investment in Enova was calculated using a stock price of $29.53 per share (based on the average of the high and low market prices on the first day of trading, which was November 13, 2014).

 

8

Additional Financial Information

Non-GAAP Disclosure

In addition to the financial information prepared in conformity with GAAP, the Company provides historical non-GAAP financial information. Management believes that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of the Company’s operations. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s business that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.

Management provides non-GAAP financial information for informational purposes and to enhance understanding of the Company’s consolidated financial statements. Readers should consider the information in addition to, but not instead of or superior to, its financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.

Adjusted EBITDA

The tables below show adjusted EBITDA, a non-GAAP measure that the Company has defined as income (loss) from operations excluding depreciation and amortization. Management believes adjusted EBITDA is used by investors to analyze operating performance and evaluate the Company’s ability to incur and service debt and its capacity for making capital expenditures. Adjusted EBITDA is also useful to investors to help assess the Company’s estimated enterprise value. In addition, management believes that the adjustments shown below are useful to investors in order to allow them to compare the Company’s financial results during the periods shown without the effect of each of these income and expense items. The computation of adjusted EBITDA as presented below may differ from the computation of similarly-titled measures provided by other companies. The following table provides a reconciliation between income (loss) from operations, which is the nearest GAAP measure presented in the Company’s financial statements for analysis of the components of the Company’s business, to Adjusted EBITDA. Adjustments provided below were not included in the pro forma financial statements shown above.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

ADJUSTED EBITDA

For the Nine Months Ended September 30, 2014

(dollars in thousands, except per share data)

 

     Consolidated      Distribution
of Enova (a)		     As Adjusted  

Income (loss) from operations

    $ 190,609       $ (173,955 )    $ 16,654   

Depreciation and amortization expenses

      59,202         (13,772 )      45,430   

Adjustments:

        

Corporate Reorganization (b)

      6,143         —          6,143   

Loss on divestiture (c)

      5,176         —          5,176   

2013 Litigation Settlement (d)

      635         —          635   
  

 

 

     

 

 

    

 

 

  

Adjusted EBITDA

    $ 261,765       $ (187,727 )    $ 74,038   
  

 

 

     

 

 

    

 

 

  

 

9

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

ADJUSTED EBITDA

For the Nine Months Ended September 30, 2013

(dollars in thousands, except per share data)

 

     Consolidated      Distribution
of Enova (a)		     As Adjusted  

Income (loss) from operations

    $ 155,353       $ (114,101 )    $ 41,252   

Depreciation and amortization expenses

      54,314         (12,986 )      41,328   

Adjustments:

        

2013 Litigation Settlement (e)

      18,000         —          18,000   
  

 

 

     

 

 

    

 

 

  

Adjusted EBITDA

    $ 227,667       $ (127,087 )    $ 100,580   
  

 

 

     

 

 

    

 

 

  

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

ADJUSTED EBITDA

For the Year Ended December 31, 2013

(dollars in thousands, except per share data)

 

     Consolidated     Distribution
of Enova (a)		     As Adjusted  

Income (loss) from operations

    $ 211,783      $ (150,615 )    $ 61,168   

Depreciation and amortization expenses (f)

      73,092        (17,143 )      55,949   

Adjustments:

       

Texas Consumer Loan Store Closures (g)

      1,373        —          1,373   

Regulatory Penalty (h)

      5,000        (2,500 )      2,500   

2013 Litigation Settlement (e)

      18,000        —          18,000   

Charges related to the Ohio Adjustment (i)

      (5,000 )      —          (5,000 ) 
  

 

 

    

 

 

    

 

 

  

Adjusted EBITDA

    $ 304,248      $ (170,258 )    $ 133,990   
  

 

 

    

 

 

    

 

 

  

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

ADJUSTED EBITDA

For the Year Ended December 31, 2012

(dollars in thousands, except per share data)

 

     Consolidated      Distribution
of Enova (a)		     As Adjusted  

Income (loss) from operations

    $ 215,915       $ (126,288 )    $ 89,627   

Depreciation and amortization expenses (j)

      62,864         (13,272 )      49,592   

Adjustments:

        

Charges related to the Mexico Reorganization (k)

      21,712         —          21,712   

Charges related to the Ohio Reimbursement Program (l)

      13,400         —          13,400   

Charges related to the proposed Enova IPO (m)

      3,879         (3,879 )      —     
  

 

 

     

 

 

    

 

 

  

Adjusted EBITDA

    $ 317,770       $ (143,439 )    $ 174,331   
  

 

 

     

 

 

    

 

 

  

 

10

 

(a) The “Distribution of Enova” includes amounts attributable to Enova, which were included in the Company’s historical financial statements.
(b) Represents charges of $6.1 million, before tax benefit of $2.3 million, related to the Company’s August 2014 reorganization of its corporate functions in anticipation of the distribution of Enova (the “Corporate Reorganization”).
(c) Represents a loss on the sale of the Company’s Mexico-based pawn operations of $2.8 million and tax provision of $1.7 million, a $2.1 million expense, before tax benefit of $0.3 million, related to an uncollectible receivable as a result of the Company’s discontinuation of its Mexico-based pawn operations, and a loss on the sale of Colorado pawn lending locations of $0.3 million, before tax benefit of $0.1 million.
(d) Represents charges of $0.6 million, before tax benefit of $0.2 million, related to the settlement of a litigation matter in 2013 (the “2013 Litigation Settlement”).
(e) Represents charges of $18.0 million, before tax benefit of $6.7 million.
(f) Excludes $0.2 million of depreciation and amortization expenses related to the Texas Consumer Loan Store Closures as discussed further in (g) below.
(g) Represents charges of $1.4 million, before tax benefit of $0.5 million, related to the closure of 36 consumer lending-only retail services locations in Texas in 2013 (the “Texas Consumer Loan Store Closures”).
(h) Represents charges that are nondeductible for tax purposes related to a penalty paid to the Consumer Financial Protection Bureau (“CFPB”) in connection with the issuance of a consent order by the CFPB in November 2013 (the “Regulatory Penalty”). Enova incurred 50% of the Company’s charge for the Regulatory Penalty.
(i) Represents the decrease in the Company’s remaining liability related to a voluntary program to reimburse Ohio customers in connection with legal collections proceedings initiated by the Company in Ohio (the “Ohio Reimbursement Program”) during 2013 after the assessment of the claims made to date and related matters (the “Ohio Adjustment”) of $5.0 million, before tax provision of $1.8 million.
(j) Excludes $12.6 million of depreciation and amortization expenses related to the Mexico Reorganization as discussed further in (k) below.
(k) Represents charges of $21.7 million, before tax benefit of $1.2 million and noncontrolling interest of $2.3 million, related to the reorganization of the Company’s Mexico-based pawn operations to include only full-service pawn locations and discontinuation of operations of 148 of its Mexico-based pawn locations that primarily offered pawn loans based on the pledge of jewelry-based collateral (“the Mexico Reorganization”). Includes $12.6 million of depreciation and amortization expenses as noted in (j) above.
(l) Represents charges related to the Ohio Reimbursement Program, before tax benefit of $5.0 million.
(m) Represents charges directly related to the withdrawn proposed initial public offering by Enova (the “Enova IPO”) of $3.9 million, before tax benefit of $1.5 million.

 

11

Adjusted Net Income and Diluted Net Income Per Share

In addition to reporting financial results in accordance with GAAP, the Company has provided adjusted net income and adjusted diluted net income per share attributable to the Company (collectively, the “Adjusted Earnings Measures”), which are non-GAAP measures. Management believes that the presentation of these measures provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments and amortization methods, which provides a more complete understanding of the Company’s financial performance, competitive position and prospects for the future. Management also believes that investors regularly rely on non-GAAP financial measures, such as the Adjusted Earnings Measures, to assess operating performance and that such measures may highlight trends in the Company’s business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. In addition, management believes that the adjustments included in the table below are useful to investors in order to allow them to compare the Company’s financial results across the periods presented. The computation of Adjusted Earnings Measures as presented below may differ from the computation of similarly-titled measures provided by other companies. Adjustments provided below were not included in the pro forma financial statements shown above.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

ADJUSTED NET INCOME AND DILUTED NET INCOME PER SHARE

For the Nine Months Ended September 30, 2014

(dollars in thousands, except per share data)

 

     Consolidated      Distribution of
Enova (a)		     As Adjusted  
     $      Per
Diluted
Share(b)		      $     Per
Diluted
Share(b)		     $     Per
Diluted
Share(b)(c)		  

Net income and diluted net income per share attributable to the Company

    $ 76,624         2.61       $ (94,501 )      (3.22 )    $ (17,877 )      (0.62 ) 

Adjustments (net of tax):

               

Loss on divestitures (d)

      6,444         0.22         —          —          6,444        0.22   

Corporate Reorganization (e)

      3,870         0.13         —          —          3,870        0.13   

Loss on early extinguishment of debt (f)

      14,208         0.48         —          —          14,208        0.48   

2013 Litigation Settlement (g)

      400         0.01         —          —          400        0.01   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted net income and adjusted diluted net income per share attributable to the Company

    $ 101,546         3.45       $ (94,501 )      (3.22 )    $ 7,045        0.22   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

 

12

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

ADJUSTED NET INCOME AND DILUTED NET INCOME PER SHARE

For the Nine Months Ended September 30, 2013

(dollars in thousands, except per share data)

 

     Consolidated     Distribution of
Enova (a)		     As Adjusted  
     $     Per
Diluted
Share(b)		     $     Per
Diluted
Share(b)		     $     Per
Diluted
Share(b)		  

Net income and diluted net income per share attributable to the Company

    $ 115,244        3.73      $ (63,363 )      (2.05 )    $ 51,881        1.68   

Adjustments (net of tax):

             

2013 Litigation Settlement (h)

      11,340        0.37        —          —          11,340        0.37   

Tax benefit related to Creazione Deduction (i)

      (33,201 )      (1.08 )      —          —          (33,201 )      (1.08 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted net income and adjusted diluted net income per share attributable to the Company

    $ 93,383        3.02      $ (63,363 )      (2.05 )    $ 30,020        0.97   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

ADJUSTED NET INCOME AND DILUTED NET INCOME PER SHARE

For the Year Ended December 31, 2013

(dollars in thousands, except per share data)

 

     Consolidated     Distribution of
Enova (a)		     As Adjusted  
     $     Per
Diluted
Share(b)		     $     Per
Diluted
Share(b)		     $     Per
Diluted
Share(b)		  

Net income and diluted net income per share attributable to the Company

    $ 142,528        4.66      $ (83,338 )      (2.72 )    $ 59,190        1.93   

Adjustments (net of tax):

             

Texas Consumer Loan Store Closures (j)

      865        0.03        —          —          865        0.03   

Loss on early extinguishment of debt (k)

      382        0.01        —          —          382        0.01   

Regulatory Penalty (l)

      5,000        0.16        (2,500 )      (0.08 )      2,500        0.08   

2013 Litigation Settlement (h)

      11,340        0.37        —          —          11,340        0.37   

Tax benefit related to Creazione Deduction (i)

      (33,201 )      (1.09 )      —          —          (33,201 )      (1.09 ) 

Charges related to Ohio Adjustment and Ohio Reimbursement Program (m)

      (3,209 )      (0.10 )      —          —          (3,209 )      (0.10 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted net income and adjusted diluted net income per share attributable to the Company

    $ 123,705        4.04      $ (85,838 )      (2.80 )    $ 37,867        1.23   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

13

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

ADJUSTED NET INCOME AND DILUTED NET INCOME PER SHARE

For the Year Ended December 31, 2012

(dollars in thousands, except per share data)

 

     Consolidated      Distribution of
Enova (a)		     As Adjusted  
     $      Per
Diluted
Share(b)		      $     Per
Diluted
Share(b)		     $      Per
Diluted
Share(b)		  

Net income and diluted net income per share attributable to the Company

    $ 107,470         3.42       $ (66,566 )      (2.12 )    $ 40,904         1.30   

Adjustments (net of tax):

                

Charges related to withdrawn proposed Enova IPO (n)

      2,424         0.07         (2,424 )      (0.07 )      —           —     

Charges related to the Mexico Reorganization (o)

      25,421         0.81         —          —          25,421         0.81   

Charges related to Ohio Adjustment and Ohio Reimbursement Program (p)

      8,442         0.27         —          —          8,442         0.27   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Adjusted net income and adjusted diluted net income per share attributable to the Company

    $ 143,757         4.57       $ (68,990 )      (2.19 )    $ 74,767         2.38   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

 

(a) The “Distribution of Enova” column includes amounts attributable to Enova, which were included in the Company’s historical financial statements.
(b) Diluted shares are calculated by giving effect to the potential dilution that could occur if securities or other contracts to issue common shares were exercised and converted into common shares during the period. Per share values shown in the “As Adjusted” column may not compute correctly due to rounding differences.
(c) Net income and diluted net income per share attributable to the Company and Adjusted net income and adjusted diluted net income attributable to the Company were computed in the same manner as Basic earnings per share due to the loss that results for the nine months ended September 30, 2014 on an as-adjusted basis. Adjustments shown were computed based on the diluted weighted average share value for the consolidated entity.
(d) Represents a loss on the sale of the Company’s Mexico-based pawn operations of $2.8 million and tax provision of $1.7 million, a $2.1 million expense, net of tax benefit of $0.3 million, related to an uncollectible receivable as a result of the Company’s discontinuation of Mexico-based pawn operations, and a loss on the sale of Colorado pawn lending locations of $0.3 million, net of tax benefit of $0.1 million.
(e) Represents charges of $6.1 million, net of tax benefit of $2.3 million.
(f) Represents $22.6 million of charges, net of tax benefit of $8.3 million.
(g) Represents charges of $0.6 million of charges, net of tax benefit of $0.2 million.
(h) Represents charges of $18.0 million, net of a tax benefit of $6.7 million.
(i) In connection with the liquidation of Creazione Estilo, S.A. de C.V., a Mexican sociedad anónima de capital variable (“Creazione”), represents a recognized income tax benefit related to a tax deduction (the “Creazione Deduction”) included on the Company’s 2013 federal income tax return for its tax basis in the stock of Creazione.
(j) Represents charges of $1.4 million, net of tax benefit of $0.5 million.
(k) Represents charges of $0.6 million, net of tax benefit of $0.2 million.
(l) Represents charges that are nondeductible for tax purposes. Enova incurred 50% of the Company’s charge for the Regulatory Penalty.
(m) Represents charges of $5.0 million, net of tax provision of $1.8 million.
(n) Represents charges of $3.9 million, net of tax benefit of 1.5 million related to the withdrawn Enova IPO.
(o) Represents charges of $28.9 million, net of tax benefit of $1.2 million and noncontrolling interest of $2.3 million related to the reorganization of the Company’s Mexico-based pawn operations to include only full-service pawn locations and discontinuation of operations of 148 of its Mexico-based pawn locations that primarily offered pawn loans based on the pledge of jewelry-based collateral (“the Mexico Reorganization”).
(p) Represents $13.4 million charges, net of tax benefit of $5.0 million, related to the Ohio Reimbursement Program.

 

14