UNITED STATES
[ X ] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 75-2237318 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
690 East Lamar Blvd., Suite 400 | 76011 | |
Arlington, Texas | (Zip Code) | |
(Address of principal executive offices) |
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Title of Each Class
Name of Exchange on Which Registered
Common Stock, par value $.01 per share
The NASDAQ Global Select Market
Title of Each Class | Name of Exchange on Which Registered |
Common Stock, par value $.01 per share | The NASDAQ Global Select Market |
xYes ¨o No
xYes ¨o No
x Large accelerated filer | o Accelerated filer |
o Non-accelerated filer (Do not check if a smaller reporting company) | o Smaller reporting company |
¨ Accelerated filer
¨Non-accelerated filer (Do not check if a smaller reporting company)
¨Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
o¨Yes x No
PART I
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Removed and Reserved
PART II
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Item 6.
Selected Financial Data
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accounting Fees and Services
PART IV
Item 15.
Exhibits and Financial Statement Schedules
SIGNATURES
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. industries. Year Ended December 31, 2011 2010 2009 2008 2007 Mexico stores 61 58 60 64 (4) 52 U.S. stores 21 (1) 12 (2) 5 (3) 7 15 Total 82 70 65 71 67 2012 Pawn Locations Consumer Large Small Loan Total Format (1) Format (2) Locations (3) Locations United States: Total locations, beginning of period 111 24 91 226 New locations opened or acquired 20 1 - 21 Store format conversions 1 - (1) - Locations closed or consolidated - - (6) (6) Discontinued operations - - (10) (10) Total locations, end of period 132 25 74 231 Mexico: Total locations, beginning of period 333 20 33 386 New locations opened or acquired 61 - - 61 Store format conversions - (1) 1 - Total locations, end of period 394 19 34 447 Total: Total locations, beginning of period 444 44 124 612 New locations opened or acquired 81 1 - 82 Store format conversions 1 (1) - - Locations closed or consolidated - - (6) (6) Discontinued operations - - (10) (10) Total locations, end of period 526 44 108 678regulations)regulations, including recently enacted federal pawn legislation in Mexico and ordinances in the Texas cities of San Antonio and El Paso) affecting consumer loan businesses, credit services organizations and pawn businesses (in both the United States and Mexico), changes in import/export regulations and tariffs or duties, changes in anti-money laundering regulations, unforeseen litigation, changes in interest rates, monetary inflation, changes in tax rates or policies, changes in gold prices, changes in energy prices, cost of funds, changes in foreign currency exchange rates, future business decisions, public health issues, changes in demand for the Company’s services and products, changes in the Company’s ability to satisfy its debt obligations or to obtain new capital to finance growth, a prolonged interruption in the Company’s operations of its facilities, systems, and business functions, including its information technology, cash management and other business systems, the implementation of new, or changes in the interpretation of existing accounting principles or financial reporting requirements, and other uncertainties. These and other risks, uncertainties and uncertaintiesregulatory developments are further and more completely described in “Item 1A. Risk Factors.”28, 2012,18, 2013, the Company has over 720had approximately 829 locations in eighttwelve U.S. states and 2324 states in Mexico.Company’sCompany's primary business is the operation of pawn stores, which engage in retail sales, purchasing of second handsecondhand goods and consumer finance activities. The pawn stores generate significant retail sales from the merchandise acquired through collateral forfeitures and over-the-counter purchases from customers. Pawn stores are also a convenient source for small consumer loans to help customers meet their short-term cash needs. Personal property such as jewelry, consumer electronics, tools, sporting goods and musical instruments are pledged as collateral for the loans. The pawn stores also generate significant retail sales from the merchandise acquired through collateral forfeitures and over-the-counter purchases from customers. In addition, some of the Company’sCompany's pawn stores offer consumer loans or credit services products. The Company’sCompany's strategy is to focus on growing its retail-based pawn operations in the United States and Mexico.transfers and prepaid card products.transfers. The product mix in these stores varies by market.2011,2012, was primarily derived from the Company’sCompany's pawn operations in the U.S. and Mexico:Company’sCompany's principal executive offices are located at 690 East Lamar Blvd., Suite 400, Arlington, Texas 76011, and its telephone number is (817) 460-3947.whichthat buy and sell popular consumer items such as jewelry, consumer electronics, power tools, musical instruments and sporting goods. Pawnshops also provide a quick and convenient source of small customerconsumer loans to unbanked, underbankedunder-banked and credit-challenged customers. These consumers are typically not effectively or efficiently served by traditional lenders such as banks, credit unions or credit card providers. First Cash competespawn stores compete directly in both the specialty retail and consumer finance industries, primarily with its pawn operations.anwell established, industry, with the highest concentration of pawnshops located in the Southeast, Midwest and Southwest regions of the country. The operation of pawnshops is governed primarily by state laws, and accordingly, states that maintain pawn laws most conducive to profitable operations have historically seen the greatest concentration of pawnshops. Although mature, management believes that the U.S. pawn industry remains highly fragmented. The three major publicly traded pawnshop companies, which include First Cash, currently operate approximately 2,1002,200 of the estimated 12,00011,000 to 15,000 total pawnshops in the United States. The Company believes that individuals operating less than five locations own the majority of pawnshops.5,000 to 6,000 stores, estimated country-wide. While the Company operates mostly large, full-service stores in Mexico, most of the competitors’which approximately 5,000 are small "jewelry-only" stores. The jewelry-only pawnshops in Mexico are much smaller than thosemost stores in the U.S. and typically only make loans collateralized by gold jewelry and have limited, if any, retail operations. The Company currently operates over 490 pawn and consumer lending locationsmostly large, full-service stores in Mexico, where competition is extremely limited. The Company believes that there are 1,000 or fewer large format, full-service pawnshops in Mexico. A large percentage of the population in Mexico is unbanked or underbankedunder-banked and has limited access to consumer credit. The Company believes that there is significant opportunity for future expansion in Mexico due to the large potential consumer base and limited competition, especially from large format pawnshop operators.Company’sCompany's business plan is to continue the expansion of its operations by opening new retail pawn locations, acquiring existing pawnshops in strategic markets and to remain focused on increasing revenue and operating profits in its existing stores. In addition, the Company will continue to evaluate acquisition opportunities in the pawn industry, in both Mexico and the United States, if and when they arise.355431 new stores in the last five fiscal years and intends to open additional stores in locations where management believes appropriate demand and other favorable conditions exist. The following chart details store openingsadditions over the past five years: Year Ended December 31, 2012 2011 2010 2009 2008 Domestic stores: New locations opened 6 10 6 3 7 Locations acquired 46 11 6 2 — Total additions 52 21 12 5 7 International stores: New locations opened 62 61 58 60 48 Locations acquired 29 — — — 16 Total additions 91 61 58 60 64 Total: New locations opened 68 71 64 63 55 Locations acquired 75 11 6 2 16 Total additions 143 82 70 65 71 (1) Includes acquisitions of six stores in February 2011 and five stores in November 2011.(2) Includes acquisition of six stores in July 2010.(3) Includes acquisition of two stores in June 2009.(4) Includes acquisition of 16 stores in December 2008.Subsequent to December 31, 2011, the Company opened 18 new stores and completed a 29-store acquisition in Mexico, resulting in 47 additions as of February 28, 2012.Company’sCompany's experience that after a suitable location has been identified and a lease and licenses are obtained, a new store can be open for business within six to twelve weeks. The investment required to open a new location includes store operating cash, inventory, funds for pawn and consumer loans, leasehold improvements, store fixtures, security systems, computer equipment and start-up losses.Company’sCompany's existing store base are the volume and gross profit of merchandise sales, the volume and yield on customer loans outstanding, the volume and fees collected on credit services transactions, check cashing transactions and other consumer financial services transactions, and the control of store expenses, including the loss provision expense related to consumer loans and credit services loans. To encourage customer traffic, which management believes is a key determinant to increasing its stores’stores' profitability, the Company has taken several steps to distinguish its stores and to make customers feel more comfortable. In addition to a clean and secure physical store facility, the stores’stores' exteriors typically display attractive and distinctive signage similar to those used by contemporary specialty retailers.Company’sCompany's existing store base and can accommodate reasonably foreseeable growth in the near term.as well as the availability of certain regional chains, the Company believes that certain acquisition opportunities may arise from time to time. The timing of any future acquisitions is based on identifying suitable stores and purchasing them on terms that are viewed as favorable to the Company. Before making an acquisition, management typically studies a demographic analysis of the surrounding area, considers the number and size of competing stores, and researches state and local regulatory issues. Specific pawn store acquisition criteria include an evaluation of the volume of annualmerchandise sales and pawn transactions, outstanding customer pawn loan balances, historical pawn yields, retail margins and redemption rates, the qualitycondition and quantity of inventory on hand, and location and condition of the facility, including lease terms.Company’sCompany's pawn merchandise sales are primarily retail sales to the general public from its pawn stores. The items retailed are primarily used jewelry, consumer electronics, jewelry, household appliances, tools, musical instruments, and sporting goods. The Company also melts down certain quantities of scrap gold jewelry and sells the gold, silver and diamonds in commodity markets. These merchandiseMerchandise sales accounted for approximately 66% of the Company’sCompany's revenue from continuing operations during fiscal 2011.2012.pawnspawn collateral and, to a lesser extent, through purchases of used goods directly from the general public. Merchandise acquired by the Company through forfeited pawnspawn collateral is carried in inventory at the amount of the related pawn loan, exclusive of any accrued service fees.Company’sCompany's pawn stores make small loans to their customers in order to help them meet their short-term cash needs. TheAll pawn loans are collateralized by personal property such as jewelry, electronic equipment, household appliances, tools, sporting goods and musical instruments. Pawn loans are non-recourse loans and the pledged goods provide the only security to the Company for the repayment of the loan. The Company does not investigate the creditworthiness of the borrower, relying instead on the marketability and sales value of pledged goods as a basis for its credit decision. A customer does not have a legal obligation to repay a pawn loan and the decision to not repay the loan will not affect the customer’scustomer's credit score.borrower’sborrower's name, borrower’sborrower's identification number from his/her driver’sdriver's license or other identification, date, identification and description of the pledged goods, including applicable serial numbers, amount financed, pawn service fee, maturity date, total amount that must be paid to redeem the pledged goods on the maturity date, and the annual percentage rate.propertypawn collateral is forfeited to the Company and transferred to inventory at a value equal to the principal amount of the loan, exclusive of accrued interest. The Company does not record pawn loan losses or charge-offs because the amount advanced becomes the carrying cost of the forfeited collateral that is to be recovered through the merchandise sales function described above.transaction.transaction and holding the pledged property. The pawn loan fees and service charges are typically calculated as a percentage of the pawn loan amount based on the size and duration of the transaction and generally range from 12%4% to 300% annually,25% per month, as permitted by applicable laws. As required by applicable laws, the amounts of these charges are disclosed to the customer on the pawn ticket. These pawn loan fees and service charges accounted for approximately 23%26% of the Company’sCompany's revenue from continuing operations during fiscal 2011.2012.Company’sCompany's lending activities. The basis for the Company’sCompany's determination of the sale value includes such sources as precious metals spot markets, catalogs, blue books, on-line auction sites and newspapers. The Company also utilizes its integrated computer information system to recall recent selling prices of similar merchandise in its own stores and to review the customer’scustomer's previous transaction history with the Company. These sources, together with the employees’employees' experience in selling similar items of merchandise in particular stores, influence the determination of the estimated sale value of such items. The Company does not utilize a standard or mandated percentage of estimated sale value in determining the amount to be financed. Rather, the employee has the authority to set the percentage for a particular item and to determine the ratio of pawn amount to estimated sale value with the expectation that, if the item is forfeited to the pawnshop, its subsequent sale should yield a gross profit margin consistent with the Company’sCompany's historical experience. The recovery of the principal and realization of gross profit on sales of inventory is dependent on the Company’sCompany's initial assessment of the property’sproperty's estimated sale value. Improper assessment of the sale value of the collateral in the lending function can result in reduced marketability of the property and sale of the property for an amount less than the principal amount pawned. As of December 31, 2011,2012, the Company’sCompany's average pawn loan was approximately $102$110 on a consolidated basis, approximately $178$185 in its U.S. stores and approximately $66$75 in its Mexico stores.Company’sCompany's consumer loan and pawn stores in Texas offer the CSO Program, and, in Texas, credit services are also offered via an internet platform. The Company’sCompany's CSO Program in Texas is licensed as a Credit Access Business (“CAB”) under Texas Finance Code Chapter 393 and regulated by the Texas Office of the Consumer Credit Commissioner. Under the CSO Program, the Company assists customers in applying for a short-term extension of credit from an independent, non-bank, consumer lending company (the “Independent Lender”) and issues the Independent Lender a letter of credit to guarantee the repayment of the extension of credit. The extensions of credit made by the Independent Lender to credit services customers of the Company range in amount from $50$50 to $1,500,$1,500, with an average loan of $516,$518, terms of 7 to 35 days and bear interest at a rate of 10% on an annualized basis. The Company typically charges a credit services fee of $22per $100 advanced. If the extension of credit is not repaid prior to the expiration of the term, the customer’scustomer's personal check or ACH withdrawal is deposited into the Independent Lender’sLender's bank account. Banks return a significant number of customer checks deposited into the Independent Lender’sLender's account due to insufficient funds in the customers’customers' accounts. If the extension of credit is unpaid after 16 days from its due date, the Company reimburses the Independent Lender, under the terms of its letter of credit, for the outstanding principal amount,customers’customers' checks, ACH collections or subsequent cash repayments by the customers. The profitability of the Company’sCompany's credit services operations is dependent upon adequate collection of these returned items. The Company also offers an automobile title lending product under the CSO Program, however, its results were not significant in fiscal 2011.2012. These credit services fees accounted for approximately 9%8% of the Company’sCompany's revenue from continuing operations during fiscal 2011.2012.Company’sCompany's consumer loan stores in Mexico make small, unsecured consumer loans with an average loan amount of approximately $78.$86. To qualify for a consumer loan, a customer generally must have proof of steady income, residence and valid identification. At maturity, the customer typically returns to the store to pay off the loan and related fee with cash. If the customer fails to repay the loan, the Company initiates collection procedures, which can include collection calls and home visits. Consumer loans in Mexico are not secured by a personal check. The term of the consumer loan in Mexico ranges from 7 to 15 days. Consumer loans made in Mexico bear weekly service fees of 10% on the loan amount;amount on seven day loans and 20% on 14 and 15 day loans; the maximum loan amount is $400. In Mexico, the Company also offers an installment loan product with a term of 365 days and bears weekly service fees of 7% on the loan amount; the maximum loan amount is $400. These consumer loan fees accounted for approximatelyless than 1% of the Company’sCompany's revenue from continuing operations during fiscal 2011.2012.Company’sCompany's revenue and long-lived assets by geographic areas is provided in Note 1615 of Notes to Consolidated Financial Statements.and closings for the twelve months ended December 31, 2011: Pawn Locations Total Locations Domestic: Total locations, beginning of period 132 25 74 231 New locations opened 6 — — 6 Locations acquired 46 — — 46 Store format conversions — 2 (2 ) — Discontinued consumer loan operations — — (7 ) (7 ) Total locations, end of period 184 27 65 276 International: Total locations, beginning of period 394 19 34 447 New locations opened 62 — — 62 Locations acquired 29 — — 29 Total locations, end of period 485 19 34 538 Total: Total locations, beginning of period 526 44 108 678 New locations opened 68 — — 68 Locations acquired 75 — — 75 Store format conversions — 2 (2 ) — Discontinued consumer loan operations — — (7 ) (7 ) Total locations, end of period 669 46 99 814 (1) (1)The large format locations include retail showrooms and accept a broad array of pawn collateral including jewelry, electronics, appliances, tools and other consumer hard goods. At December 31, 2011, 79 of the U.S. large format pawn stores also offered consumer loans or credit services products.(2) (2)The small format locations typically have limited retail operations and primarily accept jewelry and small electronic items as pawn collateral. At December 31, 2011, all of the Texas and Mexico small format pawn stores also offered consumer loans or credit services products.(3) (3)The U.S. consumer loan locations offer a credit services product and are all located in Texas. The Mexico locations offer small, short-term consumer loans. In addition to stores shown on this chart, First Cash is also an equal partner in Cash & Go, Ltd., a joint venture, which owns and operates 39 check cashing and financial services kiosks located inside convenience stores in the state of Texas. The Company’s credit services operations also include an internet distribution channel for customers in the state of Texas.2011,2012, the Company’sCompany's stores were located in the following states:
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| Loan |
| Total |
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United States: |
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| Texas | 80 |
| 24 |
| 74 |
| 178 | |
| Maryland | 26 |
| - |
| - |
| 26 | |
| Indiana | 9 |
| - |
| - |
| 9 | |
| South Carolina | 6 |
| - |
| - |
| 6 | |
| Missouri | 4 |
| - |
| - |
| 4 | |
| District of Columbia | 2 |
| 1 |
| - |
| 3 | |
| Oklahoma | 3 |
| - |
| - |
| 3 | |
| Virginia | 2 |
| - |
| - |
| 2 | |
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| 132 |
| 25 |
| 74 |
| 231 |
Mexico: |
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| Tamaulipas | 49 |
| 1 |
| 4 |
| 54 | |
| Edo. De Mexico (State of Mexico) | 49 |
| 4 |
| - |
| 53 | |
| Baja California | 43 |
| 2 |
| 3 |
| 48 | |
| Nuevo Leon | 34 |
| 1 |
| 2 |
| 37 | |
| Jalisco | 27 |
| 3 |
| 5 |
| 35 | |
| Chihuahua | 31 |
| 1 |
| 2 |
| 34 | |
| Coahuila | 34 |
| - |
| - |
| 34 | |
| Guanajuato | 23 |
| 2 |
| 7 |
| 32 | |
| Puebla | 22 |
| 1 |
| 5 |
| 28 | |
| Aguascalientes | 7 |
| 1 |
| 5 |
| 13 | |
| Durango | 12 |
| - |
| - |
| 12 | |
| San Luis Potosi | 8 |
| 1 |
| - |
| 9 | |
| Veracruz | 8 |
| 1 |
| - |
| 9 | |
| Queretaro | 7 |
| - |
| 1 |
| 8 | |
| Distrito Federal | 7 |
| - |
| - |
| 7 | |
| Guerrero | 7 |
| - |
| - |
| 7 | |
| Hidalgo | 6 |
| 1 |
| - |
| 7 | |
| Morelos | 7 |
| - |
| - |
| 7 | |
| Colima | 5 |
| - |
| - |
| 5 | |
| Michoacan | 5 |
| - |
| - |
| 5 | |
| Zacatecas | 2 |
| - |
| - |
| 2 | |
| Sonora | 1 |
| - |
| - |
| 1 | |
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| 394 |
| 19 |
| 34 |
| 447 |
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| Total | 526 |
| 44 |
| 108 |
| 678 |
In May of 2011, legislation in the State of Texas was enacted to further regulate credit services businesses in the state, which includes the Company's CSO Program. The 2011 law creates an expanded regulatory framework under which Credit Access Businesses (“CAB”) may provide credit services products. The regulations provide that CAB be licensed, regulated and audited by the State's Office of the Consumer Credit Commissioner. The law also provides for enhanced disclosures to customers regarding credit services products. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at Pawn Locations Total Locations United States: Texas 87 26 65 178 Colorado 29 — — 29 Maryland 27 — — 27 Indiana 9 — — 9 Kentucky 7 — — 7 South Carolina 7 — — 7 Oklahoma 4 — — 4 Missouri 4 — — 4 Virginia 4 — — 4 Wyoming 3 — — 3 District of Columbia 2 1 — 3 Nebraska 1 — — 1 184 27 65 276 Mexico: Edo. De Mexico (State of Mexico) 60 4 — 64 Baja California 50 2 3 55 Tamaulipas 49 1 4 54 Nuevo Leon 43 1 2 46 Jalisco 35 3 5 43 Chihuahua 32 1 2 35 Guanajuato 25 2 7 34 Coahuila 34 — — 34 Puebla 26 1 5 32 Sonora 23 — — 23 Veracruz 16 1 — 17 Aguascalientes 7 1 5 13 Durango 12 — — 12 Morelos 11 — — 11 Distrito Federal 10 — — 10 San Luis Potosi 8 1 — 9 Guerrero 8 — — 8 Queretaro 7 — 1 8 Hidalgo 7 1 — 8 Michoacan 7 — — 7 Sinaloa 7 — — 7 Colima 5 — — 5 Zacatecas 2 — — 2 Quintana Roo 1 — — 1 485 19 34 538 Total 669 46 99 814 Company’sCompany's stores from the competition. The design consists of a well-illuminated exterior with distinctive signage and a layout similar to a contemporary specialty retailer. The Company’sCompany's stores are typically open six to seven days a week from 9:00 a.m. to between 6:00 p.m. and 9:00 p.m.Company’sCompany's computer system permits a store manager or clerk to rapidly recall the cost of an item in inventory and the date it was purchased, as well as the prior transaction history of a particular customer. It also facilitates the timely valuation of goods by showing values assigned to similar goods in the past. The Company has networked its stores to permit the Company’sCompany's headquarters to more efficiently monitor each store’sstore's operations, including merchandise sales, service charge revenue, pawns written and redeemed, and changes in inventory.employees’employees' ability to make pawns that achieve optimum pawn yields and merchandise sales margins, to be effective sales people and to provide prompt and courteous service. Therefore, the Company trains its employees through direct instruction and on-the-job pawn and sales experience. The new employee is introduced to the business through an orientation and training program that includes on-the-job training in lending practices, layaways, merchandise valuation, and general administration of store operations. Certain experienced employees receive training and an introduction to the fundamentals of management to acquire the skills necessary to advance into management positions within the organization. Management training typically involves exposure to income maximization, recruitment, inventory control and cost efficiency. The Company maintains a performance-based compensation plan for all store employees based on sales, gross profit and other performance criteria.The Company’sCompany’sCompany's stores from the competition. The designcompetition, which consists of a well-illuminated exterior with lighted signage. The interiors typically feature an ample lobby separated from employee work areas by glass teller windows. The Company’sCompany's stores are typically open six to seven days a week from 9:00 a.m. to between 6:00 p.m. and 9:00 p.m.Company’sCompany's credit services and consumer loan stores allow a store manager or clerk to rapidly recall customer check cashing histories, consumer loan histories, and other vital information. The Company attempts to attract customers primarily through the stores’stores' visibility and television advertisementsadvertising in certain markets.The new employee isNew employees are introduced to the business through a training program that includes on-the-job training in lending practices, collections efforts and general administration of store operations. Certain experienced employees receive training and an introduction to the fundamentals of management, such as income maximization, recruitment and cost efficiency to acquire the skills necessary to advance into management positions throughout the Company. The Company maintains a performance-based compensation plan for all consumer loan and credit services store employees based on gross profit, net income and other performance criteria.Company’sCompany's revenue, profitability and ability to expand.The Company competes primarily with other pawn store operators, other specialty consumer finance operators and deep-value specialty retailers. There are three large publicly-held pawnshop operators, based in the U.S., of which First Cash is the smallest. There are many public and privately held operators of consumer loan stores, some of which are significantly larger than the Company.In its retail operations, the Company’s competitors include numerous retail and wholesale stores, including jewelry stores, rent-to-own stores, discount retail stores, consumer electronics stores, other specialty retailers, on-line retailers, on-line auction sites, on-line classified advertising sites and other pawnshops. Competitive factors in the Company’s retail operations include the ability to provide the customer with a variety of merchandise items at attractive prices. Many of the retailer competitors have significantly greater size and financial resources than the Company.There is also significant competition in the consumer loan and credit services industries from internet-based providers of such products, many of which have significantly larger operations than the Company’s. In addition, the pawnshop and other specialty consumer finance industries are characterized by a large number of independent owner-operators, some of whom own and operate multiple locations. The Company believes that the primary elements of competition in these businesses are store location, the ability to lend competitive amounts on pawns and consumer loans, customer service, and management of store employees. In addition, the Company competes with financial institutions, such as banks and consumer finance companies, which generally lend on an unsecured as well as a secured basis. Other lenders may and do lend money on terms more favorable than those offered by the Company. Many of these competitors have greater financial resources than the Company.Mexico, which have broad discretionary authority.Mexico. Many statutes and regulations prescribe, among other things, the general terms of the Company’sCompany's pawn and consumer loan agreements and the maximum service fees and/or interest rates that may be charged and, in many jurisdictions, the Company must obtain and maintain regulatory operating licenses. These regulatory agencies have broad discretionary authority. The Company is also subject to United States and Mexico federal and state regulations relating to the reporting and recording of firearm pawns, purchases and sales and certain currency transactions.stories typically focus on the cost to a consumer for pawn and consumer loans, which is higher than the interest generally charged by bank,banks, credit unions and credit card issuers to a more creditworthy consumer. The consumer groups and media stories often characterize pawn and especially payday loan activities as abusive toward consumers. During the last few years, legislation has been introduced and/or enacted in the United States and Mexico federal legislative bodies, in certain state legislatures (in the United States and Mexico) and in various local jurisdictions (in the United States and Mexico) to prohibit or restrict pawn loans, payday loans, consumer loans, credit services and the related service fees. There are several instances of this type of legislation currently proposed at federal, state and local levels in both the United States and Mexico. In addition, regulatory authorities in various levels of government have proposed or publicly addressed, from time to time, the possibility of proposing new or expanded regulations that would prohibit or further restrict pawn or consumer loans.Company’sCompany's lending, credit services and retail activities operations. There can be no assurance that additional federal, state or local legislation in the United States or Mexico will not be enacted, or that existing laws and regulations will not be amended, which could have a materially adverse impact on the Company's operations and financial condition.In July 2010, the United States Congress enactedAct. Among other things, this legislation establishes a BureauAct of Consumer Financial Protection (the “Bureau”) which will have broad2010 has announced the commencement of regulatory, supervisory and enforcement powers over non-bank providers of consumer credit such as the Company. The U.S. Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), and Title X of the Dodd-Frank Act created the Consumer Financial Protection Bureau (the “CFPB”). The CFPB became operational in certain respects in July 2011, although it did not have the ability to oversee and exercise its full authority over non-depository institutions and implement related rules until a permanent director was installed. On January 4, 2012, President Obama appointed a Director of the CFPB in a recess appointment bypassing Senate confirmation. Although there remain doubts about the legality of this appointment and the appointment may be subject to legal challenge, the CFPB has announced that it will now exercise full regulatory, supervisory and enforcement powers over certain non-bank providers of consumer financial products inand services such as the United States,Company.provisions of this legislation are stillCFPB's examination authority permits CFPB examiners to inspect the Company's books and records and ask questions about its business, and the examination procedures include specific modules for examining marketing activities, loan application and origination activities, payment processing activities and sustained use by consumers, collections, defaults and consumer reporting and third-party relationships. Although the CFPB does not have the authority to regulate fees or interest rates, it is possible that at some time in the implementation phase,future the CFPB could propose and adopt rules making short-term consumer lending products and services materially less profitable or even impractical to offer, which could force the Company to modify or terminate certain of its product offerings in the United States. The CFPB could also adopt rules imposing new and potentially burdensome requirements and limitations with respect to other consumer loan products and services. Any such rules could have a material adverse effect on the Company's business, results of operations and financial condition or could make the continuance of all or part of the Company's current U.S. business impractical or unprofitable. has only recently become fully operative. Until it begins to propose specific rules and regulations that apply to the Company's consumer credit activities, it is not possible to accurately predict what effect the Dodd-Frank Act and/or the Bureau will have on the business. There can be no assurance that the Bureau will not propose and enact rules or regulations that would have a material adverse effect on the Company’sCompany's operations and financial performance. For fiscal 2011,2012, approximately 19%46% of the Company’sCompany's total revenue was generated from U.S.-based pawn and consumer credit products.Company’sCompany's traditional customer base would exceed the revenue produced at that rate. As a result, the Company does not have a loan product to offer active military personnel.traveler’straveler's checks, and similar instruments. The purpose of the registration is to enable governmental authorities to better enforce laws prohibiting money laundering and other illegal activities. The regulations require money services businesses to register with the Treasury Department by filing a form, adopted by the Financial Crimes Enforcement Network of the Treasury Department (“FinCEN”), and to re-register at least every two years thereafter. The regulations also require that a money services business maintain a list of names and addresses of, and other information about, its agents and that the list be made available to any requesting law enforcement agency (through FinCEN). The agent list must be updated annually.–- one or more related transactions that the money services business knows, suspects, or has reason to suspect (1) involve funds derived from illegal activity or are intended to hide or disguise such funds; (2) are designed to evade the requirements of the Bank Secrecy Act; or (3) appear to serve no business or lawful purpose.customers’customers' nonpublic personal information and to disclose to its customers its privacy policy and practices, including those regarding sharing the customers’customers' nonpublic personal information with third parties. Such disclosure must be made to customers at the time the customer relationship is established, at least annually thereafter, and if there is a change in the Company’sCompany's privacy policy. In addition, the Company adheres to strict document retention and destruction policies.individual’sindividual's credit application. The Company must provide a loan applicant a Notice of Adverse Action (“NOAA”) when the Company denies an application for credit. The NOAA must inform the applicant of (1) the action taken regarding the credit application; (2) a statement of the ECOA’sECOA's prohibition on discrimination; (3) the name and address of both the creditor and the federal agency that monitors compliance with the ECOA; and (4) the applicant’sapplicant's right to learn the specific reasons for the denial of credit and the contact information for the parties the applicant can contact to obtain those reasons. The Company provides NOAA letters and maintains records of all such letters as required by the ECOA and its regulations.Company’sCompany's policy to implement and maintain safeguards to discourage these practices by its employees and follow Company standards of conduct for its business throughout the U.S. and Mexico, including the prohibition of any direct or indirect payment or transfer of Company funds or assets to suppliers, vendors, or government officials in the form of bribes, kickbacks or other payoffs.eighttwelve U.S. states, all of which have licensing and/or fee regulations on pawnshop operations, which include Texas, Indiana, Oklahoma, Maryland, Virginia, South Carolina, Washington, D.C., Colorado, Kentucky, Nebraska, Wyoming and Missouri. The Company is licensed in each of the states in which a license is currently required for it to operate as a pawnbroker. Certain jurisdictions restrict or prohibit the Company from transferring and/or relocating its pawn licenses and restricts or prohibits the issuance of new licenses. The Company's fee structures are at or below the applicable rate ceilings adopted by each of these states. In addition, the Company is in compliance with the net asset requirements in states where it is required to maintain certain levels of liquid assets for each pawn store it operates in the applicable state.consumer’sconsumer's right to review his or her file, the procedures a consumer may follow to dispute information contained in his or her file, and the availability of non-profit credit counseling services. The credit services organization must also give a consumer the right to cancel the credit services agreement without penalty within three days after the agreement is signed. In addition, under the provisions of the credit services statute, each First Cash Credit, Ltd. credit services location must be registered as a credit services organization and pay a registration fee. In May of 2011, legislation in the State of Texas was passed and signed by the governor to further regulate credit services businesses in the state, which includes the Company’s CSO Program. The new law creates an expanded regulatory framework under which Credit Access Businesses (“CAB”) may provide credit services products. The regulations provided that CAB be licensed, regulated and audited by the State’s Office of the Consumer Credit Commissioner. The law also provides for enhanced disclosures to customers regarding credit services products. The Company does not currently believe that the legislation, which became effective on January 1, 2012, will have a material impact on the revenue and profitability of the Company’s CSO Program in Texas. In the cities of Dallas and Austin, Texas, local ordinances were recently passed which restrict customer access to credit services products. The ability of these cities to regulate credit services has been challenged in lawsuits filed by an industry trade association. The Company’s total revenue from credit services operations in these two cities is less than 1% of consolidated revenue and is not considered material to the Company’s overall revenue and profitability.willcould be enacted; however, if such legislation or regulations were enacted in certain jurisdictions, it could have a materially adverse impact on the revenue and profitability of the Company. PROFECO,Federal Consumer Protection Bureau ("PROFECO"), the federal consumer protection agency. PROFECO regulates the form and terms of pawn loan contracts and many operating standards and procedures for pawnshops, including retail operations. The Company’sCompany's pawn and consumer lending operations in Mexico are also subject to federal regulations which require the Company to register its operations and loan contracts and provideprovides that the Company disclose the interest rate and fees charged on pawn and consumer loan transactions. Certain state and local governmental entities in Mexico also regulate pawn and other consumer finance and retail operations through state laws and local zoning and permitting ordinances. These agencies often have authority to suspend store operations pending resolution of actual or alleged regulatory and licensing/permitting issues.Both federalstateterms of pawn loan contracts and defines certain operating standards and procedures for pawnshops, including the retail operations. In January 2013, federal legislation in Mexico has recently been proposedwas signed into law which would further regulateconveys additional regulatory authority to PROFECO regarding the pawn industry. The new legislation requires all pawn businesses to register with and be approved by PROFECO in order to legally operate. In addition, all operators must comply with additional customer notice and disclosure provisions, bonding requirements to insure against loss or potentially restrictinsolvency and reporting of certain types of suspicious transactions. There are significant fines and sanctions for failure to comply with the abilitynew regulations. The Company believes that it already complies with many of the Company to provide pawn loansrequirements under the new legislation and does not believe they will have a significant impact on its operations or other consumer loans. Such proposals typically contain restrictions on contract terms, interest rates and/or service fees, potentially restrict or eliminate the ability of “for profit” entities to offer these services and provide for new or greater overall regulatory oversight by PROFECO and/or CONDUSEF (the federal banking and financial services regulator). The Company cannot currently assess the probability of such legislation being enacted nor the potential impact of such legislation. There can be no assurance that additional federal, state or local statutes or regulations in Mexico will not be enacted, or that existing laws and regulations will not be amended.profitability. In fiscal 2011,2012, approximately 54% of the Company’sCompany's revenue was derived from its Mexican operations. Legislation which significantly regulates contract terms, restricts service fees/rates or restricts customer access to the Company’s pawn and consumer finance products could have a materially adverse impact on the Company's results of operations and financial condition.5,3006,400 employees as of February 28, 2012,18, 2013, including approximately 400500 persons employed in executive, administrative and accounting functions. In addition, Cash & Go, Ltd. had approximately 75 employees as of February 28, 2012.18, 2013. None of the Company’sCompany's employees are covered by collective bargaining agreements. The Company considers its employee relations to be satisfactory.Company’sCompany's primary website is atwww.firstcash.com. The Company makes available, free of charge, at its corporate website, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after they are electronically filed with the SEC.workers’workers' compensation insurance in Maryland, Missouri, Virginia, South Carolina, Washington, D.C., Oklahoma, Indiana, Arkansas, Wyoming, Nebraska and Arkansas,Colorado, as well as excess employer’semployer's indemnification insurance in Texas. The Company is a non-subscriber under the Texas Workers’Workers' Compensation Act.
Demand may also fluctuate by geographic region. The current geographic concentration of the Company's stores creates exposure to local economies and regional downturns. As of In addition, the Company may incur property, casualty or other losses not covered by insurance. The $6,500. Mine Safety Disclosures First Second Third Fourth Quarter Quarter Quarter Quarter 2011 High $ 39.75 $ 41.99 $ 51.29 $ 44.16 Low 29.74 36.04 39.98 34.47 2010 High $ 23.23 $ 23.63 $ 27.75 $ 32.00 Low 20.64 20.40 21.17 26.71 Total Average Total Number Of Maximum Number Number Price Shares Purchased Of Shares That May Of Shares Paid As Part Of Publicly Yet Be Purchased Purchased Per Share Announced Plans Under The Plans January 1 through January 31, 2011 - $ - - 1,359,581 February 1 through February 28, 2011 - - - 1,359,581 March 1 through March 31, 2011 35,300 35.73 35,300 1,324,281 April 1 through April 30, 2011 64,715 37.92 64,715 1,259,566 May 1 through May 31, 2011 422,963 38.26 422,963 836,603 June 1 through June 30, 2011 65,263 38.32 65,263 771,340 July 1 through July 31, 2011 310,572 43.10 310,572 460,768 August 1 through August 31, 2011 460,768 42.37 460,768 - September 1 through September 30, 2011 - - - - October 1 through October 31, 2011 - - - - November 1 through November 30, 2011 - - - - December 1 through December 31, 2011 - - - 1,500,000 Total 1,359,581 $ 40.68 1,359,581 Company’sCompany's operations and financial condition. A more detailed discussion of the regulatory environment and current developments and risks to the Company is provided in Part I, Item 1.Company’sCompany's customers' borrowing needs, they do typically characterize pawn and/or consumer loans as predatory or abusive despite the large customer demand for thesepayday advances or pawn loans. If the negative characterization of these types of loans becomes increasingly accepted by consumers, demand for consumer loan products could significantly decrease, which could materially affect the Company's results of operations and financial condition. Additionally, if the negative characterization of these types of loans becomes increasingly accepted by legislators and regulators, the Company could become subject to more restrictive laws and regulations that could have a materially adverse effect on the Company's financial condition and results of operations.Company’sCompany's profits.A significant portionApproximately 43% of the Company’sCompany's pawn loans are collateralized with gold jewelry and the Company sells significant quantities of gold acquired through collateral forfeitures or direct purchases from customers. In addition to normal market risks associated with accepting gold as loan collateral and buying and selling gold, the global economic crisis has increased the volatility of commodity markets such as those for gold and other precious metals. A significant and sustained decline in gold and/or precious metal prices could result in decreased merchandise sales and related margins, decreased inventory valuations and sub-standard collateralization of outstanding pawn loans. In addition, a significant decline in market prices could result in a lower balance of pawn loans outstanding for the Company, as customers would receive lower loan amounts for individual pieces of jewelry.Company’sCompany's foreign operations could negatively impact the Company’sCompany's operating results.The Company currently has over 490approximately 553 store locations in Mexico, a country in which there are potential risks related to geo-political events, political instability, corruption, economic volatility, drug cartel and gang-related violence, social and ethnic unrest, enforcement of property rights, governmental regulations, public safety and security among others. As in many developing markets, there are also uncertainties inas to how both local law and U.S. federal law is applied, including areas most relevant to commercial transactions and foreign investment. As a result, actions or events could occur in Mexico, which are beyond the Company’sCompany's control, which could restrict or eliminate the Company’sCompany's ability to operate some or all of its locations in Mexico or significantly reduce customer traffic, product demand and the expected profitability of such operations.Company’sCompany's allowance for credit losses for credit services and consumer loans may not be sufficient to cover actual credit losses which could adversely affect its financial condition and operating results.Under the CSO Program, the Company issues the Independent Lender a letter of credit to guarantee the repayment of the customer’scustomer's extension of credit. The Company is required to recognize a liability for the fair value of the obligation undertaken by issuing the letters of credit. The Company records the estimated fair value of the liability under the letters of credit in accrued liabilities. The Company also has customer loans arising from its consumer loan operations. The Company has to recognize losses resulting from the inability of credit services and consumer loan customers and/or borrowers to repay such receivables or loans. The Company maintains an allowance for credit losses in an attempt to cover credit losses inherent in its consumer loan operations. Additional credit losses will likely occur in the future and may occur at a rate greater than the Company has experienced to date. The allowance for credit losses is based primarily upon historical credit loss experience, with consideration given to delinquency levels, collateral values, economic conditions, and underwriting and collection practices. This evaluation is inherently subjective, as it requires estimates of material factors that may be susceptible to significant change. If the Company’sCompany's assumptions and judgments prove to be incorrect, its current allowance may not be sufficient and adjustments may be necessary to allow for different economic conditions or adverse developments in its loan portfolio.TheCompany'sTheCompany's credit services operations depend, in part, on the willingness and ability of an unaffiliated third-party lender to make extensions of credit to its customers. The loss of the relationship with this lender, and an inability to replace it with a new lender or lenders, or the failure of the lender to fund new extensions of credit and to maintain volumes, quality and consistency in its loan programs could cause the Company to lose customers and substantially decrease the revenue and earnings of the Company's credit services business. In addition, the Company’sCompany's lending and retail operations are dependent upon the Company’sCompany's ability to maintain retail banking relationships with commercial banks. The Company also relies significantly on outside vendors to provide services such as utilities, store security, armored transport, data and voice networks, and other information technology products and services.Company’sCompany's principal competitors are other pawnshops, consumer loan companies, internet-based lenders, consumer finance companies, rent-to-own stores, retail finance programs and other financial institutions that serve the Company's primary customer base. Many other financial institutions or other businesses that do not now offer products or services directed toward the Company's traditional customer base, many of whom may be much larger than the Company, could begin doing so. Significant increases in the number and size of competitors for the Company's business could result in a decrease in the number of consumer loans or pawn loans that the Company writes, resulting in lower levels of revenue and earnings in these categories. Furthermore, the Company has many competitors to its retail operations, such as retailers of new merchandise, retailers of pre-owned merchandise, other pawnshops, thrift shops, online retailers, online classified advertising sites and online auction sites. Increased competition or aggressive marketing and pricing practices by these competitors could result in decreased revenue, margins and turnover rates in the Company's retail operations. In Mexico, the Company competes directly with certain pawn stores owned by government sponsored non-profit foundations. The government could take actions that would harm the Company’sCompany's ability to compete in the Mexico market. In addition, the Company’sCompany's two largest U.S.-based pawn competitors, both of whom are larger than the Company, have launched significant acquisition and expansion programs in Mexico.Company’sCompany's loan portfolios and in consumer or market demand for pre-owned merchandise or gold such as that sold in the Company’sCompany's pawnshops. While the credit risk for much of the Company’sCompany's pawn lending is mitigated by the collateralized nature of pawn lending, a sustained deterioration in the economy could reduce the demand and resale value of pre-owned merchandise and reduce the amount that the Company could effectively lend on an item of collateral. Such reductions could adversely affect pawn loan balances, pawn loan redemption rates, inventory balances, inventory mixes, sales volumes and gross profit margins. An economic slowdown could result in a decrease in loan demand and an increase in loan defaults on consumer loan and credit services products. During such a slowdown, the Company could be required to tighten its underwriting standards, which would reduce consumer loan balances and related revenue and credit services fees, and could face more difficulty in collecting defaulted consumer loans, which could lead to an increase in loan losses. As consumer loans and credit services customers generally have to be employed to qualify for a loan or extension of credit, an increase in the unemployment rate would reduce the number of potential customers.Company’sCompany's financial position and results of operations may fluctuate significantly due to fluctuations in currency exchange rates in Mexico.During the global economic crisis of 2008 and the continued aftermath, the volatility of the exchange rate of the Mexican peso to the U.S. dollar has increased significantly. The Company derives significant revenue, earnings and cash flow from operations in Mexico. The Company’sexposureCompany'sexposure to currency exchange rate fluctuations results primarily from the translation exposure associated with the preparation of the Consolidated Financial Statements, as well as from transaction exposure associated with transactions in currencies other than an entity's functional currency. While the Consolidated Financial StatementsCompany’sCompany's Mexican subsidiaries are prepared using the Mexican peso as the functional currency and translated into U.S. dollars by applying appropriate exchange rates. As a result, fluctuations in the exchange rate of the U.S. dollar relative to the Mexican peso could cause significant fluctuations in the Company’sCompany's results. In addition, while expenses with respect to foreign operations are generally denominated in the same currency as corresponding sales, the Company has transaction exposure to the extent receipts and expenditures are not offsetting in the subsidiary's functional currency. In addition, changes in currency rates could negatively affect customer demand, especially in Mexico and in U.S. stores located along the Mexican border. In addition, the Company’sCompany's Mexican-based subsidiaries experience foreign currency exposure to the extent monetary assets and liabilities, including debt, are in U.S. dollars, rather than the subsidiaries’subsidiaries' functional currency, which is the Mexican peso. Moreover, the costs of doing business abroad may increase as a result of adverse exchange rate fluctuations.Company’sCompany's financial condition could reduce available capital.The Company currently has $1,200,000$97,500,000 outstanding on its bank line of credit, which matures in February 2015.2015. The Company has, in the past, accessed the debt capital markets to refinance existing debt obligations and to obtain capital to finance growth. Efficient access to these markets is critical to the Company’sCompany's ongoing financial success; however, the Company’sCompany's future access to the debt capital markets could become restricted due to a variety of factors, including a deterioration of the Company’sCompany's earnings, cash flows, balance sheet quality, regulatory restrictions or overall business or industry prospects, a significant deterioration in the state of the capital markets or a negative bias toward the Company’sCompany's industry by market participants. Inability to access the credit markets on acceptable terms, if at all, would have a materially adverse effect on the Company’sCompany's financial condition.Company’sCompany's revolving bank line of credit impose financial and operating restrictions on the Company.The Company’sCompany's bank line of credit contains a number of customary negative covenants and requires the Company to maintain certain financial ratios. The covenants and restrictions contained in the credit facility could limit the Company’sCompany's ability to fund future operations, make capital expenditures, make acquisitions, or other investments in the future. Any failure to comply with any of these financial and other affirmative and negative covenants would constitute an event of default under our credit facility, entitling the lenders to, among other things, terminate future credit availability, increase the interest rate on outstanding debt, and/or accelerate the maturity of outstanding obligations under the credit facility. Any such default could materially adversely affect the Company’sCompany's business, prospects, results of operations and financial condition and could impair the Company’sCompany's ability to continue current operations.Company’sCompany's business depends on the uninterrupted operation of the Company’sCompany's facilities, systems and business functions, including its information technology and other business systems.The Company’sCompany's business depends highly upon its employees’employees' ability to perform, in an efficient and uninterrupted fashion, necessary business functions such as internet support, call centers, and processing and making cash advances. Additionally, the Company’sCompany's storefront operations depend on the efficiency and reliability of the Company’sCompany's point-of-sale system. A shut-down of or inability to access the facilities in which the Company’sCompany's online operations, storefront point-of-sale system and other technology infrastructure are based, such as a power outage, a security breach, a failure of one or more of its information technology, telecommunications or other systems, or sustained or repeated disruptions of such systems could significantly impair its ability to perform such functions on a timely basis and could result in a deterioration of the Company’sCompany's ability to perform efficient storefront lending and merchandise disposition activities, provide customer service, perform collections activities, or perform other necessary business functions.Company’sCompany's computer systems could also interrupt or damage its operations or harm its reputation. In addition, the Company could be subject to liability if confidential customer information is misappropriated from its computer systems. Despite the implementation of significant security measures, these systems may still be vulnerable to physical break-ins, computer viruses, programming errors, attacks by third parties or similar disruptive problems. Any compromise of security could deter people from entering into transactions that involve transmitting confidential information to the Company’sCompany's systems, which could have a materially adverse effect on the Company’sCompany's business.2011,2012, the Company had goodwill on its consolidated balance sheet, all of which represents assets capitalized in connection with the Company’sCompany's acquisitions and business combinations. Accounting for goodwill requires significant management estimates and judgment. Management performs periodic reviews of the carrying values of goodwill to determine whether events and circumstances indicate that an impairment in value may have occurred. A variety of factors could cause the carrying value of goodwill to become impaired. Should a review indicate impairment, a write-down of the carrying value of goodwill would occur, resulting in a non-cash charge, which could have an adverse effect on the Company’sCompany's results of operations.Company’sCompany's senior management could adversely affect the Company’sCompany's business until a suitable replacement can be found. There may be a limited number of persons with the requisite skills to serve in these positions, and the Company cannot ensure that it would be able to identify or employ such qualified personnel on acceptable terms.eleven75 stores during 2011 and a 29-store chain in Mexico in January 2012.2012. The Company’sCompany's strategy is to continue to pursue attractive acquisition opportunities if and when they become available. The success of an acquisition is subject to numerous internal and external factors, such as the ability to consolidate data processing and accounting functions, the management of additional sales, administrative, operations and management personnel, overall management of a larger organization, competitive market forces, and general economic factors. Failure to successfully integrate an acquisition would have an adverse effect on the Company’sCompany's business, results of operations and financial condition. Additionally, any acquisition has the risk that the Company may not realize a return on the acquisition or the Company’sCompany's investment.Company’sCompany's profits.The Company leases most of its locations. A significant rise in real estate prices or real property taxes could result in an increase in store lease costs as the Company opens new locations and renews leases for existing locations, thereby negatively impacting the Company’sCompany's results of operations. The Company also holds certain developed and undeveloped real estate which could be impacted by adverse market fluctuations. In addition, the inability of the Company to renew, extend or replace expiring store leases could have an adverse effect on the Company’sCompany's results of operations.Company’sCompany's operating results.The occurrence of weather events such as rain, cold weather, snow, wind, storms, hurricanes, or other natural disasters adversely affecting consumer traffic and collection activities at the Company’sCompany's stores could have an adverse effect on the Company’sCompany's results of operations.Company’sCompany maintains a program of insurance coverage for various types of property, casualty and other risks. The types and amounts of insurance that the Company obtains vary from time to time, depending on availability, cost and management's decisions with respect to risk retention. The policies are subject to deductibles and exclusions that result in the Company's retention of a level of risk on a self-insurance basis. Losses not covered by insurance could be substantial and may increase the Company's expenses, which could harm the Company's results of operations and financial condition.Company’sCompany's financial results. In addition, to the extent that the Company’sCompany's customers become infected by such diseases, or feel uncomfortable visiting public locations due to a perceived risk of exposure to contagious diseases, the Company could experience a reduction in customer traffic, which could have an adverse effect on the Company’sCompany's results of operations.2025 of its pawn stores.stores and owns four other parcels of real estate. The Company leases 694819 store locations that are currently open or are in the process of opening. Leased facilities are generally leased for a term of three to five years with one or more options to renew. The Company’sCompany's existing leases expire on dates ranging between 20122013 and 2045. All current store leases provide for specified periodic rental payments ranging from approximately $702$400 to $10,411$25,000 per month.The Company also currently owns five other parcels of real estate. Two of the parcels are leased to a buy-here/pay-here car lot operation, one is held for sale and the remaining two parcels are being held for possible development for future pawnshop operations.$4,000.$5,000. The Company also leases approximately 12,000 square feet of office space in Euless, Texas for administrative operations. The lease, which expires February 28, 2013,2018, currently provides for monthly rental payments of approximately $3,500.Company’sCompany's 50% owned joint venture, Cash & Go, Ltd., leases its kiosk locations under operating leases generally with terms ranging from one to five years, with renewal options for certain locations. The joint venture’sventure's existing leases expire on dates ranging between 20122013 and 2014.2016. All current Cash & Go, Ltd. leases provide for specified periodic rental payments ranging from approximately $1,300 to $1,900$2,200 per month.Company’sCompany's operations. The Company’sCompany's strategy is generally to lease, rather than purchase, space for its pawnshop and consumer loan locations, unless the Company finds what it believes is a superior location at an attractive price. The Company believes that the facilities currently owned and leased by it as pawn stores and consumer loan stores are suitable for such purposes. The Company considers its equipment, furniture and fixtures to be in good condition.Company’sCompany's financial position, results of operations, or cash flows.Removed and ReservedRegistrant’sRegistrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesCompany’sCompany's common stock is quoted on the NasdaqNASDAQ Global Select Market under the symbol “FCFS.” The following table sets forth the quarterly high and low closing sales prices per share for the common stock, as reported by the NasdaqNASDAQ Global Select Market: First Quarter Second Quarter Third Quarter Fourth Quarter 2012 High $ 47.45 $ 43.97 $ 47.50 $ 49.64 Low 33.27 34.78 38.72 41.17 2011 High $ 40.13 $ 42.75 $ 52.18 $ 44.94 Low 29.71 35.60 38.16 34.29 28, 2012, the closing sales price for the common stock as reported by the Nasdaq Global Select Market was $42.50 per share. On February 28, 2012,18, 2013, there were approximately 5349 stockholders of record of the common stock.Company’sCompany's earnings, cash flows, and financial position. The Company’sCompany's revolving credit facility contains provisions that allow the Company to pay cash dividends within certain parameters.2011,2012, through December 31, 2011,2012, the Company issued 167,000474,077 shares of common stock relating to the exercise of outstanding stock options for an aggregate exercise price of $3,261,000$10,137,000 (including income tax benefit). During the period from January 1, 2011, through December 31, 2011, the Company issued 106,000 shares of common stock relating to the exercise of outstanding stock warrants for an aggregate exercise price of $1,305,000 (including income tax benefit). During 2011,2012, the Company granted a total of 59,000108,000 nonvested shares of common stock to certain executives of the Company, while 16,40031,000 shares wereof which vested and issued during the year.fiscal 2012. The issuance of these stock options, warrants and nonvested shares to officers and employees was exempt under Section 4(2) of the Act, and all holders had access to and/or reviewed copies of Exchange Act filings. No sales commissions were paid with respect to these issuances.In November 2007, the Company’s Board of Directors authorized a repurchase program for up to 1,000,000 shares of First Cash’s outstanding common stock. In March 2008, the Company’s Board of Directors authorized an amendment to the 2007-authorized program which allows the Company to repurchase up to 3,000,000 shares of its common stock. In August 2011, the Company completed the share repurchase program. Company’sCompany's Board of Directors authorized a repurchase program for up to 1,500,000 shares of First Cash’sCash's outstanding common stock. During fiscal 2012, the Company repurchased 1,500,000 shares of common stock at an aggregate cost of $61,275,000 to complete the 2011-authorized program. The following table provides the information with respect to purchases made by the Company of shares of its common stock during each month that the programs were in effect during fiscal 2012: January 1 through January 31, 2012 421,837 $ 37.55 421,837 1,078,163 February 1 through February 29, 2012 231,167 42.50 231,167 846,996 March 1 through March 31, 2012 309,991 42.22 309,991 537,005 April 1 through April 30, 2012 537,005 41.94 537,005 — May 1 through May 31, 2012 — — — — June 1 through June 30, 2012 — — — — July 1 through July 31, 2012 — — — — August 1 through August 31, 2012 — — — — September 1 through September 30, 2012 — — — — October 1 through October 31, 2012 — — — — November 1 through November 30, 2012 — — — — December 1 through December 31, 2012 — — — — Total 1,500,000 $ 40.85 1,500,000 transaction,transactions, block or privately negotiated transactions, and may from time to time purchase shares pursuant to a trading plan in accordance with Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended, or by any combination of such methods. The number of shares to be purchased and the timing of the purchases are based on a variety of factors, including, but not limited to, the level of cash balances, credit availability, general business conditions, regulatory requirements, the market price of the Company's stock and the availability of alternative investment opportunities. No time limit was set for completion of repurchases under the new authorization and the program may be suspended or discontinued at any time. Subsequent to December 31, 2011, the Company repurchased approximately 632,000 shares of common stock at an aggregate cost of $24,786,000 and an average cost per share of $39.20. The following table provides the information with respect to purchases made by the Company of shares of its common stock during each month that the programs were in effect during fiscal 2011:2006,2007, through December 31, 2011,2012, with the cumulative total return on the NasdaqNASDAQ Composite Index and a peer group index (whose returns are weighted according to their respective market capitalizations) over the same period (assuming the investment of $100 in the Company’sCompany's common stock, the NasdaqNASDAQ Composite Index, and the peer group). The 20112012 peer group selected by the Company includes Cash America International, Inc., EZCORP, Inc., World Acceptance Corporation, Rent-A-Center, Inc., and Aaron Rents, Inc.
Year Ended December 31, 2011 2010 2009 2008 2007 (in thousands, except per share amounts and certain operating data) Income Statement Data: Total revenue $ 521,302 $ 423,262 $ 355,278 $ 310,902 $ 259,266 Cost of revenue 226,552 175,959 150,686 126,156 103,411 Net revenue 294,750 247,303 204,592 184,746 155,855 Total expenses and other income 186,547 167,261 143,417 131,220 114,294 Income from continuing operations before income taxes 108,203 80,042 61,175 53,526 41,561 Provision for income taxes 37,338 28,668 22,879 19,905 15,128 Income from continuing operations 70,865 51,374 38,296 33,621 26,433 Income (loss) from discontinued operations, net of tax 6,917 6,284 11,468 (55,157) 8,855 Net income (loss) $ 77,782 $ 57,658 $ 49,764 $ (21,536) $ 35,288 Net income per share: Basic: Income from continuing operations $ 2.31 $ 1.70 $ 1.30 $ 1.14 $ 0.84 Net income (loss) 2.53 1.90 1.68 (0.73) 1.12 Diluted: Income from continuing operations 2.25 1.65 1.27 1.11 0.81 Net income (loss) 2.47 1.86 1.65 (0.71) 1.08 Balance Sheet Data: Net working capital $ 175,073 $ 170,376 $ 101,295 $ 95,577 $ 121,750 Total assets 357,096 342,446 256,285 265,343 291,548 Long-term liabilities 6,319 9,820 8,555 78,075 69,291 Total liabilities 41,724 44,442 43,846 110,893 90,339 Stockholders' equity 315,372 298,004 212,439 154,450 201,209 End of Year Location Counts: Pawn stores (1) 570 488 393 330 283 Credit services/consumer loan stores (excluding Cash & Go, Ltd.) (1) 108 114 143 142 124 678 602 536 472 407 (1) Includes locations where consumer loans are provided through the CSO Program.Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 and the Company’sCompany's Consolidated Financial Statements and related notes thereto required by Item 8. The information below has beenis summarized from audited financial statements for balance sheet dateseach of the five years ended December 31, 2011, and 2010 and statement of operations for the years ending December 31, 2011, 2010 and 2009.2012. Year Ended December 31, 2012 2011 2010 2009 2008 (in thousands, except per share amounts and certain operating data) Income Statement Data: Total revenue $ 595,946 $ 518,344 $ 421,454 $ 353,830 $ 309,152 Cost of revenue 257,284 225,585 175,299 150,230 125,468 Net revenue 338,662 292,759 246,155 203,600 183,684 Total expenses and other income 216,051 185,078 166,223 142,414 130,160 Income from continuing operations before income taxes 122,611 107,681 79,932 61,186 53,524 Provision for income taxes 41,506 37,158 28,630 22,883 19,904 Income from continuing operations 81,105 70,523 51,302 38,303 33,620 Income (loss) from discontinued operations, net of tax (746 ) 7,259 6,356 11,461 (55,156 ) Net income (loss) $ 80,359 $ 77,782 $ 57,658 $ 49,764 $ (21,536 ) Net income per share: Basic: Income from continuing operations $ 2.81 $ 2.30 $ 1.69 $ 1.30 $ 1.14 Net income (loss) 2.78 2.53 1.90 1.68 (0.73 ) Diluted: Income from continuing operations 2.73 2.24 1.65 1.27 1.11 Net income (loss) 2.70 2.47 1.86 1.65 (0.71 ) Balance Sheet Data: Net working capital $ 210,280 $ 175,073 $ 170,376 $ 101,295 $ 95,577 Total assets 507,692 357,096 342,446 256,285 265,343 Long-term liabilities 124,126 6,319 9,820 8,555 78,075 Total liabilities 155,276 41,724 44,442 43,846 110,893 Stockholders' equity 352,416 315,372 298,004 212,439 154,450 End of Year Location Counts: Pawn stores (1) 715 570 488 383 320 Credit services/consumer loan stores (excluding Cash & Go, Ltd.) (1) 99 101 107 146 145 814 671 595 529 465
” Year Ended December 31, 2011 2010 2009 Pawn loan balances at end of period, in thousands: Large format pawn stores - U.S. $ 40,877 $ 35,220 $ 31,277 Large format pawn stores - Mexico 31,748 34,823 22,412 Small format pawn stores - Mexico 418 346 30 Small format pawn stores - U.S. 244 99 - CSO extensions of credit at end of period, in thousands (2): Consumer loan stores - U.S. $ 7,901 $ 8,024 $ 8,415 Pawn stores - U.S. 6,450 5,760 2,758 Cash & Go, Ltd. joint venture kiosks - U.S. 1,196 1,247 1,338 Internet operations - U.S. 431 291 216 Pawn store inventories at end of period, in thousands: U.S. stores $ 23,745 $ 19,730 $ 17,285 Mexico stores 20,667 27,676 17,152 Pawn store annualized inventory turnover 4.2x 4.1x 4.3x Annualized service/finance fee yield (3): Pawn loan receivables 164% 163% 159% Consumer loan receivables, net of credit loss provision 416% 397% 364% Net consumer loan and credit services loss provision as a percentage of service fees (4) 24% 27% 28% Average pawn loans per location at end of period, in thousands: Large format pawn stores - U.S. $ 310 $ 317 $ 322 Large format pawn stores - Mexico 81 105 78 Average inventories per location, in thousands: Large format pawn stores - U.S. $ 178 $ 176 $ 178 Large format pawn stores - Mexico 52 82 60 Average outstanding customer loan amount at end of period: Pawn loan receivables - U.S. $ 178 $ 172 $ 169 Pawn loan receivables - Mexico 66 74 65 Consumer loan receivables - Mexico 78 82 88 CSO extensions of credit held by independent third-party Year Ended December 31, 2011 2010 2009 Income statement items as a percent of total revenue: Revenue: Merchandise sales 66.1 % 63.8 % 64.7 % Pawn loan fees 23.5 24.1 22.7 Consumer loan and credit services fees 10.2 11.9 12.3 Other revenue 0.2 0.2 0.3 Cost of revenue: Cost of goods sold 41.0 % 38.3 % 38.9 % Consumer loan and credit services loss 2.5 3.3 3.5 Net revenues 56.5 % 58.4 % 57.6 % Expenses and other income: Store operating expenses 25.0 % 27.4 % 27.7 % Administrative expenses 8.7 9.5 9.7 Depreciation and amortization 2.1 2.5 2.8 Interest expense, net - 0.1 0.2 Income from continuing operations before 20.7 % 18.9 % 17.2 % Provision for income taxes 7.1 6.8 6.4 Income from continuing operations 13.6 12.1 10.8 Merchandise sales gross profit margin 38.1 % 40.0 % 39.8 % Store operating profit margin 29.8 % 28.9 % 27.5 %Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations90%approximately 91% of the Company’sCompany's revenue from continuing operations during fiscal 2011.2012. The Company’sCompany's pawn revenue is derived primarily from service fees on pawn loans and merchandise sales of forfeited pawn collateral and used goods purchased directly from the general public. The Company accrues pawn loan fee revenue on a constant-yield basis over the life of the pawn loan for all pawns that the Company deems collection to be probable based on historical pawn redemption statistics. If a pawn loan is not repaid prior to the expiration of the automatic extension period, if applicable, the property is forfeited to the Company and transferred to inventory at a value equal to the principal amount of the loan, exclusive of accrued interest.Company’sCompany's consumer loan and credit services revenue, which iswas approximately 10%9% of consolidated year-to-date revenue from continuing operations isfor fiscal 2012, was derived primarily from credit services fees. The Company recognizes service fee income on consumer loans and credit services transactions on a constant-yield basis over the life of the loan or credit extension, which is generally thirty-five180 days or less. The net defaults on consumer loans and credit services transactions and changes in the valuation reserve are charged to the consumer loan credit loss provision. The credit loss provision associated with the CSO Program and consumer loans are based primarily upon historical credit loss experience, with consideration given to recent credit loss trends, delinquency rates, economic conditions and management’smanagement's expectations of future credit losses. See additional discussion of the credit loss provision and related allowances and accruals in the section titled "Results“Results of Continuing Operations."The following table details selected operating metrics regarding the Company’s loan products, inventories, and store locations (1):
lender - U.S. (5)
516
495
446(1)Inventory and loan amounts for stores in Mexico are based on translating the Mexican peso to the U.S. dollar at the exchange rate as of each year end. The exchange rates used for December 31, 2011, 2010, and 2009 were 14.0 to 1, 12.4 to 1, and 13.1 to 1, respectively.(2)Amounts shown represent the gross amount owed by customers before allowances. Active CSO extensions of credit outstanding from the independent third-party lender are not included on the Company’s balance sheet.(3)The annualized yield on pawn loans is calculated by dividing total pawn service fees by the average quarterly pawn loan balance for the year. The annualized yield, net of loss provision, for consumer loans is calculated by dividing total consumer loan service fees, net of the consumer loan loss provision, by the average quarterly consumer loan balance for the year. The annualized yield calculation for consumer loans does not include credit services fees or the related credit services loss provision.(4)Consumer loan amount includes consumer loans recorded on the Company’s balance sheet and active CSO extensions of credit by the independent third-party lender, which are not included on the Company’s balance sheet, net of the Company's estimated fair value of its liability under the letters of credit guaranteeing the extensions of credit.(5)Amounts shown represent the gross amount owed by customers before allowances. Excludes title loan amounts.are still open.remained open through the end of the measurement period. Also included are stores that were relocated during the year within a specified distance serving the same market, where there is not a significant change in store size and where there is not a significant overlap or gap in timing between the opening of the new store and the closing of the existing store. Non-retailUnless otherwise stated, non-retail sales of scrap jewelry are included in same-store revenue calculations. Same-store revenue calculations for prior periods do not reflect the reclassification of discontinued operations.Company’sCompany's stores, including salaries and related payroll costs, rent, utilities, equipment, advertising, property taxes, licenses, supplies and security. Administrative expenses consist of items relating to the operation of the corporate offices, including the compensation and benefit costs of corporate management, area supervisors and other operations management personnel, collection operations and personnel, accounting and administrative costs, information technology costs, liability and casualty insurance, outside legal and accounting fees and stockholder-related expenses.
provision
income taxes
Year Ended December 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Pawn loans at end of period, in thousands: | |||||||||||
Large format pawn stores - U.S. | $ | 54,765 | $ | 40,877 | $ | 35,220 | |||||
Large format pawn stores - Mexico | 47,512 | 31,748 | 34,823 | ||||||||
Small format pawn stores - Mexico | 629 | 418 | 346 | ||||||||
Small format pawn stores - U.S. | 275 | 244 | 99 | ||||||||
Average pawn loans per location at end of period, in thousands: | |||||||||||
Large format pawn stores - U.S. | $ | 298 | $ | 310 | $ | 317 | |||||
Large format pawn stores - Mexico | 98 | 81 | 105 | ||||||||
Pawn store inventories at end of period, in thousands: | |||||||||||
U.S. stores | $ | 32,664 | $ | 23,745 | $ | 19,730 | |||||
Mexico stores | 32,681 | 20,667 | 27,676 | ||||||||
Average inventories per location, in thousands: | |||||||||||
Large format pawn stores - U.S. | $ | 176 | $ | 178 | $ | 176 | |||||
Large format pawn stores - Mexico | 66 | 52 | 82 | ||||||||
Pawn store annualized inventory turnover | 4.2x | 4.2x | 4.1x | ||||||||
Consumer loan balances and CSO extensions of credit at end of period, in thousands (2): | |||||||||||
Consumer loan stores - U.S. | $ | 7,170 | $ | 7,065 | $ | 7,426 | |||||
Pawn stores - U.S. | 8,378 | 6,371 | 5,802 | ||||||||
Cash & Go, Ltd. joint venture kiosks - U.S. | 1,164 | 1,196 | 1,247 | ||||||||
Internet operations - U.S. | 477 | 431 | 291 | ||||||||
Average outstanding customer loan amount at end of period: | |||||||||||
Pawn loan receivables - U.S. | $ | 185 | $ | 178 | $ | 172 | |||||
Pawn loan receivables - Mexico | 75 | 66 | 74 | ||||||||
CSO extensions of credit held by independent third-party lender - U.S. (3) | 518 | 513 | 494 | ||||||||
Consumer loan receivables - Mexico | 86 | 78 | 82 |
(1) | Inventory and loan amounts for stores in Mexico are based on translating the Mexican peso to the U.S. dollar at the exchange rate as of each year end. The exchange rates used for December 31, 2012, 2011, and 2010 were 13.0 to 1, 14.0 to 1, and 12.4 to 1, respectively. |
(2) | Amounts shown represent the gross amount owed by customers before allowances. Active CSO extensions of credit outstanding from the independent third-party lender are not included on the Company's balance sheet. |
(3) | Amounts shown represent the gross amount owed by customers before allowances. Excludes title loan amounts. |
Year Ended December 31, | ||||||||
2012 | 2011 | 2010 | ||||||
Income statement items as a percent of total revenue: | ||||||||
Revenue: | ||||||||
Merchandise sales | 65.6 | % | 66.5 | % | 64.0 | % | ||
Pawn loan fees | 25.5 | 23.6 | 24.2 | |||||
Consumer loan and credit services fees | 8.7 | 9.7 | 11.5 | |||||
Other revenue | 0.2 | 0.2 | 0.3 | |||||
Cost of revenue: | ||||||||
Cost of goods sold | 41.0 | 41.2 | 38.5 | |||||
Consumer loan and credit services loss provision | 2.2 | 2.3 | 3.1 | |||||
Other cost of revenue | — | — | — | |||||
Net revenues | 56.8 | 56.5 | 58.4 | |||||
Expenses and other income: | ||||||||
Store operating expenses | 25.4 | 24.9 | 27.3 | |||||
Administrative expenses | 8.4 | 8.7 | 9.6 | |||||
Depreciation and amortization | 2.2 | 2.1 | 2.4 | |||||
Interest expense, net | 0.2 | — | 0.1 | |||||
Income from continuing operations before income taxes | 20.6 | 20.8 | 19.0 | |||||
Provision for income taxes | 7.0 | 7.2 | 6.8 | |||||
Income from continuing operations | 13.6 | 13.6 | 12.2 | |||||
Merchandise sales gross profit margin | 37.6 | % | 38.1 | % | 40.0 | % | ||
Store operating profit margin | 29.6 | 29.8 | 29.0 |
2010.
2010.
In December 2009, the Company sold all 22 of its West Coast stores to a privately-held payday lending operator. The after-tax loss for all of the West Coast stores was $101,000 in fiscal 2010. The Company recorded a gain of $901,000, or $0.03 per share, net of tax, from the sale of these stores in fiscal 2009. The after-tax earnings from operations for all of the West Coast stores were $1,376,000, or $0.05 per share in fiscal 2009. In addition, the Company sold its consumer loan operations in Michigan effective March 2009, and certain Texas consumer loan/credit services stores were discontinued in both the first and second quarters of 2009. Associated with these store closings, the Company recorded year-to-date after-tax charges in fiscal 2009 of $1,111,000, or $0.04 per share.
The Company discontinued its Auto Master buy-here/pay-here automotive operation in the third quarter of 2008 and subsequently sold the inventory and retail operations to a third party. Under a collection services agreement associated with the sale, the purchaser collected the Company’s outstanding Auto Master customer notes receivable, which were reported by the Company as a discontinued asset. After-tax net income from the discontinued Auto Master operation was $424,000, or $0.01 per share in fiscal 2011. Comparable after-tax earnings were $2,617,000, or $0.08 per share in fiscal 2010 and $6,747,000, or $0.22 per share in fiscal 2009. These earnings reflect collections of the remaining customer receivable portfolio in excess of estimated liquidation fair value. The Company realized net cash collections of $1,263,000 and $5,240,000 on these accounts during 2011 and 2010, respectively, and recorded a pre-tax benefit of approximately $763,000 and $3,102,000, respectively, from these cash collections as compared to the estimated fair value of the receivables recorded on the Company’s balance sheet. The collection of these Auto Master receivables was completed during 2011, as the outstanding receivable balances were fully collected and/or written-off.
customers at prices above the carrying value.
As defined by ASC 810-10-65, the
Increase/(Decrease) | ||||||||||||||||||||
Year Ended December 31, | Constant Currency | |||||||||||||||||||
2012 | 2011 | Increase/(Decrease) | Basis | |||||||||||||||||
Domestic revenue: | ||||||||||||||||||||
Retail merchandise sales | $ | 104,289 | $ | 82,497 | $ | 21,792 | 26 | % | 26 | % | ||||||||||
Scrap jewelry sales | 57,551 | 56,091 | 1,460 | 3 | % | 3 | % | |||||||||||||
Pawn loan fees | 63,640 | 52,085 | 11,555 | 22 | % | 22 | % | |||||||||||||
Consumer loan and credit services fees | 47,779 | 45,516 | 2,263 | 5 | % | 5 | % | |||||||||||||
Other revenue | 938 | 1,020 | (82 | ) | (8 | )% | (8 | )% | ||||||||||||
274,197 | 237,209 | 36,988 | 16 | % | 16 | % | ||||||||||||||
International revenue: | ||||||||||||||||||||
Retail merchandise sales | 183,167 | 154,300 | 28,867 | 19 | % | 26 | % | |||||||||||||
Scrap jewelry sales | 46,155 | 51,913 | (5,758 | ) | (11 | )% | (11 | )% | ||||||||||||
Pawn loan fees | 88,597 | 70,235 | 18,362 | 26 | % | 34 | % | |||||||||||||
Consumer loan and credit services fees | 3,823 | 4,685 | (862 | ) | (18 | )% | (14 | )% | ||||||||||||
Other revenue | 7 | 2 | 5 | 250 | % | 271 | % | |||||||||||||
321,749 | 281,135 | 40,614 | 14 | % | 20 | % | ||||||||||||||
Total revenue: | ||||||||||||||||||||
Retail merchandise sales | 287,456 | 236,797 | 50,659 | 21 | % | 26 | % | |||||||||||||
Scrap jewelry sales | 103,706 | 108,004 | (4,298 | ) | (4 | )% | (4 | )% | ||||||||||||
Pawn loan fees | 152,237 | 122,320 | 29,917 | 24 | % | 29 | % | |||||||||||||
Consumer loan and credit services fees | 51,602 | 50,201 | 1,401 | 3 | % | 3 | % | |||||||||||||
Other revenue | 945 | 1,022 | (77 | ) | (8 | )% | (7 | )% | ||||||||||||
$ | 595,946 | $ | 518,344 | $ | 77,602 | 15 | % | 18 | % |
Increase/(Decrease) | ||||||||||||||||||||
Balance at December 31, | Constant Currency | |||||||||||||||||||
2012 | 2011 | Increase/(Decrease) | Basis | |||||||||||||||||
Domestic: | ||||||||||||||||||||
Pawn loans | $ | 55,040 | $ | 41,121 | $ | 13,919 | 34 | % | 34 | % | ||||||||||
CSO credit extensions held by independent third-party (1) | 15,234 | 14,167 | 1,067 | 8 | % | 8 | % | |||||||||||||
Other consumer loans | 1,149 | 63 | 1,086 | 1,724 | % | 1,724 | % | |||||||||||||
71,423 | 55,351 | 16,072 | 29 | % | 29 | % | ||||||||||||||
International: | ||||||||||||||||||||
Pawn loans | 48,141 | 32,166 | 15,975 | 50 | % | 39 | % | |||||||||||||
Other consumer loans | 730 | 795 | (65 | ) | (8 | )% | (15 | )% | ||||||||||||
48,871 | 32,961 | 15,910 | 48 | % | 38 | % | ||||||||||||||
Total: | ||||||||||||||||||||
Pawn loans | 103,181 | 73,287 | 29,894 | 41 | % | 36 | % | |||||||||||||
CSO credit extensions held by independent third-party (1) | 15,234 | 14,167 | 1,067 | 8 | % | 8 | % | |||||||||||||
Other consumer loans | 1,879 | 858 | 1,021 | 119 | % | 113 | % | |||||||||||||
$ | 120,294 | $ | 88,312 | $ | 31,982 | 36 | % | 32 | % | |||||||||||
Pawn inventories: | ||||||||||||||||||||
Domestic pawn inventories | $ | 32,664 | $ | 23,745 | $ | 8,919 | 38 | % | 38 | % | ||||||||||
International pawn inventories | 32,681 | 20,667 | 12,014 | 58 | % | 47 | % | |||||||||||||
$ | 65,345 | $ | 44,412 | $ | 20,933 | 47 | % | 42 | % |
peso-denominated earnings stream.
Increase/(Decrease) | ||||||||||||||||||||
Year Ended December 31, | Constant Currency | |||||||||||||||||||
2011 | 2010 | Increase/(Decrease) | Basis | |||||||||||||||||
Domestic revenue: | ||||||||||||||||||||
Retail merchandise sales | $ | 82,497 | $ | 70,980 | $ | 11,517 | 16 | % | 16 | % | ||||||||||
Scrap jewelry sales | 56,091 | 39,400 | 16,691 | 42 | % | 42 | % | |||||||||||||
Pawn loan fees | 52,085 | 44,071 | 8,014 | 18 | % | 18 | % | |||||||||||||
Consumer loan and credit services fees | 45,516 | 43,799 | 1,717 | 4 | % | 4 | % | |||||||||||||
Other revenue | 1,020 | 980 | 40 | 4 | % | 4 | % | |||||||||||||
237,209 | 199,230 | 37,979 | 19 | % | 19 | % | ||||||||||||||
International revenue: | ||||||||||||||||||||
Retail merchandise sales | 154,300 | 117,556 | 36,744 | 31 | % | 29 | % | |||||||||||||
Scrap jewelry sales | 51,913 | 41,957 | 9,956 | 24 | % | 24 | % | |||||||||||||
Pawn loan fees | 70,235 | 58,074 | 12,161 | 21 | % | 19 | % | |||||||||||||
Consumer loan and credit services fees | 4,685 | 4,625 | 60 | 1 | % | — | % | |||||||||||||
Other revenue | 2 | 12 | (10 | ) | (83 | )% | (84 | )% | ||||||||||||
281,135 | 222,224 | 58,911 | 27 | % | 25 | % | ||||||||||||||
Total revenue: | ||||||||||||||||||||
Retail merchandise sales | 236,797 | 188,536 | 48,261 | 26 | % | 24 | % | |||||||||||||
Scrap jewelry sales | 108,004 | 81,357 | 26,647 | 33 | % | 33 | % | |||||||||||||
Pawn loan fees | 122,320 | 102,145 | 20,175 | 20 | % | 19 | % | |||||||||||||
Consumer loan and credit services fees | 50,201 | 48,424 | 1,777 | 4 | % | 4 | % | |||||||||||||
Other revenue | 1,022 | 992 | 30 | 3 | % | 3 | % | |||||||||||||
$ | 518,344 | $ | 421,454 | $ | 96,890 | 23 | % | 22 | % |
|
|
|
|
|
|
|
|
|
| Increase/(Decrease) | ||||||
|
|
| Year Ended December 31, |
|
|
|
|
|
| Constant Currency | ||||||
|
|
| 2011 |
| 2010 |
| Increase/(Decrease) |
| Basis | |||||||
United States revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Retail merchandise sales | $ | 82,508 |
| $ | 70,980 |
| $ | 11,528 |
| 16 % |
|
| 16 % |
| |
| Scrap jewelry sales |
| 56,134 |
|
| 39,416 |
|
| 16,718 |
| 42 % |
|
| 42 % |
| |
| Pawn loan fees |
| 52,098 |
|
| 44,071 |
|
| 8,027 |
| 18 % |
|
| 18 % |
| |
| Credit services fees |
| 48,170 |
|
| 45,384 |
|
| 2,786 |
| 6 % |
|
| 6 % |
| |
| Consumer loan fees |
| 193 |
|
| 178 |
|
| 15 |
| 8 % |
|
| 8 % |
| |
| Other revenue |
| 1,064 |
|
| 1,009 |
|
| 55 |
| 5 % |
|
| 5 % |
| |
|
|
|
| 240,167 |
|
| 201,038 |
|
| 39,129 |
| 19 % |
|
| 19 % |
|
Mexico revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Retail merchandise sales |
| 154,300 |
|
| 117,556 |
|
| 36,744 |
| 31 % |
|
| 29 % |
| |
| Scrap jewelry sales |
| 51,913 |
|
| 41,957 |
|
| 9,956 |
| 24 % |
|
| 24 % |
| |
| Pawn loan fees |
| 70,235 |
|
| 58,074 |
|
| 12,161 |
| 21 % |
|
| 19 % |
| |
| Consumer loan fees |
| 4,685 |
|
| 4,625 |
|
| 60 |
| 1 % |
|
| - |
| |
| Other revenue |
| 2 |
|
| 12 |
|
| (10) |
| (83)% |
|
| (84)% |
| |
|
|
|
| 281,135 |
|
| 222,224 |
|
| 58,911 |
| 27 % |
|
| 25 % |
|
Total revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Retail merchandise sales |
| 236,808 |
|
| 188,536 |
|
| 48,272 |
| 26 % |
|
| 24 % |
| |
| Scrap jewelry sales |
| 108,047 |
|
| 81,373 |
|
| 26,674 |
| 33 % |
|
| 33 % |
| |
| Pawn loan fees |
| 122,333 |
|
| 102,145 |
|
| 20,188 |
| 20 % |
|
| 19 % |
| |
| Credit services fees |
| 48,170 |
|
| 45,384 |
|
| 2,786 |
| 6 % |
|
| 6 % |
| |
| Consumer loan fees |
| 4,878 |
|
| 4,803 |
|
| 75 |
| 2 % |
|
| - |
| |
| Other revenue |
| 1,066 |
|
| 1,021 |
|
| 45 |
| 4 % |
|
| 4 % |
| |
|
|
| $ | 521,302 |
| $ | 423,262 |
| $ | 98,040 |
| 23 % |
|
| 22 % |
|
Foreign
the total.
Increase/(Decrease) | ||||||||||||||||||||
Balance at December 31, | Constant Currency | |||||||||||||||||||
2011 | 2010 | Increase/(Decrease) | Basis | |||||||||||||||||
Domestic: | ||||||||||||||||||||
Pawn loans | $ | 41,121 | $ | 35,319 | $ | 5,802 | 16 | % | 16 | % | ||||||||||
CSO credit extensions held by independent third-party (1) | 14,167 | 13,698 | 469 | 3 | % | 3 | % | |||||||||||||
Other consumer loans | 63 | 39 | 24 | 62 | % | 62 | % | |||||||||||||
55,351 | 49,056 | 6,295 | 13 | % | 13 | % | ||||||||||||||
International: | ||||||||||||||||||||
Pawn loans | 32,166 | 35,169 | (3,003 | ) | (9 | )% | 3 | % | ||||||||||||
Other consumer loans | 795 | 956 | (161 | ) | (17 | )% | (6 | )% | ||||||||||||
32,961 | 36,125 | (3,164 | ) | (9 | )% | 3 | % | |||||||||||||
Total: | ||||||||||||||||||||
Pawn loans | 73,287 | 70,488 | 2,799 | 4 | % | 10 | % | |||||||||||||
CSO credit extensions held by independent third-party (1) | 14,167 | 13,698 | 469 | 3 | % | 3 | % | |||||||||||||
Other consumer loans | 858 | 995 | (137 | ) | (14 | )% | (3 | )% | ||||||||||||
$ | 88,312 | $ | 85,181 | $ | 3,131 | 4 | % | 9 | % | |||||||||||
Pawn inventories: | ||||||||||||||||||||
Domestic pawn inventories | $ | 23,745 | $ | 19,730 | $ | 4,015 | 20 | % | 20 | % | ||||||||||
International pawn inventories | 20,667 | 27,676 | (7,009 | ) | (25 | )% | (16 | )% | ||||||||||||
$ | 44,412 | $ | 47,406 | $ | (2,994 | ) | (6 | )% | (1 | )% |
|
|
|
| Balance at |
|
|
|
|
|
| Increase/(Decrease) | ||||||
|
|
|
| December 31, |
|
|
|
|
|
| Constant Currency | ||||||
|
|
|
| 2011 |
| 2010 |
| Increase/(Decrease) |
| Basis | |||||||
United States: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
| Pawn loans | $ | 41,121 |
| $ | 35,319 |
| $ | 5,802 |
| 16 % |
|
| 16 % |
| ||
| CSO credit extensions held by an |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| independent third-party (1) |
| 15,147 |
|
| 14,296 |
|
| 851 |
| 6 % |
|
| 6 % |
| |
| Other |
| 63 |
|
| 39 |
|
| 24 |
| 62 % |
|
| 62 % |
| ||
|
|
|
|
| 56,331 |
|
| 49,654 |
|
| 6,677 |
| 13 % |
|
| 13 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mexico: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Pawn loans |
| 32,166 |
|
| 35,169 |
|
| (3,003) |
| (9)% |
|
| 3 % |
| ||
| Other |
| 795 |
|
| 956 |
|
| (161) |
| (17)% |
|
| (6)% |
| ||
|
|
|
|
| 32,961 |
|
| 36,125 |
|
| (3,164) |
| (9)% |
|
| 3 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Pawn loans |
| 73,287 |
|
| 70,488 |
|
| 2,799 |
| 4 % |
|
| 10 % |
| ||
| CSO credit extensions held by an |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| independent third-party (1) |
| 15,147 |
|
| 14,296 |
|
| 851 |
| 6 % |
|
| 6 % |
| |
| Other |
| 858 |
|
| 995 |
|
| (137) |
| (14)% |
|
| (3)% |
| ||
|
|
|
| $ | 89,292 |
| $ | 85,779 |
| $ | 3,513 |
| 4 % |
|
| 9 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pawn inventories: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
| U.S. pawn inventories | $ | 23,745 |
| $ | 19,730 |
| $ | 4,015 |
| 20 % |
|
| 20 % |
| ||
| Mexico pawn inventories |
| 20,667 |
|
| 27,676 |
|
| (7,009) |
| (25)% |
|
| (16)% |
| ||
|
|
|
| $ | 44,412 |
| $ | 47,406 |
| $ | (2,994) |
| (6)% |
|
| (1)% |
|
CSO amounts outstanding are composed of the principal portion of active CSO extensions of credit by an independent third-party lender, which are not included on the Company's balance sheet, net of the Company’sCompany's estimated fair value of its liability under the letters of credit guaranteeing the extensions of credit.
The consolidated annualized yield on pawn loans was 164% in fiscal 2011, compared to 163% in the prior year.
The average value of the Mexican peso to the U.S. dollar increased from 12.6 to 1 in fiscal 2010 to 12.4 to 1 in the fiscal 2011. However, the end-of-period value of the Mexican peso to the U.S. dollar decreased from 12.4 to 1 at December 31, 2010, to 14.0 to 1 at December 31, 2011. As a result, the translated revenue results of the Mexican operations into U.S. dollars were increased by this currency rate fluctuation while the translated value of peso-denominated assets at December 31, 2011, was decreased. While the strengthening of the Mexican peso positively affected the translated dollar-value of revenue, the offsetting cost of sales and operating expenses were inflated as well. The scrap jewelry generated in Mexico is exported and sold in U.S. dollars, which significantly reduces the Company’s net peso-denominated earnings stream. As a result of these natural currency hedges, the impact of the currency rate fluctuation on year-to-date net income and earnings per share was not significant.
Twelve Months Ended December 31, 2010, Compared to Twelve Months Ended December 31, 2009.
The following table details the components of revenue for the fiscal year ended December 31, 2010, as compared to the fiscal year ended December 31, 2009 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current-year results at prior-year average exchange rates. The Company’s management reviews and analyzes business results in a constant currency because the Company believes this is a meaningful indicator of the Company’s underlying business trends.
|
|
|
|
|
|
|
|
|
| Increase/(Decrease) | ||||||
|
|
| Year Ended December 31, |
|
|
|
|
|
| Constant Currency | ||||||
|
|
| 2010 |
| 2009 |
| Increase/(Decrease) |
| Basis | |||||||
United States revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Retail merchandise sales | $ | 70,980 |
| $ | 66,376 |
| $ | 4,604 |
| 7 % |
|
| 7 % |
| |
| Scrap jewelry sales |
| 39,416 |
|
| 34,454 |
|
| 4,962 |
| 14 % |
|
| 14 % |
| |
| Pawn loan fees |
| 44,071 |
|
| 38,323 |
|
| 5,748 |
| 15 % |
|
| 15 % |
| |
| Credit services fees |
| 45,384 |
|
| 39,602 |
|
| 5,782 |
| 15 % |
|
| 15 % |
| |
| Consumer loan fees |
| 178 |
|
| 357 |
|
| (179) |
| (50)% |
|
| (50)% |
| |
| Other revenue |
| 1,009 |
|
| 1,120 |
|
| (111) |
| (10)% |
|
| (10)% |
| |
|
|
|
| 201,038 |
|
| 180,232 |
|
| 20,806 |
| 12 % |
|
| 12 % |
|
Mexico revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Retail merchandise sales |
| 117,556 |
|
| 84,566 |
|
| 32,990 |
| 39 % |
|
| 30 % |
| |
| Scrap jewelry sales |
| 41,957 |
|
| 44,097 |
|
| (2,140) |
| (5)% |
|
| (5)% |
| |
| Pawn loan fees |
| 58,074 |
|
| 42,482 |
|
| 15,592 |
| 37 % |
|
| 28 % |
| |
| Consumer loan fees |
| 4,625 |
|
| 3,840 |
|
| 785 |
| 20 % |
|
| 13 % |
| |
| Other revenue |
| 12 |
|
| 61 |
|
| (49) |
| (80)% |
|
| (82)% |
| |
|
|
|
| 222,224 |
|
| 175,046 |
|
| 47,178 |
| 27 % |
|
| 20 % |
|
Total revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Retail merchandise sales |
| 188,536 |
|
| 150,942 |
|
| 37,594 |
| 25 % |
|
| 20 % |
| |
| Scrap jewelry sales |
| 81,373 |
|
| 78,551 |
|
| 2,822 |
| 4 % |
|
| 4 % |
| |
| Pawn loan fees |
| 102,145 |
|
| 80,805 |
|
| 21,340 |
| 26 % |
|
| 22 % |
| |
| Credit services fees |
| 45,384 |
|
| 39,602 |
|
| 5,782 |
| 15 % |
|
| 15 % |
| |
| Consumer loan fees |
| 4,803 |
|
| 4,197 |
|
| 606 |
| 14 % |
|
| 7 % |
| |
| Other revenue |
| 1,021 |
|
| 1,181 |
|
| (160) |
| (14)% |
|
| (14)% |
| |
|
|
| $ | 423,262 |
| $ | 355,278 |
| $ | 67,984 |
| 19 % |
|
| 16 % |
|
Foreign revenue accounted for 53% of the total revenue for fiscal 2010, while domestic revenue accounted for 47% of total revenue.
The following table details customer loans and inventories held by the Company and active CSO credit extensions from an independent third-party lender as of December 31, 2010, as compared to December 31, 2009 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current-year balances at the prior-year end-of-period exchange rate.
|
|
|
| Balance at |
|
|
|
|
|
| Increase/(Decrease) | ||||||
|
|
|
| December 31, |
|
|
|
|
|
| Constant Currency | ||||||
|
|
|
| 2010 |
| 2009 |
| Increase/(Decrease) |
| Basis | |||||||
United States: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
| Pawn loans | $ | 35,319 |
| $ | 31,277 |
| $ | 4,042 |
| 13 % |
|
| 13 % |
| ||
| CSO credit extensions held by an |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| independent third-party (1) |
| 14,296 |
|
| 11,837 |
|
| 2,459 |
| 21 % |
|
| 21 % |
| |
| Other |
| 39 |
|
| 84 |
|
| (45) |
| (54)% |
|
| (54)% |
| ||
|
|
|
|
| 49,654 |
|
| 43,198 |
|
| 6,456 |
| 15 % |
|
| 15 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mexico: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Pawn loans |
| 35,169 |
|
| 22,442 |
|
| 12,727 |
| 57 % |
|
| 49 % |
| ||
| Other |
| 956 |
|
| 887 |
|
| 69 |
| 8 % |
|
| 2 % |
| ||
|
|
|
|
| 36,125 |
|
| 23,329 |
|
| 12,796 |
| 55 % |
|
| 47 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Pawn loans |
| 70,488 |
|
| 53,719 |
|
| 16,769 |
| 31 % |
|
| 28 % |
| ||
| CSO credit extensions held by an |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| independent third-party (1) |
| 14,296 |
|
| 11,837 |
|
| 2,459 |
| 21 % |
|
| 21 % |
| |
| Other |
| 995 |
|
| 971 |
|
| 24 |
| 2 % |
|
| (3)% |
| ||
|
|
|
| $ | 85,779 |
| $ | 66,527 |
| $ | 19,252 |
| 29 % |
|
| 26 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pawn inventories: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
| U.S. pawn inventories | $ | 19,730 |
| $ | 17,285 |
| $ | 2,445 |
| 14 % |
|
| 14 % |
| ||
| Mexico pawn inventories |
| 27,676 |
|
| 17,152 |
|
| 10,524 |
| 61 % |
|
| 53 % |
| ||
|
|
|
| $ | 47,406 |
| $ | 34,437 |
| $ | 12,969 |
| 38 % |
|
| 33 % |
|
(1)
CSO amounts outstanding are composed of the principal portion of active CSO extensions of credit by an independent third-party lender, which are not included on the Company's balance sheet, net of the Company’s estimated fair value of its liability under the letters of credit guaranteeing the extensions of credit.
Store Operations
The overall increase in year-over-year revenue of 19% was due to a combination of significant same-store revenue growth and revenue from new pawn stores. Same-store revenue grew by 12% in Mexico, while same-store revenue grew by 8% in the United States. The same-store revenue growth from Mexico is reflective of continued maturation of stores in Mexico, where the Company has concentrated the majority of its store openings over the past several years. Same-store revenue growth in the United States was primarily the result of strong demand for pawn and consumer loan products and increased revenue from scrap jewelry sales. Same-store sales increased by 12% in the Company’s U.S. consumer loan stores, as a result of increased demand for non-bank sponsored credit products. Revenue generated by the new stores opened since January 1, 2009 increased by $27,485,000 in Mexico and $5,509,000 in the United States, compared to fiscal 2009.
Combined pawn retail and scrap jewelry sales increased by 18% for fiscal 2010, with Mexico stores recording 24% growth and U.S. stores 9% growth. Pawn retail sales increased by 25%, primarily the result of a 39% sales increase in Mexico, which reflected continued store maturation and an increased mix of hard good (primarily consumer electronics and power tools) inventories. The 4% increase in pawn scrap jewelry sales was primarily due to a 23% increase in the weighted-average selling price of scrap gold, offset by a 19% decline in the quantity of scrap gold sold. The decline in scrap jewelry volume was related to pawn operations in Mexico, where the percentage of jewelry pawn and “buy” transactions has decreased as a percentage of the overall inventory mix compared to the prior year. The shift in inventory mix is the result of the Company’s increased focus on hard good transactions (electronics and tools) where there is less competition in Mexico, as compared to jewelry lending and “buys,” where there is greater competition. The total volume of gold scrap jewelry sold in fiscal 2010 was approximately 63,000 ounces at an average cost of $845 per ounce and an average selling price of $1,200 per ounce.
Revenue from pawn loan fees increased 26%, which was composed of a 15% increase in the United States and a 37% increase in Mexico. The increase in revenue was reflective of growth in pawn loans of 13% in the United States, which has a more mature store base, and 57% growth in Mexico, where almost half of the stores are less than three years old. The increases in pawn loan fees and receivables were positively impacted by continued consumer credit demand in most markets, new stores and store maturation. Service fees from consumer loans and credit services increased 15% compared to fiscal 2009, which was consistent with the increase in outstanding consumer loans and CSO transaction volumes and reflected strong consumer credit demand.
The gross profit margin on total merchandise sales was 40% for both fiscal 2010 and 2009. The retail merchandise margin, which excludes scrap jewelry sales, was 42% for both fiscal 2010 and 2009. The gross margin on sales of scrap jewelry was 35% during both fiscal 2010 and 2009. Pawn inventories increased over the prior year by 38%, which was reflective of growth in pawn loan balances, especially in Mexico. At December 31, 2010, the Company’s pawn inventories, at cost, were comprised as follows: 42% jewelry (primarily gold), 41% electronics and appliances, 7% tools and 10% other. On a cost basis, 98% of total inventories at December 31, 2010, had been held for one year or less, while 2% had been held for more than one year.
The Company’s consumer loan and credit services loss provision was 27% of consumer loan and credit services fee revenue during fiscal 2010, compared to 28% for the prior year. The Company’s loss reserve on consumer loans increased to $53,000, or 5.0% of the gross loan balance at December 31, 2010, compared to $52,000, or 5.1% of the gross loan balance at December 31, 2009. The estimated fair value of liabilities under the CSO letters of credit, net of anticipated recoveries from customers, was $1,026,000, or 6.7% of the gross loan balance at December 31, 2010, compared to $890,000, or 7.0% of the gross loan balance at December 31, 2009, which is included as a component of the Company’s accrued liabilities.
Store operating expenses of $115,994,000 during fiscal 2010 increased by 18% compared to $98,432,000 during fiscal 2009, primarily as a result of new store openings and the appreciation of the Mexican peso since January 1, 2009. As a percentage of revenue, store operating expenses declined from 28% in fiscal 2009 to 27% in fiscal 2010, primarily the result of the Company’s ability to leverage same-store revenue increases.
The net store profit contribution from continuing operations for the current year was $122,435,000, which equates to a store-level operating margin of 29%, compared to 28% in 2009, which was reflective of the same-store sales revenue growth and operating leverage.
The average value of the Mexican peso to the U.S. dollar increased from 13.5 to 1 in fiscal 2009 to 12.6 to 1 in fiscal 2010. As a result, the translated revenue results of the Mexican operations into U.S. dollars were increased by this currency rate fluctuation. While the strengthening of the Mexican peso positively affected the translated dollar-value of revenue, the offset cost of sales and operating expenses were inflated as well. As a result of these natural currency hedges, the impact of the currency rate fluctuation on net income and earnings per share was not significant.
Administrative Expenses, Interest, Taxes and Income
Administrative expenses increased 18% to $40,522,000 during fiscal 2010 compared to $34,281,000 during fiscal 2009, which reflected a 12% increase in the weighted-average store count and increased general management and supervisory compensation expense related to increased store count, revenue and profitability. As a percentage of revenue, administrative expenses were 10% in both fiscal 2010 and 2009.
Interest expense decreased to $391,000 during fiscal 2010, compared to $765,000 for fiscal 2009, reflecting lower borrowing levels.
For fiscal 2010 and 2009, the Company’s effective federal income tax rates of 35.8% and 37.4%, respectively, differed from the federal statutory tax rate of approximately 35%, primarily as a result of state and foreign income taxes. The decrease in the overall rate for 2010 relates primarily to an increased percentage of income being generated in Mexico, on which the Company is not subject to state income taxes.
Income from continuing operations increased 34% to $51,374,000 during fiscal 2010 compared to $38,296,000 during fiscal 2009.
At December 31, 2011,
In January 2012, the Company borrowed $13,000,000 under its Unsecured Credit Facility to fund an acquisition and stock repurchases. On February 28, 2012, the Company entered into an agreement to amend and extend the terms of the Unsecured Credit Facility through February 2015. Under the amended terms, the amount of the Unsecured Credit Facility was increased to $50,000,000, which can be increased to $100,000,000, subject to lender approval. The Unsecured Credit Facility bears interest at the prevailing LIBOR rate plus a margin, which varies from 1.5% to 2.0%, depending on the Company’s cash flow leverage ratios as defined in the amended agreement.
During the fourth quarter of 2011,
Year Ended December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Cash flow provided by operating activities | $ | 88,792 | $ | 80,375 | $ | 73,645 | ||||||
Cash flow (used in) investing activities | $ | (159,904 | ) | $ | (22,104 | ) | $ | (47,696 | ) | |||
Cash flow provided by (used in) financing activities | $ | 49,525 | $ | (52,593 | ) | $ | 13,649 | |||||
Working capital | $ | 210,280 | $ | 175,073 | $ | 170,376 | ||||||
Current ratio | 7.75x | 5.94x | 5.92x | |||||||||
Liabilities to equity ratio | 44 | % | 13 | % | 15 | % | ||||||
Inventory turns | 4.2x | 4.2x | 4.1x |
|
|
|
| Year Ended December 31, | |||||||
|
|
|
| 2011 |
| 2010 |
| 2009 | |||
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow provided by operating activities | $ | 80,375 |
| $ | 73,645 |
| $ | 85,213 | |||
Cash flow used in investing activities | $ | (22,104) |
| $ | (47,696) |
| $ | (17,633) | |||
Cash flow (used in) provided by financing activities | $ | (52,593) |
| $ | 13,649 |
| $ | (71,322) | |||
|
|
|
|
|
|
|
|
|
|
|
|
Working capital | $ | 175,073 |
| $ | 170,376 |
| $ | 101,295 | |||
Current ratio |
| 5.94x |
|
| 5.92x |
|
| 3.87x | |||
Liabilities to equity ratio |
| 13% |
|
| 15% |
|
| 21% | |||
Inventory turns |
| 4.2x |
|
| 4.1x |
|
| 4.3x |
Cash used for purchasing property and equipment for existing stores and administrative locations totaled $11,658,000 in fiscal 2011. This amount included approximately $3,592,000 for the purchase of the real estate of four existing U.S. pawn stores which were formerly leased properties.
During fiscal 2011, the Company repurchased approximately 1,360,000 shares of common stock at an aggregate cost of $55,308,000 and an average cost per share of $40.68 to complete the 2007-authorized repurchase program. The 2011 repurchases were funded through operating cash flows and existing cash balances; no debt was incurred to fund the repurchases.
Year Ended December 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Income from continuing operations | $ | 81,105 | $ | 70,523 | $ | 51,302 | |||||
Adjustments: | |||||||||||
Income taxes | 41,506 | 37,158 | 28,630 | ||||||||
Depreciation and amortization | 12,949 | 10,962 | 10,380 | ||||||||
Interest expense | 1,488 | 135 | 391 | ||||||||
Interest income | (216 | ) | (278 | ) | (97 | ) | |||||
Earnings from continuing operations before interest, taxes, depreciation and amortization | $ | 136,832 | $ | 118,500 | $ | 90,606 |
|
| Year Ended December 31, | |||||||
|
| 2011 |
| 2010 |
| 2009 | |||
|
|
|
|
|
|
|
|
|
|
Income from continuing operations | $ | 70,865 |
| $ | 51,374 |
| $ | 38,296 | |
Adjustments: |
|
|
|
|
|
|
|
| |
| Income taxes |
| 37,338 |
|
| 28,668 |
|
| 22,879 |
| Depreciation and amortization |
| 11,014 |
|
| 10,451 |
|
| 10,006 |
| Interest expense |
| 135 |
|
| 391 |
|
| 765 |
| Interest income |
| (278) |
|
| (97) |
|
| (67) |
Earnings before interest, taxes, depreciation and amortization | $ | 119,074 |
| $ | 90,787 |
| $ | 71,879 |
Year Ended December 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Cash flow from operating activities, including discontinued operations | $ | 88,792 | $ | 80,375 | $ | 73,645 | |||||
Cash flow from investing activities: | |||||||||||
Pawn and consumer loans | (17,325 | ) | (5,208 | ) | (23,648 | ) | |||||
Purchases of property and equipment | (21,841 | ) | (28,974 | ) | (18,385 | ) | |||||
Free cash flow | $ | 49,626 | $ | 46,193 | $ | 31,612 |
|
|
|
| Year Ended December 31, | |||||||
|
|
|
| 2011 |
| 2010 |
| 2009 | |||
Cash flow from operating activities, including discontinued operations | $ | 80,375 |
| $ | 73,645 |
| $ | 85,213 | |||
Cash flow from investing activities: |
|
|
|
|
|
|
|
| |||
| Pawn loans |
| (5,092) |
|
| (21,824) |
|
| (10,624) | ||
| Consumer loans |
| (116) |
|
| (1,824) |
|
| (2,340) | ||
| Purchases of property and equipment |
| (28,974) |
|
| (18,385) |
|
| (15,376) | ||
|
| Free cash flow | $ | 46,193 |
| $ | 31,612 |
| $ | 56,873 |
Constant Currency
Results
Payments Due by Period | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
Total | Less Than 1 Year | 1 - 3 Years | 3 - 5 Years | More Than 5 Years | |||||||||||||||
Operating leases | $ | 106,765 | $ | 31,839 | $ | 45,229 | $ | 17,958 | $ | 11,739 | |||||||||
Revolving credit facility (1) | 102,500 | — | 102,500 | — | — | ||||||||||||||
Notes payable | 11,563 | 3,212 | 5,181 | 3,170 | — | ||||||||||||||
Interest on notes payable | 922 | 377 | 427 | 118 | — | ||||||||||||||
Employment contracts | 9,666 | 2,849 | 3,115 | 1,261 | 2,441 | ||||||||||||||
Consulting contract with former officer and director of the Company | 2,800 | 700 | 1,400 | 700 | — | ||||||||||||||
Total | $ | 234,216 | $ | 38,977 | $ | 157,852 | $ | 23,207 | $ | 14,180 |
|
|
| Payments Due by Period | |||||||||||||
|
|
| (in thousands) | |||||||||||||
|
|
|
|
|
| Less |
|
|
|
|
|
|
| More | ||
|
|
|
|
|
| Than 1 |
| 1 - 3 |
| 3 - 5 |
| Than 5 | ||||
|
|
| Total |
| Year |
| Years |
| Years |
| Years | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating leases | $ | 83,499 |
| $ | 25,768 |
| $ | 36,322 |
| $ | 15,126 |
| $ | 6,283 | ||
Employment contracts |
| 12,256 |
|
| 2,748 |
|
| 4,276 |
|
| 2,151 |
|
| 3,081 | ||
Consulting contract with former officer and |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| director of the Company |
| 3,500 |
|
| 700 |
|
| 1,400 |
|
| 1,400 |
|
| - | |
|
| Total | $ | 99,255 |
| $ | 29,216 |
| $ | 41,998 |
| $ | 18,677 |
| $ | 9,364 |
(1) | Excludes interest obligations under the line of credit agreement. See Note 9 of Notes to Consolidated Financial Statements. |
Management’s
22, 2013
Not applicable.Company’sCompany's Proxy Statement to be filed with the Securities and Exchange Commission in connection with the solicitation of proxies for the Company’sCompany's Annual Meeting of Stockholders.Company’sCompany's website atwww.firstcash.com. The Company intends to disclose future amendments to, or waivers from, certain provisions of its Code of Ethics on its website in accordance with applicable NASDAQ and SEC requirements. Copies of the Company’sCompany's Code of Ethics are also available, free of charge, by submitting a written request to First Cash Financial Services, Inc., Investor Relations, 690 E. Lamar Blvd., Suite 400, Arlington, Texas 76011.Company’sCompany's Proxy Statement.Company’sCompany's Proxy Statement.Company’sCompany's Proxy Statement.
The following documents are filed as a part of this report: (1) Consolidated Financial Statements: Page Report of Independent Registered Public Accounting Firm F-1 Consolidated Balance Sheets F-2 Consolidated Statements of Income F-3 Consolidated Statements of Comprehensive Income F-4 Consolidated Statements of Changes in Stockholders’ Equity F-5 Consolidated Statements of Cash Flows F-8 Notes to Consolidated Financial Statements F-10 (2) All schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto. (3) Exhibits: Incorporated by Reference Exhibit No. Exhibit Description Form File No. Exhibit Filing Date Filed Herewith 3.1 Amended Certificate of Incorporation DEF 14A 0-19133 A 04/29/2004 3.2 Amended Bylaws 10-K 0-19133 3.2 03/31/2000 4.1 Common Stock Specimen S-1 33-48436 4.2a 06/05/1992 10.1 Consulting Agreement - Phillip E. Powell * 10-K 0-19133 10.2 03/16/2005 10.2 First Cash Financial Services, Inc. 1999 Stock Option Plan * S-3 333-71077 10.63 01/25/1999 10.3 Executive Incentive Compensation Plan * DEF 14A 0-19133 A 04/30/2003 10.4 First Cash Financial Services, Inc. 2004 Long-Term Incentive Plan * DEF 14A 0-19133 A 04/29/2004 10.5 Stock Purchase Agreement - Auto Master 8-K 0-19133 2.1 08/28/2006 10.6 Amendment to Consulting Agreement - Phillip E. Powell * 10-K 0-19133 10.12 03/16/2007 10.7 Amended and Restated Employment Agreement - Rick L. Wessel * 10-Q 0-19133 10.1 11/09/2007 10.8 Employment Agreement - Stephen O. Coffman * DEF 14A 0-19133 A 04/29/2008 10.9 Asset Purchase Agreement - Sale of Auto Master to Interstate Auto Group, Inc. 8-K 0-19133 10.1 12/09/2008 10.10 Collection Services Agreement - Interstate Auto Group, Inc. 8-K 0-19133 10.2 12/09/2008 10.11 Stock Purchase Agreement - Central America Capital, S.A. de C.V. 8-K 0-19133 10.1 12/11/2008 10.12 Amendment No. 2 to Consulting Agreement - Phillip E. Powell * 10-Q 0-19133 10.1 05/05/2010 10.13 Amendment No. 1 to First Amended and Restated Employment Agreement - Rick L. Wessel * 10-Q 0-19133 10.2 05/05/2010 10.14 Amended and Restated Employment Agreement - Stephen O. Coffman * 10-Q 0-19133 10.3 05/05/2010 10.15 Employment Agreement - R. Douglas Orr * 10-Q 0-19133 10.4 05/05/2010 10.16 Amended and Restated Credit Agreement - JPMorgan Chase Bank, N.A. 10-Q 0-19133 10.5 05/05/2010 10.17 First Cash Financial Services, Inc. 2011 Long-Term Incentive Plan * DEF 14A 0-19133 A 04/28/2011 10.18 Membership Interest Purchase Agreement - BBR Unlimited, LLC 8-K 0-19133 10.1 01/17/2012 10.19 First Amendment to Amended and Restated Credit Agreement X 14.1 Amended and Restated Code of Ethics 10-K 0-19133 14.1 03/15/2010 21.1 Subsidiaries X 23.1 Consent of Independent Registered Public Accounting Firm, Hein & Associates LLP X 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 101 (1) The following financial information from our Annual Report on Form 10-K for fiscal 2011, filed with the SEC on February 29, 2012, are formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets at December 31, 2011, and December 31, 2010; (ii) Consolidated Statements of Income for the year ended December 31, 2011, December 31, 2010, and December 31, 2009; (iii) Consolidated Statements of Comprehensive Income for the year ended December 31, 2011, December 31, 2010, and December 31, 2009; (iv) Consolidated Statements of Changes in Stockholders’ Equity for the year ended December 31, 2011, December 31, 2010, and December 31, 2009; (v) Consolidated Statements of Cash Flows for the year ended December 31, 2011, December 31, 2010, and December 31, 2009; and (vi) Notes to Consolidated Financial Statements. X * Indicates management contract or compensatory plan, contract or arrangement. (1) The XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.(a) The following documents are filed as part of this report: (1) Consolidated Financial Statements: Page Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Comprehensive Income Consolidated Statements of Changes in Stockholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements (2) All schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto. (3) Exhibits: Incorporated by Reference Exhibit No. Exhibit Description Form File No. Exhibit Filing Date Filed Herewith 3.1 Amended Certificate of Incorporation DEF 14A 0-19133 A 04/29/2004 3.2 Amended Bylaws 10-K 0-19133 3.2 03/31/2000 4.1 Common Stock Specimen S-1 33-48436 4.2a 06/05/1992 10.1 Consulting Agreement - Phillip E. Powell * 10-K 0-19133 10.2 03/16/2005 10.2 First Cash Financial Services, Inc. 1999 Stock Option Plan * S-3 333-71077 10.63 01/25/1999 10.3 Executive Incentive Compensation Plan * DEF 14A 0-19133 A 04/30/2003 10.4 DEF 14A 0-19133 A 04/29/2004 10.5 Amendment to Consulting Agreement - Phillip E. Powell * 10-K 0-19133 10.12 03/16/2007 10.6 Amended and Restated Employment Agreement - Rick L. Wessel * 10-Q 0-19133 10.1 11/09/2007 10.7 DEF 14A 0-19133 A 04/29/2008 10.8 10-Q 0-19133 10.1 05/05/2010 10.9 10-Q 0-19133 10.2 05/05/2010 10.10 Amended and Restated Employment Agreement - Stephen O. Coffman * 10-Q 0-19133 10.3 05/05/2010 10.11 Employment Agreement - R. Douglas Orr * 10-Q 0-19133 10.4 05/05/2010 10.12 Amended and Restated Credit Agreement - JPMorgan Chase Bank, N.A. 10-Q 0-19133 10.5 05/05/2010 10.13 DEF 14A 0-19133 A 04/28/2011 10.14 Membership Interest Purchase Agreement - BBR Unlimited, LLC 8-K 0-19133 10.1 01/17/2012 10.15 First Amendment to Amended and Restated Credit Agreement 10-K 0-19133 10.19 02/29/2012 10.16 First Cash 401(k) Profit Sharing Plan, as amended effective as of October 1, 2010 (executed on August 5, 2010) S-8 333- 106881 4(g) 05/31/2012 10.17 Membership Interest, Stock and Asset Purchase Agreement - Mister Money 8-K 0-19133 10.1 06/20/2012 10.18 8-K 0-19133 10.1 08/16/2012 10.19 Second Amendment to Amended and Restated Credit Agreement 8-K 0-19133 10.1 09/13/2012 14.1 Amended and Restated Code of Ethics 10-K 0-19133 14.1 03/15/2010 21.1 Subsidiaries X 23.1 Consent of Independent Registered Public Accounting Firm, Hein & Associates LLP X 31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act provided by Rick L. Wessel, Chief Executive Officer X 31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act provided by R. Douglas Orr, Chief Financial Officer X
FIRST CASH FINANCIAL SERVICES, INC. /s/ R. DOUGLAS ORR Signature Chairman of the Board, President, Chief Executive Officer (Principal Executive Officer) February February Director February Director February Director February Incorporated by Reference Exhibit No. Exhibit Description Form File No. Exhibit Filing Date Filed Herewith 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 provided by Rick L. Wessel, Chief Executive Officer X 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 provided by R. Douglas Orr, Chief Financial Officer X 101 (1) The following financial information from our Annual Report on Form 10-K for fiscal 2012, filed with the SEC on February 22, 2013, is formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets at December 31, 2012, and December 31, 2011, (ii) Consolidated Statements of Income for the years ended December 31, 2012, December 31, 2011, and December 31, 2010, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, December 31, 2011, and December 31, 2010, (iv) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2012, December 31, 2011, and December 31, 2010, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2012, December 31, 2011, and December 31, 2010, and (vi) Notes to Consolidated Financial Statements. X * Indicates management contract or compensatory plan, contract or arrangement. (1) The XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document. Dated: February 29, 201222, 2013(Registrant)(Registrant) /s/ RICK L. WESSEL Rick L. Wessel Chief Executive Officer (Principal Executive Officer) R. Douglas Orr Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) SignatureCapacityDateCapacity Date 29, 201229, 201229, 201229, 201229, 2012
| FIRST CASH FINANCIAL SERVICES, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands, except per share amounts) | ||||||||
|
| ||||||||
|
|
|
|
| December 31, | ||||
|
|
|
|
| 2011 |
| 2010 | ||
| ASSETS |
|
|
|
|
| |||
| Cash and cash equivalents | $ | 70,296 |
| $ | 67,240 | |||
| Pawn loan fees and service charges receivable |
| 10,842 |
|
| 10,446 | |||
| Pawn loans |
| 73,287 |
|
| 70,488 | |||
| Consumer loans, net |
| 858 |
|
| 995 | |||
| Inventories |
| 44,412 |
|
| 47,406 | |||
| Prepaid expenses and other current assets |
| 9,705 |
|
| 5,644 | |||
| Deferred tax assets |
| 1,078 |
|
| - | |||
| Current assets of discontinued operations |
| - |
|
| 2,779 | |||
|
| Total current assets |
| 210,478 |
|
| 204,998 | ||
|
|
|
|
|
|
|
|
|
|
| Property and equipment, net |
| 73,451 |
|
| 58,425 | |||
| Goodwill, net |
| 70,395 |
|
| 68,595 | |||
| Other non-current assets |
| 2,772 |
|
| 2,668 | |||
| Non-current assets of discontinued operations |
| - |
|
| 7,760 | |||
|
|
| Total assets | $ | 357,096 |
| $ | 342,446 | |
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
| |||
| Current portion of notes payable | $ | - |
| $ | 465 | |||
| Accounts payable and accrued liabilities |
| 25,629 |
|
| 27,730 | |||
| Income taxes payable |
| 9,776 |
|
| 5,436 | |||
| Deferred taxes payable |
| - |
|
| 991 | |||
|
| Total current liabilities |
| 35,405 |
|
| 34,622 | ||
|
|
|
|
|
|
|
|
|
|
| Notes payable, net of current portion |
| - |
|
| 1,386 | |||
| Deferred income tax liabilities |
| 6,319 |
|
| 8,434 | |||
|
|
| Total liabilities |
| 41,724 |
|
| 44,442 | |
|
|
|
|
|
|
|
|
|
|
| Commitments and contingencies (Note 12 and Note 15) |
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
| Stockholders' equity: |
|
|
|
|
| |||
|
| Preferred stock; $.01 par value; 10,000 shares authorized; no shares issued or |
|
|
|
|
| ||
|
|
| outstanding |
| - |
|
| - | |
|
| Common stock; $.01 par value; 90,000 shares authorized; |
|
|
|
|
| ||
|
|
| 38,291 and 38,002 shares issued, respectively; |
|
|
|
|
| |
|
|
| 30,091 and 31,162 shares outstanding, respectively |
| 383 |
|
| 380 | |
|
| Additional paid-in capital |
| 147,649 |
|
| 142,344 | ||
|
| Retained earnings |
| 333,523 |
|
| 255,741 | ||
|
| Accumulated other comprehensive loss from cumulative foreign currency |
|
|
|
|
| ||
|
|
| translation adjustments |
| (13,463) |
|
| (3,049) | |
|
| Common stock held in treasury,8,200 and 6,840 shares at cost, respectively |
| (152,720) |
|
| (97,412) | ||
|
|
| Total stockholders' equity |
| 315,372 |
|
| 298,004 | |
|
|
| Total liabilities and stockholders' equity | $ | 357,096 |
| $ | 342,446 | |
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part | ||||||||
|
| ||||||||
| F-2 |
| FIRST CASH FINANCIAL SERVICES, INC. | ||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||
| (in thousands, except per share amounts) | ||||||||||
|
| ||||||||||
|
|
|
| Year Ended December 31, | |||||||
|
|
|
| 2011 |
| 2010 |
| 2009 | |||
| Revenue: |
|
|
|
|
|
|
|
| ||
|
| Merchandise sales | $ | 344,855 |
| $ | 269,909 |
| $ | 229,493 | |
|
| Pawn loan fees |
| 122,333 |
|
| 102,145 |
|
| 80,805 | |
|
| Consumer loan and credit services fees |
| 53,048 |
|
| 50,187 |
|
| 43,799 | |
|
| Other revenue |
| 1,066 |
|
| 1,021 |
|
| 1,181 | |
|
|
| Total revenue |
| 521,302 |
|
| 423,262 |
|
| 355,278 |
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenue: |
|
|
|
|
|
|
|
| ||
|
| Cost of goods sold |
| 213,453 |
|
| 162,045 |
|
| 138,090 | |
|
| Consumer loan and credit services loss provision |
| 12,888 |
|
| 13,757 |
|
| 12,434 | |
|
| Other cost of revenue |
| 211 |
|
| 157 |
|
| 162 | |
|
|
| Total cost of revenue |
| 226,552 |
|
| 175,959 |
|
| 150,686 |
|
|
|
|
|
|
|
|
|
|
|
|
| Net revenue |
| 294,750 |
|
| 247,303 |
|
| 204,592 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| Expenses and other income: |
|
|
|
|
|
|
|
| ||
|
| Store operating expenses |
| 130,294 |
|
| 115,994 |
|
| 98,432 | |
|
| Administrative expenses |
| 45,382 |
|
| 40,522 |
|
| 34,281 | |
|
| Depreciation and amortization |
| 11,014 |
|
| 10,451 |
|
| 10,006 | |
|
| Interest expense |
| 135 |
|
| 391 |
|
| 765 | |
|
| Interest income |
| (278) |
|
| (97) |
|
| (67) | |
|
|
| Total expenses and other income |
| 186,547 |
|
| 167,261 |
|
| 143,417 |
|
|
|
|
|
|
|
|
|
|
|
|
| Income from continuing operations before income taxes |
| 108,203 |
|
| 80,042 |
|
| 61,175 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Provision for income taxes |
| 37,338 |
|
| 28,668 |
|
| 22,879 |
|
|
|
|
|
|
|
|
|
|
|
|
| Income from continuing operations |
| 70,865 |
|
| 51,374 |
|
| 38,296 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from discontinued operations, net of tax (Note 5) |
| 6,917 |
|
| 6,284 |
|
| 11,468 | |
| Net income | $ | 77,782 |
| $ | 57,658 |
| $ | 49,764 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| Basic income per share: |
|
|
|
|
|
|
|
| ||
|
| Income from continuing operations (basic) | $ | 2.31 |
| $ | 1.70 |
| $ | 1.30 | |
|
| Income from discontinued operations (basic) |
| 0.22 |
|
| 0.20 |
|
| 0.38 | |
|
| Net income per basic share | $ | 2.53 |
| $ | 1.90 |
| $ | 1.68 | |
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted income per share: |
|
|
|
|
|
|
|
| ||
|
| Income from continuing operations (diluted) | $ | 2.25 |
| $ | 1.65 |
| $ | 1.27 | |
|
| Income from discontinued operations (diluted) |
| 0.22 |
|
| 0.21 |
|
| 0.38 | |
|
| Net income per diluted share | $ | 2.47 |
| $ | 1.86 |
| $ | 1.65 | |
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part | ||||||||||
|
| ||||||||||
| F-3 |
| FIRST CASH FINANCIAL SERVICES, INC. | |||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||
| (in thousands) | |||||||||||
|
| |||||||||||
|
|
|
|
| Year Ended December 31, | |||||||
|
|
|
|
| 2011 |
| 2010 |
| 2009 | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income | $ | 77,782 |
| $ | 57,658 |
| $ | 49,764 | |||
| Other comprehensive income (loss): |
|
|
|
|
|
|
|
| |||
|
| Currency translation adjustment, gross |
| (15,797) |
|
| 5,546 |
|
| 4,884 | ||
|
| Tax (expense) benefit |
| 5,383 |
|
| (2,104) |
|
| (1,807) | ||
| Comprehensive income | $ | 67,368 |
| $ | 61,100 |
| $ | 52,841 | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part | |||||||||||
|
| |||||||||||
| F-4 |
| FIRST CASH FINANCIAL SERVICES, INC. | |||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY | |||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
| Other |
|
|
|
|
|
| Total | |||
|
|
|
|
| Preferred |
| Common |
| Paid-In |
| Retained |
| Comprehensive |
| Common Stock |
| Stockholders' | |||||||||||||
|
|
|
|
| Stock |
| Stock |
| Capital |
| Earnings |
| Loss |
| Held in Treasury |
| Equity | |||||||||||||
|
|
|
|
| Shares |
| Amount |
| Shares |
| Amount |
|
|
|
|
|
|
|
|
|
| Shares |
| Amount |
|
|
| |||
| Balance at |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| 12/31/2010 | - |
| $ | - |
| 38,002 |
| $ | 380 |
| $ | 142,344 |
| $ | 255,741 |
| $ | (3,049) |
| 6,840 |
| $ | (97,412) |
| $ | 298,004 | ||
| Shares issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| under share- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| based comp- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| ensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| plan | - |
|
| - |
| 289 |
|
| 3 |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| 3 | ||
| Exercise of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| options and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| warrants | - |
|
| - |
| - |
|
| - |
|
| 2,475 |
|
| - |
|
| - |
| - |
|
| - |
|
| 2,475 | ||
| Income tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| benefit from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| exercise of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| stock options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| and warrants | - |
|
| - |
| - |
|
| - |
|
| 2,088 |
|
| - |
|
| - |
| - |
|
| - |
|
| 2,088 | ||
| Share-based |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| expense | - |
|
| - |
| - |
|
| - |
|
| 742 |
|
| - |
|
| - |
| - |
|
| - |
|
| 742 | ||
| Net income | - |
|
| - |
| - |
|
| - |
|
| - |
|
| 77,782 |
|
| - |
| - |
|
| - |
|
| 77,782 | |||
| Currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| translation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| adjustment, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| net of tax | - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
| (10,414) |
| - |
|
| - |
|
| (10,414) | ||
| Repurchases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| of treasury |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| stock | - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
| 1,360 |
|
| (55,308) |
|
| (55,308) | ||
| Balance at |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| 12/31/2011 | - |
| $ | - |
| 38,291 |
| $ | 383 |
| $ | 147,649 |
| $ | 333,523 |
| $ | (13,463) |
| 8,200 |
| $ | (152,720) |
| $ | 315,372 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| F-5 |
| FIRST CASH FINANCIAL SERVICES, INC. | |||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY | |||||||||||||||||||||||||||||
| CONTINUED | |||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
| Other |
|
|
|
|
|
| Total | |||
|
|
|
|
| Preferred |
| Common |
| Paid-In |
| Retained |
| Comprehensive |
| Common Stock |
| Stockholders' | |||||||||||||
|
|
|
|
| Stock |
| Stock |
| Capital |
| Earnings |
| Loss |
| Held in Treasury |
| Equity | |||||||||||||
|
|
|
|
| Shares |
| Amount |
| Shares |
| Amount |
|
|
|
|
|
|
|
|
|
| Shares |
| Amount |
|
|
| |||
| Balance at |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| 12/31/2009 | - |
| $ | - |
| 36,697 |
| $ | 367 |
| $ | 117,892 |
| $ | 198,083 |
| $ | (6,491) |
| 6,840 |
| $ | (97,412) |
| $ | 212,439 | ||
| Shares issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| under share- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| based comp- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| ensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| plan | - |
|
| - |
| 1,305 |
|
| 13 |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| 13 | ||
| Exercise of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| options and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| warrants | - |
|
| - |
| - |
|
| - |
|
| 17,292 |
|
| - |
|
| - |
| - |
|
| - |
|
| 17,292 | ||
| Income tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| benefit from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| exercise of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| stock options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| and warrants | - |
|
| - |
| - |
|
| - |
|
| 6,154 |
|
| - |
|
| - |
| - |
|
| - |
|
| 6,154 | ||
| Share-based |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| expense | - |
|
| - |
| - |
|
| - |
|
| 1,006 |
|
| - |
|
| - |
| - |
|
| - |
|
| 1,006 | ||
| Net income | - |
|
| - |
| - |
|
| - |
|
| - |
|
| 57,658 |
|
| - |
| - |
|
| - |
|
| 57,658 | |||
| Currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| translation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| adjustment, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| net of tax | - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
| 3,442 |
| - |
|
| - |
|
| 3,442 | ||
| Repurchases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| of treasury |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| stock | - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| - | ||
| Balance at |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| 12/31/2010 | - |
| $ | - |
| 38,002 |
| $ | 380 |
| $ | 142,344 |
| $ | 255,741 |
| $ | (3,049) |
| 6,840 |
| $ | (97,412) |
| $ | 298,004 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| F-6 |
| FIRST CASH FINANCIAL SERVICES, INC. | |||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY | |||||||||||||||||||||||||||||
| CONTINUED | |||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
| Other |
|
|
|
|
|
| Total | |||
|
|
|
|
| Preferred |
| Common |
| Paid-In |
| Retained |
| Comprehensive |
| Common Stock |
| Stockholders' | |||||||||||||
|
|
|
|
| Stock |
| Stock |
| Capital |
| Earnings |
| Loss |
| Held in Treasury |
| Equity | |||||||||||||
|
|
|
|
| Shares |
| Amount |
| Shares |
| Amount |
|
|
|
|
|
|
|
|
|
| Shares |
| Amount |
|
|
| |||
| Balance at |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| 12/31/2008 | - |
| $ | - |
| 36,099 |
| $ | 361 |
| $ | 112,750 |
| $ | 148,319 |
| $ | (9,568) |
| 6,840 |
| $ | (97,412) |
| $ | 154,450 | ||
| Shares issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| under share- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| based comp- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| ensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| plan | - |
|
| - |
| 598 |
|
| 6 |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| 6 | ||
| Exercise of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| options and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| warrants | - |
|
| - |
| - |
|
| - |
|
| 2,112 |
|
| - |
|
| - |
| - |
|
| - |
|
| 2,112 | ||
| Income tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| benefit from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| exercise of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| stock options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| and warrants | - |
|
| - |
| - |
|
| - |
|
| 2,759 |
|
| - |
|
| - |
| - |
|
| - |
|
| 2,759 | ||
| Share-based |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| expense | - |
|
| - |
| - |
|
| - |
|
| 346 |
|
| - |
|
| - |
| - |
|
| - |
|
| 346 | ||
| Distribution to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| joint venture | - |
|
| - |
| - |
|
| - |
|
| (75) |
|
| - |
|
| - |
| - |
|
| - |
|
| (75) | ||
| Net income | - |
|
| - |
| - |
|
| - |
|
| - |
|
| 49,764 |
|
| - |
| - |
|
| - |
|
| 49,764 | |||
| Currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| translation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| adjustment, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| net of tax | - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
| 3,077 |
| - |
|
| - |
|
| 3,077 | ||
| Repurchases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| of treasury |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| stock | - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
| - |
|
| - |
|
| - | ||
| Balance at |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| 12/31/2009 | - |
| $ | - |
| 36,697 |
| $ | 367 |
| $ | 117,892 |
| $ | 198,083 |
| $ | (6,491) |
| 6,840 |
| $ | (97,412) |
| $ | 212,439 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| F-7 |
| FIRST CASH FINANCIAL SERVICES, INC. | |||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| (in thousands) | |||||||||||
|
| |||||||||||
|
|
|
|
|
|
| Year Ended December 31, | |||||
|
|
|
|
|
|
|
| 2011 |
| 2010 |
| 2009 |
| Cash flow from operating activities: |
|
|
|
|
|
| |||||
|
| Net income |
| $ | 77,782 | $ | 57,658 | $ | 49,764 | |||
|
| Adjustments to reconcile net income to net cash flow provided by operating |
|
|
|
|
|
| ||||
|
|
| activities: |
|
|
|
|
|
|
| ||
|
|
|
| Non-cash portion of credit loss provision |
| 156 |
| 1,914 |
| 1,735 | ||
|
|
|
| Share-based compensation expense |
| 742 |
| 1,006 |
| 346 | ||
|
|
|
| Depreciation and amortization expense |
| 11,026 |
| 10,513 |
| 11,112 | ||
|
|
|
| Deferred income taxes |
| 1,200 |
| 1,845 |
| 16,076 | ||
|
|
|
| Net gain on sales of consumer loan stores |
| (9,965) |
| - |
| (1,841) | ||
|
| Changes in operating assets and liabilities: |
|
|
|
|
|
| ||||
|
|
|
| Pawn fees and service charges receivable |
| (697) |
| (2,176) |
| (867) | ||
|
|
|
| Automotive finance receivables |
| 500 |
| 2,138 |
| 7,566 | ||
|
|
|
| Merchandise inventories |
| 445 |
| (3,875) |
| (1,842) | ||
|
|
|
| Prepaid expenses and other assets |
| (4,576) |
| 1,169 |
| (686) | ||
|
|
|
| Accounts payable and accrued expenses |
| (883) |
| 6,966 |
| (71) | ||
|
|
|
| Income taxes payable, current |
| 4,645 |
| (3,513) |
| 3,921 | ||
|
|
| Net cash flow provided by operating activities |
| 80,375 |
| 73,645 |
| 85,213 | |||
| Cash flow from investing activities: |
|
|
|
|
|
| |||||
|
| Pawn loan receivables |
| (5,092) |
| (21,824) |
| (10,624) | ||||
|
| Consumer loans |
| (116) |
| (1,824) |
| (2,340) | ||||
|
| Purchases of property and equipment |
| (28,974) |
| (18,385) |
| (15,376) | ||||
|
| Proceeds from sales of consumer loan stores |
| 19,857 |
| - |
| 12,014 | ||||
|
| Acquisitions of pawn stores |
| (7,779) |
| (5,663) |
| (1,307) | ||||
|
|
| Net cash flow used in investing activities |
| (22,104) |
| (47,696) |
| (17,633) | |||
| Cash flow from financing activities: |
|
|
|
|
|
| |||||
|
| Payments of debt |
|
| (1,851) |
| (9,810) |
| (76,199) | |||
|
| Purchases of treasury stock |
| (55,308) |
| - |
| - | ||||
|
| Proceeds from exercise of share-based compensation awards |
| 2,478 |
| 17,305 |
| 2,118 | ||||
|
| Income tax benefit from exercise of stock options and warrants |
| 2,088 |
| 6,154 |
| 2,759 | ||||
|
|
| Net cash flow provided by (used in) financing activities |
| (52,593) |
| 13,649 |
| (71,322) | |||
| Effect of exchange rates on cash |
| (2,622) |
| 865 |
| 1,513 | |||||
|
|
| Change in cash and cash equivalents |
| 3,056 |
| 40,463 |
| (2,229) | |||
| Cash and cash equivalents at beginning of the year |
| 67,240 |
| 26,777 |
| 29,006 | |||||
| Cash and cash equivalents at end of the year | $ | 70,296 | $ | 67,240 | $ | 26,777 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part | |||||||||||
|
| |||||||||||
| F-8 |
| FIRST CASH FINANCIAL SERVICES, INC. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||
| CONTINUED | ||||||||||||||||
| (in thousands) | ||||||||||||||||
|
| ||||||||||||||||
|
|
|
| Year Ended December 31, | |||||||||||||
|
|
|
| 2011 |
| 2010 |
| 2009 | |||||||||
| Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
| ||||||||
|
| Cash paid during the period for: |
|
|
|
|
|
|
|
| |||||||
|
|
| Interest | $ | 145 |
| $ | 265 |
| $ | 1,564 | ||||||
|
|
| Income taxes | $ | 24,579 |
| $ | 22,336 |
| $ | 6,260 | ||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| Supplemental disclosure of non-cash investing activity: |
|
|
|
|
|
|
|
| ||||||||
|
| Non-cash transactions in connection with pawn receivables settled through |
|
|
|
|
|
|
|
| |||||||
|
|
| forfeitures of collateral transferred to inventories | $ | 90,293 |
| $ | 98,134 |
| $ | 78,960 | ||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| Supplemental disclosure of non-cash financing activity: |
|
|
|
|
|
|
|
| ||||||||
|
| Notes payable issued in connection with pawn acquisitions | $ | - |
| $ | 2,000 |
| $ | - | |||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| The accompanying notes are an integral part | ||||||||||||||||
|
| ||||||||||||||||
| F-9 |
FIRST CASH FINANCIAL SERVICES, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) December 31, 2012 2011 ASSETS Cash and cash equivalents $ 50,285 $ 70,296 Pawn loan fees and service charges receivable 15,367 10,842 Pawn loans 103,181 73,287 Consumer loans, net 1,879 858 Inventories 65,345 44,412 Prepaid expenses and other current assets 4,225 9,705 Deferred tax assets 1,148 1,078 Total current assets 241,430 210,478 Property and equipment, net 93,304 73,451 Goodwill, net 166,429 69,695 Other non-current assets 6,529 3,472 Total assets $ 507,692 $ 357,096 LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of notes payable $ 3,212 $ — Accounts payable and accrued liabilities 27,938 25,629 Income taxes payable — 9,776 Total current liabilities 31,150 35,405 Revolving unsecured credit facility 102,500 — Notes payable, net of current portion 8,351 — Deferred income tax liabilities 13,275 6,319 Total liabilities 155,276 41,724 Commitments and contingencies (Note 11 and Note 14) Stockholders' equity: Preferred stock; $0.01 par value; 10,000 shares authorized; no shares issued or outstanding — — Common stock; $0.01 par value; 90,000 shares authorized; 388 383 Additional paid-in capital 159,081 147,649 Retained earnings 413,882 333,523 Accumulated other comprehensive income (loss) from cumulative foreign currency translation adjustments (6,940 ) (13,463 ) (213,995 ) (152,720 ) Total stockholders' equity 352,416 315,372 Total liabilities and stockholders' equity $ 507,692 $ 357,096
FIRST CASH FINANCIAL SERVICES, INC. | |||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||
(in thousands, except per share amounts) | |||||||||||||
Year Ended December 31, | |||||||||||||
2012 | 2011 | 2010 | |||||||||||
Revenue: | |||||||||||||
Merchandise sales | $ | 391,162 | $ | 344,801 | $ | 269,893 | |||||||
Pawn loan fees | 152,237 | 122,320 | 102,145 | ||||||||||
Consumer loan and credit services fees | 51,602 | 50,201 | 48,424 | ||||||||||
Other revenue | 945 | 1,022 | 992 | ||||||||||
Total revenue | 595,946 | 518,344 | 421,454 | ||||||||||
Cost of revenue: | |||||||||||||
Cost of goods sold | 243,997 | 213,411 | 162,035 | ||||||||||
Consumer loan and credit services loss provision | 13,160 | 11,984 | 13,123 | ||||||||||
Other cost of revenue | 127 | 190 | 141 | ||||||||||
Total cost of revenue | 257,284 | 225,585 | 175,299 | ||||||||||
Net revenue | 338,662 | 292,759 | 246,155 | ||||||||||
Expenses and other income: | |||||||||||||
Store operating expenses | 151,731 | 128,955 | 115,102 | ||||||||||
Administrative expenses | 50,099 | 45,304 | 40,447 | ||||||||||
Depreciation and amortization | 12,949 | 10,962 | 10,380 | ||||||||||
Interest expense | 1,488 | 135 | 391 | ||||||||||
Interest income | (216 | ) | (278 | ) | (97 | ) | |||||||
Total expenses and other income | 216,051 | 185,078 | 166,223 | ||||||||||
Income from continuing operations before income taxes | 122,611 | 107,681 | 79,932 | ||||||||||
Provision for income taxes | 41,506 | 37,158 | 28,630 | ||||||||||
Income from continuing operations | 81,105 | 70,523 | 51,302 | ||||||||||
Income (loss) from discontinued operations, net of tax | (746 | ) | 7,259 | 6,356 | |||||||||
Net income | $ | 80,359 | $ | 77,782 | $ | 57,658 | |||||||
Basic income per share: | |||||||||||||
Income from continuing operations | $ | 2.81 | $ | 2.30 | $ | 1.69 | |||||||
Income (loss) from discontinued operations | (0.03 | ) | 0.23 | 0.21 | |||||||||
Net income per basic share | $ | 2.78 | $ | 2.53 | $ | 1.90 | |||||||
Diluted income per share: | |||||||||||||
Income from continuing operations | $ | 2.73 | $ | 2.24 | $ | 1.65 | |||||||
Income (loss) from discontinued operations | (0.03 | ) | 0.23 | 0.21 | |||||||||
Net income per diluted share | $ | 2.70 | $ | 2.47 | $ | 1.86 | |||||||
The accompanying notes are an integral part of these consolidated financial statements. |
FIRST CASH FINANCIAL SERVICES, INC. | |||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||
(in thousands) | |||||||||||||
Year Ended December 31, | |||||||||||||
2012 | 2011 | 2010 | |||||||||||
Net income | $ | 80,359 | $ | 77,782 | $ | 57,658 | |||||||
Other comprehensive income (loss): | |||||||||||||
Currency translation adjustment, gross | 10,167 | (15,797 | ) | 5,546 | |||||||||
Tax (expense) benefit | (3,644 | ) | 5,383 | (2,104 | ) | ||||||||
Comprehensive income | $ | 86,882 | $ | 67,368 | $ | 61,100 | |||||||
The accompanying notes are an integral part of these consolidated financial statements. |
FIRST CASH FINANCIAL SERVICES, INC. | |||||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY | |||||||||||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Accum- ulated Other Compre- hensive Income (Loss) | Common Stock Held in Treasury | Total Stock- holders' Equity | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||
Balance at 12/31/2011 | — | $ | — | 38,291 | $ | 383 | $ | 147,649 | $ | 333,523 | $ | (13,463 | ) | 8,200 | $ | (152,720 | ) | $ | 315,372 | ||||||||||||||||||
Shares issued under share-based com-pensation plan | — | — | 505 | 5 | — | — | — | — | — | 5 | |||||||||||||||||||||||||||
Exercise of stock options | — | — | — | — | 4,291 | — | — | — | — | 4,291 | |||||||||||||||||||||||||||
Income tax benefit from exercise of stock options | — | — | — | — | 5,841 | — | — | — | — | 5,841 | |||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | 1,300 | — | — | — | — | 1,300 | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | 80,359 | — | — | — | 80,359 | |||||||||||||||||||||||||||
Currency translation adjustment, net of tax | — | — | — | — | — | — | 6,523 | — | — | 6,523 | |||||||||||||||||||||||||||
Repurchases of treasury stock | — | — | — | — | — | — | — | 1,500 | (61,275 | ) | (61,275 | ) | |||||||||||||||||||||||||
Balance at 12/31/2012 | — | $ | — | 38,796 | $ | 388 | $ | 159,081 | $ | 413,882 | $ | (6,940 | ) | 9,700 | $ | (213,995 | ) | $ | 352,416 | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements. |
FIRST CASH FINANCIAL SERVICES, INC. | |||||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY | |||||||||||||||||||||||||||||||||||||
CONTINUED | |||||||||||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Accum- ulated Other Compre- hensive Income (Loss) | Common Stock Held in Treasury | Total Stock- holders' Equity | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||
Balance at 12/31/2010 | — | $ | — | 38,002 | $ | 380 | $ | 142,344 | $ | 255,741 | $ | (3,049 | ) | 6,840 | $ | (97,412 | ) | $ | 298,004 | ||||||||||||||||||
Shares issued under share-based com-pensation plan | — | — | 289 | 3 | — | — | — | — | — | 3 | |||||||||||||||||||||||||||
Exercise of stock options and warrants | — | — | — | — | 2,475 | — | — | — | — | 2,475 | |||||||||||||||||||||||||||
Income tax benefit from exercise of stock options and warrants | — | — | — | — | 2,088 | — | — | — | — | 2,088 | |||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | 742 | — | — | — | — | 742 | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | 77,782 | — | — | — | 77,782 | |||||||||||||||||||||||||||
Currency translation adjustment, net of tax | — | — | — | — | — | — | (10,414 | ) | — | — | (10,414 | ) | |||||||||||||||||||||||||
Repurchases of treasury stock | — | — | — | — | — | — | — | 1,360 | (55,308 | ) | (55,308 | ) | |||||||||||||||||||||||||
Balance at 12/31/2011 | — | $ | — | 38,291 | $ | 383 | $ | 147,649 | $ | 333,523 | $ | (13,463 | ) | 8,200 | $ | (152,720 | ) | $ | 315,372 | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements. |
FIRST CASH FINANCIAL SERVICES, INC. | |||||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY | |||||||||||||||||||||||||||||||||||||
CONTINUED | |||||||||||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Accum- ulated Other Compre- hensive Income (Loss) | Common Stock Held in Treasury | Total Stock- holders' Equity | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||
Balance at 12/31/2009 | — | $ | — | 36,697 | $ | 367 | $ | 117,892 | $ | 198,083 | $ | (6,491 | ) | 6,840 | $ | (97,412 | ) | $ | 212,439 | ||||||||||||||||||
Shares issued under share-based com-pensation plan | — | — | 1,305 | 13 | — | — | — | — | — | 13 | |||||||||||||||||||||||||||
Exercise of stock options and warrants | — | — | — | — | 17,292 | — | — | — | — | 17,292 | |||||||||||||||||||||||||||
Income tax benefit from exercise of stock options and warrants | — | — | — | — | 6,154 | — | — | — | — | 6,154 | |||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | 1,006 | — | — | — | — | 1,006 | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | 57,658 | — | — | — | 57,658 | |||||||||||||||||||||||||||
Currency translation adjustment, net of tax | — | — | — | — | — | — | 3,442 | — | — | 3,442 | |||||||||||||||||||||||||||
Repurchases of treasury stock | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Balance at 12/31/2010 | — | $ | — | 38,002 | $ | 380 | $ | 142,344 | $ | 255,741 | $ | (3,049 | ) | 6,840 | $ | (97,412 | ) | $ | 298,004 | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements. |
FIRST CASH FINANCIAL SERVICES, INC. | |||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(in thousands) | |||||||||||
Year Ended December 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Cash flow from operating activities: | |||||||||||
Net income | $ | 80,359 | $ | 77,782 | $ | 57,658 | |||||
Adjustments to reconcile net income to net cash flow provided by operating activities: | |||||||||||
Non-cash portion of credit loss provision | 866 | 156 | 1,914 | ||||||||
Share-based compensation expense | 1,300 | 742 | 1,006 | ||||||||
Depreciation and amortization expense | 12,975 | 11,026 | 10,513 | ||||||||
Deferred income taxes | 3,242 | 1,200 | 1,845 | ||||||||
Loss (gain) on disposition of consumer loan stores | 966 | (9,965 | ) | — | |||||||
Changes in operating assets and liabilities, net of business combinations: | |||||||||||
Pawn fees and service charges receivable | (3,245 | ) | (697 | ) | (2,176 | ) | |||||
Merchandise inventories | (2,777 | ) | 445 | (3,875 | ) | ||||||
Prepaid expenses and other assets | 6,297 | (4,076 | ) | 3,307 | |||||||
Accounts payable and accrued expenses | (1,135 | ) | (883 | ) | 6,966 | ||||||
Income taxes payable, current | (10,056 | ) | 4,645 | (3,513 | ) | ||||||
Net cash flow provided by operating activities | 88,792 | 80,375 | 73,645 | ||||||||
Cash flow from investing activities: | |||||||||||
Pawn loan receivables | (16,700 | ) | (5,092 | ) | (21,824 | ) | |||||
Consumer loans | (625 | ) | (116 | ) | (1,824 | ) | |||||
Purchases of property and equipment | (21,841 | ) | (28,974 | ) | (18,385 | ) | |||||
Proceeds from disposition of consumer loan stores | — | 19,857 | — | ||||||||
Acquisitions of pawn stores, net of cash acquired | (120,738 | ) | (7,779 | ) | (5,663 | ) | |||||
Net cash flow used in investing activities | (159,904 | ) | (22,104 | ) | (47,696 | ) | |||||
Cash flow from financing activities: | |||||||||||
Change in line of credit, net | 102,500 | — | — | ||||||||
Payments of notes payable | (1,837 | ) | (1,851 | ) | (9,810 | ) | |||||
Purchases of treasury stock | (61,275 | ) | (55,308 | ) | — | ||||||
Proceeds from exercise of share-based compensation awards | 4,296 | 2,478 | 17,305 | ||||||||
Income tax benefit from exercise of stock options and warrants | 5,841 | 2,088 | 6,154 | ||||||||
Net cash flow provided by (used in) financing activities | 49,525 | (52,593 | ) | 13,649 | |||||||
Effect of exchange rates on cash | 1,576 | (2,622 | ) | 865 | |||||||
Change in cash and cash equivalents | (20,011 | ) | 3,056 | 40,463 | |||||||
Cash and cash equivalents at beginning of the year | 70,296 | 67,240 | 26,777 | ||||||||
Cash and cash equivalents at end of the year | $ | 50,285 | $ | 70,296 | $ | 67,240 | |||||
The accompanying notes are an integral part of these consolidated financial statements. |
FIRST CASH FINANCIAL SERVICES, INC. | |||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
CONTINUED | |||||||||||
(in thousands) | |||||||||||
Year Ended December 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid during the period for: | |||||||||||
Interest | $ | 1,357 | $ | 145 | $ | 265 | |||||
Income taxes | $ | 38,810 | $ | 24,579 | $ | 22,336 | |||||
Supplemental disclosure of non-cash investing activity: | |||||||||||
Non-cash transactions in connection with pawn loans settled through forfeitures of collateral transferred to inventories | $ | 100,572 | $ | 90,293 | $ | 98,134 | |||||
Supplemental disclosure of non-cash financing activity: | |||||||||||
Notes payable issued in connection with pawn acquisitions | $ | 13,400 | $ | — | $ | 2,000 | |||||
The accompanying notes are an integral part of these consolidated financial statements. |
4.
customers at prices above the carrying value.
Year Ended December 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Balance at beginning of year | $ | 831 | $ | 1,026 | $ | 890 | |||||
Provision for credit losses under letters of credit | 11,947 | 11,208 | 12,192 | ||||||||
Amounts paid to Independent Lender under letters of credit, net of recoveries from customers | (12,045 | ) | (11,403 | ) | (12,056 | ) | |||||
Balance at end of year | $ | 733 | $ | 831 | $ | 1,026 |
|
|
| Year Ended December 31, | |||||||
|
|
| 2011 |
| 2010 |
| 2009 | |||
Balance at beginning of year | $ | 1,026 |
| $ | 890 |
| $ | 749 | ||
| Provision for credit losses under letters of credit |
| 12,112 |
|
| 12,826 |
|
| 11,533 | |
| Amounts paid to Independent Lender under letters |
|
|
|
|
|
|
|
| |
|
| of credit, net of recoveries from customers |
| (12,307) |
|
| (12,690) |
|
| (11,392) |
Balance at end of year | $ | 831 |
| $ | 1,026 |
| $ | 890 |
The Company did not have any outstanding balance for financial instruments at
December 31, 2012 and 2011.Year Ended December 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Numerator: | |||||||||||
Income from continuing operations for calculating basic and diluted earnings per share | $ | 81,105 | $ | 70,523 | $ | 51,302 | |||||
Income (loss) from discontinued operations | (746 | ) | 7,259 | 6,356 | |||||||
Net income for calculating basic and diluted earnings per share | $ | 80,359 | $ | 77,782 | $ | 57,658 | |||||
Denominator: | |||||||||||
Weighted-average common shares for calculating basic earnings per share | 28,912 | 30,706 | 30,266 | ||||||||
Effect of dilutive securities: | |||||||||||
Stock options, warrants and nonvested awards | 801 | 792 | 792 | ||||||||
Weighted-average common shares for calculating diluted earnings per share | 29,713 | 31,498 | 31,058 | ||||||||
Basic earnings per share: | |||||||||||
Income from continuing operations | $ | 2.81 | $ | 2.30 | $ | 1.69 | |||||
Income (loss) from discontinued operations | (0.03 | ) | 0.23 | 0.21 | |||||||
Net income per basic share | $ | 2.78 | $ | 2.53 | $ | 1.90 | |||||
Diluted earnings per share: | |||||||||||
Income from continuing operations | $ | 2.73 | $ | 2.24 | $ | 1.65 | |||||
Income (loss) from discontinued operations | (0.03 | ) | 0.23 | 0.21 | |||||||
Net income per diluted share | $ | 2.70 | $ | 2.47 | $ | 1.86 |
|
|
| Year Ended December 31, | |||||||
|
|
| 2011 |
| 2010 |
| 2009 | |||
Numerator: |
|
|
|
|
|
|
|
| ||
| Income from continuing operations for calculating basic |
|
|
|
|
|
|
|
| |
|
| and diluted earnings per share | $ | 70,865 |
| $ | 51,374 |
| $ | 38,296 |
|
|
|
|
|
|
|
|
|
|
|
| Income from discontinued operations |
| 6,917 |
|
| 6,284 |
|
| 11,468 | |
| Net income for calculating basic and diluted |
|
|
|
|
|
|
|
| |
|
| earnings per share | $ | 77,782 |
| $ | 57,658 |
| $ | 49,764 |
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
| ||
| Weighted-average common shares for calculating basic |
|
|
|
|
|
|
|
| |
|
| earnings per share |
| 30,706 |
|
| 30,266 |
|
| 29,559 |
| Effect of dilutive securities: |
|
|
|
|
|
|
|
| |
|
| Stock options, warrants and nonvested awards |
| 792 |
|
| 792 |
|
| 632 |
| Weighted-average common shares for calculating diluted |
|
|
|
|
|
|
|
| |
|
| earnings per share |
| 31,498 |
|
| 31,058 |
|
| 30,191 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share: |
|
|
|
|
|
|
|
| ||
| Income from continuing operations (basic) | $ | 2.31 |
| $ | 1.70 |
| $ | 1.30 | |
| Income from discontinued operations (basic) |
| 0.22 |
|
| 0.20 |
|
| 0.38 | |
| Net income per basic share | $ | 2.53 |
| $ | 1.90 |
| $ | 1.68 | |
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share: |
|
|
|
|
|
|
|
| ||
| Income from continuing operations (diluted) | $ | 2.25 |
| $ | 1.65 |
| $ | 1.27 | |
| Income from discontinued operations (diluted) |
| 0.22 |
|
| 0.21 |
|
| 0.38 | |
| Net income per diluted share | $ | 2.47 |
| $ | 1.86 |
| $ | 1.65 |
In December 2010, the FASB issued ASU 2010-29, “Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations” (“ASU 2010-29”). This amendment affects any public entity as defined by Topic 805, Business Combinations, that enters into business combinations that are material on an individual or aggregate basis. The comparative financial statements should present and disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. ASU 2010-29 is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The adoption of ASU 2010-29 did not have a material effect on the Company’s financial position or results of operations, however, the Company may have additional disclosure requirements if the Company completes a material acquisition.
In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). The amendments in ASU 2011-04 generally represent clarification of Topic 820, but also include instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. This update results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and International Financial Reporting Standards (“IFRS”). The provisions ofASUof ASU 2011-04 are effective prospectively for interim and annual periods beginning after December 15, 2011. Early adoption is prohibited. The Company does not expectadoption of ASU 2011-04 todid not have a material effect on the Company’sCompany's financial position, results of operations or financial statement disclosures.
Fast Cash | Mister Money | BBR Unlimited (Mexico) | Other | Total | |||||||||||||||
Pawn loans | $ | 6,495 | $ | 3,357 | $ | 2,246 | $ | 3,115 | $ | 15,213 | |||||||||
Consumer loans | — | 1,202 | — | — | 1,202 | ||||||||||||||
Inventory | 2,693 | 3,545 | 1,296 | 4,138 | 11,672 | ||||||||||||||
Other current assets | 921 | 553 | 200 | 117 | 1,791 | ||||||||||||||
Property and equipment | 131 | 497 | 4,124 | 2,830 | 7,582 | ||||||||||||||
Goodwill | 34,431 | 15,694 | 39,386 | 5,620 | 95,131 | ||||||||||||||
Intangible assets | 1,360 | 939 | 988 | 465 | 3,752 | ||||||||||||||
Other non-current assets | 58 | 54 | 38 | — | 150 | ||||||||||||||
Current liabilities | (165 | ) | (226 | ) | (1,415 | ) | (190 | ) | (1,996 | ) | |||||||||
Purchase price | $ | 45,924 | $ | 25,615 | $ | 46,863 | $ | 16,095 | $ | 134,497 |
Year Ended | Year Ended | |||||||||||||||
December 31, 2012 | December 31, 2011 | |||||||||||||||
As Reported | Pro Forma | As Reported | Pro Forma | |||||||||||||
Total revenue from continuing operations | $ | 595,946 | $ | 631,873 | $ | 518,344 | $ | 599,528 | ||||||||
Income from continuing operations | 81,105 | 85,249 | 70,523 | 80,483 | ||||||||||||
Net income | 80,359 | 84,503 | 77,782 | 87,742 | ||||||||||||
Income from continuing operations per share: | ||||||||||||||||
Basic | $ | 2.81 | $ | 2.95 | $ | 2.30 | $ | 2.62 | ||||||||
Diluted | 2.73 | 2.87 | 2.24 | 2.56 | ||||||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 2.78 | $ | 2.92 | $ | 2.53 | $ | 2.86 | ||||||||
Diluted | 2.70 | 2.84 | 2.47 | 2.79 |
Consistent with the Company’s strategy to continue its expansion of pawn stores in selected markets, in July 2010, the Company acquired the pawn loans, inventory, layaways and other operating assets of five pawn stores located in Maryland and one pawn store located in Texas from King Pawn Financial Services, Inc. and Minit Pawn Shop, Inc., respectively. The combined purchase price for these stores was $7,663,000 and was composed of $5,663,000 in cash and notes payable to the selling shareholders of $2,000,000. The acquisitions have been accounted for using the purchase method of accounting. Accordingly, the purchase price was allocated to assets and liabilities acquired based upon their estimated fair market values at the date of acquisitions. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill in the amount of $5,382,000, which is expected to be deductible for tax purposes. The assets, liabilities and results of operations of the locations were included in the Company’s consolidated results as of the acquisitions on July 1, 2010, and July 12, 2010. Pro forma results of consolidated operations, and the revenue and earnings of the acquired operations earned during the year of acquisition, have not been presented because the acquisitions were not significant in relation to the Company’s consolidated financial position or results of operations.
Consumer Loan Operations
2010.
2010.
In December 2009, the Company sold all 22 of its consumer loan stores located in California, Washington and Oregon (“West Coast stores”) to a privately-held operator. Under the terms of the agreement, the buyer purchased the outstanding customer loans, customer account lists and fixed assets, assumed leases at all the store locations and hired a significant number of the employees. The after-tax loss from operations for the West Coast stores was $101,000 in fiscal 2010. The Company recorded a gain of $901,000, or $0.03 per share, net of tax, from the sale of these stores in 2009. The after-tax earnings from operations for the West Coast stores were $1,376,000, or $0.05 per share in 2009.
The Company completed the sale of eight consumer/payday loan stores in Michigan to another operator in the third quarter of 2009 and closed the remaining four stores in Michigan. Under the terms of the asset purchase agreement, the buyer purchased the outstanding customer loans, customer account lists and fixed assets, assumed leases at all the store locations and hired a significant number of the employees. In addition, five under-performing consumer loan/credit services stores in Texas were closed during the first quarter of 2009 and four such stores were closed during the second quarter of 2009. Associated with this sale and these store closings, the Company recorded after-tax charges of $1,111,000, or $0.04 per share in 2009.
Year Ended December 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Consumer loan and credit services fees | $ | 1,453 | $ | 4,416 | $ | 12,152 | |||||
Consumer loan and credit services loss provision | (533 | ) | (979 | ) | (2,318 | ) | |||||
Net revenue | 920 | 3,437 | 9,834 | ||||||||
Expenses and other (gain) loss: | |||||||||||
Operating and administrative expenses | 1,076 | 2,051 | 4,060 | ||||||||
Depreciation and amortization | 26 | 64 | 133 | ||||||||
Loss (gain) on disposition of consumer loan stores | 966 | (9,965 | ) | — | |||||||
Gain on excess collections of notes receivable | — | (764 | ) | (3,102 | ) | ||||||
Gain on sale of real estate | — | — | (293 | ) | |||||||
Total expenses and other (gains)/losses | 2,068 | (8,614 | ) | 798 | |||||||
Income (loss) from discontinued operations before income taxes | (1,148 | ) | 12,051 | 9,036 | |||||||
Tax benefit (expense) | 402 | (4,792 | ) | (2,680 | ) | ||||||
Income (loss) from discontinued operations, net of tax | $ | (746 | ) | $ | 7,259 | $ | 6,356 | ||||
Income (loss) from discontinued operations (basic) | $ | (0.03 | ) | $ | 0.23 | $ | 0.21 | ||||
Income (loss) from discontinued operations (diluted) | $ | (0.03 | ) | $ | 0.23 | $ | 0.21 |
|
|
|
|
| Year Ended December 31, | |||||||
|
|
|
|
| 2011 |
| 2010 |
| 2009 | |||
Consumer loan and credit services fees | $ | 1,458 |
| $ | 10,344 |
| $ | 20,907 | ||||
Consumer loan and credit services loss provision |
| (12) |
|
| (1,658) |
|
| (3,508) | ||||
| Net revenue |
| 1,446 |
|
| 8,686 |
|
| 17,399 | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses and other (gain) loss: |
|
|
|
|
|
|
|
| ||||
| Operating and administrative expenses |
| 577 |
|
| 3,035 |
|
| 9,729 | |||
| Depreciation and amortization |
| 12 |
|
| 62 |
|
| 363 | |||
| Net gain on sale/disposal of assets |
| (9,965) |
|
| - |
|
| (471) | |||
|
|
|
|
|
| (9,376) |
|
| 3,097 |
|
| 9,621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from discontinued operations before income taxes |
| 10,822 |
|
| 5,589 |
|
| 7,778 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense |
| (4,329) |
|
| (1,922) |
|
| (3,057) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income from discontinued operations | $ | 6,493 |
| $ | 3,667 |
| $ | 4,721 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income from discontinued operations per basic share | $ | 0.21 |
| $ | 0.12 |
| $ | 0.16 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income from discontinued operations per diluted share | $ | 0.21 |
| $ | 0.13 |
| $ | 0.16 |
Auto Master Buy-Here/Pay-Here Operation
In September 2008, the Company sold its buy-here/pay-here automotive business, Auto Master. A collections agreement (“Collections Agreement”) associated with the sale provides that the buyer manages all collections and loan servicing activities of Auto Master’s outstanding customer receivable portfolio. All principal amounts, finance charges and related fees collected by the buyer, as well as any proceeds from sales of repossessed vehicles, are remitted to the Company as collected, net of a collection management fee, based on a calculation as described in the Collections Agreement. The Company received these cash flows over the term of the outstanding customer notes receivable, the majority of which matured in 2009 and 2010. These are considered to be indirect cash flows, as the Company has limited control over the collections operations of the buyer. As a result, the customer loan balances are not considered as held for sale and are reported in discontinued operations for all periods presented.
All revenue and expenses reported for each period herein have been adjusted to reflect reclassification of the discontinued Auto Master operation. Discontinued operations include the revenue and expenses which can be specifically identified with Auto Master, and exclude any allocation of general administrative corporate costs, except interest expense. Interest expense in fiscal 2009 of $773,000 was allocated to Auto Master based on the amount of net funds advanced to Auto Master at the Company’s corporate cost of funds.
After-tax net income from the discontinued Auto Master operation was $424,000, or $0.01 per share in 2011, $2,617,000, or $0.08 per share in 2010, and $6,747,000, or $0.22 per share in 2009. These earnings were primarily from collections of the remaining customer receivable portfolio in excess of estimated liquidation fair value. The Company realized net cash collections of $1,263,000, $5,240,000 and $20,936,000 on these accounts during 2011, 2010 and 2009, respectively, and recorded a pre-tax benefit of approximately $763,000, $3,102,000 and $13,370,000, respectively, from these cash collections as compared to the estimated fair value of the receivables recorded on the Company’s balance sheet. The Company completed the cash collections of these Auto Master receivables during 2011, as the outstanding receivable balances were fully collected and/or written-off.
There were no assets or liabilities for this discontinued operation at December 31, 2011. At December 31, 2010, the remaining Auto Master gross receivables, net of estimated collection costs, totaled approximately $1,797,000, which the Company carried, as a component of current assets, at an estimated fair value of $500,000.
The following table summarizes the operating results of Auto Master, which has been reclassified as discontinued operations in the consolidated statements of operations for the years ended December 31, 2011, 2010 and 2009 (in thousands):
|
|
|
|
| Year Ended December 31, | |||||||
|
|
|
|
| 2011 |
| 2010 |
| 2009 | |||
Revenue |
| $ | - |
| $ | - |
| $ | 131 | |||
Cost of revenue |
| - |
|
| - |
|
| (115) | ||||
| Net revenue |
| - |
|
| - |
|
| 16 | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses and other (gain) loss: |
|
|
|
|
|
|
|
| ||||
| Operating and administrative expenses |
| 57 |
|
| 58 |
|
| 1,337 | |||
| Depreciation and amortization |
| - |
|
| - |
|
| - | |||
| Gain on excess collections of notes receivable |
| (764) |
|
| (3,102) |
|
| (13,370) | |||
| Gain on sale of real estate |
| - |
|
| (293) |
|
| - | |||
|
|
|
|
|
| (707) |
|
| (3,337) |
|
| (12,033) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from discontinued operations before income taxes |
| 707 |
|
| 3,337 |
|
| 12,049 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense |
| (283) |
|
| (720) |
|
| (5,302) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income from discontinued operations | $ | 424 |
| $ | 2,617 |
| $ | 6,747 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income from discontinued operations per basic share | $ | 0.01 |
| $ | 0.08 |
| $ | 0.22 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income from discontinued operations per diluted share | $ | 0.01 |
| $ | 0.08 |
| $ | 0.22 |
Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The valuation of the Company’s financial instruments as of December 31, 2011, and 2010, were $0 and $500,000, respectively.
The following table summarizes the changes in the fair value of the Company’s level 3 assets (in thousands):
|
|
| Year Ended December 31, | |||||||
|
|
| 2011 |
| 2010 |
| 2009 | |||
Level 3 Assets - Automotive Finance Receivables: |
|
|
|
|
|
|
|
| ||
| Balance at beginning of year | $ | 500 |
| $ | 2,638 |
| $ | 10,204 | |
|
| Net cash collections of principal |
| (1,263) |
|
| (5,240) |
|
| (20,936) |
|
| Adjustments for realized gains from collections |
| 763 |
|
| 3,102 |
|
| 13,370 |
| Balance at end of year | $ | - |
| $ | 500 |
| $ | 2,638 |
NOTE 7 -
Pawn | Consumer Loan | Total | |||||||||
December 31, 2012 | |||||||||||
Total customer loans | $ | 103,181 | $ | 1,990 | $ | 105,171 | |||||
Less allowance for doubtful accounts | — | (111 | ) | (111 | ) | ||||||
$ | 103,181 | $ | 1,879 | $ | 105,060 | ||||||
December 31, 2011 | |||||||||||
Total customer loans | $ | 73,287 | $ | 902 | $ | 74,189 | |||||
Less allowance for doubtful accounts | — | (44 | ) | (44 | ) | ||||||
$ | 73,287 | $ | 858 | $ | 74,145 |
|
|
|
| Consumer |
|
|
| |
| Pawn |
| Loan |
| Total | |||
December 31, 2011 |
|
|
|
|
|
|
|
|
Total customer loans | $ | 73,287 |
| $ | 902 |
| $ | 74,189 |
Less allowance for doubtful accounts |
| - |
|
| (44) |
|
| (44) |
| $ | 73,287 |
| $ | 858 |
| $ | 74,145 |
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
|
|
|
|
|
|
Total customer loans | $ | 70,488 |
| $ | 1,048 |
| $ | 71,536 |
Less allowance for doubtful accounts |
| - |
|
| (53) |
|
| (53) |
| $ | 70,488 |
| $ | 995 |
| $ | 71,483 |
Year Ended December 31, | |||||||
2012 | 2011 | ||||||
Land | $ | 10,481 | $ | 9,108 | |||
Buildings | 12,386 | 10,705 | |||||
Furniture, fixtures, equipment and leasehold improvements | 154,155 | 125,173 | |||||
177,022 | 144,986 | ||||||
Less: accumulated depreciation | (83,718 | ) | (71,535 | ) | |||
$ | 93,304 | $ | 73,451 |
| Year Ended December 31, | ||||
| 2011 |
| 2010 | ||
Land | $ | 9,108 |
| $ | 7,687 |
Buildings |
| 10,705 |
|
| 5,508 |
Furniture, fixtures, equipment and leasehold improvements |
| 125,173 |
|
| 110,976 |
|
| 144,986 |
|
| 124,171 |
Less: accumulated depreciation |
| (71,535) |
|
| (65,746) |
| $ | 73,451 |
| $ | 58,425 |
Year Ended December 31, | |||||||
2012 | 2011 | ||||||
Deferred layaway sales revenue | $ | 9,260 | $ | 6,583 | |||
Sales, property, and payroll withholding taxes payable | 4,790 | 4,080 | |||||
Accrued compensation | 5,197 | 3,993 | |||||
Trade accounts payable | 2,511 | 3,325 | |||||
Benefits liabilities and withholding payable | 970 | 1,373 | |||||
Reserves for expected losses on outstanding CSO letters of credit | 733 | 831 | |||||
Other accrued liabilities | 4,477 | 5,444 | |||||
$ | 27,938 | $ | 25,629 |
| Year Ended December 31, | ||||
| 2011 |
| 2010 | ||
|
|
|
|
|
|
Deferred layaway sales revenue | $ | 6,583 |
| $ | 6,093 |
Sales, property and payroll withholding taxes payable |
| 4,080 |
|
| 4,369 |
Accrued compensation |
| 3,993 |
|
| 6,683 |
Trade accounts payable |
| 3,325 |
|
| 2,679 |
Benefits liabilities and withholding payable |
| 1,373 |
|
| 1,231 |
Reserves for expected losses on outstanding CSO letters of credit |
| 831 |
|
| 1,026 |
Other accrued liabilities |
| 5,444 |
|
| 5,649 |
| $ | 25,629 |
| $ | 27,730 |
Subsequent to
During the fourth quarter of 2011, the Company repaid the entire remaining balances on notes payable of $1,426,000 related to a July 2010 multi-store pawn acquisition. See Note 4. During the third quarter of 2010, the Company repaid the entire remaining balances on notes payable of $6,066,000 related to a 2008 multi-store pawn acquisition and notes payable of $563,000 related to a 2006 acquisition.
As of December 31, 2011, the Company had nonotes payable arising from a
long-term debt for each of the five years after
December 31, 2012 are as follows (in thousands):Fiscal | |||
2013 | $ | 3,212 | |
2014 | 3,325 | ||
2015 | 104,356 | ||
2016 | 1,784 | ||
2017 | 1,386 | ||
Thereafter | — | ||
$ | 114,063 |
Year Ended December 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Income from continuing operations before income taxes | $ | 122,611 | $ | 107,681 | $ | 79,932 | |||||
Current income taxes: | |||||||||||
Federal | $ | 17,554 | $ | 16,698 | $ | 13,470 | |||||
Foreign | 19,748 | 17,304 | 12,606 | ||||||||
State and local | 962 | 749 | 710 | ||||||||
38,264 | 34,751 | 26,786 | |||||||||
Deferred income taxes | 3,242 | 2,407 | 1,844 | ||||||||
Provision for income taxes | $ | 41,506 | $ | 37,158 | $ | 28,630 |
|
| Year Ended December 31, | |||||||
|
| 2011 |
| 2010 |
| 2009 | |||
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes | $ | 108,203 |
| $ | 80,042 |
| $ | 61,175 | |
|
|
|
|
|
|
|
|
|
|
Current income taxes: |
|
|
|
|
|
|
|
| |
| Federal | $ | 16,878 |
| $ | 13,508 |
| $ | 7,678 |
| Foreign |
| 17,304 |
|
| 12,606 |
|
| 9,564 |
| State and local |
| 749 |
|
| 710 |
|
| 1,379 |
|
|
| 34,931 |
|
| 26,824 |
|
| 18,621 |
Deferred income taxes |
| 2,407 |
|
| 1,844 |
|
| 4,258 | |
|
| $ | 37,338 |
| $ | 28,668 |
| $ | 22,879 |
|
|
| December 31, | ||||
|
|
| 2011 |
| 2010 | ||
Deferred tax assets: |
|
|
|
|
| ||
| Cumulative foreign translation adjustment | $ | 7,091 |
| $ | 1,708 | |
| Interest accrual on pawn forfeits |
| 931 |
|
| 1,043 | |
| Foreign tax credits |
| 304 |
|
| 3,506 | |
| Other |
| 852 |
|
| 800 | |
|
| Total deferred tax assets |
| 9,178 |
|
| 7,057 |
|
|
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
|
| ||
| Intangible asset amortization |
| 13,855 |
|
| 14,023 | |
| Functional currency tax-basis adjustment |
| - |
|
| 1,962 | |
| Other |
| 564 |
|
| 497 | |
|
| Total deferred tax liabilities |
| 14,419 |
|
| 16,482 |
Net deferred tax liablities | $ | (5,241) |
| $ | (9,425) | ||
|
|
|
|
|
|
|
|
Reported as: |
|
|
|
|
| ||
| Current deferred tax assets | $ | 1,078 |
| $ | - | |
| Current deferred taxes payable |
| - |
|
| (991) | |
| Non-current deferred income tax liabilities |
| (6,319) |
|
| (8,434) | |
|
| Net deferred tax liabilities | $ | (5,241) |
| $ | (9,425) |
December 31, | |||||||
2012 | 2011 | ||||||
Deferred tax assets: | |||||||
Cumulative foreign translation adjustment | $ | 3,447 | $ | 7,091 | |||
Interest accrual on pawn forfeits | 1,365 | 931 | |||||
Foreign tax credits | — | 304 | |||||
Other | 495 | 852 | |||||
Total deferred tax assets | 5,307 | 9,178 | |||||
Deferred tax liabilities: | |||||||
Intangible asset amortization | 15,823 | 13,855 | |||||
Share-based compensation | 1,101 | 97 | |||||
Other | 510 | 467 | |||||
Total deferred tax liabilities | 17,434 | 14,419 | |||||
Net deferred tax liabilities | $ | (12,127 | ) | $ | (5,241 | ) | |
Reported as: | |||||||
Current deferred tax assets | $ | 1,148 | $ | 1,078 | |||
Non-current deferred income tax liabilities | (13,275 | ) | (6,319 | ) | |||
Net deferred tax liabilities | $ | (12,127 | ) | $ | (5,241 | ) |
Year Ended December 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Tax at the U.S. federal statutory rate | $ | 42,914 | $ | 37,688 | $ | 27,976 | |||||
State income taxes, net of federal tax benefit of $337, $262 and $249, respectively | 625 | 487 | 462 | ||||||||
Additional foreign tax credit claimed from prior periods | (778 | ) | — | — | |||||||
Other taxes and adjustments, net | (1,255 | ) | (1,017 | ) | 192 | ||||||
Provision for income taxes | $ | 41,506 | $ | 37,158 | $ | 28,630 |
|
| Year Ended December 31, | |||||||
|
| 2011 |
| 2010 |
| 2009 | |||
|
|
|
|
|
|
|
|
|
|
Tax at the U.S. federal statutory rate | $ | 37,871 |
| $ | 28,015 |
| $ | 21,411 | |
State income taxes, net of federal tax benefit of$262, $249 and |
|
|
|
|
|
|
|
| |
| $483, respectively |
| 487 |
|
| 462 |
|
| 896 |
Other taxes and adjustments, net |
| (1,020) |
|
| 191 |
|
| 572 | |
|
| $ | 37,338 |
| $ | 28,668 |
| $ | 22,879 |
The Company has cumulative foreign tax credits of $304,000 as of the end of 2011, which will expire at the end of 2018. The Company expects that it will utilize the foreign tax credits prior to their expiration.
Fiscal | |||
2013 | $ | 31,839 | |
2014 | 25,694 | ||
2015 | 19,535 | ||
2016 | 12,312 | ||
2017 | 5,646 | ||
Thereafter | 11,739 | ||
$ | 106,765 |
Fiscal |
|
|
2012 | $ | 25,768 |
2013 |
| 20,957 |
2014 |
| 15,365 |
2015 |
| 10,447 |
2016 |
| 4,679 |
Thereafter |
| 6,283 |
| $ | 83,499 |
Contingent Assessment
The Company transfers scrap jewelry generated by its pawn operations in Mexico into the United States, where such jewelry is melted and sold for its precious metals content, which is primarily gold. These cross-border transfers are subject to numerous import/export regulations by customs and border security authorities in both Mexico and the United States. The Company’s long-standing practice, as previously approved by customs authorities, has been to import such materials designated for remelting into the United States under certain duty-free provisions of the Harmonized Tariff Schedule of the United States. The United States Customs and Border Protection Agency (“CBP”) has requested certain transaction records pertaining to the Company’s cross-border remelting processes. In addition, CBP assessed duties on certain cross-border remelting transactions occurring in 2008 and 2009 totaling approximately $620,000, including accrued interest. The Company cannot currently estimate the likelihood that additional assessments will be issued by CBP. The Company is appealing the assessments issued to date by CBP, however, it cannot assess the likelihood that such appeals will be successful.
December 31, 2012 | |||
Balance, beginning of year | $ | 69,695 | |
Acquisitions (Note 4) | 95,131 | ||
Foreign currency adjustments | 1,603 | ||
Balance, end of year | $ | 166,429 | |
December 31, 2011 | |||
Balance, beginning of year | $ | 67,895 | |
Acquisitions (Note 4) | 4,510 | ||
Foreign currency adjustments | (2,710 | ) | |
Balance, end of year | $ | 69,695 |
December 31, 2011 |
| |||||
| Balance, beginning of year | $ | 68,595 |
| ||
|
| Acquisitions (Note 4) |
| 4,510 |
| |
|
| Foreign currency adjustments |
| (2,710) |
| |
| Balance, end of year | $ | 70,395 |
| ||
|
|
|
|
|
|
|
December 31, 2010 |
|
|
| |||
| Balance, beginning of year | $ | 61,971 |
| ||
|
| Acquisitions (Note 4) |
| 5,382 |
| |
|
| Foreign currency adjustments |
| 1,242 |
| |
| Balance, end of year | $ | 68,595 |
|
Options and warrants
Ranges of |
| Total Warrants |
| Weighted-Average |
| Currently | ||||||||
Exercise Prices |
| and Options |
| Remaining Life |
| Exercisable | ||||||||
$ | 2.67 | - | $ | 5.00 |
|
| 255 | (1) |
| 1.3 |
|
| 243 | (1) |
$ | 5.01 | - | $ | 10.00 |
|
| 90 |
|
| 6.2 |
|
| 50 |
|
$ | 10.01 | - | $ | 15.00 |
|
| 489 |
|
| 3.5 |
|
| 489 |
|
$ | 15.01 | - | $ | 20.00 |
|
| 1,160 |
|
| 3.5 |
|
| 1,160 |
|
$ | 20.01 | - | $ | 25.00 |
|
| 25 |
|
| 5.3 |
|
| 8 |
|
$ | 35.01 | - | $ | 40.00 |
|
| 90 |
|
| 9.4 |
|
| - |
|
|
|
|
|
|
|
| 2,109 |
|
| 3.6 |
|
| 1,950 |
|
Range of | Weighted-Average | Currently | ||||||||||||||||
Exercise Prices | Options | Remaining Life | Exercisable | |||||||||||||||
$ | 10.00 | - | $ | 15.00 | 400 | 3.1 | 380 | |||||||||||
$ | 15.01 | - | $ | 20.00 | 1,120 | 2.5 | 1,120 | |||||||||||
$ | 20.01 | - | $ | 25.00 | 25 | 4.3 | 12 | |||||||||||
$ | 35.01 | - | $ | 40.00 | 90 | 8.4 | — | |||||||||||
1,635 | 3.0 | 1,512 |
(1) Includes 240,000 outstanding warrants at an exercise price of $3.83.
2012 | 2011 | 2010 | ||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||
Average | Average | Average | ||||||||||||||||||
Underlying | Exercise | Underlying | Exercise | Underlying | Exercise | |||||||||||||||
Shares | Price | Shares | Price | Shares | Price | |||||||||||||||
Outstanding at beginning of year | 2,109 | $ | 16.39 | 2,292 | $ | 14.63 | 3,567 | $ | 14.25 | |||||||||||
Granted | — | — | 90 | 39.11 | — | — | ||||||||||||||
Exercised | (474 | ) | 9.06 | (273 | ) | 9.08 | (1,275 | ) | 13.57 | |||||||||||
Outstanding at end of year | 1,635 | 18.51 | 2,109 | 16.39 | 2,292 | 14.63 | ||||||||||||||
Exercisable at end of year | 1,512 | 17.35 | 1,950 | 15.48 | 2,180 | 15.27 |
|
| 2011 |
| 2010 |
| 2009 | |||||||||
|
|
|
| Weighted- |
|
|
| Weighted- |
|
|
| Weighted- | |||
|
|
|
| Average |
|
|
| Average |
|
|
| Average | |||
|
| Underlying |
| Exercise |
| Underlying |
| Exercise |
| Underlying |
| Exercise | |||
|
| Shares |
| Price |
| Shares |
| Price |
| Shares |
| Price | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at beginning of year | 2,292 |
| $ | 14.63 |
| 3,567 |
| $ | 14.25 |
| 4,216 |
| $ | 12.80 | |
| Granted | 90 |
|
| 39.11 |
| - |
|
| - |
| - |
|
| - |
| Exercised | (273) |
|
| 9.08 |
| (1,275) |
|
| 13.57 |
| (599) |
|
| 3.54 |
| Canceled or forfeited | - |
|
| - |
| - |
|
| - |
| (50) |
|
| 20.00 |
Outstanding at end of year | 2,109 |
|
| 16.39 |
| 2,292 |
|
| 14.63 |
| 3,567 |
|
| 14.25 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of year | 1,950 |
|
| 15.48 |
| 2,180 |
|
| 15.27 |
| 3,413 |
|
| 14.83 |
At December 31, 2011,2012, the aggregate intrinsic value for the stock options and warrants outstanding was $39,805,000,$50,859,000, of which $38,244,000$48,808,000 was exercisable at the end of the year, with weighted-average remaining contractual terms of 3.63.0 years. The aggregate intrinsic value reflects the total pre-tax intrinsic value (the difference between the Company's closing stock price on the last trading day of the period and the exercise price of the options, and warrants, multiplied by the number of in-the-money options and warrants)options) that would have been received by the option and warrant holders had all option and warrant holders exercised their options and warrants on December 31, 2011.
2012.
2012 | 2011 | 2010 | ||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||
Average | Average | Average | ||||||||||||||||||
Fair Value | Fair Value | Fair Value | ||||||||||||||||||
Underlying | at Date | Underlying | at Date | Underlying | at Date | |||||||||||||||
Shares | of Grant | Shares | of Grant | Shares | of Grant | |||||||||||||||
Outstanding at beginning of year | 76 | $ | 30.74 | 33 | $ | 28.50 | — | $ | — | |||||||||||
Granted | 108 | 43.45 | 59 | 31.59 | 63 | 28.50 | ||||||||||||||
Vested | (31 | ) | 33.04 | (16 | ) | 29.26 | (30 | ) | 28.50 | |||||||||||
Outstanding at end of year | 153 | 39.24 | 76 | 30.74 | 33 | 28.50 |
|
| 2011 |
| 2010 |
| 2009 | |||||||||
|
|
|
| Weighted- |
|
|
| Weighted- |
|
|
| Weighted- | |||
|
|
|
| Average |
|
|
| Average |
|
|
| Average | |||
|
|
|
| Fair |
|
|
| Fair |
|
|
| Fair | |||
|
|
|
| Value |
|
|
| Value |
|
|
| Value | |||
|
|
|
| at Date |
|
|
| at Date |
|
|
| at Date | |||
|
| Shares |
| of Grant |
| Shares |
| of Grant |
| Shares |
| of Grant | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at beginning of year | 33 |
| $ | 28.50 |
| - |
| $ | - |
| 15 |
| $ | 15.32 | |
| Granted | 59 |
|
| 31.59 |
| 63 |
|
| 28.50 |
| - |
|
| - |
| Vested | (16) |
|
| 29.26 |
| (30) |
|
| 28.50 |
| (15) |
|
| 15.32 |
| Canceled or forfeited | - |
|
| - |
| - |
|
| - |
| - |
|
| - |
Outstanding at end of year | 76 |
|
| 30.74 |
| 33 |
|
| 28.50 |
| - |
|
| - |
2012
.Year Ended December 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Gross compensation costs: | |||||||||||
Stock options | $ | 134 | $ | 112 | $ | 91 | |||||
Nonvested stock | 1,166 | 630 | 915 | ||||||||
Total gross compensation costs | 1,300 | 742 | 1,006 | ||||||||
Income tax benefits: | |||||||||||
Stock options | (45 | ) | (39 | ) | (33 | ) | |||||
Nonvested stock | (217 | ) | (217 | ) | (328 | ) | |||||
Total income tax benefits | (262 | ) | (256 | ) | (361 | ) | |||||
Net compensation expense | $ | 1,038 | $ | 486 | $ | 645 | |||||
Tax benefit realized from stock options exercised during the year | $ | 5,841 | $ | 2,088 | $ | 6,154 |
|
|
| Year Ended December 31, | |||||||
|
|
| 2011 |
| 2010 |
| 2009 | |||
Gross compensation costs: |
|
|
|
|
|
|
|
| ||
| Stock options | $ | 112 |
| $ | 91 |
| $ | 204 | |
| Nonvested stock |
| 630 |
|
| 915 |
|
| 142 | |
|
| Total gross compensation costs |
| 742 |
|
| 1,006 |
|
| 346 |
|
|
|
|
|
|
|
|
|
|
|
Income tax benefits: |
|
|
|
|
|
|
|
| ||
| Stock options |
| (39) |
|
| (33) |
|
| (76) | |
| Nonvested stock |
| (217) |
|
| (328) |
|
| (53) | |
|
| Total income tax benefits |
| (256) |
|
| (361) |
|
| (129) |
|
|
|
|
|
|
|
|
|
|
|
Net compensation expense | $ | 486 |
| $ | 645 |
| $ | 217 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax benefit realized from stock options and warrants |
|
|
|
|
|
|
|
| ||
| exercised during the year | $ | 2,088 |
| $ | 6,154 |
| $ | 2,759 |
Year Ended December 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Revenue: | |||||||||||
United States | $ | 274,197 | $ | 237,209 | $ | 199,230 | |||||
Mexico | 321,749 | 281,135 | 222,224 | ||||||||
$ | 595,946 | $ | 518,344 | $ | 421,454 | ||||||
Pawn loans and consumer loans: | |||||||||||
United States | $ | 56,189 | $ | 41,184 | $ | 35,358 | |||||
Mexico | 48,871 | 32,961 | 36,125 | ||||||||
$ | 105,060 | $ | 74,145 | $ | 71,483 | ||||||
Inventories: | |||||||||||
United States | $ | 32,664 | $ | 23,745 | $ | 19,730 | |||||
Mexico | 32,681 | 20,667 | 27,676 | ||||||||
$ | 65,345 | $ | 44,412 | $ | 47,406 | ||||||
Long-lived assets: | |||||||||||
United States | $ | 47,343 | $ | 40,018 | $ | 28,508 | |||||
Mexico | 48,452 | 35,383 | 31,745 | ||||||||
$ | 95,795 | $ | 75,401 | $ | 60,253 |
|
| Year Ended December 31, | |||||||
|
| 2011 |
| 2010 |
| 2009 | |||
Revenue: |
|
|
|
|
|
|
|
| |
| United States | $ | 240,167 |
| $ | 201,038 |
| $ | 180,232 |
| Mexico |
| 281,135 |
|
| 222,224 |
|
| 175,046 |
|
| $ | 521,302 |
| $ | 423,262 |
| $ | 355,278 |
|
|
|
|
|
|
|
|
|
|
Pawn loans and consumer loans: |
|
|
|
|
|
|
|
| |
| United States | $ | 41,184 |
| $ | 35,358 |
| $ | 31,361 |
| Mexico |
| 32,961 |
|
| 36,125 |
|
| 23,329 |
|
| $ | 74,145 |
| $ | 71,483 |
| $ | 54,690 |
|
|
|
|
|
|
|
|
|
|
Inventories: |
|
|
|
|
|
|
|
| |
| United States | $ | 23,745 |
| $ | 19,730 |
| $ | 17,285 |
| Mexico |
| 20,667 |
|
| 27,676 |
|
| 17,152 |
|
| $ | 44,412 |
| $ | 47,406 |
| $ | 34,437 |
|
|
|
|
|
|
|
|
|
|
Long-lived assets: |
|
|
|
|
|
|
|
| |
| United States | $ | 40,018 |
| $ | 28,508 |
| $ | 24,040 |
| Mexico |
| 35,383 |
|
| 31,745 |
|
| 25,407 |
|
| $ | 75,401 |
| $ | 60,253 |
| $ | 49,447 |
Quarter Ended | |||||||||||||||
March 31 | June 30 | September 30 | December 31 | ||||||||||||
2012 | |||||||||||||||
Total revenue | $ | 134,626 | $ | 132,385 | $ | 149,695 | $ | 179,240 | |||||||
Cost of revenue | 56,565 | 57,557 | 63,757 | 79,405 | |||||||||||
Net revenue | 78,061 | 74,828 | 85,938 | 99,835 | |||||||||||
Total expenses and other income | 51,417 | 49,890 | 55,961 | 58,783 | |||||||||||
Income from continuing operations | 17,452 | 16,333 | 19,636 | 27,684 | |||||||||||
Income (loss) from discontinued operations, net of tax | 60 | 16 | (747 | ) | (75 | ) | |||||||||
Net income | 17,512 | 16,349 | 18,889 | 27,609 | |||||||||||
Diluted income per share: | |||||||||||||||
Income from continuing operations, net of tax | 0.57 | 0.56 | 0.67 | 0.93 | |||||||||||
Income (loss) from discontinued operations, net of tax | 0.01 | — | (0.03 | ) | — | ||||||||||
Net income | 0.58 | 0.56 | 0.64 | 0.93 | |||||||||||
Diluted weighted average shares | 30,353 | 29,404 | 29,430 | 29,666 | |||||||||||
2011 | |||||||||||||||
Total revenue | $ | 120,373 | $ | 120,138 | $ | 132,852 | $ | 144,981 | |||||||
Cost of revenue | 50,385 | 51,501 | 57,126 | 66,573 | |||||||||||
Net revenue | 69,988 | 68,637 | 75,726 | 78,408 | |||||||||||
Total expenses and other income | 45,563 | 45,285 | 47,642 | 46,588 | |||||||||||
Income from continuing operations | 15,876 | 15,179 | 18,252 | 21,216 | |||||||||||
Income from discontinued operations, net of tax | 6,680 | 159 | 181 | 239 | |||||||||||
Net income | 22,556 | 15,338 | 18,433 | 21,455 | |||||||||||
Diluted income per share: | |||||||||||||||
Income from continuing operations, net of tax | 0.49 | 0.48 | 0.58 | 0.69 | |||||||||||
Income from discontinued operations, net of tax | 0.21 | — | 0.01 | 0.01 | |||||||||||
Net income | 0.70 | 0.48 | 0.59 | 0.70 | |||||||||||
Diluted weighted average shares | 32,075 | 31,869 | 31,195 | 30,854 |
|
|
| Quarter Ended | ||||||||||
|
|
| March 31 |
| June 30 |
| September 30 |
| December 31 | ||||
2011 |
|
|
|
|
|
|
|
|
|
|
|
| |
Total revenue | $ | 120,838 |
| $ | 120,581 |
| $ | 133,349 |
| $ | 146,534 | ||
Cost of revenue |
| 50,545 |
|
| 51,647 |
|
| 57,319 |
|
| 67,041 | ||
Net revenue |
| 70,293 |
|
| 68,934 |
|
| 76,030 |
|
| 79,493 | ||
Total expenses and other income |
| 45,824 |
|
| 45,544 |
|
| 47,896 |
|
| 47,283 | ||
Income from continuing operations, net of tax |
| 15,905 |
|
| 15,204 |
|
| 18,284 |
|
| 21,472 | ||
Income (loss) from discontinued operations, net of tax |
| 6,651 |
|
| 134 |
|
| 149 |
|
| (17) | ||
Net income |
| 22,556 |
|
| 15,338 |
|
| 18,433 |
|
| 21,455 | ||
Diluted income per share: |
|
|
|
|
|
|
|
|
|
|
| ||
| Income from continuing operations, net of tax |
| 0.50 |
|
| 0.48 |
|
| 0.59 |
|
| 0.70 | |
| Income (loss) from discontinued operations, net of tax |
| 0.20 |
|
| - |
|
| - |
|
| - | |
| Net income |
| 0.70 |
|
| 0.48 |
|
| 0.59 |
|
| 0.70 | |
Diluted weighted average shares |
| 32,075 |
|
| 31,869 |
|
| 31,195 |
|
| 30,854 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
| |
Total revenue | $ | 94,660 |
| $ | 95,013 |
| $ | 106,083 |
| $ | 127,506 | ||
Cost of revenue |
| 39,373 |
|
| 39,405 |
|
| 43,416 |
|
| 53,765 | ||
Net revenue |
| 55,287 |
|
| 55,608 |
|
| 62,667 |
|
| 73,741 | ||
Total expenses and other income |
| 39,239 |
|
| 39,533 |
|
| 42,228 |
|
| 46,261 | ||
Income from continuing operations, net of tax |
| 10,112 |
|
| 10,280 |
|
| 13,230 |
|
| 17,752 | ||
Income from discontinued operations, net of tax |
| 1,970 |
|
| 1,503 |
|
| 1,007 |
|
| 1,804 | ||
Net income |
| 12,082 |
|
| 11,783 |
|
| 14,237 |
|
| 19,556 | ||
Diluted income per share: |
|
|
|
|
|
|
|
|
|
|
| ||
| Income from continuing operations, net of tax |
| 0.33 |
|
| 0.33 |
|
| 0.43 |
|
| 0.56 | |
| Income from discontinued operations, net of tax |
| 0.06 |
|
| 0.05 |
|
| 0.03 |
|
| 0.06 | |
| Net income |
| 0.39 |
|
| 0.38 |
|
| 0.46 |
|
| 0.62 | |
Diluted weighted average shares |
| 30,734 |
|
| 30,791 |
|
| 31,041 |
|
| 31,666 |
NOTE 18 - SUBSEQUENT EVENT
Consistent with the Company’s strategy to continue its expansion of pawn stores in selected markets, in January 2012, the Company acquired the operating entity owning the pawn loans, inventory, layaways and other operating assets and liabilities of 29 pawn stores located in western Mexico from BBR Unlimited, LLC. The purchase price for these stores was $46,700,000, net of cash acquired, and was composed of $41,800,000 in cash and a note payable to the seller of $4,900,000. The Company is in the process of determining the allocation of the purchase price to the assets and liabilities acquired. This transaction will be recorded in the first quarter of 2012 and the assets, liabilities and results of operations of the locations will be included in the Company’s consolidated results as of the acquisition on January 10, 2012. Pro forma results of consolidated operations have not been presented because the acquisition was not significant in relation to the Company’s consolidated financial position or results of operations.