Exhibit 99.1
FOR IMMEDIATE RELEASE
Contacts: Jamie Fulmer- (864) 342-5633
jfulmer@advanceamerica.net
Advance America Announces Record Annual Revenue of $709.6 Million
SPARTANBURG, S.C., February 13, 2008— Advance America, Cash Advance Centers, Inc. (NYSE: AEA) today reported the results of its operations for the year and fourth quarter ended December 31, 2007.
For the year ended December 31, 2007, total revenues increased 5.5% to $709.6 million, compared to $672.3 million for the same period in 2006. Total revenues for the quarter ended December 31, 2007 decreased 1.1% to $183.6 million compared to $185.7 million for the same period in 2006. For the quarter ended December 31, 2007, total revenues for the centers opened prior to October 1, 2006 and still open as of December 31, 2007 increased 2.8% compared to the same period in 2006.
On September 20, 2007, the Company announced the closing of 31 centers in Pennsylvania, 45 centers in Oregon, and 27 underperforming centers in various other states, for a total of 103 center closings. The Company incurred charges of approximately $11.0 million for these center closings during the third quarter, including writing down the value of its receivables by $6.7 million, which includes impaired receivables for all
centers in Pennsylvania, center closing costs of $2.9 million, and loss on disposal of fixed assets of $1.4 million.
On December 18, 2007, the Company announced its decision to close all remaining centers in Pennsylvania, resulting in additional charges of $1.7 million for center closing costs and disposal of fixed assets. These charges are reflected in the Company’s results for the year ended December 31, 2007. In addition to these charges of $1.7 million, prior to our decision to close these centers, we incurred $2.2 million of operating expenses in Pennsylvania during the quarter.
The provision for doubtful accounts as a percent of total revenues for the quarter ended December 31, 2007 was 23.4% compared to 22.1% for the same period in 2006. For the year ended December 31, 2007, the provision for doubtful accounts, which includes the write down of receivables of $6.8 million, as a percent of total revenues for the year, was 19.8% compared to 18.0% in 2006. Excluding the write down of receivables, the provision for doubtful accounts, as a percent of total revenues, was 18.8% for the year. The Company believes excluding the write down of receivables facilitates an understanding of recurring operating results and the comparison of period over period performance for continuing center operations. Proceeds from the sale of previously written-off customer receivables during the fourth quarter of 2007 totaled approximately $1.8 million compared to $2.6 million for the same period in 2006.
Center gross profit was $169.7 million in 2007 compared to $186.6 million in 2006. For the quarter ended December 31, 2007, center gross profit was $39.1 million compared to $49.6 million for the same period in 2006. The previously mentioned write down of receivables and center closing costs reduced center gross profit by $10.5 million for the year and $0.9 million for the quarter ended December 31, 2007.
Net income for the year ended December 31, 2007 was $54.4 million, compared to $70.2 million for the same period in 2006. Net income for the quarter ended December 31, 2007 was $11.5 million compared to $18.9 million for the same period in 2006. The previously mentioned write down of receivables, center closing costs, and loss on disposal of fixed assets reduced net income by $7.4 million for the year and $0.9 million for the quarter ended December 31, 2007.
For the year ended December 31, 2007, diluted earnings per share were $0.70 compared to diluted earnings per share of $0.87 for the same period in 2006. Diluted earnings per share were $0.15 for the quarter ended December 31, 2007, compared to diluted earnings per share of $0.24 for the same period in 2006. The previously mentioned write down of receivables, center closing costs, and loss on disposal of fixed assets reduced diluted earnings per share by approximately $0.10 for the year ended December 31, 2007 and $0.01 for the quarter.
Commenting on the fourth quarter and full year 2007 results, Advance America’s President and Chief Executive Officer Ken Compton said, “We are pleased to report our
fourth consecutive year of record revenue as a public company. We believe this is a reflection of the continued underlying strength of our business model. 2007 was a challenging year, but many of the initiatives we have begun, such as our expansion into the United Kingdom and Canada, and the introduction of new product offerings, have positioned our Company well for the future.”
The Company continues to focus on its expansion efforts in both the United Kingdom and Canada. Currently the Company operates 12 centers in the United Kingdom and has 85 total limited licensees. The Company operates a total of 10 centers in Canada.
During the fourth quarter, the Company repurchased approximately 4.4 million shares of its common stock in the open market for an aggregate purchase price of $40.0 million. For the year, the Company repurchased approximately 6.5 million shares for an aggregate purchase price of $67.0 million. So far in 2008, the Company has repurchased an additional 1.6 million shares for an aggregate price of $13.6 million completing the remaining authorization on the Company’s previously announced share repurchase program. In total, since December 31, 2006, the Company has repurchased approximately 8.1 million shares or 10.1% of outstanding shares.
As of December 31, 2007, the Company had returned approximately $239 million in cash to its stockholders through the repurchase of shares and the payment of our quarterly dividends since becoming a public company in December of 2004.
Today, the Company’s Board of Director’s authorized an additional $75 million share repurchase program, and the Company intends to enter into a pre-arranged share repurchase plan intended to comply with the requirements of Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended. Commenting on the Company’s share repurchase program Compton said, “We continue to believe that the repurchase of the Company’s shares at the current prices represents an attractive use of capital for our stockholders.”
Also today, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share. The dividend will be payable on March 7, 2008, to stockholders of record as of February 26, 2008.
The Company opened or acquired 57 and 221 new centers during the three months and year ended December 31, 2007, respectively, compared to 123 and 302 during the same periods in 2006. As of December 31, 2007, the Company had an operating network of 2,832 centers and 85 limited licensees in 35 states, the United Kingdom, and Canada.
The Company will discuss these results during a conference call on Thursday, February 14 at 9:00 a.m. (EST). To listen to this call, please dial the conference telephone number (877) 440-5787. This call will also be webcast live and can be accessed at Advance America’s website www.advanceamericacash.com. An audio replay of the call will be available online or by telephone (888) 203-1112 (replay passcode: 1043000) until the close of business on February 21, 2008.
About Advance America:
Founded in 1997, Advance America, Cash Advance Centers, Inc. is the country’s leading provider of payday cash advance services with approximately 2,800 centers and 85 limited licensees in 35 states, the United Kingdom, and Canada. The Company offers convenient, less-costly credit options to consumers whose needs are not met by traditional financial institutions. The Company is a founding member of the Community Financial Services Association of America (CFSA), whose mission is to promote laws that provide substantive consumer protections and to encourage responsible industry practices.
Forward-Looking Statements and Information:
Certain statements contained in this release may constitute “forward-looking statements” within the meaning of federal securities laws. All statements in this release other than those relating to our historical information or current condition are forward-looking statements. For example, any statements regarding our future financial performance, our business strategy, and expected developments in our industry are forward-looking statements. Although we believe that the current views and expectations reflected in these forward-looking statements are reasonable, those views and expectations and the related statements are inherently subject to risks, uncertainties, and other factors, many of which are not under our control and may not even be predictable. Therefore, actual results could differ materially from our expectations as of today and any future results, performance, or achievements expressed directly or impliedly by the forward looking statements. For a more detailed discussion of some of the factors that may cause our actual results to differ from our current expectations, please refer to the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and of our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007, copies of which are available from the Securities and Exchange Commission, upon request from us, or by going to our website: www.advanceamericacash.com.
Consolidated Balance Sheets
December 31, 2006 and 2007
(in thousands, except per share data)
| | 2006 | | 2007 | |
| | | | | |
Assets | | | | | |
Current assets | | | | | |
Cash and cash equivalents | | $ | 67,245 | | $ | 28,251 | |
Advances and fees receivable, net | | 237,725 | | 221,480 | |
Deferred income taxes | | 11,798 | | 13,737 | |
Other current assets | | 11,664 | | 13,578 | |
Total current assets | | 328,432 | | 277,046 | |
Restricted cash | | 5,446 | | 5,701 | |
Property and equipment, net | | 63,198 | | 57,616 | |
Goodwill | | 122,627 | | 127,286 | |
Other assets | | 5,389 | | 4,049 | |
Total assets | | $ | 525,092 | | $ | 471,698 | |
| | | | | |
Liabilities and Stockholders' Equity | | | | | |
Current liabilities | | | | | |
Accounts payable | | $ | 21,164 | | $ | 16,204 | |
Accrued liabilities | | 31,737 | | 31,823 | |
Income taxes payable | | 14,983 | | — | |
Accrual for third-party lender losses | | — | | 4,587 | |
Current portion of long-term debt | | 537 | | 542 | |
Total current liabilities | | 68,421 | | 53,156 | |
Revolving credit facility | | 104,835 | | 142,302 | |
Long-term debt | | 5,678 | | 5,136 | |
Deferred income taxes | | 13,564 | | 20,629 | |
Other liabilities | | 157 | | 184 | |
Total liabilities | | 192,655 | | 221,407 | |
| | | | | |
Non-controlling interest in variable interest entity | | 32,540 | | — | |
| | | | | |
| | | | | |
Commitments and contingencies | | | | | |
Stockholders' equity | | | | | |
Preferred stock, par value $.01 per share, 25,000 shares authorized; | | | | | |
no shares issued and outstanding | | — | | — | |
Common stock, par value $.01 per share, 250,000 shares authorized; | | | | | |
96,821 shares issued and 79,534 shares outstanding at December 31, 2006; | | | | | |
96,821 shares issued and 72,947 shares outstanding at December 31, 2007 | | 968 | | 968 | |
Paid in capital | | 285,382 | | 286,999 | |
Retained earnings | | 118,258 | | 133,789 | |
Accumulated other comprehensive loss | | — | | (75 | ) |
Common stock in treasury (17,287 shares at cost at December 31, 2006; | | | | | |
23,874 shares at cost at December 31, 2007) | | (104,711 | ) | (171,390 | |
Total stockholders' equity | | 299,897 | | 250,291 | |
Total liabilities and stockholders' equity | | $ | 525,092 | | $ | 471,698 | |
Consolidated Statements of Income
Quarter and Year Ended December 31, 2006 and 2007
(in thousands, except per share data)
| | Quarter Ended
December 31, | | Year Ended
December 31, | |
| | 2006 | | 2007 | | 2006 | | 2007 | |
| | (unaudited) | | (unaudited) | | | | | |
Revenues: | | | | | | | | | |
Fees and interest charged to customers | | $ | 185,652 | | $ | 183,609 | | $ | 659,876 | | $ | 709,557 | |
Marketing, processing and servicing fees | | — | | — | | 12,418 | | — | |
Total revenues | | 185,652 | | 183,609 | | 672,294 | | 709,557 | |
| | | | | | | | | |
Center Expenses: | | | | | | | | | |
Salaries and related payroll costs | | 46,559 | | 50,225 | | 185,938 | | 199,416 | |
Occupancy costs | | 23,034 | | 24,679 | | 87,276 | | 96,847 | |
Provision for doubtful accounts | | 41,030 | | 42,902 | | 120,855 | | 140,245 | |
Center depreciation expense | | 4,199 | | 4,324 | | 16,233 | | 17,200 | |
Advertising expense | | 7,165 | | 7,332 | | 20,375 | | 26,770 | |
Other center expenses | | 14,106 | | 15,093 | | 54,986 | | 59,340 | |
Total center expenses | | 136,093 | | 144,555 | | 485,663 | | 539,818 | |
Center gross profit | | 49,559 | | 39,054 | | 186,631 | | 169,739 | |
| | | | | | | | | |
Corporate and Other Expenses (Income): | | | | | | | | | |
General and administrative expenses | | 13,608 | | 15,404 | | 53,363 | | 59,410 | |
Corporate depreciation expense | | 863 | | 752 | | 3,661 | | 3,162 | |
Interest expense | | 3,133 | | 3,288 | | 7,129 | | 11,059 | |
Interest income | | (119 | ) | (56 | ) | (538 | ) | (317 | ) |
Loss on disposal of property and equipment | | 135 | | 761 | | 960 | | 3,189 | |
Loss on impairment of assets | | — | | — | | — | | 314 | |
Income before income taxes | | 31,939 | | 18,905 | | 122,056 | | 92,922 | |
Income tax expense | | 12,299 | | 7,510 | | 48,858 | | 37,831 | |
Income before (income) loss of consolidated variable interest entity | | 19,640 | | 11,395 | | 73,198 | | 55,091 | |
(Income) loss of consolidated variable interest entity | | (780 | ) | 105 | | (3,047 | ) | (706 | ) |
Net income | | $ | 18,860 | | $ | 11,500 | | $ | 70,151 | | $ | 54,385 | |
| | | | | | | | | |
Net income per common share - basic | | $ | 0.24 | | $ | 0.15 | | $ | 0.87 | | $ | 0.70 | |
Weighted average number of shares outstanding - basic | | 79,109 | | 75,425 | | 80,889 | | 77,923 | |
| | | | | | | | | |
Net income per common share - diluted | | $ | 0.24 | | $ | 0.15 | | $ | 0.87 | | $ | 0.70 | |
Weighted average number of shares outstanding - diluted | | 79,148 | | 75,426 | | 80,917 | | 77,935 | |
