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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-9733
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CASH AMERICA INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-2018239
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1600 WEST 7TH STREET 76102-2599
FORT WORTH, TEXAS (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (817) 335-1100
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Securities Registered Pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- ------------------------------ ------------------------------
<S> <C>
Common Stock New York Stock Exchange
$.10 par value per share
</TABLE>
Securities Registered Pursuant to Section 12(g) of the Act:
None
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
--- ---
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. /X/
THE AGGREGATE MARKET VALUE OF 27,961,252 SHARES OF THE REGISTRANT'S COMMON
STOCK HELD BY NONAFFILIATES ON MARCH 6, 1996 WAS APPROXIMATELY $153,786,886.
AT MARCH 6, 1996 THERE WERE 28,739,879 SHARES OF THE REGISTRANT'S COMMON
STOCK, $.10 PAR VALUE, ISSUED AND OUTSTANDING.
DOCUMENTS INCORPORATED BY REFERENCE
THE REGISTRANT'S ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED DECEMBER
31, 1995 AND THE DEFINITIVE PROXY STATEMENT PERTAINING TO THE 1996 ANNUAL
MEETING OF SHAREHOLDERS ARE INCORPORATED HEREIN BY REFERENCE INTO PARTS II AND
IV, AND PART III, RESPECTIVELY.
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CASH AMERICA INTERNATIONAL, INC.
YEAR ENDED DECEMBER 31, 1995
INDEX TO FORM 10-K
<TABLE>
<S> <C>
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . . 15
PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters . . . . . . . . . . . . . . . 15
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . 15
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . 15
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . 16
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 16
PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . . . . . . . . . . 16
SIGNATURES
</TABLE>
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INTRODUCTION
Cash America International, Inc. (the "Company") was incorporated in
Texas on October 4, 1984, to succeed to the business, assets and liabilities of
a predecessor corporation formed one year earlier to engage in the pawnshop
business. As of December 31, 1995, the Company owns pawnshops through
wholly-owned subsidiaries in fourteen states and the United Kingdom and Sweden.
The Company's principal executive offices are located at 1600 West Seventh
Street, Fort Worth, Texas 76102, and its telephone number is (817) 335-1100.
As used herein, the "Company" includes Cash America International, Inc. and its
subsidiaries.
PART I
ITEM 1. BUSINESS
General
The Company is engaged in acquiring, establishing and operating
pawnshops which lend money on the security of pledged tangible personal
property. Pawnshops function as convenient sources of consumer loans and as
sellers primarily of previously-owned merchandise acquired when customers do
not redeem their pawned goods. The Company contracts for a pawn service charge
to compensate it for the amount of funds advanced. The pawn service charge is
typically calculated as a percentage of the loan amount based on the size and
duration of the transaction, in a manner similar to which interest is charged
on a loan, and has generally ranged from 12% to 240% annually, as permitted by
applicable state pawnshop laws. The pledged property is held through the term
of the transaction, which, in the Company's domestic operations, is generally
one month with an automatic sixty-day redemption period unless otherwise
earlier repaid, renewed or extended. (For pawn service charges and transaction
periods applicable to the Company's foreign operations, see
"Business--Regulation." ). A majority of the amounts advanced by the Company
are paid in full, together with accrued service charges, or are renewed or
extended through payment of accrued service charges. For the years 1993, 1994,
and 1995, loans repaid or renewed as a percentage of loans made were 71.7%,
70.7%, and 71.0% respectively. In the event that the borrower does not redeem
his pawned goods, the unredeemed collateral is forfeited to the Company and
then becomes inventory available for sale.
The Company's growth has been the result of its business strategy of
acquiring existing pawnshops and establishing new pawnshops that can benefit
from the Company's centralized management and standardized operations. The
Company intends to continue its business strategy of acquiring and establishing
pawnshops, increasing its share of consumer loan business, and concentrating
multiple pawnshops in regional and local markets in order to expand market
penetration, enhance name recognition and reinforce marketing programs. Studies
indicate to the Company that a large portion of its customers consists of
individuals who do not regularly transact business with banks. (See, for
example, John P. Caskey, Fringe Banking - Check Cashing Outlets, Pawnshops and
the Poor, 1994.) These generally are persons who do not have checking accounts
and conduct as many of their transactions as possible on a cash basis.
Pursuant to the Company's business expansion strategy, the Company
added a net 31 locations in 1993, 60 locations in 1994 and 33 locations in
1995. Of these net 124 locations added, 47 were acquisitions and 93 were
start-ups, while 16 locations were either closed or combined. In February
1992, the Company acquired the Harvey & Thompson pawnshop chain in the United
Kingdom. On June 30, 1993, the Company acquired 18 pawnshops, located
primarily in San Antonio and Houston, Texas, from Express Cash International
Corporation. On September 22, 1994, the Company acquired the ten-pawnshop
Svensk Pantbelaning chain in Sweden. As of December 31, 1995, the Company had
327 domestic and 46 foreign operating locations.
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The Company plans to continue to expand its operating locations
through new start-ups and acquisitions. However, during 1992 the Company moved
to a strategy of opening more start-up units and acquiring fewer stores
relative to total additions. Excluding the chains discussed above, the Company
acquired 19 stores in individual purchase transactions during 1993, 1994, and
1995.
LENDING FUNCTION
The Company is engaged in the business of lending money on the
security of pledged goods. The pledged goods are generally tangible personal
property other than securities or printed evidences of indebtedness and
generally consist of jewelry, tools, televisions and stereos, musical
instruments, firearms, and other miscellaneous items. (In the Company's
foreign operations, the pledged goods predominately consist of jewelry.) The
pledged tangible personal property is intended to provide security to the
Company for the repayment of the amount advanced plus accrued pawn service
charges. Pawn loans are made without personal liability to the borrower.
Because the loan is made without the borrower's personal liability, the Company
does not investigate the creditworthiness of the borrower, but relies on the
pledged personal property, and the possibility of its forfeiture, as a basis
for its lending decision. The Company contracts for a pawn service charge as
compensation for the amount of funds advanced. Pawn service charges
contributed approximately 48% of the Company's net revenues (total revenues
less cost of sales) in 1993, 51% in 1994 and 52% in 1995.
At the time a pawn transaction is entered into, a pawn transaction
agreement, commonly referred to as a pawn ticket, is delivered to the borrower
(pledgor) that sets forth, among other items, the name and address of the
pawnshop and the pledgor, the pledgor's identification number from his or her
driver's license or other approved identification, the date, the identification
and description of the pledged goods, including applicable serial numbers, the
amount financed, the pawn service charge, the maturity date, the total amount
that must be paid to redeem the pledged goods on the maturity date and the
annual percentage rate.
With regard to domestic operations, the amount that the Company is
willing to finance is typically based on a percentage of the pledged personal
property's estimated resale value. The sources for the Company's determination
of the estimated resale value are numerous and include catalogues, blue books,
newspapers and previous similar pawn loan transactions. These sources,
together with the employees' experience in selling similar items of merchandise
in particular pawnshops, influence the determination of the estimated resale
value of such items. The Company does not utilize a standard or mandated
percentage of estimated resale value in determining the amount to be financed.
Rather, the employees have the authority to set the percentage for a particular
item and determine the ratio of loan amount to estimated resale value with the
expectation that, if the item is forfeited to the pawnshop, its subsequent
resale would yield a gross profit margin consistent with the Company's
historical experience. The pledged property is held through the term of the
transaction, which generally is one month with an automatic sixty-day
redemption period (see "Regulation" for exceptions in certain states), unless
earlier repaid, renewed or extended. A majority of the amounts advanced by the
Company are paid in full with accrued service charges or are renewed or
extended through payment of accrued service charges. In the event the pledgor
does not repay, renew or extend his loan, the unredeemed collateral is
forfeited to the Company and then becomes inventory available for sale. The
Company does not record loan losses or charge-offs inasmuch as, if the pledged
goods are not redeemed, the amount advanced becomes the carrying cost of the
forfeited collateral ("inventory") that is to be recovered through the resale
function described below.
With regard to the Company's foreign operations, the amount that the
pawnshop is willing to finance in a pledge of jewelry is typically based on a
fixed amount per gram of the gold or silver content of the pledged property
plus additional amounts for diamonds and other features which, in the store
management's assessment,
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enhance the market value of the pledged property. Declines in gold and silver
prices historically have resulted in reduction of the amount that the pawnshop
is willing to lend against an item, which reduces the amount of the pawnshop's
loan portfolio and related pawn service charge income. The pawn loans are made
for a term of six months with an approximate annual yield in 1995 of 56%. The
collateral is held through the term of the loan, and, in the event that the
loan is not repaid or renewed on or before maturity, the unredeemed collateral
is sold at auction or by private sale.
The recovery of the amount advanced, as well as realization of gross
profit on sales of inventory, is dependent on the Company's initial assessment
of the property's estimated resale value. Improper assessment of the resale
value of the collateral in the lending function can result in reduced
marketability of the property and resale of the property for an amount less
than the amount advanced. However, historically, the Company has experienced
gross profits from sales of inventory. Declines in gold and silver prices
generally will also reduce the resale value of jewelry items acquired in pawn
transactions and could adversely affect the Company's ability to recover the
carrying cost of the acquired collateral. For 1993, 1994 and 1995, the
Company experienced gross profit margins on sales of inventory of 40%, 41% and
42%, respectively.
At December 31, 1995, the Company had approximately 944,300 loans
outstanding with an aggregate balance outstanding of $87,782,000 or $93 per
loan outstanding.
Presented below is information with respect to pawn loans made,
acquired, repaid and forfeited for the years ended December 31, 1993, 1994 and
1995:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------
1993 1994 1995
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($ in thousands)
<S> <C> <C> <C>
Loans made . . . . . . . . . . . . . . . . . . . . . . . . . . . . $224,165 $285,818 $319,733
Loans acquired . . . . . . . . . . . . . . . . . . . . . . . . . . 3,267 17,297 362
Loans repaid . . . . . . . . . . . . . . . . . . . . . . . . . . . (105,739) (136,575) (180,726)
Loans renewed . . . . . . . . . . . . . . . . . . . . . . . . . . (54,967) (65,356) (46,130)
Loans forfeited:
Transferred to inventory . . . . . . . . . . . . . . . . . . (62,300) (70,032) (79,542)
Sold at auction . . . . . . . . . . . . . . . . . . . . . . . (1,724) (3,111) (5,966)
Effect of exchange rate translation . . . . . . . . . . . . . . . (270) 965 1,956
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (269) -0- -0-
-------- -------- --------
Net increase in pawn loans outstanding at end of period . . . $2,163 $29,006 $9,687
======== ======== ========
Loans repaid or renewed as a percent of loans made . . . . . . . . 71.7% 70.7% 71.0%
======== ======== ========
</TABLE>
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RESALE FUNCTION
The Company engages in the sale of inventory acquired when a pawn loan
is not repaid, when used goods are purchased from the general public and when
new merchandise is acquired from vendors. New goods consist primarily of
accessory merchandise which enhances the marketability of existing inventory,
such as tools, consumer electronics and new jewelry items purchased during peak
selling seasons. For the year ended December 31, 1995, $100,275,000 of
merchandise was added to inventory, of which $79,542,000 was from loans not
repaid and $20,733,000 was purchased from vendors, customers and through
acquisition of pawnshops.
The Company does not provide its customers with warranties on the used
merchandise sold. The Company permits its customers to purchase inventory on a
layaway plan whereby the customer agrees to purchase an item by making an
initial cash deposit representing a small part of the selling price and making
additional, non-interest bearing payments of the balance of the selling price
in accordance with a specified schedule. The Company then separates the
specified item from its showroom and holds the item until the selling price is
paid in full. Should the customer fail to make a required payment, the item is
returned to the showroom. At December 31, 1995, the Company held approximately
$3,524,000 in customer layaway deposits.
The Company provides an allowance for shrinkage and valuation of its
inventory based on management's evaluation of the merchandise. Management's
evaluation takes into consideration historical shrinkage, the quantity and age
of slow-moving goods on hand and markdowns necessary to liquidate slow-moving
goods. At December 31, 1995, total inventory on hand was $56,647,000, after
deducting $2,372,000 for allowance for shrinkage and valuation of inventory.
OPERATIONS
Store Management
Each location has a manager who is responsible for supervising its
personnel and assuring that it is managed in accordance with Company guidelines
and established policies and procedures. Each manager reports to an Area
Manager who typically oversees approximately five to ten store managers. Each
Area Manager reports to a Regional Manager or Division Manager. As of January
1, 1995, the Company has established five geographic operating divisions in the
United States, each of which is managed by a Division Manager. The Harvey &
Thompson and Svensk Pantbelaning chains follow a similar management
organization, with a managing director overseeing these operations.
Trade Name
The Company operates its pawnshops under the trade name "Cash America
Pawn" in the U.S., "Harvey & Thompson Pawnbrokers" in the U.K., and "Svensk
Pantbelaning" in Sweden. The Company has registered the "Cash America" mark
and descriptive logos and phrases with the United States Patent and Trademark
Office.
Personnel
The Company employs approximately 2,365 employees as of December 31,
1995. Of the total employees, approximately 175 were in executive,
administrative, clerical and accounting functions.
The Company has an established training program that provides a
combination of classroom instruction, video presentation and on-the-job loan
and sales experience. The new employee is introduced to the business
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through an orientation program and through a three-month training program that
includes classroom and on-the-job training in loans, layaways, inventory and
general administration of store operations.
The experienced employee receives training and an introduction to the
fundamentals of management to acquire the skills necessary to move into
management positions within the organization. Manager training involves a
twelve month program and includes additional management principles and more
extensive training in income maximization, recruitment, inventory control and
cost efficiency.
FUTURE EXPANSION
Since its inception, the Company has engaged in a series of mergers
and acquisitions to expand its business. The Company's objective is to
continue to expand the number of pawnshops it owns and operates through
acquisitions and by establishing new stores. Management believes that such
anticipated expansion will provide economies of scale in supervision,
purchasing, administration and marketing by decreasing the overall average cost
of such functions per store owned. The primary pawnshop acquisition criteria
include evaluation of the volume of annual loan transactions, outstanding loan
balances, inventory on hand, sales history, and location and condition of the
facility, including lease terms or fair market value of the facility if it is
to be purchased. The primary pawnshop start-up criteria include the
facility-related items noted above and conditions in the surrounding community
indicating a sufficient level of potential customers.
The Company's business strategy is to continue expanding its pawnshop
business into jurisdictions outside of its existing geographic markets.
Consistent with its business strategy, in 1994 the Company expanded operations
into the states of Missouri, Alabama, North Carolina, South Carolina, and
Sweden. The Company will consider expanding into other markets which meet the
risk/reward considerations of the Company.
The Company's expansion has not only been in acquiring previously
owned pawnshops, but also in establishing new locations. After a suitable
location has been found and a lease and license are obtained, the new location
can be ready for business within four to six weeks, with completion of sales
counters, vaults and security system and transfer of inventory from other
locations. The approximate start-up costs, defined as the investment in
property, plant and equipment, for recently established pawnshops have ranged
from $200,000 to $400,000, with an average cost per location of approximately
$250,000 in 1995. This amount does not include inventory transferred from
other stores, funds to advance on pawn loans and operating expenses.
The Company's expansion program is subject to numerous factors which
cannot be predicted, such as the availability of attractive acquisition
candidates or sites on suitable terms and general economic conditions.
Further, there can be no assurance that future expansion can be continued on a
profitable basis. Among other factors, the following factors will impact the
Company's future planned expansion.
Statutory Requirements. The Company's ability to add
newly-established stores in Texas counties having a population of more than
250,000 is limited by a law that became effective September 1, 1991, which
requires a finding of public need and probable profitability by the Texas
Consumer Credit Commissioner as a condition to the issuance of any new pawnshop
license. In addition, the present statutory and regulatory environment of some
states renders expansion into those states impractical. See "Business --
Regulation."
Competition. The Company faces competition in its expansion program.
Several competing pawnshop companies have completed public securities offerings
and have announced active expansion and acquisition programs. A number of
smaller companies have also entered the market. While the Company believes
that it is the largest pawnshop operator in the United States, there can be no
assurance that the Company will be more
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successful than its competitors in pursuing acquisition opportunities and
leases for attractive start-up locations. Increased competition could also
increase prices for attractive acquisition candidates.
Access to Capital. In some states, the Company is required by law to
maintain a minimum amount of certain unencumbered net assets (currently
$150,000 in Texas) for each pawnshop location. The Company's expansion plans
will therefore be limited in these states to the extent the Company is unable
to maintain these required levels of unencumbered net assets. These
requirements also make it difficult for the Company to rely on secured
financing for expansion purposes due to the requirement that expansion capital
be unencumbered, which would reduce the availability of capital for expansion
purposes.
Availability of Qualified Store Management Personnel. The Company's
ability to expand may also be limited by the availability of qualified store
management personnel. While the Company seeks to train its existing personnel
to enable those capable of doing so to assume management positions and to
create attractive compensation packages to retain existing management
personnel, there can be no assurance that sufficient qualified personnel will
be available to satisfy the Company's needs with respect to its planned
expansion.
COMPETITION
The Company encounters significant competition in connection with its
lending and resale operations. Some competitors may have greater financial
resources than the Company. Several competing pawnshop companies have
completed securities offerings in recent years. See "Business -- Future
Expansion." These competitive conditions may adversely affect the Company's
revenues and profitability.
The Company, in connection with the lending of money, competes with
other pawnshops and forms of financial institutions such as consumer finance
companies, which generally lend on an unsecured as well as a secured basis.
Other lenders may lend money on terms more favorable than the Company. The
pawnshop industry is characterized by a large number of independent
owner-operators, some of whom own and operate multiple pawnshops.
REGULATION
The Company's pawnshop operations are subject to extensive regulation,
supervision and licensing under various federal, state and local statutes,
ordinances and regulations in the fourteen states and two foreign countries in
which it operates. (For a geographic breakdown of operating locations, see
"Properties.") Set forth below is a summary of the state pawnshop regulations
in those states containing a preponderance of the Company's domestic operating
locations.
Texas Pawnshop Regulations. Pursuant to the terms of the Texas
Pawnshop Act, the Texas Consumer Credit Commissioner has primary responsibility
for the regulation of pawnshops and enforcement of laws relating to pawnshops
in Texas. The Company is required to furnish the Texas Consumer Credit
Commissioner with copies of information, documents and reports which are
required to be filed by it with the Securities and Exchange Commission.
The Texas Pawnshop Act prescribes the stratified loan amounts and the
maximum allowable rates of service charge that pawnbrokers in Texas may charge
for the lending of money within each stratified range of loan amounts. That
is, the Texas law establishes the maximum allowable service charge rates based
on the amount financed per pawn loan. The maximum allowable pawn service
charges under the Texas Pawnshop Act for the various stratified loan amounts
for the fiscal years ended June 30, 1994, 1995 and 1996 are as follows:
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<TABLE>
<CAPTION>
Year Ended June 30, 1994 Year Ended June 30, 1995 Year Ended June 30, 1996
- ------------------------------------ ----------------------------------- ------------------------------------
Maximum Maximum Maximum
Amount Allowable Amount Allowable Amount Allowable
Financed Annual Financed Annual Financed Annual
Per Pawn Percentage Per Pawn Percentage Per Pawn Percentage
Loan Rate Loan Rate Loan Rate
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$ 1 to $ 120. . . . 240% $ 1 to $ 126 . . . . 240% $ 1 to $ 129 . . . . 240%
121 to 400. . . . 180 127 to 420 . . . . 180 130 to 430 . . . . 180
401 to 1,200. . . . 30 421 to 1,260 . . . . 30 431 to 1,290 . . . . 30
1,201 to 10,000. . . . 12 1,261 to 10,500 . . . . 12 1,291 to 10,750 . . . . 12
</TABLE>
These rates are reviewed and established annually. The maximum allowable
service charge rates were established and have not been revised since 1971 when
the Texas Pawnshop Act was enacted. Since 1981, the ceiling amounts for
stratification of the loan amounts to which these rates apply have been revised
each July 1 in relation to the Consumer Price Index. The Texas Pawnshop Act
also prescribes the maximum allowable pawn loan. Under current Texas law, a
pawn loan may not exceed $10,750. In addition to establishing maximum
allowable service charge rates and loan ceilings, the Texas Pawnshop Act also
provides for the licensing of pawnshops and pawnshop employees. To be eligible
for a pawnshop license in Texas, an applicant must (i) be of good moral
character, (ii) have net assets of at least $150,000 readily available for use
in conducting the business of each licensed pawnshop, (iii) show that the
pawnshop will be operated lawfully and fairly in accordance with the Texas
Pawnshop Act, (iv) show that the applicant has the financial responsibility,
experience, character, and general fitness to command the confidence of the
public in its operations, and (v) in the case of a business entity, the good
moral character requirement shall apply to each officer, director and holder of
5% or more of the entity's outstanding shares.
As part of the license application process, any existing pawnshop
licensee who would be affected by the granting of the proposed application may
request a public hearing at which to appear and present evidence for or against
the application. For an application for a new license in a county with a
population of 250,000 or more, the Consumer Credit Commissioner must find not
only that the applicant meets the other requirements for a license, but also
that (i) there is a public need for the proposed pawnshop and (ii) the volume
of business in the community in which the pawnshop will conduct business
indicates a profitable operation is probable.
The Texas Consumer Credit Commissioner may, after notice and hearing,
suspend or revoke any license for a Texas pawnshop upon finding, among other
things, that (i) any fees or charges have not been paid; (ii) the licensee
violates (whether knowingly or unknowingly without due care) any provisions of
the Texas Pawnshop Act or any regulation or order thereunder; or (iii) any fact
or condition exists which, if it had existed at the time the original
application was filed for a license, would have justified the Commissioner in
refusing such license.
Under the Texas Pawnshop Act, a pawnbroker may not accept a pledge
from a person under the age of 18 years; make any agreement requiring the
personal liability of the borrower; accept any waiver of any right or
protection accorded to a pledgor under the Texas Pawnshop Act; fail to exercise
reasonable care to protect pledged goods from loss or damage; fail to return
pledged goods to a pledgor upon payment of the full amount due; make any charge
for insurance in connection with a pawn transaction; enter into any pawn
transaction that has a maturity date of more than one month; display for sale
in storefront windows or sidewalk display cases, pistols, swords, canes,
blackjacks and similar weapons; operate a pawnshop between the hours of 9:00
p.m. and
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7:00 a.m.; or purchase used or secondhand personal property or certain building
construction materials unless a record is established containing the name,
address and identification of the seller, a complete description of the
property, including serial number, and a signed statement that the seller has
the right to sell the property.
Florida Pawnshop Regulations. The Florida statute governing the
Company's operations in that state provides that pawn transactions may take the
form of a loan of money or a buy-sell agreement, whereby the pawnbroker agrees
to hold property for a specified period of time to allow the seller the
exclusive right to repurchase the property. The Company's Florida transactions
take the form of buy-sell agreements. The property placed with a pawnbroker is
subject to sale or disposal when the seller has not repurchased the property
from the pawnbroker and there has been no payment on account made for a period
of sixty days after the sale. The Florida law provides for registrations of
pawnbrokers with the Florida Department of Revenue, which has broad power to
enforce the registration requirements under the statute, to adopt rules and
regulations to effectuate the purposes of the statute, and to impose fines for
violation of the registration requirements. The statute prohibits pawnbrokers
from entering into pawn transactions with a person who is under the influence
of alcohol or drugs, a person who is under the age of eighteen, or a person
using a name other than his own name or the registered name of his business.
Also, pawnbrokers may not engage in or conduct business as such between the
hours of 10:00 p.m. and 8:00 a.m. and may not conduct any pawn transaction at a
drive-through window or similar device. The law also requires pawnbrokers to
maintain detailed records of all transactions in secondhand goods and to
deliver such records to the appropriate local law enforcement agencies. The
statute referred to above does not establish a maximum allowable rate of
interest or fees that pawnbrokers may charge.
Georgia Pawnshop Regulations. Georgia state law requires pawnbrokers
to maintain detailed permanent records concerning pawn transactions and to keep
them available for inspection by duly authorized law enforcement authorities.
The Georgia statute prohibits pawnbrokers from failing to make entries of
material matters in the their permanent records; making false entries in their
records; falsifying, obliterating, destroying, or removing permanent records
from their places of business; refusing to allow duly authorized law
enforcement officers to inspect their records; failing to maintain records of
each pawn transaction for at least four years; accepting a pledge or purchase
from a person under the age of eighteen or who the pawnbroker knows is not the
true owner of the property; making any agreement requiring the personal
liability of the pledgor or seller or waiving any of the provisions of the
Georgia statute; or failing to return or replace pledged goods upon payment of
the full amount due (unless the pledged goods have been taken into custody by a
court or a law enforcement officer). In the event pledged goods are lost or
damaged while in the possession of the pawnbroker, the pawnbroker must replace
the lost or damaged goods with like kinds of merchandise. Under Georgia law,
total interest and service charges may not, during each thirty-day period of
the loan, exceed 25% of the principal amount advanced in the pawn transaction
(except that after ninety days from the original date of the loan, the maximum
rate declines to 12.5% for each subsequent thirty-day period). The statute
provides that municipal authorities may license pawnbrokers, define their
powers and privileges by ordinance, impose taxes upon them, revoke their
licenses, and exercise such general supervision as will ensure fair dealing
between the pawnbroker and his customers.
Tennessee Pawnshop Regulations. Tennessee state law provides for the
licensing of pawnbrokers in that state. It also (i) requires that pawn
transactions be reported to local law enforcement agencies, (ii) requires
pawnbrokers to maintain insurance coverage on the property held on pledge for
the benefit of the pledgor, (iii) establishes certain hours during which
pawnshops may be open for business and (iv) requires that certain bookkeeping
records be maintained. Tennessee law prohibits pawnbrokers from selling,
redeeming or disposing of any goods pledged or pawned to or with them within 48
hours after making their report to local law enforcement agencies. The
Tennessee statute establishes a maximum allowable interest rate of 24% per
annum; however, the pawnshop operator may charge an additional fee of up to
one-fifth of the amount of the loan per month for investigating the title,
storing and insuring the security and various other expenses.
8
<PAGE> 11
Oklahoma Pawnshop Regulations. The Company's Oklahoma operations are
subject to the Oklahoma Pawnshop Act. Following substantially the same
statutory scheme as the Texas Pawnshop Act, the Oklahoma Pawnshop Act provides
for the licensing and bonding of pawnbrokers in Oklahoma and provides for the
Oklahoma Administrator of Consumer Credit to investigate the general fitness of
the applicant and generally regulate pawnshops in that state. The
Administrator has broad rule-making authority with respect to Oklahoma
pawnshops.
In general, the Oklahoma Pawnshop Act prescribes the stratified loan
amounts and the maximum rates of service charges which pawnbrokers in Oklahoma
may charge for lending money in Oklahoma within each stratified range of loan
amounts. The regulations provide for a graduated rate structure similar to
that utilized in federal income tax computations. For example, under this
method of calculation a $500 pawn loan earns interest as follows: (a) the first
$150 at 240%, annually, (b) the next $100 at 180%, annually and (c) the
remaining $250 at 120%, annually. The maximum allowable pawn service charges
for the various stratified loan amounts under the Oklahoma statute are as
follows:
<TABLE>
<CAPTION>
Maximum
Amount Allowable
Financed Annual
Per Pawn Percentage
Loan Rate
-------- ----------
<S> <C> <C>
$ 1 to $ 150 ............... 240%
151 to 250 ............... 180
251 to 500 ............... 120
501 to 1,000 ............... 60
1,001 to 25,000 ............... 36
</TABLE>
A pawn loan in Oklahoma may not exceed $25,000.
Louisiana Pawnshop Regulations. Louisiana law provides for the
licensing and bonding of pawnbrokers in that state. In addition, the act
requires that pawn transactions be reported to local law enforcement agencies,
establishes hours during which pawnbrokers may be open for business and
requires certain bookkeeping practices. Under the Louisiana statute, no
pawnbroker may sell any jewelry pledged as collateral until the lapse of six
months from the time the loan was made or extended by payment of accrued
interest. All other unredeemed collateral from loans can be sold after the
lapse of three months. Louisiana state law establishes maximum allowable rates
of interest on pawn loans of 10% per month. In addition, Louisiana law
provides that the pawnbroker may also charge a one-time fee not to exceed 10%
for all other services. Various municipalities and parishes in the state of
Louisiana have promulgated additional ordinances and regulations pertaining to
pawnshops.
Indiana Pawnshop Regulations. The Indiana Pawnbroking Law provides
for a maximum allowable interest rate of 36% per annum for loans up to $870,
21% per annum for loans over $870 and up to $2,900, and 15% per annum for loans
for over $2,900. Pawnbrokers may charge an additional fee of up to one-fifth
of the principal amount of the loan per month for investigating the title,
storing, providing security, appraisal, handling, making daily reports to local
law enforcement officers and other expenses and costs associated with servicing
the pledge. The pawnbroker must hold a pawned item for ninety days from the
maturity of the loan before selling the item, provided that ten days before
making the sale a notice is mailed to the pledgor indicating that, unless the
item is redeemed within ten days, it will be subject to sale. The Indiana
Pawnbroking Law also provides for the licensing and bonding of pawnbrokers in
that state. Pawnbrokers must maintain detailed permanent records
9
<PAGE> 12
concerning pawn transactions and keep those records available for inspection by
duly authorized law enforcement authorities. The Indiana Department of
Financial Institutions administers the licensing of pawnbrokers and generally
regulates Indiana pawnshops and enforces the Indiana Pawnbroking Law.
Although pawnshop regulations vary from state to state to a
considerable degree, the regulations summarized above are representative of the
regulatory frameworks affecting the Company in the various states in which its
operating units are located.
United Kingdom Regulations. Pawnshops in the United Kingdom conduct
pawn operations in a manner that is similar to the Company's domestic
operations, except that pawnshops generally lend money only on the security of
jewelry and gold and silver items. The Consumer Credit Act 1974 in the United
Kingdom requires that the pawnbroker notify the customer following the
expiration of the six month loan term and before the pledged items are sold by
the pawnbroker. Unredeemed items are generally sold at auction nine months
after the initial pledge date. For loans exceeding L.25, any amounts received
on the sale in excess of the principal amount of the loan, accrued pawn service
charge and disposition expenses must be held by the pawnbroker to be reclaimed
by the customer. If the pawnbroker is the highest bidder at the auction, it
reclaims the merchandise for later resale through its retail operations and may
realize gross profit on resale. For loans of L.25 or less, unredeemed
merchandise is automatically forfeited to the pawnbroker, and the pawnbroker
resells such merchandise through its retail operations.
Pawnbrokers in the United Kingdom are licensed and regulated by the
Office of Fair Trading (the "OFT") pursuant to the Consumer Credit Act 1974.
Licenses are valid for five years, subject to possible revocation, suspension,
or variance by the OFT. Unlike most state statutes in the United States
governing pawnbrokers, the Consumer Credit Act 1974 and the regulations
promulgated thereunder do not specify a maximum allowable interest rate
chargeable by pawnbrokers in the United Kingdom. Rather, the statute prohibits
pawnbrokers from entering into "extortionate credit bargains" with customers.
Currently, the Company charges a rate of six percent (6%) per month.
Sweden Regulations. The regulatory environment for pawnshops in
Sweden is very similar to that in the United Kingdom. Sweden's 1949 statute
governing pawnbroking was repealed and replaced with a new pawnbroking act
effective January 1, 1996. The new act provides that the loan term may not
exceed one year, that the pawnbroker is entitled to default interest on arrears
for a maximum of four months from the due date, and that the pawnbroker may not
sell unredeemed merchandise less than two months after the due date. The sale
must take place at a public auction, and the original customer is entitled to
any excess sales proceeds.
Like Sweden's previous pawnbroking statute, the new act provides for
licensing and supervision of pawnshops by the local County Administrative
Boards. The act does not specify a maximum allowable interest rate for pawn
loans, and, unlike the previous statute, it does not authorize the local County
Administrative Boards to regulate the rates that pawnbrokers may charge. Also,
the act grants Swedish pawnbrokers the new authority to purchase unredeemed
merchandise at the public auction sale and then resell the merchandise to the
public from the pawnshop premises.
Other Regulatory Matters, Etc. With respect to gun sales, each of the
pawnshops must comply with the Brady Handgun Violence Prevention Act (the
"Brady Act"), which took effect on February 28, 1994. The Brady Act imposes a
waiting period/background check requirement in connection with sales of
handguns by federally licensed firearms dealers. In addition, the Company must
continue to comply with the longstanding regulations promulgated by the
Department of the Treasury, Bureau of Alcohol, Tobacco and Firearms which
require each pawnshop dealing in guns to maintain a permanent written record of
all receipts and dispositions of firearms.
10
<PAGE> 13
In addition to the state statutes and regulations described above,
many of the Company's pawnshops are subject to municipal ordinances, which may
require, for example, local licenses or permits and specified recordkeeping
procedures, among other things. Each of the Company's pawnshops voluntarily or
pursuant to municipal ordinance provides to the police department having
jurisdiction copies of all daily transactions involving pawn loans and
over-the-counter purchases. These daily transaction reports are designed to
provide the local police with a detailed description of the goods involved
including serial numbers, if any, and the name and address of the owner
obtained from a valid identification card.
A copy of the transaction ticket is provided to local law enforcement
agencies for processing by the National Crime Investigative Computer to
determine rightful ownership. Goods held to secure pawn loans or goods
purchased which are determined to belong to an owner other than the borrower or
seller are subject to recovery by the rightful owner. However, the Company
historically has not experienced a material number of claims of this sort, and
the claims experienced have not had a material adverse effect on the Company's
results of operations.
Casualty insurance, including burglary coverage, is maintained for
each of the Company's pawnshops, and fidelity coverage is maintained on each of
the Company's employees.
Management of the Company believes its operations are conducted in
compliance with all federal, state and local laws and ordinances applicable to
its business.
EXECUTIVE OFFICERS
The following sets forth, as of March 10, 1996, certain data
concerning the executive officers of the Company, all of whom are elected on an
annual basis. There is no family relationship between any of the executive
officers.
<TABLE>
<CAPTION>
Name Age Position
- ----------------------- --- -----------------------------------------------
<S> <C> <C>
Jack R. Daugherty 48 Chairman of the Board and Chief Executive
Officer
Daniel R. Feehan 45 President, Chief Operating Officer and Director
Don R. Blevins 56 Executive Vice President - European Operations
Robert D. Brockman 41 Executive Vice President - Administration
Thomas A. Bessant, Jr. 37 Vice President - Finance and Treasurer
D. Eugene Kellough 56 Vice President and Controller
Hugh A. Simpson 36 Vice President - General Counsel and Secretary
Gregory W. Trees 52 Vice President - Marketing and Merchandising
</TABLE>
Jack R. Daugherty has been Chairman of the Board and Chief Executive
Officer of the Company since its founding in 1984. Mr. Daugherty has owned and
operated pawnshops since 1971.
Daniel R. Feehan has been President and Chief Operating Officer since
January 1990.
11
<PAGE> 14
Don R. Blevins joined the Company in May 1990. He has served in
various capacities with the Company, including Area Manager from March 1991 to
February 1992. Mr. Blevins was then assigned to the Company's U.K. subsidiary,
Harvey & Thompson Limited, where he served as Managing Director until December
1995. He has served as Executive Vice President of European Operations since
January 1, 1996.
Robert D. Brockman joined the Company in July 1995 as Executive Vice
President-Administration. Prior to that, he served as Vice President - Human
Resources of THORN Americas, Inc., the operator of the Rent-A-Center chain of
rent-to-own stores, from December 1986 to June 1995.
Thomas A. Bessant, Jr. joined the Company in May 1993 as Vice
President-Finance and Treasurer. Prior to joining the Company, Mr. Bessant was
a Senior Manager in the Corporate Finance Consulting Services Group of Arthur
Andersen & Co., S. C. in Dallas, Texas from June 1989. Prior to that time, Mr.
Bessant was Vice President in the Corporate Banking Division of NCNB Texas,
N.A., and its predecessor banking corporations, beginning in 1981.
D. Eugene Kellough was elected Vice President and Assistant Secretary
of the Company in January 1989 and on March 1, 1989 was elected Vice President
and Secretary of the Company. In April 1991, Mr. Kellough was elected Vice
President and Controller.
Hugh A. Simpson joined the Company in December 1990 as Vice President
and General Counsel. In April 1991, Mr. Simpson was elected Vice President -
General Counsel and Secretary.
Gregory W. Trees has served as Vice President-Marketing and
Merchandising since joining the Company in March 1992. For a period of
thirteen years leading up to the time he joined the Company, Mr. Trees served
as Vice President of Marketing with Western Auto Supply Company.
ITEM 2. PROPERTIES
As of March 10, 1996 the Company owns the real estate and buildings
for 16 of its pawnshop locations. Since May 1992, the Company's headquarters
have been located in a nine-story building adjacent to downtown Fort Worth,
Texas. The Company purchased the building in January 1992. All of the
Company's other locations are leased from unaffiliated parties under
non-cancelable operating leases.
The following table sets forth, as of March 10, 1996, the geographic
markets served by the Company and the number of locations in such markets in
which it presently operates.
<TABLE>
<CAPTION>
Number of Locations
in Area
--------------------
<S> <C> <C>
TEXAS:
Dallas/Ft. Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Houston . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Central/South Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
West Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Rio Grande Valley . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
---
Total Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
---
</TABLE>
12
<PAGE> 15
<TABLE>
<S> <C>
FLORIDA:
Tampa/St. Petersburg . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Orlando . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Jacksonville . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---
Total Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
---
GEORGIA:
Atlanta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Savannah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
---
Total Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
---
TENNESSEE:
Memphis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Nashville . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---
Total Tennessee . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
---
OKLAHOMA:
Tulsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Oklahoma City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---
Total Oklahoma . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---
LOUISIANA:
Baton Rouge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
New Orleans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
---
Total Louisiana . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
---
INDIANA:
Indianapolis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fort Wayne . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---
Total Indiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---
MISSOURI:
Kansas City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
St. Louis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---
Total Missouri . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
---
KENTUCKY:
Louisville . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---
ALABAMA:
Mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Birmingham . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---
Total Alabama . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
---
</TABLE>
13
<PAGE> 16
<TABLE>
<S> <C>
NORTH CAROLINA:
Charlotte . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Greensboro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---
Total North Carolina . . . . . . . . . . . . . . . . . . . . . . . . 7
---
SOUTH CAROLINA:
Charleston . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Greenville . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
---
Total South Carolina . . . . . . . . . . . . . . . . . . . . . . . . 7
---
COLORADO:
Denver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---
OHIO:
Cincinnati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---
Total United States . . . . . . . . . . . . . . . . . . . . . . . . . 329
---
UNITED KINGDOM:
London . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---
Total United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . 36
---
SWEDEN:
Stockholm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---
Total Sweden . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---
GRAND TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375
===
</TABLE>
The Company considers its equipment, furniture and fixtures and owned
buildings to be in good condition. The Company has its own construction
supervisors who engage local contractors to remodel and upgrade its domestic
pawnshop facilities throughout the year.
The Company's leases typically require the Company to pay all
maintenance costs, insurance costs and property taxes. For additional
information concerning the Company's leases see Note 12 of Notes to
Consolidated Financial Statements in the Annual Report which is incorporated
herein by reference.
ITEM 3. LEGAL PROCEEDINGS
The Company is a defendant in certain lawsuits encountered in the
ordinary course of its business. Certain of these matters are covered to an
extent by insurance. In the opinion of management, the resolution of these
matters will not have a material adverse effect on the Company's financial
position, results of operations or liquidity.
14
<PAGE> 17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to the Company's security holders
during the fourth quarter ended December 31, 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information contained under the caption "Common Stock Data" in the
Annual Report is incorporated herein by reference in response to this Item 5.
ITEM 6. SELECTED FINANCIAL DATA
Information contained under the caption "Seven Year Summary of
Selected Financial Data" in the Annual Report is incorporated herein by
reference in response to this Item 6.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information contained under the caption "Management's Discussion of
Financial Condition and Results of Operations" in the Annual Report is
incorporated herein by reference in response to this Item 7.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements and Income Statement Quarterly Data for the
Company are contained in the Annual Report and are incorporated herein by
reference in response to this Item 8.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company had no disagreements on accounting or financial disclosure
matters with its independent public accountants to report under this Item 9.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information contained under the caption "Election of Directors" in the
Company's Proxy Statement is incorporated herein by reference in response to
this Item 10. See Item 1, "Executive Officers" for information concerning
executive officers.
15
<PAGE> 18
ITEM 11. EXECUTIVE COMPENSATION
Information contained under the caption "Executive Compensation" in
the Company's Proxy Statement is incorporated herein by reference in response
to this Item 11.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information contained under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the Company's Proxy Statement is
incorporated herein by reference in response to this Item 12.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information contained under the caption "Executive Compensation" in
the Company's Proxy Statement is incorporated herein by reference in response
to this Item 13.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(1) The following financial statements of the Company and Report of
Independent Accountants are contained in the Annual Report and are
incorporated herein by reference.
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of December 31, 1995 and 1994.
Consolidated Statements of Income for the years ended December
31, 1995, 1994 and 1993.
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1995, 1994 and 1993.
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS
(2) The following financial statement schedule of the Company, as
listed below, is included herein.
Schedule II -- Allowance for Valuation of Inventory.
Report of Independent Accountants on Financial Statement Schedule.
16
<PAGE> 19
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission
are not required under the related instructions, are inapplicable,
or the required information is included elsewhere in the financial
statements.
(3) The exhibits filed in response to Item 601 of Regulation S-K are
listed in the Exhibit Index on pages 21 through 23.
(4) During the fourth quarter ended December 31, 1995, the Company did
not file any reports on Form 8-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on March 27, 1996.
CASH AMERICA INTERNATIONAL, INC.
By: /s/ JACK R. DAUGHERTY
-----------------------------------
Jack R. Daugherty
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on March 27, 1996 on
behalf of the registrant and in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ JACK R. DAUGHERTY Chairman of the Board and March 27, 1996
- ----------------------------------- Chief Executive Officer
Jack R. Daugherty (Principal Executive Officer)
/s/ DANIEL R. FEEHAN President, Chief Operating March 27, 1996
- ----------------------------------- Officer and Director
Daniel R. Feehan (Principal Financial and
Accounting Officer)
Director March , 1996
- -----------------------------------
Morton A. Cohn
/s/ A. R. DIKE Director March 27, 1996
- -----------------------------------
A. R. Dike
</TABLE>
17
<PAGE> 20
<TABLE>
<S> <C> <C>
/s/ JAMES H. GREER Director March 27, 1996
- -----------------------------------
James H. Greer
/s/ B. D. HUNTER Director March 27, 1996
- -----------------------------------
B. D. Hunter
/s/ CLIFTON H. MORRIS, JR. Director March 27, 1996
- -----------------------------------
Clifton H. Morris, Jr.
/s/ CARL P. MOTHERAL Director March 27, 1996
- -----------------------------------
Carl P. Motheral
/s/ SAMUEL W. RIZZO Director March 27, 1996
- -----------------------------------
Samuel W. Rizzo
Director March , 1996
- -----------------------------------
R. L. Waltrip
</TABLE>
18
<PAGE> 21
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Stockholders
Cash America International, Inc.
Our report on the consolidated financial statements of Cash America
International, Inc. and Subsidiaries, which includes an explanatory paragraph
related to a change in accounting principle, has been incorporated by reference
in this Form 10-K from page 26 of the 1995 Annual Report to Stockholders of
Cash America International, Inc. In connection with our audits of such
financial statements, we have also audited the related financial statement
schedule listed in Item 14 of this Form 10-K.
In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Fort Worth, Texas
January 26, 1996
19
<PAGE> 22
CASH AMERICA INTERNATIONAL, INC.
SCHEDULE II--ALLOWANCE FOR VALUATION OF INVENTORY
For the Three Years Ended December 31, 1995
<TABLE>
<CAPTION>
Additions
--------------------------------
Balance
at Charged Charged Balance
Beginning to to at End
Description of Period Expense Other Deductions(a) of Period
- ----------- --------- ------- ----- ------------- ---------
($ in thousands)
<S> <C> <C> <C> <C> <C>
Year Ended:
December 31, 1995 . . . . . . . $2,514 $1,394 $ -0- $1,536 $ 2,372
======= ====== ===== ====== =======
December 31, 1994 . . . . . . . $2,120 $2,371 $ -0- $1,977 $2,514
====== ====== ===== ====== ======
December 31, 1993 . . . . . . . $1,898 $2,398 $ -0- $2,176 $2,120
====== ====== ===== ====== ======
</TABLE>
- ---------------
(a) Deducted from allowance for write-off or other disposition of inventory.
20
<PAGE> 23
EXHIBIT INDEX
The following documents are filed as a part of this report. Those
exhibits previously filed and incorporated herein by reference are identified
below. Exhibits not required for this report have been omitted.
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
3.1 --Articles of Incorporation of Cash America Investments, Inc. filed
in the office of the Secretary of State of Texas on October 4,
1984.(a) (Exhibit 3.1)
3.2 --Articles of Amendment to the Articles of Incorporation of Cash
America Investments, Inc. filed in the office of the Secretary of
State of Texas on October 26, 1984.(a) (Exhibits 3.2)
3.3 --Articles of Amendment to the Articles of Incorporation of Cash
America Investments, Inc. filed in the office of the Secretary of
State of Texas on September 24, 1986.(a) (Exhibit 3.3)
3.4 --Articles of Amendment to the Articles of Incorporation of Cash
America Investments, Inc. filed in the office of the Secretary of
State of Texas on September 30, 1987.(b) (Exhibit 3.4)
3.5 --Articles of Amendment to the Articles of Incorporation of Cash
America Investments, Inc. filed in the office of the Secretary of
State of Texas on April 23, 1992 to change the Company's name to
"Cash America International, Inc." (c) (Exhibit 3.5)
3.6 --Articles of Amendment to the Articles of Incorporation of Cash
America International, Inc. filed in Office of the Secretary of State
of Texas on May 21, 1993. (d) (Exhibit 3.6)
3.7 --Bylaws of Cash America International, Inc.(e) (Exhibit 3.5)
3.8 --Amendment to Bylaws of Cash America International, Inc. dated
effective September 26, 1990.(f) (Exhibit 3.6)
3.9 --Amendment to Bylaws of Cash America International, Inc. dated
effective April 22, 1992.(c) (Exhibit 3.8)
4.1 --Form of Stock Certificate.(a) (Exhibit 4.1)
4.1a --Form of Stock Certificate.(f) (Exhibit 4.1a)
4.1b --Form of Stock Certificate.(c) (Exhibit 4.1b)
10.1 --1987 Stock Option Plan (with Stock Appreciation Rights) for Cash
America International, Inc.(g) (Exhibit 4.1)
10.2 --1989 Non-Employee Director Stock Option Plan.(h) (Exhibit 10.47)
10.3 --1989 Key Employee Stock Option Plan.(h) (Exhibit 10.48)
10.4 --1994 Long-Term Incentive Plan.(i) (Exhibit 10.5)
</TABLE>
21
<PAGE> 24
<TABLE>
<S> <C>
10.5 --Executive Employment Agreements between the Company and Messrs.
Daugherty and Feehan, each dated April 25, 1990.(j) (Exhibit 10.48)
10.6 --Consultation Agreements between the Company and Messrs. Cohn, Dike,
Greer, Hunter, Morris, Motheral, Rizzo and Waltrip, each dated April
25, 1990.(j) (Exhibit 10.49)
10.7 --Executive Employment Agreement between the Company and Gregory W.
Trees dated March 30, 1992.(i) (Exhibit 10.9)
10.8 --Note Agreement between the Company and Teachers Insurance and
Annuity Association of America dated as of May 6, 1993.(k) (Exhibit
10.1)
10.9 --First Supplement to Note Agreement between the Company and Teachers
Insurance and Annuity Association of America dated as of September
20, 1994.(i) (Exhibit 10.11)
10.10 --Second Supplement (May 12, 1995), Third Supplement (July 7, 1995),
and Fourth Supplement (November 10, 1995) to 1993 Note Agreement
between the Company and Teachers Insurance and Annuity Association of
America.(l) (Exhibit 10.1)
10.11 --Note Agreement between the Company and Teachers Insurance and
Annuity Association of America dated as of July 7, 1995.(m) (Exhibit
10.1)
10.12 --First Supplement (November 10, 1995) to 1995 Note Agreement between
the Company and Teachers Insurance and Annuity Association of
America.(l) (Exhibit 10.2)
10.13 --Senior Revolving Credit Facility Agreement among the Company and
NationsBank of Texas, N.A., Bank One, Texas, N.A., First Interstate
Bank of Texas, N.A., Daiwa Bank, Ltd., and Texas Commerce Bank,
National Association, dated June 29, 1993.(n) (Exhibit 10.1)
10.14 --First Amendment (June 7, 1994), Second Amendment (September 21,
1994), and Third Amendment (March 10, 1995) to Senior Revolving
Credit Facility Agreement.(i) (Exhibit 10.13)
10.15 --Fourth Amendment (June 7, 1995) and Fifth Amendment (November 13,
1995) to Senior Revolving Credit Facility Agreement.(l) (Exhibit
10.3)
10.16 --Sixth Amendment (March 5, 1996) to Senior Revolving Credit Facility
Agreement.
13 --1995 Annual Report to Stockholders of the Company and 1996 Proxy
Statement.
21 --Subsidiaries of Cash America International, Inc.
23 --Consent of Coopers & Lybrand L.L.P.
27 --Financial Data Schedule.
</TABLE>
- ---------------
22
<PAGE> 25
Certain Exhibits are incorporated by reference to the Exhibits shown in
parenthesis contained in the Company's following filings with the Securities
and Exchange Commission:
(a) Registration Statement Form S-1, File No. 33-10752.
(b) Amendment No. 1 to its Registration Statement on Form S-4, File No.
33-17275.
(c) Annual Report on Form 10-K for the year ended December 31, 1992.
(d) Annual Report on Form 10-K for the year ended December 31, 1993.
(e) Post-Effective Amendment No. 1 to its Registration Statement on Form S-4,
File No. 33-17275.
(f) Annual Report on Form 10-K for the year ended December 31, 1990.
(g) Registration Statement on Form S-8, File No. 33-29658.
(h) Annual Report on Form 10-K for the year ended December 31, 1989.
(i) Annual Report on Form 10-K for the year ended December 31, 1994.
(j) Post-Effective Amendment No. 4 to its Registration Statement on Form S-4,
File No. 33-17275.
(k) Quarterly Report on Form 10-Q for the quarter ended March 31, 1993.
(l) Quarterly Report on Form 10-Q for the quarter ended September 30,1995.
(m) Quarterly Report on Form 10-Q for the quarter ended June 30, 1995.
(n) Quarterly Report on Form 10-Q for the quarter ended June 30, 1993.
23
<PAGE> 1
EXHIBIT 10.16
SIXTH AMENDMENT TO
SENIOR REVOLVING CREDIT FACILITY AGREEMENT
THIS SIXTH AMENDMENT TO SENIOR REVOLVING CREDIT FACILITY AGREEMENT
(the "Sixth Amendment") is entered into as of the 5th day of March, 1996 (but
effective as of December 31, 1995), by and among NATIONSBANK OF TEXAS, N.A.
("NationsBank"), FIRST INTERSTATE BANK OF TEXAS, N.A. ("First Interstate"),
BANK ONE, TEXAS, N.A. ("Bank One"), THE SUMITOMO BANK, LIMITED, assignee of The
Daiwa Bank, Limited ("Sumitomo"), CITIBANK, N.A. ("Citibank"), and BANK OF
AMERICA TEXAS, N.A. ("Bank of America") (such banks, and their successors and
assigns, are collectively referred to herein as "Banks"), CASH AMERICA
INTERNATIONAL, INC., a Texas corporation ("Company"), and NationsBank as
Issuing Bank and as Administrative Agent for Banks to the extent and in the
manner provided for in the "Credit Agreement" (defined below and herein so
called), with the acknowledgement, approval and agreement of all "Guarantors"
and "Consolidated Subsidiaries" (as each of such terms is defined in the Credit
Agreement) existing as of the date hereof.
W I T N E S S E T H:
WHEREAS, certain of the Banks, Company, Issuing Bank and
Administrative Agent are parties to that certain Senior Revolving Credit
Facility Agreement dated as of June 29, 1993, as amended by that certain First
Amendment to Senior Revolving Credit Facility Agreement, dated as of June 7,
1994, by that certain Second Amendment to Senior Revolving Credit Facility
Agreement, dated as of September 21, 1994, by that certain Third Amendment to
Senior Revolving Credit Facility Agreement, dated as of March 10, 1995, by that
certain Fourth Amendment to Senior Credit Facility Agreement, dated as of June
7, 1995 and by that certain Fifth Amendment to Senior Revolving Credit Facility
Agreement, dated as of November 13, 1995 (said Credit Agreement, as amended,
the "Credit Agreement"); and
WHEREAS, Company has requested certain amendments to the Credit
Agreement as set forth hereinbelow; and
WHEREAS, Banks are willing to consent to such amendments, subject to
the terms and conditions of this Sixth Amendment; and
WHEREAS, the parties desire to amend the Credit Agreement by this
Sixth Amendment to reflect the agreements, modifications and amendments as set
forth hereinbelow;
NOW, THEREFORE, for and in consideration of the above premises and for
other good and valuable consideration, the parties hereto agree as follows:
1. Definitions. Capitalized terms used in this Sixth Amendment
which are defined in the Credit Agreement, as amended by this Sixth Amendment,
shall have the same meanings as
<PAGE> 2
assigned therein when used herein, unless otherwise provided herein or the
context hereof shall otherwise require.
2. Representations and Warranties. In order to induce Banks to
enter into this Sixth Amendment, Company represents and warrants to Banks that:
A. Company, Guarantors and Consolidated Subsidiaries
each have the corporate power and requisite authority to execute, deliver and
carry out the terms and provisions of this Sixth Amendment, the Credit
Agreement, as amended hereby, and any other Loan Papers to be executed by them,
and Company, Guarantors and Consolidated Subsidiaries have each taken all
corporate action necessary to authorize such matters;
B. Each Affiliate of Company which has executed or shall
execute any Loan Papers has the power and requisite authority to execute,
deliver and carry out the terms and provisions of such Loan Papers;
C. Neither the execution and delivery of this Sixth
Amendment nor any other documents executed by Company or any of Guarantors,
Consolidated Subsidiaries or other Affiliates of Company in connection
herewith, nor the consummation of any of the transactions herein or therein
contemplated, nor compliance with the terms and provisions hereof or thereof,
will contravene or conflict with any provision of law, statute or regulation to
which Company or any of its Subsidiaries or other Affiliates of Company or any
of Guarantors is subject or any judgment, license, order or permit applicable
to Company or any of its Subsidiaries or other Affiliates of Company or any of
Guarantors or any indenture, agreement or other instrument to which Company or
any of its Subsidiaries or other Affiliates of Company or Guarantors may be
subject; no consent, approval, authorization or order of any court,
Governmental Authority or third party is required in connection with the
execution and delivery of this Sixth Amendment or any of the other documents
executed and delivered in connection herewith or to consummate the transactions
contemplated herein or therein;
D. This Sixth Amendment, the Credit Agreement, as
amended hereby, and the other Loan Papers are the legal and binding obligations
of the parties executing such documents, enforceable in accordance with their
respective terms, except as limited by bankruptcy, insolvency or other laws of
general application relating to the enforcement of creditors' rights;
E. As of the date of this Sixth Amendment, no event has
occurred and is continuing which constitutes an Event of Default or a Potential
Event of Default; and
F. All of the representations and warranties of Company
contained in Article 6 of the Credit Agreement, as amended by this Sixth
Amendment, are true and correct as of the date hereof.
- 2 -
<PAGE> 3
3. Conditions Precedent. This Sixth Amendment and the
obligations of Banks hereunder are subject to the condition precedent that
Administrative Agent shall have received for each Bank the following, each in
form and substance satisfactory to Administrative Agent and such Bank:
A. Sixth Amendment. A fully executed original
counterpart of this Sixth Amendment, signed by duly authorized officers of
Company, all Guarantors and Consolidated Subsidiaries and Majority Banks;
B. Officers' Certificates. A Certificate signed by duly
authorized officers of Company and all Guarantors and Consolidated Subsidiaries
stating (in their representative capacities, but not in their individual
capacities) that (to the best knowledge and belief of such officers, after
reasonable investigation and review of matters pertinent to the subject matter
of such certificate): (i) all of the representations and warranties contained
in Article 6 of the Credit Agreement, as amended by this Sixth Amendment, and
the other Loan Papers are true and correct as of the date hereof and will be
true and correct upon execution and delivery of this Sixth Amendment and all
Loan Papers in connection herewith and after giving effect hereto and thereto;
(ii) no event has occurred and is continuing, or would result from the
execution, delivery and performance of the Credit Agreement, as amended by this
Sixth Amendment, and the other Loan Papers which constitutes an Event of
Default or a Potential Event of Default; and (iii) the Officer Certificates and
all attachments thereto (including copies of resolutions, articles of
incorporation, partnership agreements and by-laws) which have previously been
delivered to Administrative Agent and Banks by Company, Guarantors and
Consolidated Subsidiaries and their respective officers are true and correct,
have not been altered (except as specifically noted) and are in full force and
effect.
C. Other Items. Such other items as Administrative
Agent or Banks may reasonably request prior to the execution, delivery and
acceptance of this Sixth Amendment.
4. Amendments to Credit Agreement. Effective as of December 31,
1995, and subject only to the conditions precedent set forth in Section 3
hereof, the Credit Agreement shall be, and is hereby, amended as follows:
A. The definition of "Adjusted Consolidated Net Cash
Flow" set forth in Section 1.04 is hereby deleted.
B. Subsection (g) of Section 8.14 of the Credit
Agreement is hereby amended in its entirety to read as follows:
"(g) Consolidated Funded Debt to Consolidated Net
Cash Flow. Company shall not permit, as of the end of fiscal
quarters of Company indicated below, the ratio of (i)
Consolidated Funded Debt as of the end of such fiscal quarter,
to (ii) Consolidated Net Cash Flow for the most recent four
(4) fiscal
- 3 -
<PAGE> 4
quarters of Company to be greater than (A) 4.50 to 1.0 as of
the last fiscal quarter of each fiscal year-end of Company or
(B) 5.00 to 1.0 as of any other fiscal quarter of Company."
5. Certain Loan Papers. Each of the undersigned Guarantors
hereby consents to the terms of this Sixth Amendment and other Loan Papers and
to the execution hereof and thereof and further agrees and confirms that (i)
the Joint and Several Guaranty and the Subrogation and Contribution Agreement
continue in full force and effect, (ii) neither the execution of this Sixth
Amendment or any other Loan Papers in connection herewith or therewith, nor the
consummation of the transactions described herein or therein shall alter the
liability or obligations of any of the Guarantors under the terms of the Joint
and Several Guaranty and the Subrogation and Contribution Agreement and (iii)
each reference in the Joint and Several Guaranty and the Subrogation and
Contribution Agreement to the "Loan Agreement" or the "Senior Revolving Credit
Facility Agreement" shall be deemed to refer to the Credit Agreement, as
amended by this Sixth Amendment.
6. Further Assurances. Company, its Subsidiaries and all
Affiliates of Company which shall ever execute Loan Papers, including without
limitation Guarantors, shall each make, execute or endorse, and acknowledge and
deliver or file or cause same to be done, all such documents, notices or other
assurances, and take all such other action consistent with the terms and
provisions of the Credit Agreement, as amended hereby, as Majority Banks or
Administrative Agent may, from time to time, deem reasonably necessary or
proper in connection with this Sixth Amendment.
7. Scope of Amendments. Any and all other provisions of the
Credit Agreement and any other Loan Papers are hereby amended and modified
wherever necessary and even though not specifically addressed herein, so as to
conform to the amendments and modifications set forth in this Sixth Amendment.
8. Limitation on Agreements. The amendments set forth herein are
limited in scope as described herein and shall not be deemed (a) to be a
consent under or waiver of any other term or condition in the Credit Agreement
or any of the Loan Papers, or (b) to prejudice any right or rights which any of
Banks or Administrative Agent now has or may have in the future under, or in
connection with the Credit Agreement, as amended hereby, the Notes, the other
Loan Papers, or any of the documents referred to herein or therein.
9. Governing Law. This Sixth Amendment has been prepared, is
being executed and delivered and is intended to be performed in the State of
Texas, and the substantive laws of such state and the applicable federal laws
of the United States of America shall govern the validity, construction,
enforcement and interpretation of this Sixth Amendment.
- 4 -
<PAGE> 5
10. Multiple Counterparts. This Sixth Amendment may be executed
in any number of counterparts, all of which taken together shall constitute one
and the same agreement, and any of the parties hereto may execute this Sixth
Amendment by signing any such counterpart.
By signing below where indicated, the undersigned, CASH AMERICA, INC. OF SOUTH
CAROLINA, FLORIDA CASH AMERICA, INC., GEORGIA CASH AMERICA, INC., CASH AMERICA,
INC. OF LOUISIANA, CASH AMERICA, INC. OF NORTH CAROLINA, CASH AMERICA, INC. OF
TENNESSEE, CASH AMERICA, INC. OKLAHOMA, CASH AMERICA, INC. OF KENTUCKY, CASH
AMERICA PAWN, INC. OF OHIO, CASH AMERICA MANAGEMENT L.P., CASH AMERICA PAWN
L.P., CASH AMERICA HOLDING, INC., EXPRESS CASH INTERNATIONAL CORPORATION
(successor in interest to Express Cash Acquisition, Inc.), CASH AMERICA, INC.
OF ALABAMA, CASH AMERICA, INC. OF COLORADO, CASH AMERICA, INC. OF INDIANA, CASH
AMERICA, INC., CASH AMERICA OF MISSOURI, INC.and VINCENT'S JEWELERS AND LOAN,
INC., as Consolidated Subsidiaries and as Guarantors, and HARVEY & THOMPSON
LIMITED, CAII PANTBELANING AKTIEBOLAG and SVENSK PANTBELANING AB, as
Consolidated Subsidiaries, do each acknowledge and approve the Credit
Agreement, as amended by this Sixth Amendment, and the other Loan Papers, and
the terms thereof, and specifically agree to comply with all provisions therein
and herein which refer to or affect such Guarantors, the Joint and Several
Guaranty, the Subrogation and Contribution Agreement and any matter in
connection therewith.
THE CREDIT AGREEMENT, AS AMENDED BY THIS SIXTH AMENDMENT, AND THE OTHER LOAN
PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, Company, Banks, Guarantors, Consolidated
Subsidiaries, Administrative Agent and Issuing Bank have executed this Sixth
Amendment as of the day and year first above written, effective as of December
31, 1995.
COMPANY
CASH AMERICA INTERNATIONAL, INC.
By: /s/ THOMAS A. BESSANT, Jr.
-----------------------------------
Thomas A. Bessant, Jr.
Vice President-Finance and
Treasurer
- 6 -
<PAGE> 7
GUARANTORS
CASH AMERICA, INC. OF SOUTH CAROLINA
FLORIDA CASH AMERICA, INC.
GEORGIA CASH AMERICA, INC.
CASH AMERICA, INC. OF LOUISIANA
CASH AMERICA, INC. OF NORTH CAROLINA
CASH AMERICA, INC. OF TENNESSEE
CASH AMERICA, INC. OF OKLAHOMA
CASH AMERICA, INC. OF KENTUCKY
CASH AMERICA PAWN, INC. OF OHIO
CASH AMERICA MANAGEMENT L.P., a Delaware limited partnership, by its general
partner, Cash America Holding, Inc.
CASH AMERICA PAWN L.P., a Delaware limited partnership, by its general partner,
Cash America Holding, Inc.
CASH AMERICA HOLDING, INC.
EXPRESS CASH INTERNATIONAL CORPORATION, a Delaware corporation
CASH AMERICA, INC. OF ALABAMA
CASH AMERICA, INC. OF COLORADO
CASH AMERICA, INC. OF INDIANA
CASH AMERICA, INC.
CASH AMERICA OF MISSOURI, INC.
VINCENT'S JEWELERS AND LOAN, INC.
By: /s/ THOMAS A. BESSANT, JR.
-----------------------------------
Thomas A. Bessant, Jr. Vice President for All
- 7 -
<PAGE> 8
CONSOLIDATED SUBSIDIARIES
HARVEY & THOMPSON LIMITED
By: /s/ DANIEL R. FEEHAN
-----------------------------------
Daniel R. Feehan, Director
SVENSK PANTBELANING AB
By: /s/ DANIEL R. FEEHAN
-----------------------------------
Daniel R. Feehan, Director
CAII PANTBELANING AKTIEBOLAG
By: /s/ DANIEL R. FEEHAN
-----------------------------------
Daniel R. Feehan, Director
- 8 -
<PAGE> 9
BANKS
NATIONSBANK OF TEXAS, N.A.
By: /s/ TODD SHIPLEY
-----------------------------------
Todd Shipley
Senior Vice President
FIRST INTERSTATE BANK OF TEXAS,
N.A.
By: /s/ KIMBERLY K. WELCH
Kimberly K. Welch
Assistant V. President
BANK ONE, TEXAS, N.A.
By: /s/ BARRY KROMANN
Barry Kromann
Vice President
CITIBANK, N.A.
By: /s/ DAVID L. HARRIS
David L. Harris
Vice President
- 9 -
<PAGE> 10
THE SUMITOMO BANK, LIMITED
By: /s/ JAMES T. WANG
James T. Wang
Vice President and Manager
By: /s/ KIRK L. STITES
Kirk L. Stites
Vice President
BANK OF AMERICA TEXAS, N.A.
By: /s/ DONALD P. HELLMAN
Donald P. Hellman
Vice President
- 10 -
<PAGE> 11
ADMINISTRATIVE AGENT AND ISSUING BANK
NATIONSBANK OF TEXAS, N.A.
By: /s/ TODD SHIPLEY
-----------------------------------
Todd Shipley
Senior Vice President
- 11 -
<PAGE> 1
EXHIBIT 13
SEVEN YEAR SUMMARY OF SELECTED FINANCIAL DATA
(Dollars in thousands, except per share)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991(a) 1990 1989
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS - for the year
Revenues $253,579 $262,105 $224,700 $185,410 $137,681 $115,644 $87,008
Operating income 31,493 31,370 25,262 21,694 17,288 15,126 11,063
- -------------------------------------------------------------------------------------------------------------------------------
Income before taxes, extraordinary
item, and cumulative effect of
change in accounting principle 20,616 24,958 21,766 20,348 17,464 13,691 11,101
- -------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item
and cumulative effect of change
in accounting principle 12,849 15,498 13,839 13,006 10,513 8,662 7,002
Extraordinary item - - - - 393 - -
Cumulative effect on prior years
of change in accounting principle (19,772) - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
Net (loss) income $ (6,923) $ 15,498 $ 13,839 $ 13,006 $ 10,906 $ 8,662 $ 7,002
===============================================================================================================================
Fully diluted (loss) earnings per share -
Income before cumulative
effect of change in
accounting principle $.45 $.53 $.48 $.45 $.44 $.36 $.29
Cumulative effect of change
in accounting principle (.69) - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
Net (loss) income $(.24) $.53 $.48 $.45 $.44 $.36 $.29
- -------------------------------------------------------------------------------------------------------------------------------
Dividends per share $.05 $.05 $.05 $.04 3/4 $.04 $.02 2/3 $.02
Weighted average shares
outstanding - Fully
diluted (in thousands) 28,863 29,269 29,070 28,788 24,640 24,216 24,110
- -------------------------------------------------------------------------------------------------------------------------------
Pro forma amounts(b):
Net income $ 12,849 $ 11,599 $ 11,327 $ 10,432 $ 9,312 $ 5,491 $ 3,787
Fully diluted earnings per share $.45 $.40 $.39 $.36 $.38 $.23 $.16
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1995 1994(b) 1993(b) 1992(b) 1991(b) 1990(b) 1989(b)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL POSITION - at December 31
Loans $ 87,782 $ 78,095 $ 49,089 $ 46,926 $ 28,990 $ 23,305 $20,043
Inventory 56,647 58,079 43,865 40,110 23,441 19,759 15,044
Working capital 162,604 148,347 101,854 96,541 59,926 50,402 40,312
Total assets 315,178 304,485 229,220 203,088 126,589 107,119 91,138
Long-term debt 123,462 119,796 64,000 50,000 30,500 20,050 9,575
Stockholders' equity 176,023 163,662 150,849 140,585 89,312 80,744 75,548
Current ratio 11.4x 8.1x 8.2x 8.7x 9.8x 9.0x 7.7x
Debt to equity 70.1% 73.2% 42.4% 35.6% 34.1% 24.8% 12.7%
- --------------------------------------------------------------------------------------------------------------------------
LOCATIONS - at year-end 373 340 280 249 178 151 123
==========================================================================================================================
</TABLE>
(a) Income before extraordinary item and cumulative effect of change in
accounting principle and net income include $469,000 of securities gains,
net of taxes.
(b) Unaudited pro forma amounts assuming retroactive application of change in
accounting principle.
12
<PAGE> 2
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CHANGE IN ACCOUNTING PRINCIPLE
Effective January 1, 1995, the Company changed its method of income
recognition on pawn loans. Under the new method, the Company accrues pawn
service charges on all loans that the Company deems collection is probable
based on historical loan redemption statistics. For loans not repaid, the
carrying value of the forfeited collateral ("inventory") is stated at the lower
of cost (cash amount loaned) or market. Pawn service charges were previously
accrued on all loans. For loans not repaid, the carrying value of the
forfeited collateral ("inventory") was stated at the lower of cost (cash amount
loaned plus accrued pawn service charges) or market. The change in accounting
principle resulted in a charge for the cumulative effect of the change of $19.8
million after taxes in the first quarter of 1995.
During that period of time between the inception of a pawn loan and
the later sale of the forfeited collateral, the change in accounting principle
will not affect the amount of net revenues or earnings reported by the Company;
it will only affect the timing of net revenue and earnings recognition.
Generally, this change will result in lower pawn service charges and cost of
sales. The new method will more closely align net revenue and earnings
recognition with the actual collection of cash from loan payments and the sale
of forfeited collateral.
Recent changes in the business environment, have led the Company to
focus more clearly on the importance of generating higher cash-on-cash returns
in its business activities. The Company has experienced a significant increase
in competition from other pawnshops and similar lending companies over the last
several years. With competitive influences affecting areas such as
loan-to-value ratios and discounting of sales prices, which resulted in lower
margins, the Company's previous accounting method increasingly hampered its
ability to focus on the cash return on capital employed. The Company is taking
steps to address this problem and to enhance its position in the marketplace
through new incentive compensation programs, revised store configuration, and
training programs with an emphasis on rewarding the maximization of cash
returns on capital employed. The new method provides a better means of
measuring the Company's accomplishment of its strategic objectives. The
Company believes shareholder value can be enhanced by generating higher returns
on the capital employed by the Company.
For purposes of comparison and discussion of the financial results,
the following analysis compares fiscal 1995 to prior years based on an
unaudited pro forma retroactive application using the changed accounting
principle on those years.
IMPACT OF EXPANDING OPERATIONS
The Company has expanded its operations over the three years ended
December 31, 1995 by acquiring 47 stores and by opening an additional 93 units
for a total of 140 gross store additions. Sixteen stores were closed or
combined into existing locations to end the three-year period with 373
operating pawnshops, or a net addition of 124 stores compared to the December
31, 1992 total of 249. At December 31, 1995, the Company operated 327
pawnshops in 14 states of the United States, 36 jewelry-only and loan-only
pawnshops in the United Kingdom operating under the name Harvey & Thompson,
Ltd., and 10 loan-only pawnshops which are primarily jewelry-only in Sweden
under the name Svensk Pantbelaning. On September 22, 1994 a subsidiary of Cash
America acquired the largest pawnbroking chain in Sweden, Svensk Pantbelaning.
On June 30, 1993 the Company acquired 18 pawnshops in Texas from Express Cash
International Corporation for the largest domestic acquisition in the period.
Net revenues (total revenue less cost of sales) increased 17% in 1995
and 20% in 1994, with stores in operation for at least one year increasing 5%
in 1995 and 8% in 1994. The remaining increase was attributed to contributions
from the increase in the average number of stores in operation of 17% in 1995
and 18% in 1994.
PAWN SERVICE CHARGES
Pawn service charge revenues, which are impacted by loan balances and
loan yields, increased 20% in 1995 and 27% in 1994. A portion of the increase
is from same store changes in average pawn loans outstanding, which increased
6% in 1995 and increased by 12% in 1994, combined with the increases in the
average number of stores in operation as noted above. Svensk Pantbelaning's
operations for a full year in 1995 and four months in 1994 accounted for 45%
and 19% of the increase in pawn service charges for 1995 and 1994,
respectively.
The yield on loans outstanding decreased in fiscal 1995 from
approximately 106% in 1993 and 1994 to 96% in 1995 because of the inclusion of
a full year of operations of Svensk Pantbelaning which operates at a much lower
yield than the Company's other operating segments. The consolidated 96% annual
loan yield represents a weighted average of the distinctive yields which the
Company realized in the three different countries in which it operates. In its
domestic operations, Cash America has realized annual yields, over the
three-year period of 123% in 1995, 122% in 1994, and 116% in 1993.
Internationally, loans at Harvey & Thompson in the United Kingdom yielded 69%
during 1995 compared to loan yields in 1994 and 1993 of about 70%, while Svensk
Pantbelaning in Sweden yielded approximately 45% in 1995 and 50% per annum
during the four-month period after its acquisition in 1994, producing a blended
international yield of 56% in 1995 and 66% in 1994.
The increases in average loan balance per average location in
operation and in the average pawn loan at the end of the year are both a result
of the acquisition of the Swedish pawnbroking locations, which have higher
averages per location and amounts per loan.
SALES AND GROSS PROFIT
Retail sales have increased during the periods by 12% in 1995 and 12%
in 1994. Sales increases during the periods were impacted by the increase in
average number of locations as noted above. Same store sales were flat in both
1995 and 1994. Gross profit margins increased in 1995 to 41.8% compared to
40.9% in 1994 and 40% in 1993. The increase in gross profit margin in 1995 and
1994 is attributed to a higher portion of sales of forfeited merchandise which,
under the new accounting principle, carries a higher gross profit margin than
inventory which is purchased from customers and vendors.
EXPENSES
Operating and administrative expenses as a percentage of net revenues
decreased in 1995 compared to 1994 and 1993 primarily as a result of greater
efficiencies of scale of operating multiple units. On a consolidated basis,
operating and administrative expenses as a percent of net revenues declined
from 71% in 1994 and 1993 to 69% in 1995.
Domestic operating and administrative expenses as a percent of
domestic net revenues was 72% in 1995 compared to 74% in 1994 and 73% in 1993.
An emphasis on cost containment and a moderation in the number of new store
openings in the Company's domestic operations contributed to the reduction in
expenses as a percent of domestic net revenue. As a percent of foreign net
revenue, operating and administrative costs related to foreign operations were
49% in 1995, 41% in 1994 and 47% in 1993. Operating and administrative
13
<PAGE> 3
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
expenses associated with foreign operations were higher in 1995 compared to
prior periods due to a significant increase in new store start-ups by Harvey &
Thompson, which opened six new locations during the year compared to only one
new store in each of the last two years, the inclusion of a full year of
Swedish operations and the relocation of the Company's European corporate
offices to a larger facility. The lower cost structure, as a percent of net
revenue, of foreign operations is due to the nature of the loans-only,
primarily jewelry operation, in which low loan forfeiture rates and smaller
retail operations allow for sharply lower personnel, occupancy and other costs
than in domestic stores.
Depreciation and amortization as a percentage of net revenues
increased during both 1994 and 1995 as a result of two factors. Depreciation
and amortization related to leasehold improvements, equipment, start-up
expenses, and intangible assets on the 124 net store additions during the
periods accounted for much of the increase. Additionally, depreciation expense
increased as a result of the Company's installation during the periods of a
point-of-sale computer system and related supporting systems, which was
substantially completed in late 1994.
Interest expense increased sharply during the periods due to increased
interest rates and higher levels of average debt outstanding. Continuing the
trend of the second half of 1994 through the first three quarters of 1995,
short-term rates on the Company's borrowings under its bank line of credit
increased due to the increasing interest rate market in the United States.
Also contributing to the increased interest expense was the acquisition of
Svensk Pantbelaning in September 1994, which was financed almost entirely with
borrowings of Swedish Kronor under a term loan which bears interest at rates in
effect for Swedish currency which are higher than U.S. short-term interest
rates. The Company's consolidated interest rate also increased over the
periods due to the placement of $30 million in long-term fixed rate notes in
May of 1993, and $20 million of long-term fixed rate notes issued in July of
1995, which replaced short-term floating rate debt at lower rates.
OTHER INCOME/(EXPENSES)
Other income/(expense) represents the net effect of a variety of items
including operating losses from the Company's equity interest in affiliates,
rental income, gains and losses on disposition of certain non-operating assets,
and other miscellaneous items. Other expense increased in 1995 by $300,000 due
to a $500,000 increase in losses on the Company's equity interest in affiliates
and a $200,000 decrease in losses on the sale of non-operating assets.
INCOME TAXES
The effective income tax rate decreased in 1995 after an increase in
1994 compared to 1993 because of the use of certain foreign tax credits
available to the Company which were utilized in 1995. The effective income tax
rate in 1995 decreased to 37.7% from 37.9% in 1994 which was higher than the
1993 level of 36.4%. On January 1, 1993 the Company changed its method of
accounting for income taxes from the deferred method to the liability method
required by SFAS 109, resulting in the reduction of income taxes by $265,000.
Without this change the resulting rate would have been 37.6% in 1993. The
increase in the effective tax rate from 1993 to 1994 was due to the increased
share of domestic earnings originating from states which have state income
taxes.
IMPACT OF FOREIGN OPERATIONS ON FUTURE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The Company is subject to the risk of unexpected changes in foreign
currency exchange rates by virtue of its operations in the United Kingdom and
Sweden. The Company's foreign assets, liabilities and earnings are denominated
in either British pounds sterling or Swedish Kronor, but are converted to U.S.
dollars in accordance with generally accepted accounting principles for
consolidation into the Company's financial statements. Any translation losses
or gains resulting from converting balance sheet accounts are recorded in the
equity section of the balance sheet. At December 31, 1995 the Company had
recorded a cumulative reduction to stockholders' equity of $3.8 million as a
result of fluctuations in the foreign currency exchange rates.
For income statement purposes, British pounds sterling during 1995,
1994, and 1993 and Swedish Kronor ("SEK") in 1995 and 1994 were translated to
U.S. dollars using the monthly average foreign exchange rate in effect for each
of the respective years. Net income from foreign operations during 1995, 1994
and 1993 translated to $4.4 million, $4.1 million and $2.6 million,
respectively, for the three years. Future earnings and comparisons with prior
periods reported by the Company may fluctuate depending on applicable average
exchange rates in effect during the periods.
LIQUIDITY AND CAPITAL RESOURCES
For the year 1995, the Company invested $1.6 million for the
acquisition of 4 pawnshops and $15.7 million on real estate, leasehold
improvements, and equipment for start-up locations, remodeling selected
pawnshops, additions to its computer systems, other fixed asset purchases, and
other investments. In addition, the Company invested $7.4 million for the net
increase in the loan portfolio in 1995.
The funding of these capital investments was supported primarily by
internally generated operating cash flow of $22.9 million and was supplemented
by the Company's $125 million revolving line of credit. The $125 million
revolving line of credit is with a syndicate of six banks and had a balance of
$44.9 million outstanding at December 31, 1995 compared to $43.7 million
(adjusted for the issuance of the Notes due 2007 discussed below) at December
31, 1994. Harvey & Thompson has a L.5 million committed line of credit with a
U.K. based commercial bank. As of December 31, 1995, L.500 thousand
(approximately US $775 thousand) was outstanding under the Harvey & Thompson
line of credit. Svensk Pantbelaning entered into a SEK 10 million line of
credit from a Swedish commercial bank in 1995. There was no usage under the
SEK 10 million line of credit in 1995.
Effective July 7, 1995, the Company issued $20 million of Senior
Unsecured Notes, maturing July 2007. Proceeds were used to pay down the
Company's domestic bank line of credit. The unsecured notes bear interest at
8.14% per year payable semi-annually and are scheduled to be amortized in four
equal principal installments beginning July 7, 2003.
Effective May 12, 1993, the Company issued $30 million of Senior
Unsecured Notes, maturing May 2003. Proceeds were used to pay down the
Company's domestic bank line of credit. The unsecured notes bear interest at
8.33% per year payable semi-annually and are scheduled to be amortized in seven
equal principal installments beginning May 1, 1997. Effective June 2, 1993,
the Company entered into interest rate exchange contracts on $20 million of the
debt. The effective interest rate under the notes for the twelve months ended
December 31, 1995 was 9.26%. For the six-month period commencing December 2,
1995 the effective interest rate on the notes is 8.93% on an annualized basis.
The interest rate exchange contracts end on June 2, 1996.
Management believes that borrowings available under its $125 million,
L.5 million and SEK 10 million revolving bank line of credit facilities, cash
generated from operations and current working capital of $163 million will be
sufficient to meet the Company's anticipated future capital requirements.
14
<PAGE> 4
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands - December 31)
SUMMARY
The Company has expanded significantly over the past three years by
increasing from 249 operating locations at December 31, 1992, to 373 operating
locations at December 31, 1995. The growth in store locations has occurred as a
result of acquisitions and the start-up of new Company stores. Selected
consolidated data for the three years ended December 31, 1995, which reflect
the unaudited pro forma effects in 1994 and 1993 of applying the new accounting
principle as if the change had occurred on December 31, 1992, are presented
below.
<TABLE>
<CAPTION>
As Reported Unaudited Pro Forma
----------- ------------------------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET REVENUES
Pawn service charges $ 78,857 51.9% $ 65,703 50.7% $ 51,901 48.1%
- --------------------------------------------------------------------------------------------------------------------------------
Gross profit from sales
Sales 174,722 156,247 139,950
Cost of sales 101,707 92,288 84,020
- --------------------------------------------------------------------------------------------------------------------------------
Gross profit 73,015 48.1% 63,959 49.3% 55,930 51.9%
- --------------------------------------------------------------------------------------------------------------------------------
Net revenues $151,872 100.0% $129,662 100.0% $107,831 100.0%
================================================================================================================================
</TABLE>
<TABLE>
<S> <C> <C> <C>
OTHER DATA
Yield on loans outstanding 96% 106% 105%
Average loan balance per average
location in operation $227 $202 $187
Average pawn loan at year-end
(whole dollars) $093 $089 $075
Gross profit as a percentage of sales 41.8% 40.9% 40.0%
Average annual inventory turnover 1.7x 1.8x 1.9x
Average inventory per average location
in operation $160 $164 $172
Expenses as a percentage of
net revenues:
Operations and administration 69.2% 71.0% 71.0%
Depreciation and amortization 10.1 9.5 9.2
Interest, net 6.9 4.8 3.3
Income from operations before
depreciation and amortization
as a percentage of total revenues 18.5% 16.9% 16.3%
Income before income taxes as a
percentage of total revenues 8.1% 8.5% 9.3%
Locations in operation:
Beginning of year 340 280 249
Acquired 4 21 22
Start-ups 32 42 19
Combined or closed (3) (3) (10)
- --------------------------------------------------------------------------------------------------------------------------------
End of year 373 340 280
- --------------------------------------------------------------------------------------------------------------------------------
Average number of locations
in operation 363 309 262
================================================================================================================================
</TABLE>
15
<PAGE> 5
CONSOLIDATED BALANCE SHEETS - December 31
(Dollars in thousands)
<TABLE>
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,435 $ 4,827
Service charges receivable 11,829 18,626
Loans 87,782 78,095
Inventory, net 56,647 80,894
Prepaid expenses and other 5,894 6,319
Deferred tax asset 12,710 475
- -------------------------------------------------------------------------------------------------------------------------
Total current assets 178,297 189,236
Property and equipment, net 64,987 63,241
Intangible assets, net 63,421 64,915
Other assets 8,473 6,865
- -------------------------------------------------------------------------------------------------------------------------
Total assets $315,178 $324,257
=========================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 9,584 $ 13,790
Customer layaway deposits 3,524 3,576
Income taxes currently payable 2,585 3,661
- -------------------------------------------------------------------------------------------------------------------------
Total current liabilities 15,693 21,027
- -------------------------------------------------------------------------------------------------------------------------
Long-term debt 123,462 119,796
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities 139,155 140,823
- -------------------------------------------------------------------------------------------------------------------------
Commitments and contingencies (Note 12)
Stockholders' equity:
Common stock, $.10 par value per share, 80,000,000 shares
authorized; shares issued, 30,235,164 in 1995 and 1994 3,024 3,024
Paid in surplus 121,840 121,481
Retained earnings 61,727 70,081
Foreign currency translation adjustment (3,834) (3,692)
- -------------------------------------------------------------------------------------------------------------------------
182,757 190,894
Less - shares held in treasury, at cost (1,495,285 in 1995
and 1,666,099 in 1994) (6,734) (7,460)
- -------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 176,023 183,434
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $315,178 $324,257
=========================================================================================================================
</TABLE>
See notes to consolidated financial statements.
16
<PAGE> 6
CONSOLIDATED STATEMENTS OF INCOME - Years Ended December 31
(Dollars in thousands, except per share)
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PAWN SERVICE CHARGES $ 78,857 $105,858 $ 84,750
==========================================================================================================================
GROSS PROFIT FROM SALES
Sales 174,722 156,247 139,950
Cost of sales 101,707 126,254 112,882
- --------------------------------------------------------------------------------------------------------------------------
Gross profit 73,015 29,993 27,068
- --------------------------------------------------------------------------------------------------------------------------
NET REVENUES 151,872 135,851 111,818
==========================================================================================================================
OPERATING EXPENSES
Operations 88,147 78,204 64,178
Administration 16,937 13,918 12,416
Amortization 3,607 3,545 3,278
Depreciation 11,688 8,814 6,684
- --------------------------------------------------------------------------------------------------------------------------
Total operating expenses 120,379 104,481 86,556
- --------------------------------------------------------------------------------------------------------------------------
Income from operations 31,493 31,370 25,262
Interest expense, net (10,437) (6,265) (3,608)
Other income/(expense) (440) (147) 112
- --------------------------------------------------------------------------------------------------------------------------
Income before income taxes 20,616 24,958 21,766
Provision for income taxes 7,767 9,460 7,927
- --------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of change in accounting principle 12,849 15,498 13,839
Cumulative effect on prior years of change in accounting principle (19,772) - -
- --------------------------------------------------------------------------------------------------------------------------
NET (LOSS) INCOME $ (6,923) $ 15,498 $ 13,839
==========================================================================================================================
(Loss) earnings per share:
Primary -
Income before cumulative effect of change in accounting principle $.45 $.54 $.48
Cumulative effect of change in accounting principle (.69) - -
- --------------------------------------------------------------------------------------------------------------------------
Net (loss) income $(.24) $.54 $.48
- --------------------------------------------------------------------------------------------------------------------------
Fully diluted -
Income before cumulative effect of change in accounting principle $.45 $.53 $.48
Cumulative effect of change in accounting principle (.69) - -
- --------------------------------------------------------------------------------------------------------------------------
Net (loss) income $(.24) $.53 $.48
- --------------------------------------------------------------------------------------------------------------------------
Weighted average shares (in thousands):
Primary 28,863 28,930 28,938
Fully diluted 28,863 29,269 29,070
==========================================================================================================================
Unaudited pro forma amounts assuming retroactive application of
change in accounting principle:
Net income $ 12,849 $ 11,599 $ 11,327
Primary earnings per share $.45 $.40 $.39
Fully diluted earnings per share $.45 $.40 $.39
==========================================================================================================================
</TABLE>
See notes to consolidated financial statements.
17
<PAGE> 7
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - Years Ended December 31
(Dollars in thousands, except per share)
<TABLE>
<CAPTION>
Foreign
Common Stock Treasury Stock Currency
----------------- Paid in Retained ------------------ Translation
Shares Amount Surplus Earnings Shares Amount Adjustment Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1992 30,235,164 $3,024 $120,822 $43,578 2,037,724 $(8,798) $(4,680) $153,946
Treasury shares reissued - - (128) - (205,587) 845 - 717
Tax benefit from exercise
of option shares - - 261 - - - - 261
Dividends declared -
$.05 per share - - - (1,413) - - - (1,413)
Foreign currency
translation adjustment - - - - - - (628) (628)
Net income - - - 13,839 - - - 13,839
- --------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 1993 30,235,164 3,024 120,955 56,004 1,832,137 (7,953) (5,308) 166,722
Treasury shares acquired - - - - 68,500 (552) - (552)
Treasury shares reissued - - 441 - (234,538) 1,045 - 1,486
Tax benefit from exercise
of option shares - - 85 - - - - 85
Dividends declared -
$.05 per share - - - (1,421) - - - (1,421)
Foreign currency
translation adjustment - - - - - - 1,616 1,616
Net income - - - 15,498 - - - 15,498
- --------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 1994 30,235,164 3,024 121,481 70,081 1,666,099 (7,460) (3,692) 183,434
Treasury shares reissued - - 297 - (170,814) 726 - 1,023
Tax benefit from exercise
of option shares - - 62 - - - - 62
Dividends declared -
$.05 per share - - - (1,431) - - - (1,431)
Foreign currency
translation adjustment - - - - - - (142) (142)
Net loss - - - (6,923) - - - (6,923)
- --------------------------------------------------------------------------------------------------------------------------
BALANCE AT
DECEMBER 31, 1995 30,235,164 $3,024 $121,840 $61,727 1,495,285 $(6,734) $(3,834) $176,023
==========================================================================================================================
</TABLE>
See notes to consolidated financial statements.
18
<PAGE> 8
CONSOLIDATED STATEMENTS OF CASH FLOWS - Years Ended December 31
(Dollars in thousands)
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Sales $ 174,722 $ 156,247 $ 139,950
Pawn service charges 77,343 64,525 51,904
Other income (expense) (440) (147) 267
Additions to inventory, including loans forfeited (100,024) (104,611) (85,981)
Operations and administration expense (109,934) (91,108) (80,450)
Interest paid (9,766) (6,408) (3,538)
Layaway deposits, net (54) 759 (13)
Income taxes paid (8,910) (9,197) (7,021)
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 22,937 10,060 15,118
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Loans forfeited and transferred to inventory 85,508 73,143 64,025
Loans repaid or renewed 226,856 201,929 160,697
Loans made, including loans renewed (319,733) (285,818) (224,157)
- ------------------------------------------------------------------------------------------------------------------------
Net (increase) decrease in loans (7,369) (10,746) 565
- ------------------------------------------------------------------------------------------------------------------------
Acquisitions (1,612) (11,693) (9,347)
Investments in and advances to affiliates (2,200) (2,600) -
Purchases of property and equipment (13,467) (22,784) (16,704)
Proceeds from sales of property and equipment 124 1,330 186
- ------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (24,524) (46,493) (25,300)
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of common stock 581 778 717
Net (payments) borrowings under bank lines of credit (19,347) 55,533 (16,000)
Proceeds from issuance of long-term debt 20,000 - 30,000
Payments on notes payable and other obligations - (15,471) (5,076)
Treasury shares acquired - (552) -
Dividends paid (1,431) (1,421) (1,413)
- ------------------------------------------------------------------------------------------------------------------------
Net cash (used) provided by financing activities (197) 38,867 8,228
- ------------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 392 148 (34)
- ------------------------------------------------------------------------------------------------------------------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,392) 2,582 (1,988)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,827 2,245 4,233
- ------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 3,435 $ 4,827 $ 2,245
- ------------------------------------------------------------------------------------------------------------------------
RECONCILIATION OF NET (LOSS) INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net (loss) income $ (6,923) $ 15,498 $ 13,839
Adjustments to reconcile net (loss) income to net cash provided
by operating activities:
Cumulative effect of change in accounting principle 19,772 - (265)
Amortization 3,607 3,545 3,278
Depreciation 11,688 8,814 6,684
(Increase) decrease in service charges receivable (1,514) (3,439) 91
Decrease (increase) in inventory 1,683 (16,251) (6,036)
Decrease (increase) in prepaid expenses and other 120 (2,286) (1,595)
(Decrease) increase in accounts payable and accrued expenses (4,299) 3,157 (2,036)
(Decrease) increase in layaway deposits, net (54) 759 (13)
(Decrease) increase in income taxes currently payable (1,014) 1,235 791
(Decrease) increase in deferred income taxes (129) (972) 380
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 22,937 $ 10,060 $ 15,118
========================================================================================================================
</TABLE>
See notes to consolidated financial statements.
19
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the
accounts of Cash America International, Inc. and its wholly owned subsidiaries
("Company") and the Company's 49% investments in and share of net earnings or
losses of its unconsolidated affiliates treated as equity investments. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The Company is engaged in acquiring, establishing and operating
pawnshops in the United States, the United Kingdom and Sweden.
FOREIGN CURRENCY TRANSLATION
The assets and liabilities of international subsidiaries are
translated into United States Dollars at the rates of exchange in effect at the
balance sheet date, and resulting adjustments are accumulated as a separate
component of stockholders' equity. Revenues and expenses are translated at the
monthly average exchange rates occurring during the year.
CASH AND CASH EQUIVALENTS
The Company considers cash on hand in stores, deposits in banks, and
short-term marketable securities with original maturities of 90 days or less as
cash and cash equivalents.
LOANS AND INCOME RECOGNITION
Pawn loans ("loans") are generally made on the pledge of tangible
personal property. Effective January 1, 1995, the Company changed its method of
income recognition on pawn loans. Under the new method, the Company accrues
pawn service charges on all loans that the Company deems collection is probable
based on historical loan redemption statistics. For loans not repaid, the
carrying value of the forfeited collateral ("inventory") is stated at the lower
of cost (cash amount loaned) or market. Prior to 1995, pawn service charges
were accrued on all loans. For loans not repaid, the carrying value of the
forfeited collateral ("inventory") was stated at the lower of cost (cash amount
loaned plus accrued pawn service charges) or market. See Note 2 for further
discussion of the accounting change.
INVENTORY, SALES AND COST OF SALES
Inventory includes merchandise acquired from forfeited loans,
merchandise purchased directly from the public and new merchandise purchased
from vendors.
Inventory is stated at the lower of cost (specific identification) or
market. The Company provides an allowance for shrinkage and valuation based on
management's evaluation of the merchandise. The allowance deducted from the
carrying value of inventory amounted to $2,372,000 and $2,514,000, at December
31, 1995 and 1994, respectively.
Income is recognized and inventory is reduced at the time merchandise
is sold. Interim customer payments for layaway sales are recorded as deferred
revenue and subsequently recognized as income during the period in which final
payment is received. Cost of sales and the inventory reduction are computed on
a specific identification basis.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation expense is
generally provided on a straight-line basis, using estimated useful lives of 15
to 30 years for buildings and 3 to 10 years for equipment and leasehold
improvements.
The cost of property retired or sold and the related accumulated
depreciation is removed from the accounts, and any resulting gain or loss is
recognized in the income statement.
INTANGIBLE ASSETS
Intangible assets, consisting primarily of excess purchase price over
net assets acquired, are being amortized on a straight-line basis over their
expected periods of benefit, generally 25 to 40 years. Management assesses the
recoverability of intangible assets by comparing the intangible assets to the
undiscounted cash flows expected to be generated by the acquired stores during
the anticipated period of benefit.
Pre-opening costs associated with the establishment of new stores are
capitalized and expensed over three years. Generally, revenues in new pawnshops
attain a mature store level after three years. Pre-opening costs remaining to
be amortized totaled $587,000 and $655,000 at December 31, 1995 and 1994,
respectively.
Accumulated amortization of intangible assets was $15,431,000 and
$13,463,000 at December 31, 1995 and 1994, respectively.
INCOME TAXES
The Company files a consolidated federal income tax return for its
domestic operations. The provision for income taxes is based on pretax income
as reported for financial statement purposes. Deferred income taxes result from
differences in the bases of certain assets and liabilities for income tax and
financial reporting purposes.
20
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Deferred federal income taxes are not provided on the undistributed
earnings of foreign subsidiaries to the extent the Company intends to
permanently reinvest such earnings in the United Kingdom and Sweden.
Effective January 1, 1993, the Company changed its method of
accounting for income taxes from the deferred method to the liability method
required by SFAS 109. The cumulative effect of adopting SFAS 109 was to
increase net income by $265,000, or $.01 per share, through a reduction in the
provision for income taxes during the first quarter of 1993.
FAIR VALUES OF FINANCIAL INSTRUMENTS
Pawn loans are outstanding for a relatively short period, generally 90
days or less for domestic loans and 180 days or less for foreign loans,
depending on local regulations. The rate of pawn service charge bears no
relationship to interest rate market movements. Generally, pawn loans may not
be resold to anyone but a licensed pawnbroker. For these reasons, management
believes that the fair value of pawn loans approximates their carrying value.
The Company's bank credit facilities bear interest at rates which are
adjusted frequently based on market rate changes. Accordingly, management
believes that the fair value of that debt approximates its carrying value. The
fair value of the 8.33% and 8.14% Senior Notes payable (See Note 7) was
estimated based on quoted market values for debt issues with similar
characteristics or rates currently available for debt with similar terms.
Management believes that the fair value of the Senior Notes approximates the
carrying value.
The Company's interest rate swap agreements are repriced every three
and six months. Due to their short-term nature, the fair value of interest rate
agreements approximate their carrying value.
HEDGING AND DERIVATIVES ACTIVITY
The Company uses derivative financial instruments for the purpose of
hedging currency, on a short-term basis, and interest rate exposures which
exist as part of ongoing business operations. In the event the Company
transfers funds between foreign currencies, it may enter into a short-term
currency swap at the time of the transaction to eliminate the risk of foreign
currency fluctuations. The Company may utilize interest rate swap and interest
rate cap agreements to alter interest rate exposure. Amounts expected to be
paid or received on interest rate swap and interest rate cap agreements are
recognized as adjustments to interest expense. The Company may, from time to
time, enter into forward sale contracts with an industry buyer of fine gold
which is produced from the Company's liquidation of forfeited gold merchandise.
As a policy, the Company does not engage in speculative or leveraged
transactions, nor does the Company hold or issue financial instruments for
trading purposes.
SHARES, PER SHARE DATA AND EARNINGS (LOSS) PER SHARE
Earnings (loss) per share calculations assume exercise of all
outstanding stock options with appropriate adjustment to weighted average
shares outstanding using the treasury stock method of calculation.
OTHER RECENT PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board ("FASB")
issued SFAS 121, "Accounting for the Impairment of Long Lived Assets and for
Long Lived Assets to Be Disposed Of." In October 1995, the FASB issued SFAS
123, "Accounting for Stock-Based Compensation." SFAS 121 and 123 are effective
for fiscal years beginning after December 15, 1995. Adoption of SFAS 121 and
123 in 1996 is not expected to have a material effect on the Company's
consolidated financial position or results of operation.
NOTE 2 - CHANGE IN ACCOUNTING PRINCIPLE
Effective January 1, 1995, the Company changed its method of income
recognition on pawn loans. The Company accrues pawn service charges for all
loans that the Company deems collection is probable based on historical loan
redemption statistics. For loans not repaid, the carrying value of the
forfeited collateral ("inventory") is stated at the lower of cost (cash amount
loaned) or market. The Company believes the accounting change provides a more
timely matching of revenues and expenses with which to measure results of
operations. The cumulative effect of the accounting change on years prior to
January 1, 1995, of $19,772,000 (net of a tax benefit of $11,611,000) is
included as a reduction of 1995 net income.
The effect for 1995 of adopting the change in income recognition on
pawn loans was to decrease income before cumulative effect of change in
accounting principle $2,358,000 ($.08 per share) and net income $22,130,000
($.77 per share). The unaudited pro forma amounts shown in the statements of
income reflect the effect of retroactive application on pawn service charges,
cost of sales and related income taxes.
NOTE 3 - ACQUISITIONS
During February and November, 1995, the Company acquired a total of
four pawnshops in purchase transactions for an aggregate cash consideration of
$1,612,000. Their
21
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
results of operations have been included in the Company's operations from the
date of acquisition. During 1994, the Company acquired 21 pawnshops in purchase
transactions occurring throughout the year for an aggregate cash consideration
of $11,693,000. On September 22, 1994, the Company acquired all of the shares of
the Svensk Pantbelaning group of companies, which consisted of 10 pawnshops
located in Sweden, for cash consideration of approximately $5 million and
assumed liabilities of $17 million. Eleven other pawnshops were acquired in
purchase transactions throughout 1994. The results of operations for these
pawnshops have been included in the Company's operations from the date of
acquisition.
NOTE 4 - PROPERTY AND EQUIPMENT
Major classifications of property and equipment at December 31, 1995
and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Land $ 4,901 $ 4,995
Buildings and improvements 11,044 10,936
Equipment, leasehold improvements
and other 86,926 74,308
- ---------------------------------------------------------------------------
Total 102,871 90,239
Less - accumulated depreciation (37,884) (26,998)
- ---------------------------------------------------------------------------
Property and equipment - net $ 64,987 $ 63,241
===========================================================================
</TABLE>
NOTE 5 - INVESTMENTS IN AFFILIATES
On September 20, 1995, the Company acquired, for a nominal amount, a
49% interest in a private company which offers new automobile and truck tires
and wheels on a rent-to-own basis. The Company also acquired an option for $1
million to purchase an additional 41% interest. In conjunction with its
investment, the Company has entered into a revolving credit agreement which
provides for maximum borrowings of $2 million from the Company. Interest is
payable quarterly at a rate reset monthly that is equivalent to LIBOR plus 4%.
As of December 31, 1995, the affiliate had borrowings outstanding of $800,000
at an effective interest rate of 9.94%. The affiliate has granted the Company a
security interest in all of its assets. The entire unpaid principal balance is
due and payable on February 28, 1998. The amounts are included in other assets.
On July 13, 1994, the Company paid $2 million to acquire a 49%
interest in a private Texas-based company which sells franchised check-cashing
kiosks. In conjunction with this investment, the Company has entered into a
revolving credit agreement with the affiliate, which provides for a total
maximum borrowing of $2 million from the Company. Interest is payable
quarterly at a rate reset monthly that is equivalent to LIBOR plus 4%. As of
December 31, 1995, the affiliate had borrowings outstanding of $2,000,000 at an
effective interest rate of 9.94%. The affiliate has granted the Company a
security interest in and lien on all of its assets. The entire unpaid principal
balance is due and payable on February 28, 1997. The amounts are included in
other assets.
NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses at December 31, 1995 and 1994
were as follows:
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Trade accounts payable $1,974 $ 4,864
Accrued taxes, other than income 3,561 3,572
Accrued payroll and fringe benefits 1,567 3,069
Accrued interest payable 1,508 836
Other accrued liabilities 974 1,449
- ---------------------------------------------------------------------------
Total $9,584 $13,790
===========================================================================
</TABLE>
NOTE 7 - LONG-TERM DEBT
The Company has a $125,000,000 unsecured bank line of credit pursuant
to a single credit agreement dated June 29, 1993 ("the U.S. Line of Credit").
The agreement provides the Company an annual option to request an extension of
the maturity date of the facility by one year. On June 7, 1995, the Company
modified the agreement to extend the maturity date of $25,000,000 of the
facility to June 5, 1996, and $100,000,000 to April 30, 1998. Interest is paid
quarterly at rates determined at the Company's option of either the bank's
prime lending rate or LIBOR plus 1%. In addition, the agreement provides for
annual commitment fees of .375% per annum on the unused portion of $100,000,000
of the commitment and .15% per annum on the unused portion of $25,000,000 of
the commitment. On May 5, 1995, the Company entered into an interest rate cap
agreement for the two years ending on May 5, 1997, that limits the maximum
LIBOR interest rate to 7% on $20,000,000 of debt.
During 1995, the weighted average amount outstanding under the U.S.
Line of Credit was $65,618,000, with an effective interest rate of 7.43%. At
December 31, 1995, the amount outstanding under the $100,000,000 portion of the
facility was $44,900,000 with a weighted average interest rate of 6.86%. There
were no borrowings outstanding at December 31, 1995, under the $25,000,000
portion of the facility.
On July 7, 1995, the Company issued $20,000,000 of "8.14% Senior
Notes," due July 7, 2007. Interest is payable on January 7 and July 7 of each
year. Mandatory annual payments of $4,000,000 commence July 7, 2003. Note
proceeds were applied to the debt outstanding under the U.S. Line of Credit.
22
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
On May 12, 1993, the Company issued $30,000,000 of "8.33% Senior
Notes," due May 1, 2003. Interest is payable on May 1 and November 1 of each
year. Mandatory annual payments of $4,285,714 commence May, 1997. On May 28,
1993, the Company entered into two three-year swap agreements for $10,000,000
each, under which the Company receives a fixed rate of 4.87% and pays a
variable rate based on the prevailing six-month BBA average LIBOR rate (5.69%
as of December 31, 1995), repriced every six months. The effective interest
rate on the 8.33% Senior Notes for the twelve months ended December 31, 1995,
was 9.26% after taking into account the two swap transactions. For the
six-month period commencing December 2, 1995, the effective rate of interest on
the 8.33% Senior Notes is 8.93% on an annualized basis.
On September 21, 1994, in conjunction with the acquisition of Svensk
Pantbelaning, the Company's wholly owned subsidiary, CAII Pantbelaning AB
("CAIIP") established an unsecured 193,750,000 Swedish Kronor ("SEK") term loan
("the Swedish Term Loan"). As of December 31, 1995, SEK 185,000,000
(approximately $27,787,000) was outstanding under the term loan. The term loan
is guaranteed by Cash America International, Inc. and matures three years from
the date of inception. There is no scheduled amortization of the principal
balance of the term loan prior to maturity. Interest is payable at the
Stockholm InterBank Offered Rate (STIBOR) plus 1% (9.88% as of December 31,
1995). On June 2, 1995, CAIIP entered into a floating-to-fixed interest rate
exchange agreement. The agreement fixes the interest rate on SEK 118,750,000
(approximately $17,836,000 as of December 31, 1995) at 10.94% through August
17, 1998. The effective rate of interest on the Swedish Term Loan at December
31, 1995, was 10.55% after taking into account the interest rate exchange
agreement.
The 8.14% and 8.33% Senior Note Agreements, the Swedish Term Loan and
the U.S. Line of Credit agreements have similar provisions that require the
Company to maintain certain financial ratios and limit specific payments and
equity distributions, including cash dividends and the redemption of Company
stock. At December 31, 1995, the most restrictive of these agreements limits
the aggregate of such payments to approximately $12 million.
The Company's wholly owned subsidiary, Harvey & Thompson, Ltd., has a
committed 5 million pound sterling unsecured line of credit, which matures on
April 30, 1998, from a United Kingdom based commercial bank ("the UK Line of
Credit"). The UK Line of Credit is guaranteed by Cash America International,
Inc. Interest is payable quarterly at an interest rate equal to the Bank's
sterling cost of funds plus 60 basis points for borrowings less than 13 days
and 55 basis points for borrowings of 14 days or more. Harvey & Thompson, Ltd.
pays a fee on the unused portion of the line of credit of .30% per annum. The
facility is governed by a credit agreement which provides minimum levels of
assets and net worth which must be maintained by Harvey & Thompson. The balance
outstanding under the U.K. Line of Credit as of December 31, 1995, was 500,000
pounds sterling (approximately $775,000) at an interest rate of 7.11%.
The Company's wholly owned subsidiary, Svensk Pantbelaning AB, has a
SEK 10 million unsecured line of credit with a commercial bank (the "Swedish
Line of Credit") that is guaranteed by Cash America International, Inc.
Interest is payable quarterly at an interest rate equal to the Bank's base
funding rate plus 1.00%. Svensk Pantbelaning pays a fee on the unused portion
of the line of credit of .375% per annum. There were no borrowings under the
Swedish Line of Credit in 1995.
The annual maturities of long-term debt through 2000 are: 1996 - none;
1997 - $32.8 million; 1998 - $49.2 million; 1999 - $4.3 million; 2000 - $4.3
million. The scheduled maturities in 1998 include $44.9 million outstanding
under the U.S. Line of Credit which includes the annual extension option
discussed above.
NOTE 8 - INCOME TAXES
The components of the Company's deferred tax liabilities and assets as
of December 31 are as follows:
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Deferred tax liabilities:
Deferred acquisition and start-up costs $ 201 $ 224
Reversal of revenues reported on a cash
basis by acquired subsidiary - 97
Amortization of acquired intangibles 456 215
Foreign tax reserves 303 172
Other 236 293
- ---------------------------------------------------------------------------
Total deferred tax liabilities $ 1,196 $1,001
===========================================================================
Deferred tax assets:
Provision for inventory valuation allowance $ 599 $ 648
Tax over book accrual of pawn service
charges 12,134 -
Book over tax depreciation 809 813
Net operating loss carryforwards 337 652
Other 509 363
- ---------------------------------------------------------------------------
Total deferred tax assets (14,388 2,476
Valuation allowance for deferred tax assets (482) (702)
- ---------------------------------------------------------------------------
Net deferred tax assets $ 13,906 $1,774
- ---------------------------------------------------------------------------
Net deferred tax (assets) liabilities $(12,710) $ (773)
===========================================================================
</TABLE>
23
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
The components of the provision for income taxes and the income to
which it relates for the years ended December 31, 1995, 1994 and 1993 are shown
below:
<TABLE>
<CAPTION>
1995 1994 1993
- ---------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Income from continuing operations
before income taxes:
Domestic $13,961 $18,625 $17,752
Foreign 6,655 6,333 4,014
- ---------------------------------------------------------------------------------
$20,616 $24,958 $21,766
=================================================================================
</TABLE>
Provision for income taxes:
<TABLE>
<CAPTION>
1995 1994 1993
- ---------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Current portion of provision:
Federal $ 6,127 $ 7,293 $ 6,145
Foreign 1,536 2,151 1,399
State and local 437 428 231
- ---------------------------------------------------------------------------------
$ 8,100 $ 9,872 $ 7,775
=================================================================================
Deferred portion of (benefit) provision:
Federal $ (624) $ (491) $ 118
Foreign 351 79 34
State and local (60) - -
- ---------------------------------------------------------------------------------
$ (333) $ (412) $ 152
- ---------------------------------------------------------------------------------
Total provision $ 7,767 $ 9,460 $ 7,927
=================================================================================
</TABLE>
The effective tax rate differs from the federal statutory rate for the
following reasons:
<TABLE>
<CAPTION>
1995 1994 1993
- ---------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Tax provision computed at the
statutory federal income tax rate $ 7,216 $ 8,735 $ 7,618
Non-deductible amortization of
intangible assets 465 439 421
Foreign tax rate difference (547) (170) (78)
Other 633 456 (34)
- ---------------------------------------------------------------------------------
Total provision $ 7,767 $ 9,460 $ 7,927
=================================================================================
Effective tax rate 37.7% 37.9% 36.4%
=================================================================================
</TABLE>
As of December 31, 1995, the Company has net operating loss
carryforwards of $963,000 for U.S. income tax purposes. The loss carryforwards
resulted from the 1993 acquisition of Express Cash International Corporation
("ECI") and expire December 31, 2002 through 2006. The amount of these losses
which the Company can utilize each year is limited to approximately $342,000.
At December 31, 1995, the deferred tax assets related to these carryforwards
and pre-acquisition deductible temporary differences of ECI have been offset
by a $482,000 valuation allowance. When realized, the tax benefits from these
items will be applied to reduce goodwill related to the ECI acquisition. Such
reductions of goodwill amounted to $220,000 for 1995.
During 1995, the Company realized a $62,000 tax benefit from the
exercise of stock options by officers and directors. The benefit was recorded
as an increase to paid in surplus.
Domestic income taxes have not been provided on undistributed earnings
of foreign subsidiaries to the extent that it is the Company's intention to
reinvest these earnings overseas indefinitely. Upon distribution of accumulated
earnings of all foreign subsidiaries, the Company would be subject to U.S.
income taxes (net of foreign tax credits) of approximately $100,000.
NOTE 9 - STOCKHOLDERS' EQUITY
The Company has reserved 1,500,000 shares of its common stock for
issuance under its 1987 Stock Option Plan (with appreciation rights) ("1987
Plan"), 3,000,000 shares for issuance under its 1989 Non-Employee Director
Stock Option Plan and Key Employee Stock Option Plan ("1989 Plans") and
1,400,000 shares for issuance under the 1994 Long-Term Incentive Plan ("1994
Plan").
Under the 1987 Plan, options are granted at fair market prices at the
date of the grant, and expire five years from the date of the grant. Options
that have been granted pursuant to the 1987 Plan are exercisable 25% each year
beginning one year after the date of the grant.
At December 31, 1995, 218,190 shares were reserved for future grants
under the 1987 Plan.
A summary of stock option activity for the 1987 Plan is as follows:
<TABLE>
<CAPTION>
Options Outstanding
- ---------------------------------------------------------------------------
Number Option Price
Stock Option Activity of Shares per Share
- ---------------------------------------------------------------------------
<S> <C> <C>
December 31, 1992 1,068,592 $3.54-$9.88
Granted 173,000 $6.88-$8.88
Exercised (212,349) $3.54-$7.75
Cancelled (13,372) $5.94-$9.38
- ---------------------------------------------------------------------------
December 31, 1993 1,015,871 $3.54-$9.88
Granted 75,000 $7.75
Exercised (210,371) $3.54-$7.00
Cancelled (7,500) $7.00
- ---------------------------------------------------------------------------
December 31, 1994 873,000 $5.94-$9.88
Exercised (154,750) $5.94
Cancelled (173,318) $5.94-$9.38
- ---------------------------------------------------------------------------
December 31, 1995 544,932 $6.88-$9.88
- ---------------------------------------------------------------------------
Exercisable at December 31, 1995 383,794 $6.88-$9.88
===========================================================================
</TABLE>
Pursuant to the 1989 Plans, options were granted in October 1989 to
purchase 3,000,000 shares at $6.34 per share. The options were granted at
market price at date of grant and expire 10 years from that date. Options
granted to purchase 1,545,000 of the shares are exercisable 40% six months from
date of grant and 10% each year thereafter. Options granted to purchase 750,000
of the shares are exercisable 40% from date of grant and 10% each year
thereafter. Options granted to purchase 705,000 of the shares are exercisable
20% from date of grant and 20% each year thereafter.
24
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
A summary of stock option activity for the 1989 Plans is as follows:
<TABLE>
<CAPTION>
Options Outstanding
- -----------------------------------------------------------------------------
Number Option Price
Stock Option Activity of Shares per Share
- -----------------------------------------------------------------------------
<S> <C> <C>
Inception of plan - October 1989 3,000,000 $6.34
Cancelled 1990 (150,000) $6.34
Cancelled 1992 (30,000) $6.34
- -----------------------------------------------------------------------------
Outstanding at December 31, 1995 2,820,000 $6.34
- -----------------------------------------------------------------------------
Exercisable at December 31, 1995 2,820,000 $6.34
=============================================================================
</TABLE>
The Company adopted the 1994 Plan on April 27, 1994, and reserved
1,400,000 shares of Company Common Stock to be used in the form of stock
options, performance shares and restricted stock for key employees of the
Company. The 1994 Plan will expire ten years from its effective date unless
terminated earlier or extended by the Board of Directors. Options that have
been granted pursuant to the 1994 Plan are exercisable 25% each year beginning
one year after the date of the grant.
A summary of stock option activity for the 1994 Plan is as follows:
<TABLE>
<CAPTION>
Options Outstanding
- -----------------------------------------------------------------------------
Number Option Price
Stock Option Activity of Shares per Share
- -----------------------------------------------------------------------------
<S> <C> <C>
Granted 1994 449,500 $7.88
- -----------------------------------------------------------------------------
December 31, 1994 449,500 $7.88
Granted 173,000 $5.63-$7.13
Cancelled (28,500) $7.88
- -----------------------------------------------------------------------------
December 31, 1995 594,000 $5.63-$7.88
- -----------------------------------------------------------------------------
Exercisable at December 31, 1995 105,250 $7.88
=============================================================================
</TABLE>
Shares issued upon exercise of options may be issued from treasury
shares or from authorized but unissued shares.
NOTE 10 - EMPLOYEE BENEFIT PLAN
The Cash America International, Inc. 401(K) Employees' Savings Plan,
which commenced on January 1, 1991, and was amended April 1, 1994, is open to
substantially all employees who have been employed for one year and work at
least 1,000 hours per year. Under the plan, up to 15% of a participant's
earnings may be contributed subject to statutory limitations. At its
discretion, the Company may make a matching contribution equal to a percentage
of the amount of the participant contributions. The Company determines the
percentage annually, and any matching contributions may be made in cash or in
Company stock. Company contributions to participants' accounts vest at the rate
of 25% each year after two years of service, thus a participant is 100% vested
after five years of service. Total Company contributions to the plan were
$207,000 and $162,000 in 1995 and 1994, respectively.
NOTE 11 - BUSINESS SEGMENT INFORMATION
The Company operates in a single industry. In addition to its domestic
operations, it has subsidiaries in the United Kingdom and Sweden.
<TABLE>
<CAPTION>
United
States Foreign Consolidated
- --------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
1995
----
Total revenues $233,250 $20,329 $253,579
Income from operations 22,627 8,866 31,493
Total assets excluding cash
and equivalents 250,964 60,779 311,743
1994
----
Total revenues $248,514 $13,591 $262,105
Income from operations 24,495 6,875 31,370
Total assets excluding cash
and equivalents 265,229 54,201 319,430
1993
----
Total revenues $215,809 $ 8,891 $224,700
Income from operations 21,420 3,842 25,262
Total assets excluding cash
and equivalents 216,305 26,544 242,849
================================================================================
</TABLE>
NOTE 12 - COMMITMENTS AND CONTINGENCIES
The Company leases certain of its pawnshop facilities under operating
leases. Future minimum rentals due under non-cancelable leases are as follows
for each of the years ending December 31:
<TABLE>
<CAPTION>
(Dollars in thousands)
<S> <C>
1996 $13,949
1997 10,955
1998 8,164
1999 5,346
2000 2,323
Later years 8,269
----------------------------------------------------
Total $49,006
====================================================
</TABLE>
Rent expense was $14,285,000, $11,201,000 and $9,110,000 for 1995,
1994 and 1993, respectively.
The Company is party to a number of lawsuits arising in the normal
course of business. In the opinion of management, the resolution of these
matters will not have a material adverse effect on the Company's financial
position, results of operations or liquidity.
25
<PAGE> 15
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
CASH AMERICA INTERNATIONAL, INC.
We have audited the accompanying consolidated balance sheets of Cash
America International, Inc. and Subsidiaries as of December 31, 1995 and 1994,
and the related consolidated statements of income, stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Cash
America International, Inc. and Subsidiaries as of December 31, 1995 and 1994,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, the
Company changed its method of income recognition on pawn loans effective
January 1, 1995.
COOPERS & LYBRAND L.L.P.
Fort Worth, Texas
January 26, 1996
26
<PAGE> 16
INCOME STATEMENT QUARTERLY DATA (UNAUDITED)
(In thousands, except per share)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
1995 - AS REPORTED QUARTER QUARTER QUARTER QUARTER
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues $ 60,265 $60,102 $57,636 $75,576
Gross profit $(16,798 $17,482 $15,781 $22,954
Income before cumulative effect of
change in accounting principle $ 2,656 $ 3,118 $ 1,603 $ 5,472
Net (loss) income $(17,116) $ 3,118 $ 1,603 $ 5,472
Income before cumulative effect of
change in accounting principle per
share - Fully diluted $.09 $.11 $.06 $.19
Net (loss) income per share - Fully diluted $(.59) $.11 $.06 $.19
Weighted average shares - Fully diluted 29,033 28,907 28,815 28,733
1994 - As reported
- -------------------------------------------------------------------------------------------------------------------------
Total revenues $ 55,314 $57,203 $63,261 $86,327
Gross profit $ 6,869 $ 6,347 $ 5,793 $10,984
Net income $ 2,932 $ 3,055 $ 4,211 $ 5,300
Net income per share - Fully diluted $.10 $.11 $.15 $.18
Weighted average shares - Fully diluted 28,984 28,864 28,869 29,304
=========================================================================================================================
1994 - Pro forma(a)
- -------------------------------------------------------------------------------------------------------------------------
Total revenues $ 48,250 $47,168 $51,800 $74,732
Gross profit $ 14,455 $13,500 $13,926 $22,078
Net income $ 3,261 $ 1,239 $ 2,115 $ 4,984
Net income per share - Fully diluted $.11 $.04 $.07 $.17
Weighted average shares - Fully diluted 28,984 28,864 28,869 29,304
=========================================================================================================================
</TABLE>
(a) Unaudited pro forma amounts assuming retroactive application of change
in accounting principle.
COMMON STOCK DATA
The New York Stock Exchange is the principal exchange on which Cash
America International, Inc. common stock is traded. There were 925
stockholders of record (not including individual participants in security
listings) as of February 15, 1996. The high and low sales prices of common
stock as quoted on the composite tape of the New York Stock Exchange and cash
dividends per share during 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
1995 QUARTER QUARTER QUARTER QUARTER
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
High $9.75 $8.13 $7.63 $6.88
Low 6.63 6.88 6.25 4.63
Close 7.00 7.38 6.88 5.50
Cash Dividend .01 1/4 .01 1/4 .01 1/4 .01 1/4
1994
- -------------------------------------------------------------------------------------------------------------------------
High $10.13 $8.88 $8.50 $9.88
Low 7.63 7.75 7.50 7.63
Close 7.88 7.75 8.00 9.88
Cash Dividend .01 1/4 .01 1/4 .01 1/4 .01 1/4
=========================================================================================================================
</TABLE>
27
<PAGE> 17
CASH AMERICA INTERNATIONAL, INC.
1600 WEST 7TH STREET
FORT WORTH, TEXAS 76102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1996
To Our Shareholders:
The Annual Meeting of Shareholders of Cash America International, Inc. (the
"Company") will be held at the Fort Worth Club, 11th Floor, Fort Worth Club
Building, 306 West 7th Street, Fort Worth, Texas on Wednesday, April 24, 1996 at
10:00 a.m., Fort Worth Time, for the following purposes:
(1) To elect ten (10) persons to serve as directors of the Company to
hold office until the next annual meeting of shareholders or until their
successors are duly elected and qualified.
(2) To ratify the appointment of Coopers & Lybrand L.L.P. as the
Company's independent auditors for the year 1996.
(3) To consider and act upon a proposal to amend the Company's 1989
Non-Employee Director Stock Option Plan.
(4) To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only holders of record of the Common Stock of the Company at the close of
business on March 6, 1996 are entitled to notice of and to vote at the Annual
Meeting. The presence, in person or by proxy, of the holders of a majority of
the issued and outstanding Common Stock entitled to vote at the meeting is
required for a quorum to transact business. The stock transfer books will not be
closed.
Management sincerely desires your presence at the meeting. However, so that
we may be sure that your shares are represented and voted in accordance with
your wishes, please sign and date the enclosed proxy and return it promptly in
the enclosed stamped envelope. If you attend the meeting, you may revoke your
proxy and vote in person.
By Order of the Board of Directors,
HUGH A. SIMPSON
Secretary
Fort Worth, Texas
March 15, 1996
<PAGE> 18
CASH AMERICA INTERNATIONAL, INC.
1600 WEST 7TH STREET
FORT WORTH, TEXAS 76102
(PRINCIPAL EXECUTIVE OFFICES)
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 1996
SOLICITATION OF PROXIES
The proxy statement and accompanying proxy are furnished in connection with
the solicitation by the Board of Directors of Cash America International, Inc.,
a Texas corporation (the "Company"), of proxies to be voted at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held at the Fort Worth Club
located on the 11th Floor of the Fort Worth Club Building, 306 West 7th Street,
Fort Worth, Texas on Wednesday, April 24, 1996 at 10:00 a.m., Fort Worth Time
and at any recess or adjournment thereof. The solicitation will be by mail, and
this Proxy Statement and the accompanying form of proxy will be mailed to
shareholders on or about March 15, 1996.
The enclosed proxy, even though executed and returned, may be revoked at
any time prior to the voting of the proxy by giving written notice of revocation
to the Secretary of the Company at its principal executive offices or by
executing and delivering a later-dated proxy or by attending the Annual Meeting
and voting his or her shares in person. However, no such revocation shall be
effective until such notice has been received by the Company at or before the
Annual Meeting. Such revocation will not affect a vote on any matters taken
prior to receipt of such revocation. Mere attendance at the Annual Meeting will
not of itself revoke the proxy.
The expense of such solicitation will be borne by the Company and will
include reimbursement paid to brokerage firms and other custodians, nominees and
fiduciaries for their expenses in forwarding solicitation material regarding the
meeting to beneficial owners. The Company has retained Kissel-Blake Inc. to
assist in the solicitation of proxies from shareholders, and will pay such firm
a fee for its services of approximately $5,000.00. Further solicitation of
proxies may be made by telephone, facsimile or oral communication following the
original solicitation by directors, officers and regular employees of the
Company or by its transfer agent who will not be additionally compensated
therefor, but will be reimbursed by the Company for out-of-pocket expenses.
A copy of the Annual Report to Shareholders of the Company for its fiscal
year ended December 31, 1995 is being mailed with this Proxy Statement to all
shareholders entitled to vote, but does not form any part of the information for
solicitation of proxies.
VOTING SECURITIES OUTSTANDING; QUORUM
The record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting was the close of business on March 6, 1996
(the "Record Date"). At the close of business on March 6, 1996, there were
28,739,879 shares of Common Stock, par value $.10 per share, issued and
outstanding, each of which is entitled to one vote on all matters properly
brought before the meeting. There are no cumulative voting rights. The presence
in person or by proxy of the holders of a majority of the issued and outstanding
shares of Common Stock on the Record Date is necessary to constitute a quorum at
the Annual Meeting. Assuming the presence of a quorum, the affirmative vote of a
majority of the shares of Common Stock present, or represented by proxy, and
entitled to vote at the Annual Meeting is necessary for the election of
directors, for ratification of the appointment of independent auditors, and for
the approval of the proposed amendment to the Company's 1989 Non-Employee
Director Stock Option Plan. Shares voted for a
<PAGE> 19
proposal and shares represented by returned proxies that do not contain
instructions to vote against a proposal or to abstain from voting will be
counted as shares cast for the proposal. Shares will be counted as cast against
the proposal if the shares are voted either against the proposal or to abstain
from voting. Broker non-votes will not change the number of votes for or against
the proposal and will not be treated as shares entitled to vote.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the shareholders of the Company will consider and
vote on the following matters:
(1) Election of ten (10) persons to serve as directors of the Company
to hold office until the next annual meeting of shareholders or until their
successors are duly elected and qualified.
(2) Ratification of the appointment of Coopers & Lybrand L.L.P. as the
Company's independent auditors for the year 1996.
(3) A proposal to amend the Company's 1989 Non-Employee Director Stock
Option Plan.
(4) Such other business as may properly come before the Annual Meeting
or any adjournments thereof.
ELECTION OF DIRECTORS
The Company's Board of Directors for the ensuing year will consist of ten
(10) members who are to be elected for a term expiring at the next annual
meeting of shareholders or until their successors shall be elected and shall
have qualified. The following slate of ten nominees has been chosen by the Board
of Directors and the Board recommends that each be elected. Unless otherwise
indicated in the enclosed form of Proxy, the persons named in such proxy intend
to vote for the election of the following nominees for the office of director.
Messrs. Morton A. Cohn, James H. Greer, Clifton H. Morris, Jr., and R. L.
Waltrip have chosen not to stand for re-election, and hence are not nominees.
Nominees James H. Graves, Timothy J. McKibben, Alfred M. Micallef and Rosalin
Rogers are not presently serving as directors. All of the other nominees are
presently serving as directors.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NAME AND AGE DURING PAST FIVE YEARS SINCE
- ------------------------------ ----------------------------------------------------- --------
<S> <C> <C>
Jack Daugherty Chairman of the Board and Chief Executive Officer of 1983
(48) the Company since its inception. Mr. Daugherty has
owned and operated pawnshops since 1971.
A. R. Dike Mr. Dike has owned and served as Chairman of the 1988
(60) Board and Chief Executive Officer of The Dike Co.,
Inc. (a private insurance agency) for the past twenty
years. He was Chairman and Chief Executive Officer of
The Insurance Alliance, Inc. from January 1988 to
September 1991 and has been Chairman of Willis
Corroon Corporation of Texas since September 1991.
Daniel R. Feehan President and Chief Operating Officer of the Company 1984
(45) since January 1990.
B. D. Hunter Mr. Hunter is founder and Chairman of the Board and 1984
(66) Chief Executive Officer of Huntco, Inc., an
intermediate steel processing company.
Carl P. Motheral Mr. Motheral has served over twenty-five years as 1983
(69) President and Chief Executive Officer and also
Director of Motheral Printing Company (a commercial
printing company).
</TABLE>
2
<PAGE> 20
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NAME AND AGE DURING PAST FIVE YEARS SINCE
- ------------------------------ ----------------------------------------------------- --------
<S> <C> <C>
Samuel W. Rizzo Consultant and private investor since 1995, and prior 1984
(60) to that Executive Vice President of Service
Corporation International ("SCI"), a publicly held
company that owns and operates funeral homes and
related businesses, since February 1990.
James H. Graves Managing Director and Partner of J. C. Bradford & --
(47) Co., a Nashville based securities firm, where he has
worked for more than five years.
Timothy J. McKibben Chairman of the Board of Ancor Holdings L.L.C., a --
(47) private investment firm, since January 1995, and from
October 1988 until November 1994, Chief Executive
Officer of Anago Incorporated, a company that
manufactures disposable medical products.
Alfred M. Micallef Chief Executive Officer of JMK International, Inc., a --
(53) holding company of rubber and plastics manufacturing
businesses, since 1975.
Rosalin Rogers Private investor since 1986, and prior to that a --
(45) principal with the brokerage firm of Financial First,
Inc. in New York, New York.
</TABLE>
Each nominee for election as a director has consented to serve if elected.
The Board of Directors does not contemplate that any of the above-named nominees
for director will be unable to accept election as a director of the Company.
Should any of them become unavailable for election as a director of the Company
then the persons named in the enclosed form of proxy intend to vote such shares
represented in such proxy for the election of such other person or persons as
may be nominated or designated by the Board of Directors.
Certain nominees for director of the Company hold directorships in
companies with a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934. Mr. Hunter is a director of Mark Twain
Bancshares, Inc., Celebrity, Inc., SCI, and Huntco, Inc. Messrs. Daugherty,
Rizzo and Graves are directors of Hallmark Financial Services, Inc. Messrs.
Daugherty and Feehan are also directors of KBK Capital Corporation. Mr. Rizzo is
also a director of Tanknology Environmental, Inc. Also, Mr. Daugherty is a
director of Dog World Inc., and Mr. Micallef is a director of Snyder Oil
Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held seven meetings during the fiscal year ended
December 31, 1995. Standing committees of the Board include the Executive
Committee, Audit Committee, Executive Compensation Committee, Stock Option
Committee, and Finance Committee. The Company does not have a Nominating
Committee.
The Executive Committee's principal responsibilities include: (a) approval
of acquisitions, (b) general review of the Company's financial condition and
results of operations, and (c) exercising other powers of the Board when the
Board is not in session. Its members are Messrs. Daugherty, Feehan, Greer,
Morris, Motheral, Rizzo and Waltrip. The Executive Committee held seven meetings
during fiscal 1995.
The Audit Committee's principal responsibilities consist of (a)
recommending the selection of independent accountants, (b) reviewing the scope
of the audit conducted by such auditors, as well as the audit itself, and (c)
reviewing the Company's internal audit activities and matters concerning
financial reporting, accounting and audit procedures, and policies generally.
Its members are Messrs. Morris, Motheral and Rizzo. The Audit Committee held
four meetings during fiscal 1995.
The Stock Option Committee has the general duty to review and approve
granting of stock options. The Stock Option committee administers the Company's
1987 Stock Option Plan (with Stock Appreciation
3
<PAGE> 21
Rights) and the 1989 Key Employee Plan. Its members are Messrs. Greer, Hunter
and Morris. The Stock Option Committee held one meeting during fiscal year 1995.
The Finance Committee has the responsibility of reviewing and making
recommendations to the Board concerning (a) the Company's credit facilities and
permitted indebtedness, (b) the Company's capital needs and its opportunities in
the capital markets, and (c) other aspects of the Company's financial
strategies, policies and structure. Its members are Messrs. Feehan, Rizzo and
Waltrip. The Finance Committee did not meet in 1995.
All directors attended 75% or more of the total number of meetings of the
Board and of committees on which they serve.
DIRECTORS' COMPENSATION
Directors each receive a retainer of $1,500 per quarter. In addition, Board
members receive $1,500 per quarterly Board meeting attended, Executive Committee
members receive $1,200 for each Executive Committee meeting attended, and all
other committee members receive $750 for each committee meeting attended.
During 1989, the Company adopted the 1989 Non-Employee Director Stock
Option Plan (the "Non-Employee Director Plan"), which provided for the grant to
the Company's non-employee directors of options to purchase the Company's $.10
par value Common Stock. The Non-Employee Director Plan was approved by the
Company's shareholders at the 1990 Annual Meeting. Effective October 25, 1989,
all of the options available for grant under the Non-Employer Director Plan were
granted to the following persons and in the following amounts (after adjustment
for stock splits in 1990 and 1992): 225,000 shares to each non-employee director
serving on the Executive Committee of the Board of Directors (i.e., Messrs.
Waltrip, Rizzo, Cohn, Motheral and Morris), 150,000 shares to each other
non-employee director with at least each two years of service on the Board of
Directors as of the date of grant (i.e., Messrs. Hunter and Greer), and 120,000
shares to each other non-employee director (i.e., Mr. Dike). The exercise price
for all shares underlying such options was the last reported sale price of the
Common Stock on the American Stock Exchange on the day preceding the date of
grant ($6.33 after adjustment for stock splits in 1990 and 1992). The options
granted are for a term of 10 years from the date of grant. The options may be
exercised with respect to 40 per cent of the number of shares subject to the
options six months after the date of grant, and an additional 10 per cent of the
shares subject to the options shall be exercisable as of the first, second,
third, fourth, fifth and sixth anniversaries of the date of grant, except that
in the event of the death or termination of service as a director by reason of
disability, or in the event of a "change in control" of the Company (as that
term is defined in the Non-Employee Director Plan), the options shall be
immediately exercisable in full. An option holder may use already-owned Common
Stock as full or partial payment for the exercise of options granted under the
Non-Employee Director Plan. As a condition to participation in the Non-Employee
Director Plan, each director named above in this paragraph entered into a
Consultation Agreement with the Company dated as of April 25, 1990. Under these
Agreements, the non-employee directors have agreed to serve the Company in an
advisory and consultive capacity. They do not receive any additional
compensation under these Agreements, however.
4
<PAGE> 22
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company has only one outstanding class of equity securities, its Common
Stock, par value $.10 per share.
The following table sets forth certain information, as of the Record Date,
with respect to each person or entity who is known to the Company to be the
beneficial owner of more than five percent (5%) of the Company's Common Stock.
The information below was derived solely from filings made by such owners with
the Securities and Exchange Commission.
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------------------------------------------------------------ --------- --------
<S> <C> <C>
David L. Babson & Co., Inc.............................................. 2,146,600(1) 7.47%
One Memorial Drive
Cambridge, Massachusetts 02142
Wanger Asset Management, L.P............................................ 1,669,200(2) 5.81%
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
</TABLE>
- ---------------
(1) Based upon information contained in a Schedule 13G, filed with the Company,
which indicates that David L. Babson & Co., Inc. has the voting power with
regard to 1,024,300 shares and the right to dispose of all 2,146,600
shares.
(2) Based upon information contained in a Schedule 13G, filed with the Company,
which indicates that Wanger Asset Management, L.P. has no voting power with
regard to the shares and has the right to dispose of all 1,669,200 shares.
The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock, as of February 26, 1996, by its
directors, nominees for election as directors, named executive officers, and all
directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF
BENEFICIAL PERCENT
NAME OWNERSHIP(1)(2) OF CLASS
---------------------------------------------------------- ----------------- --------
<S> <C> <C>
Jack Daugherty............................................ 957,496 3.23%
Morton A. Cohn............................................ 403,748(3) 1.39%
A. R. Dike................................................ 126,000 .44%
Daniel R. Feehan.......................................... 450,763(4) 1.55%
James H. Greer............................................ 150,000 .52%
B. D. Hunter.............................................. 165,000(5) .57%
Clifton H. Morris, Jr..................................... 227,000(6) .78%
Carl P. Motheral.......................................... 444,065 1.53%
Samuel W. Rizzo........................................... 306,710(7) 1.05%
R. L. Waltrip............................................. 253,278 .87%
Gregory W. Trees.......................................... 30,438 .11%
Dale R. Westerfeld........................................ 46,217(8) .16%
Don R. Blevins............................................ 8,883 *
Terry R. Kuntz(9)......................................... -0- --
Robert D. Brockman........................................ -0- --
James H. Graves........................................... -0- --
Timothy J. McKibben....................................... -0- --
Alfred M. Micallef........................................ -0- --
Rosalin Rogers............................................ 6,000 *
All Directors and Executive Officers as a group (18
persons)................................................ 3,631,719(10) 11.50%
</TABLE>
5
<PAGE> 23
- ---------------
* Indicates ownership of less than .1% of the Company's Common Stock.
(1) Beneficial ownership as reported in the above table has been determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended. Unless otherwise indicated, each of the persons named has sole
voting and investment power with respect to the shares reported.
(2) Except for the percentages of certain parties that are based on options
exercisable within sixty days of February 26, 1996, as indicated below, the
percentages indicated are based on 28,739,879 shares of Common Stock issued
and outstanding on February 26, 1996. In the case of parties holding
options, the percentage ownership is calculated on the assumption that the
shares presently purchasable or purchasable within the next sixty days
underlying such options are outstanding. The shares subject to options that
are exercisable within sixty days of February 26, 1996 are as follows: Mr.
Daugherty -- 863,000 shares; Messrs. Cohn, Morris, Motheral, Rizzo and
Waltrip -- 225,000 shares each; Mr. Dike -- 120,000 shares; Mr.
Feehan -- 320,750 shares; Messrs. Greer and Hunter -- 150,000 shares each;
Mr. Trees -- 25,625 shares; Mr. Westerfeld -- 20,500 shares; and Mr.
Blevins -- 8,500 shares.
(3) This amount includes 68,248 shares held in trust for Mr. Cohn's children
over which Mr. Cohn has voting power only in the form of an irrevocable
voting proxy. Mr. Cohn disclaims any beneficial ownership thereof.
(4) This amount includes 2,400 shares owned by Mr. Feehan's wife and 600 shares
in the name of Mr. Feehan's children.
(5) This amount includes 15,000 shares held by a corporation that Mr. Hunter
indirectly controls. Mr. Hunter disclaims beneficial ownership of such
shares.
(6) This amount includes 2,000 shares owned by Mr. Morris' wife.
(7) This amount includes 18,600 shares owned by trusts of which Mr. Rizzo is
trustee and 4,000 shares owned by Mr. Rizzo's wife.
(8) This amount includes 450 shares owned in the name of Mr. Westerfeld's
children.
(9) Mr. Kuntz resigned as Executive Vice President of the Company effective
June 30, 1995.
(10) This amount includes 2,827,375 shares that directors and executive officers
have the right to acquire within the next sixty days through the exercise
of stock options.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company's executive officers and directors are required to file under
the Securities Exchange Act of 1934 reports of ownership and changes of
ownership with the Securities and Exchange Commission. Based solely upon copies
of such reports and information provided to the Company by individual directors
and executive officers, the Company believes that during the fiscal year ended
December 31, 1995 all filing requirements applicable to executive officers and
directors have been complied with.
6
<PAGE> 24
EXECUTIVE COMPENSATION
The following sets forth information concerning the compensation of the
Company's Chief Executive Officer, each of the other four most highly
compensated executive officers, and two former executive officers of the Company
for the fiscal years shown.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION --
AWARDS
--------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING ALL OTHER
NAME AND ---------------------- OPTIONS/ COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SARS (#) ($)(1)
- ---------------------------- ---- --------- -------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Jack R. Daugherty, 1995 378,000 -- -- 48,534
Chairman and CEO 1994 360,000 36,000 175,000 42,202
1993 300,000 60,000 25,500 38,399
Daniel R. Feehan, 1995 315,000 -- -- 30,464
President and Chief 1994 300,000 28,500 145,000 29,242
Operating Officer 1993 240,000 48,000 20,500 27,721
Gregory W. Trees, 1995 150,000 -- 5,000 3,515
Vice President -- 1994 137,500 12,500 7,000 2,576
Marketing and 1993 125,000 9,375 6,500 1,034
Merchandising(2)
Dale R. Westerfeld, 1995 129,130 -- 5,000 28,356
Former Vice President -- 1994 120,000 10,000 6,500 2,473
Chief Financial Officer(3) 1993 97,500 9,750 6,500 644
Don R. Blevins, Executive 1995 120,000 -- 7,500 2,674
Vice President -- European
Operations(4)
Terry R. Kuntz, 1995 113,000 -- -- 227,297
Former Executive Vice 1994 215,000 19,000 15,000 4,144
President -- Operations(5) 1993 190,000 19,000 14,500 2,644
Robert D. Brockman, 1995 87,500 21,045 7,500 33,534
Executive Vice President --
Administration(6)
</TABLE>
- ---------------
<TABLE>
<S> <C> <C>
(1) The amounts disclosed in this column include:
(a) Company contributions of the following amounts under the Company's 401(k) Employees'
Savings Plan on behalf of Mr. Daugherty, $260 in 1993, $3,560 in 1994 and $3,675 in
1995; Mr. Feehan, $260 in 1993, $2,560 in 1994 and $2,625 in 1995; Mr. Trees, $390
in 1993, $1,932 in 1994 and $2,161 in 1995; Mr. Westerfeld, $1,829 in 1994 and
$1,770 in 1995; Mr. Blevins, $1,189 in 1995; and Mr. Kuntz, $1,500 in 1994 and $975
in 1995.
(b) Payment by the Company of premiums for 1993, 1994 and 1995, respectively, for term
life insurance on behalf of Mr. Daugherty: $644, $644 and $679; Mr. Feehan: $644,
$377 and $398; Mr. Trees: $644, $1,066 and $1,354; Mr. Westerfeld: $644, $377 and
$479; and Mr. Kuntz: $644, $644, and $322. Payments in 1995 for Messrs. Blevins and
Brockman were $1,485 and $730, respectively.
(c) Payment of the following amounts for additional term life insurance on behalf of Mr.
Daugherty, $2,495 in 1993, $2,998 in 1994 and $9,180 in 1995; Mr. Feehan, $1,817 in
1993, $1,038 in 1994 and $2,441 in 1995; and Mr. Kuntz, $2,000 in 1993 and 1994.
(d) Annual premium payments under split-dollar life insurance policies on Mr. Feehan
($25,000) and on Mr. Daugherty's spouse ($35,000).
(2) Mr. Trees joined the Company on March 30, 1992. The amount in the last column for 1993
includes $9,721 for certain moving and temporary living expenses.
</TABLE>
7
<PAGE> 25
<TABLE>
<S> <C> <C>
(3) Mr. Westerfeld transferred to the Company's U.K. subsidiary in 1995 to serve as Managing
Director, and he no longer serves as an executive officer of the Company. The amount in
the last column includes $26,287 for moving and temporary living expenses.
(4) Mr. Blevins has served as an executive officer of the Company's U.K. subsidiary and in
January 1996 became Executive Vice President -- European Operations of the Company. Prior
to that time he was not serving as an executive officer of the Company; therefore, no
compensation figures are shown for prior fiscal years.
(5) Mr. Kuntz resigned as Executive Vice President -- Operations of the Company effective
June 30,1995. The amount in the last column for 1995 includes a separation payment of
$226,000.
(6) Mr. Brockman joined the Company on June 21, 1995. The amount in the last column includes
$32,804 for moving and temporary living expenses.
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table shows all individual grants of stock options to the
named executive officers of the Company during the fiscal year ended December
31, 1995.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/ OPTIONS/SARS
SARS GRANTED TO EXERCISE OR GRANT DATE
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME (#) FISCAL YEAR ($/SH) DATE VALUE($)(1)
- -------------------------------------------- --------- ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Jack R. Daugherty -0- -- -- -- --
Daniel R. Feehan -0- -- -- -- --
Gregory W. Trees 5,000(2) 3.1 5.625 12/13/00 9,700
Dale R. Westerfeld 5,000(2) 3.1 5.625 12/13/00 9,700
Don R. Blevins 7,500(2) 4.7 5.625 12/13/00 14,550
Terry R. Kuntz -0- -- -- -- --
Robert D. Brockman 7,500(2) 4.7 5.625 12/13/00 14,550
</TABLE>
- ---------------
(1) As permitted by the Securities and Exchange Commission's rules on executive
compensation disclosure, the Company used the Black-Scholes model of option
valuation to determine grant date present value. The Company does not
advocate or necessarily agree that the Black-Scholes model can properly
determine the value of an option. Calculations are based upon the following
assumptions: (i) dividend yield of .62% per share based on the Company's
history of dividend payments; (ii) volatility of 34%; (iii) exercise of the
option at the end of the option term; (iv) a risk-free rate of return of
5.5% (based on the then quoted yield of Treasury Strips maturing 5 years
from the grant date); and (v) a 3% annual discount factor for vesting
limitations.
(2) These stock options were granted on December 14, 1995 and become exercisable
in four equal annual installments beginning one year after the grant date.
8
<PAGE> 26
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table provides information concerning option exercises in
fiscal 1995 and the value of unexercised options held by each of the named
executive officers at the end of the Company's last fiscal year.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY
FY-END OPTIONS/SARS AT
(#)(1) FY-END ($)(2)
SHARES --------------- --------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------- ------------ ------------ --------------- --------------------
<S> <C> <C> <C> <C>
Jack R. Daugherty 25,500 30,281.25 863,000/133,500 N/A
Daniel R. Feehan 22,500 26,718.75 320,750/113,250 N/A
Gregory W. Trees -0- N/A 25,625/20,375 N/A
Dale R. Westerfeld 9,500 11,281.25 20,500/15,000 N/A
Don R. Blevins -0- N/A 8,500/16,000 N/A
Terry R. Kuntz -0- N/A -0-/-0- N/A
Robert D. Brockman -0- N/A -0-/17,500 N/A
</TABLE>
- ---------------
(1) These figures reflect the appropriate adjustments for the Company's
three-for-two stock split in May 1990 and the two-for-one stock split in
April 1992.
(2) Based upon the closing price of $5.50 per share of the Company's Common
Stock on the New York Stock Exchange on December 29, 1995, the last trading
day of the fiscal year, none of the unexercised options were in-the-money.
COMPENSATION COMMITTEE REPORT
The Executive Compensation Committee of the Company's Board of Directors
consists entirely of outside directors of the Company. The Committee oversees
and administers the Company's executive compensation program and administers the
Company's 1994 Long-Term Incentive Plan. Its decisions relating to executive
compensation are reviewed by the full Board of Directors. The Committee held one
meeting during fiscal 1995.
- -- OVERALL EXECUTIVE COMPENSATION POLICIES
The basic philosophy of the Company's executive compensation program is to
link the compensation of its executive officers to their contribution toward the
enhancement of shareholder value. Consistent with that philosophy, the program
is designed to meet the following policy objectives:
- Attracting and retaining qualified executives critical to the long-term
success of the Company.
- Tying executive compensation to the Company's general performance and
specific attainment of long-term strategic goals.
- Rewarding executives for contributions to strategic management designed
to enhance long-term shareholder value.
- Providing incentives that align the executive's interest with those of
the Company's shareholders.
9
<PAGE> 27
- -- ELEMENTS OF EXECUTIVE COMPENSATION
The Company's executive compensation program consists of the following
elements designed to meet the policy objectives set out above:
Base Salary
The Committee set the annual salary of the Company's Chief Executive
Officer and the President and reviewed the annual salaries of the Company's
other executive officers for fiscal 1995. In setting appropriate annual
salaries, the Committee takes into consideration the minimum salaries set forth
in certain executives' employment contracts (described elsewhere in this Proxy
Statement), the level and scope of responsibility, experience, and performance
of the executive, the internal fairness and equity of the Company's overall
compensation structure, and the relative compensation of executives in similar
positions in the marketplace. The Committee relies on information supplied by an
outside compensation consulting firm pertaining to competitive compensation. The
Committee tends to position base salary and annual incentive targets at the 50th
percentile of the competitive market. The Committee believes that very few of
the companies in the peer group described below under "Performance Graph" are
included in the surveys used for compensation comparisons. Those surveys
represent a much broader collection of U.S. companies.
Annual Incentive Compensation
Beginning in fiscal 1989, the Board of Directors adopted an annual
incentive cash bonus plan for its highest ranking executive officers, who for
fiscal 1995 were Messrs. Daugherty and Feehan. Under this plan, such executive
officers could receive an annual incentive cash bonus based on the Company's
annual pre-tax earnings performance measured against the financial plan approved
by the Board of Directors for that year. The incentive bonus ranges from 20
percent to 50 percent of each executive officer's base salary. The 20 percent
bonus is payable upon the Company achieving the specified pre-tax earnings goal,
and additional sums are payable if and to the extent the Company exceeds the
goal, with the full 50 percent payable if the Company exceeds the goal by 5
percent or more.
The Board of Directors adopted a similar bonus plan for the other executive
officers and vice presidents of the Company. For those participants, the
incentive bonus ranges from 10 percent to 20 percent of their base salary. No
bonuses were paid in fiscal 1995 under this plan.
Stock Options
In furtherance of the objective of providing long-term incentives that
relate to improvement in long-term shareholder value, the Company has awarded
stock options to its executive officers under its 1987 Stock Option Plan (with
Stock Appreciation Rights). As stated elsewhere in this Proxy Statement, this
Plan is administered by the Board's Stock Option Committee. The Company has
previously granted just under the maximum number of options permitted to be
granted under this Plan and, thus, did not grant any options to its executive
officers under this Plan in 1995.
Long-Term Incentive Plan
Upon the recommendation of the Committee, the Board of Directors adopted
the 1994 Long-Term Incentive Plan in January 1994, and the shareholders of the
Company approved the 1994 Plan at the Annual Meeting in April 1994. The 1994
Plan provides for expanded forms of stock-based long-term incentive compensation
awards. This Plan is intended to further the objective of fostering and
promoting improvement in long-term financial results and increases in
shareholder value. Awards under the 1994 Plan may take the form of restricted
stock grants, stock options, stock appreciation rights, performance share
awards, or a combination of the above. The Company granted options to certain of
its executive officers in 1995 at an exercise price equal to the closing price
of the Company's common stock on the New York Exchange on the day preceding the
date of grant. The options become exercisable in equal increments annually
beginning on the first anniversary of the date of grant. (See the "Options/SAR
Grants in Last Fiscal Year" table in this Proxy Statement.) This arrangement
rewards effective management that results in long-term increases in the
10
<PAGE> 28
Company's stock price. The number of options granted to the Company's highest
paid executive officers, as reflected elsewhere in this Proxy Statement, is
based in part on many of the same considerations underlying the determination of
annual base salary. The Committee relies on its outside compensation consultant
to supply market data on long-term incentives. The committee uses the
Black-Scholes model to determine competitive option awards equal to the 50th
percentile of general market practices.
Deductibility Cap on Executive Compensation
A federal tax law enacted in 1994 disallows corporate deductibility for
certain compensation paid in excess of $1,000,000 to the Chief Executive Officer
and the four other most highly paid executive officers. "Performance-based
compensation," as defined in the tax law, is not subject to the deductibility
limitation, provided certain shareholder approval and other requirements are
met. Although the cash compensation paid to the Company's Chief Executive
Officer and the four other most highly paid executive officers is well below the
$1,000,000 level in each case, the Committee determined that the Company should
seek to ensure that future stock option and performance award compensation under
the 1994 Plan qualifies as "performance-based compensation." Accordingly, the
1994 Plan is intended to meet the requirements of this tax law and thereby
preserve full deductibility of both stock option and stock-based performance
award compensation expense.
- -- CEO'S COMPENSATION FOR FISCAL 1995
The fiscal 1995 salary of Mr. Jack R. Daugherty, Chief Executive Officer of
the Company, was based primarily on his rights under his ten-year employment
agreement with the Company dated April 25, 1990, which is described elsewhere in
this Proxy Statement. Under that agreement, Mr. Daugherty's minimum base salary
is $225,000. The Committee has increased Mr. Daugherty's base salary annually
since that time (except in 1993) after taking into consideration the factors
described under "Base Salary" above. For fiscal 1995, the Committee set Mr.
Daugherty's base salary at $378,000, which represents a 5% increase. The
Committee believes that the total cash compensation paid to Mr. Daugherty was
appropriate in light of the Company's accomplishments in 1995, including a 17%
increase in revenue net of cost of goods sold and a 25% increase in income from
operations.
These 1995 accomplishments also support the Committee's belief that the
fiscal 1995 cash compensation of the Company's other executive officers was set
at appropriate levels.
EXECUTIVE COMPENSATION COMMITTEE
R. L. Waltrip, Chairman
A. R. Dike
B. D. Hunter
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate future filings, including this Proxy Statement,
in whole or in part, the preceding report and the Performance Graph on Page 12
shall not be incorporated by reference into any such filings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following non-employee directors serve on the Executive Compensation
Committee of the Company's Board of Directors: A. R. Dike, B. D. Hunter, and R.
L. Waltrip.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
As a condition to receiving grants of options under the 1989 Key Employee
Stock Option Plan for Cash America International, Inc., Messrs. Daugherty and
Feehan entered into employment agreements with the Company dated April 25, 1990.
Upon the expiration of the initial terms of the agreements (ten years in the
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<PAGE> 29
case of Mr. Daugherty and five years in the case of Mr. Feehan), they
automatically renew for additional one-year periods until one party notifies the
other to the contrary. Under these agreements, compensation is determined
annually by the Company's Board of Directors, subject to minimum annual
compensation for Messrs. Daugherty and Feehan of $225,000 and $190,000,
respectively. Included in each agreement is a covenant of the employee not to
compete with the Company during the term of his employment and for a period of
three years thereafter. The employment agreements also provide that if the
employee is terminated by the Company other than for cause, the Company will pay
to the employee the remainder of his current year's salary (undiscounted) plus
the discounted present value (employing an interest rate of 8%) of two
additional years' salary. In the event the employee resigns or is terminated
other than for cause within twelve months after a "change in control" of the
Company (as that term is defined in the employment agreement), the employee will
be entitled to earned and vested bonuses at the date of termination plus the
remainder of his current year's salary (undiscounted) plus the present value
(employing an interest rate of 8%) of two additional years' salary (for which
purpose "salary" includes the annual rate of compensation immediately prior to
the "change in control" plus the average annual cash bonus for the immediately
preceding three year period). The Company also entered into a similar employment
agreement effective March 30, 1992 with Gregory W. Trees, Vice
President -- Marketing and Merchandising. It provides for minimum annual
compensation of $125,000. The primary term of the agreement has an expiration
date of March 31, 1995 and is followed by two one-year renewal terms.
PERFORMANCE GRAPH
The following Performance Graph shows the changes over the past five year
period in the value of $100 invested in: (1) the Company's Common Stock, (2) the
Standard & Poor's 500 Index, and (3) the common stock of a peer group of
companies whose returns are weighted according to their respective market
capitalizations. The values of each investment as of the beginning of each year
are based on share price appreciation and the reinvestment of dividends. The
peer group consists of the following companies, whose businesses taken as a
whole resemble the Company's unique combination of consumer lending and resale
activities: Beneficial Corp., Household International, Circuit City Stores,
Jewelmaster, Inc., Peoples Jewellers, MacFrugal's Bargains, Luria (L.) & Sons,
Inc., Oshman's Sporting Goods, Lowe's Corp., and Tandy Corp.
TOTAL SHAREHOLDER RETURNS -- DIVIDENDS REINVESTED
[GRAPH]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
CASH AMERICA
MEASUREMENT PERIOD IN- PEER GROUP
(FISCAL YEAR COVERED) TERNATIONAL S&P 500 INDEX
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
DEC 90 100 100 100
- ------------------------------------------------------------------------------
DEC 91 127.92 130.47 140.39
- ------------------------------------------------------------------------------
DEC 92 145.19 140.41 176.09
- ------------------------------------------------------------------------------
DEC 93 125.92 154.56 248.24
- ------------------------------------------------------------------------------
DEC 94 133.42 156.60 273.27
- ------------------------------------------------------------------------------
DEC 95 74.86 215.45 314.83
- ------------------------------------------------------------------------------
</TABLE>
Data Source: Standard & Poor's Compustat
12
<PAGE> 30
TRANSACTIONS WITH MANAGEMENT
The Board of Directors of the Company adopted an officer stock loan program
in 1994. The purpose of the program is (i) to facilitate and encourage the
ownership of Company common stock by the officers of the Company and (ii) to
establish the terms for stock loan transactions with officers. Participants in
the program can utilize loan proceeds to acquire and hold common stock of the
Company by means of option exercises or otherwise. The stock to be held as a
result of the loan must be pledged to the Company to secure the obligation to
repay the loan. The loan proceeds for a particular borrowing may not exceed a
certain percentage of the then current value of the stock to be pledged, with
that percentage varying depending on whether the stock is acquired through
option exercise or otherwise. Under the terms of the loan, interest accrues at
the rate of 1% over a designated bank's "prime rate." Interest is payable
annually and may be paid with additional loan proceeds, provided that the
outstanding aggregate principal balance of the officer's loan would not exceed
the then aggregate value of the pledged stock that would secure the loan. The
limit on the principal balance that a participant may have outstanding under
this program is three times annual base salary for executive officers and twice
the amount of annual base salary for other officers. The aggregate principal
balance of all outstanding loans under the program may not exceed $5,000,000 at
any time. A participant may not obtain additional loan proceeds at any time when
his then outstanding principal balance would exceed the aggregate value of his
pledged stock. If that outstanding balance exceeds the value of the pledged
stock for a period of 24 consecutive months, the borrower must repay the
principal balance in 20 equal quarterly installments. As of December 31, 1995,
Messrs. Daugherty and Feehan had stock loans outstanding under this program in
the aggregate principal amounts of $625,723 and $897,220, respectively.
PROPOSAL TO APPROVE AMENDMENT TO THE 1989 NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN
The Board of Directors has proposed that the Non-Employee Director Plan be
amended to increase the term of the options granted under such Plan from ten
(10) years to fifteen (15) years by revising Section 5 of such Plan to read as
follows: "The Options granted under this Plan shall be for a term of fifteen
years from the date of granting of each Option." (For a description of the
material features of the Non-Employee Director Plan, see the discussion under
"Directors' Compensation" in this Proxy Statement, which description does not
purport to be complete and is qualified in its entirety by reference to the text
of the Non-Employee Director Plan. A copy of the Non-Employee Director Plan has
been filed with the Securities and Exchange Commission, and any shareholder
desiring a copy of this Plan may obtain it by writing to Cash America
International, Inc., 1600 West 7th Street, Fort Worth, Texas 76102, Attention:
Corporate Secretary.) If this proposed amendment is approved, the option
agreements covering the options granted under this Plan will be amended to
provide that the term of such options will expire October 25, 2004.
The options granted under the Non-Employee Director Plan are "non-qualified
options" under the federal income tax laws. The recipients of options incurred
no tax upon the grant of the options, and the Company received no expense
deduction. At the time of the exercise of an option, the excess of the fair
market value over the exercise price will constitute ordinary income to the
holder, and the Company will be allowed a deduction in the same amount. (On
March 6, 1996, the closing price per share of the Company's common stock on the
New York Stock Exchange was $5.50.)
The Board of Directors believes that the proposed amendment, if approved,
would further the goal of rewarding those efforts of the Company's outside
directors that result in the enhancement of long-term shareholder value.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE PROPOSED AMENDMENT TO
THE 1989 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
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<PAGE> 31
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. of Fort Worth, Texas served as independent public
accountants for the Company for fiscal 1995 and has reported on the Company's
financial statements. The Board of Directors of the Company has selected Coopers
& Lybrand L.L.P. to audit the accounts of the Company for the fiscal year ending
December 31, 1996 and recommends to the shareholders that they ratify this
selection for the ensuing fiscal year ending December 31, 1996. The Company has
been advised that Coopers & Lybrand L.L.P. has no relationship with the Company
or its subsidiaries other than that arising from the firm's employment as
auditors. The affirmative vote of a majority of the outstanding shares of Common
Stock present at the Annual Meeting in person or by proxy is necessary for the
ratification of the appointment of Coopers & Lybrand L.L.P. as independent
public accountants.
A representative of Coopers & Lybrand L.L.P. is expected to be present at
the Annual Meeting and will be afforded an opportunity to make a statement and
will be available to respond to appropriate questions at such meeting.
While shareholder ratification is not required for the selection of Coopers
& Lybrand L.L.P. since the Board of Directors has the responsibility for the
selection of the Company's independent public accountants, the selection is
being submitted for ratification at the Annual Meeting with a view towards
soliciting the shareholders' opinion thereon, which opinion will be taken into
consideration in future deliberations.
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF COOPERS & LYBRAND
L.L.P. AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE 1996 FISCAL
YEAR.
OTHER BUSINESS
Any proposal to be presented by a shareholder at the Company's 1997 Annual
Meeting of Shareholders must be presented to the Company by no later than
November 15, 1996.
It is important that proxies be returned promptly to avoid unnecessary
expense. Therefore, shareholders are urged, regardless of the number of shares
of stock owned, to date, sign and return the enclosed proxy in the enclosed
reply envelope.
By Order of the Board of Directors
HUGH A. SIMPSON
Secretary
March 15, 1996
14
<PAGE> 32
APPENDIX
1989 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
OF
CASH AMERICA INVESTMENTS, INC.
1. Purpose of the Plan.
This 1989 Non-Employee Director Stock Option Plan (the "Plan") is
intended as an incentive to retain as independent directors on the Board of
Directors of the Company persons of training, experience and ability, to
encourage the sense of proprietorship of such persons, and to stimulate the
active interest of such persons in the development and financial success of the
Company. It is further intended that options (the "Options") issued pursuant
to this Plan shall constitute nonqualified stock options within the meaning of
Section 83 of the Internal Revenue Code of 1986, as amended ("Code").
2. Shares and Options.
Subject to adjustments provided in Paragraph 8 hereof, a total of
515,000 shares (the "Shares") of Common Stock, $.10 par value ("Stock"), of the
Company shall be subject to the Plan. The Shares subject to the Plan shall
consist of unissued shares or previously issued shares reacquired and held by
the Company, or any Subsidiary of the Company, and such number of Shares shall
be and hereby is reserved for sale for such purpose. Any of such Shares that
may remain unsold and that are not subject to outstanding Options at the
termination of the Plan shall cease to be reserved for the purpose of the Plan,
but until termination of the Plan the Company shall at all times reserve a
sufficient number of Shares to meet the requirements of the Plan. Should any
Option expire or be cancelled prior to its exercise in full, the Shares
theretofore subject to such Option may not again be subjected to an Option
under the Plan.
3. Automatic Grant of Options.
(a) Options shall be granted to those persons (an "Eligible Person")
who as of the effective date hereof are Directors of the Company and are
not employees of the Company or a Subsidiary. Each Option shall be
evidenced by an option agreement, which shall contain terms that are not
inconsistent with this Plan or applicable laws. The Options automatically
granted to Directors under this Plan shall be in addition to regular
director's fees or other benefits with respect to the Director's position
with the Company or its Subsidiaries. Neither the Plan nor any Option
granted under the Plan shall confer upon any person any right to continue
to serve as a Director. For purposes of this Plan, the term Subsidiary
shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of the granting of
the Option, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one or more of the other
corporations in such chain.
<PAGE> 33
(b) Options shall be granted as follows:
(i) Each Eligible Person who is a member of the Executive
Committee of the Board of Directors of the Company as of the effective
date hereof shall be granted an Option for Seventy Five Thousand
(75,000) Shares;
(ii) Each Eligible Person who is not a member of the Executive
Committee as of the effective date hereof and has at least two (2)
years of service on the Board of Directors shall be granted an Option
for Fifty Thousand (50,000) Shares; and
(iii) All other Eligible Persons as of the effective date hereof
shall be granted an Option for Forty Thousand (40,000) Shares.
The number of Shares subject to each such Option shall constitute the
maximum number of Shares which each respect Eligible Person may acquire under
the Plan.
4. Option Price.
(a) The exercise price of each Share placed under Option pursuant to
the Plan shall be the fair market value of such Share on October 24, 1989,
the date preceding the day on which Options under the Plan are hereby
granted.
(b) The fair market value of a Share on a particular date shall be the
closing price of Stock, which shall be (i) if the Stock is listed or
admitted for trading on any United States national securities exchange, the
last reported sale price of Stock on such exchange as reported in any
newspaper of general circulation or (ii) if Stock is quoted on NASDAQ or
any similar system of automated dissemination of quotations of securities
prices in common use, the mean between the closing high bid and low asked
quotations for such day of Stock on such system. If neither clause (i) nor
(ii) is applicable, the fair market value shall be determined by any fair
and reasonable means prescribed by the Board.
5. Option Period.
The Options granted under this Plan shall be for a term of ten years
from the date of granting of each Option.
6. Exercise of Options; Certain Conditions to Grant.
(a) Options granted under this Plan shall be exercisable,
cumulatively, with respect to 40% of the number of Shares subject to the
Option effective as of the date of grant of the Option, and an additional
10% of the Shares subject to the Option shall be exercisable as of the
first, second, third, fourth, fifth and sixth anniversaries of the date of
grant. The above described Options shall be exercisable irrespective of
the limitations described above in the event of death of the Optionee while
serving as a Director of the Company or termination of service as a
Director of the Company of the Optionee by reason of disability. The term
"Optionee" shall mean a person to
2
<PAGE> 34
whom an Option is granted under this Plan or any successor to the rights of
such person under this Plan by reason of the death of such person.
As a condition to receiving grants of Options described in this
subparagraph (a) of Paragraph 6, each Optionee will be required to enter into a
consulting agreement with the Company. Each such consulting agreement shall be
for an initial term of one year, (and shall renew annually for additional one
year terms unless terminated by either party), shall describe the position and
duties of the Optionee as a director and shall provide for a covenant not to
compete running for the duration of the consulting agreement and for three
years after termination of the Optionee's service as a director of the Company.
Covenants not to compete contained in consulting agreements shall prohibit
competition in any state in which the Company is operating at the time of
termination of service as a director of the Company or any state in which the
Company had reasonable prospects of engaging in business during the
noncompetition period.
Notwithstanding the foregoing provisions, no Option shall be
exercisable within six months of the date of grant; provided, that this
limitation does not apply in the event of the death or disability of the
Optionee.
(b) Options may be exercised solely by the Optionee during his
lifetime or after his death by the personal representative of the
Optionee's estate or the person or persons entitled thereto under his will
or under the laws of descent and distribution.
(c) An Option shall be deemed exercised when (i) the Company has
received written notice of such exercise in accordance with the terms of
the Option, (ii) full payment of the aggregate exercise price of the Shares
as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Board of Directors in its sole discretion have
been made for the Optionee's payment to the Company of the amount, if any,
that the Company determines to be necessary for the Company to withhold in
accordance with applicable federal or state income tax withholding
requirements. The exercise price of any Shares purchased shall be paid
solely in cash, by certified or cashier's check, by money order, by
personal check (if approved by the Board of Directors), or, at the option
of the Optionee, in Stock theretofore owned by such Optionee (or by a
combination of the above). For purposes of determining the amount, if any,
of the exercise price satisfied by payment in Stock, such Stock shall be
valued at its fair market value on the date preceding the date of exercise
in accordance with subparagraph (b) of Paragraph 4. Any Stock delivered in
satisfaction of all or a portion of the exercise price shall be
appropriately endorsed for transfer and assignment to the Company. No
Optionee shall be, or have any of the rights or privileges of, a
shareholder of the Company in respect of any Shares purchasable upon the
exercise of any part of an Option unless and until certificates
representing such Shares shall have been issued by the Company to such
holder.
(d) Upon termination of an Optionee's service as a Director of the
Company or upon the nonrenewal of a consulting agreement, in each case for
any reason, Options not theretofore vested and exercisable shall be
forfeited; provided, that if the Company terminates the Optionee's service
as a Director one-half of the Shares subject to the Option that were not
theretofore exercisable shall be immediately exercisable as of the date of
termination of such service.
3
<PAGE> 35
(e) In the event of a change in control of the Company (as hereafter
defined) all Options then outstanding shall be exercisable immediately. As
used herein, the term "change in control of the Company" shall be deemed to
have occurred if (i) any "person" (as such term is used in Section 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934 as amended) becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities, (ii) during any period of 12 months, individuals
who at the beginning of such period constitute the Board of Directors of
the Company cease for any reason to constitute a majority thereof unless
the election, or the nomination for election by the Company's stockholders,
of each new director was approved by a vote of at least a majority of the
directors then still in office who were directors at the beginning of the
period or (iii) a person (as defined in clause (i) above) acquires (or,
during the 12-month period ending on the date of the most recent
acquisition by such person or group of persons, has acquired) gross assets
of the Company that have an aggregate fair market value greater than or
equal to over 50% of the fair market value of all of the gross assets of
the Company immediately prior to such acquisition or acquisitions.
7. Assignability.
No Option shall be assignable or otherwise transferable except by
will or the laws of descent and distribution.
8. Adjustments.
(a) In the event of any change in the outstanding Stock of the Company
by reason of a stock split, stock dividend, combination or reclassification
of shares, recapitalization, merger, or similar event, the Board may adjust
proportionally (i) the number of shares of Stock (A) reserved under the
Plan and (B) covered by outstanding Options; and (ii) the stock prices
related to outstanding Options. In the event of any other change affecting
Stock or any distribution (other than normal cash dividends) to holders of
Stock, such adjustments as may be deemed equitable by the Board, including
adjustments to avoid fractional shares, shall be made to give proper effect
to such event. In the event of a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or
liquidation, the Board shall be authorized to issue or assume stock Options
by means of substitution of new Options for previously issued options or an
assumption of previously issued Options.
(b) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in connection
with direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number of
or exercise price of Shares then subject to outstanding Options granted
under the Plan.
(c) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under the Plan shall not affect in any manner
the right or power of the Company to make, authorize or consummate (1) any
or all adjustments, recapitalizations, reorganizations or other
4
<PAGE> 36
changes in the Company's capital structure or its business; (2) any merger
or consolidation of the Company; (3) any issue by the Company of debt
securities, or preferred or preference stock which would rank above the
Shares subject to outstanding Options; (4) the dissolution or liquidation
of the Company; (5) any sale, transfer or assignment of all or any part of
the assets or business of the Company; or (6) any other corporate act or
proceeding, whether of a similar character or otherwise.
9. Purchase for Investment.
Whether or not the Options and Shares covered by the Plan have been
registered under the Securities Act of 1933, as amended, each person exercising
an Option under the Plan may be required by the Company to give a
representation in writing that he is acquiring such shares for his own account
for investment and not with a view to, or for sale in connection with, the
distribution of any part thereof. As a condition of any transfer of the
certificate evidencing Shares, the Board may obtain such other agreements or
undertakings, if any, that it may deem necessary or appropriate to assume
compliance with any provisions of the Plan or any law or regulation.
10. Effective Date of Plan.
The Plan shall become effective on October 25, 1989, the date on which
it has been adopted by the Board of Directors. The adoption of the Plan,
however, is conditioned upon the approval by the holders of a majority of the
shares of Stock then outstanding on or before October 25, 1990. The Plan shall
become null and void and all grants of Options thereunder null and void if the
shareholders of the Company should fail to so approve the Plan. The Plan shall
terminate October 25, 1999, subject to early termination by the Board of
Directors pursuant to Section 12 of the Plan.
11. Amendment, Modification, Suspension of Discontinuance of this Plan.
The Board of Directors may amend, modify, suspend or terminate the
Plan for the purpose of meeting or addressing any changes in legal requirements
or for any other purpose permitted by law. Subject to changes in law or other
legal requirements, including any change in the provisions of Rule 16b-3 that
would permit otherwise, the Plan may not be amended without the consent of the
holders of a majority of the shares of Stock then outstanding, to (i) increase
materially the aggregate number of shares of Stock that may be issued under the
Plan (except for adjustments pursuant to Paragraph 8 of the Plan), (ii)
increase materially the benefit accruing to Optionees under the Plan, or (iii)
modify materially the requirements as to eligibility for participation in the
Plan.
12. Government Regulations.
The Plan, and the granting and exercise of Options thereunder, and the
obligation of the Company to sell and deliver shares under such Options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.
5
<PAGE> 37
13. Interpretation.
(a) If any provision of the Plan is held invalid for any reason, such
holding shall not affect the remaining provisions hereof, but instead the
Plan shall be construed and enforced as if such provision had never been
included in the Plan.
(b) THIS PLAN SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
(c) Headings contained in this Agreement are for convenience only and
shall in no manner be construed as part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender shall
be a reference to such other gender as is appropriate.
14. Section 83(b) Election.
If as a result of exercising an Option, an Optionee receives Shares
that are subject to a "substantial risk of forfeiture" and are not
"transferable" as those terms are defined for purposes of Section 83(a) of the
Code, then such Optionee may elect under Section 83(b) of the Code to include
in his gross income, for his taxable year in which the Shares are transferred
to him, the excess of the fair market value of such Shares at the time of
transfer (determined without regard to any restriction other than one which by
its terms will never lapse), over the amount paid for the Shares. If the
Optionee makes the Section 83(b) election described above, the Optionee shall
(i) make such election in a manner that is satisfactory to the Committee, (ii)
provide the Company with a copy of such election, (iii) agree to promptly
notify the Company if any Internal Revenue Service or state tax agent, on audit
or otherwise, questions the validity or correctness of such election or of the
amount of income reportable on account of such election, and (iv) agree to such
withholding as the Committee may reasonably require in its sole and absolute
discretion.
6
<PAGE> 38
SUPPLEMENTAL INFORMATION
To: Securities and Exchange Commission
Re: Supplemental information pursuant to Rule 14a-101, Item 10, Instruction 5
The shares of Cash America International, Inc. common stock underlying
the options granted under the Company's 1989 Non-Employee Director Stock Option
Plan were registered on Form S-8 (SEC File No. 33-36430) effective August 20,
1990.
7
<PAGE> 39
<TABLE>
<S> <C> <C>
/X/ Please mark your SHARES IN YOUR NAME
votes as in this
example.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of ----- ----- 2. Ratification of the appointment of Coopers & ----- ------ ------
Directors / / / / Lybrand L.L.P. as independent auditors for / / / / / /
(see reverse) the year 1996.
3. Approval of the proposed amendment to the / / / / / /
Company's 1989 Non-Employee Director Stock
For, except vote withheld from the following Option Plan.
nominee(s):
4. In their discretion the proxies are authorized to vote upon such
other matters as may come before the meeting or any adjournment
- -------------------------------------------- thereof.
</TABLE>
Change
of / /
Address
SIGNATURES(S) DATE
------------------------------- --------------------------
SIGNATURES(S) DATE
------------------------------- --------------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
CASH AMERICA INTERNATIONAL, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING APRIL 24, 1996
P R O X Y
The undersigned hereby constitutes and appoints Jack R. Daugherty, Daniel R.
Feehan, and Hugh A. Simpson, and each of them, my true and lawful attorneys and
proxies, with power of substitution, to represent the undersigned and vote at
the annual meeting of shareholders of Cash America International, Inc. (the
"Company") to be held in Fort Worth, Texas on April 24, 1996, and at any
adjournment thereof, all of the stock of the Company standing in my name as of
the record date of March 6, 1996 on all matters coming before said meeting.
Election of Directors, Nominees: (change of address)
Jack R. Daugherty, A.R. Dike,
Daniel R. Feehan, James H. Graves, ---------------------------------
B.D. Hunter, Timothy J. McKibben,
Alfred M. Micallef, Carl P. Motheral, ---------------------------------
Samuel W. Rizzo, Rosalin Rogers
---------------------------------
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card).
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF CASH AMERICA INTERNATIONAL, INC.
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation
or Formation
---------------
<S> <C>
Cash America, Inc. Delaware
Cash America, Inc. of Louisiana Delaware
Cash America, Inc. of North Carolina North Carolina
Georgia Cash America, Inc. Georgia
Florida Cash America, Inc. Florida
Cash America, Inc. of South Carolina South Carolina
Cash America, Inc. of Kentucky Kentucky
Cash America, Inc. of Oklahoma Oklahoma
Cash America, Inc. of Tennessee Tennessee
Cash America Pawn, Inc. of Ohio Ohio
Cash America, Inc. of Alabama Alabama
Cash America, Inc. of Colorado Colorado
Cash America, Inc. of Indiana Indiana
Cash America of Missouri, Inc. Missouri
Express Cash International Corporation Delaware
Cash America Holding, Inc. Delaware
Cash America Pawn L.P. Delaware
Cash America Management L.P. Delaware
Vincent's Jewelers and Loan, Inc. Missouri
Harvey & Thompson Limited United Kingdom
CAII Pantbelaning Aktiebolag Sweden
Svensk Pantbelaning AB Sweden
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the two separate registration
statements of Cash America International, Inc. on Form S-8, (File No. 33-29658
and File No. 33-36430) of our reports dated January 26, 1996, which include an
explanatory paragraph related to a change in accounting principle, on our
audits of the consolidated financial statements and financial statement
schedule of Cash America International, Inc. as of December 31, 1995 and 1994,
and for each of the three years in the period ended December 31, 1995, which
reports are included or incorporated by reference in this Annual Report on Form
10-K.
COOPERS & LYBRAND L.L.P.
Fort Worth, Texas
March 26, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 3,435
<SECURITIES> 0
<RECEIVABLES> 99,611
<ALLOWANCES> 0
<INVENTORY> 56,647
<CURRENT-ASSETS> 178,297
<PP&E> 102,871
<DEPRECIATION> 37,884
<TOTAL-ASSETS> 315,178
<CURRENT-LIABILITIES> 15,693
<BONDS> 123,462
<COMMON> 3,024
0
0
<OTHER-SE> 172,999
<TOTAL-LIABILITY-AND-EQUITY> 315,178
<SALES> 174,722
<TOTAL-REVENUES> 253,579
<CGS> 101,707
<TOTAL-COSTS> 189,854
<OTHER-EXPENSES> 32,232
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,437
<INCOME-PRETAX> 20,616
<INCOME-TAX> 7,767
<INCOME-CONTINUING> 12,849
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (19,772)
<NET-INCOME> (6,923)
<EPS-PRIMARY> (.24)
<EPS-DILUTED> (.24)
</TABLE>
