<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to _______________
Commission File Number 1-9733
CASH AMERICA INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-2018239
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
1600 WEST 7TH STREET
FORT WORTH, TEXAS 76102
(Address of principal executive offices) (Zip Code)
(817) 335-1100
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal
year, if changed since last report.)
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
------ ------
APPLICABLE ONLY TO CORPORATE ISSUERS:
25,810,601 common shares, $.10 par value, were outstanding as of April 30, 2000
================================================================================
<PAGE> 2
CASH AMERICA INTERNATIONAL, INC.
INDEX TO 10-Q
<TABLE>
<CAPTION>
PART I. FINANCIAL STATEMENTS
Page
<S> <C>
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - March 31, 2000
and 1999 and December 31, 1999..................................................... 1
Consolidated Statements of Income - Three Months
Ended March 31, 2000 and 1999...................................................... 2
Consolidated Statements of Stockholders' Equity -
Three Months Ended March 31, 2000 and 1999......................................... 3
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 2000 and 1999......................................... 4
Notes to Consolidated Financial Statements......................................... 5
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition............................. 10
PART II. OTHER INFORMATION............................................................... 21
SIGNATURE................................................................................. 22
</TABLE>
<PAGE> 3
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) (UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999 1999
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,599 $ 5,769 $ 6,186
Loans 115,907 120,845 125,349
Merchandise held for disposition, net 56,572 63,125 64,419
Inventory 3,549 1,213 2,801
Finance and service charges receivable 18,928 18,304 21,052
Other receivables and prepaid expenses 12,884 7,398 6,279
Income taxes recoverable 8,921 5,422 8,824
Deferred tax assets 5,278 7,487 5,548
----------- ----------- -----------
Total current assets 228,638 229,563 240,458
Property and equipment, net 55,378 62,132 60,961
Intangible assets, net 90,036 89,570 90,901
Other assets 9,887 3,993 9,911
Investment in and advances
to unconsolidated subsidiary 8,082 18,832 15,392
----------- ----------- -----------
Total assets $ 392,021 $ 404,090 $ 417,623
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 19,360 $ 18,036 $ 20,931
Customer deposits 4,635 4,750 4,131
Income taxes currently payable 1,423 2,344 1,587
Current portion of long-term debt 5,309 4,693 5,390
----------- ----------- -----------
Total current liabilities 30,727 29,823 32,039
Deferred tax liabilities 1,646 1,381 1,668
Long-term debt 173,605 180,048 196,976
----------- ----------- -----------
Stockholders' equity:
Common stock, $.10 par value per
share, 80,000,000 shares authorized 3,024 3,024 3,024
Paid in surplus 127,852 126,991 127,350
Retained earnings 100,379 107,207 105,331
Accumulated other comprehensive loss (4,667) (3,774) (3,989)
Notes receivable - stockholders (6,145) (3,510) (5,820)
----------- ----------- -----------
220,443 229,938 225,896
Less -- shares held in treasury, at cost (34,400) (37,100) (38,956)
----------- ----------- -----------
Total stockholders' equity 186,043 192,838 186,940
----------- ----------- -----------
Total liabilities and stockholders' equity $ 392,021 $ 404,090 $ 417,623
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
Page 1
<PAGE> 4
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data) (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
------------ ------------
REVENUE
<S> <C> <C>
Finance and service charges $ 29,526 $ 31,495
Proceeds from disposition of merchandise 62,519 61,210
Lending franchise fees and royalties 79 11
Rental operations 3,741 1,450
Check cashing royalties and fees 1,131 1,482
------------ ------------
TOTAL REVENUE 96,996 95,648
------------ ------------
COSTS OF REVENUE
Disposed merchandise 42,476 40,416
Rental operations 1,182 323
------------ ------------
NET REVENUE 53,338 54,909
============ ============
OPERATING EXPENSES
Lending operations 31,386 29,707
Rental operations 2,508 511
Check cashing operations 367 2,146
Administration 6,687 7,360
Depreciation 3,528 3,913
Amortization 1,105 1,188
------------ ------------
Total operating expenses 45,581 44,825
------------ ------------
INCOME FROM OPERATIONS 7,757 10,084
Interest expense, net 3,299 3,331
Equity in loss of unconsolidated subsidiary 7,341 587
Gain from issuance of subsidiary's stock -- (4,815)
------------ ------------
Income (loss) before income taxes (2,883) 10,981
Provision for income taxes 1,754 6,181
------------ ------------
NET INCOME (LOSS) $ (4,637) $ 4,800
============ ============
Net income (loss) per share:
Basic $ (.18) $ .19
Diluted (.18) .18
------------ ------------
Weighted average shares:
Basic 25,282 25,191
Diluted 25,282 26,419
============ ============
</TABLE>
See notes to consolidated financial statements.
Page 2
<PAGE> 5
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(In thousands, except share data) (UNAUDITED)
<TABLE>
<CAPTION>
ACCUMULATED NOTES
COMMON STOCK OTHER RECEIVABLE -
------------------------- PAID IN RETAINED COMPREHENSIVE COMPREHENSIVE STOCK-
SHARES AMOUNT SURPLUS EARNINGS INCOME (LOSS) INCOME (LOSS) HOLDERS
------------ ---------- --------- ---------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1999 30,235,164 $ 3,024 $ 127,350 $ 105,331 $ (3,989) $ (5,820)
Comprehensive loss:
Net loss (4,637) $ (4,637)
Other comprehensive
loss - Foreign
currency translation
adjustments (678) (678)
-------------
Comprehensive loss $ (5,315)
-------------
Dividends declared--
$.0125 per share (315)
Treasury shares acquired
Treasury shares reissued 485
Tax benefit from exercise
of option shares 17
Change in notes
receivable -
stockholders (325)
------------ ---------- --------- ---------- ------------- ------------- ----------
Balance at
March 31, 2000 30,235,164 $ 3,024 $ 127,852 $ 100,379 $ (4,667) $ (6,145)
============ ========== ========= ========== ============= ============= ========
Balance at
December 31, 1998 30,235,164 $ 3,024 $ 126,615 $ 102,722 $ (2,414) $ (3,263)
Comprehensive income:
Net income 4,800 $ 4,800
Other comprehensive
loss - Foreign
currency translation
adjustments (1,360) (1,360)
-------------
Comprehensive income $ 3,440
-------------
Dividends declared--
$.0125 per share (315)
Treasury shares acquired
Treasury shares reissued (232)
Tax benefit from exercise
of option shares 608
Change in notes
receivable - stockholders (247)
------------ ---------- --------- ---------- ------------- ------------- ----------
Balance at
March 31, 1999 30,235,164 $ 3,024 $ 126,991 $ 107,207 $ (3,774) $ (3,510)
============ ========== ========= ========== ============= ============= ==========
<CAPTION>
TREASURY STOCK
-----------------------
SHARES AMOUNT
----------- -----------
<S> <C> <C>
Balance at
December 31, 1999 5,055,170 $ (38,956) $
Comprehensive loss:
Net loss
Other comprehensive
loss - Foreign
currency translation
adjustments
Comprehensive loss
Dividends declared--
$.0125 per share
Treasury shares acquired (3,341) 45
Treasury shares reissued (588,200) 4,511
Tax benefit from exercise
of option shares
Change in notes
receivable -
stockholders
--------- -----------
Balance at
March 31, 2000 4,463,629 $ (34,400)
========= ===========
Balance at
December 31, 1998 5,114,218 $ (39,240)
Comprehensive income:
Net income
Other comprehensive
loss - Foreign
currency translation
adjustments
Comprehensive income
Dividends declared--
$.0125 per share
Treasury shares acquired (750) 3
Treasury shares reissued (279,939) 2,137
Tax benefit from exercise
of option shares
Change in notes
receivable - stockholders
----------- -----------
Balance at
March 31, 1999 4,833,529 $ (37,100)
=========== ===========
</TABLE>
See notes to consolidated financial statements.
Page 3
<PAGE> 6
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (4,637) $ 4,800
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 3,528 3,913
Amortization 1,105 1,188
Equity in loss of unconsolidated subsidiary 7,341 587
Gain from issuance of subsidiary's stock -- (4,815)
Changes in operating assets and liabilities-
Merchandise held for disposition and inventory 7,138 1,238
Finance and service charges receivable 2,031 1,282
Other receivables and prepaid expenses (155) 737
Accounts payable and accrued expenses (1,537) 675
Customer deposits, net 504 599
Current income taxes (227) 3,767
Deferred taxes, net 39 1,500
---------- ----------
Net cash provided by operating activities 15,130 15,471
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Loans forfeited and transferred to merchandise held for disposition 32,424 34,632
Loans repaid or renewed 77,042 79,867
Loans made, including loans renewed (100,695) (107,852)
---------- ----------
Net decrease in loans 8,771 6,647
---------- ----------
Acquisitions, net of cash acquired (425) (1,509)
Effect on cash of de-consolidation of subsidiary -- (4,795)
Advance to unconsolidated subsidiary -- (500)
Purchases of property and equipment (4,386) (6,572)
---------- ----------
Net cash provided (used) by investing activities 3,960 (6,729)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net payments under bank lines of credit (22,822) (8,596)
Payments on capital lease obligations (255) (107)
Net proceeds from reissuance of treasury shares 4,671 1,658
Treasury shares sold 45 3
Dividends paid (315) (315)
---------- ----------
Net cash used by financing activities (18,676) (7,357)
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1) (33)
---------- ----------
CHANGE IN CASH AND CASH EQUIVALENTS 413 1,352
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,186 4,417
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,599 $ 5,769
========== ==========
</TABLE>
See notes to consolidated financial statements.
Page 4
<PAGE> 7
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of Cash
America International, Inc. and its majority owned subsidiaries (the "Company").
Through March 9, 1999, the assets and liabilities of the Company's automated
check cashing machine operations, now known as innoVentry Corp. ("innoVentry"),
and the results of its operations were included in the consolidated financial
statements. The Company disposed of a majority interest in innoVentry on March
9, 1999, and began accounting for its investment and its proportionate share of
the results of innoVentry's operations by the equity method of accounting. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
The financial statements as of March 31, 2000 and 1999, and for the
three month periods then ended are unaudited but, in management's opinion,
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results for such interim periods.
Operating results for the three month periods are not necessarily indicative of
the results that may be expected for the full fiscal year.
Certain amounts in the consolidated financial statements for the three
month period ended March 31, 1999, have been reclassified to conform to the
presentation format adopted in 2000. These reclassifications have no effect on
the net income previously reported.
These financial statements and related notes should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's 1999 Annual Report to Stockholders.
2. REVENUE RECOGNITION
Lending Operations - Pawn loans ("loans") are made on the pledge of tangible
personal property. The Company accrues finance and service charge revenue on all
loans that the Company deems collectible based on historical loan redemption
statistics. For loans not repaid, the carrying value of the forfeited collateral
("merchandise held for disposition") is stated at the lower of cost (cash amount
loaned) or market.
Revenue is recognized at the time of disposition of merchandise.
Interim customer payments for layaway sales are recorded as deferred revenue and
subsequently recognized as revenue during the period in which final payment is
received.
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<PAGE> 8
Check Cashing Operations - The Company records fees derived from its owned check
cashing locations in the period in which the service is provided. Royalties
derived from franchised locations are recorded on the accrual basis.
Rental Operations - Tire and wheel rentals are paid on a weekly basis in advance
and revenue is recognized in the period earned. Rental payments received prior
to the period due are recorded as deferred revenue. Customers may return the
rented tires and wheels at any time and have no obligation to complete the
rental agreement. Rent-A-Tire has also entered into agreements to operate and
manage stores for unrelated investors. The investors own the stores and incur
all costs to operate them. Management fees earned by Rent-A-Tire are recorded in
revenue over the life of the agreement. In addition, Rent-A-Tire receives
compensation for its efforts in constructing and opening each store that it
manages for a third party.
3. PROPERTY AND EQUIPMENT
On March 28, 2000, a tornado severely damaged the Company's corporate
headquarters in Fort Worth, Texas. Headquarters operations have been relocated
to temporary facilities and the Company's operating locations were not affected.
The Company owns the building and management will evaluate all of its
alternatives relating to its restoration. The Company's insurance coverage
provides proceeds for the loss of the building; replacement of furniture,
improvements, and equipment; recovery of losses resulting from business
interruption; and recovery of other general expenses that will be incurred. The
net book value of $6.3 million of property and equipment damaged or destroyed is
included in other receivables and prepaid expenses in the accompanying
consolidated balance sheet at March 31, 2000. Based upon current assessments of
the insurance coverage, management believes that there will be no significant
adverse effect on the Company's consolidated financial position or results of
operations. However, there can be no assurance that the Company will not
ultimately incur an extraordinary loss, net of insurance recovery and applicable
income taxes.
Page 6
<PAGE> 9
4. LONG-TERM DEBT
The Company's long-term debt instruments and balances outstanding as of March 31
are as follows (in thousands):
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
U.S. Line of Credit up to $150 million
due June 30, 2003 $ 78,750 $ 85,500
U.K. Line of Credit up to(pound)10 million
due April 30, 2001 14,628 7,575
Swedish Lines of Credit up to SEK 215 million 13,298 17,779
8.33% senior unsecured notes due 2003 17,143 21,429
8.14% senior unsecured notes due 2007 20,000 20,000
7.10% senior unsecured notes due 2008 30,000 30,000
Capital lease obligations payable 4,595 1,958
6.25% subordinated unsecured notes due 2004 500 500
------------ ------------
178,914 184,741
Less current portion 5,309 4,693
------------ ------------
Total long-term debt $ 173,605 $ 180,048
============ ============
</TABLE>
5. WEIGHTED AVERAGE SHARES
The reconciliation of basic and diluted weighted average common shares
outstanding for the three month periods ended March 31, follows (in thousands):
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
Weighted average shares - Basic 25,282 25,191
Effect of shares applicable to stock option plans -- 1,191
Effect of shares applicable to nonqualified savings plan -- 37
---------- ----------
Weighted average shares - Diluted 25,282 26,419
========== ==========
</TABLE>
Diluted weighted average shares for the three month period ended March
31, 2000, excludes approximately 780,000 shares and 47,000 shares applicable to
stock option plans and the nonqualified savings plan, respectively. These shares
are excluded due to their antidilutive effect as a result of the Company's net
loss during the three month period ended March 31, 2000.
Page 7
<PAGE> 10
6. UNCONSOLIDATED SUBSIDIARY
Summarized unaudited results of operations for innoVentry for the three month
periods ended March 31, follows (in thousands):
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
Total net revenue $ 3,358 $ 859
Expenses including net interest expense (23,709) (4,678)
Income tax benefit -- 207
---------- ----------
Net loss $ (20,351) $ (3,612)
========== ==========
</TABLE>
The Company recorded $2.5 million of net loss from innoVentry's
operations in 1999 prior to de-consolidation on March 9, 1999. Thereafter, the
Company recorded its proportionate share of innoVentry's net loss by the equity
method. The Company owns a 38.3% voting interest in innoVentry as of March 31,
2000.
7. OPERATING SEGMENT INFORMATION
The Company has two reportable operating segments in the lending industry and
one each in the check cashing and rental industries. While the United States and
foreign lending segments offer the same services, each is managed separately due
to the different operational strategies required. The rental operation offers
different services and products thus requiring its own technical, marketing and
operational strategy. The same is true with respect to the check cashing
operations. However, the Company has not controlled the operations of innoVentry
since March 9, 1999.
Information concerning the segments is set forth below (in thousands):
<TABLE>
<CAPTION>
Lending
------------------------------------
United Check
States Foreign Total Cashing Rental Consolidated
---------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended
March 31, 2000:
Total revenue $ 83,489 $ 8,803 $ 92,292 $ 963 $ 3,741 $ 96,996
Income (loss)
from operations 5,990 2,322 8,312 256 (811) 7,757
Total assets at end of
period 262,465 88,049 350,514 19,649 21,858 392,021
---------- ---------- ---------- ---------- ---------- ------------
Three Months Ended
March 31, 1999:
Total revenue $ 85,448 $ 7,445 $ 92,893 $ 1,305(A) $ 1,450 $ 95,648
Income (loss)
from operations 9,455 2,984 12,439 (2,333)(A) (22) 10,084
Total assets at end of
period 286,282 80,170 366,452 28,209 9,429 404,090
========== ========== ========== ========== ========== ============
</TABLE>
(A) Includes innoVentry operations through March 9, 1999.
Page 8
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8. LITIGATION
The Company is a defendant in certain lawsuits encountered in the ordinary
course of its 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.
Page 9
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
SUMMARY CONSOLIDATED FINANCIAL DATA
FIRST QUARTER ENDED MARCH 31, 2000 vs.
FIRST QUARTER ENDED MARCH 31, 1999
================================================================================
(Dollars in thousands)
The following table sets forth selected consolidated financial data with
respect to the Company and its consolidated lending operations as of March 31,
2000 and 1999, and for the three months then ended.
<TABLE>
<CAPTION>
2000 1999 Change
------------ ------------ ------------
<S> <C> <C> <C>
REVENUE
Finance and service charges $ 29,526 $ 31,495 (6)%
Proceeds from disposition of merchandise 62,519 61,210 2%
Lending franchise fees and royalties 79 11 618%
Rental operations 3,741 1,450 158%
Check cashing royalties and fees 1,131 1,482 (24)%
------------ ------------ ------------
TOTAL REVENUE 96,996 95,648 1%
------------ ------------ ------------
COSTS OF REVENUE
Disposed merchandise 42,476 40,416 5%
Rental operations 1,182 323 266%
------------ ------------ ------------
NET REVENUE $ 53,338 $ 54,909 (3)%
============ ============ ============
OTHER DATA
CONSOLIDATED OPERATIONS:
Net revenue contribution by source--
Finance and service charges 55.4% 57.4% (3)%
Margin on disposition of merchandise 37.7% 37.9% (1)%
Rental operations 4.8% 2.0% 140%
Check cashing operations 2.1% 2.7% (22)%
Expenses as a percentage of net revenue--
Operations and administration 76.8% 72.3% 6%
Depreciation and amortization 8.7% 9.3% (6)%
Interest, net 6.2% 6.1% 2%
Income from operations before depreciation
and amortization as a percentage of total revenue 12.8% 15.9% (20)%
Income from operations as a percentage of total revenue 8.0% 10.5% (24)%
------------ ------------ ------------
LENDING OPERATIONS:
Annualized yield on pawn loans 99% 102% (3)%
Average pawn loan balance per average location in operation $ 258 $ 270 (4)%
Average pawn loan amount at end of period (not in thousands) $ 105 $ 104 1%
Margin on disposition of merchandise as a percentage
of proceeds from disposition of merchandise 32.1% 34.0% (6)%
Average annualized merchandise turnover 2.8x 2.5x 12%
Average merchandise held for disposition
per average location $ 131 $ 140 (6)%
Lending locations in operation--
Beginning of period 466 464
Acquired -- --
Start-ups 1 --
Combined or closed (3) (3)
End of period 464 461 1%
Additional franchise locations at end of period 15 5 200%
Total locations at end of period 479 466 3%
Average number of owned locations (a) 465 463 --
============ ============ ============
</TABLE>
(a) Averages based on accumulation of month-end balances and dividing aggregate
total by total months in the period.
Page 10
<PAGE> 13
GENERAL
The Company is a diversified provider of specialty financial services
to individuals in the United States, United Kingdom and Sweden. The Company
offers secured non-recourse loans, commonly referred to as pawn loans, to
individuals through its lending operations. The pawn loan portfolio generates
finance and service charge revenue. The disposition of merchandise, primarily
collateral from unredeemed pawn loans, is a related but secondary source of net
revenue from the Company's lending function. The Company also provides rental of
tires and wheels through its subsidiary, Rent-A-Tire, Inc. ("Rent-A-Tire") and
check cashing services through its franchised and company owned Mr. Payroll(R)
manned check cashing centers.
The Company expanded its lending operations during the fifteen month
period ended March 31, 2000, by adding a net 10 locations. It acquired 5
operating units, established 5 locations, and combined or closed 7 locations. In
addition, 10 franchise units were opened including 3 company-owned locations
that were sold to a franchisee. As of March 31, 2000, the Company's lending
operations consisted of 479 lending units--411 owned units and 15 franchised
units in 17 states in the United States, 42 jewelry-only units in the United
Kingdom, and 11 loan-only and primarily jewelry-only units in Sweden.
During the fifteen month period ended March 31, 2000, Rent-A-Tire
acquired 14 tire and wheel rental stores that it previously managed and
established 9 stores. As of March 31, 2000, Rent-A-Tire owned and operated 27
stores and also managed 14 additional stores for a third party that were added
during 1999.
During the first quarter of 1999, the Company restructured its check
cashing operations in a series of transactions designed to isolate and
accelerate the development and deployment of its automated check cashing machine
("CCM"). In January 1999, the Company transferred its manned check cashing
operations into a new wholly owned consolidated subsidiary ("Mr. Payroll"). As
of March 31, 2000, Mr. Payroll operated 126 franchised and 10 company owned
manned check cashing centers in twenty states. On March 9, 1999, Wells Fargo
Cash Centers, Inc. ("Cash Centers"), a wholly owned subsidiary of Wells Fargo
Bank, N.A., contributed approximately $27.0 million of cash and assets to the
Company's CCM subsidiary (now known as "innoVentry") and received newly issued
shares of innoVentry's senior convertible Series A preferred stock representing
45% of innoVentry's voting interest. Additionally, certain members of the newly
constituted management of innoVentry subscribed for newly issued shares of
common stock of innoVentry, representing 10% of its voting interest. The Company
also assigned 10% of its senior convertible Series A preferred stock to the
former owners of innoVentry's predecessor in consideration for the termination
of an option issued in conjunction with the Company's original acquisition of
innoVentry's predecessor. Upon completion of the transactions, the Company's
residual ownership interest in innoVentry was 40.5%. As a result, the Company no
longer controlled innoVentry, it was de-consolidated and the Company began
accounting for its investment and its share of the results of innoVentry's
operations after March 9, 1999, by the equity method of accounting whereby the
Company records its proportionate share of innoVentry's earnings or losses in
its consolidated financial statements. In October 1999, the Company, Cash
Centers, and a third party each purchased $10.0 million of innoVentry's
Page 11
<PAGE> 14
newly issued senior convertible Series B voting preferred stock. The Company's
voting interest as of March 31, 2000, is 38.3%.
RESULTS OF OPERATIONS
FIRST QUARTER ENDED MARCH 31, 2000, COMPARED TO THE
FIRST QUARTER ENDED MARCH 31, 1999
Net Revenue: Consolidated. Consolidated net revenue decreased 3%, or
$1.6 million, to $53.3 million during the first quarter ended March 31, 2000
(the "current quarter"), from $54.9 million during the first quarter ended March
31, 1999 (the "prior year quarter"). Net revenue from lending activities and
check cashing operations declined $2.7 million and $.3 million, respectively.
Rental operations net revenue increased $1.4 million.
Net Revenue: Lending Activities. Net revenue from lending operations
decreased $2.7 million to $49.8 million during the current quarter from $52.5
million during the prior year quarter. Same units (those in operation for more
than one year) accounted for $2.1 million of the decrease and an additional
decrease of $.6 million resulted from a net reduction of 3 lending units since
March 31, 1999. The principal components of lending operations net revenue are
finance and service charges, which declined $2.0 million, net revenue from the
disposition of merchandise, which declined $.8 million, domestic franchising
activities, which increased $.1 million, and foreign check cashing operations,
which was the same in both quarters.
Finance and service charges decreased $2.0 million, or 6%, in the
current quarter compared to the prior year quarter. Fluctuations in finance and
service charges are caused by changes in both the average balance outstanding of
pawn loans and the annualized yield of the pawn loan portfolio. Of the $2.0
million decline, $1.3 million was the result of a 4% decrease in the average
pawn loan balance which was caused by a 6% decrease in the average number of
loans outstanding that was partially offset by a 2% increase in the average
amount per loan. The remaining $.7 million decline was caused by a 3% decrease
in the consolidated annualized loan yield.
Pawn loans outstanding at March 31, 2000, decreased $4.9 million, or
4%, to $115.9 million from $120.8 million at March 31, 1999. This decline is
primarily attributable to a decrease in loan demand leading to a lower number of
loans outstanding. Management believes this trend of lower average loan balances
will continue which will result in lower levels of finance and service charges
and net revenue until loan demand or customer count increases. Pawn loans
outstanding at March 31, 2000, were 8% lower than at December 31, 1999, compared
to a 6% decline for the comparable period of the preceding year. For domestic
operations, pawn loan balances decreased 13% during the 2000 period and 11%
during the comparable 1999 period. Historically, the Company's domestic pawn
loans have declined during the first quarter when the Internal Revenue Service
processes federal income tax refunds. Management believes that many customers
use a portion of their refund to repay or extend their loans and purchase items
of personal property. Foreign loan balances, denominated in local currencies,
increased during both periods. However, they did not lessen the impact of the
domestic decreases since both currencies were weaker against the dollar at
Page 12
<PAGE> 15
March 31, 2000, as compared to December 31, 1999. After translation into
dollars, the net foreign loan balance increase was negligible.
The consolidated annualized loan yield, which represents the blended
result derived from the distinctive loan yields realized in the three countries
in which the Company operates, was 99% in the current quarter compared to 102%
in the prior year quarter. The decrease in the yield was primarily the result of
a lower blended yield on foreign loans as the domestic annualized loan yield was
133% for the current quarter compared to 131% for the prior year quarter. The
domestic increase is primarily attributable to slightly higher redemption rates
and decreased loan demand leading to a greater decline in loan balances during
the current quarter. The blended yield on average foreign pawn loans outstanding
was 51% for the current quarter compared to 55% in the prior year quarter. The
decrease in the blended foreign loan yield resulted primarily from a decline in
loan yield in the United Kingdom to 53% from 59%. Average pawn loan balances in
the United Kingdom during the current quarter were 18% higher than the prior
year quarter. However, lower redemption rates and lower returns on the
disposition of unredeemed collateral contributed to the decline in loan yield.
Net revenue from the disposition of merchandise represents the proceeds
received from the disposition of merchandise in excess of the cost of
merchandise disposed. Proceeds from the disposition of merchandise in the
current quarter were $1.3 million, or 2%, higher than the prior year quarter
primarily due to a $1.3 million increase from the United Kingdom lending units,
including $.5 million from same units. The margin on disposition of merchandise
declined to 32.1% in the current quarter from 34.0% during the prior year
quarter. Excluding the effect of the disposition of scrap jewelry, the margin on
disposition of merchandise fell to 34.1% for the current quarter from 35.4% in
the prior year quarter primarily due to price discounting to reduce merchandise
to more desirable levels. The margin on disposition of scrap jewelry was
negligible and contributed to the lower overall margin on all merchandise
disposed in the current quarter. The net result of the increased proceeds and
reduced margin was an $.8 million, or 4% decline in net revenue from the
disposition of merchandise. As a result of management's decision to emphasize
disposition of merchandise, the ratio of pawn loan balances to merchandise
balances improved. The merchandise turnover rate increased to 2.8 times in the
current quarter compared to 2.5 times in the prior year quarter and the balance
of merchandise available for disposition at March 31, 2000, was 10.4% less than
at March 31, 1999.
Net Revenue: Other Activities. Net revenue of Rent-A-Tire increased to
$2.5 million in the current quarter from $1.1 million in the prior year quarter.
Tire and wheel rentals and sales net revenue increased $1.2 million as a result
of an average of 21 more stores in operation in the current quarter compared to
the prior year quarter. The level of activity in managed stores primarily drives
management fees and related revenue. Such revenue increased $.2 million as a
result of a 31% increase in the number of tires and wheels on rental agreements
in the managed stores.
The restructuring of the Company's check cashing operations and
de-consolidation of innoVentry resulted in a $.3 million decrease in other net
revenue in the current year quarter compared to the prior year quarter.
Following de-consolidation, the Company began accounting for its investment in
innoVentry by the equity method and, accordingly, the
Page 13
<PAGE> 16
Company's share of the results of operations of innoVentry is recorded in
"Equity in loss of unconsolidated subsidiary." See "Other Items" below.
Operations and Administration Expenses. Due in part to the 3% decrease
in consolidated net revenue, consolidated operations and administration expenses
as a percentage of net revenue were 76.8% in the current quarter compared to
72.3% for the prior year quarter. Total operations and administration expenses
increased a net amount of $1.2 million, or 3%, in the current quarter as
compared to the prior year quarter. Domestic lending operations expenses
increased $1.4 million primarily as a result of higher personnel benefits and
occupancy expenses. Foreign lending operations contributed $.6 million of the
increase and Rent-A-Tire accounted for $2.0 million of the increase due to an
average of 21 more stores during the current quarter. Check cashing operations
expenses decreased $2.8 million as a result of the de-consolidation of
innoVentry in March 1999.
Depreciation and Amortization. Depreciation and amortization expenses
as a percentage of net revenue decreased to 8.7% in the current quarter from
9.3% in the prior year quarter. Depreciation and amortization expenses decreased
9.2% primarily as a result of a moderation in the Company's unit expansion of
its lending operations.
Interest Expense. Net interest expense as a percentage of net revenue
increased to 6.2% in the current quarter from 6.1% in the prior year quarter.
Average debt outstanding decreased 1.5% to $194.4 million during the current
quarter from $197.4 million during the prior year quarter. The effective blended
borrowing cost was 6.8% in both quarters. As a result, interest expense was
approximately the same because the current quarter was one day longer than the
prior year quarter.
Other Items. Equity in loss of unconsolidated subsidiary, representing
the Company's share of innoVentry's net losses following de-consolidation in
March 1999, was $7.3 million in the current quarter compared to $.6 million in
the prior year quarter. The Company expects innoVentry's losses to continue as
its operations continue to expand. However, the future losses recorded by the
Company will be limited to the carrying value of its investment in and advances
to innoVentry.
In the prior year quarter, the Company recorded a gain of $4.8 million,
before applicable income tax expense of $3.7 million, from the issuance of
innoVentry's senior convertible Series A preferred stock and common stock in
March 1999.
Income Taxes. The Company's consolidated effective tax rate is impacted
in the current quarter by the effect of the valuation allowance provided against
the deferred tax assets arising from the Company's equity in the losses of
innoVentry and in the prior year quarter by the effects of income taxes provided
upon the de-consolidation of innoVentry on March 9, 1999. The Company recognized
no net deferred tax benefits in the current quarter from the equity losses
arising from its investment in innoVentry. Excluding the effects of the equity
in innoVentry's losses after de-consolidation and the gain from issuance of
innoVentry's stock and their related tax effects, the Company's consolidated
effective income tax rate for the current quarter is 39.2% compared to 40.0% in
the prior year quarter. The effective tax rate decreased because, in the current
quarter, a slightly higher proportion of income before taxes occurred in the
foreign entities which have a lower combined effective
Page 14
<PAGE> 17
tax rate. The effective tax rate of the United States entities (excluding the
effects of innoVentry discussed above) decreased slightly to 45.0% for the
current quarter compared to 45.5% for the prior year quarter. The effective tax
rate of the foreign lending operations was 31.4% for both the current quarter
and the prior year quarter.
The Company anticipates that the tax benefit from future innoVentry
losses will be recognized when it is more likely than not that such benefits
will be realized. As a result, management believes that the Company's
consolidated effective income tax rate will continue to be substantially higher
than the statutory income tax rate.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $15.1 million during the
current quarter. The Company invested $4.4 million in purchases of property and
equipment during the current quarter including $2.5 million for property
improvements, remodeling selected operating units, and additions to computer
systems of the lending operations. The remaining $1.9 million was for the
purchase of equipment and the continued development of a point-of-sale software
system for Rent-A-Tire. The Company also invested $.4 million for the
acquisition of one tire rental store. The Company paid $22.8 million to reduce
its net borrowings under the Company's bank lines of credit, paid $.3 million of
debt obligations in connection with capital leases, and paid $.3 million in
dividends. These activities were funded from the cash flow generated by
operating activities, the reduction of pawn loan balances by $8.8 million, and
$4.7 million from the issuance of common shares pursuant to the Company's stock
option plans.
On March 28, 2000, a tornado severely damaged the Company's corporate
headquarters in Fort Worth, Texas. Headquarters operations have been relocated
to temporary facilities and the Company's operating locations were not affected.
The Company owns the building and management will evaluate all of its
alternatives relating to its restoration. The Company's insurance coverage
provides proceeds for the loss of the building; replacement of furniture,
improvements, and equipment; recovery of losses resulting from business
interruption; and recovery of other general expenses that will be incurred.
Based upon current assessments of the insurance coverage, management believes
that there will be no significant adverse effect on the Company's consolidated
financial position, results of operations, or liquidity.
As of March 31, 2000, the Company's voting interest in innoVentry is
38.3%. In the event innoVentry requires additional capital in the future, the
Company has the opportunity to make additional investments. In the event the
Company does not participate in future capital fundings of innoVentry, its
ownership interest will be diluted. Management believes that innoVentry intends
to continue to develop and market the CCM, now known as the RPM(TM) Cash
Management Machine, as a financial services machine. The Company anticipates
that innoVentry will incur future losses and require additional capital until
sufficient revenues are generated from its sales and operations.
The Company plans to add approximately 10 to 15 new lending units
during the remainder of 2000. These additions will likely occur through a
combination of new openings and acquisitions of existing locations. Rent-A-Tire
plans to add approximately 15 to 20
Page 15
<PAGE> 18
additional rental stores during the remainder of 2000 through the acquisition of
existing stores or the opening of new stores.
On October 19, 1999, the Company announced that its Board of Directors
had authorized management to purchase up to one million shares of its common
stock in the open market. During the current quarter, the Company made no
purchases under the program. Purchases may be made from time to time in the open
market and it is expected that funding of the program will come from operating
cash flow and existing bank facilities.
Management believes that borrowings available under its revolving
credit facilities, cash generated from operations and current working capital of
$191.6 million should be sufficient to meet the Company's anticipated future
capital requirements.
IMPACT OF FOREIGN CURRENCY EXCHANGE RATES
The Company is subject to the risk of unexpected changes in foreign
currency rates by virtue of its operations in the United Kingdom and Sweden. The
Company's foreign assets, liabilities, and earnings are converted into U.S.
dollars for consolidation into the Company's financial statements. At March 31,
2000, the Company had recorded a cumulative other comprehensive loss of $4.7
million as a result of fluctuations in foreign currency exchange rates. Future
earnings and comparisons with prior periods reported by the Company may
fluctuate depending on applicable currency exchange rates in effect during the
periods.
Page 16
<PAGE> 19
DOMESTIC LENDING OPERATIONS
================================================================================
(Dollars in thousands)
The following table sets forth selected financial data for the Company's
domestic lending operations as of March 31, 2000 and 1999, and for the three
months then ended.
<TABLE>
<CAPTION>
2000 1999 Change
----------- ----------- -----------
<S> <C> <C> <C>
REVENUE
Finance and service charges $ 23,145 $ 25,119 (8)%
Proceeds from disposition of merchandise 60,265 60,318 --
Lending franchise fees and royalties 79 11 618%
----------- ----------- -----------
TOTAL REVENUE 83,489 85,448 (2)%
----------- ----------- -----------
COSTS OF REVENUE
Disposed merchandise 40,292 39,628 2%
----------- ----------- -----------
NET REVENUE $ 43,197 $ 45,820 (6)%
=========== =========== ===========
OTHER DATA
Net revenue contribution by source--
Finance and service charges 53.6% 54.8% (2)%
Margin on disposition of merchandise 46.2% 45.2% 2%
Lending franchise fees and royalties .2% -- --
Expenses as a percentage of net revenue--
Operations and administration 77.9% 70.3% 11%
Depreciation and amortization 8.3% 9.1% (9)%
Interest, net 3.9% 5.2% (24)%
Income from operations before depreciation
and amortization as a percentage of total revenue 11.4% 15.9% (28)%
Income from operations as a percentage of total revenue 7.2% 11.1% (35)%
Annualized yield on pawn loans 133% 131% 2%
Average pawn loan balance per average location in operation $ 170 $ 188 (10)%
Average pawn loan amount at end of period (not in thousands) $ 80 $ 82 (2)%
Margin on disposition of merchandise as a percentage
of proceeds from disposition of merchandise 33.1% 34.3% (3)%
Average annualized merchandise turnover 2.8x 2.5x 12%
Average merchandise held for disposition
per average location $ 139 $ 154 (10)%
Lending locations in operation--
Beginning of period 413 414
Acquired -- --
Start-ups 1 --
Combined or closed (3) (3)
End of period 411 411 --
Additional franchise locations at end of period 15 5 200%
Total locations at end of period 426 416 2%
Average number of owned locations (a) 412 413 --
=========== =========== ===========
</TABLE>
(a) Averages based on accumulation of month-end balances and dividing aggregate
total by total months in the period.
Page 17
<PAGE> 20
FOREIGN LENDING OPERATIONS
================================================================================
(Dollars in thousands)
The following table sets forth selected consolidated financial data in U.S.
dollars for Harvey & Thompson, Ltd. and Svensk Pantbelaning as of March 31, 2000
and 1999, and for the three months then ended, using the following currency
exchange rates:
<TABLE>
<CAPTION>
2000 1999 Change
----------- ----------- -----------
<S> <C> <C> <C>
Harvey & Thompson, Ltd. (U.K. pound sterling per U.S. dollar)--
Balance sheet data - end of period rate .6262 .6204 (1)%
Income statement data - three months average rate .6194 .6124 (1)%
Svensk Pantbelaning (Swedish Kronor per U.S. dollar)--
Balance sheet data - end of period rate 8.6325 8.2608 (4)%
Income statement data - three months average rate 8.5990 8.0012 (7)%
----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
2000 1999 Change
----------- ----------- -----------
<S> <C> <C> <C>
REVENUE
Finance and service charges $ 6,381 $ 6,376 --
Proceeds from disposition of merchandise 2,254 892 153%
Check cashing fees 168 177 (5)%
----------- ----------- -----------
TOTAL REVENUE 8,803 7,445 18%
----------- ----------- -----------
COSTS OF REVENUE
Disposed merchandise 2,184 788 177%
----------- ----------- -----------
NET REVENUE $ 6,619 $ 6,657 (1)%
=========== =========== ===========
OTHER DATA
Net revenue contribution by source--
Finance and service charges 96.4% 95.8% 1%
Margin on disposition of merchandise 1.1% 1.6% (31)%
Check cashing fees 2.5% 2.6% (5)%
Expenses as a percentage of net revenue--
Operations and administration 57.0% 47.8% 19%
Depreciation and amortization 7.9% 7.4% 7%
Interest, net 6.1% 5.1% 20%
Income from operations before depreciation
and amortization as a percentage of total revenue 32.3% 46.7% (31)%
Income before income taxes as a percentage of total revenue 26.4% 40.1% (34)%
Annualized yield on loans 51% 55% (7)%
Average loan balance per average location in operation $ 941 $ 945 --
Average loan amount at end of period (not in thousands) $ 182 $ 178 2%
Margin on disposition of merchandise as a percentage
of proceeds from disposition of merchandise 3.1% 11.7% (73)%
Average annualized merchandise turnover 2.4x 2.1x 14%
Average merchandise held for disposition
per average location $ 68 $ 30 127%
Lending locations in operation--
Beginning of period 53 50
Acquired -- --
Start-ups -- --
Combined or closed -- --
End of period 53 50 6%
Average number of owned locations (a) 53 50 6%
=========== =========== ===========
</TABLE>
(a) Averages based on accumulation of month-end balances and dividing aggregate
total by total months in the period.
Page 18
<PAGE> 21
OTHER OPERATIONS
================================================================================
(Dollars in thousands)
The following table sets forth selected financial data with respect to the
Company's other domestic operations as of March 31, 2000 and 1999, and for the
three months then ended.
<TABLE>
<CAPTION>
2000 1999 Change
-------- -------- --------
<S> <C> <C> <C>
RENTAL OPERATIONS:
REVENUE
Tire and wheel rentals $ 2,411 $ 691 249%
Management fees 603 482 25%
Tire and wheel sales 432 101 328%
Lease income and other 295 176 68%
-------- -------- --------
TOTAL REVENUE 3,741 1,450 158%
-------- -------- --------
COSTS OF REVENUE
Tire and wheel rentals 885 248 257%
Tire and wheel sales 297 75 296%
-------- -------- --------
NET REVENUE $ 2,559 $ 1,127 127%
======== ======== ========
OTHER DATA
Owned rental locations--
Rental agreements outstanding at end of period $ 8,546 $ 2,977 187%
Average balance per rental agreement
at end of period (not in thousands) $ 1,071 $ 970 10%
Locations in operation at end of period 27 8 238%
Average locations in operation for the period (a) 26 5 420%
Managed rental locations--
Locations in operation at end of period 14 13 8%
Average locations in operation for the period (a) 14 14 --
======== ======== ========
CHECK CASHING OPERATIONS:
REVENUE
Check cashing royalties and fees (b) $ 963 $ 889 8%
-------- -------- --------
TOTAL REVENUE 963 889 8%
-------- -------- --------
NET REVENUE $ 963 $ 889 8%
======== ======== ========
OTHER DATA
Franchised and owned check cashing centers--
Centers in operation at end of period 136 135 1%
Average centers in operation for the period (a) 136 136 --
======== ======== ========
</TABLE>
(a) Averages based on accumulation of month-end balances and dividing aggregate
total by total months in the period.
(b) Excludes CCM operations that were de-consolidated at the close of business,
March 9, 1999.
Page 19
<PAGE> 22
CAUTIONARY STATEMENT REGARDING RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE
RESULTS
Certain portions of this report contain forward-looking statements
about the business, financial condition and prospects of the Company. The actual
results of the Company could differ materially from those indicated by the
forward-looking statements because of various risks and uncertainties including,
without limitation, changes in demand for the Company's services, changes in
competition, the ability of the Company to open new operating units in
accordance with its plans, economic conditions, real estate market fluctuations,
interest rate fluctuations, changes in the capital markets, changes in tax and
other laws and governmental rules and regulations applicable to the Company's
business, factors affecting innoVentry's business, and other risks indicated in
the Company's filings with the Securities and Exchange Commission. These risks
and uncertainties are beyond the ability of the Company to control, and, in many
cases, the Company cannot predict all of the risks and uncertainties that could
cause its actual results to differ materially from those indicated by the
forward-looking statements. When used in this report, the words "believes,"
"estimates," "plans," "expects," "anticipates" and similar expressions as they
relate to the Company or its management are intended to identify forward-looking
statements.
Page 20
<PAGE> 23
PART II
Item 1. LEGAL PROCEEDINGS
See Note 8 of Notes to Consolidated Financial Statements
Item 2. CHANGES IN SECURITIES
Not Applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
Item 5. OTHER INFORMATION
Not Applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
99.1 Audit Committee Charter
(b) Reports on Form 8-K - None
Page 21
<PAGE> 24
SIGNATURE
Pursuant to the requirements 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.
CASH AMERICA INTERNATIONAL, INC.
-----------------------------------------------------------
(Registrant)
BY: /s/ Thomas A. Bessant, Jr.
---------------------------------------------------
Thomas A. Bessant, Jr.
Executive Vice President and
Chief Financial Officer
Date: May 12, 2000
Page 22
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
99.1 Audit Committee Charter
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 6,599
<SECURITIES> 0
<RECEIVABLES> 134,835
<ALLOWANCES> 0
<INVENTORY> 60,121
<CURRENT-ASSETS> 228,638
<PP&E> 121,273
<DEPRECIATION> 65,895
<TOTAL-ASSETS> 392,021
<CURRENT-LIABILITIES> 30,727
<BONDS> 173,605
0
0
<COMMON> 3,024
<OTHER-SE> 183,019
<TOTAL-LIABILITY-AND-EQUITY> 392,021
<SALES> 62,598
<TOTAL-REVENUES> 96,996
<CGS> 43,658
<TOTAL-COSTS> 77,919
<OTHER-EXPENSES> 11,320
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,299
<INCOME-PRETAX> (2,883)
<INCOME-TAX> 1,754
<INCOME-CONTINUING> (4,637)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,637)
<EPS-BASIC> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
<PAGE> 1
EXHIBIT 99.1
CHARTER
OF THE
AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF
CASH AMERICA INTERNATIONAL, INC.
PURPOSE.
The Audit Committee of the Board of Directors of Cash America International,
Inc. (the "Company") serves to assist the Board in fulfilling its oversight
responsibilities by: (i) serving as an independent and objective party to
monitor the Company's financial reporting process and internal control system,
(ii) reviewing and appraising the audit efforts of the Company's independent
auditor, and (iii) providing an open avenue of communication among the
independent auditor, financial and senior management and the Board of Directors.
In carrying out its responsibilities, the Audit Committee should pay particular
attention to the special issues posed by the unique nature of the Company's
consumer financial services business.
ORGANIZATION.
The members of the Audit Committee shall consist of three (3) or more directors
as determined by the Board. Each of the members shall be independent directors
and free from any relationship that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgment as a member of
the Audit Committee. All members of the Audit Committee are to have a working
familiarity with basic finance and accounting practices, or acquire such a
familiarity within a reasonable period of time after his or her appointment to
the Audit Committee, and at least one member of the Audit Committee shall have
accounting or related financial management expertise.
The members of the Audit Committee are to be elected by the Board and shall
serve until their successors are duly elected and qualified. Unless a Chair is
elected by the full Board, the members of the Audit Committee may designate a
Chair by a majority vote of the full Committee membership.
AUTHORITY.
The Audit Committee shall have the authority to consult with special legal,
accounting or other consultants to advise the Committee as circumstances may
dictate. The Audit Committee may request any officer or employee of the Company
or the Company's outside counsel or independent auditor to attend a meeting of
the Committee or to meet with any members of, or consultants to, the Committee.
MEETINGS.
The Audit Committee shall hold regular meetings as may be necessary and special
meetings as may be called by the Chairman of the Committee. As part of its job
to foster open communication, the Committee should meet at least annually with
management and the independent auditor in separate executive sessions to discuss
any matters that the Committee or either of these groups believe should be
discussed privately. The Committee should meet at least three times annually, or
more frequently as circumstances dictate, and make regular reports to the Board.
<PAGE> 2
ROLES AND RESPONSIBILITIES.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
2. Review the Company's annual financial statements and any other financial
information submitted to the Securities and Exchange Commission or the
public, including any certification, report, opinion, or review rendered
by the independent auditor.
3. Establish regular and separate reporting to the Committee by each of
management and the independent auditor regarding any significant
judgments made in management's preparation of the financial statements
and the view of each as to the appropriateness of such judgments.
4. Review with management and the independent auditor the Company's
quarterly financial statements prior to their filing with the Securities
and Exchange Commission. The Chair of the Committee may represent the
entire Committee for purposes of this review.
5. Meet periodically with management to review the Company's major financial
risk exposures and the steps management has taken to monitor and control
such exposures.
6. Consider and approve, if appropriate, major changes to the Company's
auditing and accounting principles and practices as suggested by the
independent auditor, internal auditors or management, and review the
extent to which such changes have been implemented.
7. Recommend to the Board the appointment of the independent auditor, which
firm is ultimately accountable to the Audit Committee and the Board.
8. Approve the fees to be paid to the independent auditor for its work
relating to the Company's financial statements.
9. On an annual basis, obtain from the independent auditor, and review and
discuss with the independent auditor, a formal written statement
delineating all relationships the independent auditor has with the
Company and actively engage in a dialogue with the independent auditor
with respect to any disclosed relationships or services that may impact
the objectivity and independence of the independent auditor.
10. Evaluate together with the Board the performance of the independent
auditor and, if so determined by the Audit Committee, recommend to the
Board the replacement of the independent auditor after a complete
evaluation with the Board has been concluded.
11. Review any significant disagreements between management and the
independent auditor in connection with the preparation of the financial
statements and promptly report any such disagreements to the Board in
writing.
2
<PAGE> 3
12. Review the appointment and replacement of the senior internal auditing
executive.
13. Review any significant reports to management prepared by the internal
auditing department and management's responses.
14. Meet with the independent auditor prior to the audit to review the
planning and staffing of the audit.
15. Obtain reports from management, the Company's senior internal auditing
executive and the independent auditor that the Company's
subsidiary/foreign affiliated entities are in conformity with applicable
legal requirements and applicable Company compliance policies.
16. Discuss with the independent auditor the matters required to be discussed
by Statement on Auditing Standards No. 61, Communication with Audit
Committees (as amended by No. 89, Audit Adjustments, and No. 90, Audit
Committee Communications), relating to the conduct of the audit.
17. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter. Such review should
include:
(a) Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
required information.
(b) Any changes required in the planned scope of the internal audit.
(c) The internal audit department responsibilities, budget and
staffing.
(d) The integrity of the Company's financial reporting process, both
internal and external.
18. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
19. Advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations.
20. Review with the Company's General Counsel legal matters that may have a
material impact on the financial statements, the Company's compliance
policies and any material reports or inquiries received from regulators
or governmental agencies.
21. Meet at least annually with the chief financial officer, the senior
internal auditing executive and the independent auditor in separate
sessions to review, among other things, the independent auditor's
judgment about the quality and appropriateness of the Company's
accounting principles as applied in its financial reporting.
3
<PAGE> 4
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the Audit Committee to conduct investigations, to resolve disagreements, if any,
between management and the independent auditor or to assure compliance with laws
and regulations and the Company's compliance policies.
AS ADOPTED BY THE BOARD OF DIRECTORS OF
CASH AMERICA INTERNATIONAL, INC.
APRIL 26, 2000
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