FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number:
September 30, 2001 0-19133
FIRST CASH FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2237318
(State of Incorporation) (IRS Employers
Identification Number)
690 East Lamar, Suite 400
Arlington, Texas
(Address of principal executive 76011
offices) (Zip Code)
(817)460-3947
(Registrant's telephone number, including area code)
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 ___
As of November 9, 2001, there were 8,754,687 shares of Company common stock,
par value $.01 per share ("Common Stock"), issued and outstanding.
Part I. Financial Information
Item 1. Financial Statements
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2001 2000
------- -------
(unaudited)
(in thousands, except share data)
ASSETS
Cash and cash equivalents................... $ 10,146 $ 6,611
Service charges receivable.................. 2,831 2,707
Receivables................................. 22,988 22,043
Inventories................................. 12,791 17,221
Prepaid expenses and other current assets... 2,439 1,884
------- -------
Total current assets .................... 51,195 50,466
Property and equipment, net................. 9,861 10,378
Intangible assets, net...................... 52,362 53,508
Receivable from Cash & Go, Ltd.............. 7,282 4,580
Other....................................... 106 186
------- -------
$120,806 $119,118
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt and
notes payable............................. $ 1,433 $ 1,643
Accounts payable and accrued expenses....... 8,786 6,460
Income taxes payable........................ 56 528
------- -------
Total current liabilities ............... 10,275 8,631
Revolving credit facility................... 33,500 39,000
Long-term debt and notes payable, net of
current portion .......................... 1,972 3,019
Deferred income taxes....................... 3,534 2,814
------- -------
49,281 53,464
------- -------
Stockholders' equity:
Preferred stock; $.01 par value;
10,000,000 shares authorized; no shares
issued or outstanding .................. - -
Common stock; $.01 par value; 20,000,000
shares authorized; 9,320,868 and
9,320,868 shares issued, respectively;
8,666,687 and 8,796,027 shares
outstanding, respectively .............. 93 93
Additional paid-in capital ............... 50,953 50,953
Retained earnings ........................ 28,500 22,949
Common stock receivables from officers ... (5,006) (5,826)
Common stock held in treasury, at cost,
654,181 and 524,841 shares, respectively (3,015) (2,515)
------- -------
71,525 65,654
------- -------
$120,806 $119,118
======= =======
The accompanying notes are an integral
part of these condensed consolidated financial statements.
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
------------------- ------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2001 2000 2001 2000
------- ------- ------- -------
(unaudited, in thousands, except per share amounts)
Revenues:
Merchandise sales................... $ 12,138 $ 12,662 $ 40,132 $ 40,663
Service charges..................... 13,470 12,004 38,847 33,975
Check cashing fees.................. 529 536 1,709 1,687
Other............................... 494 505 1,604 1,703
------- ------- ------- -------
26,631 25,707 82,292 78,028
------- ------- ------- -------
Cost of goods sold and expenses:
Cost of goods sold.................. 7,567 8,071 26,228 26,482
Operating expenses.................. 12,622 11,685 36,440 34,992
Interest expense.................... 326 721 1,154 2,185
Depreciation........................ 593 564 1,769 1,618
Amortization........................ 382 379 1,146 1,137
Administrative expenses............. 2,214 2,494 6,884 6,069
------- ------- ------- -------
23,704 23,914 73,621 72,483
------- ------- ------- -------
Income before income taxes............... 2,927 1,793 8,671 5,545
Provision for income taxes............... 1,054 690 3,122 2,107
------- ------- ------- -------
Income before cumulative effect of change
in accounting principle, net of tax 1,873 1,103 5,549 3,438
Cumulative effect on prior years of
change in accounting principle......... - - - (2,287)
------- ------- ------- -------
Net income............................... $ 1,873 $ 1,103 $ 5,549 $ 1,151
======= ======= ======= =======
Net income per share:
Basic
Income before cumulative effect of
change in accounting principle..... $ 0.22 $ 0.13 $ 0.64 $ 0.39
Cumulative effect of change in
accounting principle, net of tax... - - - (0.26)
------- ------- ------- -------
Net income .......................... $ 0.22 $ 0.13 $ 0.64 $ 0.13
======= ======= ======= =======
Diluted
Income before cumulative effect of
change in accounting principle..... $ 0.20 $ 0.13 $ 0.60 $ 0.39
Cumulative effect of change in
accounting principle, net of tax... - - - (0.26)
------- ------- ------- -------
Net income .......................... $ 0.20 $ 0.13 $ 0.60 $ 0.13
======= ======= ======= =======
The accompanying notes are an integral
part of these condensed consolidated financial statements.
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Month Period
Ended September 30,
--------------------
2001 2000
-------- --------
(unaudited, in thousands)
Cash flows from operating activities:
Net income ..................................... $ 5,549 $ 1,151
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization................ 2,915 2,755
Cumulative effect of change
in accounting principle.................... - 2,287
Changes in operating assets and liabilities:
(Increase) decrease in service
charges receivable........................... (124) 298
Decrease in inventories ....................... 4,430 409
Increase in prepaid expenses and other assets.. (473) (681)
Increase in accounts payable and
accrued expenses............................. 2,326 1,849
Increase in income taxes payable ............. 248 695
-------- --------
Net cash flows from operating activities..... 14,871 8,763
-------- --------
Cash flows from investing activities:
Net (increase) decrease in receivables ......... (945) 2,241
Purchases of property and equipment ............ (1,252) (1,730)
Acquisition of existing stores ................. - (4)
Increase in receivable from Cash & Go, Ltd ..... (2,702) (2,415)
-------- --------
Net cash flows from investing activities ....... (4,899) (1,908)
-------- --------
Cash flows from financing activities:
Proceeds from debt ............................. 10,200 6,272
Repayments of debt ............................. (16,957) (11,537)
Common stock receivables from officers ......... 820 (3,172)
Purchase of treasury stock ..................... (500) (250)
-------- --------
Net cash flows from financing activities .... (6,437) (8,687)
-------- --------
Increase (decrease) in cash and cash equivalents.. 3,535 (1,832)
Cash and cash equivalents at beginning
of the period .................................. 6,611 10,717
-------- --------
Cash and cash equivalents at end of the period.... $ 10,146 $ 8,885
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ...................................... $ 1,966 $ 2,148
======== ========
Income taxes .................................. $ 2,873 $ 1,418
======== ========
The accompanying notes are an integral
part of these condensed consolidated financial statements.
FIRST CASH FINANCIAL SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements,
including the notes thereto, include the accounts of First Cash Financial
Services, Inc. (the "Company") and its wholly owned subsidiaries. Such
unaudited consolidated financial statements are condensed and do not include
all disclosures and footnotes required by generally accepted accounting
principles in the United States of America for complete financial
statements. Such interim period financial statements should be read in
conjunction with the Company's consolidated financial statements which are
included in the Company's December 31, 2000 Annual Report on Form 10-K. All
significant inter-company accounts and transactions have been eliminated in
consolidation. The consolidated financial statements as of September 30,
2001 and for the periods ended September 30, 2001 and 2000 are unaudited,
but in management's opinion, include all adjustments (consisting of only
normal recurring adjustments) considered necessary to present fairly the
financial position, results of operations and cash flows for such interim
periods. Operating results for the period ended September 30, 2001 are not
necessarily indicative of the results that may be expected for the full
fiscal year.
Note 2 - Revolving Credit Facility
The Company currently maintains a $50,000,000 long-term line of credit
with a group of commercial lenders (the "Credit Facility"). At September
30, 2001, $33,500,000 was outstanding under this Credit Facility and an
additional $16,500,000 was available to the Company pursuant to the
available borrowing base. The Credit Facility bears interest at the
prevailing LIBOR rate (which was approximately 2.7% at September 30, 2001)
plus one percent, and matures on September 1, 2002. Amounts available under
the Credit Facility are limited to 325% of the Company's earnings before
income taxes, interest, depreciation and amortization for the trailing
twelve months. Under the terms of the Credit Facility, the Company is
required to maintain certain financial ratios and comply with certain
technical covenants. The Company was in compliance with these requirements
and covenants during the nine months ended September 30, 2001 and as of
November 9, 2001.
Note 3 - Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share data):
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2001 2000 2001 2000
------ ------ ------ ------
Numerator:
Income before cumulative effect
of change in accounting principle
for calculating basic and diluted
earnings per share $ 1,873 $ 1,103 $ 5,549 $ 3,438
Cumulative effect on prior years
of change in accounting principle
for calculating basic and diluted
earnings per share - - - (2,287)
------ ------ ------ ------
Net income for calculating basic
and diluted earnings per share $ 1,873 $ 1,103 $ 5,549 $ 1,151
====== ====== ====== ======
Denominator:
Weighted-average common
shares for calculating basic
earnings per share 8,667 8,796 8,690 8,819
Effect of dilutive securities:
Stock options and warrants 744 - 532 71
------ ------ ------ ------
Weighted-average common
shares for calculating diluted
earnings per share 9,411 8,796 9,222 8,890
====== ====== ====== ======
Note 4 - Change in Accounting Principle
Effective January 1, 2000, the Company changed its method of income
recognition on pawn loans. The Company accrues pawn service charge revenue
on a constant yield basis for all pawn loans that the Company deems
collection to be probable based on historical loan redemption statistics.
For loans not repaid, the cost of forfeited collateral (inventory) is stated
at the lower of cost (cash amount loaned) or market. Prior to 2000, the
Company recognized service charge income on a constant yield basis over the
initial loan period for all pawn loans written. Service charges applicable
to the extension periods or additional loan periods were not recognized as
income until the loan was repaid or renewed. If the loan was not repaid,
the carrying value of the forfeited collateral (inventory) was stated at the
lower of cost (the principal amount loaned plus accrued service charges) 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 method change on all
periods since inception of the Company through December 31, 1999 is
$2,287,000 (after an income tax benefit of $1,373,000) and is included as a
one-time reduction to net income for the nine months ended September 30,
2000.
Note 5 - Operating Segment Information
The Company has three reportable operating segments: pawn lending
stores, check cashing/payroll advance stores, and a software and hardware
provider. The Company's pawn stores offer non-recourse loans on the
collateral of pledged tangible personal property as well as short-term
secured consumer loans commonly referred to as payroll advances. The
Company's check cashing and payroll advance stores provide check cashing
services, short-term secured consumer loans, bill payment services, money
transfer services and money order sales. The Company's computer software
subsidiary, Answers, etc., provides turnkey point of sale operating systems
to other check cashing and payroll advance operators unaffiliated with the
Company.
Management of the Company evaluates performance based on the operating
income of each segment. There are no inter-segmental sales. Each of the
segments is supervised separately. Information concerning the segments is
set forth below (in thousands):
Check Cashing/
Pawn Payroll Advance
Stores Stores Software Consolidated
------ ------ -------- ------------
Three Months Ended
September 30, 2001
------------------
Total revenues $21,491 $ 4,603 $ 537 $ 26,631
Depreciation and amortization 719 203 53 975
Income before interest and
income taxes 2,251 1,026 (24) 3,253
Total assets at
September 30, 2001 90,102 28,608 2,096 120,806
Capital expenditures 480 18 - 497
Three Months Ended
September 30, 2000
------------------
Total revenues 20,869 4,359 479 25,707
Depreciation and amortization 853 48 42 943
Income before interest and
income taxes 1,040 1,736 (262) 2,514
Total assets at
September 30, 2000 87,809 32,421 2,275 122,505
Capital expenditures 338 29 21 388
Nine Months Ended
September 30, 2001
------------------
Total revenues 67,610 13,026 1,656 82,292
Depreciation and amortization 2,150 606 159 2,915
Income before interest and
income taxes 7,137 2,948 (260) 9,825
Total assets at
September 30, 2001 90,102 28,608 2,096 120,806
Capital expenditures 1,100 137 15 1,252
Nine Months Ended
September 30, 2000
------------------
Total revenues 64,085 12,324 1,619 78,028
Depreciation and amortization 2,507 137 111 2,755
Income before interest
and income taxes 3,798 4,703 (771) 7,730
Total assets at
September 30, 2000 87,809 32,421 2,275 122,505
Capital expenditures 1,272 281 177 1,730
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
First Cash Financial Services, Inc. is the nation's third largest
publicly traded pawnshop operator and currently owns and operates pawn
stores in Texas, Oklahoma, Washington, D.C., Maryland, Missouri, South
Carolina, Virginia and Mexico. The Company's pawn stores engage in both
consumer finance and retail sales activities. The Company's pawn stores
provide a convenient source for consumer loans, lending money against
pledged tangible personal property such as jewelry, electronic equipment,
tools, sporting goods and musical equipment. These pawn stores also
function as retailers of previously-owned merchandise acquired in forfeited
pawn transactions and over-the-counter purchases from customers. The
Company's pawn stores also offer short-term, secured advances ("payroll
advances").
The Company also currently owns check cashing and payroll advance
stores in California, Washington, Oregon, Illinois, Texas and Washington
D.C. These stores provide a broad range of consumer financial services,
including check cashing, money order sales, wire transfers, bill payment
services and payroll advances. The Company also owns Answers, etc., a
company which provides computer hardware and software to third party check
cashing and payroll advance operators throughout the country, as well as
ongoing technical support. In addition, the Company is a 50% partner in
Cash & Go, Ltd., a joint venture, which owns financial service kiosks
located inside convenience stores.
Although the Company has had significant increases in revenues due
primarily to acquisitions and secondarily to new store openings, the Company
has also incurred increases in operating expenses attributable to the
additional stores and increases in administrative expenses attributable to
building a management team and the support personnel required by the
Company's growth. Operating expenses consist of all items directly related
to the operation of the Company's stores, including salaries and related
payroll costs, rent, utilities, advertising, property taxes, licenses,
supplies, security and net returned checks. Administrative expenses consist
of items relating to the operation of the corporate office, including the
salaries of corporate officers, area supervisors and other management,
accounting and administrative costs, liability and casualty insurance,
outside legal and accounting fees and stockholder-related expenses.
Effective January 1, 2000, the Company changed its method of income
recognition on pawn loans. The Company accrues pawn service charge revenue
on a constant yield basis for all pawn loans that the Company deems
collection to be probable based on historical loan redemption statistics.
For loans not repaid, the cost of forfeited collateral (inventory) is stated
at the lower of cost (cash amount loaned) or market. Prior to 2000, the
Company recognized service charge income on a constant yield basis over the
initial loan period for all pawn loans written. Service charges applicable
to the extension periods or additional loan periods were not recognized as
income until the loan was repaid or renewed. If the loan was not repaid,
the carrying value of the forfeited collateral (inventory) was stated at the
lower of cost (the principal amount loaned plus accrued service charges) 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 method change on all
periods since inception of the Company through December 31, 1999 is
$2,287,000 (after an income tax benefit of $1,373,000) and is included as a
one-time reduction to net income for the nine months ended September 30,
2000.
RESULTS OF OPERATIONS
Three months ended September 30, 2001 compared to the three months ended
September 30, 2000
Total revenues increased 4% to $26,631,000 for the three months ended
September 30, 2001 ("the Third Quarter of 2001") as compared to revenues of
$25,707,000 for the three months ended September 30, 2000 ("the Third
Quarter of 2000"). Of the $924,000 increase in total revenues, $524,000 was
attributable to decreased merchandise sales, $1,466,000 was attributable to
increased service charges, while other income and check cashing fees
decreased $18,000. As a percentage of total revenues, merchandise sales
decreased from 49% to 46%, service charges increased from 47% to 50%, check
cashing fees and other income remained unchanged at 4% of total revenues
during both the Third Quarter of 2000 and the Third Quarter of 2001. Gross
profit as a percentage of merchandise sales increased to 38% during the
Third Quarter of 2001 compared to 36% during the Third Quarter of 2000.
This increase in the Company's gross profit margin was primarily the result
of a lower volume of scrap jewelry sales, which have lower margins, during
the Third Quarter of 2001.
The aggregate receivables balance (pawn loans plus payday advances)
increased 9% from $21,073,000 as of September 30, 2000 to $22,988,000 as of
September 30, 2001. Of the $1,915,000 increase, $371,000 was attributable
to the addition of 9 stores acquired or opened subsequent to September 30,
2000. The remaining increase of $1,544,000 was derived from the increase in
aggregate receivable balances at the 138 stores in operation at both
September 30, 2000 and September 30, 2001.
Operating expenses increased 8% to $12,622,000 during the Third Quarter
of 2001 compared to $11,685,000 during the Third Quarter of 2000, primarily
due to an increase in net bad debt related to payroll advances and
additional new store openings. Administrative expenses decreased $280,000
to $2,214,000 during the Third Quarter of 2001 compared to $2,494,000 during
the Third Quarter of 2000, primarily due to a decrease in legal expenses.
Interest expense decreased 55% from $721,000 in the Third Quarter of 2000 to
$326,000 in the Third Quarter of 2001, primarily due to lower interest rates
and an overall lower level of debt during the Third Quarter of 2001 compared
to the Third Quarter of 2000.
For the Third Quarter of 2001 and the Third Quarter of 2000, the
Company's tax provisions of 36% and 38%, respectively, of income before
income taxes differed from the statutory federal rate of 34% primarily due
to state income taxes, net of the federal tax benefit.
Nine months ended September 30, 2001 compared to nine months ended September
30, 2000
Total revenues increased 5% to $82,292,000 for the nine months ended
September 30, 2001 (the "Nine-Month 2001 Period") as compared to $78,028,000
for the nine months ended September 30, 2000 (the "Nine-Month 2000 Period").
Of the $4,264,000 increase in total revenues, $531,000, was attributable to
a decrease in merchandise sales, $4,872,000, was attributable to increased
service charges, while check cashing fees and other income decreased
$77,000. As a percentage of total revenues, merchandise sales decreased
from 52% to 49% during the Nine-Month 2001 Period compared to the Nine-Month
2000 Period, while service charges increased from 44% to 47%, respectively.
Check cashing fees and other income remained at 4% of total revenues in the
Nine-Month 2000 and 2001 Periods. Gross profit as a percentage of
merchandise sales remained constant at 35% in the Nine-Month 2000 and 2001
Periods.
The aggregate receivables balance (pawn loans plus payday advances)
increased 9% from $21,073,000 as of September 30, 2000 to $22,988,000 as of
September 30, 2001. Of the $1,915,000 increase, $371,000 was attributable
to the addition of 9 stores acquired or opened subsequent to September 30,
2000. The remaining increase of $1,544,000 was derived from the increase in
aggregate receivable balances at the 138 stores in operation at both
September 30, 2000 and September 30, 2001.
Operating expenses increased 4% to $36,440,000 during the Nine-Month
2001 Period compared to $34,992,000 during the Nine-Month 2000 Period, due
primarily to an increase in net bad debt related to payroll advances and
additional new store openings. Administrative expenses increased 13% to
$6,884,000 during the Nine-Month 2001 Period compared to $6,069,000 during
the Nine-Month 2000 Period, primarily due to legal accrual and the addition
of supervisory staff and other overhead related to the introduction of
payday advances in the Company's pawn stores. Interest expense decreased
$1,031,000 to $1,154,000 in the Nine-Month 2001 Period compared to
$2,185,000 in the Nine-Month 2000 Period.
For both the Nine-Month 2001 and 2000 Periods, the Company's tax
provisions of 36% and 38% of income before income taxes differed from the
statutory rate of 34% primarily due to state income taxes, net of the
federal tax benefit.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operations and acquisitions have been financed with funds
generated from operations, bank and other borrowings, and the issuance of
the Company's securities.
The Company currently maintains a $50,000,000 long-term line of credit
with a group of commercial lenders (the "Credit Facility"). At September
30, 2001, $33,500,000 was outstanding under this Credit Facility and an
additional $16,500,000 was available to the Company pursuant to the
available borrowing base. The Credit Facility bears interest at the
prevailing LIBOR rate (which was approximately 2.7% at September 30, 2001)
plus one percent, and matures on September 1, 2002. Amounts available under
the Credit Facility are limited to 325% of the Company's earnings before
income taxes, interest, depreciation and amortization for the trailing
twelve months. Under the terms of the Credit Facility, the Company is
required to maintain certain financial ratios and comply with certain
technical covenants. The Company was in compliance with these requirements
and covenants during the nine months ended September 30, 2001 and as of
November 9, 2001. The Company is required to pay an annual commitment
fee of 1/8 of 1% on the average daily unused portion of the Credit
Facility commitment. The Company is prohibited from paying dividends to its
stockholders. Substantially all of the unencumbered assets of the Company
have been pledged as collateral against indebtedness under the Credit
Facility.
As of September 30, 2001, the Company's primary sources of liquidity
were $10,146,000 in cash and cash equivalents, $2,831,000 in service charges
receivable, $22,988,000 in receivables, $12,791,000 in inventories and
$16,500,000 of available and unused funds under the Company's Credit
Facility. The Company had working capital as of September 30, 2001 of
$40,920,000 and a total liabilities to equity ratio of 0.69 to 1.
Net cash provided by operating activities for the Company during the
Nine-Month 2001 Period was $14,871,000 as compared with $8,763,000 provided
by operating activities during the Nine-Month 2000 Period. Net cash used by
investing activities during the Nine-Month 2001 Period was $4,899,000 as
compared with $1,908,000 used by investing activities during the Nine-Month
2000 Period. Net cash used for financing activities of $6,437,000 during
the Nine-Month 2001 Period compares to net cash provided by financing
activities of $8,687,000 during the Nine-Month 2000 Period.
The profitability and liquidity of the Company are affected by the
amount of pawn loans outstanding, which is controlled in part by the
Company's pawn lending decisions. The Company is able to influence the
frequency of forfeiture of collateral by increasing or decreasing the amount
loaned in relation to the resale value of the pledged property. Tighter
credit decisions generally result in smaller loans in relation to the
estimated resale value of the pledged property and can thereby decrease the
Company's aggregate loan balance and, consequently, decrease pawn service
charges. Additionally, small loans in relation to the pledged property's
estimated sale value tend to increase loan redemptions and improve the
Company's liquidity. Conversely, providing larger loans in relation to the
estimated sale value of the pledged property can result in an increase in
the Company's pawn service charge income. Also larger average loan balances
can result in an increase in loan forfeitures, which increases the quantity
of goods on hand and, unless the Company increases inventory turnover,
reduces the Company's liquidity. In each of the Company's last three fiscal
years, at least 70% of the amounts loaned were either paid in full or
renewed. The Company's renewal policy allows customers to renew pawn loans
by repaying all accrued interest on such pawn loans. In addition to these
factors, the Company's liquidity is affected by merchandise sales and the
pace of store expansions.
Management believes that the Credit Facility, current assets and cash
generated from operations will be sufficient to accommodate the Company's
current operations for at least the next twelve months. The Company has
no significant capital commitments as of November 9, 2001. The Company
currently has no written commitments for additional borrowings or future
acquisitions; however, the Company intends to continue to grow and will
likely seek additional capital to facilitate expansion. The Company will
evaluate acquisitions, if any, based upon opportunities, acceptable
financing, purchase price, strategic fit and qualified management personnel.
The Company intends to continue to engage in a plan of expansion
primarily through new store openings in both check cashing/payroll advance
locations for the Company, and kiosks for Cash & Go, Ltd., the Company's 50%
convenience store joint venture. Secondarily, the Company will selectively
expand through existing store acquisitions. While the Company continually
looks for, and is presented with, potential acquisition candidates, the
Company has no definitive plans or commitments for further acquisitions. If
the Company encounters an attractive opportunity to acquire or open a new
store in the near future, the Company will seek additional financing, the
terms of which will be negotiated on a case-by-case basis. Between October
1, 2001 and November 9, 2001, the Company did not open or acquire any new
stores. All store openings and acquisitions during the nine months ended
September 30, 2001 were financed with proceeds from the Company's Credit
Facility and with cash generated from operations.
New Accounting Pronouncements
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations" is effective July 1, 2001 and prohibits pooling-of-interests
accounting for acquisitions. SFAS No. 142, "Goodwill and Other Intangible
Assets" is effective January 1, 2002 and specifies that goodwill and some
intangible assets will no longer be amortized but instead will be subject to
periodic impairment testing. SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets" is effective January 1, 2002 and amends
the accounting for impairment of long-lived assets and segments of a
business to be disposed of. The Company has not yet determined the effect
of adopting SFAS No. 142 and No. 144 will have on it's financial statements.
FORWARD LOOKING INFORMATION
This release may contain forward-looking statements about the business,
financial condition and prospects of First Cash Financial Services, Inc.
Forward-looking statements can be identified by the use of forward-looking
terminology such as "believes," "expects," "may," "estimates," "will,"
"should," "plans," "intends," or "anticipates" or the negative thereof, or
other variations thereon, or comparable terminology, or by discussions of
strategy. Forward-looking statements in this release include, without
limitation, the earnings per share discussion above, the expectation of
increased loan growth, the expectation for additional store openings, and
the expectation of growth in the Company's payday advance products. These
statements are made to provide the public with management's assessment of
the Company's business. Although the Company believes that the expectations
reflected in forward-looking statements are reasonable, there can be no
assurances that such expectations will prove to be accurate. Security
holders are cautioned that such forward-looking statements involve risks and
uncertainties. The forward-looking statements contained in this report
speak only as of the date of this report, and the Company expressly
disclaims any obligation or undertaking to release any updates or revisions
to any such statement to reflect any change in the Company's expectations or
any change in events, conditions or circumstance on which any such statement
is based. Certain factors may cause results to differ materially from those
anticipated by some of the statements made in this report. Such factors are
difficult to predict and many are beyond the control of the Company, but may
include changes in regional or national economic conditions, the ability to
integrate new stores, changes in governmental regulations, unforeseen
litigation, changes in interest rates or tax rates, future business
decisions and other uncertainties.
PART II. OTHER INFORMATION
ITEM 2. Changes in securities
b. During the nine months ended September 2001, the Company
repurchased 129,340 shares of common stock for a price of $3.87 per
share. During October and November 2001 the Company issued 88,000
shares of common stock relating to the exercise of outstanding
stock warrants and options for an aggregate exercise price of
$260,000.
ITEM 4. Submission of matters to a vote of security holders
ITEM 6. Exhibits and reports on Form 8-K
SIGNATURES
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.
Dated: November 9, 2001 FIRST CASH FINANCIAL SERVICES, INC.
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(Registrant)
/s/ Phillip E. Powell /s/ Rick L. Wessel
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Phillip E. Powell Rick L. Wessel
Chairman of the Board and Chief Accounting Officer
Chief Executive Officer