SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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November 2, 2005 |
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(Date of Report - Date of Earliest Event Reported) |
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First Cash Financial Services, Inc. |
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(Exact name of registrant as specified in its charter) |
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Delaware |
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(State or other jurisdiction of incorporation) |
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0-19133 |
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75-2237318 |
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(Commission File Number) |
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(IRS Employer Identification No.) |
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690 East Lamar Blvd., Suite 400, Arlington, Texas 76011 |
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(Address of principal executive offices, including zip code) |
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(817) 460-3947 |
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(Registrant’s telephone number, including area code) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01 Other Events
First Cash Financial Services, Inc. has made available on its corporate website (www.firstcash.com) its most recent investor presentation. This investor presentation is included herein as Exhibit 99.1.
The information provided in this Item 8.01 shall not be deemed “filed” for purposes of the Securities Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by the specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits:
99.1 First Cash Financial Services, Inc. Investor Presentation
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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.
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Dated: November 2, 2005 |
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FIRST CASH FINANCIAL SERVICES, INC. |
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(Registrant) |
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/s/ R. DOUGLAS ORR |
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R. Douglas Orr |
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Chief Accounting Officer |
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EXHIBIT INDEX
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Exhibit Number |
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Document |
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99.1 |
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First Cash Financial Services, Inc. Investor Presentation |
4
Exhibit 99.1
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Investor Presentation
November 1, 2005
[GRAPHIC APPEARS HERE]
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Investor contact information: |
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• Phone: |
817.505.3199 |
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• Email: |
investorrelations@firstcash.com |
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• Website: |
www.firstcash.com |
[GRAPHIC APPEARS HERE]
Safe Harbor Statement
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Certain statements included in this presentation which are not historical in nature – including statements regarding the company’s and/or management’s strategies, beliefs, expectations, plans for new stores, plans and expected results for new products and services, projections of earnings and revenues, expected effect of regulatory pronouncements, potential legislation, or other predictions of the future – are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the Safe Harbor provisions for forward-looking statements contained in such Act. |
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Forward-looking statements are made based on assumptions involving certain known and unknown risks and uncertainties – many of which are beyond the company’s control – and other important factors that could cause actual results, performance or achievements to differ materially from expectations expressed or implied by such forward-looking statements. These risk factors and uncertainties are listed from time to time in the company’s filings with the Securities and Exchange Commission, including – but not limited to – our annual reports on Form 10-K for the years ending December 31, 2003 and 2004 and our reports on Form 10-Q for the periods ended March 31, 2005, June 30, 2005 and September 30, 2005. |
Nov. 2005
Company Overview
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Leading provider of specialty consumer finance products |
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Pawn loans and related retail |
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Payday advances and credit services |
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Superior performance metrics and financial position |
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Significant growth through store expansion strategy |
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Mexico pawn stores |
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U.S. payday advance stores |
[GRAPHIC APPEARS HERE]
Nov. 2005
Recognition and Rankings
[GRAPHIC APPEARS HERE]
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Forbes 200 Best Small Companies |
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Recognized for four consecutive years: 2002, 2003, 2004 & 2005 |
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Fortune Small Business 100 |
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America’s Fastest Growing Small Companies |
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Recognized for two consecutive years: 2004 & 2005 |
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Russell 2000 Index |
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Added as component company effective June 25, 2004 |
Nov. 2005
Company History
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1988 |
Founded – 3 pawn stores in Texas |
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Early 90’s |
Goes public; multi-state pawn store roll-up acquisitions |
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Late 90’s |
Payday lending acquisitions; introduction of payday product in pawn stores |
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First pawn stores opened in Mexico |
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2001 to present |
Expansion through new store openings: U.S. payday & Mexico pawn |
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2005 |
Introduction of credit services product |
[GRAPHIC APPEARS HERE]
Nov. 2005
Store Counts
[CHART APPEARS HERE]
Nov. 2005
Geographic Markets & Product Offerings
[GRAPHIC APPEARS HERE]
Nov. 2005
Revenue Mix
Trailing 12 Months Ended Sept. 30, 2005
[CHART APPEARS HERE]
Nov. 2005
Pawn Products
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Pawn loans |
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30 day loan |
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10% to 20% monthly service fee |
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Secured by personal property |
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Many customers are unbanked or under-banked – no credit check required |
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Pawn-related retail |
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Merchandise sales of forfeited pawn collateral |
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Primarily jewelry, consumer electronics & tools |
[GRAPHIC APPEARS HERE]
Nov. 2005
Pawn Retail Metrics
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Year to Date (through Q3): |
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Total merchandise margins |
40% |
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Retail margins (excludes scrap jewelry sales) |
44% |
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Inventory turns |
3.2x |
Composition of Pawn Inventory
[CHART APPEARS HERE]
[GRAPHIC APPEARS HERE]
Nov. 2005
Pawn Receivables
[CHART APPEARS HERE]
Nov. 2005
Payday Advance Product
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Payday Advances |
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7 to 31 day loan |
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Requires proof of employment and bank account |
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Secured by personal check held until due date |
[GRAPHIC APPEARS HERE]
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Financial Metrics |
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15% to 18% service charge per advance |
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Annual loss provision in a range of 20% to 25% of service charges collected |
Nov. 2005
Payday Advance Regulatory Landscape
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Payday advances currently provided for under existing regulations in 38 states |
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First Cash writes payday advances directly in seven of these states |
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In Texas, the current payday law does not provide for a sufficient service fee |
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As an alternative to traditional payday advances, First Cash has adopted a credit services (“CSO”) model |
Nov. 2005
Credit Services Model
Utilized in Texas
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Texas Finance Code Section 393 provides for credit service organizations (“CSO”s) |
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CSO provides customers access to a short-term loan funded by an independent consumer lending company |
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Customer pays fee to CSO for its services: |
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processing of application |
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providing letter of credit |
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disbursement and collection of lender funds |
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Customer pays interest to lender (at less than 10% APR) |
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Nov. 2005
Comparison of Texas
Bank Model to CSO Model
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Former |
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New |
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Maximum loan amount |
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$500 |
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$1,000 |
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Rate charged to customers |
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18% per loan |
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20% CSO fee per loan* |
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Net fee realized by First Cash |
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Approx. 16% per loan |
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20% per loan |
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Expected loss provision (as % of fee) |
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20% to 25% |
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20% to 25% |
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* - In addition, customer pays small interest charge to third-party lender. Interest capped at 10% APR. |
Nov. 2005
Superior Performance & Financial Position
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Operating results |
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Industry leading performance metrics |
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Consistent growth |
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Increasing margins |
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Financial Position |
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Debt-free |
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Strong cash flows |
Nov. 2005
Third Quarter 2005 Highlights
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Q3 diluted EPS of $0.39 |
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Up 26% over prior year |
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Ahead of $0.37 consensus |
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19th consecutive quarter of double-digit EPS growth |
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Significant year-to-date net growth |
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Diluted EPS up 23% |
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Net income up 21% |
Nov. 2005
Earnings Per Share Growth
[CHART APPEARS HERE]
Nov. 2005
Consistency of Earnings
Trailing 12 Months Diluted Earnings per Share
[CHART APPEARS HERE]
Trailing 12 Months Diluted Earnings per Share from Continuing Operations; Reflects Three-for-Two Stock Split on April 6, 2004
Nov. 2005
Operational Focus
Pre-Tax Operating Income as Percentage of Revenues
[CHART APPEARS HERE]
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Attention to key operational metrics: |
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Loan growth |
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Loan yields |
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Retail margins |
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Inventory management |
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Expense control important part of corporate culture |
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Sales associate & manager compensation plans reward store profitability |
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Nov. 2005
Net Cash Position
[CHART APPEARS HERE]
Nov. 2005
Utilization of
Free Cash Flows
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Growth funded from current cash flows |
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Loan growth at new & existing stores |
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Capital expenditures for new stores |
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Start-up costs for new stores |
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Repurchased $24 million of stock over past 15 months |
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Nov. 2005
Balance Sheet
[CHART APPEARS HERE]
Nov. 2005
Growth Strategy
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New store openings in multiple markets |
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United States |
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Mexico |
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Multiple products |
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Pawn loans & related retail |
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Payday advances |
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Credit services |
Nov. 2005
New Store Openings
2005 Projection:
Approximately 55 - 60 New Stores
[CHART APPEARS HERE]
Nov. 2005
Mexico Pawn Demographics
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Over 80% of the population is estimated to be “unbanked” |
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88% of all consumer transactions are made in cash |
[GRAPHIC APPEARS HERE]
Nov. 2005
Mexico Expansion Markets
[GRAPHIC APPEARS HERE]
Nov. 2005
New Store Financial Model
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Cap Ex |
$80,000 to $125,000 |
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- Leasehold improvements |
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- Computer & security equipment |
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Working Capital (first year) |
$80,000 to $150,000 |
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- Operating cash |
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- Loan funding |
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- Inventory (pawn only) |
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Start-up Losses |
$40,000 to $60,000 |
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- Pre-opening |
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- First six months of operation |
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Totals |
$200,000 to $335,000 |
Nov. 2005
First Cash Summary
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Industry leader |
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Operational focus |
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Strong cash flows and no debt |
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19 consecutive quarters of double digit EPS growth |
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Well-defined expansion strategy |
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New store opening model |
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Multiple product lines |
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Geographic diversification |
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Meaningful growth goals |
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20% annual increase in store counts |
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Short & long-term EPS growth |
Nov. 2005
Investor contact information: |
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• Phone: |
817.505.3199 |
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• Email: |
investorrelations@firstcash.com |
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• Website: |
www.firstcash.com |
[GRAPHIC APPEARS HERE]