FCFS 06.27.2014 8-K (YTD)

UNITED STATES
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

June 27, 2014
(Date of Report - Date of Earliest Event Reported)

First Cash Financial Services, Inc.
(Exact name of registrant as specified in its charter)


Delaware
(State or other jurisdiction of incorporation)


0-19133
(Commission File Number)
75-2237318
(IRS Employer Identification No.)


690 East Lamar Blvd., Suite 400, Arlington, Texas 76011
(Address of principal executive offices, including zip code)


(817) 460-3947
(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:
¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))



Item 8.01. Other Events.

As previously reported, on March 24, 2014, First Cash Financial Services, Inc. (the “Company”) issued and sold $200 million of 6.75% Senior Notes due 2021 (the “Notes”) pursuant to an exemption from registration under the Securities Act of 1933, as amended. The Notes are guaranteed by certain of the Company’s domestic subsidiaries (the “Guarantor Subsidiaries”). In connection with the issuance and sale of the Notes, the Company and the Guarantor Subsidiaries agreed to file a registration statement on Form S-4 with the Securities and Exchange Commission with regard to an offer to exchange the unregistered Notes and related guarantees for new registered notes and guarantees with substantially identical terms, except for the transfer restrictions and registration rights that do not apply to the new notes.

In connection with the exchange offer, the Company will become subject to the requirements of Rule 3-10 of Regulation S-X which requires certain financial information regarding guarantors of registered securities to be included or incorporated by reference in the registration statement. The Company is filing this Current Report on Form 8-K for the purpose of including in its audited financial statements for the year ended December 31, 2013 an additional footnote (“Note 17 - Condensed Consolidating Guarantor Financial Statements”) containing the required condensed consolidating financial information relating to the Guarantor Subsidiaries. These audited financial statements will be incorporated by reference into the Company’s registration statement related to the exchange offer.

The revised audited financial statements are filed as Exhibit 99.1 to this Current Report on Form 8-K. The audited financial statements of the Company which were previously filed as part of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 otherwise remain unchanged.

Item 9.01. Financial Statements and Exhibits.
 
(d) The following Exhibits are filed herewith as part of this report:
 
 
 
 
 
 
23.1
Consent of Independent Registered Public Accounting firm, Hein & Associates LLP
 
 
99.1
Consolidated Audited Financial Statements of First Cash Financial Services, Inc. and subsidiaries as of December 31, 2013 and 2012, and for each of the three years ended December 31, 2013, 2012 and 2011, as modified solely to include new Note 17 to the Consolidated Audited Financial Statements.
 
 
101
XBRL Instance Documents and Related Items



2


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: June 27, 2014
FIRST CASH FINANCIAL SERVICES, INC.
 
(Registrant)
 
 
 
/s/ R. DOUGLAS ORR
 
R. Douglas Orr
 
Executive Vice President and Chief Financial Officer
 
(Principal Financial and Accounting Officer)


EXHIBIT INDEX

Exhibit Number
Description
23.1
Consent of Independent Registered Public Accounting firm, Hein & Associates LLP
99.1
Consolidated Audited Financial Statements of First Cash Financial Services, Inc. and subsidiaries as of December 31, 2013 and 2012, and for each of the three years ended December 31, 2013, 2012 and 2011, as modified solely to include new Note 17 to the Consolidated Audited Financial Statements.
101
XBRL Instance Documents and Related Items


3
FCFS 06.27.2014 EXHIBIT 23.1


EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements Nos. 333-71077 and 333-106878 on Form S-3, and Nos. 333-73391, 333-106880, 333-106881, 333-132665 and 333-181837 on Form S-8 of our report dated February 27, 2014, except for Note 17, as to which the date is June 27, 2014, relating to the financial statements of First Cash Financial Services, Inc. as of December 31, 2013 and 2012, and for the three years in the period ended December 31, 2013, appearing in First Cash Financial Services, Inc.’s Current Report on Form 8-K dated June 27, 2014.




/s/ Hein & Associates LLP
Dallas, Texas
June 27, 2014



FCFS 06.27.2014 YTD EXHIBIT 99.1
 
 
EXHIBIT 99.1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
To the Board of Directors and Stockholders of First Cash Financial Services, Inc.

We have audited the accompanying consolidated balance sheets of First Cash Financial Services, Inc., and subsidiaries as of December 31, 2013, and 2012, and the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for the three years in the period ended December 31, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of First Cash Financial Services, Inc., and subsidiaries as of December 31, 2013, and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.

/s/ Hein & Associates LLP
Dallas, Texas
February 27, 2014 except for Note 17, as to which the date is June 27, 2014





 
 
EXHIBIT 99.1

FIRST CASH FINANCIAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
 
 
 
 
 
 
December 31,
 
 
 
2013
 
2012
 
ASSETS
 
 
 
 
 
Cash and cash equivalents
 
$
70,643

 
$
50,285

 
Pawn loan fees and service charges receivable
 
16,689

 
15,158

 
Pawn loans
 
115,234

 
103,181

 
Consumer loans, net
 
1,450

 
1,879

 
Inventories
 
77,793

 
65,345

 
Prepaid expenses and other current assets
 
3,369

 
4,434

 
Deferred tax assets
 
5,044

 
1,148

 
Total current assets
 
290,222

 
241,430

 
 
 
 
 
 
 
Property and equipment, net
 
108,137

 
93,304

 
Goodwill, net
 
251,241

 
166,386

 
Other non-current assets
 
9,373

 
6,572

 
Total assets
 
$
658,973

 
$
507,692

 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
Current portion of notes payable
 
$
3,326

 
$
3,212

 
Accounts payable and accrued liabilities
 
38,023

 
27,938

 
Income taxes payable
 
7,412

 

 
Total current liabilities
 
48,761

 
31,150

 
 
 
 
 
 
 
Revolving unsecured credit facility
 
182,000

 
102,500

 
Notes payable, net of current portion
 
5,026

 
8,351

 
Deferred income tax liabilities
 
8,827

 
13,275

 
Total liabilities
 
244,614

 
155,276

 
 
 
 
 
 
 
Commitments and contingencies (Note 11)
 

 

 
 
 
 
 
 
 
Stockholders' equity:
 
 
 
 
 
Preferred stock; $0.01 par value; 10,000 shares authorized; no shares issued or
 
 
 
 
 
outstanding
 

 

 
Common stock; $0.01 par value; 90,000 shares authorized;
 
 
 
 
 
39,377 and 38,796 shares issued, respectively;
 
 
 
 
 
28,948 and 29,096 shares outstanding, respectively
 
394

 
388

 
Additional paid-in capital
 
176,675

 
159,081

 
Retained earnings
 
497,728

 
413,882

 
Accumulated other comprehensive income (loss) from cumulative foreign
 
 
 
 
 
currency translation adjustments
 
(7,751
)
 
(6,940
)
 
Common stock held in treasury, 10,429 and 9,700 shares at cost, respectively
 
(252,687
)
 
(213,995
)
 
Total stockholders' equity
 
414,359

 
352,416

 
Total liabilities and stockholders' equity
 
$
658,973

 
$
507,692

 
 
 
 
 
 
 
The accompanying notes are an integral part
of these consolidated financial statements.


 
 
EXHIBIT 99.1

FIRST CASH FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
 
 
 
 
 
 
 
Year Ended December 31,
 
 
2013
 
2012
 
2011
 
Revenue:
 
 
 
 
 
 
 
Retail merchandise sales
 
$
367,187

 
$
287,456

 
$
236,797

 
Pawn loan fees
 
181,555

 
152,237

 
122,320

 
Consumer loan and credit services fees
 
43,781

 
48,692

 
46,876

 
Wholesale scrap jewelry revenue
 
68,325

 
103,706

 
108,004

 
Total revenue
 
660,848

 
592,091

 
513,997

 
 
 
 
 
 
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
Cost of retail merchandise sold
 
221,361

 
167,144

 
142,106

 
Consumer loan and credit services loss provision
 
11,368

 
12,556

 
11,331

 
Cost of wholesale scrap jewelry sold
 
58,545

 
76,853

 
71,305

 
Total cost of revenue
 
291,274

 
256,553

 
224,742

 
 
 
 
 
 
 
 
 
Net revenue
 
369,574

 
335,538

 
289,255

 
 
 
 
 
 
 
 
 
Expenses and other income:
 
 
 
 
 
 
 
Store operating expenses
 
181,321

 
148,879

 
126,107

 
Administrative expenses
 
49,530

 
50,211

 
45,259

 
Depreciation and amortization
 
15,361

 
12,939

 
10,944

 
Interest expense
 
3,492

 
1,488

 
135

 
Interest income
 
(322
)
 
(216
)
 
(277
)
 
Total expenses and other income
 
249,382

 
213,301

 
182,168

 
 
 
 
 
 
 
 
 
Income from continuing operations before income taxes
 
120,192

 
122,237

 
107,087

 
 
 
 
 
 
 
 
 
Provision for income taxes
 
35,713

 
41,375

 
36,950

 
 
 
 
 
 
 
 
 
Income from continuing operations
 
84,479

 
80,862

 
70,137

 
 
 
 
 
 
 
 
 
Income (loss) from discontinued operations, net of tax
 
(633
)
 
(503
)
 
7,645

 
Net income
 
$
83,846

 
$
80,359

 
$
77,782

 
 
 
 
 
 
 
 
 
Basic income per share:
 
 
 
 
 
 
 
Income from continuing operations
 
$
2.91

 
$
2.80

 
$
2.29

 
Income (loss) from discontinued operations
 
(0.02
)
 
(0.02
)
 
0.24

 
Net income per basic share
 
$
2.89

 
$
2.78

 
$
2.53

 
 
 
 
 
 
 
 
 
Diluted income per share:
 
 
 
 
 
 
 
Income from continuing operations
 
$
2.86

 
$
2.72

 
$
2.23

 
Income (loss) from discontinued operations
 
(0.02
)
 
(0.02
)
 
0.24

 
Net income per diluted share
 
$
2.84

 
$
2.70

 
$
2.47

 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part
of these consolidated financial statements.


 
 
EXHIBIT 99.1

FIRST CASH FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
 
 
 
 
 
 
 
Year Ended December 31,
 
 
2013
 
2012
 
2011
 
Net income
 
$
83,846

 
$
80,359

 
$
77,782

 
Other comprehensive income (loss):
 
 
 
 
 
 
 
Currency translation adjustment, gross
 
(1,374
)
 
10,167

 
(15,797
)
 
Tax (expense) benefit
 
563

 
(3,644
)
 
5,383

 
Comprehensive income
 
$
83,035

 
$
86,882

 
$
67,368

 
 
 
 
 
 
 
 
 
 The accompanying notes are an integral part
of these consolidated financial statements.


 
 
EXHIBIT 99.1

FIRST CASH FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred
Stock
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accum-
ulated
Other
Compre-
hensive
Income
(Loss)
 
Common Stock
Held in Treasury
 
Total
Stock-
holders'
Equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
 
 
Shares
 
Amount
 
 
Balance at 12/31/2012
 

 
$

 
38,796

 
$
388

 
$
159,081

 
$
413,882

 
$
(6,940
)
 
9,700

 
$
(213,995
)
 
$
352,416

Shares issued under share-based com-pensation plan
 

 

 
8

 

 

 

 

 

 

 

Exercise of stock options
 

 

 
573

 
6

 
9,236

 

 

 

 

 
9,242

Income tax benefit from exercise of stock options
 

 

 

 

 
7,805

 

 

 

 

 
7,805

Share-based compensation expense
 

 

 

 

 
553

 

 

 

 

 
553

Net income
 

 

 

 

 

 
83,846

 

 

 

 
83,846

Currency translation adjustment, net of tax
 

 

 

 

 

 

 
(811
)
 

 

 
(811
)
Repurchases of treasury stock
 

 

 

 

 

 

 

 
729

 
(38,692
)
 
(38,692
)
Balance at 12/31/2013
 

 
$

 
39,377

 
$
394

 
$
176,675

 
$
497,728

 
$
(7,751
)
 
10,429

 
$
(252,687
)
 
$
414,359

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part
of these consolidated financial statements.







 
 
EXHIBIT 99.1

FIRST CASH FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
CONTINUED
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred
Stock
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accum-
ulated
Other
Compre-
hensive
Income
(Loss)
 
Common Stock
Held in Treasury
 
Total
Stock-
holders'
Equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
 
 
Shares
 
Amount
 
 
Balance at 12/31/2011
 

 
$

 
38,291

 
$
383

 
$
147,649

 
$
333,523

 
$
(13,463
)
 
8,200

 
$
(152,720
)
 
$
315,372

Shares issued under share-based com-pensation plan
 

 

 
31

 

 

 

 

 

 

 

Exercise of stock options and warrants
 

 

 
474

 
5

 
4,291

 

 

 

 

 
4,296

Income tax benefit from exercise of stock options and warrants
 

 

 

 

 
5,841

 

 

 

 

 
5,841

Share-based compensation expense
 

 

 

 

 
1,300

 

 

 

 

 
1,300

Net income
 

 

 

 

 

 
80,359

 

 

 

 
80,359

Currency translation adjustment, net of tax
 

 

 

 

 

 

 
6,523

 

 

 
6,523

Repurchases of treasury stock
 

 

 

 

 

 

 

 
1,500

 
(61,275
)
 
(61,275
)
Balance at 12/31/2012
 

 
$

 
38,796

 
$
388

 
$
159,081

 
$
413,882

 
$
(6,940
)
 
9,700

 
$
(213,995
)
 
$
352,416

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part
of these consolidated financial statements.



 
 
EXHIBIT 99.1

FIRST CASH FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
CONTINUED
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred
Stock
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accum-
ulated
Other
Compre-
hensive
Income
(Loss)
 
Common Stock
Held in Treasury
 
Total
Stock-
holders'
Equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
 
 
Shares
 
Amount
 
 
Balance at 12/31/2010
 

 
$

 
38,002

 
$
380

 
$
142,344

 
$
255,741

 
$
(3,049
)
 
6,840

 
$
(97,412
)
 
$
298,004

Shares issued under share-based com-pensation plan
 

 

 
16

 

 

 

 

 

 

 

Exercise of stock options and warrants
 

 

 
273

 
3

 
2,475

 

 

 

 

 
2,478

Income tax benefit from exercise of stock options and warrants
 

 

 

 

 
2,088

 

 

 

 

 
2,088

Share-based compensation expense
 

 

 

 

 
742

 

 

 

 

 
742

Net income
 

 

 

 

 

 
77,782

 

 

 

 
77,782

Currency translation adjustment, net of tax
 

 

 

 

 

 

 
(10,414
)
 

 

 
(10,414
)
Repurchases of treasury stock
 

 

 

 

 

 

 

 
1,360

 
(55,308
)
 
(55,308
)
Balance at 12/31/2011
 

 
$

 
38,291

 
$
383

 
$
147,649

 
$
333,523

 
$
(13,463
)
 
8,200

 
$
(152,720
)
 
$
315,372

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part
of these consolidated financial statements.



 
 
EXHIBIT 99.1

FIRST CASH FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Year Ended December 31,
 
2013
 
2012
 
2011
Cash flow from operating activities:
 
 
 
 
 
Net income
$
83,846

 
$
80,359

 
$
77,782

Adjustments to reconcile net income to net cash flow provided by operating activities:
 
 
 
 
 
Non-cash portion of credit loss provision
1,033

 
866

 
156

Share-based compensation expense
553

 
1,300

 
742

Depreciation and amortization expense
15,361

 
12,975

 
11,026

Deferred income taxes
(7,928
)
 
3,242

 
1,200

Loss (gain) on disposition of consumer loan stores
1,298

 
966

 
(9,965
)
Changes in operating assets and liabilities, net of business combinations:
 
 
 
 
 
Pawn fees and service charges receivable
(1,371
)
 
(3,245
)
 
(697
)
Merchandise inventories
(1,200
)
 
(2,777
)
 
445

Prepaid expenses and other assets
2,030

 
6,297

 
(4,076
)
Accounts payable and accrued expenses
5,586

 
(1,135
)
 
(883
)
Income taxes payable, current
7,510

 
(10,056
)
 
4,645

Net cash flow provided by operating activities
106,718

 
88,792

 
80,375

Cash flow from investing activities:
 
 
 
 
 
Loan receivables, net of cash repayments
(411
)
 
(17,325
)
 
(5,208
)
Purchases of property and equipment
(26,672
)
 
(21,841
)
 
(28,974
)
Proceeds from disposition of consumer loan stores

 

 
19,857

Acquisitions of pawn stores, net of cash acquired
(113,643
)
 
(120,738
)
 
(7,779
)
Net cash flow used in investing activities
(140,726
)
 
(159,904
)
 
(22,104
)
Cash flow from financing activities:
 
 
 
 
 
Borrowings from revolving credit facility
152,500

 
194,500

 

Repayments of revolving credit facility
(73,000
)
 
(92,000
)
 

Repayments of notes payable
(3,211
)
 
(1,837
)
 
(1,851
)
Purchases of treasury stock
(38,692
)
 
(61,275
)
 
(55,308
)
Proceeds from exercise of share-based compensation awards
9,242

 
4,296

 
2,478

Income tax benefit from exercise of stock options and warrants
7,805

 
5,841

 
2,088

Net cash flow provided by (used in) financing activities
54,644

 
49,525

 
(52,593
)
Effect of exchange rates on cash
(278
)
 
1,576

 
(2,622
)
Change in cash and cash equivalents
20,358

 
(20,011
)
 
3,056

Cash and cash equivalents at beginning of the year
50,285

 
70,296

 
67,240

Cash and cash equivalents at end of the year
$
70,643

 
$
50,285

 
$
70,296

 
 
 
 
 
 
The accompanying notes are an integral part
of these consolidated financial statements.
    



 
 
EXHIBIT 99.1

FIRST CASH FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
CONTINUED
(in thousands)
 
Year Ended December 31,
 
2013
 
2012
 
2011
Supplemental disclosure of cash flow information:
 
 
 
 
 
Cash paid during the period for:
 
 
 
 
 
Interest
$
3,477

 
$
1,357

 
$
145

Income taxes
$
27,111

 
$
38,810

 
$
24,579

 
 
 
 
 
 
Supplemental disclosure of non-cash investing activity:
 
 
 
 
 
Non-cash transactions in connection with pawn loans settled through forfeitures of collateral transferred to inventories
$
147,976

 
$
100,572

 
$
90,293

 
 
 
 
 
 
Supplemental disclosure of non-cash financing activity:
 
 
 
 
 
Notes and other amounts payable in connection with pawn acquisitions
$
2,008

 
$
13,759

 
$

 
 
 
 
 
 
The accompanying notes are an integral part
of these consolidated financial statements.



 
 
EXHIBIT 99.1

FIRST CASH FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND NATURE OF THE COMPANY

First Cash Financial Services, Inc., (the “Company”) was incorporated in Delaware. The Company is engaged primarily in the operation of pawn stores, which lend money on the collateral of pledged personal property and retail previously owned merchandise acquired through pawn forfeitures and purchases directly from the general public. In addition to making short-term secured pawn loans, certain of the Company's pawn stores offer short-term consumer loans and credit services. The Company also operates consumer loan stores that provide consumer loans, credit services, check cashing, and other related financial services. As of December 31, 2013, the Company owned and operated 821 pawn stores and 85 consumer loan stores in 12 U.S. states and 26 states in Mexico.

The Company manages its pawn and consumer loan operations under three operating segments: U.S. pawn operations, U.S. consumer loan operations and Mexico operations. The three operating segments have been aggregated into one reportable segment because they have similar economic characteristics and similar long-term financial performance metrics. Additionally, all three segments offer similar and overlapping products and services to a similar customer demographic, operate in similar regulatory environments, and are supported by a single, centralized administrative support platform.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed in the preparation of these financial statements:

Principles of consolidation - The accompanying consolidated financial statements of the Company include the accounts of its wholly-owned subsidiaries. The Company regularly makes acquisitions and the results of operations for the acquired stores have been consolidated since the acquisition dates. All significant intercompany accounts and transactions have been eliminated. See Note 4.

Cash and cash equivalents - The Company considers any highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents.

Customer loans and revenue recognition - Pawn loans are secured by the customer's pledge of tangible personal property with terms of typically 30 days. The Company accrues pawn loan fee revenue on a constant-yield basis over the life of the pawn loan for all pawns for which the Company deems collection to be probable based on historical pawn redemption statistics. If the pawn is not repaid, the principal amount loaned becomes the carrying value of the forfeited collateral, which is recovered through sales to other customers at prices above the carrying value.

The Company's pawn merchandise sales are primarily retail sales to the general public in its pawn stores. The Company acquires pawn merchandise inventory through forfeited pawns and through purchases of used goods directly from the general public. The Company records sales revenue at the time of the sale. The Company presents merchandise sales net of any sales or value-added taxes collected. The Company does not provide financing to customers for the purchase of its merchandise, but does permit its customers to purchase merchandise on an interest-free layaway plan. Should the customer fail to make a required payment, the previous payments are forfeited to the Company. Interim payments from customers on layaway sales are recorded as deferred revenue and subsequently recorded as income during the period in which final payment is received or when previous payments are forfeited to the Company. Some jewelry is melted at a third-party facility and the precious metal content is sold at either prevailing market commodity prices or a previously agreed upon price with a commodity buyer. The Company records revenue from these transactions when a price has been agreed upon and the Company ships the jewelry to the buyer.

Consumer loans are unsecured cash advances and installment loans with terms that range from 7 to 365 days. The Company accrues consumer loan fees on a constant-yield basis over the term of the consumer loan. The Company offers a credit services product (“CSO Program”) to assist customers in obtaining an extension of credit from an independent, non-bank, consumer lending company (the “Independent Lender”). The Company's CSO Program in Texas is licensed as a Credit Access Business (“CAB”) under Texas Finance Code Chapter 393 and regulated by the Texas Office of the Consumer Credit Commissioner. The Company recognizes credit services fees ratably over the life of the extension of credit made by the Independent Lender. The extensions of credit made by the Independent Lender to credit services customers of the Company have terms of 7 to 180 days. The Company records a liability for any collected, but unearned, credit services fees received from its customers.
 


 
 
EXHIBIT 99.1

Credit loss provisions - The Company has determined no allowance related to credit losses on pawn loans is required as the fair value of the pledged collateral is significantly in excess of the pawn loan amount. The Company maintains an allowance for credit losses on consumer loans on an aggregate basis at a level it considers sufficient to cover estimated losses in the collection of its consumer loans. The allowance for credit losses is based primarily upon historical credit loss experience, with consideration given to recent credit loss trends and changes in loan characteristics (e.g., average amount financed and term), delinquency levels, collateral values, economic conditions and underwriting and collection practices. The Company considers consumer loans to be in default if they are not repaid on the due date and writes off the principal amount and service charge receivable as of the default date. Net defaults and changes in the consumer loan allowance are charged to the consumer loan loss provision.

Under the CSO Program, the Company issues the Independent Lender a letter of credit to guarantee the repayment of the extension of credit. These letters of credit constitute a guarantee for which the Company is required to recognize, at the inception of the guarantee, a liability for the fair value of the obligation undertaken by issuing the letters of credit. According to the letter of credit, if the borrower defaults on the extension of credit, the Company will pay the Independent Lender the principal, accrued interest, insufficient funds fee, and late fees, all of which the Company records as a component of its credit loss provision. The Company is entitled to seek recovery, directly from its customers, of the amounts it pays the Independent Lender in performing under the letters of credit. The Company records the estimated fair value of the liability under the letters of credit in accrued liabilities. The allowances for credit losses and the estimated fair value of the liability under the letters of credit are periodically reviewed by management with any changes reflected in current operations. Although it is at least reasonably possible that events or circumstances could occur in the future that are not presently foreseen which could cause actual credit losses to be materially different from the recorded allowance for credit losses, the Company believes that it has given appropriate consideration to all relevant factors and has made reasonable assumptions in determining the allowance for credit losses.

Changes in the liability for credit services losses are as follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Balance at beginning of year
$
669

 
$
765

 
$
943

Provision for credit losses under letters of credit
9,899

 
11,222

 
10,418

Amounts paid to Independent Lender under letters of credit, net of recoveries from customers
(9,988
)
 
(11,318
)
 
(10,596
)
Balance at end of year
$
580

 
$
669

 
$
765


Foreign Currency Transactions - The Company has significant operations in Mexico where the functional currency for the Company's Mexican subsidiaries is the Mexican peso. Accordingly, the assets and liabilities of these subsidiaries are translated into U.S. dollars at the exchange rate in effect at each balance sheet date, and the resulting adjustments are accumulated in other comprehensive income (loss) as a separate component of stockholders' equity. Revenue and expenses are translated at the average exchange rates occurring during the year-to-date period. Prior to translation, U.S. dollar-denominated transactions of the Mexican-based subsidiaries are remeasured into Mexican pesos using current rates of exchange for monetary assets and liabilities and historical rates of exchange for non-monetary assets and liabilities. Gains and losses from remeasurement of dollar-denominated monetary assets and liabilities in Mexico are included in store operating expenses.

Store operating expenses - Costs incurred in operating the pawn stores and consumer loan stores have been classified as store operating expenses. Operating expenses include salary and benefit expense of store-level employees, occupancy costs, bank charges, security, insurance, utilities, supplies, depreciation, cash shortages and other costs incurred by the stores.

Layaway and deferred revenue - Interim payments from customers on layaway sales are credited to deferred revenue and subsequently recorded as income during the period in which final payment is received or when the previous payments are forfeited to the Company.

Inventories - Inventories represent merchandise purchased directly from the general public and merchandise acquired from forfeited pawns. Inventories purchased directly from customers are recorded at cost. Inventories from forfeited pawns are recorded at the amount of the pawn principal on the unredeemed goods, exclusive of accrued interest. The cost of inventories is determined on the specific identification method. Inventories are stated at the lower of cost or market and, accordingly, inventory valuation allowances are established when inventory carrying values are in excess of estimated selling prices, net of direct costs of disposal. Management has evaluated inventories and determined that a valuation allowance is not necessary.



 
 
EXHIBIT 99.1

Property and equipment - Property and equipment are recorded at cost. Depreciation is recorded on the straight-line method based on estimated useful lives of 15 years for buildings and three to five years for equipment. The costs of improvements on leased stores are capitalized as leasehold improvements and are amortized on the straight-line method over the applicable lease period, or useful life, if shorter. Maintenance and repairs are charged to expense as incurred; renewals and betterments are charged to the appropriate property and equipment accounts. Upon sale or retirement of depreciable assets, the cost and related accumulated depreciation is removed from the accounts, and the resulting gain or loss is included in the results of operations in the period the assets are sold or retired.

Goodwill - Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in each business combination. The Company performs its goodwill impairment assessment annually as of December 31, and between annual assessments if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company's reporting units, which are tested for impairment, are U.S. pawn operations, U.S. consumer loan operations and Mexico operations. The Company assesses goodwill for impairment at a reporting unit level by first assessing a range of qualitative factors, including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company's products and services, regulatory and political developments, entity specific factors, such as strategy and changes in key personnel, and overall financial performance. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company proceeds to the two-step impairment testing methodology.

Long-lived assets - Property and equipment and non-current assets are reviewed for impairment whenever events or changes in circumstances indicate that the net book value of the asset may not be recoverable. An impairment loss is recognized if the sum of the expected future cash flows (undiscounted and before interest) from the use of the asset is less than the net book value of the asset. Generally, the amount of the impairment loss is measured as the difference between the net book value of the asset and the estimated fair value of the related asset. The Company has not recorded any impairment loss for the fiscal years ended December 31, 2013, 2012 and 2011.

Fair value of financial instruments - The fair value of financial instruments is determined by reference to various market data and other valuation techniques, as appropriate. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. All fair value measurements related to acquisitions are level 3, non-recurring measurements, based on non-observable inputs. Unless otherwise disclosed, the fair values of financial instruments approximate their recorded values, due primarily to their cash nature. The Company did not have any outstanding balance for financial instruments at December 31, 2013, and 2012.

Income taxes - The Company uses the liability method of computing deferred income taxes on all material temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. See Note 10.

Advertising - The Company expenses the costs of advertising the first time the advertising takes place. Advertising expense from continuing operations for the fiscal years ended December 31, 2013, 2012 and 2011, was $2,244,000, $2,007,000, and $1,717,000, respectively.

Share-based compensation - All share-based payments to employees, including grants of employee stock options, are recognized in the financial statements based on the grant-date fair value. The Company recognizes compensation cost net of estimated forfeitures and recognizes the compensation cost for only those awards expected to vest on a straight-line basis over the requisite service period of the award, which is generally the vesting term. The Company estimated the forfeiture rate based on its historical experience and its expectations of future forfeitures. The Company records share-based compensation cost as an administrative expense. The Company applied the alternative transition method in calculating its pool of excess tax benefits available to absorb future tax deficiencies. See Note 13.

Forward Sales Commitments - The Company periodically uses forward sale agreements with a major gold bullion bank to sell a portion of the expected amount of scrap gold and silver jewelry, which is typically broken or of low retail value, produced in the normal course of business from its liquidation of such merchandise. These commitments qualify for an exemption from derivative accounting as normal sales, based on historical terms, conditions and quantities, and are therefore not recorded on the Company's balance sheet. As of December 31, 2013, the Company has no forward sales commitments for gold or silver ounces of its expected scrap jewelry sales.



 
 
EXHIBIT 99.1

Earnings per share - Basic income per share is computed by dividing income by the weighted-average number of shares outstanding during the year. Diluted income per share is calculated by giving effect to the potential dilution that could occur if securities or other contracts to issue common shares were exercised and converted into common shares during the year.

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Numerator:
 
 
 
 
 
Income from continuing operations for calculating basic and diluted earnings per share
$
84,479

 
$
80,862

 
$
70,137

Income (loss) from discontinued operations
(633
)
 
(503
)
 
7,645

Net income for calculating basic and diluted earnings per share
$
83,846

 
$
80,359

 
$
77,782

 
 
 
 
 
 
Denominator:
 
 
 
 
 
Weighted-average common shares for calculating basic earnings per share
29,079

 
28,912

 
30,706

Effect of dilutive securities:
 
 
 
 
 
Stock options, warrants and nonvested awards
495

 
801

 
792

Weighted-average common shares for calculating diluted earnings per share
29,574

 
29,713

 
31,498

 
 
 
 
 
 
Basic earnings per share:
 
 
 
 
 
Income from continuing operations
$
2.91

 
$
2.80

 
$
2.29

Income (loss) from discontinued operations
(0.02
)
 
(0.02
)
 
0.24

Net income per basic share
$
2.89

 
$
2.78

 
$
2.53

 
 
 
 
 
 
Diluted earnings per share:
 
 
 
 
 
Income from continuing operations
$
2.86

 
$
2.72

 
$
2.23

Income (loss) from discontinued operations
(0.02
)
 
(0.02
)
 
0.24

Net income per diluted share
$
2.84

 
$
2.70

 
$
2.47


Pervasiveness of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and related revenue and expenses, and the disclosure of gain and loss contingencies at the date of the financial statements. Such estimates and assumptions are subject to a number of risks and uncertainties, which may cause actual results to differ materially from the Company's estimates. Significant estimates include allowances for doubtful accounts receivable and related credit loss provisions and impairment of goodwill.

Reclassification - Certain amounts for the years ended December 31, 2011, and 2012 have been reclassified in order to conform to the 2013 presentation.

Recent accounting pronouncements - In October 2012, the Financial Accounting Standards Board issued ASU 2012-04, “Technical Corrections and Improvements” ("ASU 2012-04"). The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in ASU 2012-04 are effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 did not have a material effect on the Company’s financial position, results of operations or financial statement disclosures.

In February 2013, the Financial Accounting Standards Board issued ASU No. 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income” (“ASU 2013-02”). The amendments in ASU 2013-02 require an entity to disclose the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under generally accepted accounting principles in the United States ("GAAP") to be reclassified in its entirety to net income. For other amounts that are not required under GAAP


 
 
EXHIBIT 99.1

to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. The amendments of ASU 2013-02 are effective prospectively for reporting periods beginning after December 15, 2012. The adoption of ASU 2013-02 did not have a material effect on the Company’s financial position, results of operations or financial statement disclosures.

NOTE 3 - CAPITAL STOCK

In March 2008, the Company's Board of Directors authorized an amendment to the 2007-authorized share repurchase program which allowed the Company to repurchase up to 3,000,000 shares of its common stock. During fiscal 2011, the Company repurchased approximately 1,360,000 shares of its common stock at an aggregate cost of $55,308,000 to complete the 2007-authorized repurchase program, as amended.

In December 2011, the Company's Board of Directors authorized a share repurchase program which allowed the Company to repurchase up to 1,500,000 shares of its common stock. During fiscal 2012, the Company repurchased 1,500,000 shares of its common stock at an aggregate cost of $61,275,000 to complete the 2011-authorized repurchase program.

In January 2013, the Company's Board of Directors authorized a new share repurchase program which allows the Company to repurchase up to 1,500,000 shares of its common stock. During fiscal 2013, the Company repurchased 729,000 shares of its common stock at an aggregate cost of $38,692,000 and 771,000 shares remain available for repurchase under the repurchase program. Under its share repurchase program, the Company can purchase common stock in open market transactions, block purchases or privately negotiated transactions, and may from time to time purchase shares pursuant to a trading plan in accordance with Rule 10b5-1 and Rule 10b-18 under the Exchange Act, or by any combination of such methods. The number of shares to be purchased and the timing of the purchases are based on a variety of factors, including, but not limited to, the level of cash balances, credit availability, general business conditions, regulatory requirements, the market price of the Company's stock and the availability of alternative investment opportunities. No time limit was set for completion of repurchases under the new authorization and the program may be suspended or discontinued at any time.

NOTE 4 - ACQUISITIONS

2013 Acquisitions
Consistent with the Company’s strategy to continue its expansion of pawn stores in selected markets, in December 2013, the Company acquired from JoLin Enterprises, Inc. ("JoLin") the pawn loans, inventory, layaways and other operating assets and liabilities of 12 large format pawn stores located in South Carolina. The purchase price for the transaction was $30,072,000, net of cash acquired, and was composed of $29,072,000 in cash paid at closing and an additional $1,000,000 payable to the sellers in two equal payments due in March and June 2014. The acquisition has been accounted for using the purchase method of accounting for both financial reporting and tax purposes. Accordingly, the purchase price was allocated to assets and liabilities acquired based upon their estimated fair market values at the date of acquisition, which were comparable for financial and tax purposes. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill of approximately $20,483,000, which is deductible for U.S. income tax purposes. The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of JoLin. For tax purposes, the goodwill and intangible assets are being amortized over the statutory period of 15 years. The estimated fair values of the assets acquired are preliminary, as the Company is gathering information to finalize the valuation of these assets by June 2014. The assets, liabilities and results of operations of the locations are included in the Company’s consolidated results as of the acquisition date, December 14, 2013.
In September 2013, the Company acquired from Baja Unlimited, LLC and its subsidiaries ("Baja"), the operating entity owning the pawn loans, inventory, layaways and other operating assets and liabilities of eight large format pawn stores located in the Cabo/La Paz markets in Baja California Sur, Mexico. The purchase price for the all-cash transaction was $12,350,000, net of cash acquired, plus a nominal residual payment to be determined based on certain post-closing adjustments. The acquisition has been accounted for using the purchase method of accounting for both financial reporting and tax purposes. Accordingly, the purchase price was allocated to assets and liabilities acquired based upon their estimated fair market values at the date of acquisition, which were comparable for financial and tax purposes. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill of approximately $9,955,000, which is not deductible for foreign income tax purposes. The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of Baja. The assets, liabilities and results of operations of the locations are included in the Company’s consolidated results as of the acquisition date, September 30, 2013.



 
 
EXHIBIT 99.1

In June 2013, the Company acquired from O'Pak Credit LP, Pro Pawn LP and Milar Credit LP (collectively "Valu + Pawn") the pawn loans, inventory, layaways and other operating assets and liabilities of 19 large format pawn stores located in Texas. The purchase price for the transaction was $69,967,000, net of cash acquired, and was composed of $68,967,000 in cash paid at closing and an additional $1,000,000 payable to the sellers in June 2014. The acquisition has been accounted for using the purchase method of accounting for both financial reporting and tax purposes. Accordingly, the purchase price was allocated to assets and liabilities acquired based upon their estimated fair market values at the date of acquisition, which were comparable for financial and tax purposes. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill of approximately $52,334,000, which is deductible for U.S. income tax purposes. The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of Valu + Pawn. For tax purposes, the goodwill and intangible assets are being amortized over the statutory period of 15 years. The assets, liabilities and results of operations of the locations are included in the Company’s consolidated results as of the acquisition date, June 25, 2013.
Additionally, during fiscal 2013, three pawn stores located in three U.S. states were acquired in separate acquisitions for an aggregate purchase price of $2,903,000, net of cash acquired, and was composed of $2,895,000 in cash and payables to the sellers of $8,000. These acquisitions resulted in additional goodwill of approximately $1,769,000.

The allocations of the purchase prices for the Company's acquisitions during 2013 (the "2013 acquisitions") are as follows (in thousands):
 
Valu + Pawn
 
Baja Unlimited, LLC
 
JoLin Enterprises, Inc.
 
Other
 
Total
Pawn loans
$
9,361

 
$
824

 
$
4,559

 
$
397

 
$
15,141

Inventory
5,024

 
583

 
3,221

 
532

 
9,360

Other current assets
1,071

 
34

 
359

 
43

 
1,507

Property and equipment
1,002

 
939

 
782

 
55

 
2,778

Goodwill
52,334

 
9,955

 
20,483

 
1,769

 
84,541

Intangible assets
2,190

 
300

 
1,020

 
155

 
3,665

Other non-current assets
73

 
6

 

 
4

 
83

Current liabilities
(1,088
)
 
(291
)
 
(352
)
 
(52
)
 
(1,783
)
Purchase price
$
69,967

 
$
12,350

 
$
30,072

 
$
2,903

 
$
115,292


During fiscal 2013, revenue from the 2013 acquisitions since the acquisition dates was $26,046,000. The combined transaction and one-time integration costs of the 2013 acquisitions recorded during fiscal 2013 were approximately $2,350,000. During fiscal 2013, the net earnings from the 2013 acquisitions since the acquisition dates (including acquisition and integration costs) were $2,691,000.

The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if all the 2013 acquisitions had occurred on January 1, 2012. The unaudited pro forma financial information has been prepared for informational purposes only and does not purport to be indicative of what would have resulted had the acquisition occurred on the date indicated or what may result in the future (in thousands, except per share data):
 
 
Year Ended
 
Year Ended
 
 
December 31, 2013
 
December 31, 2012
 
 
As Reported
 
Pro Forma
 
As Reported
 
Pro Forma
Total revenue from continuing operations
 
$
660,848

 
$
713,329

 
$
592,091

 
$
672,411

Income from continuing operations
 
84,479

 
89,971

 
80,862

 
89,908

Net income
 
83,846

 
89,338

 
80,359

 
89,405

Income from continuing operations per share:
 
 
 
 
 
 
 
 
Basic
 
$
2.91

 
$
3.09

 
$
2.80

 
$
3.11

Diluted
 
2.86

 
3.04

 
2.72

 
3.03

Net income per share:
 
 
 
 
 
 
 
 
Basic
 
$
2.89

 
$
3.07

 
$
2.78

 
$
3.09

Diluted
 
2.84

 
3.02

 
2.70

 
3.01




 
 
EXHIBIT 99.1

2012 Acquisitions
In September 2012, the Company acquired the stock of LTS, Incorporated, the operating entity owning the pawn loans, inventory, layaways and other operating assets and liabilities of 16 large format Fast Cash Pawn stores located in Colorado. The purchase price for the transaction was $45,924,000, net of cash acquired, and was composed of $37,424,000 in cash and notes payable to the selling shareholders of $8,500,000. The notes payable bear interest at 4.0% per annum and the remaining balance is payable in monthly payments of principal and interest scheduled through September 2017. The acquisition has been accounted for using the purchase method of accounting. Accordingly, the purchase price was allocated to assets and liabilities acquired based upon their estimated fair market values at the date of acquisition, which were comparable for financial and tax purposes. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill of approximately $34,431,000, which is deductible for U.S. income tax purposes. The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company with LTS, Incorporated. For tax purposes, the goodwill and intangible assets are being amortized over the statutory period of 15 years. The assets, liabilities and results of operations of the locations are included in the Company's consolidated results as of the acquisition date, September 14, 2012.
In June 2012, the Company acquired from Mister Money Investments, Inc., L&W Properties, LLC, Mister Money - - RM, Inc., Mister Money - - KY, Inc., LWC, LLC and MMRD, LLC (collectively “Mister Money”), the assets of 21 stores located in Colorado, Kentucky, Wyoming and Nebraska, and certain operating entities owning the pawn loans, inventory, layaways and other operating assets and liabilities of three other pawn stores located in Colorado and Kentucky. The combined purchase price for all 24 stores was $25,615,000, net of cash acquired, and was composed of $25,315,000 in cash paid at closing and an additional $300,000 paid in December 2012. The acquisition has been accounted for using the purchase method of accounting. Accordingly, the purchase price was allocated to assets and liabilities acquired based upon their estimated fair market values at the date of acquisition, which were comparable for financial and tax purposes. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill of approximately $15,694,000, which is deductible for U.S. income tax purposes. The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company with Mister Money. For tax purposes, the goodwill and intangible assets are being amortized over the statutory period of 15 years. The assets, liabilities and results of operations of the locations are included in the Company's consolidated results as of the acquisition date, June 15, 2012.
In January 2012, the Company acquired from BBR Unlimited, LLC ("BBR"), the operating entity owning the pawn loans, inventory, layaways and other operating assets and liabilities of 29 pawn stores located in western Mexico. The purchase price for these stores was $46,863,000, net of cash acquired, and was composed of $41,963,000 in cash and a note payable to the seller of $4,900,000. The note payable bears interest at 3.0% per annum and the remaining balance is payable in monthly payments of principal and interest scheduled through January 2015. The acquisition has been accounted for using the purchase method of accounting. Accordingly, the purchase price was allocated to assets and liabilities acquired based upon their estimated fair market values at the date of acquisition, which were comparable for financial and tax purposes. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill of $39,386,000, of which, a significant majority is not deductible for income tax purposes. The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company with BBR. The assets, liabilities and results of operations of the locations are included in the Company's consolidated results as of the acquisition date, January 10, 2012.
Additionally, during fiscal 2012, six pawn stores located in three U.S. states were acquired in five separate acquisitions for an aggregate purchase price of $16,095,000, net of cash acquired, and was composed of $15,736,000 in cash and payables to the sellers of $359,000. These acquisitions resulted in additional recorded goodwill of $5,620,000.
NOTE 5 - DISCONTINUED OPERATIONS

The Company’s strategy has been to grow its pawn operations while reducing regulatory exposure from other consumer lending products, which include certain consumer loan and credit services products offered in the United States. As a result, in December 2013, the Company initiated a plan to discontinue the operations of the Cash & Go, Ltd. joint venture, a consolidated 50%-owned subsidiary, which owns and operates 37 check cashing and financial services kiosks located inside convenience stores in the state of Texas. In connection with this decision, the Company recorded a charge of $844,000, net of tax, or $0.03 per share, for the quarter ended December 31, 2013. The after-tax earnings from operations for Cash & Go, Ltd. were $211,000, or $0.01 per share, in fiscal 2013. Comparable after-tax earnings were $243,000, or $0.01 per share, in 2012 and $386,000, or $0.01 per share, in 2011. The Company expects to wind down operations and liquidate the assets of Cash & Go, Ltd. over the first six months of fiscal 2014.


 
 
EXHIBIT 99.1

In September 2012, the Company closed seven of its consumer loan stores located in the Texas cities of Austin and Dallas due in part to city ordinances enacted during 2012, which significantly restricted the Company's ability to provide credit services products. The Company recorded a loss on disposal of $628,000, net of tax, or $0.03 per share, from these stores. The after-tax operating results from operations for these Texas stores were immaterial in 2012 and 2011.

In March 2011, the Company sold all ten of its consumer loan stores located in Illinois to a privately-held operator of check cashing and consumer lending stores. Under the terms of the agreement, the buyer purchased the outstanding customer loans, customer account lists and fixed assets, assumed leases at all the store locations and hired all of the store-level employees. During fiscal 2011, the Company recorded a gain of approximately $5,979,000, net of tax, or $0.19 per share, from the sale of these stores. The after-tax earnings from operations for the Illinois stores were an additional $514,000, or $0.02 per share, during fiscal 2011.

All revenue, expenses and income reported in these financial statements have been adjusted to reflect reclassification of all discontinued operations. The carrying amounts of the assets and liabilities for discontinued operations at December 31, 2013, and 2012 were immaterial.

The following table summarizes the operating results, including gains or losses from dispositions, of all the operations which have been reclassified as discontinued operations in the consolidated statements of operations for the years ended December 31, 2013, 2012 and 2011 (in thousands, except per share data):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Consumer loan and credit services fees
$
3,337

 
$
5,308

 
$
8,763

Consumer loan and credit services loss provision
(691
)
 
(1,264
)
 
(1,822
)
Net revenue
2,646

 
4,044

 
6,941

 
 
 
 
 
 
Expenses and other (gain) loss:
 
 
 
 
 
Operating and administrative expenses
2,322

 
3,816

 
4,943

Depreciation and amortization

 
36

 
82

Loss (gain) on disposition of consumer loan stores
1,298

 
966

 
(9,965
)
Gain on excess collections of notes receivable

 

 
(764
)
Total expenses and other (gains)/losses
3,620

 
4,818

 
(5,704
)
Income (loss) from discontinued operations before income taxes
(974
)
 
(774
)
 
12,645

Tax benefit (expense)
341

 
271

 
(5,000
)
Income (loss) from discontinued operations, net of tax
$
(633
)
 
$
(503
)
 
$
7,645

Income (loss) from discontinued operations (basic)
$
(0.02
)
 
$
(0.02
)
 
$
0.24

Income (loss) from discontinued operations (diluted)
$
(0.02
)
 
$
(0.02
)
 
$
0.24


NOTE 6 - CUSTOMER LOANS AND VALUATION ACCOUNTS

Customer loans, net of unearned finance fees, consist of the following (in thousands):
 
Pawn
 
Consumer Loan
 
Total
December 31, 2013
 
 
 
 
 
Total customer loans
$
115,234

 
$
1,534

 
$
116,768

Less allowance for doubtful accounts

 
(84
)
 
(84
)
 
$
115,234

 
$
1,450

 
$
116,684

 
 
 
 
 
 
December 31, 2012
 
 
 
 
 
Total customer loans
$
103,181

 
$
1,990

 
$
105,171

Less allowance for doubtful accounts

 
(111
)
 
(111
)
 
$
103,181

 
$
1,879

 
$
105,060



 
 
EXHIBIT 99.1

NOTE 7 - PROPERTY AND EQUIPMENT

Property and equipment used in continuing operations consist of the following (in thousands):
 
Year Ended December 31,
 
2013
 
2012
Land
$
11,816

 
$
10,481

Buildings
17,895

 
12,386

Furniture, fixtures, equipment and leasehold improvements
175,098

 
154,155

 
204,809

 
177,022

Less: accumulated depreciation
(96,672
)
 
(83,718
)
 
$
108,137

 
$
93,304


Depreciation expense from continuing operations for the fiscal years ended December 31, 2013, 2012 and 2011, was $14,285,000, $12,377,000, and $10,743,000, respectively.

NOTE 8 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of the following (in thousands):
 
Year Ended December 31,
 
2013
 
2012
Deferred layaway sales revenue
$
11,090

 
$
9,169

Accrued compensation
7,703

 
5,162

Sales, property, and payroll withholding taxes payable
5,573

 
4,776

Trade accounts payable
3,342

 
2,507

Benefits liabilities and withholding payable
1,016

 
967

Reserves for expected losses on outstanding CSO letters of credit
580

 
669

Other accrued liabilities from discontinued operations
361

 
262

Other accrued liabilities
8,358

 
4,426

 
$
38,023

 
$
27,938


NOTE 9 - REVOLVING CREDIT FACILITY AND NOTES PAYABLE

At December 31, 2013, the Company maintained a revolving line of credit with its lenders (the "2012 Credit Facility”) in the amount of $205,000,000, which was scheduled to mature in February 2015. At December 31, 2013, the Company had $182,000,000 outstanding under the 2012 Credit Facility and $23,000,000 available for borrowings. During the year ended December 31, 2013, the Company received net proceeds of $79,500,000 from the 2012 Credit Facility. The 2012 Credit Facility charges interest at the prevailing 30-day LIBOR rate plus a fixed spread of 2.0%. The interest rate on amounts outstanding under the 2012 Credit Facility was 2.19% at December 31, 2013. Under the terms of the 2012 Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants, which include a fixed charge coverage ratio, a leverage ratio and a covenant to maintain a defined level of tangible net worth. The Company’s 2012 Credit Facility contains provisions that allow the Company to repurchase stock and/or pay cash dividends within certain parameters and restricts the Company from pledging any of its assets as collateral against other indebtedness. The Company was in compliance with the requirements and covenants of the 2012 Credit Facility as of December 31, 2013. The Company is required to pay an annual commitment fee of 0.375% on the average daily unused portion of the 2012 Credit Facility commitment.

Subsequent to year end, on February 5, 2014, the Company entered into an agreement with a group of commercial lenders to establish a new revolving credit facility (the "2014 Credit Facility") in the amount of $160,000,000 with an accordion feature whereby the facility may be increased up to an additional $50,000,000 with the consent of any increasing or additional participating lenders. The Company used proceeds from the 2014 Credit Facility and available cash balances to retire and terminate the 2012 Credit Facility. The 2014 Credit Facility matures in February 2019 and bears interest, at the Company's option, at either (i) the prevailing LIBOR rate (with interest periods of 1, 2, 3 or 6 months at the Company's option) plus a fixed spread of 2.5% or (ii) the prevailing prime or base rate plus a fixed spread of 1.5%. The Company is required to maintain certain financial ratios and comply with certain financial covenants, including compliance with a leverage ratio of no greater than 2.5 times Consolidated


 
 
EXHIBIT 99.1

EBITDA (as defined in the 2014 Credit Facility). The 2014 Credit Facility limits the Company's ability to incur additional indebtedness, subject to customary exceptions, including permitted additional unsecured debt so long as the aggregate principal amount of the loans and commitments under the 2014 Credit Facility plus such additional unsecured debt plus foreign third-party loans does not in the aggregate exceed $500,000,000. The 2014 Credit Facility is unsecured except for the pledge of 65% of the stock of certain of the Company's foreign subsidiaries, and the Company is restricted from pledging any of its other assets as collateral against other indebtedness. The 2014 Credit Facility is guaranteed by the Company's material U.S. operating subsidiaries. The 2014 Credit Facility allows the Company to repurchase shares of its stock and to pay cash dividends within certain parameters. The Company is required to pay an annual commitment fee of 0.50% on the average daily unused portion of the 2014 Credit Facility commitment. At February 5, 2014, upon the effectiveness of the 2014 Credit Facility, the Company had $145,870,000 outstanding under the 2014 Credit Facility and $14,130,000 available for borrowings and the 2014 Credit Facility had an interest rate of 2.69%.
At December 31, 2013, the Company had notes payable arising from a 16-store pawn acquisition in September 2012, with a remaining balance of $6,531,000 bearing interest at 4.0% per annum. The remaining balance is payable in monthly payments of principal and interest scheduled through September 2017. Of the $6,531,000 in notes payable, $1,647,000 is classified as a current liability and $4,884,000 is classified as long-term debt.

At December 31, 2013, the Company also had a note payable arising from a 29-store pawn acquisition in January 2012, with a remaining balance of $1,821,000 bearing interest at 3.0% per annum. The remaining balance is payable in monthly payments of principal and interest scheduled through January 2015. Of the $1,821,000 in notes payable, $1,679,000 is classified as a current liability and $142,000 is classified as long-term debt.

As of December 31, 2013, annual maturities of the outstanding long-term debt for each of the five years after December 31, 2013 are as follows (in thousands):
Fiscal
 
2014
$
3,326

2015
183,856

2016
1,784

2017
1,386

2018

Thereafter

 
$
190,352




 
 
EXHIBIT 99.1

NOTE 10 - INCOME TAXES

Components of the provision for income taxes and the income to which it relates for the years ended December 31, 2013, 2012 and 2011 consist of the following (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Income from continuing operations before income taxes:
 
 
 
 
 
Domestic
$
43,936

 
$
48,419

 
$
44,199

Foreign
76,256

 
73,818

 
62,888

Income from continuing operations before income taxes
$
120,192

 
$
122,237

 
$
107,087

 
 
 
 
 
 
Current income taxes:
 
 
 
 
 
Federal
$
22,468

 
$
17,423

 
$
16,490

Foreign
20,392

 
19,748

 
17,304

State and local
781

 
962

 
749

Current provision for income taxes
43,641

 
38,133

 
34,543

 
 
 
 
 
 
Deferred provision (benefit) for income taxes:
 
 
 
 
 
Federal
(799
)
 
3,122

 
2,540

Foreign
(7,218
)
 

 

State and local
89

 
120

 
(133
)
Total deferred provision (benefit) for income taxes
(7,928
)
 
3,242

 
2,407

 
 
 
 
 
 
Provision for income taxes
$
35,713

 
$
41,375

 
$
36,950


The provision for income taxes related to discontinued operations was a $341,000 benefit, $271,000 benefit and $5,000,000 expense for the years ended December 31, 2013, 2012 and 2011, respectively.

In July 2013, the Company terminated an election to include foreign subsidiaries in its consolidated U.S. federal income tax return and it is the Company's intent to indefinitely reinvest the earnings of these subsidiaries outside the U.S. Accordingly, under current U.S. income tax law, the undistributed earnings of the foreign subsidiaries should not be subject to U.S. federal income tax as of July 2013. The Company recognized an estimated one-time net income tax benefit of approximately $3,979,000 in 2013 related primarily to changes in deferred tax assets and liabilities, net of certain one-time U.S. tax liabilities associated with the termination of the election. The amount of the benefit could be subject to adjustment pending the preparation and filing of the Company's 2013 tax returns during 2014. The cumulative amount of indefinitely reinvested earnings of foreign subsidiaries is $23,485,000 at December 31, 2013. These earnings would be subject to additional U.S. taxes of $1,076,000 if the earnings were repatriated into the U.S. for 2013.
   


 
 
EXHIBIT 99.1

The principal current and non-current deferred tax assets and liabilities consist of the following at December 31, 2013, and 2012 (in thousands):
 
December 31,
 
2013
 
2012
Deferred tax assets:
 
 
 
Depreciation
$
5,841

 
$

Cumulative foreign translation adjustment
4,010

 
3,447

Deferred cost of goods sold deduction
2,507

 

Interest accrual on forfeited pawn loans
1,053

 
1,365

Deferred compensation
773

 

Allowance for consumer loan losses
427

 

Other
1,091

 
495

Total deferred tax assets
15,702

 
5,307

 
 
 
 
Deferred tax liabilities:
 
 
 
Intangible asset amortization
17,760

 
15,823

Share-based compensation
918

 
1,101

Other
807

 
510

Total deferred tax liabilities
19,485

 
17,434

 
 
 
 
Net deferred tax liabilities
$
(3,783
)
 
$
(12,127
)
 
 
 
 
Reported as:
 
 
 
Current deferred tax assets
$
5,044

 
$
1,148

Non-current deferred income tax liabilities
(8,827
)
 
(13,275
)
Net deferred tax liabilities
$
(3,783
)
 
$
(12,127
)

The effective rate on income from continuing operations differs from the U.S. federal statutory rate of 35%. The following is a reconciliation of such differences (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Tax at the U.S. federal statutory rate
$
42,067

 
$
42,783

 
$
37,480

State income taxes, net of federal tax benefit of $273, $337 and $262, respectively
508

 
625

 
487

Effect of indefinitely reinvesting foreign earnings
(2,281
)
 

 

Tax restructuring
(3,979
)
 

 

Additional foreign tax credit claimed from prior periods

 
(778
)
 

Other taxes and adjustments, net
(602
)
 
(1,255
)
 
(1,017
)
Provision for income taxes
$
35,713

 
$
41,375

 
$
36,950

Effective tax rate
29.7
%
 
33.8
%
 
34.5
%

The Company reviews the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. Interest and penalties related to income tax liabilities that could arise would be classified as interest expense in the Company's consolidated statements of income. There were no such interest or penalties for the fiscal years ended December 31, 2013, 2012 and 2011.



 
 
EXHIBIT 99.1

As of December 31, 2013, and 2012, the Company had no unrecognized tax benefits and, therefore, the Company did not have a liability for accrued interest and penalties. The Company does not believe its unrecognized tax benefits will significantly change over the next twelve months.

The Company files federal income tax returns in the United States and Mexico, as well as multiple state and local income tax returns in the United States. During fiscal 2013, the U.S. Internal Revenue Service completed its examination of the Company's U.S. federal income tax returns for the years ended December 31, 2006, 2007, and 2008, which resulted in no adjustments. The Company's U.S. federal returns are not subject to examination for tax years prior to 2010. The Company's state income tax returns are not subject to examination for the tax years prior to 2010 with the exception of three states, which are not subject to examination for tax years prior to 2009. With respect to Mexico, the tax years prior to 2008 are closed to examination.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

Leases

The Company leases certain of its facilities and equipment under operating leases with terms generally ranging from three to five years. Most facility leases contain renewal options. Remaining future minimum rentals due under non-cancelable operating leases are as follows (in thousands):
Fiscal
 
2014
$
39,329

2015
33,115

2016
25,083

2017
16,701

2018
9,177

Thereafter
17,583

 
$
140,988


Rent expense from continuing operations under such leases was $40,484,000, $32,940,000 and $27,416,000 for the years ended December 31, 2013, 2012 and 2011, respectively.

Litigation

The Company is, from time to time, a defendant (actual or threatened) in certain lawsuits and arbitration claims encountered in the ordinary course of its business, the resolution of which, in the opinion of management, should not have a material adverse effect on the Company's financial position, results of operations, or cash flows.

Guarantees

The Company offers a fee-based CSO Program to assist consumers in its Texas markets in obtaining extensions of credit. The Company’s CSO Program in Texas is licensed as a Credit Access Business (“CAB”) under Texas Finance Code Chapter 393 and regulated by the Texas Office of the Consumer Credit Commissioner. Under the CSO Program, the Company assists customers in applying for a short-term extension of credit from the Independent Lender and issues the Independent Lender a letter of credit to guarantee the repayment of the extension of credit. The extensions of credit made by the Independent Lender to credit services customers of the Company range in amount from $50 to $1,500, have terms of 7 to 180 days and bear interest at a rate of 10% on an annualized basis. The Independent Lender is considered a variable interest entity of the Company. The net loans outstanding represent less than 50% of the Independent Lender's total assets. In addition, the Company does not have any ownership interest in the Independent Lender, does not exercise control over it and is not the primary beneficiary and, therefore, does not consolidate the Independent Lender's results with its results.

The letters of credit under the CSO Program constitute a guarantee for which the Company is required to recognize, at the inception of the guarantee, a liability for the fair value of the obligation undertaken by issuing the letters of credit. The Independent Lender may present the letter of credit to the Company for payment if the customer fails to repay the full amount of the extension of credit and accrued interest after the due date of the extension of credit. Each letter of credit expires approximately 30 days after the due date of the extension of credit. The Company's maximum loss exposure under all of the outstanding letters of credit issued on behalf of its customers to the Independent Lender as of December 31, 2013, was $13,992,000 compared to $16,168,000 at December 31, 2012. According to the terms of the letter of credit, if the borrower defaults on the extension of credit, the Company


 
 
EXHIBIT 99.1

will pay the Independent Lender the principal, accrued interest, insufficient funds fee, and late fees, all of which the Company records as a component of its credit loss provision. The Company is entitled to seek recovery, directly from its customers, of the amounts it pays the Independent Lender in performing under the letters of credit. The Company records the estimated fair value of the liability under the letters of credit, which was $580,000 at December 31, 2013, as a component of accrued liabilities. The loss provision associated with the CSO Program is based primarily upon historical loss experience, with consideration given to recent loss trends, delinquency rates, economic conditions and management's expectations of future credit losses.

NOTE 12 - GOODWILL
    
The Company performed its assessment of goodwill and determined there was no impairment as of December 31, 2013, and 2012.

The accumulated amortization for goodwill was $8,065,000 at December 31, 2013, and 2012. Changes in the carrying value of goodwill were as follows (in thousands):
December 31, 2013
 
Balance, beginning of year
$
166,386

Acquisitions (Note 4)
84,541

Foreign currency adjustments
(73
)
Other adjustments
387

Balance, end of year
$
251,241

 
 
December 31, 2012
 
Balance, beginning of year
$
69,652

Acquisitions (Note 4)
95,131

Foreign currency adjustments
1,603

Balance, end of year
$
166,386


NOTE 13 - EQUITY COMPENSATION PLANS AND SHARE-BASED COMPENSATION
The Company has previously adopted equity and share-based compensation plans to attract and retain executives, directors and key employees. During 2011, the Company's shareholders approved the 2011 Long-Term Incentive Plan, which allows for additional equity grants. Under these plans, the Company has granted qualified and non-qualified common stock options and nonvested common stock awards to officers, directors and other key employees. At December 31, 2013, 1,074,000 shares were reserved for future grants under the plans.

Stock Options

Historically, common stock options have been granted to purchase the Company's common stock at an exercise price equal to or greater than the fair market value at the date of grant and generally have a maximum duration of ten years. The Company typically issues shares of common stock to satisfy option exercises.

Stock options outstanding as of December 31, 2013, are as follows (in thousands, except exercise price and life):

Range of
 
 
 
Weighted-Average
 
Currently
Exercise Prices
 
Options
 
Remaining Life
 
Exercisable
$
10.00

-
$
15.00

 
 
170

 
 
1.8
 
 
170

 
$
15.01

-
$
20.00

 
 
779

 
 
1.6
 
 
779

 
$
20.01

-
$
25.00

 
 
13

 
 
3.3
 
 
4

 
$
35.01

-
$
40.00

 
 
90

 
 
7.4
 
 

 
 
 
 
 
 
1,052

 
 
2.2
 
 
953

 



 
 
EXHIBIT 99.1

A summary of stock option activity for the years ended December 31, 2013, 2012 and 2011, is as follows (in thousands, except exercise price):
 
2013
 
2012
 
2011
 
 
 
Weighted-
 
 
 
Weighted-
 
 
 
Weighted-
 
 
 
Average
 
 
 
Average
 
 
 
Average
 
Underlying
 
Exercise
 
Underlying
 
Exercise
 
Underlying
 
Exercise
 
Shares
 
Price
 
Shares
 
Price
 
Shares
 
Price
Outstanding at beginning of year
1,635

 
$
18.51

 
2,109

 
$
16.39

 
2,292

 
$
14.63

Granted

 

 

 

 
90

 
39.11

Exercised
(573
)
 
16.12

 
(474
)
 
9.06

 
(273
)
 
9.08

Canceled or forfeited
(10
)
 
10.00

 

 

 

 

Outstanding at end of year
1,052

 
19.90

 
1,635

 
18.51

 
2,109

 
16.39

 
 
 
 
 
 
 
 
 
 
 
 
Exercisable at end of year
953

 
18.05

 
1,512

 
17.35

 
1,950

 
15.48


At December 31, 2013, the aggregate intrinsic value for the stock options outstanding was $44,098,000, of which $41,741,000 was exercisable at the end of the year, with weighted-average remaining contractual terms of 2.2 years. The aggregate intrinsic value reflects the total pre-tax intrinsic value (the difference between the Company's closing stock price on the last trading day of the period and the exercise price of the options, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2013.
    
The total intrinsic value of options exercised for fiscal 2013, 2012 and 2011, was $22,375,000, $16,878,000 and $6,345,000, respectively. The intrinsic values are based on the closing price of the Company's stock on the date of exercise. The Company typically issues shares of common stock to satisfy option exercises.

There were no common stock options granted in fiscal 2013 and 2012. The common stock options granted in 2011 have a ten year life and vest annually during periods ranging from five to ten years from the date of grant. The fair value of option grants in 2011 were estimated at the date of the grant using a Black-Scholes option pricing model with the following weighted-average assumptions: expected volatility was 40.0%; risk-free interest rate was 1.0%; expected terms of options was 7.25 years; and weighted-average fair value of options granted was $15.27.

Nonvested Common Stock Awards

The Company has granted nonvested common stock awards (also known as "restricted stock") to Company officers and to the non-management members of the Board of Directors under the Company's incentive plans. The nonvested common stock awards are issued as common shares upon vesting. The 2013 awards included 1,000 shares, which vest ratably over time through 2020. The 2012 awards included 50,000 shares with performance-based criteria with measurement periods beginning in 2012 through 2015 and 50,000 shares with performance-based criteria with measurement periods beginning in 2013 through 2016. The vesting performance criteria for awards with a measurement period beginning in 2012 relate to the Company's growth in net income from continuing operations compared to the 2011 base period. The vesting performance criteria for awards with a measurement period beginning in 2013 relate to the Company's growth in earnings per share from continuing operations compared to the 2012 base period. All other 2012 awards vest ratably over time through 2019. The 2011 awards included 50,000 shares with performance-based criteria with measurement periods beginning in 2011 through 2015. The vesting performance criteria for each year relate to the Company's growth in net income from continuing operations compared to the 2010 base period. All other 2011 awards vest ratably over time through 2018. The grant date fair value of the nonvested awards is based on the Company's closing stock price on the day of the grant date, and the grant date fair value of performance award units is based on the maximum amount of the award expected to be achieved. The amount attributable to award grants is amortized to expense over the vesting periods.



 
 
EXHIBIT 99.1

The following table summarizes the nonvested common stock award activity during 2013, 2012 and 2011 (in thousands, except fair value amounts):
 
2013
 
2012
 
2011
 
 
 
Weighted-
 
 
 
Weighted-
 
 
 
Weighted-
 
 
 
Average
 
 
 
Average
 
 
 
Average
 
 
 
Fair Value
 
 
 
Fair Value
 
 
 
Fair Value
 
Underlying
 
at Date
 
Underlying
 
at Date
 
Underlying
 
at Date
 
Shares
 
of Grant
 
Shares
 
of Grant
 
Shares
 
of Grant
Outstanding at beginning of year
153

 
$
39.24

 
76

 
$
30.74

 
33

 
$
28.50

Granted
1

 
51.70

 
108

 
43.45

 
59

 
31.59

Vested
(8
)
 
32.97

 
(31
)
 
33.04

 
(16
)
 
29.26

Canceled or forfeited
(29
)
 
39.49

 

 

 

 

Outstanding at end of year
117

 
39.91

 
153

 
39.24

 
76

 
30.74


Nonvested common stock awards vesting in 2013, 2012 and 2011 had an aggregate intrinsic value of $224,000, $1,469,000 and $578,000, respectively, based on the closing price of the Company's stock on the date of vesting. The outstanding award units had an aggregate intrinsic value of $7,229,000 at December 31, 2013.

Share-Based Compensation Expense

The Company's net income includes the following compensation costs related to share-based compensation arrangements (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Gross compensation costs:
 
 
 
 
 
Stock options
$
158

 
$
134

 
$
112

Nonvested stock
395

 
1,166

 
630

Total gross compensation costs
553

 
1,300

 
742

 
 
 
 
 
 
Income tax benefits:
 
 
 
 
 
Stock options
(55
)
 
(45
)
 
(39
)
Nonvested stock
(138
)
 
(217
)
 
(217
)
Total income tax benefits
(193
)
 
(262
)
 
(256
)
 
 
 
 
 
 
Net compensation expense
$
360

 
$
1,038

 
$
486

 
 
 
 
 
 
Tax benefit realized from stock options exercised during the year
$
7,805

 
$
5,841

 
$
2,088


As of December 31, 2013, the total compensation cost related to nonvested stock options not yet recognized was $680,000 and is expected to be recognized over the weighted-average period of 2.5 years. As of December 31, 2013, the total compensation cost related to nonvested common stock awards not yet recognized was $4,253,000 and is expected to be recognized over the weighted-average period of 1.9 years. There was $1,288,000, $0 and $0 of excess tax benefit over exercise price recorded as increases to additional paid-in capital in fiscal 2013, 2012 and 2011, respectively.



 
 
EXHIBIT 99.1

NOTE 14 - FIRST CASH 401(k) PROFIT SHARING PLAN

The First Cash 401(k) Profit Sharing Plan (the “Plan”) is provided by the Company for all full-time, U.S.-based, employees who have been employed with the Company for six months or longer. Under the Plan, a participant may contribute up to 100% of earnings, with the Company matching the first 6% at a rate of 40%. The employee and Company contributions are paid to a corporate trustee and invested in various funds. Company contributions made to participants' accounts become fully vested upon completion of five years of service. The total Company matching contributions to the Plan were $712,000, $602,000 and $525,000 for the years ended December 31, 2013, 2012 and 2011, respectively.

NOTE 15 - GEOGRAPHIC AREAS

The following table shows revenue, selected current assets and long-lived assets (all non-current assets except goodwill, intangibles and deferred tax assets) by geographic area (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Revenue:
 
 
 
 
 
United States
$
297,862

 
$
270,342

 
$
232,862

Mexico
362,986

 
321,749

 
281,135

 
$
660,848

 
$
592,091

 
$
513,997

 
 
 
 
 
 
Pawn loans and consumer loans:
 
 
 
 
 
United States
$
66,548

 
$
56,189

 
$
41,184

Mexico
50,136

 
48,871

 
32,961

 
$
116,684

 
$
105,060

 
$
74,145

 
 
 
 
 
 
Inventories:
 
 
 
 
 
United States
$
40,910

 
$
32,664

 
$
23,745

Mexico
36,883

 
32,681

 
20,667

 
$
77,793

 
$
65,345

 
$
44,412

 
 
 
 
 
 
Long-lived assets:
 
 
 
 
 
United States
$
58,539

 
$
47,343

 
$
40,008

Mexico
52,339

 
48,452

 
35,383

 
$
110,878

 
$
95,795

 
$
75,391



 
 
EXHIBIT 99.1

NOTE 16 - QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized quarterly financial data (in thousands, except per share data) for the fiscal years ended December 31, 2013, and 2012, are set forth below. The Company's operations are subject to seasonal fluctuations. The amounts reported below have been adjusted to reflect reclassification of the discontinued operations.
 
Quarter Ended
 
March 31
 
June 30
 
September 30
 
December 31
2013
 
 
 
 
 
 
 
Total revenue
$
159,912

 
$
142,354

 
$
173,379

 
$
185,203

Cost of revenue
68,652

 
58,207

 
79,404

 
85,011

Net revenue
91,260

 
84,147

 
93,975

 
100,192

Total expenses and other income
60,094

 
60,387

 
64,524

 
64,377

Income from continuing operations
20,180

 
15,654

 
23,127

 
25,518

Income (loss) from discontinued operations, net of tax
84

 
9

 
14

 
(740
)
Net income
20,264

 
15,663

 
23,141

 
24,778

Diluted income per share:
 
 
 
 
 
 
 
Income from continuing operations, net of tax
0.68

 
0.53

 
0.79

 
0.87

Income (loss) from discontinued operations, net of tax

 

 

 
(0.03
)
Net income
0.68

 
0.53

 
0.79

 
0.84

Diluted weighted average shares
29,955

 
29,603

 
29,353

 
29,393

 
 
 
 
 
 
 
 
2012
 
 
 
 
 
 
 
Total revenue
$
133,629

 
$
131,505

 
$
148,700

 
$
178,257

Cost of revenue
56,456

 
57,379

 
63,518

 
79,200

Net revenue
77,173

 
74,126

 
85,182

 
99,057

Total expenses and other income
50,648

 
49,243

 
55,294

 
58,116

Income from continuing operations
17,375

 
16,297

 
19,578

 
27,612

Income (loss) from discontinued operations, net of tax
137

 
52

 
(689
)
 
(3
)
Net income
17,512

 
16,349

 
18,889

 
27,609

Diluted income per share:
 
 
 
 
 
 
 
Income from continuing operations, net of tax
0.57

 
0.56

 
0.67

 
0.93

Income (loss) from discontinued operations, net of tax
0.01

 

 
(0.03
)
 

Net income
0.58

 
0.56

 
0.64

 
0.93

Diluted weighted average shares
30,353

 
29,404

 
29,430

 
29,666



 
 
EXHIBIT 99.1

Note 17 - CONDENSED CONSOLIDATING GUARANTOR FINANCIAL STATEMENTS

On March 24, 2014, the Company completed an offering of $200,000,000 of 6.75% senior notes due on April 1, 2021 (the “Notes”) to certain initial purchasers for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The Notes are fully, unconditionally, jointly, and severally guaranteed by certain of the Company's domestic subsidiaries (collectively, "Guarantor Subsidiaries”). Each of the Guarantor Subsidiaries is 100% owned, directly or indirectly, by the Company. The following supplemental financial information sets forth, on a consolidating basis, the balance sheets, statements of comprehensive income and statements of cash flows of First Cash Financial Services, Inc. (the “Parent Company”), the Guarantor Subsidiaries and the Parent Company’s other subsidiaries (“Non-Guarantor Subsidiaries”).

The supplemental condensed consolidating financial information has been prepared pursuant to Securities and Exchange Commission rules and regulations for condensed financial information and does not include the more complete disclosures included in annual financial statements. Investments in consolidated subsidiaries have been presented under the equity method of accounting. The principal eliminating entries eliminate investments in subsidiaries, intercompany balances and intercompany revenues and expenses. The condensed financial information may not necessarily be indicative of the results of operations or financial position had the Guarantor Subsidiaries or Non-Guarantor Subsidiaries operated as independent entities.



 
 
EXHIBIT 99.1

Condensed Consolidating Balance Sheet
December 31, 2013
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent
Company
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
24,674

 
$
4,240

 
$
41,729

 
$

 
$
70,643

Pawn loan fees and service charges receivable
 

 
7,934

 
8,755

 

 
16,689

Pawn loans
 

 
56,566

 
58,668

 

 
115,234

Consumer loans, net
 

 
694

 
756

 

 
1,450

Inventories
 

 
33,817

 
43,976

 

 
77,793

Prepaid expenses and other current assets
 
1,971

 

 
1,398

 

 
3,369

Deferred tax assets
 
907

 

 
4,137

 

 
5,044

Total current assets
 
27,552

 
103,251

 
159,419

 

 
290,222

 
 
 
 
 
 
 
 
 
 
 
Property and equipment, net
 
4,155

 
47,374

 
56,608

 

 
108,137

Goodwill, net
 

 
149,470

 
101,771

 

 
251,241

Other non-current assets
 

 
6,020

 
3,353

 

 
9,373

Deferred tax assets
 

 

 
6,943

 
(6,943
)
 

Intercompany receivable
 

 

 
156,794

 
(156,794
)
 

Investments in subsidiaries
 
751,785

 

 

 
(751,785
)
 

Total assets
 
$
783,492

 
$
306,115

 
$
484,888

 
$
(915,522
)
 
$
658,973

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
Current portion of notes payable
 
$
3,326

 
$

 
$

 
$

 
$
3,326

Accounts payable and accrued liabilities
 
13,804

 
6,942

 
17,277

 

 
38,023

Income taxes payable
 
7,302

 

 
110

 

 
7,412

Total current liabilities
 
24,432

 
6,942

 
17,387

 

 
48,761

 
 
 
 
 
 
 
 
 
 
 
Revolving unsecured credit facility
 
182,000

 

 

 

 
182,000

Notes payable, net of current portion
 
5,026

 

 

 

 
5,026

Deferred income tax liabilities
 
881

 
10,080

 
4,809

 
(6,943
)
 
8,827

Intercompany payable
 
156,794

 

 

 
(156,794
)
 

Total liabilities
 
369,133

 
17,022

 
22,196

 
(163,737
)
 
244,614

 
 
 
 
 
 
 
 
 
 
 
Stockholders' equity:
 
 
 
 
 
 
 
 
 
 
Preferred stock
 

 

 

 

 

Common stock
 
394

 

 

 

 
394

Additional paid-in capital
 
176,675

 

 

 

 
176,675

Retained earnings
 
490,280

 
289,093

 
470,140

 
(751,785
)
 
497,728

Accumulated other comprehensive income (loss) from cumulative foreign currency translation adjustments
 
(303
)
 

 
(7,448
)
 

 
(7,751
)
Common stock held in treasury, at cost
 
(252,687
)
 

 

 

 
(252,687
)


 
 
EXHIBIT 99.1

Condensed Consolidating Balance Sheet (Continued)
December 31, 2013
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent
Company
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Eliminations
 
Consolidated
Total stockholders' equity
 
414,359

 
289,093

 
462,692

 
(751,785
)
 
414,359

Total liabilities and stockholders' equity
 
$
783,492

 
$
306,115

 
$
484,888

 
$
(915,522
)
 
$
658,973



 
 
EXHIBIT 99.1

Condensed Consolidating Balance Sheet
December 31, 2012
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent
Company
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
12,145

 
$
3,885

 
$
34,255

 
$

 
$
50,285

Pawn loan fees and service charges receivable
 

 
6,999

 
8,159

 

 
15,158

Pawn loans
 

 
50,091

 
53,090

 

 
103,181

Consumer loans, net
 

 
1,076

 
803

 

 
1,879

Inventories
 

 
29,325

 
36,020

 

 
65,345

Prepaid expenses and other current assets
 
3,733

 

 
1,263

 
(562
)
 
4,434

Deferred tax assets
 
1,148

 

 

 

 
1,148

Total current assets
 
17,026

 
91,376

 
133,590

 
(562
)
 
241,430

 
 
 
 
 
 
 
 
 
 
 
Property and equipment, net
 
3,732

 
38,802

 
50,770

 

 
93,304

Goodwill, net
 

 
95,368

 
71,018

 

 
166,386

Other non-current assets
 

 
3,503

 
3,069

 

 
6,572

Deferred tax assets
 

 

 
3,447

 
(3,447
)
 

Intercompany receivable
 

 

 
118,494

 
(118,494
)
 

Investments in subsidiaries
 
572,928

 

 

 
(572,928
)
 

Total assets
 
$
593,686

 
$
229,049

 
$
380,388

 
$
(695,431
)
 
$
507,692

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
Current portion of notes payable
 
$
3,212

 
$

 
$

 
$

 
$
3,212

Accounts payable and accrued liabilities
 
7,629

 
5,585

 
14,724

 

 
27,938

Income taxes payable
 

 

 
562

 
(562
)
 

Total current liabilities
 
10,841

 
5,585

 
15,286

 
(562
)
 
31,150

 
 
 
 
 
 
 
 
 
 
 
Revolving unsecured credit facility
 
102,500

 

 

 

 
102,500

Notes payable, net of current portion
 
8,351

 

 

 

 
8,351

Deferred income tax liabilities
 
1,084

 
8,492

 
7,146

 
(3,447
)
 
13,275

Intercompany payable
 
118,494

 

 

 
(118,494
)
 

Total liabilities
 
241,270

 
14,077

 
22,432

 
(122,503
)
 
155,276

 
 
 
 
 
 
 
 
 
 
 
Stockholders' equity:
 
 
 
 
 
 
 
 
 
 
Preferred stock
 

 

 

 

 

Common stock
 
388

 

 

 

 
388

Additional paid-in capital
 
159,081

 

 

 

 
159,081

Retained earnings
 
407,160

 
214,972

 
364,678

 
(572,928
)
 
413,882

Accumulated other comprehensive income (loss) from cumulative foreign currency translation adjustments
 
(218
)
 

 
(6,722
)
 

 
(6,940
)
Common stock held in treasury, at cost
 
(213,995
)
 

 

 

 
(213,995
)


 
 
EXHIBIT 99.1

Condensed Consolidating Balance Sheet (Continued)
December 31, 2012
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent
Company
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Eliminations
 
Consolidated
Total stockholders' equity
 
352,416

 
214,972

 
357,956

 
(572,928
)
 
352,416

Total liabilities and stockholders' equity
 
$
593,686

 
$
229,049

 
$
380,388

 
$
(695,431
)
 
$
507,692



 
 
EXHIBIT 99.1

Condensed Consolidating Statement of Comprehensive Income
Year Ended December 31, 2013
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent
Company
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Eliminations
 
Consolidated
Revenue:
 
 
 
 
 
 
 
 
 
 
Retail merchandise sales
 
$

 
$
121,194

 
$
245,993

 
$

 
$
367,187

Pawn loan fees
 

 
71,586

 
109,969

 

 
181,555

Consumer loan and credit services fees
 

 
39,771

 
4,010

 

 
43,781

Wholesale scrap jewelry revenue
 

 
35,147

 
33,178

 

 
68,325

Total revenue
 

 
267,698

 
393,150

 

 
660,848

 
 
 
 
 
 
 
 
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
 
 
 
Cost of retail merchandise sold
 

 
65,381

 
155,980

 

 
221,361

Consumer loan and credit services loss provision
 

 
10,659

 
709

 

 
11,368

Cost of wholesale scrap jewelry sold
 

 
29,148

 
29,397

 

 
58,545

Total cost of revenue
 

 
105,188

 
186,086

 

 
291,274

 
 
 
 
 
 
 
 
 
 
 
Net revenue
 

 
162,510

 
207,064

 

 
369,574

 
 
 
 
 
 
 
 
 
 
 
Expenses and other income:
 
 
 
 
 
 
 
 
 
 
Store operating expenses
 

 
76,821

 
104,500

 

 
181,321

Administrative expenses
 
30,900

 

 
18,630

 

 
49,530

Depreciation and amortization
 
1,193

 
4,739

 
9,429

 

 
15,361

Interest expense
 
3,492

 

 

 

 
3,492

Interest income
 
(8
)
 

 
(314
)
 

 
(322
)
Total expenses and other income
 
35,577

 
81,560

 
132,245

 

 
249,382

 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations before income taxes
 
(35,577
)
 
80,950

 
74,819

 

 
120,192

 
 
 
 
 
 
 
 
 
 
 
Provision for income taxes
 
(12,637
)
 
28,333

 
20,017

 

 
35,713

 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
 
(22,940
)
 
52,617

 
54,802

 

 
84,479

 
 
 
 
 
 
 
 
 
 
 
Income (loss) from discontinued operations, net of tax
 

 

 
(633
)
 

 
(633
)
Net income
 
$
(22,940
)
 
$
52,617

 
$
54,169

 
$

 
$
83,846

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
Currency translation adjustment, net of tax expense or benefit
 
(811
)
 

 

 

 
(811
)
Comprehensive income
 
$
(23,751
)
 
$
52,617

 
$
54,169

 
$

 
$
83,035



 
 
EXHIBIT 99.1

Condensed Consolidating Statement of Comprehensive Income
Year Ended December 31, 2012
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent
Company
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Eliminations
 
Consolidated
Revenue:
 
 
 
 
 
 
 
 
 
 
Retail merchandise sales
 
$

 
$
89,373

 
$
198,083

 
$

 
$
287,456

Pawn loan fees
 

 
57,220

 
95,017

 

 
152,237

Consumer loan and credit services fees
 

 
44,419

 
4,273

 

 
48,692

Wholesale scrap jewelry revenue
 

 
51,978

 
51,728

 

 
103,706

Total revenue
 

 
242,990

 
349,101

 

 
592,091

 
 
 
 
 
 
 
 
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
 
 
 
Cost of retail merchandise sold
 

 
45,572

 
121,572

 

 
167,144

Consumer loan and credit services loss provision
 

 
11,837

 
719

 

 
12,556

Cost of wholesale scrap jewelry sold
 

 
36,672

 
40,181

 

 
76,853

Total cost of revenue
 

 
94,081

 
162,472

 

 
256,553

 
 
 
 
 
 
 
 
 
 
 
Net revenue
 

 
148,909

 
186,629

 

 
335,538

 
 
 
 
 
 
 
 
 
 
 
Expenses and other income:
 
 
 
 
 
 
 
 
 
 
Store operating expenses
 

 
59,843

 
89,036

 

 
148,879

Administrative expenses
 
36,281

 

 
13,930

 

 
50,211

Depreciation and amortization
 
1,096

 
3,861

 
7,982

 

 
12,939

Interest expense
 

 
1,488

 

 

 
1,488

Interest income
 

 
(11
)
 
(205
)
 

 
(216
)
Total expenses and other income
 
37,377

 
65,181

 
110,743

 

 
213,301

 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations before income taxes
 
(37,377
)
 
83,728

 
75,886

 

 
122,237

 
 
 
 
 
 
 
 
 
 
 
Provision for income taxes
 
(12,859
)
 
30,561

 
23,673

 

 
41,375

 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
 
(24,518
)
 
53,167

 
52,213

 

 
80,862

 
 
 
 
 
 
 
 
 
 
 
Income (loss) from discontinued operations, net of tax
 

 

 
(503
)
 

 
(503
)
Net income
 
$
(24,518
)
 
$
53,167

 
$
51,710

 
$

 
$
80,359

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
Currency translation adjustment, net of tax expense or benefit
 
6,523

 

 

 

 
6,523

Comprehensive income
 
$
(17,995
)
 
$
53,167

 
$
51,710

 
$

 
$
86,882



 
 
EXHIBIT 99.1

Condensed Consolidating Statement of Comprehensive Income
Year Ended December 31, 2011
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent
Company
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Eliminations
 
Consolidated
Revenue:
 
 
 
 
 
 
 
 
 
 
Retail merchandise sales
 
$

 
$
71,863

 
$
164,934

 
$

 
$
236,797

Pawn loan fees
 

 
47,199

 
75,121

 

 
122,320

Consumer loan and credit services fees
 

 
42,051

 
4,825

 

 
46,876

Wholesale scrap jewelry revenue
 

 
51,345

 
56,659

 

 
108,004

Total revenue
 

 
212,458

 
301,539

 

 
513,997

 
 
 
 
 
 
 
 
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
 
 
 
Cost of retail merchandise sold
 

 
36,085

 
106,021

 

 
142,106

Consumer loan and credit services loss provision
 

 
10,484

 
847

 

 
11,331

Cost of wholesale scrap jewelry sold
 

 
33,454

 
37,851

 

 
71,305

Total cost of revenue
 

 
80,023

 
144,719

 

 
224,742

 
 
 
 
 
 
 
 
 
 
 
Net revenue
 

 
132,435

 
156,820

 

 
289,255

 
 
 
 
 
 
 
 
 
 
 
Expenses and other income:
 
 
 
 
 
 
 
 
 
 
Store operating expenses
 

 
52,776

 
73,331

 

 
126,107

Administrative expenses
 
34,695

 

 
10,564

 

 
45,259

Depreciation and amortization
 
1,079

 
3,343

 
6,522

 

 
10,944

Interest expense
 
135

 

 

 

 
135

Interest income
 
(111
)
 

 
(166
)
 

 
(277
)
Total expenses and other income
 
35,798

 
56,119

 
90,251

 

 
182,168

 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations before income taxes
 
(35,798
)
 
76,316

 
66,569

 

 
107,087

 
 
 
 
 
 
 
 
 
 
 
Provision for income taxes
 
(10,015
)
 
26,711

 
20,254

 

 
36,950

 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
 
(25,783
)
 
49,605

 
46,315

 

 
70,137

 
 
 
 
 
 
 
 
 
 
 
Income (loss) from discontinued operations, net of tax
 

 

 
7,645

 

 
7,645

Net income
 
$
(25,783
)
 
$
49,605

 
$
53,960

 
$

 
$
77,782

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
Currency translation adjustment, net of tax expense or benefit
 
(10,414
)
 

 

 

 
(10,414
)
Comprehensive income
 
$
(36,197
)
 
$
49,605

 
$
53,960

 
$

 
$
67,368



 
 
EXHIBIT 99.1

Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 2013
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent
Company
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Eliminations
 
Consolidated
Cash flow from operating activities:
 
 
 
 
 
 
 
 
 
 
Net cash flow provided by (used in) operating activities
 
$
(78,714
)
 
$
82,737

 
$
102,695

 
$

 
$
106,718

Cash flow from investing activities:
 
 
 
 
 
 
 
 
 
 
Loan receivables, net of cash repayments
 

 
(78
)
 
(333
)
 

 
(411
)
Purchases of property and equipment
 
(1,616
)
 
(11,584
)
 
(13,472
)
 

 
(26,672
)
Acquisitions of pawn stores, net of cash acquired
 

 
(70,720
)
 
(42,923
)
 

 
(113,643
)
Investing activity with subsidiaries
 
38,215

 

 
(38,215
)
 

 

Net cash flow provided by (used in) investing activities
 
36,599

 
(82,382
)
 
(94,943
)
 

 
(140,726
)
Cash flow from financing activities:
 
 
 
 
 
 
 
 
 
 
Borrowings from revolving credit facilities
 
152,500

 

 

 

 
152,500

Repayments of revolving credit facilities
 
(73,000
)
 

 

 

 
(73,000
)
Repayments of notes payable
 
(3,211
)
 

 

 

 
(3,211
)
Purchases of treasury stock
 
(38,692
)
 

 

 

 
(38,692
)
Proceeds from exercise of share-based compensation awards
 
9,242

 

 

 

 
9,242

Income tax benefit from exercise of stock options
 
7,805

 

 

 

 
7,805

Net cash flow provided by (used in) financing activities
 
54,644

 

 

 

 
54,644

Effect of exchange rates on cash
 

 

 
(278
)
 

 
(278
)
Change in cash and cash equivalents
 
12,529

 
355

 
7,474

 

 
20,358

Cash and cash equivalents at beginning of the period
 
12,145

 
3,885

 
34,255

 

 
50,285

Cash and cash equivalents at end of the period
 
$
24,674

 
$
4,240

 
$
41,729

 
$

 
$
70,643



 
 
EXHIBIT 99.1

Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 2012
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent
Company
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Eliminations
 
Consolidated
Cash flow from operating activities:
 
 
 
 
 
 
 
 
 
 
Net cash flow provided by (used in) operating activities
 
$
(123,042
)
 
$
94,644

 
$
117,190

 
$

 
$
88,792

Cash flow from investing activities:
 
 
 
 
 
 
 
 
 
 
Loan receivables, net of cash repayments
 

 
(6,702
)
 
(10,623
)
 

 
(17,325
)
Purchases of property and equipment
 
379

 
(7,379
)
 
(14,841
)
 

 
(21,841
)
Acquisitions of pawn stores, net of cash acquired
 

 
(73,106
)
 
(47,632
)
 

 
(120,738
)
Investing activity with subsidiaries
 
41,815

 
(8,500
)
 
(33,315
)
 

 

Net cash flow provided by (used in) investing activities
 
42,194

 
(95,687
)
 
(106,411
)
 

 
(159,904
)
Cash flow from financing activities:
 
 
 
 
 
 
 
 
 
 
Borrowings from revolving credit facilities
 
194,500

 

 

 

 
194,500

Repayments of revolving credit facilities
 
(92,000
)
 

 

 

 
(92,000
)
Repayments of notes payable
 
(1,837
)
 

 

 

 
(1,837
)
Purchases of treasury stock
 
(61,275
)
 

 

 

 
(61,275
)
Proceeds from exercise of share-based compensation awards
 
4,296

 

 

 

 
4,296

Income tax benefit from exercise of stock options
 
5,841

 

 

 

 
5,841

Net cash flow provided by (used in) financing activities
 
49,525

 

 

 

 
49,525

Effect of exchange rates on cash
 

 

 
1,576

 

 
1,576

Change in cash and cash equivalents
 
(31,323
)
 
(1,043
)
 
12,355

 

 
(20,011
)
Cash and cash equivalents at beginning of the period
 
43,468

 
4,928

 
21,900

 

 
70,296

Cash and cash equivalents at end of the period
 
$
12,145

 
$
3,885

 
$
34,255

 
$

 
$
50,285



 
 
EXHIBIT 99.1

Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 2011
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent
Company
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Eliminations
 
Consolidated
Cash flow from operating activities:
 
 
 
 
 
 
 
 
 
 
Net cash flow provided by (used in) operating activities
 
$
(7,515
)
 
$
26,830

 
$
61,060

 
$

 
$
80,375

Cash flow from investing activities:
 
 
 
 
 
 
 
 
 
 
Loan receivables, net of cash repayments
 

 
(3,749
)
 
(1,459
)
 

 
(5,208
)
Purchases of property and equipment
 
7,075

 
(22,513
)
 
(13,536
)
 

 
(28,974
)
Proceeds from disposition of consumer loan stores
 

 

 
19,857

 

 
19,857

Acquisitions of pawn stores, net of cash acquired
 

 

 
(7,779
)
 

 
(7,779
)
Investing activity with subsidiaries
 
52,500

 

 
(52,500
)
 

 

Net cash flow provided by (used in) investing activities
 
59,575

 
(26,262
)
 
(55,417
)
 

 
(22,104
)
Cash flow from financing activities:
 
 
 
 
 
 
 
 
 
 
Repayments of notes payable
 
(1,851
)
 

 

 

 
(1,851
)
Purchases of treasury stock
 
(55,308
)
 

 

 

 
(55,308
)
Proceeds from exercise of share-based compensation awards
 
2,478

 

 

 

 
2,478

Income tax benefit from exercise of stock options
 
2,088

 

 

 

 
2,088

Net cash flow provided by (used in) financing activities
 
(52,593
)
 

 

 

 
(52,593
)
Effect of exchange rates on cash
 

 

 
(2,622
)
 

 
(2,622
)
Change in cash and cash equivalents
 
(533
)
 
568

 
3,021

 

 
3,056

Cash and cash equivalents at beginning of the period
 
44,001

 
4,360

 
18,879

 

 
67,240

Cash and cash equivalents at end of the period
 
$
43,468

 
$
4,928

 
$
21,900

 
$

 
$
70,296