Current Report
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Date of Report (Date of earliest event reported): October 28, 2009
Advance America, Cash Advance Centers, Inc.
(Exact name of registrant as specified in its charter)
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Delaware |
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001-32363 |
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58-2332639 |
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(State of Incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.) |
135 North
Church Street
Spartanburg, South Carolina 29306
(Address of principal executive offices) (Zip Code)
(864) 342-5600
(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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12(b))
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
On October 28, 2009, Advance America, Cash Advance Centers, Inc. (the “Company”) entered into an Indemnification Agreement (the “Agreement”) with Tony Colletti, one of its directors. The Agreement provides that the Company will indemnify the covered director to the fullest extent permitted by law. The Agreement is in substantially the same form as the indemnification agreements previously entered into with the Company’s other directors and officers, the form of which was previously filed with the Securities and Exchange Commission as an exhibit to the Company’s Registration Statement on Form S-1 (file no. 333-118227) and is incorporated herein by reference. The form of Indemnification Agreement should be reviewed for the complete set of terms and conditions relating thereto.
Also, on October 28, 2009, the Nominating and Corporate Governance Committee of the Board of Directors (the “Board”) recommended, and the Board approved, effective as of January 1, 2010, an increase in annual fees for chairpersons of the Company’s standing committees to $10,000 for the Audit Committee chairperson, $7,500 for the Compensation Committee chairperson, and $4,000 for the Nominating and Corporate Governance Committee chairperson. These amounts are in addition to the annual fees for non-executive directors and meeting fees.
Item 2.02. Results of Operations and Financial Condition.
On October 28, 2009, the Company issued a press release announcing its earnings for the fiscal quarter ended September 30, 2009. The earnings release is attached hereto as Exhibit 99.1 to this current report. This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as expressly set forth by specific reference in such filing.
Item 8.01. Other Events.
On October 28, 2009, the Company announced that the Board declared a regular quarterly cash dividend of $0.0625 per share payable on December 4, 2009 to stockholders of record as of November 24, 2009.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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Exhibit
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Description |
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10.1 |
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Description of Compensation Arrangement for Non-Executive Directors. |
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99.1 |
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Press Release, dated October 28, 2009, of Advance America, Cash Advance Centers, Inc. furnished pursuant to Item 2.02. Results of Operations and Financial Condition. |
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: October 28, 2009
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ADVANCE AMERICA, CASH ADVANCE CENTERS, INC. |
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By: |
/s/ J. Patrick O’Shaughnessy |
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J. Patrick O’Shaughnessy |
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Chief Financial Officer and Executive Vice President |
3
Exhibit 10.1
Description of Compensation Arrangement for Non-Executive Directors
Non-executive directors continue to be entitled to receive annual fees equal to $70,000.
Effective January 1, 2010, the Audit Committee chairperson is entitled to receive an additional annual fee equal to $10,000, the Compensation Committee chairperson is entitled to receive an additional annual fee equal to $7,500, and the Nominating and Corporate Governance Committee chairperson is entitled to receive an additional annual fee equal to $4,000.
Non-executive directors continue to be entitled to receive $1,000 for any meeting of the Board of Directors (the “Board”) or a committee thereof that they attend.
Directors may elect to receive fees in the form of common stock pursuant to the Advance America, Cash Advance Centers, Inc. Policy Regarding Receipt of Common Stock in Lieu of Cash Director’s Fees.
All directors are entitled to reimbursement of their expenses incurred in connection with participating in Board and committee meetings.
Exhibit 99.1
FOR IMMEDIATE RELEASE
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Contacts: |
Jamie Fulmer- (864) 342-5633 |
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jfulmer@advanceamerica.net |
Advance
America Cash Advance Reports Diluted Earnings per
Share of $0.20 for the Third Quarter
SPARTANBURG, S.C., October 28, 2009 — Advance America, Cash Advance Centers, Inc. (NYSE: AEA) today reported the results of its operations for the nine months and quarter ended September 30, 2009.
For the nine months ended September 30, 2009, total revenues decreased 5.4% to $474.4 million, compared to $501.5 million for the same period in 2008. Total revenues for the quarter ended September 30, 2009 decreased 3.4% to $167.9 million, compared to $173.9 million for same period in 2008. These comparisons include the results of operations in Arkansas and New Mexico, states the Company exited in 2008, as well as operations in New Hampshire, a state in which the Company ceased making advances in January 2009. Revenue from these three states for the nine months and quarter ended September 30, 2008 was $10.1 million and $3.6 million, respectively. In addition, as a result of a new Ohio law enacted in November 2008, the contribution to revenues from our centers in that state has decreased dramatically. Revenue from Ohio declined by $16.6 million and
$3.8 million for the nine months and quarter ended September 30, 2009, respectively, compared to the same periods in 2008.
Excluding revenues from Arkansas, New Mexico, New Hampshire, and Ohio for the nine month periods ended September 30, 2009 and 2008, total revenues decreased by 0.1% during this period in 2009 compared to the same period in 2008. Excluding revenues from those same states for the quarters ended September 30, 2009 and 2008, total revenues increased by 1.0% during this period in 2009 compared to the same period in 2008.
For the quarter ended September 30, 2009, total revenues for centers opened prior to July 1, 2008 and still open as of September 30, 2009 increased 1.8% compared to the same period in 2008.
The provision for doubtful accounts as a percentage of total revenues for the nine months ended September 30, 2009 was 19.6%, compared to 18.6% for the same period in 2008. For the quarter ended September 30, 2009, the provision for doubtful accounts as a percentage of total revenues was 23.1%, compared to 24.2% for the same period in 2008. For the nine months ended September 30, 2009, the Company sold approximately $2.2 million of previously written-off receivables, compared to $0.6 million during the same period in 2008. The Company did not sell any previously written-off receivables during the quarter ended September 30, 2009, compared to $0.1 million for the same period in 2008.
For the nine months ended September 30, 2009, the Company’s advertising expense was $15.4 million, or 3.2% of revenue, compared to $16.1 million, or 3.2% of revenue, for the same period in 2008. For the quarter ended September 30, 2009, the Company’s advertising expense was $4.2 million, or 2.5% of revenue, compared to $6.1 million, or 3.5% of revenue, for the same period in 2008.
Center expenses for the nine months and quarter ended September 30, 2009 were $362.1 million and $124.6 million, respectively, compared to $382.3 million and $136.4 million for the same periods in 2008. Excluding the provision for doubtful accounts and advertising expense for the quarter ended September 30, 2009, center expenses decreased by $6.6 million or 7.5% compared to the same period in 2008, primarily due to center consolidation and cost control initiatives.
Center gross profit decreased 5.7% to $112.3 million for the first nine months of 2009, from $119.1 million for the same period of 2008. For the quarter ended September 30, 2009, center gross profit increased 15.6 % to $43.3 million, from $37.4 million for the quarter ended September 30, 2008. During the first nine months of 2009, the Company closed 190 centers in 26 different states and the United Kingdom, of which 24 of those centers were closed during the quarter ended September 30, 2009. As a result, the Company had approximately $5.3 million and $0.2 million of center closing costs during the nine months and quarter ended September 30, 2009, respectively, compared to $2.0 million and $0.9 million during the same periods in 2008, excluding any increases in the
provision for doubtful accounts. As of September 30, 2009, the Company had an operating network of 2,614 centers and 75 limited licensees in 33 states, the United Kingdom, and Canada.
For the nine months ended September 30, 2009, general and administrative expenses were $42.1 million, compared to $50.7 million for the same period in 2008, a decrease of 16.9%. General and administrative expenses for the quarter ended September 30, 2009 were $14.3 million, compared to $18.3 million for the same quarter in 2008, a decrease of 22.1%. The decrease in general and administrative expenses for the nine months and quarter ended September 30, 2009 is primarily due to lower public and government relations expenditures, in addition to the Company’s continued emphasis on controlling costs, partially offset by higher legal expenses.
The Company recorded a charge of $6.4 million during the quarter ended September 30, 2009 for previously disclosed settlements of lawsuits.
For the nine months ended September 30, 2009, the Company’s income tax expense was 37.7%, compared to 43.2% during the same period in 2008. For the quarter ended September 30, 2009, the Company’s income tax expense decreased to 39.3% of income before taxes, compared to 44.2% during the same period in 2008. These decreases are primarily due to the reduction in state taxes as a result of claims filed for recovery of taxes recognized in prior years and other discrete items.
Net income for the first nine months of 2009 increased 5.6% to $34.4 million, compared to $32.5 million for the same period in 2008. Net income for the quarter ended September 30, 2009 increased 48.8% to $12.6 million, compared to $8.5 million for the same period in 2008.
Basic and diluted earnings per share were $0.56 for the nine months ended September 30, 2009, compared to basic and diluted earnings per share of $0.50 for the same period in 2008. For the quarter ended September 30, 2009, basic and diluted earnings per share were $0.21 and $0.20, respectively, compared to basic and diluted earnings per share of $0.14 for the same period in 2008. Excluding the charge for the previously disclosed lawsuit settlements, diluted earnings per share for the nine months and quarter ended September 30, 2009, would have been $0.62 and $0.27, respectively.
Commenting on the results of the third quarter of 2009, Advance America’s President and Chief Executive Officer, Ken Compton, said, “We are encouraged by our results and believe they serve as a strong indication that our business is recovering from the effects of regulatory events in late 2008 and early 2009, and that Advance America remains a trusted source of short-term credit for our customers. In addition, sound cost control initiatives and recent consolidation efforts are showing results and have effectively positioned the Company to deal with the impact of the current recession and provide value for our stockholders.”
Today, the Company’s Board of Directors declared a regular quarterly dividend of $0.0625 per share. The dividend, the Company’s twentieth consecutive quarterly dividend, will be payable on December 4, 2009, to stockholders of record as of November 24, 2009.
As of September 30, 2009, the Company had returned approximately $367.4 million in cash to its stockholders through the repurchase of shares and the payment of quarterly dividends since becoming a public company in December of 2004.
The Company will discuss these results during a conference call on Thursday, October 29 at 8:00 a.m. (ET).
To listen to this call, please dial the conference telephone number (800) 289-0573. This call will also be webcast live and can be accessed at Advance America’s website www.advanceamerica.net. An audio replay of the call will be available online or by telephone (888) 203-1112 (replay pass code: 1132437) until November 4, 2009.
About Advance America Cash Advance
Founded in 1997, Advance America, Cash Advance Centers, Inc. (NYSE: AEA) is the country’s leading provider of cash advance services, with approximately 2,600 centers and 75 limited licensees in 33 states, the United Kingdom, and Canada. The Company offers convenient, less-costly credit options to consumers whose needs are not met by traditional financial institutions. The Company is a founding member of the Community Financial Services Association of America (CFSA), whose mission is to promote laws that provide substantive consumer protections and to encourage responsible industry practices. Please visit www.advanceamerica.net for more information.
# # #
Forward-Looking Statements and Information:
Certain statements contained in this release may constitute “forward-looking statements” within the meaning of federal securities laws. All statements in this release other than those relating to our historical information or current condition are forward-looking statements. For example, any statements regarding our future financial performance, our business strategy, and expected developments in our industry are forward-looking statements. Although we believe that the current views and expectations reflected in these forward-looking statements are reasonable, those views and expectations and the related statements are
inherently subject to risks, uncertainties, and other factors, many of which are not under our control and may not even be predictable. Therefore, actual results could differ materially from our expectations as of today and any future results, performance, or achievements expressed directly or impliedly by the forward-looking statements. For a more detailed discussion of some of the factors that may cause our actual results to differ from our current expectations, please refer to the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, copies of which are available from the Securities and Exchange Commission, upon request from us, or by going to our website: www.advanceamerica.net.
Interim Unaudited Consolidated Statements of Income
Three and Nine Months Ended September 30, 2008 and 2009
(in thousands, except per share data)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2008 |
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2009 |
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2008 |
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2009 |
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Total Revenues |
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$ |
173,861 |
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$ |
167,920 |
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$ |
501,459 |
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$ |
474,437 |
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Center Expenses: |
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Salaries and related payroll costs |
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47,783 |
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44,508 |
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148,489 |
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137,425 |
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Provision for doubtful accounts |
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42,126 |
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38,783 |
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93,132 |
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92,893 |
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Occupancy costs |
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25,204 |
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23,399 |
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75,233 |
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71,419 |
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Center depreciation expense |
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4,115 |
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3,159 |
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12,638 |
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10,142 |
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Advertising expense |
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6,109 |
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4,235 |
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16,099 |
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15,351 |
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Other center expenses |
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11,095 |
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10,558 |
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36,730 |
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34,870 |
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Total center expenses |
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136,432 |
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124,642 |
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382,321 |
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362,100 |
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Center gross profit |
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37,429 |
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43,278 |
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119,138 |
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112,337 |
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Corporate and Other Expenses (Income): |
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General and administrative expenses |
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18,312 |
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14,259 |
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50,696 |
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42,128 |
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Legal settlements |
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— |
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6,399 |
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— |
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6,399 |
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Corporate depreciation expense |
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760 |
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671 |
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2,320 |
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2,038 |
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Interest expense |
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3,029 |
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1,556 |
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8,246 |
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4,850 |
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Interest income |
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(37 |
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(126 |
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(107 |
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(160 |
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(Gain)/loss on disposal of property and equipment |
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221 |
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(197 |
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439 |
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(244 |
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Loss on impairment of assets |
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— |
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— |
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236 |
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2,209 |
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Income before income taxes |
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15,144 |
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20,716 |
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57,308 |
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55,117 |
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Income tax expense |
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6,689 |
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8,135 |
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24,775 |
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20,751 |
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Net income |
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$ |
8,455 |
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$ |
12,581 |
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$ |
32,533 |
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$ |
34,366 |
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Net income per common share - basic |
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$ |
0.14 |
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$ |
0.21 |
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$ |
0.50 |
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$ |
0.56 |
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Weighted average number of shares outstanding - basic |
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61,000 |
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60,866 |
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65,375 |
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60,863 |
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Net income per common share - diluted |
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$ |
0.14 |
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$ |
0.20 |
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$ |
0.50 |
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$ |
0.56 |
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Weighted average number of shares outstanding - diluted |
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61,008 |
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61,712 |
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65,378 |
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61,613 |
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Consolidated Balance Sheets
December 31, 2008 and September 30, 2009
(in thousands, except per share data)
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December 31, |
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September 30, |
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2008 |
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2009 |
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(unaudited) |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
16,017 |
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$ |
12,910 |
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Advances and fees receivable, net |
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220,115 |
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212,182 |
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Deferred income taxes |
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13,008 |
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13,008 |
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Other current assets |
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15,721 |
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16,281 |
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Total current assets |
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264,861 |
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254,381 |
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Restricted cash |
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4,633 |
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4,510 |
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Property and equipment, net |
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46,091 |
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34,738 |
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Goodwill |
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126,661 |
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127,030 |
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Other assets |
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4,764 |
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4,231 |
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Total assets |
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$ |
447,010 |
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$ |
424,890 |
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Liabilities and Stockholders’ Equity |
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Current liabilities |
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Accounts payable |
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$ |
13,977 |
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$ |
12,023 |
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Accrued liabilities |
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33,917 |
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32,674 |
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Income taxes payable |
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1,625 |
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— |
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Accrual for third-party lender losses |
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3,960 |
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4,334 |
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Current portion of long-term debt |
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545 |
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469 |
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Total current liabilities |
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54,024 |
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49,500 |
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Revolving credit facility |
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189,817 |
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149,039 |
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Long-term debt |
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4,590 |
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4,236 |
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Deferred income taxes |
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22,311 |
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22,311 |
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Deferred revenue |
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4,791 |
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3,222 |
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Other liabilities |
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218 |
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302 |
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Total liabilities |
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275,751 |
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228,610 |
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Commitments and contingencies |
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Stockholders’ equity |
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Preferred stock, par value $.01 per share, 25,000 shares authorized; no shares issued and outstanding |
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— |
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— |
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Common stock, par value $.01 per share, 250,000 shares authorized; 96,821 shares issued and 61,087 shares outstanding at December 31, 2008; 96,821 shares issued and 61,621 shares outstanding at September 30, 2009 |
|
968 |
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968 |
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Paid in capital |
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288,635 |
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289,922 |
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Retained earnings |
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143,961 |
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166,780 |
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Accumulated other comprehensive loss |
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(2,585 |
) |
(1,846 |
) |
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Common stock in treasury (35,734 shares at cost at December 31, 2008; 35,200 shares at cost at September 30, 2009) |
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(259,720 |
) |
(259,544 |
) |
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Total stockholders’ equity |
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171,259 |
|
196,280 |
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Total liabilities and stockholders’ equity |
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$ |
447,010 |
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$ |
424,890 |
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