SPARTANBURG, S.C., July 26 /PRNewswire-FirstCall/ -- Advance America, Cash Advance Centers, Inc. today reported the results of its operations for the second quarter and six months ended June 30, 2006.
For the six months ended June 30, 2006, total revenues increased 6.7% to $308.1 million, compared to $288.7 million for same period in 2005. Total revenues for the quarter ended June 30, 2006 increased 3.7% to $155.9 million compared to $150.3 million for the quarter ending June 30, 2005. For the quarter ended June 30, 2006, total revenues for the centers opened prior to April 1, 2005 and still open as of June 30, 2006 increased 4.6% compared to the same period in 2005. Excluding centers in Arkansas, Illinois, Indiana, and Pennsylvania where legislative and regulatory changes have negatively affected revenues during the period, total revenues for the quarter ended June 30, 2006 for centers opened prior to April 1, 2005 and still open as of June 30, 2006 increased 17.4% compared to the same period in 2005.
Center gross profit increased 10.6%, from $80.1 million in the first six months of 2005 to $88.6 million in the first six months of 2006. For the quarter ended June 30, 2006, center gross profit was $38.5 million compared to $34.2 million for the quarter ended June 30, 2005.
Net income for the first six months of 2006 was $33.3 million, compared to net income of $30.5 million for the same period in 2005. Net income for the quarter ended June 30, 2006 was $12.9 million compared to $10.7 million for the quarter ended June 30, 2005.
Diluted earnings per share were $0.16 for the quarter ended June 30, 2006 compared to diluted earnings per share of $0.13 for the same period in 2005. For the six months ended June 30, 2006, diluted earnings per share were $0.41 compared to diluted earnings per share of $0.36 for the same period in 2005.
Commenting on the second quarter 2006 results, Advance America's President and Chief Executive Officer Ken Compton said, "This was a challenging quarter, but one that also underscored the overall strength of our business model. We experienced new regulatory changes, which caused us to alter our business model in Pennsylvania and Arkansas and reduced revenues for the second quarter. In addition, the Company continues to experience the effects of previous legislative and regulatory changes in Illinois and Indiana, which we believe improve the regulatory landscape, but have impaired our results for the second quarter. We remain encouraged by continued consumer demand for the payday cash advance product and strong growth rates in the other 32 states in which we operate."
The Company previously announced that in both Pennsylvania and Arkansas it had ceased operations as marketing, processing, and servicing agent for Federal Deposit Insurance Corporation (FDIC) supervised banks that offered payday cash advances and installment loans. In Pennsylvania, the bank discontinued offering both advances and loans in March 2006. In Arkansas the bank discontinued offering installment loans in April and payday cash advances in June 2006. These changes resulted in an estimated reduction in revenue of approximately $9.6 million for the quarter ended June 30, 2006 compared to the same period in 2005.
On June 20, 2006, the Company announced that its subsidiary in Pennsylvania began offering consumers in that state a new financial service called the Advance America Choice-Line of Credit. This service allows customers access up to $500 in credit for a monthly participation fee plus interest on outstanding loan balances. Since the introduction of the Choice- Line of Credit, representatives from the Pennsylvania Department of Banking have asserted, in both public comments and informal discussions with the Company, that this product violates the Pennsylvania Consumer Discount Company Act. The Company, however, remains confident that it is in compliance with all applicable laws.
On June 26, 2006, the Company's subsidiary in Arkansas began operating under existing state based legislation, directly providing consumers with check-cashing services. Depending on consumer acceptance of these products, and other management and regulatory issues, the Company expects operating results in both Pennsylvania and Arkansas will be similar to those historically generated prior to the implementation of the Revised FDIC Guidance in July 2005.
In Illinois and Indiana, modifications to state-based legislation, which the Company supported, resulted in a $4.3 million reduction in revenue for the quarter ended June 30, 2006 compared to the same period of 2005.
The Company opened 46 and 88 new centers during the second quarter and six months ended June 30, 2006, respectively, compared to 104 and 126 during the same periods in 2005. As of June 30, 2006, the Company had expanded its national operating network to a total of 2,670 centers in 36 states.
The provision for doubtful accounts and agency bank losses as a percent of total revenues for the quarter ended June 30, 2006 was 17.6% compared to 20.3% for the same period in 2005. Proceeds from the sale of previously written-off customer receivables during the second quarter of 2006 totaled approximately $1.2 million.
On July 26, 2006, the Company's Board of Directors declared a regular quarterly dividend of $0.11 per share. The dividend will be payable on September 8, 2006, to stockholders of record as of August 28, 2006.
The Company will discuss these results during a conference call on Thursday, July 27, at 9:00 a.m. (EDT). To listen to this call, please dial the conference telephone number (800) 810-0924. This call will also be webcast live and can be accessed at Advance America's website http://www.advanceamericacash.com/. An audio replay of the call will be available online or by telephone (888) 203-1112 (replay passcode: 9046150) until the close of business on August 2, 2006.
About Advance America
Founded in 1997, Advance America, Cash Advance Centers, Inc. is the country's leading provider of payday cash advance services with approximately 2,670 centers in 36 states. 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.
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 Quarterly Report on Form 10- Q for the fiscal quarter ended March 31, 2006, a copy of which is available from the Securities and Exchange Commission, upon request from us, or by going to our website: http://www.advanceamericacash.com/.
Interim Unaudited Consolidated Statements of Income
Three and Six Months Ended June 30, 2005 and 2006
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2006 2005 2006
Revenues:
Fees and interest charged to
customers $114,693 $152,611 $219,849 $295,703
Marketing, processing and
servicing fees 35,624 3,310 68,851 12,387
Total revenues 150,317 155,921 288,700 308,090
Provision for doubtful accounts
and agency bank losses (30,567) (27,435) (40,658) (39,311)
Net revenues 119,750 128,486 248,042 268,779
Center Expenses:
Salaries and related payroll costs 42,541 46,171 84,589 92,718
Occupancy costs 19,153 21,081 38,280 42,129
Center depreciation expense 3,595 4,000 7,132 7,953
Advertising expense 7,611 6,111 12,856 9,430
Other center expenses 12,612 12,635 25,049 27,925
Total center expenses 85,512 89,998 167,906 180,155
Center gross profit 34,238 38,488 80,136 88,624
Corporate and Other Expenses
(Income):
General & administrative expenses 13,345 13,766 25,146 26,777
Corporate depreciation expense 1,072 935 2,149 1,896
Interest expense 732 919 1,558 1,826
Interest income (67) (123) (158) (299)
Loss on disposal of property and
equipment 27 283 123 491
Income before income taxes 19,129 22,708 51,318 57,933
Income tax expense 8,384 8,924 20,835 23,237
Income before income of
consolidated variable interest
entity 10,745 13,784 30,483 34,696
Income of consolidated variable
interest entity - (888) - (1,373)
Net income $10,745 $12,896 $30,483 $33,323
Net income per common share -
basic $0.13 $0.16 $0.36 $0.41
Consolidated Balance Sheets
December 31, 2005 and June 30, 2006 (unaudited)
(in thousands, except per share data)
December 31, June 30,
2005 2006
(unaudited)
Assets
Current assets
Cash and cash equivalents $27,259 $34,342
Advances and fees receivable, net 193,468 202,002
Deferred income taxes 6,367 6,437
Other current assets 5,033 14,111
Total current assets 232,127 256,892
Restricted cash 10,034 10,552
Property and equipment, net 64,990 61,768
Goodwill 122,586 122,627
Other assets 6,651 6,029
Total assets $436,388 $457,868
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $9,306 $10,658
Accrued liabilities 29,895 31,443
Income taxes payable 11,349 2,665
Accrual for excess bank losses 1,373 1,014
Current portion of long-term debt 503 490
Total current liabilities 52,426 46,270
Revolving credit facility 37,933 34,213
Long-term debt 6,185 5,935
Deferred income taxes 15,706 16,031
Other liabilities 44 134
Total liabilities 112,294 102,583
Non-controlling interest in variable
interest entity 21,069 35,810
Commitments and contingencies
Stockholders' equity
Preferred stock, par value $.01 per
share, 25,000 shares authorized;
no shares issued and outstanding - -
Common stock, par value $.01 per
share, 250,000 shares authorized;
96,821 shares issued and 82,219
shares outstanding at December
31, 2005; 96,821 shares issued and 82,353
shares outstanding at June 30, 2006 968 968
Paid in capital 282,840 284,066
Retained earnings 83,842 99,048
Common stock in treasury (14,602
shares at cost at December 31, 2005;
14,468 shares at cost at
June 30, 2006) (64,625) (64,607)
Total stockholders' equity 303,025 319,475
Total liabilities and
stockholders' equity $436,388 $457,868
