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