Dollar Financial Corp. Reports Operating Results (10-K)
Dollar Financial Corp is a leading international financial services company serving under-banked consumers. Its customers are typically service sector individuals who require basic financial services but for reasons of convenience and accessibility purchase some or all of their financial services from the Company rather than from banks and other financial institutions. To meet the needs of these customers the Company provides a range of consumer financial products and services primarily consisting of check cashing short-term consumer loans Western Union money order and money transfer products reloadable VISA? and MasterCard? branded debit cards electronic tax filing bill payment services and legal document preparation services. Dollar Financial Corp. has a market cap of $402.9 million; its shares were traded at around $16.73 with a P/E ratio of 9.1 and P/S ratio of 0.8. Highlight of Business Operations: As of December 31, 2008, 24,066,072 shares of the registrants common stock, par value $0.001 per share, were outstanding. As of such date the aggregate market value of voting stock (based upon the last reported sales price in The Nasdaq Global Select Market) held by non-affiliates of the registrant was approximately $247,880,542. As of August 31, 2009, the number of shares of the Common Stock outstanding was 24,102,985.
Our U.S. business had revenues of $153.7 million for the twelve-month period ended June 30, 2008 (fiscal 2008) and $154.9 million for the twelve-month period ended June 30, 2009 (fiscal 2009).
On June 30, 2009, we acquired a 76% interest in an established consumer lending business in Poland. The acquired company, Optima, S.A., founded in 1999 and headquartered in Gdansk, offers unsecured loans of generally 40 50 week durations with an average loan amount of $250 to $500. The loan transaction includes a convenient in-home servicing feature, whereby loan disbursement and collection activities take place in the customers home according to a mutually agreed upon and pre-arranged schedule. The in-home loan servicing concept is well accepted within Poland and Eastern Europe, and was initially established in the U.K. nearly 100 years ago. Customer sales and service activities are managed through an extensive network of local commission based representatives across five provinces in northwestern Poland.
At June 30, 2009, of our 1,206 overall locations, we have 175 franchised/agent locations in Canada, the United Kingdom and in the United States. The franchised/agent locations offer many of the same products and services offered by company-operated stores using the same associated trade names, trademarks and service marks within the standards and guidelines we have established. Total franchise/agent revenues were $5.0 million for fiscal 2008 and $4.2 million for fiscal 2009. The decline in revenues in fiscal 2009 is due to the decrease in the number of franchise stores.
Our customers, many of whom receive income on an irregular basis or from multiple employers, are drawn to our convenient neighborhood locations, extended operating hours and high-quality customer service. Our products and services, principally our check cashing and short-term consumer loan program, provide immediate access to cash for living expenses or other needs. We principally cash payroll checks, although our stores also cash government benefit, personal and income-tax-refund checks. During fiscal 2009, we cashed 9.3 million checks with a total face amount of $4.5 billion and an average face amount of $487 per check. We originated 4.1 million single-payment consumer loans with an average principal amount of $406 and a weighted average term of approximately 18.1 days. In addition, we acted as a servicer and direct lender originating approximately 6,000 longer-term installment loans with an average principal amount of $815 and a weighted average term of approximately 210 days. We strive to provide our customers with high-value ancillary services, including Western Union money order and money transfer products, electronic tax filing, reloadable VISA® and Mastercard® debit cards, bill payment, foreign currency exchange, pawn broking, gold buying, photo ID and prepaid local and long-distance phone services.
Growing Through Disciplined Network Expansion We intend to continue to grow our network through the addition of new stores and acquisitions, while adhering to a disciplined selection process. In order to optimize our expansion, we carefully assess potential markets by analyzing demographic, competitive and regulatory factors, site selection and availability, and growth potential. We seek to add locations that offer check cashing, consumer lending, debit cards, foreign currency, pawn lending, gold buying and other services or a combination of any of these products and services. In fiscal 2009, we entered into Poland, our fifth country, with the acquisition of Optima, S.A., that offers unsecured loans with payment terms of generally 40 50 week durations with an average loan amount of $250 to $500. Also during fiscal 2009, we acquired an established profitable U.K. Internet-based consumer lending business which was immediately accretive to earnings. The acquired company is competitively positioned in a rapidly growing market and further expands our expertise within the Internet lending arena. Moreover, we believe we can export and leverage this expertise to other European countries as well as our Canadian business unit. We continue to actively seek to acquire targeted competitor operations in selected expansion markets in the United States, Canada, the United Kingdom, Europe and Latin America.
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