EDMONTON, May 24, 2013 /PRNewswire/ – The Cash Store Financial Services Inc.
(“Cash Store Financial” or the “Company”) (TSX: CSF; NYSE: CSFS) today
announced that it has filed amended and restated consolidated financial
statements and MD&A for the years ended September 30, 2012, September
30, 2011 and the fifteen month period ended September 30, 2010. The
Company has also restated the December 31, 2011, March 31, 2012, June
30, 2012 and December 31, 2012 unaudited interim consolidated financial
statements.
These consolidated financial statements and MD&A, as initially reported,
have been amended and restated to correct for an error resulting from
the misunderstanding of the settlement terms and conditions of the
March 5, 2004 British Columbia Class Action claim, which resulted in
the application of an accounting principle to measure and record the
liability as at September 30, 2010 and subsequent reporting periods,
that was not appropriate in the circumstances. The restatement
resulted in a reduction in net income in the fifteen months ended
September 30, 2010 of $6.6 million, or $0.38 per share, an increase in
net income in the year ended September 30, 2011 of $1.5 million, or
$0.09 per share, and an increase in net loss of $433,000, or $0.03 per
share, in the year ended September 30, 2012.
The correction of the error resulted in the previously disclosed maximum
settlement exposure of $18.8 million being expensed with the majority
of the expense being recognized in the fifteen month period ended
September 30, 2010. The maximum potential exposure consists of
approximately $6.2 million in cash, which was paid to the Settlement
Administrator in 2011, approximately $6.2 million in credit vouchers,
and $6.4 million in legal fees, which was paid to the plaintiff’s
counsel in 2010. After cash and credit vouchers have been disbursed by
the Settlement Administrator, the remaining accrual for unclaimed
credit vouchers as of March 31, 2013 was approximately $5.3 million.
The Company will revise its accrual for unclaimed cash and vouchers to
the extent that the applicable de-recognition criteria have been met
which is expected to occur in late fiscal 2014.
In conjunction with the restatement, the Company has also restated the
consolidated financial statements and MD&A for the year ended September
30, 2011, the fifteen month period ended September 30, 2010, and the
three months ended December 31, 2011 to include disclosure of related
party transactions consistent with those provided by the Company from
March 31, 2012 onwards. Specifically, the restated disclosures include
transactions with a privately held entity that raises capital and
provides advances to the Company’s customers (third-party lender). The
privately held entity is controlled by the father of the Senior Vice
President of Operations of the Company. The addition of this disclosure
did not impact the previously reported financial position or results of
operations of the Company.
The corrections had no impact on total revenues, operating margin, or
cash position and had no impact on compliance with debt covenants in
any periods presented.
In connection with these matters, the Company has re-evaluated its
conclusions regarding the effectiveness of its internal control over
financial reporting for the affected periods and determined that
material weaknesses existed. As a result of the material weaknesses,
the Company has now concluded that such controls were ineffective.
Accordingly, the Company has restated its disclosures to include the
identification of material weaknesses related to the restatements.
The financial statements are available at www.sedar.com.
About Cash Store Financial
Cash Store Financial is the only lender and broker of short-term
advances and provider of other financial services in Canada that is
listed on the Toronto Stock Exchange (TSX: CSF). Cash Store Financial
also trades on the New York Stock Exchange (NYSE: CSFS). Cash Store
Financial operates 513 branches across Canada under the banners “Cash
Store Financial” and “Instaloans”. Cash Store Financial also operates
25 branches in the United Kingdom.
Cash Store Financial and Instaloans primarily act as lenders and brokers
to facilitate short-term advances and provide other financial services
to income-earning consumers who may not be able to obtain them from
traditional banks. Cash Store Financial also provides a private-label
debit card (the “Freedom” card) and a prepaid credit card (the “Freedom
MasterCard”) as well as other financial services, including bank
accounts.
Cash Store Financial employs approximately 1,900 associates and is
headquartered in Edmonton, Alberta.
Cash Store Financial is a Canadian corporation that is not affiliated
with Cottonwood Financial Ltd. or the outlets Cottonwood Financial
Ltd. operates in the United States under the name “Cash Store.” Cash
Store Financial does not do business under the name “Cash Store” in the
United States and does not own or provide any consumer lending services
in the United States.
Forward-Looking Information
This news release contains “forward-looking information” within the
meaning of applicable Canadian securities legislation and
“forward-looking statements” within the meaning of United States
federal securities legislation, which we refer to herein, collectively,
as “forward-looking information”. Forward-looking information includes,
but is not limited to, information with respect to our objectives,
strategies, operations and financial results, competition, as well as
initiatives to grow revenue or reduce retention payments. Generally,
forward-looking information can be identified by the use of
forward-looking terminology such as “estimates”, “plans”, “expects”, or
“does not expect”, “is expected”, “budget”, “scheduled”, “forecasts”,
“intends”, “anticipates”, or “does not anticipate”, or “believes” or
variations of such words and phrases or state that certain actions,
events or results “may”, “could”, “would”, “might”, or “will be taken”,
“occur”, or “be achieved”. In particular, this news release contains
forward-looking information with respect to our goals and strategic
priorities, introduction of products, share repurchase initiatives,
branch openings and competition, as well as initiatives to grow revenue
or reduce retention payments. Forward-looking information is subject
to known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performance or
achievements of Cash Store Financial, to be materially different from
those expressed or implied by such forward-looking information,
including, but not limited to, changes in economic and political
conditions, legislative or regulatory developments, technological
developments, third-party arrangements, competition, litigation, risks
associated with but not limited to, market conditions, and other
factors described under the heading “Risk Factors” in our Annual MD&A,
which is on file with Canadian provincial securities regulatory
authorities, and in our Annual Report on Form 20-F filed with the U.S.
Securities and Exchange Commission. All material assumptions used in
providing forward-looking information are based on management’s
knowledge of current business conditions and expectations of future
business conditions and trends, including our knowledge of the current
credit, interest rate and liquidity conditions affecting us and the
general economic conditions in Canada, the United Kingdom and
elsewhere. Although we believe the assumptions used to make such
statements are reasonable at this time and have attempted to identify
in our continuous disclosure documents important factors that could
cause actual results to differ materially from those contained in
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated or intended. Certain
material factors or assumptions are applied by us in making
forward-looking information, including without limitation, factors and
assumptions regarding our continued ability to fund our payday loan
business, rates of customer defaults, relationships with, and payments
to, third party lenders, demand for our products, as well as our
operating cost structure and current consumer protection regulations.
There can be no assurance that such information will prove to be
accurate, as actual results and future events could differ materially
from those anticipated in such information. Accordingly, readers should
not place undue reliance on forward-looking information. We do not
undertake to update any forward-looking information, except in
accordance with applicable securities laws.
SOURCE The Cash Store Financial Services Inc.
The Kid Mero
John Kicklighter
M. Edward Borasky
Stella
