QCCO » Topics » Note 16 - Subsequent Events

This excerpt taken from the QCCO 10-Q filed May 8, 2009.

Note 19 – Subsequent Events

Dividends. On May 5, 2009, the Company’s board of directors declared a quarterly dividend of $0.05 per common share. The dividend is payable on June 2, 2009 to stockholders of record as of May 19, 2009. The Company estimates that the total amount of the dividend will be approximately $900,000.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This excerpt taken from the QCCO 10-K filed Mar 13, 2009.

NOTE 16—SUBSEQUENT EVENTS

Purchase of buy-here, pay-here locations. In January 2009, the Company purchased two buy-here, pay-here locations in Missouri for approximately $4.0 million. The acquisition was funded through a draw under the Company’s credit facility.

Equity Compensation Grants. During first quarter 2009, the Company granted approximately 411,744 restricted shares to various employees and non-employee directors under the 2004 Plan. The total fair market value of the restricted shares under these grants was approximately $1.7 million. The 359,464 restricted shares granted to employees vest equally over four years and had a fair market value on the date of grant of $1.5 million. The 52,280 shares granted to the directors vested immediately upon the date of grant and had a fair market value of approximately $230,000. In addition, the Company granted 530,492 stock options to certain employees that vest equally over four years and had a fair market value on the date of grant of approximately $811,000. The Company expects the issuance of the restricted stock and stock options during first quarter of 2009 will result in an increase in compensation expense of approximately $529,000 (net of estimated forfeitures) for the year ended December 31, 2009. The restricted stock awards and stock option grants for shares in excess of approximately 162,000 shares (the maximum number of shares still available for grants of restricted stock and options under the 2004 Plan) are subject to stockholder approval of a proposed amendment to the 2004 Plan to increase the number of shares available for issuance under the 2004 Plan.

Dividend. On February 12, 2009, the Company’s board of directors declared a quarterly cash dividend of $0.05 per common share. The quarterly dividend is payable on March 9, 2009 to stockholders of record as of February 23, 2009. The Company estimates that the total amount of the dividend will be approximately $900,000.

 

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QC HOLDINGS, INC. AND SUBSIDIARIES

This excerpt taken from the QCCO 10-Q filed Nov 7, 2008.

Note 18 – Subsequent Events

Dividends. On November 4, 2008, the Company’s board of directors established a regular quarterly dividend of $0.05 per common share. Together with this regular quarterly dividend, the board of directors declared a special cash dividend of $0.10 per common share. The quarterly dividend and special dividend are payable on December 2, 2008 to stockholders of record as of November 20, 2008. The Company estimates that the total amount of the dividends will be approximately $2.7 million.

 

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Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This excerpt taken from the QCCO 10-Q filed Aug 8, 2008.

Note 18 – Subsequent Events

Dividends. On August 5, 2008, the Company’s board of directors declared a cash dividend of $0.10 per common share. The dividend is payable on September 4, 2008 to stockholders of record as of August 20, 2008. The Company estimates that the total amount of the dividends will be approximately $1.8 million.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This excerpt taken from the QCCO 10-Q filed May 9, 2008.

Note 15 – Subsequent Events

Dividends. On April 29, 2008, the Company’s board of directors declared a cash dividend of $0.05 per common share. The dividend is payable on May 23, 2008 to stockholders of record as of May 16, 2008. The Company estimates that the total amount of the dividends will be approximately $900,000.

 

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Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
These excerpts taken from the QCCO 10-K filed Mar 14, 2008.

NOTE 16 – SUBSEQUENT EVENTS

Equity Compensation Grants. During first quarter 2008, the Company granted approximately 161,672 restricted shares to various employees and directors under the 2004 Plan. The total fair market value of the restricted shares under these grants was approximately $1.6 million. The 140,512 restricted shares granted to employees vest equally over four years and had a fair market value on the date of grant of $1.4 million. The 21,160 shares granted to the directors vested immediately upon the date of grant and had a fair market value of approximately $216,000. In addition, the Company granted 235,700 stock options to certain employees that vest equally over four years and had a fair market value on the date of grant of approximately $1.1 million. The Company expects the issuance of the restricted stock and stock options during first quarter of 2008 will result in an increase in compensation expense of approximately $782,000 (net of estimated forfeitures) for the year ended December 31, 2008

Interest Rate Swap Agreement. The Company entered into an interest rate swap agreement that will take effect on March 31, 2008. The swap agreement is designated as a cash flow hedge, and changes the floating rate interest obligation associated with the $50 million term loan into a fixed rate. The swap agreement has a maturity date of December 6, 2012. Under the swap, the Company will pay a fixed interest rate of 3.43% and receive interest at a rate of LIBOR.

Stock Repurchase Program. In March 2008, the Company’s board of directors increased the authorization limit of the Company’s common stock repurchase program to $60 million and extended the program through June 30, 2009.

Amendment of Credit Agreement. On March 7, 2008, the Company entered into an amendment of its credit agreement, which modified the interest margin on the loans based on various leverage ratios, amended certain definitions and financial covenants and added a covenant regarding the minimum ratio of consolidated current assets to total consolidated debt. The amendment also reduced the accordion feature of the credit agreement to $25 million from $50 million. As a result, borrowings under the amended credit facility may be increased to a maximum of $120 million subject to the terms and conditions set forth therein.

 

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NOTE 16 – SUBSEQUENT EVENTS

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Equity Compensation Grants. During first quarter 2008, the Company granted approximately 161,672 restricted shares to various employees and
directors under the 2004 Plan. The total fair market value of the restricted shares under these grants was approximately $1.6 million. The 140,512 restricted shares granted to employees vest equally over four years and had a fair market value on the
date of grant of $1.4 million. The 21,160 shares granted to the directors vested immediately upon the date of grant and had a fair market value of approximately $216,000. In addition, the Company granted 235,700 stock options to certain employees
that vest equally over four years and had a fair market value on the date of grant of approximately $1.1 million. The Company expects the issuance of the restricted stock and stock options during first quarter of 2008 will result in an increase in
compensation expense of approximately $782,000 (net of estimated forfeitures) for the year ended December 31, 2008

Interest Rate
Swap Agreement.
The Company entered into an interest rate swap agreement that will take effect on March 31, 2008. The swap agreement is designated as a cash flow hedge, and changes the floating rate interest obligation associated with the
$50 million term loan into a fixed rate. The swap agreement has a maturity date of December 6, 2012. Under the swap, the Company will pay a fixed interest rate of 3.43% and receive interest at a rate of LIBOR.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Stock Repurchase Program. In March 2008, the Company’s board of directors increased the authorization limit of the Company’s common
stock repurchase program to $60 million and extended the program through June 30, 2009.

Amendment of Credit Agreement. On
March 7, 2008, the Company entered into an amendment of its credit agreement, which modified the interest margin on the loans based on various leverage ratios, amended certain definitions and financial covenants and added a covenant regarding
the minimum ratio of consolidated current assets to total consolidated debt. The amendment also reduced the accordion feature of the credit agreement to $25 million from $50 million. As a result, borrowings under the amended credit facility may be
increased to a maximum of $120 million subject to the terms and conditions set forth therein.

 


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This excerpt taken from the QCCO 10-Q filed Nov 8, 2007.

Note 16 – Subsequent Events

Dividend. On October 30, 2007, the Company’s board of directors declared a cash dividend of $0.10 per common share. The dividend is payable on November 19, 2007 to stockholders of record as of November 12, 2007. The Company estimates that the total amount of the dividend will be approximately $2 million.

 

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Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This excerpt taken from the QCCO 10-Q filed May 9, 2007.

Note 16 – Subsequent Events

Dividends. On May 1, 2007, the Company’s board of directors declared a cash dividend of $0.10 per common share. The dividend is payable on May 31, 2007 to stockholders of record as of May 15, 2007. The Company estimates that the total amount of the dividend will be approximately $2 million.

 

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Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This excerpt taken from the QCCO 10-K filed Mar 14, 2007.

NOTE 18 – SUBSEQUENT EVENTS

Equity Compensation Grants. In January 2007, the Company granted approximately 84,474 restricted shares to various employees and directors under the 2004 Plan. The total fair market value of the restricted shares under these grants was approximately $1.3 million. The 71,974 restricted shares granted to employees vest equally over four years and had a fair market value on the date of grant of approximately $1.1 million. The 12,500 shares granted to the directors vested immediately upon the date of grant and had a fair market value of approximately $200,000. The Company expects the issuance of the restricted stock in January 2007 and the issuance of restricted stock and performance-based shares to executives in December 2006 will result in an increase in compensation expense of approximately $1.2 million (net of estimated forfeitures) for the year ended December 31, 2007. For the year ended December 31, 2006, the Company recognized approximately $33,000 in stock-based compensation expense related to the restricted stock and performance-based shares granted to executives in December 2006.

 

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This excerpt taken from the QCCO 10-Q filed Nov 8, 2006.

Note 12 – Subsequent Events

On October 30, 2006, the Company entered into an amendment to its credit agreement to amend certain terms of the credit facility and to provide for the waiver of a covenant default resulting from the repurchase of approximately $10 million of the Company’s common stock during the three months ended September 30, 2006. The amendment provides for greater flexibility in repurchasing the Company’s common stock within the parameters of the existing authorization as discussed in Note 11.

 

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This excerpt taken from the QCCO 10-K filed Mar 14, 2006.

NOTE 16 – SUBSEQUENT EVENTS

Credit Facility. On January 19, 2006, the Company entered into a credit agreement with a syndicate of banks, which provides for a revolving line of credit (including provisions permitting the issuance of letters of credit) in the aggregate principal amount of up to $45.0 million (the credit facility). The credit facility is secured by all the capital stock of each subsidiary of the Company and all personal property (including, without limitation, all present and future accounts receivable, general intangibles (including intellectual property), instruments, chattel paper, deposit accounts, investment property and the proceeds thereof). Borrowings under the facility are available at rates based on the LIBOR or the Federal Funds rate. The credit facility has a grid that adjusts borrowing costs up or down based upon the Company’s leverage ratio. Leverage ratio is defined as the ratio of total debt to EBITDA (earnings before interest, provision for income taxes, depreciation and amortization). An annual facility fee of 0.25% is required on the credit facility. Among other provisions, the credit facility contains financial covenants related to EBITDA, total indebtedness, fixed charges and minimum consolidated net worth. The credit facility matures on January 19, 2009.

Equity Compensation Grants. In January 2006, the Company granted 667,500 options to certain employees and directors under the 2004 Plan. The options consisted of 627,500 options that vest equally over four years and 40,000 options that vested immediately upon grant. All options expire 10 years from the date of grant. The Company estimates that the fair value of these option grants (using the Black-Scholes option valuation model) is approximately $3.8 million. In addition, the Company granted 65,325 restricted shares to various employees pursuant to restricted stock agreements. The restricted shares vest equally over four years. The fair market value of the restricted shares under these grants was approximately $782,000. The Company is adopting the provisions of SFAS 123R during the first quarter of 2006 as discussed in Note 2. As a result, the Company expects the issuance of these stock options and restricted stock will result in an increase in compensation expense of approximately $1.3 million for the year ended December 31, 2006.

 

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This excerpt taken from the QCCO 10-Q filed May 13, 2005.

Note 7 – Subsequent Events

 

Accelerated Vesting of Stock Options. On May 9, 2005, the Compensation Committee of the Board of Directors approved the acceleration of vesting of all unvested options to purchase common stock of the Company that had an exercise price that was greater than the market price on that date (out-of-the-money options). This action resulted in the accelerated vesting of options to purchase 964,000 shares of common stock of the Company. The weighted average exercise price of the accelerated options was $15.97 per share. The closing price of the Company’s common stock on the Nasdaq National Market on May 9, 2005 was $13.50 per share.

 

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The Company is accelerating the vesting of these options because it believes it is in the best interest of the stockholders to reduce future compensation expense that the Company would otherwise be required to report in its income statement upon adoption of SFAS 123 in the first quarter of 2006. SFAS 123R will require that compensation expense associated with stock options be recognized in the Company’s income statement, rather than as pro forma disclosures in the footnotes to the consolidated financial statements. Pro forma disclosures in the footnotes to the consolidated financial statements will include the impact of early vesting of options in the second quarter of 2005 and will result in an approximate $6.2 million pre-tax charge to pro forma earnings.

 

Common Stock Repurchase Program. On May 12, 2005, the Company’s Board of Directors authorized the expenditure of up to $10 million to repurchase shares of the Company’s common stock. The Company plans to purchase the shares through open market and negotiated transactions. The number of shares repurchased will depend on various factors, including the price of the stock and market conditions. The Company expects to fund the share repurchase program with cash flow from operations. The common stock repurchase program expires on December 31, 2005.

 

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This excerpt taken from the QCCO 10-K filed Mar 31, 2005.

NOTE 15 – SUBSEQUENT EVENTS

 

Corporate Relocation. In February 2005, the Company entered into a seven-year lease for new corporate headquarters in Overland Park, Kansas. The Company expects to move into the new location in the second quarter of 2005 and to spend an estimated $2.0 million in capital expenditures to complete the tenant improvement, furnishings and technology of the new office space. In addition, the Company expects rent expense to increase by approximately $675,000 per year as a result of the lease.

 

Off-Balance Sheet Arrangement. In February 2005, the Company entered into a marketing and service agreement with First Bank of Delaware (FBD) with respect to short-term consumer loans to be made by the bank in the State of Texas. Under this agreement, the Company will provide various marketing and servicing services to FBD in connection with FBD’s short-term consumer loans in Texas, for which the Company will be paid fees by FBD. The Company will also earn additional fees if FBD’s loan loss ratio for these short-term consumer loans is below specified levels. The Company is not involved in the loan approval process, in determining the loan approval procedures or criteria, and as discussed in Note 3, the Company will not acquire or own any participation interest in these loans. Consequently, FBD loans will not be included in the Company’s loans receivable and will not be reflected in the consolidated balance sheet.

 

Under the agreement, however, the Company is obligated to reimburse FBD an amount equal to the net amount charged off by FBD for the loans serviced by the Company, less FBD’s targeted loan loss ratio. Therefore, the Company could be obligated to pay FBD for loan losses in excess of the targeted loan loss rate. Because of the Company’s economic exposure for potential losses related to the FBD loans, the Company will establish a payable to reflect the anticipated losses related to uncollected FBD loans. The payable will be recognized at its fair value pursuant to FIN 45.

 

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QC HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

North Carolina Litigation. On February 8, 2005, the Company, two of its subsidiaries, including the subsidiary doing business in North Carolina, and Mr. Don Early, the Company’s Chairman of the Board and Chief Executive Officer, were sued in Superior Court of New Hanover County, North Carolina in a putative class action by customers of County Bank. The lawsuit alleges that the Company violated various North Carolina laws, including the North Carolina Consumer Finance Act, the North Carolina Check Cashers Act, the North Carolina Loan Brokers Act, the state unfair trade practices statute and the state usury statute, in connection with payday loans made by the bank to the two plaintiffs through the Company’s retail locations in North Carolina. The lawsuit alleges that the Company made the payday loans to the plaintiffs in violations of various state statutes, and that if the Company is not viewed as the “actual lenders or makers” of the payday loans, the Company’s services to the bank that made the loans violated various North Carolina statutes.

 

Plaintiffs are seeking certification as a class, unspecified monetary damages, and treble damages and attorneys fees under specified North Carolina statutes. Plaintiffs have not sued County Bank in this matter and have specifically stated in the complaint that plaintiffs do not challenge the right of out-of-state banks to enter into loans with North Carolina residents at such rates as the bank’s home state may permit, all as authorized by North Carolina and federal law. Because this case is in the preliminary stages, the Company is not able to assess the likelihood of any outcomes in this action.

 

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