QCCO » Topics » Note 4 - Significant Business Transactions

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

Note 4 – Significant Business Transactions

Closure of Branches. During first quarter 2009, the Company closed 23 of its lower performing branches in various states (which included four branches that were consolidated into nearby branches). In accordance with GAAP, the Company recorded approximately $1.1 million in pre-tax charges during the three months ended March 31, 2009 associated with these closings. The charges included a $667,000 loss for the disposition of fixed assets, $409,000 for lease terminations and other related occupancy costs, $15,000 in severance and benefit costs and $6,000 for other costs.

 

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During third quarter 2008, the Company closed 13 of its 32 branches in Ohio, primarily due to a new law that went into effect on September 1, 2008 that effectively precludes payday loans. In accordance with GAAP, the Company recorded approximately $943,000 in pre-tax charges during 2008 associated with these closings. The charges included a $554,000 loss for the disposition of fixed assets, $342,000 for lease terminations and other related occupancy costs, $40,000 in severance and benefit costs and $7,000 for other costs.

The following table summarizes the accrued costs associated with the closure of branches and the activity related to those charges as of March 31, 2009 (in thousands):

 

     Balance at
December 31,
2008
   Additions    Reductions     Balance at
March 31,
2009

Lease and related occupancy costs (a)

   $ 318    $ 465    $ (231 )   $ 552

Severance

        15      (15 )  

Other

        6      (6 )  
                            

Total

   $ 318    $ 486    $ (252 )   $ 552
                            

 

(a) The additions include charges of $56,000 during the three months ended March 31, 2009 to increase the lease liabilities for branches that were closed prior to January 1, 2009 and not included in discontinued operations. The increase was primarily due to changes in estimates based on the Company’s ability to sub-lease space in branch locations.

As of March 31, 2009, the balance of $552,000 for accrued costs associated with the closure of branches is included as a current liability on the Consolidated Balance Sheet as the Company expects that the liabilities for these costs will be settled within one year.

Note 5 – Discontinued Operations

As noted above, the closure of branches during first quarter 2009 included 19 branches that were not consolidated into nearby branches. These branches and the Ohio branches that closed during third quarter 2008 are reported as discontinued operations in accordance with Statement of Financial Accounting Standards No. 144 – Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). In accordance with SFAS 144, the Consolidated Statements of Income and related disclosures in the accompanying notes present the results of these branches as discontinued operations for all periods presented. With respect to the Consolidated Balance Sheets and related disclosures in the accompanying notes and the Consolidated Statements of Cash Flows, the items associated with the discontinued operations are included with the continuing operations for all periods presented.

Summarized financial information for discontinued operations during the three months ended March 31, 2008 and 2009 is presented below (in thousands):

 

     Three Months Ended
March 31,
 
     2008     2009  

Total revenues

   $ 1,542     $ 651  

Provision for losses

     743       447  

Other branch expenses

     1,022       807  

Branch gross loss

     (223 )     (603 )

Loss before income taxes

     (232 )     (1,167 )

Benefit for income taxes

     91       461  

Loss from discontinued operations

   $ (141 )   $ (706 )

 

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

Note 6 – Significant Business Transactions

Closure of branches. The Company closed eight of its lower performing branches during the first nine months of 2008 by consolidating those branches into nearby branches. In accordance with GAAP, the Company recorded approximately $428,000 in pre-tax charges during the nine months ended September 30, 2008 associated with these closings. The charges included a $278,000 loss for the disposition of fixed assets, $145,000 for lease terminations and other related occupancy costs and $5,000 for other costs.

During second quarter 2007, the Company decided to close all branches in Oregon due to a new law that went into effect on July 1, 2007 that effectively precludes payday loans. In accordance with GAAP, the Company recorded approximately $517,000 in pre-tax charges during second quarter 2007 associated with these closings. The charges included a $373,000 loss for the disposition of fixed assets, $102,000 for lease terminations and other related occupancy costs, $31,000 in severance and benefit costs and $11,000 for other costs.

During first quarter 2007, the Company closed 31 of its lower performing branches in various states (the majority of which were consolidated into nearby branches) and terminated the de novo process on eight branches that never opened. In accordance with GAAP, the Company recorded approximately $3.0 million in pre-tax charges during first quarter 2007 as a result of these closings. The charges recorded included $1.5 million loss for the disposition of fixed assets, $1.5 million for lease terminations and other related occupancy costs and $40,000 for other costs.

In the Consolidated Statements of Income with respect to the closure of branches discussed above, the losses associated with the disposition of fixed assets are reported in other expense, the costs associated with lease terminations are included in branch occupancy costs and the other costs are included in other branch expenses.

The following table summarizes the accrued costs associated with the closure of branches (including the Ohio branches discussed in Note 4) and the activity related to those charges as of September 30, 2008 (in thousands):

 

     Balance at
December 31,
2007
   Additions    Reductions     Balance at
September 30,
2008

Lease and related occupancy costs (a)

   $ 351    $ 882    $ (903 )   $ 330

Severance

        40      (40 )  

Other

        12      (12 )  
                            

Total

   $ 351    $ 934    $ (955 )   $ 330
                            

 

(a) The additions include charges of $441,000 during the nine months ended September 30, 2008 to increase the lease liabilities for branches that were closed prior to January 1, 2008, primarily due to changes in estimates based on the Company’s ability to sub-lease space in branch locations.

As of September 30, 2008, the balance of $330,000 for accrued costs associated with the closure of branches is included as a current liability on the Consolidated Balance Sheet as the Company expects that the liabilities for these costs will be settled within one year.

 

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This excerpt taken from the QCCO 10-Q filed Aug 8, 2008.

Note 6 – Significant Business Transactions

Closure of branches. The Company closed six of its lower performing branches during the first half of 2008 by consolidating those branches into nearby branches. In accordance with GAAP, the Company recorded approximately $310,000 in pre-tax charges during the six months ended June 30, 2008 associated with these closings. The charges included a $194,000 loss for the disposition of fixed assets, $113,000 for lease terminations and other related occupancy costs and $3,000 for other costs.

During second quarter 2007, the Company decided to close all its branches in Oregon due to a new law that went into effect on July 1, 2007 that effectively precludes payday loans. In accordance with GAAP, the Company recorded approximately $517,000 in pre-tax charges during second quarter 2007 associated with these closings. The charges included a $373,000 loss for the disposition of fixed assets, $102,000 for lease terminations and other related occupancy costs, $31,000 in severance and benefit costs and $11,000 for other costs.

During first quarter 2007, the Company closed 31 of its lower performing branches in various states (the majority of which were consolidated into nearby branches) and terminated the de novo process on eight branches that never opened. In accordance with GAAP, the Company recorded approximately $3.0 million in pre-tax charges during first quarter 2007 as a result of these closings. The charges recorded included $1.5 million loss for the disposition of fixed assets, $1.5 million for lease terminations and other related occupancy costs and $40,000 for other costs.

In the Consolidated Statements of Income with respect to the closure of branches discussed above, the losses associated with the disposition of fixed assets are reported in other expense, the costs associated with lease terminations are included in occupancy costs and the other costs are included in other branch expenses.

The following table summarizes the accrued costs associated with the closure of branches (including the Ohio branches discussed in Note 4) and the activity related to those charges as of June 30, 2008 (in thousands).

 

     Balance at
December 31,
2007
   Additions    Reductions     Balance at
June 30, 2008

Lease and related occupancy costs (a)

   $ 351    $ 556    $ (309 )   $ 598

Severance

        40        40

Other

        11      (11 )  
                            

Total

   $ 351    $ 607    $ (320 )   $ 638
                            

 

(a) The additions include a charge of $168,000 to increase the lease liability for branches that were closed during 2007.

As of June 30, 2008, the balance of $638,000 for accrued costs associated with the closure of branches is included as a current liability on the Consolidated Balance Sheet as the Company expects that the liabilities for these costs will be settled within one year.

This excerpt taken from the QCCO 10-Q filed May 9, 2008.

Note 4 – Significant Business Transactions

Closure of branches. During first quarter 2007, the Company closed 31 of its lower performing branches in various states (the majority of which were consolidated into nearby branches) and terminated the de novo process on eight branches that never opened. In accordance with GAAP, the Company recorded approximately $3.0 million in pre-tax charges during first quarter 2007 as a result of these closings. The charges recorded included $1.5 million loss for the disposition of fixed assets, $1.5 million for lease terminations and other related occupancy costs and $40,000 for other costs. In the Consolidated Statements of Income, the loss associated with the disposition of fixed assets is reported as other expense, the costs associated with the lease terminations are occupancy costs and the other costs of $40,000 are included in other branch expenses.

The following table summarizes the accrued costs associated with the closure of branches discussed above and the activity related to those charges as of March 31, 2008 (in thousands).

 

     Balance at
December 31,
2007
   Additions    Reductions     Balance at
March 31,
2008

Lease and related occupancy costs

   $ 351    $ 109    $ (116 )   $ 344
                            

As of March 31, 2008, the balance of $344,000 for accrued costs associated with the closure of branches is included as a current liability on the Consolidated Balance Sheet as the Company expects that the liabilities for these costs will be settled within one year.

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

Note 4 – Significant Business Transactions

Closure of branches. During third quarter 2007, the Company closed all its branches in Oregon due to a new law that went into effect on July 1, 2007 that effectively precludes payday loans. In accordance with GAAP, the Company recorded approximately $517,000 in pre-tax charges during second quarter 2007 associated with these closings. The charges included a $373,000 loss for the disposition of fixed assets, $102,000 for lease terminations and other related occupancy costs, $31,000 in severance and benefit costs and $11,000 for other costs. In the Consolidated Statements of Income, the loss associated with the disposition of fixed assets is reported as an other expense, the costs associated with the lease terminations are included in occupancy costs and the other costs of $11,000 are included in other branch expenses.

During first half 2007, the Company closed 31 of its lower performing branches in various states (the majority of which were consolidated into nearby branches) and terminated the de novo process on eight branches that never opened. In accordance with GAAP, the Company recorded approximately $3.0 million in pre-tax charges during first quarter 2007 as a result of these closings. The charges recorded included $1.5 million loss for the disposition of fixed assets, $1.5 million for lease terminations and other related occupancy costs and $40,000 for other costs. In the Consolidated Statements of Income, the loss associated with the disposition of fixed assets is reported as an other expense, the costs associated with the lease terminations are occupancy costs and the other costs of $40,000 are included in other branch expenses.

The following table summarizes the accrued costs associated with the closure of branches and the activity related to those charges as of September 30, 2007 (in thousands).

 

     Balance at
December 31,
2006
   Additions    Reductions     Balance at
September 30,
2007

Lease and related occupancy costs

   $ —      $ 1,558    $ (1,102 )   $ 456

Severance

        31      (23 )     8

Other

        51      (51 )  
                            

Total

   $ —      $ 1,640    $ (1,176 )   $ 464
                            

As of September 30, 2007, the balance of $464,000 for accrued costs associated with the closure of branches is included as a current liability on the Consolidated Balance Sheet as the Company expects that the liabilities for these costs will be settled within one year.

 

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Acquisitions. During the first nine months of 2007, the Company acquired 13 branches and certain assets, in four separate acquisitions, for a total of $3.3 million, which included net book value of depreciable assets of approximately $204,000 and loans receivable of approximately $1.4 million. In connection with an acquisition of eight branches in Missouri, the Company closed six of the branches acquired and transferred the receivable balances to existing locations. The Company used the purchase method of accounting. The excess of the total acquisition cost over the fair value of the net assets acquired totaled $1.9 million. Of this amount, the Company allocated $1.3 million to goodwill, $388,000 to customer relationships and $206,000 to non-compete agreements. The purchase price allocations with respect to these acquisitions have been completed. See additional information in Note 8. The pro forma results of operations have not been presented because the results of operations for the Company would not have been materially different from those reported for the first nine months ended September 30, 2007.

On September 24, 2007, QC Auto Services purchased certain assets from Hart Family Motors, Inc., an automotive retailer and related finance company focused exclusively on the “buy-here/pay-here” segment of the used vehicle market. The purchase price was $375,000, which included net book value of depreciable assets of $50,000. The Company used the purchase method of accounting. The excess of the total acquisition cost over the fair value of the net assets acquired totaled $325,000, which was allocated to goodwill. The purchase price allocation with respect to this acquisition has been completed. The pro forma results of operations have not been presented because the results of operations for the Company would not have been materially different from those reported for the first nine months ended September 30, 2007.

On December 1, 2006, the Company acquired all of the issued and outstanding membership interests in Express Check Advance of South Carolina, LLC (ECA). The results of ECA’s operations have been included in the consolidated financial statements since that date. ECA currently operates 50 payday loan branches in South Carolina. As a result of the acquisition, the Company has established a significant presence in South Carolina. The aggregate purchase price was $16.3 million, net of cash acquired. The acquisition was funded with a draw on the Company’s revolving credit facility, which was repaid during first quarter 2007.

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

Note 4 – Significant Business Transactions

Closure of branches. During second quarter 2007, the Company decided to close all its branches in Oregon due to a new law that went into effect on July 1, 2007 that effectively precludes payday loans. The Company expects to close its eight branches in Oregon by the end of third quarter 2007. In accordance with GAAP, the Company recorded approximately $517,000 in pre-tax charges during second quarter 2007 associated with these expected closings. The charges included a $373,000 loss for the disposition of fixed assets, $102,000 for lease terminations and other related occupancy costs, $31,000 in severance and benefit costs and $11,000 for other costs. In the Consolidated Statements of Income, the loss associated with the disposition of fixed assets is reported as an other expense, the costs associated with the lease terminations are included in occupancy costs and the other costs of $11,000 are included in other branch expenses.

During first quarter 2007, the Company closed 39 of its lower performing branches largely due to regulatory changes that affected the prospects for the long-term profitability of each branch. In accordance with GAAP, the Company recorded approximately $3.0 million in pre-tax charges during first quarter 2007 as a result of these closings. The charges recorded included $1.5 million loss for the disposition of fixed assets, $1.5 million for lease terminations and other related occupancy costs and $40,000 for other costs. In the Consolidated Statements of Income, the loss associated with the disposition of fixed assets is reported as an other expense, the costs associated with the lease terminations are occupancy costs and the other costs of $40,000 are included in other branch expenses.

The following table summarizes the accrued costs associated with the closure of branches and the activity related to those charges as of June 30, 2007(in thousands).

 

     Balance at
December 31,
2006
   Additions    Reductions    

Balance at
June 30,

2007

Lease and related occupancy costs

   $ —      $ 1,558    $ (901 )   $ 657

Severance

        31        31

Other

        51      (51 )  
                            

Total

   $ —      $ 1,640    $ (952 )   $ 688
                            

As of June 30, 2007, the balance of $688,000 for accrued costs associated with the closure of branches is included as a current liability on the Consolidated Balance Sheet as the Company expects that the liabilities for these costs will be settled by December 31, 2007.

 

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Acquisitions. During the first six months of 2007, the Company acquired 13 branches and certain assets, in four separate acquisitions, for a total of $3.3 million, which included net book value of depreciable assets of approximately $204,000 and loans receivable of approximately $1.4 million. In connection with an acquisition of eight branches in Missouri, the Company closed six of the branches acquired and transferred the receivable balances to existing locations. The Company used the purchase method of accounting. The excess of the total acquisition cost over the fair value of the net assets acquired totaled $1.9 million. Of this amount, the Company allocated $1.3 million to goodwill, $388,000 to customer relationships and $206,000 to non-compete agreements. The purchase price allocations with respect to these acquisitions have been completed. See additional information in Note 8. The pro forma results of operations have not been presented because the results of operations for the Company would not have been materially different from those reported for the first six months ended June 30, 2007.

On December 1, 2006, the Company acquired all of the issued and outstanding membership interests in Express Check Advance of South Carolina, LLC (ECA). The results of ECA’s operations have been included in the consolidated financial statements since that date. ECA currently operates 50 payday loan branches in South Carolina. As a result of the acquisition, the Company has established a significant presence in South Carolina. The aggregate purchase price was $16.3 million, net of cash acquired. The acquisition was funded with a draw on the Company’s revolving credit facility, which was repaid during first quarter 2007.

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