NICHOLAS FINANCIAL, INC. (NASDAQ:NICK) Files An 8-K Costs Associated with Exit or Disposal Activities
Item 2.05Costs Associated with Exit or Disposal Activities.
The performance of some branches in the Nicholas Financial, Inc. (the “Company) network have consistently fallen short of management’s expectations during the 2020 Fiscal Year. As a result, on April 1, 2020, the Company announced the closure of seven branches, which represented approximately 14% of its network, as of December 31, 2019. Reduction in workforce associated with these activities impacted approximately 20 employees and represented 9% of Company workforce, as of March 31, 2020.
These consolidation activities were part of the senior management contemplated initiatives for the Fiscal Year 2021. The expected total charges are between $0.1 million and $0.2 million of cash expenditures and under $0.1 million of non-cash impairment charges associated with lease obligations. Specifically, the Company estimated approximately $40,000 for employee related costs and approximately $120,000 for lease obligations. The Company expects the majority of these charges will be recorded in the first quarter of Fiscal Year 2021. The estimates of charges could change as the Company plans evolve and become finalized.
Forward-Looking Information
This report contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on management’s current beliefs and assumptions, as well as information currently available to management. When used in this document, the words “anticipate”, “estimate”, “expect”, “will”, “may”, “plan,” “believe”, “intend” and similar expressions are intended to identify forward-looking statements. Such statements, including statements about the expected impact of exit and disposal activities, material impairments and Covid-19, are subject to certain risks, uncertainties and assumptions, including but not limited to the risk factors discussed under “Item 1A – Risk Factors” in our Annual Report on Form 10-K, and our other filings made with the U.S. Securities and Exchange Commission (“SEC”). Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. All forward-looking statements included in this report are based on information available to the Company as of the date of filing, and the Company assumes no obligation to update any such forward-looking statement except as required by law.
About NICHOLAS FINANCIAL, INC. (NASDAQ:NICK)
Nicholas Financial, Inc. (Nicholas Financial-Canada) is a holding company. The Company’s business activities are conducted through its subsidiary, Nicholas Financial, Inc. (Nicholas Financial). Nicholas Financial is a specialized consumer finance company engaged primarily in acquiring and servicing automobile finance installment contracts (Contracts) for purchases of new and used automobiles and light trucks. Nicholas Financial also originates direct consumer loans (Direct Loans) and sells consumer-finance related products. Another subsidiary, Nicholas Data Services, Inc. (NDS), acts as the interim holding company for Nicholas Financial. The Company is engaged in the business of providing financing programs, primarily on behalf of purchasers of new and used cars and light trucks. The Company originates Direct Loans in Florida and North Carolina. As of March 31, 2016, the Company’s automobile finance programs were conducted in 18 states.
