Cash America 2002 Annual Report Download - page 5

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increasingly being met with products
that have evolved over the past
twenty years to fill the void left by the
exit of traditional lenders from our
middle-class neighborhoods. Payday
loans, for instance, have grown from a
dead start 10 years ago to an estimated
annual volume of $20 billion in 2003.
Thirty-three states have already
recognized the need for this product
and passed enabling legislation.
Although the struggle may continue
for a few more years, I am convinced
other legislators and regulators will
heed the cry of the consumer and
follow suit.
In addition to the softening U.S.
economy, other market-related factors
aided our cause in 2002, including the
elevated price of gold, the deflating
value of the dollar and the bargain-
basement level of short-term interest
rates. Of these elements, a higher gold
price has the most far-reaching
implications for Cash America. The
elevated price has allowed us to reap
some short-term profit through our
scrap activity, but more importantly, it
has allowed store management to
profitably trim inventories in the face
of accelerating loan demand. The
combination of higher collateral
values for gold and historically low
average per shop inventories leaves us
poised to aggressively but safely meet
the customers’ loan demand at a time
when they most need our services.
The road ahead appears sure and
promising. The positive momentum of
our “back to basics” strategy should
carry well into 2003 with growth
throughout all segments of business,
both domestic and foreign. Loans will
continue to fuel the engine while
execution keeps the train on track.
We are right on course.
The current course continues
leading us toward the expansion of
financial services we offer to working-
class families in our neighborhoods.
We are testing check cashing and
prepaid phone services and will soon
offer money orders and money transfer
services on a limited scale. This
strategy of morphing to a
neighborhood financial service center
image has been slow in developing,
but I believe caution trumps speed
when market image is involved.
Beyond extension of our core
strategy, the future course for us must
branch out to a familiar path we have
not traveled the past few years. The
main artery of our journey will remain
paved with the success of existing
operations, but we must also
rediscover the trail leading to unit
expansion. Long-term growth targets
cannot be met without searching
alternative paths. We have spent the
past two years studying the map,
considering our options, and we are
prepared to move.
Intensification of efforts to acquire
established pawnshops will launch our
journey. Cash America is currently
recognized as the leading pawn
operator in the world and we want to
extend that lead. We also intend to
expand our presence in the short-term
cash advance market with the same
level of professionalism and customer
service orientation we brought to the
pawn industry. We have already
initiated a program to open Cash
America branded Payday Advance
outlets in the neighborhood strip
centers of a few select markets, and we
will consider acquiring independent
branches if the right opportunity
presents itself. Navigating the
expansion course can be challenging,
but I am confident we can do so
successfully.
So while I won’t debate Mr. Peters’
theories, I will argue that the course
we have set forth should lead Cash
America to a bright future of growing
shareholder value. We expect you to
hold us accountable for clear focus and
precise execution.
I will close with a personal note
acknowledging the inspiration and
guidance provided to me by Carl
Motheral, a founding Director of Cash
America. Carl passed away suddenly in
January of 2003, and you will find a
tribute to Carl’s memory on the inside
back cover of this report. I will miss
his tough questions, his constant
reminders that we all work for the
shareholders, and his laughter. I am
blessed to have known and worked
with Carl for the past eighteen years.
Thank you for your continuing
support.
Daniel R. Feehan
Chief Executive Officer
Cash America International, Inc.