Cash America 2003 Annual Report Download - page 6

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In my previous role as President and current capacity as Chief
Executive Officer, I have penned the last fifteen annual Letters to
Shareholders appearing in Cash America’s Annual Reports.
Composing a celebratory and encouraging message for our
shareholders has been more difficult in some years than others.
During those fifteen years, we have enjoyed our share of good
fortune and endured a few periods of disappointing results, mostly
of our own making. For the most part, the market has viewed us
with respect and admiration, although I suspect a shareholder or
two along the way may have suggested a less appealing descriptor.
Regardless, as I sit here today to compose my sixteenth message, I
have never felt more comfortable blending the joy of a great year
just past with the excitement of the road ahead. And, I have been
doing this long enough to understand that both current
shareholders and potential new investors are
more interested in the view through the
windshield than the images captured in the
rearview mirror. Consequently, this message
will be more anticipatory than celebratory.
First, we must take a moment to celebrate
the good news of 2003. The crisp and precise
execution of the 3,800-member team at Cash
America is once again the cornerstone of a
record-breaking performance. Your Company
surpassed a number of significant milestones in
2003, including breaking the $400 million
revenue barrier, passing $30 million in
earnings, eclipsing a $1 per share in earnings,
and posting the highest year-ending share value in our history.
The other good news from 2003 is that we are now back in
the unit expansion game. Building on the cornerstone of
execution, we once again feel safe adding the building blocks of
new units in both the pawn and cash advance arenas. Following
five years of a relatively stable unit count, we invested
approximately $70 million to add 171 new units in 2003. The
August acquisition of Cashland, an Ohio-based consumer finance
business, provided 121 of these units. Following the acquisition,
Cashland opened 14 additional units offering short-term cash
advances, check cashing, money orders and money transfer
services. Our U.S. business added 8 pawnshops and 17 of their own
short-term cash advance units. The balance of the growth came
from our foreign lending segment.
The final piece of good news for our shareholders relating to
2003 is a confirmation that your management team is not
particularly enamored with its success. Our celebration of 2003
results ended quickly. Sure, we are proud of what has been
accomplished since adoption of our “back to basics” strategy in
2000. But we also recognize that the bar has been raised following
successive record years. In a recent internal newsletter distributed
to our entire workforce, I challenged everyone to elevate their
level of anxiety about our future by sharing a paraphrased quote
from the sixth-century Chinese philosopher Lao-Tzu who wrote,
“If you wish to stay out in front, then act like you’re behind.”
That quote is a perfect segue to the anticipatory part of
this message.
Gazing through the windshield, we find a panoramic view of
opportunities we could not have considered a few short years ago –
opportunities that now appear on the horizon as a result of the
burgeoning wants and needs of the working middle class coupled
with the continuing migration of mainstream financial institutions
toward mega-mergers and away from neighborhood lending. The
banks, thrifts, credit unions and large finance companies all have
sound business reasons for stepping away from a
business they simply can’t handle profitably – a
business that is labor intensive, risky and
dependent on attentive service. This retreat that
began about 20 years ago now finds the
mainstream lenders at a point where regulations
and thin margins have led to cultural and
structural changes that have rendered them
incapable of fully servicing households with
incomes below $50,000. I see no political will to
alter the regulatory environment for these
institutions, and I have seen little movement
toward altering the cultural bias against
developing relationships with the neighborhood
plumber, nurse, mechanic or third-grade teacher.
Consequently, I believe the opportunities for Cash America
will continue to grow regardless of the ebb and flow of GDP
growth and unemployment rates. Sure, factors we don’t control,
such as short-term interest rates, gold prices, currency rates and the
general state of the economy, will always influence near-term
results – sometimes positively and sometimes negatively. But I
believe the long-term prospects for our business are undeniable.
From our formation almost 20 years ago, we have been providing a
financial bridge helping ordinary people navigate the treacherous
waters of overdue bills, unexpected expenses and the discretionary
choice of providing an occasional treat for themselves or a loved
one. The segment of the population we serve is expanding at a
faster rate than the overall population, and the economic
bifurcation of society is growing more divisive. I believe the course
we have set will ultimately transform our role from a niche player
to a mainstream provider.
Today, our offerings provide our customers with the freedom of
choice to cross the bridge of secured pawn loans or the bridge of
unsecured cash advances. This double-barrel offering has allowed
To My Fellow Shareholders:
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