Cash America 2007 Annual Report Download

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Advances
Cash America International, Inc.
2007 Annual Report

Table of contents

  • Page 1
    Advances Cash America International, Inc. 2007 Annual Report

  • Page 2
    ... names Cash America Pawn and SuperPawn. The Company also offers short-term cash advances in many of its locations, including 304 locations that offer this service under the brand names Cash America Payday Advance and Cashland. Short-term cash advances are also offered over the Internet to customers...

  • Page 3
    ...See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Financial Statements and Supplementary Data" for amounts related to the gain on the sale of foreign notes in 2007 and the... 06 07 03 04 05 06 07 $0 03 04 05 06 07 $0 Cash America International, Inc. 1

  • Page 4
    ... to managing repeat customers in a value despite achieving the records we had expected. And way that mitigates the risk of those customers falling into an while we fared better than many other financial stocks, extended cycle of debt. If loss rates escalate or we become 2 Cash America International...

  • Page 5
    ... your Reserve Bank of New York concluded that consumers in consideration of Cash America as a beacon of opportunity areas without access to payday loans experience increased in the midst of a currently stormy investment sector. credit problems, such as higher bounced check fees, more problems with...

  • Page 6
    ... customers have come to rely on us as a neighborhood financial resource, we've worked to give them access to a variety of financial tools. Today we offer cash advances and check cashing services in many pawn locations, as well as money orders, money transfers, stored value cards, insurance and...

  • Page 7
    ... would kill radio - but radio refused to die, advancing to fill an unanticipated niche. The ways we receive information continue to evolve according to our ever-changing lifestyle needs. Those same needs have paved the way for Cash America to serve an increasingly informed and diverse customer base...

  • Page 8
    ...short-term loan. The customer signs a promissory note and related documents and, in many cases, leaves a personal check for the loan amount plus fees. The customer has the option of paying off the loan in cash or allowing Cash America to deposit the check or electronically process the payment at the...

  • Page 9
    Cash America International, Inc. 7

  • Page 10
    ... As of year-end 2007, online cash advances represented $74 million in gross loan balances, and in July of 2007, Cash America began offering online service to customers in the United Kingdom with the launch of QuickQuid - demonstrating the ability to advance into new markets outside the United States...

  • Page 11
    ... alternative in a time of need. As the public becomes more educated about the favorable cost comparison of Cash America services, we're able to serve a larger and more diverse clientele. Offering small, short-term loans gives customers a lowercost option to high penalties or late fees because of the...

  • Page 12
    ... but today's employers need something more. Modern workers have advanced to offer insight and adaptability in our global workplace, and today's Cash America employees are at the top of their field, ensuring prompt and professional customer service at every point of contact. Workforces Advances in...

  • Page 13
    Cash America International, Inc. 11

  • Page 14
    12 Cash America International, Inc.

  • Page 15
    ... on pawn loans increased 8% to $161.0 million in 2007 compared to 2006, and cash advance fees increased 82% to $355.2 million during the same period. Products and items depicted on this page and preceding pages are representative of the previously owned merchandise offered for resale by Cash America...

  • Page 16
    ... Pawn, SuperPawn, CashNetUSA, Cashland and Cash America Payday Advance locations and market coverage as of December 31, 2007 Alaska Anchorage LENDING LOCATIONS As of December 31 PAWN 2007 2006 2005 Texas 199 Florida 68 Nevada 27 Tennessee 22 Louisiana 20 Arizona 18 Illinois 18 Georgia 17 Missouri...

  • Page 17
    Storefront and Internet Lending Internet Lending Only Storefront Lending Only No Lending Activity United Kingdom Ft. Wayne Omaha Cincinnati Winston-Salem Pensacola Cash America International, Inc. 15

  • Page 18
    ...182.86 212.26 423.62 * The Cash America 2007 Peer Group includes First Cash Financial Services, Inc., EZCORP, Inc., Dollar Financial Corp., QC Holdings, Inc., and Advance America, Cash Advance Centers, Inc. Source: SNL Financial LC, Charlottesville, VA Pre-Tax Income from Continuing Operations (in...

  • Page 19
    ...jurisdiction of incorporation or organization) 75-2018239 (I.R.S. Employer Identification No.) 1600 West 7th Street Fort Worth, Texas (Address of principal executive offices) 76102 - 2599 (Zip Code) Registrant's telephone number, including area code: (817) 335-1100 Securities Registered Pursuant...

  • Page 20
    ... Disclosure ...Item 9A. Controls and Procedures... 20 22 23 52 54 91 91 PART III Item 10. Directors, Executive Officers and Corporate Governance ...Item 11. Executive Compensation ...Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters...Item 13...

  • Page 21
    ... cashing centers. Many of the Company's pawn and cash advance locations also offer check cashing services and other retail financial services such as stored value cards, money orders and money transfers. Since its inception, the Company has grown by acquiring existing pawnshops and establishing new...

  • Page 22
    ... million from the sale of the notes and related rights. The Company's principal executive offices are located at 1600 West 7 th Street, Fort Worth, Texas 76102-2599, and its telephone number is (817) 335-1100. As used in this report, the term "Company" includes Cash America International, Inc. and...

  • Page 23
    ...to the Company and becomes merchandise available for disposition through the Company's pawnshops, wholesale sources, internet sales or through a major gold bullion bank. The Company does not record pawn loan losses or charge-offs because the amount advanced becomes the carrying cost of the forfeited...

  • Page 24
    .... Cash Advance Activities The Company's cash advance products are generally offered as single payment cash advance loans. These loans generally have a loan term of seven to 45 days and are generally payable on the customer's next payday. The Company originates cash advances in some of its locations...

  • Page 25
    ... its online platform. The Company offers short-term unsecured cash advances in many of its pawnshops, in standalone Cash America Payday Advance and Cashland locations, and, since its acquisition of CashNetUSA in September 2006, over the internet. As of December 31, 2007, a cash advance product was...

  • Page 26
    ... its pawnshop and payday advance locations. Other financial services include the sale of stored value cards, money orders, money transfers and auto insurance, among others. As of December 31, 2007, Mr. Payroll's operations consisted of 134 franchised and five companyowned check cashing centers in 18...

  • Page 27
    ... 31, 2007, the Company employed 5,501 persons in its operations, of whom 521 were in executive and administrative functions. Training. The Company provides extensive training to its store employees through training programs that are tailored to both pawn and cash advance lending locations, and...

  • Page 28
    ... acquisition candidates or sites on suitable terms, market conditions in the pawn or cash advance business, general economic conditions and other factors described in Item 1A - "Risk Factors" of this report. Among the primary factors that could affect the Company's future planned expansion are...

  • Page 29
    ... length of time after a loan default that a pawnshop must hold a pawned item before disposing of it. Some states require that pawn borrowers be notified before their pawned items can be offered for sale. Depending upon the severity of a violation, failure to observe a state's legal requirements for...

  • Page 30
    ...state licensing authority in order to offer the cash advance product in that state. Some states require cash advance lenders to report their customers' cash advance activities to a state-wide database, and such lenders are generally restricted from making cash advance loans to customers who may have...

  • Page 31
    ...") when the Company denies an application for credit. The NOAA must inform the applicant of: the action taken regarding the credit application; a statement of the ECOA's prohibition on discrimination; the name and address of both the creditor and the federal agency that monitors compliance with the...

  • Page 32
    ... Executive Vice President - Corporate Development Executive Vice President - Corporate Development Executive Vice President - General Counsel and Secretary Executive Vice President & Chief Operating Officer - Retail Services Division Daniel R. Feehan has been Chief Executive Officer and President...

  • Page 33
    ...Services Division in July 2007. Mr. Goldstein founded CashNetUSA in 2004 and was President and CEO from inception of the business until its sale to the Company. Prior to that, Mr. Goldstein was part of Deutsche Bank's Leveraged Finance practice in New York and worked on various secured and unsecured...

  • Page 34
    ... Kelly, Hart & Hallman, P.C., Fort Worth, Texas, for five years. He received his law degree from the University of Kansas School of Law in 1990. Dennis J. Weese joined the Company as Executive Vice President & Chief Operating Officer - Retail Services Division in September 2007. Prior to joining the...

  • Page 35
    ... quality and consistency, the Company could lose customers and related revenue from those products or services. The Company also uses third parties to support and maintain certain of its communication systems and computerized point-of-sale and information systems. The failure of such third parties...

  • Page 36
    ... retailers of new merchandise, retailers of pre-owned merchandise, other pawnshops, thrift shops, online retailers and online auction sites. Increased competition or aggressive marketing and pricing practices by these competitors could result in decreased revenues, margins and turnover rates in the...

  • Page 37
    x Adverse real estate market fluctuations could affect the Company's profits. The Company leases most of its locations. A significant rise in real estate prices could result in an increase in store lease costs as the Company opens new locations and renews leases for existing locations. The Company...

  • Page 38
    ... 31, 2007, the Company owned the real estate and buildings for nine of its pawnshop locations. The Company's headquarters are located in a nine-story building adjacent to downtown Fort Worth, Texas. The Company purchased its headquarters building in January 1992. CashNetUSA's cash advance operations...

  • Page 39
    .... Community State Bank ("CSB") for some time made loans to Georgia residents through Cash America's Georgia operating locations. The complaint in this lawsuit claims that Cash America was the true lender with respect to the loans made to Georgia borrowers and that CSB's involvement in the process is...

  • Page 40
    ... II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES (a) Market for Registrant's Common Equity The New York Stock Exchange is the principal exchange on which Cash America International, Inc. common stock is traded under the symbol...

  • Page 41
    ... shares received as partial tax payments for shares issued under stock-based compensation plans of 2,852 and 6,798 shares for the months of January and February, respectively. (3) Include shares purchased on behalf of participants relating to the Company's Non-Qualified Savings Plan of 325, 418, and...

  • Page 42
    ... and Results of Operations" and "Financial Statements and Supplementary Data" for amounts related to the gain on the sale of foreign notes in 2007 and the gain from the early termination of a lease contract in 2006. (c) Includes cash advance locations only. (d) Mr. Payroll locations only. 22

  • Page 43
    ... price of approximately $35.9 million in cash at closing and transaction costs of approximately $2.9 million. As of December 31, 2007, the Company had 942 total locations offering products and services to its customers. The Company operates in three segments: pawn lending, cash advance and check...

  • Page 44
    ... product valuation system as well as catalogs, "blue books," newspapers, internet research and previous experience with similar items. The Company performs a physical count of its merchandise in each location on a cyclical basis and reviews the composition of inventory by category and age in order...

  • Page 45
    .... Since cash advances are unsecured, unlike pawn loans, the portfolio's performance depends on the Company's ability to collect on defaulted loans. The Company believes it effectively manages the risks inherent in this product by utilizing a variety of underwriting criteria to evaluate prospective...

  • Page 46
    ... in earnings at each subsequent reporting date. Upfront costs and fees related to items for which the fair value option is elected shall be recognized in earnings as incurred and not deferred. SFAS 159 will be effective for fiscal years beginning after November 15, 2007. The Company does not expect...

  • Page 47
    ... statements of operations as a percentage of total revenue for the periods indicated. Year Ended December 31 2007 2006 2005 Revenue Finance and service charges ...Proceeds from disposition of merchandise...Cash advance fees ...Check cashing fees, royalties and other ...Total Revenue ...Cost...

  • Page 48
    ... of year, owned ...Acquired ...Start-ups ...Combined or closed ...End of year, owned ...Franchise locations at end of year...Total pawnshop locations at end of year...Average number of owned pawnshop locations in operation ...Cash advances (b) Pawn locations offering cash advances at end of year...

  • Page 49
    ... cash advance customer balances due (gross) (a) (f) ...Cash advance locations in operation - Beginning of year ...Acquired ...Start-ups...Combined or closed ...End of year ...Average number of cash advance locations in operation ...Internet lending operations: Amount of cash advances written...

  • Page 50
    ... advance customer balances due (gross): Owned by the Company (c) ...Owned by third-party lenders (a) (d)...Aggregate cash advance balances due (gross) (a) (f) ...Total locations offering cash advances at end of year ...Average total locations offering cash advances ...Number of states with online...

  • Page 51
    ... ...Total revenue (c) ...Face amount of checks cashed: Company-owned locations...Franchised locations (a) ...Combined face amount of check cashed (a) ...Fees collected from customers: Company-owned locations (c) ...Franchised locations (a) ...Combined fees collected from customers (a) ...Fees as...

  • Page 52
    ... of the cash advance products to consolidated net revenue during each of the three years of 2007, 2006 and 2005. Net revenue related to cash advance fees eclipsed pawn related net revenue, defined as finance and service charges on pawn loans plus the profit from disposition of merchandise, to become...

  • Page 53
    ... from check cashing fees, royalties and other, which increased $516,000. Net revenue from pawn lending operations includes finance and service charges and profit from disposition of merchandise, both of which increased in 2007 as compared to 2006, as well as cash advance fees from pawn locations...

  • Page 54
    ... average number of pawn loans outstanding during 2007. Management believes that the decrease in the average number of pawn loans outstanding could be related to the fact that higher advance rates on loans secured by gold collateral, such as jewelry, can allow customers to reduce the number of loans...

  • Page 55
    ..., the Company arranges for customers to obtain cash advance products from independent third-party lenders for a fee. Cash advance fees from same stores (both pawn and cash advance locations in business during the entire 24 month period ended December 31, 2007) increased $3.6 million, or 2.2%, to...

  • Page 56
    ...the Company's pawn and cash advance locations and through the Company's internet distribution channel. Management anticipates continued growth in consolidated cash advance fees for fiscal 2008, primarily due to increased consumer awareness and demand for the cash advance product, higher outstanding...

  • Page 57
    Check Cashing Fees, Royalties and Other. Check cashing fees, royalties and other income increased $516,000 to $16.4 million in 2007, or 3.2%, from $15.9 million in 2006, primarily due to expanded product offerings and their success in pawn locations and revenue growth in cash advance units. However,...

  • Page 58
    ... six months of 2007 due to a significant increase in new customers over that period as a result of opening new markets for the online distribution channel in late 2006 and early 2007. Due to the short-term nature of the cash advance product and the high velocity of loans written, seasonal trends...

  • Page 59
    ... histories as a percent of all customers in the later half of the year. This change in mix was primarily in the portfolio of cash advances originated by the Company's online channel. In addition, management took steps to reduce losses in its storefront business beginning in the last half of 2007...

  • Page 60
    ...the Company's pawn and cash advance locations and through the Company's internet distribution channel. During 2007, the Company's online distribution channel sold selected cash advances which had been previously written off. These sales generated proceeds of $4.2 million related to loans originated...

  • Page 61
    ... open market pursuant to an existing share repurchase authorization. Income Taxes. The Company's effective tax rate for continuing operations for 2007 was 36.4% as compared to 36.6% for 2006. The Company recognized a $1.1 million one-time deferred Texas margin tax credit, net of the federal income...

  • Page 62
    ... and service charges from pawn loans, which increased $9.7 million; profit from the disposition of merchandise, which increased $12.7 million; cash advance fees generated from cash advance locations, pawn locations and the internet distribution channel increased $53.0 million; and check cashing fees...

  • Page 63
    ... prevailing market prices of gold, which in turn caused the hedge-adjusted selling price per ounce to increase 25.6% in 2006 compared to 2005. The Company also experienced an 11.6% increase in the volume of refined gold sold during 2006, which was generally in line with the increase in pawn loan...

  • Page 64
    ... the Company's internet distribution channel. Cash advance fees related to cash advances originated by all third-party lenders (bank and nonbank) were $61.6 million in 2006 on $360.6 million in cash advances originated by third-party lenders, representing 31.1% of combined cash advance revenue and...

  • Page 65
    .... In order to address the short-term credit needs of customers who no longer had access to the banks' cash advance product, the Company began offering an alternative short-term credit product in selected markets in 2005. On July 1, 2005, the Company introduced a credit services organization program...

  • Page 66
    ... at the Company's collection centers, the acquisition of CashNetUSA and normal recurring salary adjustments. The increase in occupancy expense was primarily due to unit additions, higher utility costs and property taxes. The Company realigned its administrative activities during 2007 to create more...

  • Page 67
    ... by the Company in its pawn and cash advance locations and through the Company's internet distribution channel. (b) Non-GAAP presentation. For informational purposes and to provide a greater understanding of the Company's businesses. Management believes that information provided with this level of...

  • Page 68
    ... senior notes due 2021 payable in eleven annual payments of $2.3 million beginning December 19, 2011. Net proceeds received from the issuance of the notes were used to reduce the amount outstanding under the bank line of credit and for general corporate purposes. Interest Income. Interest income was...

  • Page 69
    ... activities in 2007 as compared to 2006 was primarily due to the improvement in results of pawn lending operations, the addition of CashNetUSA and the growth and development of cash advance locations opened in recent periods. Historically, the Company's finance and service charge revenue is highest...

  • Page 70
    ... at this time. Management expects the implementation of the new point-of-sale system, which will occur during 2008, will result in a substantial increase in depreciation expense. Cash flows from financing activities. During 2007, the Company borrowed $90.1 million under its bank lines of credit. The...

  • Page 71
    ... obtain cash advance products from multiple independent third-party lenders through the CSO program. As of December 31, 2007, the CSO program was available to consumers in 319 of the Company's lending locations and online borrowers located in the states of Florida and Texas. When a consumer executes...

  • Page 72
    ...the actions of third parties who offer products and services at the Company's locations, fluctuations in the price of gold, changes in competition, the ability of the Company to open new operating units in accordance with its plans, economic conditions, real estate market fluctuations, interest rate...

  • Page 73
    ... pounds were established in 2007 to minimize the effect of market fluctuations. A hypothetical 10% decline in the exchange rate of the British pound at December 31, 2007 would have decreased net income by $171,000. In addition, the notes receivable received in the sale of the Company's foreign...

  • Page 74
    ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm ...55 Report of Management on Internal Control over Financial Reporting ...56 Consolidated Balance Sheets - December 31, 2007 and 2006 ...57 ...

  • Page 75
    ... their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting...

  • Page 76
    ... internal control over financial reporting as of December 31, 2007 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in this Form 10-K. /s/ DANIEL R. FEEHAN Daniel R. Feehan President and Chief Executive Officer...

  • Page 77
    CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share data) December 31, 2007 2006 Assets Current assets: Cash and cash equivalents...Pawn loans ...Cash advances, net ...Merchandise held for disposition, net ...Finance and service charges ...

  • Page 78
    CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) Year Ended December 31, 2006 2005 2007 Revenue Finance and service charges ...$ Proceeds from disposition of merchandise ...Cash advance fees ...Check cashing fees, royalties and...

  • Page 79
    CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands, except share data) Year Ended December 31, 2006 Shares Amount 30,235,164 $ 3,024 156,557 (2,765) 2,623 5,268 161,683 229,975 60,940 (2,953) 287,962 Shares Common stock Balance at end of ...

  • Page 80
    ...) under bank line of credit...Issuance of long-term notes ...Debt issuance costs paid...Payments on notes payable and other obligations...Payments on notes receivable secured by common stock ...Proceeds from exercise of stock options ...Excess income tax benefit from stock-based compensation...

  • Page 81
    ...pawn loan portfolio generates finance and service charges revenue. A related activity of the pawn lending operations is the disposition of merchandise, primarily collateral from unredeemed pawn loans. The Company also offers unsecured cash advances in selected lending locations and over the internet...

  • Page 82
    ... of cost (cash amount loaned) or market. Revenue is recognized at the time that merchandise is sold. Interim customer payments for layaway sales are recorded as customer deposits and subsequently recognized as revenue during the period in which the final payment is received. Cash Advances x Cash...

  • Page 83
    ... derived from franchise locations on an accrual basis. Revenues derived from other financial services such as money order commissions, prepaid debit card fees, etc. are recognized when earned. Allowance for Losses on Cash Advances x In order to manage the portfolio of cash advances effectively, the...

  • Page 84
    CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Property and Equipment x Property and equipment is recorded at cost. The cost of property retired or sold and the related accumulated depreciation are removed from the accounts, and any resulting...

  • Page 85
    ... and marketing that are directly related to the pawn lending, cash advance and check cashing operations. These costs are incurred within the lending locations and the Company's call centers for customer service and collections. In addition, similar costs related to non-home office management...

  • Page 86
    CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Position FAS 123(R)-3, "Transition Election Related to Accounting for Tax Effects of Share-Based Awards" ("FSP FAS 123 (R)-3"), the "short-cut method" to determine its pool of windfall tax ...

  • Page 87
    ... operations available to common stockholders ...Net income available to common shareholders ...Denominator: Total weighted average basic shares(1) ...Effect of shares applicable to stock option plans...Effect of restricted stock unit compensation plans ...Total weighted average diluted shares...

  • Page 88
    ... markets with new customers and new financial services, on September 15, 2006, the Company, through its wholly-owned subsidiary Cash America Net Holdings, LLC, purchased substantially all of the assets of The Check Giant LLC ("TCG"). TCG offered short-term cash advances exclusively over the internet...

  • Page 89
    CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) determined at the March 31 and September 30, 2007 measurement dates were calculated at 5.5 times trailing twelve month earnings. As of December 31, 2006, the purchase price of CashNetUSA, ...

  • Page 90
    ... the internet. The cash advance products are generally offered as single payment cash advance loans. These cash advance loans typically have a term of 7 to 45 days and are generally payable on the customer's next payday. The Company originates cash advances in some of its locations and online. It...

  • Page 91
    ...borrower. The Company discontinued offering single payment third-party bank-originated cash advances to its Texas, Florida and North Carolina customers in January 2006, discontinued offering single and multipayment third-party bank-originated cash advances to its Georgia customers in April 2006, and...

  • Page 92
    ...'s participation interest in unrelated thirdparty lender originated cash advances was $-0- at December 31, 2007 and 2006. As of December 31, 2005, the Company held participation interests of $2.6 million related to programs funded through banks. 5. Property and Equipment Major classifications of...

  • Page 93
    CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) initial and the subsequent annual impairment tests, management determined that there have been no impairments. Goodwill x Changes in the carrying value of goodwill for the years ended December 31...

  • Page 94
    ... plus a margin or at the agent's base rate. The margin on the line of credit varies from 0.875% to 1.625% (1.125% at December 31, 2007), depending on the Company's cash flow leverage ratios as defined in the amended agreement. The Company also pays a fee on the unused portion ranging from 0.25% to...

  • Page 95
    CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) At December 31, 2007 and 2006, borrowings under the Company's bank line of credit consisted of three pricing tranches with conclusion dates ranging from 1 to 32 days, respectively. However, ...

  • Page 96
    ... and service charges...Allowance for cash advance losses...Valuation of notes receivable - sale of discontinued operations ...Deferred compensation ...Net capital losses...Deferred state credits ...Other ...Total deferred tax assets...Deferred tax liabilities: Amortization of acquired intangibles...

  • Page 97
    CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The effective tax rate on income from continuing operations differs from the federal statutory rate of 35% for the following reasons ($ in thousands): 2007 Tax provision computed at the federal ...

  • Page 98
    .... Community State Bank ("CSB") for some time made loans to Georgia residents through Cash America's Georgia operating locations. The complaint in this lawsuit claims that Cash America was the true lender with respect to the loans made to Georgia borrowers and that CSB's involvement in the process is...

  • Page 99
    ...at this time. On October 23, 2007, a complaint, styled Ryan Bonner, individually and on behalf of all others similarly situated, v. Cash America International, Inc., Cash America Net of Nevada, LLC, Cash America Net of Pennsylvania, LLC and Cash America of PA, LLC, d/b/a CashNetUSA.com (collectively...

  • Page 100
    ... payment of taxes for shares issued under stock-based compensation plans. On April 20, 2005, the Company's Board of Directors authorized management to purchase up to a total of 1,500,000 shares of its common stock from time to time in open market transactions and terminated the existing open market...

  • Page 101
    ... another executive officer also paid a total of $985,000 (including accrued interest) to fully repay similar officer stock loans. 12. Employee Benefit Plans The Cash America International, Inc. 401(k) Savings Plan is open to substantially all employees. Beginning January 1, 2006, new employees are...

  • Page 102
    ...the Internal Revenue Code of 1986, as amended), nonqualified stock options and restricted stock units. At December 31, 2007, 1,197,904 shares were reserved for future grants under these equity compensation plans. Historically, the Company has purchased its shares on the open market from time to time...

  • Page 103
    CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) A summary of the Company's stock option activity for each of the three years ended December 31 is as follows (shares in thousands): 2007 Weighted Average Exercise Price Shares Outstanding at ...

  • Page 104
    CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2006 and 2005, respectively, for all of the above restricted stock units granted. Total unrecognized compensation cost related to restricted units at December 31, 2007 was $6.5 million which will...

  • Page 105
    ...): Year Ended December 31, 2007: Revenue Finance and service charges ...Proceeds from disposition of merchandise ...Cash advance fees...Check cashing fees, royalties and other ...Total revenue...Cost of revenue - disposed merchandise...Net revenue ...Expenses Operations...Cash advance loss provision...

  • Page 106
    ... AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Year Ended December 31, 2005: Revenue Finance and service charges...Proceeds from disposition of merchandise...Cash advance fees ...Check cashing fees, royalties and other ...Total revenue ...Cost...

  • Page 107
    CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) As of December 31, 2007: Total assets...Goodwill ... $ 123,760 $ 44,618 $ 180,410 $ 112,737 $304,170 $157,355 Year Ended December 31, 2006: Revenue Cash advance fees...Check cashing fees, ...

  • Page 108
    ...the Company's Chief Executive Officer exercised stock options and sold Company shares under the Plan. The Chief Executive Officer used proceeds from the sales of shares under the Plan to fully repay his pre-2003 secured loan under the Company's now discontinued officer stock loan program and accrued...

  • Page 109
    CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company's bank credit facility bears interest at a rate that is frequently adjusted on the basis of market rate changes. The fair values of the remaining long-term debt instruments are ...

  • Page 110
    CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) During the second quarter of 2007, $5 was reclassified from administrative expenses to other income. The first quarter amounts included above have been conformed to the current presentation. The...

  • Page 111
    ...accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. The Report of Management on Internal Control Over Financial Reporting is included in Item 8 of this annual report on Form...

  • Page 112
    ... 2007, Daniel R. Feehan, Chief Executive Officer of the Company, filed his annual certification with the New York Stock Exchange ("NYSE") regarding the NYSE's corporate governance listing standards as required by Section 303A.12 of those listing standards. ITEM 11. EXECUTIVE COMPENSATION Information...

  • Page 113
    ... authorized, on February 29, 2008. CASH AMERICA INTERNATIONAL, INC. By: /s/ DANIEL R. FEEHAN Daniel R. Feehan Chief Executive Officer and President Pursuant to the requirements of the Securities and Exchange Act of 1934, the report has been signed by the following persons on February 29, 2008 on...

  • Page 114
    ... STATEMENT SCHEDULE To the Board of Directors and Stockholders of Cash America International, Inc. Our audits of the consolidated financial statements and of the effectiveness of internal control over financial reporting referred to in our report dated February 20, 2008 appearing in this Annual...

  • Page 115
    SCHEDULE II CASH AMERICA INTERNATIONAL, INC. VALUATION ACCOUNTS For the Three Years Ended December 31, 2007 (dollars in thousands) Balance at Beginning of Period Additions Charged Charged To To Expense Other Balance at End of Period Description Allowance for losses on cash advances - Year Ended: ...

  • Page 116
    ... and Restated Executive Employment Agreement between the Company and Mr. Feehan dated as of January 21, 2004. (q) (Exhibit 10.30) 2004 Long-Term Incentive Plan (r) (Exhibit 10.21) Amendment One (January 25, 2006) to the Cash America International, Inc. 2004 Long-Term Incentive Plan. (t) (Exhibit 10...

  • Page 117
    ...'s Code of Business Conduct and Ethics may be accessed via the Company's website at www.cashamerica.com. Subsidiaries of Cash America International, Inc. Consent of PricewaterhouseCoopers LLP. Certification of Chief Executive Officer. Certification of Chief Financial Officer. Certification of Chief...

  • Page 118
    ... Holding, Inc...Mr. Payroll Corporation...Express Cash International Corporation...Cash America of Missouri, Inc...Vincent's Jewelers and Loan, Inc...Cash America, Inc. of Utah ...Cash America Franchising, Inc...Cash America Financial Services, Inc...Cash America, Inc. of Illinois...Uptown City...

  • Page 119
    ...LLC ...Cash America Net of Missouri, LLC ...Cash America Net of Montana, LLC ...Cash America Net of Nebraska, LLC ...Cash America Net of Nevada, LLC ...Cash America Net of New Hampshire, LLC ...Cash America Net of New Mexico, LLC...CashNetUSA CO, LLC ...CashNetUSA, OR, LLC ...The Check Giant NM, LLC...

  • Page 120
    ...the effectiveness of internal control over financial reporting, which appears in this Form 10-K. We also consent to the incorporation by reference of our report dated February 20, 2008 relating to the financial statement schedule, which appears in this Form 10-K. Fort Worth, Texas February 20, 2008

  • Page 121
    ... information; and any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. b) Date: February 29, 2008 /s/ Daniel R. Feehan Daniel R. Feehan Chief Executive Officer and President

  • Page 122
    ...fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. b) Date: February 29, 2008 /s/ Thomas A. Bessant, Jr. Thomas A. Bessant, Jr. Executive Vice President and Chief Financial Officer

  • Page 123
    ... connection with the Annual Report of Cash America International, Inc. (the "Company") on Form 10-K for the year ended December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Daniel R. Feehan, Chief Executive Officer and President of the Company...

  • Page 124
    ...with the Annual Report of Cash America International, Inc. (the "Company") on Form 10-K for the year ended December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas A. Bessant, Jr., Executive Vice President and Chief Financial Officer of the...

  • Page 125
    ... President Corporate Development Dennis J. Weese Executive Vice President Chief Operating Officer Retail Services Division Other Information Corporate Address Cash America International Building 1600 West 7th Street Fort Worth, Texas 76102-2599 (817) 335-1100 www.cashamerica.com www.cashnetusa...

  • Page 126
    Cash America International, Inc. 1600 West 7th Street Fort Worth, Texas 76102-2599 (817) 335-1100 www.cashamerica.com www.cashnetusa.com www.quickquid.co.uk www.cashlandloans.com