Cash America 2007 Annual Report Download - page 28

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established pawnshops have ranged from $385,000 to $410,000, with an average estimated cost per location
of approximately $400,000 in 2007. This amount does not include merchandise transferred from other
locations, funds to advance on pawn loans and cash advances or operating expenses. The start-up costs for
recently established cash advance locations have ranged from $75,000 to $150,000, with an average
estimated cost per location of approximately $100,000 in 2007. This amount does not include funds to
advance on cash advances or operating expenses.
The Company’s expansion program is subject to numerous unpredictable factors, such as the
availability of attractive 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:
xStatutory Requirements. The Company’s ability to add start-up locations depends on the Company’s
ability to obtain all necessary licenses required to open. In addition, the current statutory and regulatory
environment of some states renders expansion into those states impractical. See “Business –
Regulation.”
xAvailability of Real Estate. The Company’s ability to add start-up locations is subject to locating
satisfactory real estate sites on terms and conditions acceptable to the Company. Factors that could
limit the availability of acceptable real estate sites could include changes in general economic
conditions, increases in real estate values or market rents, increases in competition for suitable real
estate, changing demographics in surrounding areas, restrictive zoning or sign ordinances, limited
visibility or accessibility to public streets, and excessive finish-out costs, among other factors.
xCompetition. Several competing pawnshop and cash advance companies are also pursuing expansion
and acquisition programs. A number of smaller companies and private equity firms have also entered
the market, particularly for cash advance businesses. While the Company believes that it is the largest
pawnshop operator in the United States, and one of the largest cash advance operators, there can be no
assurance that it will be more successful than its competitors in pursuing acquisition opportunities and
securing attractive start-up locations. Increased competition could also increase prices for attractive
acquisition candidates, and could also adversely affect the performance of potential acquisition targets.
xAvailability of Qualified Unit Management Personnel. The Company’s ability to expand may also be
limited by the availability of qualified unit management personnel. While the Company seeks to train
its existing personnel to enable those capable to assume management positions, there can be no
assurance that sufficient qualified personnel will be available to satisfy the Company’s needs with
respect to its planned expansion.
xCapital Requirements. In some states, the Company is required by law to maintain a minimum amount
of certain unencumbered net assets per licensed location. The Company’s expansion plans will
therefore be limited in these states to the extent the Company is able to maintain these required levels of
unencumbered net assets. At present, these requirements do not limit the Company’s growth
opportunities.
Competition
While pawnbroking is a time-honored industry, the pawnshop industry in the United States remains
very fragmented, with approximately 10,000 to 15,000 stores nationwide. Most pawnshops are owned by
independent operators. The three largest publicly traded pawnshop companies operate approximately 900
total pawnshops in the United States. Management continues to believe that the Company can achieve
economies of scale and increased operating efficiencies by increasing the number of stores under operation
and utilizing modern point-of-sale systems and proven operating methods.