Cash America 2007 Annual Report Download - page 52

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32
OVERVIEW
Components of Consolidated Net Revenue. Consolidated net revenue is total revenue reduced by the cost
of merchandise sold in the period. It represents the income available to satisfy expenses and is the measure
management uses to evaluate top line performance. The components of consolidated net revenue are:
finance and service charges from pawn loans, profit from the disposition of merchandise, cash advance fees,
and other revenue. Other revenue is comprised mostly of check cashing fees but includes royalties and
small miscellaneous other revenue items. Growth in cash advance fees has increased the related
contribution 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 the
largest component of net revenue in 2007. The growth in cash advance fees is primarily attributable to
higher average balances, the addition of new units and the addition of cash advances made over the internet
beginning in mid-September of 2006. Net revenue from pawn lending activities contributed 45.6%, 56.9%
and 62.2% of net revenue for 2007, 2006 and 2005, respectively. The following graphs show consolidated
net revenue and depict the mix of the components of net revenue for the years ended December 31, 2007,
2006 and 2005:
Contribution to Increase in Net Revenue. The Company’s net revenue increased 39.4% and 18.8% for
the years ended December 31, 2007 and 2006, respectively, compared to the prior year periods. Cash
advance fees have contributed the majority of the increase primarily because of the additional revenue and
subsequent growth in revenue that followed the September 2006 acquisition of a business offering cash
advances over the internet. In addition, higher average balances owed by customers, and the growth and
development of newly opened cash advance locations contributed to the increase. As illustrated below,
these increases represented 82.9% of the overall increase in net revenue from 2006 to 2007 and 68.3% of the
Company’s overall increase in net revenue from 2005 to 2006. The increase in aggregate pawn related net
revenue, including both finance and service charges and profit from the disposition of merchandise,
contributed 16.8% of the year over year increase in net revenue for 2007 compared to 28.9% of growth in
2006.
While the percentage of pawn lending operations’ contribution to the growth in consolidated net
revenue was smaller in the years ended December 31, 2007 and 2006 than in each of the respective prior
years, net revenue from pawn lending activities increased 9.6% and 8.2% for the years ended December 31,
2007
$682.6 million
22.0%
26.4% 28.3%
33.9%
3.3%
34.5%
30.5%
23.6%
3.2%2.4%
39.9%
52.0%
2006
$489.6 million
2005
$412.0 million
Finance and service charges
Profit from the disposition
of merchandise
Cash advance fees
Other revenue