Cash America 2007 Annual Report Download - page 55

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consolidated merchandise turnover rate was 2.7 times in both 2007 and 2006. Management expects that
profit margin on the disposition of merchandise in the near term will likely remain at or slightly below
current levels mainly due to higher inventory levels and an increase in the percentage mix of refined gold
sales, which typically have lower gross profit margins.
The table below summarizes the age of merchandise held for disposition before valuation allowance
of $2.0 million and $1.9 million, respectively, at December 31, 2007 and 2006 ($ in thousands).
2007 2006
Amount % Amount %
Merchandise held for 1 year or less –
Jewelry .................................................................. $ 60,702 60.6% $ 52,087 58.6%
Other merchandise................................................. 29,437 29.4 28,302 31.8
90,139 90.0 80,389 90.4
Merchandise held for more than 1 year –
Jewelry .................................................................. 6,264 6.3 5,280 5.9
Other merchandise................................................. 3,731 3.7 3,261 3.7
9,995 10.0 8,541 9.6
Total merchandise held for disposition.............. $ 100,134 100.0%$ 88,930 100.0%
Cash Advance Fees. Cash advance fees increased $160.1 million, or 82.1%, to $355.2 million in 2007 as
compared to $195.1 million in 2006. The increase in revenue from cash advance fees is predominantly due
to the increase in customers using the Company’s online distribution channel, and to a lesser extent, the
increase and growth of storefront locations. As of December 31, 2007, cash advance products were
available in 735 lending locations, including 431 pawnshops and 304 cash advance locations. In 319 of
these lending locations, 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 $165.2 million in 2007 compared to $161.6 million in 2006.
Cash advance fees include revenue from the cash advance portfolio owned by the Company and
fees paid to the Company for arranging cash advance products from independent third-party lenders for
customers. See further discussion in Note 4 of Notes to Consolidated Financial Statements. (Although cash
advance transactions may take the form of loans or deferred check deposit transactions, the transactions are
referred to throughout this discussion as “cash advances” for convenience.)
The following table sets forth cash advance fees by operating segment for the years ended
December 31, 2007 and 2006 ($ in thousands):
2007 2006 Inc./(Dec.)
Cash advance operations – storefront ............................. $ 128,454 $ 120,946 $ 7,508 6.2%
Cash advance operations – internet lending ................... 184,724 30,483 154,241 506.0
Total cash advance operations .................................... $ 313,178 $ 151,429 $ 161,749 106.8%
Pawn lending operations................................................. 42,018 43,676 (1,658) (3.8)
Consolidated cash advance fees ................................. $ 355,196 $ 195,105 $160,091 82.1%
The dollar value of cash advances written increased $847.2 million, or 71.9% to $2.0 billion in 2007
from $1.2 billion in 2006. These amounts include $654.8 million in 2007 and $360.6 million in 2006
extended to customers by all independent third-party lenders. The average amount per cash advance
increased to $413 from $381 primarily due to the mix within the portfolio (with a larger percent in markets
allowing for larger loans) and adjustments to underwriting criteria. The outstanding combined portfolio
balance of cash advances increased $24.2 million, or 19.5%, to $148.4 million at December 31, 2007 from