Cash America 2008 Annual Report Download - page 32

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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 combine classroom
instruction, video and online presentations, and on-the-job training. A new employee is introduced to the
business through an orientation program and through training programs covering job-appropriate topics such
as pawn lending, cash advances, layaways, merchandising, collections, anti-money laundering, compliance,
and general administration of unit operations. The experienced store employee receives additional training
and an introduction to the fundamentals of management to acquire the skills necessary to move into
management positions within the organization. Manager training involves a program that includes
additional management principles and more extensive training in topics such as income maximization,
recruitment, merchandise control, and cost efficiency.
Future Expansion
The Company has expanded both by acquiring existing pawnshops and cash advance locations
(collectively referred to as “lending locations”) from others and by establishing new start-up locations. The
Company intends to continue to increase the number of lending locations oriented more specifically to pawn
lending locations. Its business strategy is to continue expanding its lending business within its existing
geographic markets and into other markets that meet its risk/reward considerations. Management believes
that such expansion will continue to provide economies of scale in supervision, purchasing, administration
and marketing by decreasing the overall average cost of such functions per unit owned. By concentrating
multiple lending units in regional and local markets, the Company seeks to expand market penetration,
enhance name recognition and reinforce marketing programs.
Since acquiring CashNetUSA, the Company is also actively exploring strategies to increase and
enhance its online presence, with the goal of becoming the premier online cash advance provider. The
Company continues to evaluate new markets in which to establish its online presence, similar to its entry
into the United Kingdom during 2007. The Company also recently began testing an online installment loan
product in the States of New Mexico and Illinois. The Company intends to continue evaluating and offering
new products and services that complement its specialty financial services both at its physical lending
locations and online in order to meet the growing financial services needs of its customers.
When considering acquiring an existing lending location, the Company evaluates the annual volume
of loan transactions at that location, the carrying cost of merchandise, outstanding loan balances and lease
terms of the facility or, if it is to be purchased, the facility’s fair market value. When considering the startup
of a new lending location, the Company evaluates the location of the prospective site, whether conditions in
the surrounding community indicate a sufficient level of potential customers, and whether a suitable facility
is available on acceptable terms.
A new pawnshop can be ready for business within four to six weeks and a new cash advance
location can be ready within two to four weeks after the Company has leased or acquired a suitable location
and obtained a license. The finish-out of a new location includes the completion of counters, installation of
vaults and a security system and, for pawnshop locations, the transfer of merchandise from other locations.
The approximate start-up costs, which consist of the investment in property and equipment, for recently
established pawnshops have ranged from $385,000 to $410,000, with an average estimated cost per location
of approximately $400,000 in 2008. The costs associated with start-up pawnshops in Mexico are estimated
to be between $30,000 and $50,000 per shop at current exchange rates. The costs for start-up shops in
Mexico are less than domestic start-up costs primarily due to the smaller size of the Mexico pawnshops and
lower labor costs. These start-up amounts do 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. The Company currently has no
intention to actively pursue additions of cash advance locations.
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