Cash America 2008 Annual Report Download - page 50

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Company provides specialty financial services to individuals. These services include secured
non-recourse loans, commonly referred to as pawn loans, to individuals through its pawn lending operations,
unsecured cash advances in selected lending locations and on behalf of independent third-party lenders in
other locations, and check cashing and related financial services through many of its lending locations and
through franchised and Company-owned check cashing centers. The pawn loan portfolio generates finance
and service charges revenue. A related activity of the pawn lending operations is the disposition of
collateral from unredeemed pawn loans and the Company liquidates a much smaller volume of merchandise
purchased directly from customers. In addition, the Company offers online cash advances over the internet
and arranges loans online on behalf of independent third-party lenders through its internet distribution
platform. During 2008, the Company expanded its online offering of loan products to include longer term
installment loans to consumers. In July 2007, the Company began offering short-term unsecured loans to
customers who reside throughout the United Kingdom through its internet distribution platform.
As of December 31, 2008, the Company had 994 total locations offering products and services to its
customers. The Company operates in three segments: pawn lending, cash advance and check cashing.
As of December 31, 2008, the Company’s pawn lending operations consisted of 613 pawnshops,
including 598 Company-owned units and 15 unconsolidated franchised units located in 22 and 17 states and
other jurisdictions in the United States and Mexico, respectively. During the three-year period ended
December 31, 2008, the Company acquired 137 operating units, established nine locations, and combined or
closed four locations for a net increase in owned pawn lending units of 142. In addition, it acquired or
opened seven franchise locations. Included in the operating unit additions is the December 16, 2008
acquisition by the Company of 80% of the outstanding stock of Creazione Estilo, S.A. de C.V., SOFOM,
E.N.R., a Mexican sociedad anónima de capital variable, sociedad financiera de objeto múltiple, entidad no
regulada (“Creazione”), which, as of December 31, 2008, operates a chain of 112 pawnshops in central and
southern Mexico under the name “Prenda Fácil.”
At December 31, 2008, the Company’s cash advance operations consisted of 248 cash advance
locations in six states and its internet distribution channel. The Company reduced the number of net cash
advance locations by 38 over the last three years by closing or combining 64 locations while establishing 26
locations. CashNetUSA serves multiple markets through its internet distribution channel and had cash
advances outstanding in 33 states and in the United Kingdom as of December 31, 2008.
As of December 31, 2008, the Company’s check cashing operations consisted of 128 franchised and
five company-owned check cashing centers in 16 states. For the three year period ended December 31,
2008, the Company established 20 locations and combined or closed 23 locations for a net decrease in check
cashing locations of three.
On July 23, 2008, the Company, through its wholly-owned subsidiary, Primary Cash Holdings, LLC
(now known as Primary Innovations, LLC, or “PI”), purchased assets from Primary Business Services, Inc.
and its affiliates (collectively, “PBSI”) related to the business of providing loan processing services for, and
participating in receivables associated with, a bank issued line of credit made available by the bank on
certain stored-value debit cards the bank issues. Throughout this discussion, the activities of PI are included
in the results of the Company’s cash advance segment.