Cash America 2008 Annual Report Download - page 60

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37
OVERVIEW
Components of Consolidated Net Revenue, Reduced by Cash Advance Loss Provision. Consolidated
Net Revenue, Reduced by Cash Advance Loss Provision, is total revenue reduced by the cost of
merchandise sold and by the cash advance loss provision expense during the period. Therefore, the
components of consolidated net revenue reduced by the cash advance loss provision are: finance and service
charges from pawn loans, profit from the disposition of merchandise, cash advance fees less cash advance
loss provision, and other revenue. Other revenue is comprised mostly of check cashing fees but includes
royalties and small miscellaneous other revenue items generated through ancillary products offered in
stores.
During 2008, net revenue, net of the cash advance loss provision, increased 12.8% from $527.4
million to $594.7 million. This net figure becomes the income available to satisfy remaining operating
expenses and administrative expenses and is the measure management uses to evaluate top line
performance. The contributions from pawn lending activities, defined as finance and service charges plus
the profit of the disposition of merchandise, accounted for 60%, 59% and 65% of net revenue, net of loan
losses for 2008, 2007 and 2006, respectively and remains the dominant component of net revenue, net of
loan losses for the Company. The following graphs show consolidated net revenue reduced for the
provision for loan losses and depicts the mix of the components of net revenue, net of losses for the fiscal
years ended December 31, 2008, 2007 and 2006:
Contribution to Increase in Net Revenue, Reduced by Cash Advance Loss Provision. The Company’s
net revenue, reduced by loan losses increased $67.3 million, or 12.8%, and $97.4 million, or 22.6%, for the
years ended December 31, 2008 and 2007, respectively, compared to the prior year periods. Net revenue
from pawn lending activities in the current year contributed 66% of the increase due primarily to greater
finance and service charges on higher average loan balances and increased profit on higher disposition
volumes of merchandise. The more significant contribution to year over year growth from pawn lending
activities returns follows a disproportionate higher contribution to growth of net cash advance fees in 2007
compared to the prior year. In the prior year of 2007, cash advance fees, reduced by loan losses contributed
66% of the increase, primarily due to the additional revenue and subsequent growth in revenue that followed
the September 2006 acquisition of the online cash advance business. These trends are depicted in the
following graphs:
2008
$594.7 million
29% 28% 30%
35%
4%
31%
31%
31%
3%
3%
38%
37%
2007
$527.4 million
2006
$430.0 million
Finance and service charges
Profit from the disposition
of merchandise
Cash advance fees,
net of loan losses
Check cashing fees,
royalties and other