Cash America 2008 Annual Report Download - page 66

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Check Cashing Fees, Royalties and Other. Check cashing fees, royalties and other income decreased
$876,000 to $15.5 million in 2008, or 5.3%, from $16.4 million in 2007, primarily due to a lower volume of
checks being cashed, potentially due to an increase in competition, and the closing of storefront locations
during 2008. The components of these revenue items are as follows (dollars in thousands):
Year Ended December 31,
2008 2007
Pawn Cash Chec
k
Pawn Cash Chec
k
Lending Advance Cashing Total Lending Advance Cashing Total
Check cashing fees..
.
$ 646 $ 4,908 $ 400 $ 5,954 $ 780 $ 5,684 $ 485 $ 6,949
Royalties .................
.
713 ʊ 2,926 3,639 555 ʊ 3,064 3,619
Other .......................
.
2,385 3,502 61 5,948 1,933 3,846 70 5,849
$ 3,744 $ 8,410 $ 3,387 $ 15,541 $ 3,268 $ 9,530 $ 3,619 $ 16,417
Operations Expenses. Consolidated operations expenses, as a percentage of total revenue, were 31.8% in
2008 compared to 33.0% in 2007. These expenses increased $21.9 million, or 7.1%, in 2008 compared to
2007. Pawn lending operating expenses increased $16.7 million, or 8.5%, primarily due to higher personnel
costs, increased occupancy expenses and an increase in store level incentives. Cash advance operating
expenses increased $5.1 million, or 4.7%, primarily as a result of the growth and development of the
Company’s business that offers cash advances online.
As a multi-unit operator in the consumer finance industry, the Company’s operations expenses,
excluding loan losses, are predominately related to personnel and occupancy expenses. Personnel expenses
include base salary and wages, performance incentives, and benefits. Occupancy expenses include rent,
property taxes, insurance, utilities, and maintenance. The combination of personnel and occupancy
expenses represents 78.1% of total operations expenses in 2008 and 78.2% in 2007. The comparison is as
follows (dollars in thousands):
2008
% of
Revenue
2007
% of
Revenue
Personnel........................................................ $ 180,042 17.5 % $168,315 18.1 %
Occupancy ..................................................... 76,485 7.4 71,185 7.7
Other .............................................................. 71,832 6.9 66,956 7.2
Total............................................................ $ 328,359 31.8 % $306,456 33.0 %
The Company had a total of $3.2 million of personnel and occupancy charges in 2008 associated
with the closing of 56 locations in Texas, California, Ohio and Illinois during the year. Of the $3.2 million,
approximately $1.6 million was charged to personnel expenses related to store closures and the realignment
of operations management, and approximately $1.6 million was charged to occupancy expenses related to
lease terminations. Excluding these one-time charges, total operating expenses would have been $325.2
million, an increase of 6.1% over 2007.
Aside from the costs directly attributable to the closing of locations and realignment of operations
during the year, the increase in personnel expenses is mainly due to increases in store level incentives,
higher staffing levels, the growth in the Company’s online distribution channel, normal recurring salary
adjustments and higher health insurance costs. The increase in occupancy expense is primarily due to
recurring rent increases, as well as higher utility costs and property taxes. The increase in other operations
expenses was primarily due to $4.2 million of costs associated with development activities supporting a
referendum to overturn recent Ohio legislation and due to an increase in selling and other administrative
expenses.