Cash America 2008 Annual Report Download - page 98

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
75
customer service and collections. In addition, similar costs related to non-home office management
supervision, oversight of locations and similar costs incurred by the Retail Services Division for the
oversight of the Company’s physical lending locations are included in operations expenses. Administration
expenses include expenses incurred for personnel and general office activities such as accounting and legal
directly related to corporate administrative functions.
Marketing Expenses x Costs of advertising and direct customer procurement are expensed at the time of
first occurrence and included in operating expenses. Advertising expense was $34.1 million, $35.0 million
and $18.5 million for the years ended December 31, 2008, 2007, and 2006, respectively.
Stock-Based Compensation x Beginning January 1, 2006, the Company has accounted for its stock-based
employee compensation plans in accordance with Statement of Financial Accounting Standards No. 123(R),
“Share-Based Payment” (“SFAS 123(R)”), using the modified prospective method. Under the modified
prospective method, the Company is required to recognize compensation expense over the remaining
vesting periods for the portion of stock-based awards for which the requisite service had not been rendered
as of January 1, 2006.
Net Income Per Share x Basic net income per share is computed by dividing net income by the weighted
average number of common shares outstanding during the year. Diluted net income per share is calculated
by giving effect to the potential dilution that could occur if securities or other contracts to issue common
shares were exercised and converted into common shares during the year. Units issued under the
Company’s restricted stock awards are included in diluted shares upon the granting of the awards even
though the vesting of shares will occur over time.
The following table sets forth the reconciliation of numerators and denominators of basic and
diluted earnings per share computations for the years ended December 31, 2008, 2007 and 2006 (in
thousands, except per share amounts):
2008 2007 2006
Numerator:
Net income available to common shareholders .......................... $ 81,140
$ 79,346 $ 60,940
Denominator:
Total weighted average basic shares(1) ........................................... 29,327 29,643 29,676
Effect of shares applicable to stock option plans........................ 334 351 488
Effect of restricted stock unit compensation plans ..................... 431 355 368
Total weighted average diluted shares .................................... 30,092 30,349 30,532
Basic earnings per share:
Net income.................................................................................. $ 2.77 $ 2.68 $ 2.05
Diluted earnings per share:
Net income.................................................................................. $ 2.70 $ 2.61 $ 2.00
(1) Included in “Total weighted average basic shares” are vested restricted stock units of 206, 160, and 98, as
well as shares in a non-qualified savings plan of 59, 57, and 59 for the years ended December 31, 2008, 2007
and 2006, respectively.
There were no anti-dilutive shares for the years ended December 31, 2008, 2007 and 2006.
Recent Accounting Pronouncements x In September 2006, FASB issued Statement of Financial
Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines