Cash America 2009 Annual Report Download - page 36

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estate) and equipment, for recently established pawn lending locations typically range from $385,000 to
$410,000, with an average estimated cost per location of approximately $400,000 in 2009. The typical costs
associated with start-up pawnshops in Mexico are estimated to be between $40,000 and $60,000 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 also due to lower cost of labor and materials. 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 cash advance storefront locations in the
United States have typically ranged from $75,000 to $150,000, although the Company has not added any new
start-up cash advance storefront locations since 2007.
Development of New Credit Alternatives
Recent legislative and regulatory activity affecting the Company’s short-term unsecured cash advance
product has led the Company to explore new credit product alternatives to help its customers meet their short-
term credit needs. While some recent legislative and regulatory actions in certain states where the Company
operates has reduced the revenue per loan to levels that make the product less profitable or unattractive, these
regulatory changes do not eliminate the credit needs of the Company’s customers. The Company remains
committed to finding new and innovative solutions to help its customers avoid higher cost alternatives, such
as bounced check fees and late charges on bills, in the absence of alternatives such as the cash advance
product.
Consistent with the goal of providing additional services in these markets, in late 2008 and early
2009, Cash America began gold buying services and gold-based pawn lending in many of its cash advance
storefront locations. Through the addition of these services, the Company expanded its customers’ available
alternatives for short-term credit or cash while providing an opportunity for increased revenue and earnings.
The Company plans to continue its efforts to develop and deliver ancillary financial products to its diverse
and growing customer base. For example, as of December 31, 2009, 150 of the Company’s cash advance
storefront locations offered pawn lending and gold buying services.
The Company also acquired its card services business in 2008, which is operated under the wholly-
owned subsidiary Primary Innovations. Management believes that services the Company can offer to third-
party card issuers, processors and program managers could help facilitate a viable credit alternative for certain
customers. The Company intends to continue developing this platform with third parties as a national
distribution vehicle of alternative credit products.
Internet Growth
Since acquiring CashNetUSA, the Company has been actively exploring strategies to increase and
enhance its internet presence, with the goal of becoming the premier internet cash advance provider. The
Company continues to evaluate new markets in which to establish its internet presence, similar to its entry
into the United Kingdom during 2007 and Australia and Canada during 2009. Other countries are being
evaluated for expansion of the Company’s short-term cash advance product and any additional expansion will
be pursued when the country-specific characteristics and requirements meet the company’s investment
criteria. During 2008, the Company began a program with a third-party storefront cash advance company to
offer short-term cash advances through an internet channel operated by the Company. Pursuant to the
agreement between the parties, fees are divided between the parties and each participant is directly
responsible for certain program expenses. During the fourth quarter of 2008, the Company also introduced an
internet longer-term installment loan product, which typically has an average term of four months. The
Company intends to continue evaluating and offering new products and services that complement its internet
specialty financial services in order to meet the growing financial services needs of its customers.