Cash America 2009 Annual Report Download - page 92
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64
Depreciation and Amortization. Depreciation and amortization expense as a percentage of total revenue was
3.8% in 2008, compared to 3.5% in 2007. Total depreciation and amortization expense increased $7.5 million, or
23.4%, primarily due to accelerated depreciation costs related to planned store closures as well as accelerated
depreciation on computer hardware that will be replaced during the deployment of the Company’s new point-of-
sale system.
Interest Expense. Interest expense as a percentage of total revenue was 1.6% in 2008 and 1.7% in 2007. Interest
expense was flat at $16.0 million for 2008 and 2007. The Company had a higher average amount of floating rate
debt outstanding of $211.2 million during 2008 and $121.3 million during 2007, which was offset by a lower
weighted average interest rate on floating rate debt of 3.9% during 2008 compared to 6.3% during 2007. The
average amount of total debt outstanding increased during 2008 to $324.8 million from $249.8 million during 2007
mainly due to the Prenda Fácil acquisition. The effective blended borrowing cost was 4.7% in 2008 and 6.4% in
2007.
Income Taxes. The Company’s effective tax rate was 38.9% for 2008 compared to 36.4% in 2007. The Company
incurred $4.4 million of nondeductible expenses during 2008 primarily related to development activities supporting
a 2008 referendum to overturn Ohio legislation related to short-term cash advances in that state. If the prior year
expense related to the Ohio referendum activities were deductible, the effective tax rate for 2008 would have been
37.7%. The Company recognized a one-time $1.1 million deferred tax benefit during 2007 as a result of a change
in Texas law enacted during that period. Excluding the one-time Texas deferred tax benefit, the effective rate for
2007 would have been 37.3%.