Cash America 2010 Annual Report Download - page 30

1
PART I
ITEM 1. BUSINESS
Overview
Cash America International, Inc. (the “Company”) provides specialty financial services to individuals through
retail services locations and through electronic distribution platforms known as e-commerce activities. These services
include secured non-recourse loans, commonly referred to as pawn loans and unsecured consumer loans.
Pawn loans are short-term (generally 30 to 90 days) made on the pledge of tangible personal property. Pawn
loan fees and service charges revenue are generated from the Company’s pawn loan portfolio. A related activity of the
pawn lending operations is the disposition of collateral from unredeemed pawn loans and the liquidation of a smaller
volume of merchandise purchased directly from third-parties or from customers.
The Company’s consumer loan portfolio includes short-term single payment loans, longer-term multi-payment
installment loans, credit services and participation interests purchased from third parties in the micro line of credit (or
"MLOC") services channel. Consumer loans provide customers with cash, typically in exchange for a promissory note
or other repayment agreement supported, in most cases, by that customer’s personal check or authorization to debit
that customer’s account via an electronic transaction for the aggregate amount of the payment due. Through the Credit
Services Organization program (the "CSO program"), the Company provides a third-party lender's consumer loan
product in some markets by acting as a credit services organization on behalf of consumers in accordance with
applicable state laws. These include credit services, loans arranged with independent third-party lenders, assistance in
the preparation of loan applications and loan documents and acceptance of loan payments. The Company also
guarantees the customer’s payment obligations in the event of default if the customer is approved for and accepts the
loan. A customer who obtains a loan through the CSO program pays the Company a fee for these credit services
(“CSO fees”). Although consumer loan transactions may take the form of loans, deferred check deposit transactions,
credit services transactions, or the processing of, and the participation in receivables originated by, a third-party
lender’s MLOC product, the transactions are referred to throughout this discussion as “consumer loans.”
The Company was incorporated in Texas in 1984 and has been providing specialty financial services to its
customers for over 25 years. The Company believes it was the nation’s largest provider of pawn loans and the largest
operator of pawn shops in the world in 2010. As used in this report, the term “Company” includes Cash America
International, Inc. and its subsidiaries, unless the context otherwise requires.
During the second quarter of 2010, the Company renamed its Internet Services Division as the E-Commerce
Division and realigned its operating segments into two reportable segments: retail services and e-commerce. The
retail services segment includes all of the operations of the Company’s Retail Services Division, which is composed
of both domestic and foreign storefront locations that offer some or all of the following services: pawn lending,
consumer loans, check cashing and other ancillary services such as money orders, wire transfers and pre-paid debit
cards. (Most of these ancillary services are provided through third-party vendors.) The e-commerce segment
includes the operations of the Company’s E-Commerce Division, which is composed of the Company’s domestic and
foreign online channel (and includes the Company’s internet lending activities, as well as online gold buying
activities and other ancillary services) and the Company’s MLOC services channel. The segment realignment was in
response to a number of changing factors within the Company’s business. First, the Company’s business strategy
now emphasizes the offering of a broad array of products such as pawn loans, gold buying, and consumer loans in
most retail services locations, such that the previously reported delineation of pawn and consumer loan-centric
locations became obsolete. Second, the Company’s management performance assessment, allocation of resources,
and operating decisions migrated to a two segment structure with one Division President overseeing retail services
activities and another Division President overseeing e-commerce activities. Third, the Company’s e-commerce
products have expanded and now include activities such as MLOC services and online gold buying.