Cash America 2010 Annual Report Download - page 38

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services locations typically range from $500,000 to $575,000. The typical costs associated with start-up retail services
location in Mexico are estimated to be between $50,000 and $120,000 per shop at current exchange rates, depending
on the store format. The costs in Mexico are less than domestic costs primarily due to the smaller size of the Mexico
locations and to the 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 consumer loans or operating expenses.
Development of New Credit Alternatives
Recent legislative and regulatory activity affecting the Company’s consumer loan products 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 overdraft protection, returned check fees and late charges
on bills, in the absence of alternatives such as the consumer loan product.
Consistent with the goal of providing additional services in these markets, in late 2008 and early 2009, Cash
America began providing gold buying services and gold-based pawn lending in many of its retail services locations
that previously offered only consumer loans. 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.
The Company also acquired its MLOC 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, financial
institutions, 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 in 2006, the Company has been actively exploring strategies to increase and
enhance its internet presence, with the goal of becoming the premier online consumer loan provider. The Company
now offers an array of consumer credit products over the internet under the name “Enova Financial,” which include
products offered under the names “CashNetUSA,” “QuikQuid,” “DollarsDirect,” “Primary Innovations,” “Gear Hub”
and “Gold Promise.” 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 consumer loan products 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 consumer loan company to offer consumer loans through an
online lending 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 installment loan product, which typically has an average term of four
months. In 2010, the Company began to offer longer-term installment products, in both California and the United
Kingdom. In addition, the Company is now offering gold buying over the internet under the name “Gold Promise.”
The Company intends to continue pursuing the development of new products related to the MLOC business, which
operates under the name “Primary Innovations,” during 2011 and 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, both in the U.S. and internationally.
Organic Growth
The Company has the ability to leverage its existing retail services platform for pawn, consumer loan and check
cashing activities to expand its operating margins and add incremental earnings through the addition of new customers.