Cash America 2011 Annual Report Download - page 41

10
Future Expansion
Storefront Expansion
The Company historically has expanded by acquiring existing retail services locations and by establishing new
start-up locations. The Company intends to continue expanding its retail services business within its existing geographic
markets and into other markets that meet its risk/reward considerations. Management believes that such expansion will
continue to provide economies of scale in supervision, purchasing, administration and marketing by decreasing the
overall average cost of such functions per unit owned. By concentrating multiple lending units in regional and local
markets, the Company seeks to expand market penetration, enhance name recognition and leverage marketing programs.
In November 2011, the Company completed the Pawn Partners acquisition, which expanded the Company’s pawn
lending presence in the state of Arizona. See “Recent Developments—Business Developments—Pawn Partners, Inc.”
for additional information. In October 2010, the Company expanded its pawn lending presence in the States of
Washington and Arizona through its acquisition of substantially all of the assets of Maxit Financial, LLC, which owned
and operated a 39-store chain of pawn lending locations that operate in Washington and Arizona under the names
“Maxit” and “Pawn X-Change. In December 2008, the Company completed the Prenda Fácil acquisition, which
expanded the Company’s pawn presence internationally into Mexico. The Company established 10 locations, net of
closures, in Mexico during the year ended December 31, 2011, and is actively evaluating further expansion into other
Latin American countries.
The table below outlines acquisitions, start-ups and closures for Company-owned retail services locations
(excluding Mr. Payroll check cashing locations the Company also owns and operates) for the years ended December 31,
2011, 2010 and 2009.
As of December 31,
2011 2010 2009
Retail services locations at beginning of period 950 913 846
Acquired 8 44 3
Start-ups 20 40 69
Combined, or closed (5) (47) (5)
Retail services locations at end of period(a) 973 950 913
(
a
)
As of December 31, 2011, 2010 and 2009, excludes six consolidated Company-owned check cashing locations.
When considering acquiring an existing lending location, the Company evaluates, among other things, the annual
volume of loan transactions at that location, the carrying cost of merchandise, outstanding loan balances and lease terms
of the facility or, if it is to be purchased, the facility’s fair market value. When considering the start-up of a new retail
services location, the Company evaluates the location of the prospective site, whether conditions in the surrounding
community indicate a sufficient level of potential customers, and whether a suitable facility is available on acceptable
terms.
After the Company has leased or acquired a suitable location and obtained the required licenses in the United
States, a new retail services location can be ready for business within four to eight weeks. The approximate start-up
costs, which consist of the investment in property (excluding real estate) and equipment, for recently established retail
services locations in the United States typically range from $500,000 to $600,000. The typical costs associated with
start-up retail services location in Mexico are estimated to be between $50,000 and $120,000 per shop, based on
exchange rates at December 31, 2011, 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.