Cash America 2012 Annual Report Download - page 39

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•Statutory Requirements. The Company’s ability to add start-up locations depends on the Company’s ability to
obtain all necessary licenses required to open a new location. In addition, the current statutory and regulatory
environment of some states renders expansion into those states impractical.
•Availability of Real Estate. The Company’s ability to add start-up locations is subject to locating satisfactory real
estate sites on terms and conditions acceptable to the Company. Factors that could limit the availability of
acceptable real estate sites could include changes in general economic conditions, increases in real estate values or
market rents, increases in competition for suitable real estate, changing demographics in surrounding areas,
restrictive zoning or sign ordinances, limited visibility or accessibility to public streets, excessive finish-out costs
and other factors.
•Competition. Several competing pawnshop and consumer loan companies are also pursuing expansion and
acquisition programs. A number of smaller companies and private equity firms have also entered the market. While
the Company believes that it is the largest pawnshop operator and one of the largest consumer loan operators in the
United States, there can be no assurance that it will be more successful than its competitors in pursuing acquisition
opportunities and securing attractive start-up locations. Increased competition could also increase prices for
attractive acquisition candidates and could adversely affect the performance of potential acquisition targets.
•Availability of Qualified Store Management Personnel. The Company’s ability to expand may also be limited by
the availability of qualified store management personnel. While the Company seeks to train its existing personnel
to enable those capable to assume management positions, there can be no assurance that sufficient qualified
personnel will be available to satisfy the Company’s needs with respect to its planned expansion.
•Capital Requirements. In some states, the Company is required by law to maintain a minimum amount of certain
unencumbered net assets per licensed location. The Company’s expansion plans will therefore be limited in these
states to the extent the Company is able to maintain these required levels of unencumbered net assets. At present,
these requirements do not limit the Company’s growth opportunities.
Competition
Pawn Lending Activities
The Company has many competitors to its pawn lending activities, such as retailers of new merchandise and
retailers of pre-owned merchandise, thrift shops, Internet retailers, Internet auction and other similar sites and other
pawn shops. The pawnshop industry in the United States remains very fragmented, with approximately10,000 stores
nationwide operating in 2012 that were owned primarily by independent operators and, to a lesser extent, by publicly-
traded companies. The Company believes that it is the largest operator of pawnshops in the world. The three largest
publicly-traded pawnshop companies, First Cash Financial Services, Inc., EZCORP, Inc., and the Company, operated
approximately 1,400 total pawnshops in the United States in 2012. During 2012, the Company was the largest publicly-
traded pawnshop operator in the United States based on pawn loan balances and number of pawn lending locations.
Management believes that the Company can achieve economies of scale and increased operating efficiencies by
increasing the number of stores under operation and utilizing modern point-of-sale systems and proven operating
methods. Management believes that the principal competitive factors in the pawnshop industry are location, quality
customer service, the ability to loan competitive amounts at competitive rates and adequate low-cost working capital.
The pawnshop industry in Mexico is fragmented and remains substantially less developed than it is in the United
States. There has been significant growth in the number of pawnshops servicing Mexico over the last several years to an
estimated 5,000 locations operating in 2012. Most of these locations provide loans secured only by gold jewelry and are
owned by independent operators and small chains, including some owned by not-for-profit organizations and publicly-
traded companies. The Company’s primary competitors in Mexico include Monte de Piedad, Luz Saviñón, Rafael
Donde, First Cash Financial Services, Inc. and EZCORP, Inc. A large percentage of the population in Mexico is
unbanked (or do not have a relationship with a bank) or underbanked (or have limited access to banking or other
financial services) and has limited access to consumer credit. The Company believes there is a future opportunity for
growth in the number of full-service pawn locations that offer loans secured by general merchandise as well as gold