Cash America 2012 Annual Report Download - page 7

CASH A M E RICA INTER N A T I ONAL, INC .
Daniel R. Feehan
Chief Executive Ofcer and President
April 2013
REGULATORY
The regulatory focus of our
short-term unsecured lending
products has shifted in recent years
from localized issues in the U.S. to
national oversight in both the U.S.
and the UK. The initial examination
of non-bank nancial institutions
in the U.S. by the newly formed
Consumer Financial Protection
Bureau and the recent review of the
payday lending industry in the UK
by Britain’s Ofce of Fair Trading
have captured most of the headlines
and analysts’ attention in 2012. The
most frustrating part of this process
is the uncertainty it creates – making
strategic planning difcult and
promoting doubt for investors.
I wish I could provide you
with granular clarity on how these
federal agencies might impact our
business, but to do so would only
be speculation at this point. I can
tell you that we favor a regulatory
environment for our business that
promotes sensible safeguards for
consumers while also protecting
their access to credit.
Fortunately, many legislators
today are taking heed of the
growing library of independent
research documenting the lack
of credit in the underbanked
community and the dangers
associated with restricting
product design via legislation
and/or regulatory rule-making.
Credible academic research today
concludes that most customers act
responsibly in choosing
the credit options
available to them and
respond favorably in
consumer satisfaction surveys.
Unfortunately, industry
detractors often overplay perceived
grievances in the industry; some
of these grievances are real, but
most are not. A few non-bank
lenders ignore existing regulations
and sensible safeguards while
companies like Cash America
strive diligently to be compliant
and build goodwill with customers
in delivering valuable,
understandable products
that help our customers
meet specic needs.
Anything regulators can do to
curtail the real grievances without
hamstringing those of us operating
with integrity would be a long-term
win for our business. We welcome
their efforts to do so, and will
continue working diligently with our
industry associations to educate
state and federal ofcials about our
customers and our products.
SHARE REPURCHASE
We heard from some of you
during the course of 2012 with wide-
ranging views on capital allocation
strategy. Our share price had been
severely penalized in the second
half of the year due to heightened
concerns over regulatory
developments as well as the
operational and nonrecurring issues
discussed earlier in this message.
Some of you opined that the penalty
had been too steep and our best
investment opportunity might be
repurchasing our own stock.
Your Board of Directors
regularly reviews capital allocations
strategies and your views are
an important component of
their consideration. Some, but
not necessarily all, additional
factors affecting their
analysis to determine the capital
allocation strategy that is in the
best interest of our shareholders
include available investment
options, leverage ratios, debt
covenants, working capital needs,
risk factors as disclosed in our
Form 10-K, business outlook and
management’s perspective on
various growth strategies.
After a careful review in
January 2013, your Board
of Directors concluded that
our share multiple at that
point in time supported a
risk-adjusted rate of return for
share repurchase that could help
deliver value to our shareholders.
Consequently, the Board approved
an open market repurchase
authorization for 2.5 million shares
in January, replacing a previous
authorization from January 2011.
The number of shares ultimately
purchased and prices paid under
this authorization will be based
upon market conditions and other
factors like those mentioned in the
preceding paragraph that may ebb
and ow over time.
Thank you for your input during
the year and for hanging with us
through a tough 2012. We greatly
appreciate your support and belief
in our future.
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an important component of
their consideration. Some, but
not necessarily all, additional
factors affecting their
January 2013, your Board
of Directors concluded that
our share multiple at that
point in time supported a