Cash America 2012 Annual Report Download - page 88

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Foreign Pawn Loan Balances
The average balance of foreign pawn loans outstanding during 2012 decreased by $8.0 million, or 39.8%,
compared to 2011, primarily due to the closure of 148 pawn lending locations associated with the Mexico
Reorganization. In addition, there was a decrease in demand for gold-based pawn loans that was partially offset by an
increase in demand for loans on general merchandise, which were introduced in certain of the Company’s foreign retail
services locations beginning in 2011. Also, during 2012, the Company reduced the loan period from 60 to 45 days,
causing a decrease in loans outstanding. The preceding factors led to lower average foreign pawn loan balances, which
resulted in a decrease in pawn loan fees and service charges of $7.6 million, or 37.3%, to $12.8 million in 2012 from
$20.4 million in 2011. The annualized yield on foreign pawn loan balances increased to 105.9% in 2012 compared to
101.7% in 2011, primarily due to a change in the rates charged on these loans during 2012, a decrease in the maximum
loan term from 60 days to 45 days during 2012 and a higher mix of general merchandise loans, which have a higher
pawn loan yield than jewelry loans. The average amount per loan decreased to $88 in 2012 compared to $103 in 2011,
primarily due to the modification of lending rates and the effect of the change in foreign exchange rates.
Proceeds From Disposition of Merchandise
Profit from the disposition of merchandise represents the proceeds received from the disposition of merchandise
in excess of the cost of disposed merchandise, which is the Company's cost basis in the loan or the amount paid for
purchased merchandise. The following table summarizes the proceeds from the disposition of merchandise and the
related profit for the years ended December 31, 2012 and 2011 (dollars in thousands):
Year Ended December 31,
2012 2011
Retail Commercial Total Retail Commercial Total
Proceeds from disposition $ 391,566 $ 312,201 $ 703,767 $ 358,695 $ 330,189 $ 688,884
Gross profit on disposition $ 144,095 $ 81,493 $ 225,588 $ 137,620 $ 103,647 $ 241,267
Gross profit margin 36.8 % 26.1 % 32.1 % 38.4 % 31.4 % 35.0 %
Percentage of total gross profit 63.9 % 36.1 % 100.0 % 57.0 % 43.0 % 100.0 %
The total proceeds from disposition of merchandise increased $14.9 million, or 2.2%, during 2012 from 2011.
The total gross profit from the disposition of merchandise decreased $15.7 million, or 6.5%, during 2012 from 2011,
primarily due to lower gross profit on commercial sales. The overall profit margin percentage decreased to 32.1% in
2012 from 35.0% in 2011, due mainly to a higher cost of goods sold on commercial sales compared to 2011, and to a
lesser extent, a decrease in gross profit percentage on retail sales in 2012 compared to 2011. The consolidated
merchandise turnover rate decreased slightly to 3.0 times during 2012 compared to 3.1 times in 2011.
Proceeds from retail dispositions of merchandise increased $32.9 million, or 9.2%, during 2012 from 2011.
Domestic retail operations contributed $21.7 million of the increase, primarily due to the net addition of new retail
services locations through organic growth and acquisitions. Foreign retail operations contributed $11.2 million of the
increase, primarily due to increased sales of general merchandise in 2012 compared to 2011. The Company’s domestic
and foreign operations both experienced a decrease in retail gross profit margin, as the consolidated gross profit margin
on the retail disposition of merchandise decreased to 36.8% in 2012 from 38.4% in 2011. The decrease was primarily
due to the continued discounting of merchandise prices to encourage retail sales activity.
Proceeds from commercial dispositions decreased $18.0 million, or 5.4%, during 2012 over 2011. Proceeds
from dispositions decreased $16.7 million and $1.3 million, respectively, in foreign and domestic markets. The $16.7
million decrease in foreign proceeds was due mostly to lower volumes of gold sold in 2012 as compared to 2011. The
$1.3 million decrease in domestic markets was composed of a $5.1 million decrease due to lower volumes of gold sold,
primarily as a result of lower purchases of gold from customers during 2012, and, to a lesser extent lower forfeitures of