Cash America 2012 Annual Report Download - page 89

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jewelry items during 2012 compared to 2011. This decrease was partially offset by a $3.9 million increase in proceeds
from commercial dispositions from higher sales of diamonds in 2012 as compared to 2011.
Consolidated gross profit from commercial dispositions decreased $22.2 million to $81.5 million, of which
domestic operations contributed $16.2 million and foreign operations contributed $6.0 million. The gross profit margin
on commercial sales decreased to 26.1% in 2012 from 31.4% in 2011.The decrease in gross profit from commercial
dispositions was mainly due to lower volumes of gold sold and a higher average cost of gold sold relative to a smaller
increase in the market price per ounce of gold sold in both domestic and foreign operations.
The table below summarizes the age of merchandise held for disposition related to the Company’s pawn
operations before valuation allowance of $0.9 million and $0.7 million as of December 31, 2012 and 2011, respectively
(dollars in thousands):
As of December 31,
2012 2011
Amount % Amount %
Jewelry – held for one year or less $99,466 59.1 $99,683 61.3
Other merchandise – held for one year or less 59,914 35.6 56,483 34.8
Total merchandise held for one year or less 159,380 94.7 156,166 96.1
Jewelry – held for more than one year 3,283 2.0 2,626 1.6
Other merchandise – held for more than one year 5,597 3.3 3,792 2.3
Total merchandise held for more than one year 8,880 5.3 6,418 3.9
Total merchandise held for disposition $168,260 100.0 $162,584 100.0
Consumer Loan Activities
Consumer Loan Fees
Consumer loan fees increased $182.9 million, or 30.5%, to $781.5 million in 2012 compared to $598.6 million
in 2011. The increase in consumer loan fees is due to growth in the e-commerce segment. The percentage of consumer
loan fees from foreign operations to consumer loan fees from the e-commerce segment and total consolidated consumer
loan fees increased in 2012 compared to 2011 as the Company’s e-commerce business continued to experience growth
in the United Kingdom and other foreign markets. In 2012, consumer loan fees from the foreign component of the e-
commerce segment were 49.6% of consumer loan fees for the e-commerce segment and 41.8% of consolidated
consumer loan fees, up from 47.0% and 37.6% of the e-commerce segment and consolidated consumer loan fees in
2011, respectively.
Consumer Loan Loss Provision
The consumer loan loss provision increased by $90.6 million, to $316.3 million in 2012 from $225.7 million in
2011. The loss provision as a percentage of consumer loan fees increased to 40.5% in 2012 from 37.7% in 2011. The
loss provision as a percentage of consumer loan fees increased in both the Company’s retail services and e-commerce
segments, primarily due to a greater mix of installment loans and line of credit accounts as a percentage of the total
consumer loan portfolio. Installment loans and line of credit account portfolios have higher loss rates because they are
less seasoned than the Company’s short-term loan portfolios. Also contributing to the increase was the expansion of the
Company’s line of credit and installment loan products in the United States, which has resulted in an increase in new
customers. New customers tend to have a higher risk of default than customers with a history of successfully repaying
loans. The loss provision as a percentage of consumer loan fees decreased in the Company’s foreign e-commerce
operations, mainly because the portfolio is beginning to have a higher percentage of customers with established payment