Cash America 2012 Annual Report Download - page 99

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Operations and administration expenses for the e-commerce segment increased $61.2 million, or 35.4%, to
$234.4 million during 2012. Personnel expense increased $14.8 million, or 22.9%, primarily due to the addition of new
personnel to support the e-commerce segment’s growth. Marketing expense increased $35.5 million, or 48.4%, mainly
due to the online lending channel’s efforts to expand the Company’s customer base in both domestic and foreign
markets. Online and other marketing costs, excluding lead purchase costs, increased $29.2 million, primarily due to
higher expenses for television marketing and sponsored search expenses. In addition, lead purchase expenses increased
$6.3 million. The increase in other expenses was primarily due to costs related to the proposed Enova IPO and
associated activities, including $3.9 million of deferred expenses directly related to the proposed IPO, which were
expensed during 2012 due to the withdrawal of the Registration Statement on July 25, 2012.
Corporate administration expense increased $1.5 million, or 2.3%, to $66.8 million in 2012, primarily due to
expenses for due diligence conducted on an abandoned acquisition opportunity in a foreign market, which were $2.3
million in 2012, partially offset by decreased personnel expense due to lower expenses related to incentives.
Depreciation and Amortization Expenses
Consolidated depreciation and amortization expenses increased $21.3 million, or 39.3%, primarily due to
increased expenses in the retail services segment. Depreciation and amortization expenses at the retail services segment
increased $15.6 million, or 48.6%, to $47.6 million primarily due to impairment charges and losses in the Company’s
Mexico operations on property and equipment, indefinite-lived assets and other intangible assets of $7.5 million
(consisting of $6.0 million of impairment charges recognized in the third quarter of 2012 and $1.5 million of losses on
disposition incurred in the fourth quarter of 2012), $2.5 million and $2.6 million, respectively. The remaining increase
was mainly due to additional depreciation expenses associated with the Company’s new proprietary domestic point-of-
sale system, locations acquired in late 2011 and 2012, and normal facility upgrades and remodels. Depreciation and
amortization expenses at the e-commerce segment increased $2.0 million, or 17.8%, to $13.3 million. Depreciation and
amortization expenses for corporate operations increased $3.7 million, or 34.0%, to $14.5 million, primarily related to
additional depreciation expenses associated with the Company’s new proprietary domestic point-of-sale system.
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Expenses related to the Reorganization of Mexico-based Pawn Operations
As discussed in “Operations and administration expenses” and “Depreciation and amortization expenses” above,
in connection with the Mexico Reorganization, the Company recognized $28.9 million in reorganization charges during
2012.
The following table summarizes the charges recognized for the year ended December 31, 2012 related to the
Mexico Reorganization (dollars in thousands):
Type of expense Description Amount
Depreciation and amortization expenses Impairment and losses on property and equipment $ 7,478
Provision for income taxes Deferred tax asset valuation allowance 7,161
Depreciation and amortization expenses Impairment of intangible assets 5,086
Operations and administration expenses Employee termination costs 2,424
Operations and administration expenses Inventory shrinkage and loss on sale of assets 2,395
Operations and administration expenses Lease termination costs 1,628
Operations and administration expenses Impairment of other assets 1,211
Operations and administration expenses Other restructuring charges 798
Revenue Uncollectible receivables 692
Total charges related to the Mexico Reorganization $ 28,873