Cash America 2013 Annual Report Download - page 119

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segment, the Company incurred $13.4 million of charges related to the Ohio Reimbursement Program in 2012. Total
expenses for the e-commerce segment increased $63.2 million, or 34.3%, to $247.6 million in 2012. Charges of $3.9
million related to activities associated with the proposed Enova IPO, which was withdrawn in July 2012, are included in
the e-commerce segment in the third quarter of 2012.
Operations and Administration Expenses
Retail Services
Operations and administration expenses for the retail services segment increased $40.6 million, or 10.9%, to
$413.5 million during 2012 compared to 2011. Personnel expense for the retail services segment increased $9.7 million,
or 4.6%, during 2012, primarily due to normal increases in personnel resulting from acquisitions and de novo store
growth and $2.4 million of employee termination costs related to the Mexico Reorganization. Occupancy expense
increased $15.9 million, or 16.6%, during 2012, primarily due to normal rent increases, acquisitions and de novo store
growth and lease termination costs related to the Mexico Reorganization of approximately $1.6 million. Other expenses
increased $16.1 million during 2012, primarily due to expenses associated with the Ohio Reimbursement Program of
$13.4 million and $4.4 million of charges related to the Mexico Reorganization, consisting of impairment on other
assets, inventory shrinkage, loss on sales of assets and other restructuring charges.
E-Commerce
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 and incentive accruals due to the strong financial performance of
the e-commerce segment. 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other expenses was primarily due to costs related to the withdrawn proposed Enova IPO and associated activities,
including $3.9 million of deferred expenses directly related to the withdrawn proposed IPO, which were expensed
during 2012 due to the withdrawal of the Registration Statement in connection with the withdrawn IPO on July 25,
2012.
Corporate
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 in connection with the Mexico Reorganization, indefinite-lived assets and
other intangible assets of $7.5 million, $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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