Cash America 2013 Annual Report Download - page 90

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Pawn Loan Fees and Service Charges
Consolidated pawn loan balances as of December 31, 2013 were $261.1 million, which was $16.5 million higher
than the balances as of December 31, 2012, primarily due to an increase in pawn loan balances from acquisitions in the
Company’s domestic pawn operations.
Domestic Pawn Loan Balances
The average balance of domestic pawn loans outstanding during 2013 increased by $8.1 million, or 3.6%,
compared to 2012, primarily due to an increase in the loan balances as a result of the addition of 81 pawn lending
locations, net of closures, through acquisitions and de novo store growth since 2012. The increase was partially offset by
lower average pawn loan balances in same-store domestic retail services locations, which decreased 3.6% in 2013
compared to 2012. Management believes this decrease is primarily attributable to a reduction in demand for pawn loans
by customers. The average amount per loan in domestic pawn operations decreased to $127 in 2013 from $131 in 2012
and was influenced by a greater mix of pawn loans being collateralized by non-jewelry merchandise, which generally
have a lower average loan amount than loans collateralized by jewelry.
Domestic pawn loan fees and service charges increased $16.4 million, or 5.7%, to $304.5 million in 2013
compared to 2012. The increase is primarily due to higher pawn loan yields and higher average domestic pawn loan
balances during 2013. The increase in pawn loan yield was primarily due to a greater mix of pawn loans in markets with
higher statutory lending rates on pawn loans and lower forfeiture rates. The increase in average pawn loan balances is
primarily due to acquisitions and de novo store growth in the Company’s domestic pawn operations.
Foreign Pawn Loan Balances
The average balance of foreign pawn loans outstanding during 2013 decreased by $7.1 million, or 59.0%,
compared to 2012. The decrease was mainly due to the net closure of 148 pawn lending locations in 2012 as part of the
Mexico Reorganization. Consequently, foreign pawn loan fees and service charges decreased $5.5 million, or 42.9%, to
$7.3 million in 2013 compared to 2012. However, the annualized yield on pawn loans increased from 105.9% in 2012 to
147.4% in 2013, primarily due to the greater mix in 2013 of general merchandise pawn loans, which have a higher yield
than jewelry-based pawn loans in the Company’s foreign pawn operations.
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 pawn loan or the amount paid for
purchased merchandise. Retail sales include the sale of jewelry and general merchandise direct to consumers through the
Company’s domestic and foreign retail services locations or over the internet through auction and other similar sites.
Commercial sales include the sale of refined gold, platinum, silver and diamonds to brokers or manufacturers. The
following table summarizes the proceeds from the disposition of merchandise and the related profit for the years ended
December 31, 2013 and 2012 (dollars in thousands):
Year Ended December 31,
2013 2012
Retail Commercial Total Retail Commercial Total
Proceeds from disposition $ 427,644 $ 167,795 $ 595,439 $ 391,566 $ 312,201 $ 703,767
Gross profit on disposition $ 151,757 $ 33,069 $ 184,826 $ 144,095 $ 81,493 $ 225,588
Gross profit margin 35.5 % 19.7 % 31.0 % 36.8 % 26.1 % 32.1 %
Percentage of total gross profit 82.1 % 17.9 % 100.0 % 63.9 % 36.1 % 100.0 %
As the table above indicates, the Company is placing a greater emphasis on retail disposition of merchandise in
its retail services locations and de-emphasizing the commercial disposition of merchandise due to lower market prices
for pure gold. Management expects this trend to continue and will focus on the aggregate profit on the disposition of
merchandise. This shift is expected to result in higher levels of merchandise available for disposition and a decrease in