Cash America 2014 Annual Report Download - page 52

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL
The Company provides specialty financial services to individuals through its storefront lending and
franchised check cashing locations.
Pawn Lending
The Company offers secured non-recourse loans, commonly referred to as pawn loans, as its primary line of
business. The Company also offered pawn loans in Mexico through August 2014, when it sold its Mexico-based
pawn operations. See “Recent Developments—Divestiture of Mexico-based Pawn Operations” for a discussion of
the sale of the Company’s foreign retail services business. Pawn loans are short-term loans made on the pledge of
tangible personal property. Pawn loan fees and service charges are generated from the Company’s pawn loan
portfolio. A related activity of the pawn lending operations is the disposition of collateral from forfeited pawn loans
and the liquidation of a smaller volume of merchandise purchased directly from customers or from third parties.
Consumer Loan Activities
Another component of the Company's business is originating, arranging, guaranteeing or purchasing
consumer loans in some of its locations. Consumer loans provide customers with cash, typically in exchange for an
obligation to repay the amount advanced plus fees and any applicable interest. Consumer loans include short-term
loans (commonly referred to as payday loans) and installment loans.
Short-term consumer loans include unsecured short-term loans written by the Company or by a third-party
lender through the Company’s CSO programs that the Company guarantees. Installment consumer loans are longer-
term, multi-payment loans that generally require the pay-down of portions of the outstanding principal balance in
multiple installments. Installment loans include unsecured loans and loans secured by a customer’s vehicle written
by the Company or by a third-party lender through the CSO programs that the Company guarantees.
Through the Company’s CSO programs, the Company provides services related to a third-party lender’s
consumer loan products in some markets by acting as a credit services organization or credit access business on
behalf of consumers in accordance with applicable state laws. Services offered under the CSO programs include
credit-related services such as arranging CSO loans with third-party lenders. Under the CSO programs, the
Company guarantees consumer loan payment obligations to the third-party lender in the event that the customer
defaults on the loan. CSO loans are not included in the Company’s financial statements, but the Company has
established a liability for the estimated losses in support of the guarantee on these loans in its consolidated balance
sheets.
Check Cashing and Other Financial Services
Another small component of the Company's business includes the offering of check cashing and other
ancillary products and services through some of its Company-owned lending locations. The ancillary products and
services include money orders, wire transfers, prepaid debit cards and auto insurance. Most of these ancillary
products and services offered are provided through third-party vendors. In addition, the Company’s franchised
check cashing business offers check cashing services through its franchised check cashing centers.
Segment Information
The Company has one reportable operating segment through which it offers the services described above.
The Company previously had two segments: retail services and e-commerce. The retail services segment included
all of the operations of the Company's Retail Services Division, which was composed of both domestic and foreign
storefront locations. The e-commerce segment was comprised of all of the operations of Enova. In the fourth
quarter of 2014, following the Enova Spin-off in November 2014 and the sale of the Company’s Mexico-based