Cash America 2014 Annual Report Download - page 54

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Divestiture of Mexico-based Pawn Operations
On August 25, 2014, the Company completed the divestiture of its 47 pawn lending locations in Mexico for
cash consideration of approximately $18.5 million, net of cash held at the date of divestiture, including
consideration related to a non-compete agreement. These 47 Mexico pawn lending locations were previously
included in the retail services segment. The Company recorded a loss of $2.8 million related to this divestiture and
$2.1 million related to an expense for an uncollectible receivable incurred as a result of the Company’s
discontinuation of these operations. The combined amounts are included in “Loss on divestitures” in the Company’s
consolidated statements of income and cash flows.
Divestiture of Colorado Pawn Shops
On August 25, 2014, the Company exited the Colorado market through the sale of all five of its pawn
lending locations in Colorado for cash consideration of approximately $3.0 million, net of cash held at the date of
divestiture. These locations were included in the retail services segment and represented all of the locations
operated by the Company in Colorado. The Company recorded a loss of $0.3 million on the sale, which is included
in “Loss on divestitures” in the Company’s consolidated statements of income and cash flows.
Reduction in Short-Term Consumer Lending Operations
In 2014, the Company continued its strategy to de-emphasize consumer lending activities and enhance
focus on pawn lending. As a result, the Company eliminated short-term consumer lending activities in 311 of its
locations in 2014, the majority of which occurred during the last half of 2014. This reduction was in addition to the
closure of 36 locations in Texas in connection with the Texas Consumer Loan Store Closures. As of December 31,
2014, the Company only offered short-term consumer loans in 311 of its locations. Short-term consumer loan fees
comprised 7.7%, 9.7% and 9.7%, respectively, of total revenue in 2014, 2013 and 2012. Management expects the
Company’s revenue from short-term consumer loan activities in future periods to decrease from historical levels
due to the Company’s de-emphasis on this component of its lending activities.
2014 Reorganization
In the third quarter of 2014, the Company initiated a reorganization to better align the corporate and
operating cost structure with its remaining storefront operations after the Enova Spin-off, which is referred to as the
2014 Reorganization. In connection with the 2014 Reorganization, the Company incurred $7.5 million of charges
for severance and other employee-related costs, which are included in “Operations and administration” in the
consolidated statements of income. As of December 31, 2014, the Company had made payments of approximately
$4.4 million for the 2014 Reorganization and had accrued approximately $3.1 million for future payments. Accrued
amounts for the 2014 Reorganization are included in “Accounts payable and accrued expenses” in the consolidated
balance sheets. Management expects that the cost reductions resulting from the 2014 Reorganization will decrease
operations and administration expenses related to its corporate and field management operations in future periods
relative to 2014.