Profile: Cash America International Inc (CSH)

Cash America International, Inc., incorporated in 1984, provides pawn loans, short-term cash advances, check cashing services and other specialty financial services to individuals. The Company also sells merchandise in its pawnshops, primarily personal property that has been forfeited in connection with its pawn lending operations. As of December 31, 2008, the Company operated 501 pawnshops in 22 states throughout the United States (including 15 pawnshops that are franchises). Most of the Company’s pawnshops located in the United States operate under the Cash America trade name; 43 pawnshops (located in Arizona, California, Nevada and Washington) operate under the SuperPawn trade name. In addition, the Company is the majority owner of the company operating pawn shops under the name of Prenda Facil, which, as of December 31, 2008, included 112 pawn lending locations in central and southern Mexico.

The Company offers unsecured cash advances through 431 of its pawnshops, in 74 standalone Cash America Payday Advance locations, in 174 locations operated by its wholly owned subsidiary Cashland Financial Services, Inc. under the Cashland trade name, and over the Internet under the trade name CashNetUSA at www.cashnetusa.com in the United States. It also offers short-term unsecured loans to customers who reside throughout the United Kingdom through its Internet platform under the trade name QuickQuid at www.quickquid.co.uk. Through its wholly owned subsidiary Mr. Payroll Corporation (Mr. Payroll), the Company offers check cashing services through 128 franchised and five Company-owned check cashing centers. Many of the Company’s pawn and cash advance locations also offer check cashing services and other retail financial services, such as stored-value cards, money orders and money transfers.

On July 23, 2008, the Company, through a wholly owned subsidiary, acquired Primary Business Services, Inc., Primary Finance, Inc., Primary Processing, Inc. and Primary Members Insurance Services, Inc. (collectively PBSI), a group of companies in the business of, among other things, providing loan processing services for, and participating in receivables associated with, a bank issued line of credit made available by the bank on certain stored-value debit cards the bank issues. On December 16, 2008, the Company acquired 80% of the interest in Creazione Estilo, S.A. de C.V., SOFOM, E.N.R., a Mexican sociedad anonima de capital variable, sociedad financiera de objeto multiple, entidad no regulada (Creazione), which, as of December 31, 2008, operated a chain of 112 pawnshops in Mexico under the name Prenda Facil.

Pawn Lending and Merchandise Disposition Activities

When receiving a pawn loan from the Company, a customer pledges personal property to the Company as security for the loan. The Company delivers a pawn transaction agreement, commonly referred to as a pawn ticket, to the customer, along with the proceeds of the loan. If the customer does not repay the loan or redeem the property, the customer forfeits the property to the Company, and the Company sells the property. The Company relies on the disposition of pawned property to recover the principal amount of an unpaid pawn loan, plus a yield on the investment. It does not have recourse against the customer for the loan. As a result, the customer’s creditworthiness is not a factor in the loan decision, and a decision not to redeem pawned property does not affect the customer’s personal credit status.

The Company contracts for a finance and service charge to compensate it for the use of the funds loaned and to cover direct operating expenses related to the transaction. The finance and service charge is calculated as a percentage of the pawn loan amount based on the size and duration of the transaction, in a manner similar to which interest is charged on a bank loan, and generally ranges from 12% to 300% annually, as permitted by applicable state pawnshop laws.

The Company sells merchandise that pawn customers forfeit when they do not repay or renew their pawn loans. The Company sells most of this merchandise at its pawnshops, but also disposes of some items through wholesale sources, over the Internet, or, in the case of some gold jewelry, through a gold bullion bank. Its pawnshops also sell used goods purchased from the general public and some new merchandise, principally accessory merchandise, such as tools, consumer electronics and jewelry. While the Company offers refunds and exchanges for certain merchandise items, it does not provide its customers with express warranties on used merchandise; however, the Company offers customers a 30-day satisfaction guarantee, whereby customers can return merchandise and receive a full refund. The Company provides an allowance for valuation and shrinkage of its merchandise.

Cash Advance Activities

The Company’s cash advance products are offered as single payment cash advance loans. These loans have a loan term of 7 to 45 days and are payable on the customer’s next payday. The Company originates cash advances in some of its locations and arranges for customers to obtain cash advances from independent third-party lenders in others. The Company also offers cash advances over the Internet under the name CashNetUSA in the United States and under the name QuickQuid in the United Kingdom.

The Company provides services in connection with single payment cash advances originated by independent third-party lenders, whereby the Company acts as a credit services organization on behalf of consumers in accordance with applicable state laws (the CSO program). The CSO program includes arranging loans with independent third-party lenders, assisting in the preparation of loan applications and loan documents, and accepting loan payments. The Company offers short-term unsecured cash advances in many of its pawnshops, in standalone Cash America Payday Advance and Cashland locations, and over the Internet. As of December 31, 2008, a cash advance product was available in 679 total locations, including 431 pawnshop locations and 248 standalone cash advance locations, and the Internet lending operations had cash advances outstanding in 33 states and in the United Kingdom. Cash advance products offered under the CSO program were available at 249 locations and through the CashNetUSA Website.

Check Cashing and Other Services

The Company provides check cashing and other financial services through its Mr. Payroll and Cashland subsidiaries, and through many of its pawnshop and payday advance locations. Other financial services include the sale of stored-value cards, money orders and money transfers, among others. As of December 31, 2008, Mr. Payroll’s operations consisted of 128 franchised and five Company-owned check cashing centers in 16 states. Each Mr. Payroll franchisee pays royalties to Mr. Payroll based on the gross revenues of check cashing services provided within the franchisee’s facility. Cashland provides check cashing in all 174 of its cash advance locations.