-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hgug81iljXU6qnFpPvH0vanjJWkmOT2jufTUYhPqblRRFFBYbvk5u2dhGSkWIGwk 2HsbN5msgt5td3q80fdxGQ== 0000950134-99-002374.txt : 19990402 0000950134-99-002374.hdr.sgml : 19990402 ACCESSION NUMBER: 0000950134-99-002374 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CASH AMERICA INTERNATIONAL INC CENTRAL INDEX KEY: 0000807884 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS RETAIL [5900] IRS NUMBER: 752018239 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-09733 FILM NUMBER: 99581408 BUSINESS ADDRESS: STREET 1: 1600 W 7TH ST CITY: FT WORTH STATE: TX ZIP: 76102 BUSINESS PHONE: 8173351100 MAIL ADDRESS: STREET 1: 1600 WEST 7TH STREET CITY: FORT WORTH STATE: TX ZIP: 76102 FORMER COMPANY: FORMER CONFORMED NAME: CASH AMERICA INVESTMENTS INC /TX/ DATE OF NAME CHANGE: 19920520 10-K405 1 FORM 10-K FOR PERIOD ENDING DECEMBER 31, 1998 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- FORM 10-K (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1-9733 --------------------- CASH AMERICA INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) TEXAS 75-2018239 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1600 WEST 7TH STREET 76102-2599 FORT WORTH, TEXAS (Zip Code) (Address of principal executive offices)
Registrant's telephone number, including area code: (817) 335-1100 --------------------- Securities Registered Pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- --------------------- Common Stock, $.10 par value per share New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: Common Stock Purchase Rights Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of 24,391,525 shares of the registrant's common stock held by nonaffiliates on March 2, 1999 was approximately $329,285,600. At March 2, 1999 there were 25,180,149 shares of the registrant's Common Stock, $.10 par value, issued and outstanding. DOCUMENTS INCORPORATED BY REFERENCE The Registrant's Annual Report to Shareholders for the year ended December 31, 1998 and the definitive Proxy Statement pertaining to the 1999 Annual Meeting of Shareholders are incorporated herein by reference into Parts II and IV, and Part III, respectively. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 CASH AMERICA INTERNATIONAL, INC. YEAR ENDED DECEMBER 31, 1998 INDEX TO FORM 10-K PART I ........................................................................................................ 1 Item 1. Business....................................................................................... 1 Item 2. Properties.....................................................................................13 Item 3. Legal Proceedings..............................................................................15 Item 4. Submission of Matters to a Vote of Security Holders............................................15 PART II ........................................................................................................16 Item 5. Market for Registrant's Common Equity and Related Stockholder Matters..........................16 Item 6. Selected Financial Data........................................................................16 Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition..........16 Item 8. Financial Statements and Supplementary Data....................................................16 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ..........16 PART III ........................................................................................................16 Item 10. Directors and Executive Officers of the Registrant............................................16 Item 11. Executive Compensation........................................................................16 Item 12. Security Ownership of Certain Beneficial Owners and Management................................17 Item 13. Certain Relationships and Related Transactions................................................17 PART IV ........................................................................................................17 Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K..............................17 SIGNATURES.......................................................................................................18
i 3 INTRODUCTION Cash America International, Inc. (the "Company") was incorporated in Texas on October 4, 1984, to succeed to the business, assets and liabilities of a predecessor corporation formed one year earlier to engage in the pawnshop business. As of December 31, 1998, the Company owns pawnshops through wholly-owned subsidiaries in sixteen states and the United Kingdom and Sweden. The Company also provides check cashing services in twenty states through its subsidiary Mr. Payroll Corporation and rental of tires and wheels in one state through its subsidiary Rent-A-Tire, Inc. The Company's principal executive offices are located at 1600 West Seventh Street, Fort Worth, Texas 76102, and its telephone number is (817) 335-1100. As used herein, the "Company" includes Cash America International, Inc. and its subsidiaries. PART I ITEM 1. BUSINESS GENERAL The Company is a specialty financial services enterprise principally engaged in acquiring, establishing and operating pawnshops which advance money on the security of pledged tangible personal property. Pawnshops function as convenient sources of consumer loans and as sellers primarily of previously-owned merchandise acquired when customers do not redeem their pawned goods. One convenient aspect of a pawn transaction is that the customer has no legal obligation to repay the amount advanced. Instead, the Company relies on the value of the pawned property as security. As a result, the creditworthiness of the customer is not a factor, and a decision not to redeem pawned property has no effect on the customer's personal credit status. (Although pawn transactions can take the form of an advance of funds secured by the pledge of property or a "buy-sell agreement" involving the actual sale of the property with an option to repurchase it, the transactions are referred to throughout this report as "loans" for convenience.) The Company contracts for a finance and service charge to compensate it for the use of the funds advanced. The finance and service charge is typically calculated as a percentage of the loan amount based on the size and duration of the transaction, in a manner similar to which interest is charged on a loan, and has generally ranged from 12% to 300% annually, as permitted by applicable state pawnshop laws. The pledged property is held through the term of the transaction, which, in the Company's domestic operations, is generally one month with an automatic sixty day redemption period unless otherwise earlier repaid, renewed or extended. (For finance and service charges and transaction periods applicable to the Company's foreign operations, see "Business--Regulation."). A majority of the amounts advanced by the Company are paid in full, together with accrued charges, or are renewed or extended through payment of accrued charges. For the years 1996, 1997, and 1998, loans repaid or renewed as a percentage of loans made were 68.5%, 67.9%, and 66.9% respectively. In the event that the borrower does not redeem his pawned goods, the unredeemed collateral is forfeited and becomes merchandise available for disposition by the Company. The Company's growth has been the result of its business strategy of acquiring existing pawnshops and establishing new pawnshops that can benefit from the Company's centralized management and standardized operations. The Company intends to continue its business strategy of acquiring and establishing pawnshops, increasing its share of consumer loan business, and concentrating multiple pawnshops in regional and local markets in order to expand market penetration, enhance name recognition and reinforce marketing programs. Studies indicate to the Company that a large portion of its customers consists of individuals who do not regularly transact loan business with banks. (See, for example, John P. Caskey, Fringe Banking - Check Cashing 1 4 Outlets, Pawnshops and the Poor, 1994.) These generally are persons who may not have checking accounts and conduct as many of their transactions as possible on a cash basis. Pursuant to the Company's business expansion strategy, the Company added a net 9 lending locations in 1996, a net 19 lending locations in 1997, and a net 63 lending locations in 1998. Of these net 91 lending locations added, 77 were acquisitions in individual purchase transactions and 28 were start-ups, while 14 locations were either closed or combined. As of December 31, 1998, the Company had 414 domestic and 50 foreign operating locations. The Company plans to continue to expand its operating locations through new start-ups and acquisitions. While the Company's primary business involves the acquisition, establishment and operation of pawnshops, it also provides check cashing services through its subsidiary Mr. Payroll Corporation ("Mr. Payroll") and tire and wheel rental services through its subsidiary Rent-A-Tire, Inc. ("Rent-A-Tire"). At December 31, 1998, Mr. Payroll's system of manned check cashing centers consisted of 127 centers operated by independent franchisees and ten company owned centers in twenty states. Mr. Payroll earns franchise fees from the sale of check cashing franchises, royalties from franchisees based on a percentage of the gross revenue from a franchisee's check cashing business, and check cashing fees from its owned centers. In addition, Mr. Payroll has developed an automated check cashing system, and it deployed its first check cashing machine ("CCM") in June 1997. At December 31, 1998, it had deployed 91 CCM's, 38 of which were owned by Mr. Payroll. In addition, Mr. Payroll markets and sells CCM's to a variety of end users, including financial institutions and retailers. It contracts with the end user to provide check cashing services and in consideration receives payments from the end user equal to a portion of the fees associated with such activities. Mr. Payroll employed 126 employees as of December 31, 1998. In 1999, the Company entered into an agreement with Wells Fargo Bank, N.A. ("Wells Fargo") that provides for Wells Fargo to contribute cash and assets to Mr. Payroll in consideration for an equity interest in Mr. Payroll. The Company will retain a minority equity interest and will have no obligation to fund the future operations of Mr. Payroll. The Company will retain sole ownership of Mr. Payroll's manned check cashing operation. For additional information concerning Mr. Payroll and the relation of its financial condition and results of operations to that of the Company, see Note 3, Note 11, and Note 13 of Notes to Consolidated Financial Statements in the Annual Report which is incorporated herein by reference. At December 31, 1998, Rent-A-Tire operated four tire and wheel rental stores and managed an additional fourteen tire and wheel rental stores, all of which are located in Texas. Rent-A-Tire does not own the real estate connected with any of those rental stores. At December 31, 1998, Rent-A-Tire employed 123 employees. For additional information concerning Rent-A-Tire and the relation of its financial condition and results of operations to that of the Company, see Note 3 and Note 11 of Notes to Consolidated Financial Statements in the Annual Report which is incorporated herein by reference. LENDING FUNCTION The Company is engaged primarily in the business of lending money on the security of pledged goods. The pledged goods are generally tangible personal property other than securities or printed evidences of indebtedness and generally consist of jewelry, tools, televisions and stereos, musical instruments, firearms, and other miscellaneous items. (In the Company's foreign operations, the pledged goods predominately consist of jewelry.) The pledged tangible personal property is intended to provide security to the Company for the repayment of the amount advanced plus accrued finance and service charges. Pawn loans are made without personal liability to the borrower. Because the loan is made without the borrower's personal liability, the Company does not investigate the creditworthiness of the borrower, but relies on the pledged personal property, and the possibility of its forfeiture, as a basis for its lending decision. The Company contracts for a finance and service charge as compensation for the use of the funds advanced. Finance and service charges contributed 2 5 approximately 57% of the Company's net revenues (total revenues less cost of disposed merchandise) in 1996, 59% in 1997, and 58% in 1998. At the time a pawn transaction is entered into, a pawn transaction agreement, commonly referred to as a pawn ticket, is delivered to the borrower (pledgor) that sets forth, among other items, the name and address of the pawnshop and the pledgor, the pledgor's identification number from his or her driver's license or other approved identification, the date, the identification and description of the pledged goods, including applicable serial numbers, the amount financed, the finance and service charge, the maturity date, the total amount that must be paid to redeem the pledged goods on the maturity date and the annual percentage rate. With regard to domestic operations, the amount that the Company is willing to finance is typically based on a percentage of the pledged personal property's estimated disposition value. The sources for the Company's determination of the estimated disposition value are numerous and include catalogues, blue books, newspapers and previous similar pawn loan transactions. These sources, together with the employees' experience in disposing of similar items of merchandise in particular pawnshops, influence the determination of the estimated disposition value of such items. The Company does not utilize a standard or mandated percentage of estimated disposition value in determining the amount to be financed. Rather, the employees have the authority to set the percentage for a particular item and determine the ratio of loan amount to estimated disposition value with the expectation that, if the item is forfeited to the pawnshop, its subsequent disposition would yield a gross profit margin consistent with the Company's historical experience. The pledged property is held through the term of the transaction, which generally is one month with an automatic sixty day redemption period (see "Regulation" for exceptions in certain states), unless earlier repaid, renewed or extended. A majority of the amounts advanced by the Company are paid in full with accrued finance and service charges or are renewed or extended through payment of accrued finance and service charges. In the event the pledgor does not repay, renew or extend his loan, the unredeemed collateral is forfeited to the Company and then becomes merchandise available for disposition. The Company does not record loan losses or charge-offs inasmuch as, if the pledged goods are not redeemed, the amount advanced becomes the carrying cost of the forfeited collateral that is to be recovered through the merchandise disposition function described below. With regard to the Company's foreign operations, the amount that the pawnshop is willing to finance in a pledge of jewelry is typically based on a fixed amount per gram of the gold or silver content of the pledged property plus additional amounts for diamonds and other features which, in the unit management's assessment, enhance the market value of the pledged property. Declines in gold and silver prices historically have resulted in a reduction of the amount that the pawnshop is willing to lend against an item, which reduces the amount of the pawnshop's loan portfolio and related finance and service charge revenue. The pawn loans are made for a term of six months with an approximate annual blended yield on average foreign pawn loans outstanding in 1998 of 53%. The collateral is held through the term of the loan, and, in the event that the loan is not repaid or renewed on or before maturity, the unredeemed collateral is disposed of at auction or privately. The recovery of the amount advanced, as well as realization of a profit on disposition of merchandise, is dependent on the Company's initial assessment of the property's estimated disposition value. Improper assessment of the disposition value of the collateral in the lending function can result in reduced marketability of the property and disposition of the merchandise for an amount less than the amount advanced. However, the Company historically has experienced profits from the disposition of such merchandise. Declines in gold and silver prices generally will also reduce the disposition value of jewelry items acquired in pawn transactions and could adversely affect the Company's ability to recover the carrying cost of the acquired collateral. For 1996, 1997 and 1998, the Company experienced gross profit margins on dispositions of merchandise of 38%, 36%, and 36% respectively. 3 6 At December 31, 1998, the Company had approximately 1,255,000 outstanding loans totaling $128,637,000, for an average of $102 per loan. Presented below is information with respect to pawn loans made, acquired, repaid and forfeited for the years ended December 31, 1996, 1997 and 1998:
Year Ended December 31, ---------------------------------------- 1996 1997 1998 ---------- ---------- ---------- ($ in thousands) Loans made ................................................. $ 365,852 $ 391,216 $ 435,341 Loans acquired ............................................. 1,020 1,520 7,178 Loans repaid ............................................... (207,297) (227,114) (249,752) Loans renewed .............................................. (43,141) (38,548) (41,619) Loans forfeited: Available for disposition ............................. (91,501) (109,318) (124,415) Disposed of at auction ................................ (6,402) (8,945) (9,999) Effect of exchange rate translation ........................ 1,366 (4,250) (337) ---------- ---------- ---------- Net increase in pawn loans outstanding at end of period $ 19,897 $ 4,561 $ 16,397 ========== ========== ========== Loans repaid or renewed as a percent of loans made ......... 68.5% 67.9% 66.9% ========== ========== ==========
MERCHANDISE DISPOSITION FUNCTION The Company engages in the disposition of merchandise acquired when a pawn loan is not repaid, when used goods are purchased from the general public and when new merchandise is acquired from vendors. New goods consist primarily of accessory merchandise which enhances the marketability of existing merchandise, such as tools, consumer electronics and new jewelry items purchased during the Christmas selling season. For the year ended December 31, 1998, $151,451,000 of merchandise was added to merchandise held for disposition, of which $124,415,000 was from loans not repaid and $27,036,000 was purchased from vendors, customers and through acquisitions of pawnshops. The Company does not provide its customers with warranties on used merchandise purchased from the Company. The Company permits its customers to purchase merchandise on a layaway plan whereby the customer agrees to purchase an item by making an initial cash deposit representing a small part of the disposition price and making additional, non-interest bearing payments of the balance of the disposition price in accordance with a specified schedule. The Company then segregates the item and holds it until the disposition price is paid in full. Should the customer fail to make a required payment, the item is placed with the other merchandise held for disposition. At December 31, 1998, the Company held approximately $4,151,000 in customer layaway deposits. The Company provides an allowance for shrinkage and valuation of its merchandise based on management's evaluation. Management's evaluation takes into consideration historical shrinkage, the quantity and age of slow-moving merchandise on hand and markdowns necessary to liquidate slow-moving merchandise. 4 7 At December 31, 1998, total lending operations merchandise on hand was $65,417,000, after deducting an allowance for shrinkage and valuation of merchandise of $2,163,000. OPERATIONS Unit Management Each location has a unit manager who is responsible for supervising its personnel and assuring that it is managed in accordance with Company guidelines and established policies and procedures. Each unit manager reports to a Market Manager who typically oversees approximately ten unit managers. As of December 31, 1998, the Company has five geographic operating divisions in the United States, each of which is managed by a Region Vice President. Each Market Manager reports to a Region Vice President. The Harvey & Thompson and Svensk Pantbelaning chains follow a similar management organization, with a Managing Director overseeing each of these operations. Trade Name The Company operates its pawnshops under the trade name "Cash America Pawn" in the U.S., "Harvey & Thompson Pawnbrokers" in the U.K., and "Svensk Pantbelaning" in Sweden. The Company has registered the "Cash America" mark and descriptive logos and phrases with the United States Patent and Trademark Office. Personnel The Company employs approximately 3,035 employees as of December 31, 1998. Of the total employees, approximately 253 were in executive, administrative, clerical and accounting functions. The Company has an established training program that provides a combination of classroom instruction, video presentation and on-the-job loan and merchandise disposition experience. The new employee is introduced to the business through an orientation program and through a three-month training program that includes classroom and on-the-job training in loans, layaways, merchandise and general administration of unit operations. The experienced employee receives training and an introduction to the fundamentals of management to acquire the skills necessary to move into management positions within the organization. Manager training involves a twelve month program and includes additional management principles and more extensive training in income maximization, recruitment, merchandise control and cost efficiency. FUTURE EXPANSION The Company's objective is to continue to expand the number of pawnshops it owns and operates through acquisitions and by establishing new units. Management believes that such anticipated expansion will continue to provide economies of scale in supervision, purchasing, administration and marketing by decreasing the overall average cost of such functions per unit owned. The primary pawnshop acquisition criteria include evaluation of the volume of annual loan transactions, outstanding loan balances, merchandise on hand, disposition history, and location and condition of the facility, including lease terms or fair market value of the facility if it is to be purchased. The primary pawnshop start-up criteria include the facility-related items noted above and conditions in the surrounding community indicating a sufficient level of potential customers. 5 8 The Company's business strategy is to continue expanding its pawnshop business within its existing geographic markets and into other markets which meet the risk/reward considerations of the Company. The Company's expansion has not only been in acquiring previously owned pawnshops, but also in establishing new locations. After a suitable location has been found and a lease and license are obtained, the new location can be ready for business within four to six weeks, with completion of counters, vaults and security system and transfer of merchandise from other locations. The approximate start-up costs, defined as the investment in property and equipment, for recently established pawnshops have ranged from $100,000 to $255,000, with an average cost per location of approximately $170,000 in 1998. This amount does not include merchandise transferred from other locations, funds to advance on pawn loans and operating expenses. The Company's expansion program is subject to numerous factors which cannot be predicted, such as the availability of attractive acquisition candidates or sites on suitable terms and general economic conditions. Further, there can be no assurance that future expansion can be continued on a profitable basis. Among other factors, the following factors will impact the Company's future planned expansion. Statutory Requirements. The Company's ability to add newly-established locations in Texas counties having a population of more than 250,000 is limited by a law that became effective September 1, 1991, which requires a finding of public need and probable profitability by the Texas Consumer Credit Commissioner as a condition to the issuance of any new pawnshop license. In addition, the present statutory and regulatory environment of some states renders expansion into those states impractical. See "Business -- Regulation." Competition. The Company faces competition in its expansion program. Several competing pawnshop companies have implemented expansion and acquisition programs. A number of smaller companies have also entered the market. While the Company believes that it is the largest pawnshop operator in the United States, there can be no assurance that the Company will be more successful than its competitors in pursuing acquisition opportunities and leases for attractive start-up locations. Increased competition could also increase prices for attractive acquisition candidates. Capital Requirements. In some states, the Company is required by law to maintain a minimum amount of certain unencumbered net assets (currently $150,000 in Texas) for each pawnshop location. The Company's expansion plans will therefore be limited in these states to the extent the Company is unable to maintain these required levels of unencumbered net assets. Availability of Qualified Unit Management Personnel. The Company's ability to expand may also be limited by the availability of qualified unit management personnel. While the Company seeks to train its existing personnel to enable those capable of doing so to assume management positions and to create attractive compensation packages to retain existing management personnel, there can be no assurance that sufficient qualified personnel will be available to satisfy the Company's needs with respect to its planned expansion. COMPETITION The Company encounters significant competition in connection with its lending and merchandise disposition operations. Some competitors may have greater financial resources than the Company. Several competing pawnshop companies have implemented expansion and acquisition programs. See "Business -- Future Expansion." These competitive conditions may adversely affect the Company's revenues and profitability. 6 9 The Company, in connection with the lending of money, competes with other pawnshops and other forms of financial institutions such as consumer finance companies, which generally lend on an unsecured as well as a secured basis. Other lenders may lend money on terms more favorable than the Company. The pawnshop industry is characterized by a large number of independent owner-operators, some of whom own and operate multiple pawnshops. REGULATION The Company's pawnshop operations are subject to extensive regulation, supervision and licensing under various federal, state and local statutes, ordinances and regulations in the sixteen states and two foreign countries in which it operates. (For a geographic breakdown of operating locations, see "Properties.") Set forth below is a summary of the state pawnshop regulations in those states containing a preponderance of the Company's domestic operating locations. Texas Pawnshop Regulations. Pursuant to the terms of the Texas Pawnshop Act, the Texas Consumer Credit Commissioner has primary responsibility for the regulation of pawnshops and enforcement of laws relating to pawnshops in Texas. The Company is required to furnish the Texas Consumer Credit Commissioner with copies of information, documents and reports which are required to be filed by it with the Securities and Exchange Commission. The Texas Pawnshop Act prescribes the stratified loan amounts and the maximum allowable rates of pawn service charge that pawnbrokers in Texas may charge for the lending of money within each stratified range of loan amounts. That is, the Texas law establishes the maximum allowable pawn service charge rates based on the amount financed per pawn loan. The maximum allowable rates under the Texas Pawnshop Act for the various stratified loan amounts for the fiscal years ended June 30, 1997, 1998 and 1999 are as follows:
Year Ended June 30, 1997 Year Ended June 30, 1998 Year Ended June 30, 1999 ------------------------------------ ----------------------------------------- -------------------------------------- Maximum Maximum Maximum Amount Allowable Amount Allowable Amount Allowable Financed Annual Financed Annual Financed Annual Per Pawn Percentage Per Pawn Percentage Per Pawn Percentage Loan Rate Loan Rate Loan Rate ---- ---- ---- ---- ---- ---- $ 1 to $ 132 . . . . 240% $ 1 to $ 135 . . . . 240% $ 1 to $ 138 . . . . 240% 133 to 440 . . . . 180 136 to 450 . . . . 180 139 to 460 . . . . 180 441 to 1,320 . . . . 30 451 to 1,350 . . . . 30 461 to 1,380 . . . . 30 1,321 to 11,000 . . . . 12 1,351 to 11,250 . . . . 12 1,381 to 11,500 . . . . 12
These rates are reviewed and established annually. The maximum allowable service charge rates were established and have not been revised since 1971 when the Texas Pawnshop Act was enacted. Since 1981, the ceiling amounts for stratification of the loan amounts to which these rates apply have been revised each July 1 in relation to the Consumer Price Index. The Texas Pawnshop Act also prescribes the maximum allowable pawn loan. Under current Texas law, a pawn loan may not exceed $11,500. In addition to establishing maximum allowable service charge rates and loan ceilings, the Texas Pawnshop Act also provides for the licensing of pawnshops and pawnshop employees. To be eligible for a pawnshop license in Texas, an applicant must (i) be of good moral character, (ii) have net assets of at least $150,000 readily available for use in conducting the business of each licensed pawnshop, (iii) show that the pawnshop will be operated lawfully and 7 10 fairly in accordance with the Texas Pawnshop Act, (iv) show that the applicant has the financial responsibility, experience, character, and general fitness to command the confidence of the public in its operations, and (v) in the case of a business entity, the good moral character requirement shall apply to each officer, director and holder of 5% or more of the entity's outstanding shares. As part of the license application process, any existing pawnshop licensee who would be affected by the granting of the proposed application may request a public hearing at which to appear and present evidence for or against the application. For an application for a new license in a county with a population of 250,000 or more, the Consumer Credit Commissioner must find not only that the applicant meets the other requirements for a license, but also that (i) there is a public need for the proposed pawnshop and (ii) the volume of business in the community in which the pawnshop will conduct business indicates a profitable operation is probable. The Texas Consumer Credit Commissioner may, after notice and hearing, suspend or revoke any license for a Texas pawnshop upon finding, among other things, that (i) any fees or charges have not been paid; (ii) the licensee violates (whether knowingly or unknowingly without due care) any provisions of the Texas Pawnshop Act or any regulation or order thereunder; or (iii) any fact or condition exists which, if it had existed at the time the original application was filed for a license, would have justified the Commissioner in refusing such license. Under the Texas Pawnshop Act, a pawnbroker may not accept a pledge from a person under the age of 18 years; make any agreement requiring the personal liability of the borrower; accept any waiver of any right or protection accorded to a pledgor under the Texas Pawnshop Act; fail to exercise reasonable care to protect pledged goods from loss or damage; fail to return pledged goods to a pledgor upon payment of the full amount due; make any charge for insurance in connection with a pawn transaction; enter into any pawn transaction that has a maturity date of more than one month; display for disposition in storefront windows or sidewalk display cases, pistols, swords, canes, blackjacks and similar weapons; operate a pawnshop between the hours of 9:00 p.m. and 7:00 a.m.; or purchase used or secondhand personal property or certain building construction materials unless a record is established containing the name, address and identification of the seller, a complete description of the property, including serial number, and a signed statement that the seller has the right to sell the property. Florida Pawnshop Regulations. The Florida Pawnbroking Act, adopted in 1996, provides for the licensing and bonding of pawnbrokers in Florida and for the Department of Agriculture and Consumer Services' Division of Consumer Services to investigate the general fitness of applicants and generally to regulate pawnshops in the state. The statute limits the pawn service charge that a pawnbroker may collect to a maximum of 25% of the amount advanced in the pawn for each 30 day period of the transaction. The law also requires pawnbrokers to maintain detailed records of all transactions and to deliver such records to the appropriate local law enforcement officials. Among other things, the statute prohibits pawnbrokers from falsifying or failing to make entries in pawn transaction forms, refusing to allow appropriate law enforcement officials to inspect their records, failing to maintain records of pawn transactions for at least two years, making any agreement requiring the personal liability of a pledgor, failing to return pledged goods upon payment in full of the amount due (unless the pledged goods had been taken into custody by a court or law enforcement officer or otherwise lost or damaged), or engaging in title loan transactions at licensed pawnshop locations. It also prohibits pawnbrokers from entering into pawn transactions with a person who is under the influence of alcohol or controlled substances, a person who is under the age of eighteen, or a person using a name other than his own name or the registered name of his business. 8 11 Tennessee Pawnshop Regulations. Tennessee state law provides for the licensing of pawnbrokers in that state. It also (i) requires that pawn transactions be reported to local law enforcement agencies, (ii) requires pawnbrokers to maintain insurance coverage on the property held on pledge for the benefit of the pledgor, (iii) establishes certain hours during which pawnshops may be open for business and (iv) requires that certain bookkeeping records be maintained. Tennessee law prohibits pawnbrokers from selling, redeeming or disposing of any goods pledged or pawned to or with them within 48 hours after making their report to local law enforcement agencies. The Tennessee statute establishes a maximum allowable interest rate of 24% per annum; however, the pawnshop operator may charge an additional fee of up to one-fifth of the amount of the loan per month for investigating the title, storing and insuring the security and various other expenses. Georgia Pawnshop Regulations. Georgia state law requires pawnbrokers to maintain detailed permanent records concerning pawn transactions and to keep them available for inspection by duly authorized law enforcement authorities. The Georgia statute prohibits pawnbrokers from failing to make entries of material matters in their permanent records; making false entries in their records; falsifying, obliterating, destroying, or removing permanent records from their places of business; refusing to allow duly authorized law enforcement officers to inspect their records; failing to maintain records of each pawn transaction for at least four years; accepting a pledge or purchase from a person under the age of eighteen or who the pawnbroker knows is not the true owner of the property; making any agreement requiring the personal liability of the pledgor or seller or waiving any of the provisions of the Georgia statute; or failing to return or replace pledged goods upon payment of the full amount due (unless the pledged goods have been taken into custody by a court or a law enforcement officer). In the event pledged goods are lost or damaged while in the possession of the pawnbroker, the pawnbroker must replace the lost or damaged goods with like kinds of merchandise. Under Georgia law, total interest and service charges may not, during each thirty-day period of the loan, exceed 25% of the principal amount advanced in the pawn transaction (except that after ninety days from the original date of the loan, the maximum rate declines to 12.5% for each subsequent thirty-day period). The statute provides that municipal authorities may license pawnbrokers, define their powers and privileges by ordinance, impose taxes upon them, revoke their licenses, and exercise such general supervision as will ensure fair dealing between the pawnbroker and his customers. Oklahoma Pawnshop Regulations. The Company's Oklahoma operations are subject to the Oklahoma Pawnshop Act. Following substantially the same statutory scheme as the Texas Pawnshop Act, the Oklahoma Pawnshop Act provides for the licensing and bonding of pawnbrokers in Oklahoma and provides for the Oklahoma Administrator of Consumer Credit to investigate the general fitness of the applicant and generally regulate pawnshops in that state. The Administrator has broad rule-making authority with respect to Oklahoma pawnshops. In general, the Oklahoma Pawnshop Act prescribes the stratified loan amounts and the maximum rates of service charges which pawnbrokers in Oklahoma may charge for lending money in Oklahoma within each stratified range of loan amounts. The regulations provide for a graduated rate structure similar to that utilized in federal income tax computations. For example, under this method of calculation a $500 pawn loan earns interest as follows: (a) the first $150 at 240%, annually, (b) the next $100 at 180%, annually and (c) the remaining $250 at 120%, annually. The maximum allowable pawn service charges for the various stratified loan amounts under the Oklahoma statute are as follows: 9 12
Maximum Amount Allowable Financed Annual Per Pawn Percentage Loan Rate ------------ ----------- $ 1 to $ 150 ...... 240% 151 to 250 ...... 180 251 to 500 ...... 120 501 to 1,000 ...... 60 1,001 to 25,000 ...... 36
A pawn loan in Oklahoma may not exceed $25,000. Louisiana Pawnshop Regulations. Louisiana law provides for the licensing and bonding of pawnbrokers in that state. In addition, the act requires that pawn transactions be reported to local law enforcement agencies, establishes hours during which pawnbrokers may be open for business and requires certain bookkeeping practices. Under the Louisiana statute, no pawnbroker may sell any jewelry pledged as collateral until the lapse of six months from the time the loan was made or extended by payment of accrued interest. All other unredeemed collateral from loans can be sold after the lapse of three months. Louisiana state law establishes maximum allowable rates of interest on pawn loans of 10% per month. In addition, Louisiana law provides that the pawnbroker may also charge a one-time fee not to exceed 10% for all other services. Various municipalities and parishes in the state of Louisiana have promulgated additional ordinances and regulations pertaining to pawnshops. Although pawnshop regulations vary from state to state to a considerable degree, the regulations summarized above are representative of the regulatory frameworks affecting the Company in the various states in which its operating units are located. United Kingdom Regulations. Pawnshops in the United Kingdom conduct pawn operations in a manner that is similar to the Company's domestic operations, except that pawnshops generally lend money only on the security of jewelry and gold and silver items. The Consumer Credit Act 1974 in the United Kingdom requires that the pawnbroker notify the customer following the expiration of the six month loan term and before the pledged items are sold by the pawnbroker. Unredeemed items are generally sold at auction. For loans exceeding 75 pounds sterling, any amounts received on the auction sale in excess of the principal amount of the loan, accrued finance and service charge and disposition expenses must be held by the pawnbroker to be reclaimed by the customer. If the pawnbroker is the highest bidder at the auction, it reclaims the merchandise for later disposition from its pawnshop premises and may realize gross profit on resale. For loans of 75 pounds sterling or less, unredeemed merchandise is automatically forfeited to the pawnbroker, and the pawnbroker may dispose of such merchandise to the public from the pawnshop premises and retain any excess sales proceeds. Pawnbrokers in the United Kingdom are licensed and regulated by the Office of Fair Trading (the "OFT") pursuant to the Consumer Credit Act 1974. Licenses are valid for five years, subject to possible revocation, suspension, or variance by the OFT. Unlike most state statutes in the United States governing pawnbrokers, the Consumer Credit Act 1974 and the regulations promulgated thereunder do not specify a maximum allowable interest rate chargeable by pawnbrokers in the United Kingdom. Rather, the statute prohibits pawnbrokers from entering into "extortionate credit bargains" with customers. Currently, the Company typically charges a rate of six percent (6%) per month. Sweden Regulations. The regulatory environment for pawnshops in Sweden is very similar to that in the United Kingdom. Sweden's 1949 statute governing pawnbroking was repealed and replaced with a new 10 13 pawnbroking act effective January 1, 1996. The new act provides that the loan term may not exceed one year, that the pawnbroker is entitled to default interest on arrears for a maximum of four months from the due date, and that the pawnbroker may not dispose of unredeemed merchandise less than two months after the due date. The disposition must take place at a public auction, and the original customer is entitled to any excess disposition proceeds. Like Sweden's previous pawnbroking statute, the new act provides for licensing and supervision of pawnshops by the local County Administrative Boards. The act does not specify a maximum allowable interest rate for pawn loans, and, unlike the previous statute, it does not authorize the local County Administrative Boards to regulate the rates that pawnbrokers may charge. Currently, the Company typically charges a rate of between 2.75% and 3.75% per month. Also, the act grants Swedish pawnbrokers the new authority to purchase unredeemed merchandise at the public auction and then dispose of the merchandise to the public from the pawnshop premises. Other Regulatory Matters, Etc. With respect to firearm sales, each of the pawnshops must comply with the Brady Handgun Violence Prevention Act (the "Brady Act"), which took effect on February 28, 1994. The Brady Act imposes a background check requirement in connection with the disposition of firearms by federally licensed firearms dealers. In addition, the Company must continue to comply with the longstanding regulations promulgated by the Department of the Treasury, Bureau of Alcohol, Tobacco and Firearms which require each pawnshop dealing in guns to maintain a permanent written record of all receipts and dispositions of firearms. In addition to the state statutes and regulations described above, many of the Company's pawnshops are subject to municipal ordinances, which may require, for example, local licenses or permits and specified recordkeeping procedures, among other things. Each of the Company's pawnshops voluntarily or pursuant to municipal ordinance provides to the police department having jurisdiction copies of all daily transactions involving pawn loans and over-the-counter purchases. These daily transaction reports are designed to provide the local police with a detailed description of the goods involved including serial numbers, if any, and the name and address of the owner obtained from a valid identification card. A copy of the transaction ticket is provided to local law enforcement agencies for processing by the National Crime Investigative Computer to determine conflicting claims of rightful ownership. Goods held to secure pawn loans or goods purchased which are determined to belong to an owner other than the borrower or seller are subject to recovery by the rightful owner. However, the Company historically has not experienced a material number of claims of this sort, and the claims experienced have not had a material adverse effect on the Company's results of operations. Casualty insurance, including burglary coverage, is maintained for each of the Company's pawnshops, and fidelity coverage is maintained on each of the Company's employees. Management of the Company believes its operations are conducted in material compliance with all federal, state and local laws and ordinances applicable to its business. 11 14 EXECUTIVE OFFICERS The following sets forth, as of March 11, 1999, certain data concerning the executive officers of the Company, all of whom are elected on an annual basis. There is no family relationship between any of the executive officers.
Name Age Position ------------------ --- -------------------------------------------------------------------- Jack R. Daugherty 51 Chairman of the Board and Chief Executive Officer Daniel R. Feehan 48 President, Chief Operating Officer and Director Thomas A. Bessant, Jr. 40 Executive Vice President - Chief Financial Officer Jerry D. Finn 52 Executive Vice President - Foreign Operations and Operations Support Michael D. Gaston 54 Executive Vice President - Business Development Hugh A. Simpson 39 Executive Vice President - General Counsel and Secretary Gregory W. Trees 55 Executive Vice President - Domestic Operations James H. Kauffman 54 Chief Executive Officer - Rent-A-Tire, Inc.
Jack R. Daugherty has been Chairman of the Board and Chief Executive Officer of the Company since its founding in 1984. Mr. Daugherty has owned and operated pawnshops since 1971. Daniel R. Feehan has been President and Chief Operating Officer since January 1990. He served as Chairman and Co-Chief Executive Officer of Mr. Payroll Corporation from February 1998 to February 1999 before returning to the position of President and Chief Operating Officer of the Company. Thomas A. Bessant, Jr. joined the Company in May 1993 as Vice President - Finance and Treasurer. He was elected Senior Vice President - Chief Financial Officer in July 1997 and has served as Executive Vice President - Chief Financial Officer since July 1998. Prior to joining the Company, Mr. Bessant was a Senior Manager in the Corporate Finance Consulting Services Group of Arthur Andersen & Co., S. C. in Dallas, Texas from June 1989. Prior to that time, Mr. Bessant was Vice President in the Corporate Banking Division of NCNB Texas, N.A., and its predecessor banking corporations, beginning in 1981. Jerry D. Finn joined the Company in August 1994 and has served in various operations management positions since then, including Division Vice President from January 1995 to July 1997, Division Senior Vice President from July 1997 to April 1998, and Executive Vice President since April 1998. Prior to joining the Company, he served as District Supervisor for Kelly-Moore Paint Co. from March 1981 to August 1994. Michael D. Gaston joined the Company in April 1997 as Executive Vice President - Business Development. Prior to joining the Company, Mr. Gaston served as President of the Gaston Corporation, a private consulting firm, from 1984 to April 1997, and Executive Vice President of Barkley & Evergreen, an advertising and consulting agency, from 1991 to April 1997. Hugh A. Simpson joined the Company in December 1990 as Vice President and General Counsel and was elected Vice President - General Counsel and Secretary in April 1991. He was elected Senior Vice President - General Counsel and Secretary in July 1997 and has served as Executive Vice President - General Counsel and Secretary since July 1998. Gregory W. Trees joined the Company in March 1992 as Vice President - Marketing and Merchandising. Mr. Trees served as Division Vice President from April 1996 to July 1997 and Division Senior Vice President from July 1997 to April 1998. He has served as Executive Vice President - Domestic Operations since April 1998. 12 15 James H. Kauffman joined the Company in July 1996 as Executive Vice President - Chief Financial Officer. He served as President - Cash America Pawn from July 1997 to July 1998, and since then has served as Chief Executive Officer of Rent-A-Tire, Inc. Prior to joining the Company, Mr. Kauffman served as President of Keystone Steel & Wire Company, a wire products manufacturer, from July 1991 to June 1996. ITEM 2. PROPERTIES As of March 11, 1999 the Company owns the real estate and buildings for 16 of its pawnshop locations. Since May 1992, the Company's headquarters have been located in a nine-story building adjacent to downtown Fort Worth, Texas. The Company purchased the building in January 1992. All of the Company's other locations are leased from unaffiliated parties under non-cancelable operating leases. The following table sets forth, as of March 11, 1999, the geographic markets served by the Company and the number of lending locations in such markets in which it presently operates.
Number of Locations in Area ------------------- TEXAS: Houston........................................................................ 45 Central/South Texas............................................................ 58 Dallas/Fort Worth.............................................................. 38 West Texas..................................................................... 22 Rio Grande Valley.............................................................. 10 --- Total Texas .............................................................. 173 --- FLORIDA: Tampa/St. Petersburg........................................................... 15 Orlando........................................................................ 13 Jacksonville................................................................... 10 Other ......................................................................... 21 --- Total Florida.............................................................. 59 --- TENNESSEE: Memphis........................................................................ 23 Nashville...................................................................... 5 --- Total Tennessee............................................................ 28 --- GEORGIA: Atlanta........................................................................ 15 Savannah....................................................................... 5 Other ......................................................................... 2 --- Total Georgia.............................................................. 22 ---
13 16 OKLAHOMA: Oklahoma City.................................................................. 14 Tulsa ......................................................................... 6 Other ......................................................................... 1 --- Total Oklahoma............................................................. 21 --- LOUISIANA: New Orleans.................................................................... 9 Baton Rouge.................................................................... 3 Other ......................................................................... 8 --- Total Louisiana............................................................ 20 --- MISSOURI: Kansas City.................................................................... 11 St. Louis...................................................................... 5 --- Total Missouri............................................................. 16 --- INDIANA: Indianapolis................................................................... 10 Fort Wayne..................................................................... 3 Other ......................................................................... 1 --- Total Indiana.............................................................. 14 --- NORTH CAROLINA: Charlotte...................................................................... 7 Greensboro/Winston Salem....................................................... 3 Other ......................................................................... 1 --- Total North Carolina....................................................... 11 --- ALABAMA: Mobile......................................................................... 5 Birmingham..................................................................... 4 Other ......................................................................... 1 --- Total Alabama.............................................................. 10 --- KENTUCKY: Louisville..................................................................... 9 --- SOUTH CAROLINA: Charleston..................................................................... 4 Greenville..................................................................... 3 --- Total South Carolina....................................................... 7 --- UTAH: Salt Lake City................................................................. 7 --- OHIO: Cincinnati..................................................................... 6 --- COLORADO: Denver......................................................................... 1 Colorado Springs............................................................... 3 Other ......................................................................... 1 --- Total Colorado............................................................. 5 ---
14 17 ILLINOIS: Chicago........................................................................ 3 Other.......................................................................... 1 --- Total Illinois............................................................. 4 --- Total United States........................................................ 412 --- UNITED KINGDOM: London......................................................................... 26 Other ......................................................................... 13 --- Total United Kingdom....................................................... 39 --- SWEDEN: Stockholm...................................................................... 4 Other.......................................................................... 7 -- Total Sweden............................................................... 11 --- GRAND TOTAL.................................................................... 462 ===
The Company considers its equipment, furniture and fixtures and owned buildings to be in good condition. The Company has its own construction supervisors who engage local contractors to selectively remodel and upgrade its domestic pawnshop facilities throughout the year. The Company's leases typically require the Company to pay all maintenance costs, insurance costs and property taxes. For additional information concerning the Company's leases see Note 12 of Notes to Consolidated Financial Statements in the Annual Report which is incorporated herein by reference. ITEM 3. LEGAL PROCEEDINGS The Company is a defendant in certain lawsuits encountered in the ordinary course of its business. Certain of these matters are covered to an extent by insurance. In the opinion of management, the resolution of these matters will not have a material adverse effect on the Company's financial position, results of operations or liquidity. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to the Company's security holders during the fourth quarter ended December 31, 1998. 15 18 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Information contained under the caption "Common Stock Data" in the Annual Report is incorporated herein by reference in response to this Item 5. ITEM 6. SELECTED FINANCIAL DATA Information contained under the caption "Seven Year Summary of Selected Financial Data" in the Annual Report is incorporated herein by reference in response to this Item 6. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Information contained under the caption "Management's Discussion and Analysis of Results of Operations and Financial Condition" in the Annual Report is incorporated herein by reference in response to this Item 7. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Information contained under the captions "Consolidated Financial Statements," "Notes To Consolidated Financial Statements," and "Income Statement Quarterly Data" in the Annual Report is incorporated herein by reference in response to this Item 8. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE The Company had no disagreements on accounting or financial disclosure matters with its independent public accountants to report under this Item 9. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information contained under the caption "Election of Directors" in the Company's Proxy Statement is incorporated herein by reference in response to this Item 10. See Item 1, "Executive Officers" for information concerning executive officers. ITEM 11. EXECUTIVE COMPENSATION Information contained under the caption "Executive Compensation" in the Company's Proxy Statement is incorporated herein by reference in response to this Item 11. 16 19 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information contained under the caption "Security Ownership of Certain Beneficial Owners and Management" in the Company's Proxy Statement is incorporated herein by reference in response to this Item 12. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information contained under the caption "Executive Compensation" in the Company's Proxy Statement is incorporated herein by reference in response to this Item 13. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (1) The following financial statements of the Company and Report of Independent Accountants are contained in the Annual Report and are incorporated herein by reference. CONSOLIDATED FINANCIAL STATEMENTS: Consolidated Balance Sheets as of December 31, 1998 and 1997. Consolidated Statements of Income for the years ended December 31, 1998, 1997 and 1996. Consolidated Statements of Stockholders' Equity for the years ended December 31, 1998, 1997 and 1996. Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS REPORT OF INDEPENDENT ACCOUNTANTS (2) The following financial statement schedule of the Company, as listed below, is included herein. Schedule II -- Allowance for Valuation of Inventory. Report of Independent Accountants on Financial Statement Schedule. All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions, are inapplicable, or the required information is included elsewhere in the financial statements. (3) The exhibits filed in response to Item 601 of Regulation S-K are listed in the Exhibit Index on pages 22 through 24. (4) During the fourth quarter ended December 31, 1998, the Company did not file any reports on Form 8-K. 17 20 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 29, 1999. CASH AMERICA INTERNATIONAL, INC. By: /s/ JACK R. DAUGHERTY ------------------------------------- Jack R. Daugherty Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on March 29, 1999 on behalf of the registrant and in the capacities indicated.
Signature Title Date --------- ----- ---- /s/ JACK R. DAUGHERTY Chairman of the Board and March 29, 1999 - ----------------------------------------- Chief Executive Officer Jack R. Daugherty (Principal Executive Officer) /s/ DANIEL R. FEEHAN President, Chief Operating March 29, 1999 - ----------------------------------------- Officer and Director Daniel R. Feehan /s/ THOMAS A. BESSANT, JR. Executive Vice President - March 29, 1999 - ----------------------------------------- Chief Financial Officer Thomas A. Bessant, Jr. (Principal Financial and Accounting Officer) /s/ A. R. DIKE Director March 29, 1999 - ----------------------------------------- A. R. Dike
18 21 /s/ JAMES H. GRAVES Director March 29, 1999 - ----------------------------------------- James H. Graves /s/ B. D. HUNTER Director March 29, 1999 - ----------------------------------------- B. D. Hunter /s/ TIMOTHY J. McKIBBEN Director March 29, 1999 - ----------------------------------------- Timothy J. McKibben /s/ ALFRED M. MICALLEF Director March 29, 1999 - ----------------------------------------- Alfred M. Micallef /s/ CLIFTON H. MORRIS, JR. Director March 29, 1999 - ----------------------------------------- Clifton H. Morris, Jr. /s/ CARL P. MOTHERAL Director March 29, 1999 - ----------------------------------------- Carl P. Motheral /s/ SAMUEL W. RIZZO Director March 29, 1999 - ----------------------------------------- Samuel W. Rizzo /s/ ROSALIN ROGERS Director March 29, 1999 - ----------------------------------------- Rosalin Rogers
19 22 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders Cash America International, Inc. Our report on the consolidated financial statements of Cash America International, Inc. and Subsidiaries has been incorporated by reference in this Form 10-K from page 31 of the 1998 Annual Report to Stockholders of Cash America International, Inc. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed in Item 14 of this Form 10-K. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. PRICEWATERHOUSECOOPERS LLP Fort Worth, Texas January 26, 1999 20 23 CASH AMERICA INTERNATIONAL, INC. SCHEDULE II--ALLOWANCE FOR VALUATION OF INVENTORY For the Three Years Ended December 31, 1998
Additions ----------------------------- Balance at Charged Charged Balance Beginning to to at End Description of Period Expense Other Deductions(a) of Period - ------------ ------------- -------------- -------------- ------------- ------------- ($ in thousands) Year Ended: December 31, 1998 .......... $ 2,158 $ 1,338 $ -0- $ 1,333 $ 2,163 ============= ============= ============= ============= ============= December 31, 1997 .......... $ 2,078 $ 1,359 $ -0- $ 1,279 $ 2,158 ============= ============= ============= ============= ============= December 31, 1996 .......... $ 2,372 $ 1,701 $ -0- $ 1,995 $ 2,078 ============= ============= ============= ============= =============
- ------------------------------- (a) Deducted from allowance for write-off or other disposition of inventory. 21 24 EXHIBIT INDEX The following documents are filed as a part of this report. Those exhibits previously filed and incorporated herein by reference are identified below. Exhibits not required for this report have been omitted.
EXHIBIT NO. DESCRIPTION - -------- ----------- 3.1 -- Articles of Incorporation of Cash America Investments, Inc. filed in the office of the Secretary of State of Texas on October 4, 1984.(a) (Exhibit 3.1) 3.2 -- Articles of Amendment to the Articles of Incorporation of Cash America Investments, Inc. filed in the office of the Secretary of State of Texas on October 26, 1984.(a) (Exhibits 3.2) 3.3 -- Articles of Amendment to the Articles of Incorporation of Cash America Investments, Inc. filed in the office of the Secretary of State of Texas on September 24, 1986.(a) (Exhibit 3.3) 3.4 -- Articles of Amendment to the Articles of Incorporation of Cash America Investments, Inc. filed in the office of the Secretary of State of Texas on September 30, 1987.(b) (Exhibit 3.4) 3.5 -- Articles of Amendment to the Articles of Incorporation of Cash America Investments, Inc. filed in the office of the Secretary of State of Texas on April 23, 1992 to change the Company's name to "Cash America International, Inc." (c) (Exhibit 3.5) 3.6 -- Articles of Amendment to the Articles of Incorporation of Cash America International, Inc. filed in Office of the Secretary of State of Texas on May 21, 1993. (d) (Exhibit 3.6) 3.7 -- Bylaws of Cash America International, Inc.(e) (Exhibit 3.5) 3.8 -- Amendment to Bylaws of Cash America International, Inc. dated effective September 26, 1990.(f) (Exhibit 3.6) 3.9 -- Amendment to Bylaws of Cash America International, Inc. dated effective April 22, 1992.(c) (Exhibit 3.8) 4.1 -- Form of Stock Certificate.(a) (Exhibit 4.1) 4.1a -- Form of Stock Certificate.(f) (Exhibit 4.1a) 4.1b -- Form of Stock Certificate.(c) (Exhibit 4.1b) 10.1 -- 1987 Stock Option Plan (with Stock Appreciation Rights) for Cash America International, Inc.(g) (Exhibit 4.1) 10.2 -- Amendment to 1987 Stock Option Plan (with Stock Appreciation Rights) dated February 27, 1997.(h) (Exhibit 10.2) 10.3 -- Amendment to 1987 Stock Option Plan (with Stock Appreciation Rights) dated April 22, 1997. (i) (Exhibit 10.1) 10.4 -- Amendment to 1987 Stock Option Plan (with Stock Appreciation Rights) dated June 29, 1998. 10.5 -- 1989 Non-Employee Director Stock Option Plan.(j) (Exhibit 10.47) 10.6 -- Amendment to 1989 Non-Employee Director Stock Option Plan dated April 24, 1996. (h) (Exhibit 10.4) 10.7 -- 1989 Key Employee Stock Option Plan.(j) (Exhibit 10.48) 10.8 -- Amendment to 1989 Key Employee Stock Option Plan dated January 21, 1997. (h) (Exhibit 10.6) 10.9 -- 1994 Long-Term Incentive Plan.(k) (Exhibit 10.5) 10.10 -- Amendment to 1994 Long-Term Incentive Plan dated July 22, 1997. (l) (Exhibit 10.1) 10.11 -- Amended and Restated Executive Employment Agreements between the Company and Messrs. Daugherty and Feehan, each dated as of August 1, 1997. (l) (Exhibit 10.2) 10.12 -- Consultation Agreements between the Company and Messrs. Dike, Hunter, Motheral, and Rizzo, each dated April 25, 1990.(m) (Exhibit 10.49) 10.13 -- Note Agreement between the Company and Teachers Insurance and Annuity Association of America dated as of May 6, 1993.(n) (Exhibit 10.1) 10.14 -- First Supplement to Note Agreement between the Company and Teachers Insurance and Annuity Association of America dated as of September 20, 1994.(k) (Exhibit 10.11)
25 10.15 -- Second Supplement (May 12, 1995), Third Supplement (July 7, 1995), and Fourth Supplement (November 10, 1995) to 1993 Note Agreement between the Company and Teachers Insurance and Annuity Association of America.(o) (Exhibit 10.1) 10.16 -- Fifth Supplement (December 30, 1996) to 1993 Note Agreement between the Company and Teachers Insurance and Annuity Association of America. (h) (Exhibit 10.13) 10.17 -- Sixth Supplement (December 30, 1997) to 1993 Note Agreement between the Company and Teachers Insurance and Annuity Association of America. (p) (Exhibit 10.16) 10.18 -- Seventh Supplement (December 31, 1998) to 1993 Note Agreement between the Company and Teachers Insurance and Annuity Association of America. 10.19 -- Note Agreement between the Company and Teachers Insurance and Annuity Association of America dated as of July 7, 1995.(q) (Exhibit 10.1) 10.20 -- First Supplement (November 10, 1995) to 1995 Note Agreement between the Company and Teachers Insurance and Annuity Association of America. (o) (Exhibit 10.2) 10.21 -- Second Supplement (December 30, 1996) to 1995 Note Agreement between the Company and Teachers Insurance and Annuity Association of America. (h) (Exhibit 10.16) 10.22 -- Third Supplement (December 30, 1997) to 1995 Note Agreement between the Company and Teachers Insurance and Annuity Association of America. (p) (Exhibit 10.20) 10.23 -- Fourth Supplement (December 31, 1998) to 1995 Note Agreement between the Company and Teachers Insurance and Annuity Association of America. 10.24 -- Amended and Restated Senior Revolving Credit Facility Agreement among the Company, certain lenders named therein, and NationsBank of Texas, N.A., as Administrative Agent dated as of June 19, 1996. (r) (Exhibit 10.1) 10.25 -- First Amendment (December 11, 1997) to Amended and Restated Senior Revolving Credit Facility Agreement dated as of June 19, 1996. (p) (Exhibit 10.22) 10.26 -- Second Amendment (June 24, 1998) to Amended and Restated Senior Revolving Credit Facility Agreement dated as of June 19, 1996. (s) (Exhibit 10.1) 10.27 -- Third Amendment (December 11, 1998) and Fourth Amendment (December 31, 1998) to Amended and Restated Senior Revolving Credit Facility Agreement dated as of June 19, 1996. 10.28 -- Note Agreement dated as of December 1, 1997 among the Company and the Purchasers named therein for the issuance of the Company's 7.10% Senior Notes due January 2, 2008 in the aggregate principal amount of $30,000,000. (p) (Exhibit 10.23) 10.29 -- First Supplement (December 31, 1998) to Note Agreement dated as of December 1, 1997 among the Company and the Purchasers named therein. 13 -- 1998 Annual Report to Stockholders of the Company and 1999 Proxy Statement. 21 -- Subsidiaries of Cash America International, Inc. 23 -- Consent of PricewaterhouseCoopers LLP. 27 -- Financial Data Schedule.
- ------------------------ Certain Exhibits are incorporated by reference to the Exhibits shown in parenthesis contained in the Company's following filings with the Securities and Exchange Commission: (a) Registration Statement Form S-1, File No. 33-10752. (b) Amendment No. 1 to its Registration Statement on Form S-4, File No. 33-17275. (c) Annual Report on Form 10-K for the year ended December 31, 1992. (d) Annual Report on Form 10-K for the year ended December 31, 1993. (e) Post-Effective Amendment No. 1 to its Registration Statement on Form S-4, File No. 33-17275. (f) Annual Report on Form 10-K for the year ended December 31, 1990. (g) Registration Statement on Form S-8, File No. 33-29658. (h) Annual Report on Form 10-K for the year ended December 31, 1996. 26 (i) Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. (j) Annual Report on Form 10-K for the year ended December 31, 1989. (k) Annual Report on Form 10-K for the year ended December 31, 1994. (l) Quarterly Report on Form 10-Q for the quarter ended September 30, 1997. (m) Post-Effective Amendment No. 4 to its Registration Statement on Form S-4, File No. 33-17275. (n) Quarterly Report on Form 10-Q for the quarter ended March 31, 1993. (o) Quarterly Report on Form 10-Q for the quarter ended September 30,1995. (p) Annual Report on Form 10-K for the year ended December 31, 1997. (q) Quarterly Report on Form 10-Q for the quarter ended June 30, 1995. (r) Quarterly Report on Form 10-Q for the quarter ended June 30, 1996. (s) Quarterly Report on Form 10-Q for the quarter ended June 30, 1998. EX-10.4 2 AMENDMENT TO 1987 STOCK OPTION PLAN 1 EXHIBIT 10.4 AMENDMENT FIVE TO THE 1987 STOCK OPTION PLAN (WITH STOCK APPRECIATION RIGHTS) FOR CASH AMERICA INTERNATIONAL, INC. By action of the Board of Directors of Cash America International, Inc. this day, the 1987 Stock Option Plan (With Stock Appreciation Rights) for Cash America International, Inc. (the "Plan") is hereby amended as follows: Section 21 of the Plan is hereby amended to read as follows: 21. Effective Date and Termination Date. The effective date of the Plan is the date on which the Board adopts this Plan, unless otherwise provided by the Board at the time of such adoption, and the Plan shall terminate on the twelfth anniversary of the effective date. CASH AMERICA INTERNATIONAL, INC. By: /s/ HUGH A. SIMPSON -------------------------------------------- Hugh A. Simpson, Senior Vice President - General Counsel and Secretary June 29, 1998 EX-10.18 3 7TH SUPPLEMENT TO 1993 NOTE AGREEMENT 1 EXHIBIT 10.18 SEVENTH SUPPLEMENT TO 1993 NOTE AGREEMENT This Seventh Supplement to 1993 Note Agreement (the "Seventh Supplement") is made and entered into as of the 31st day of December, 1998, by and between Cash America International, Inc. (the "Company") and Teachers Insurance and Annuity Association of America ("Teachers"). RECITALS: WHEREAS, the parties hereto have entered into a Note Agreement dated as of May 6, 1993, pursuant to which the Company issued and Teachers purchased $30,000,000 aggregate principal amount of the Company's 8.33% Senior Notes Due May 1, 2003, and the parties have amended said Note Agreement by entering into a First Supplement to Note Agreement dated as of September 20, 1994, a Second Supplement to Note Agreement dated as of May 12, 1995, a Third Supplement to Note Agreement dated as of July 7, 1995, a Fourth Supplement to 1993 Note Agreement dated as of November 10, 1995, a Fifth Supplement to 1993 Note Agreement dated as of December 30, 1996 and a Sixth Supplement to 1993 Note Agreement dated as of December 30, 1997 (said Note Agreement, as amended, being referred to hereafter as the "Note Agreement"); and WHEREAS, the Company and Teachers desire to amend certain provisions of the Note Agreement. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Teachers hereby agree as follows: 1. Amendment to Section 2.01 of the Note Agreement. Section 2.01 of the Note Agreement is hereby amended by adding in alphabetical order the following new definitions: "Mr. Payroll" means Mr. Payroll Corporation, a Texas corporation. "Wells-Mr. Payroll Transaction" means a transaction pursuant to a definitive written agreement among the Company, Mr. Payroll, Wells Fargo Bank, N.A. ("Wells Fargo"), and InnoVisions, LLC, a Delaware limited liability company owned in part by Mr. Payroll and in part by Wells Fargo ("InnoVisions") containing the following material elements: (a) the transfer to a newly formed or existing Wholly-Owned Subsidiary of substantially all of Mr. Payroll's assets relating to its manned check cashing business, (b) the conversion of the common stock and preferred stock of Mr. Payroll owned by the Company into a new class of convertible preferred stock representing at least a 40% equity ownership in Mr. Payroll, (c) the issuance of common stock of Mr. Payroll, representing a 10% to 20% equity ownership interest in Mr. Payroll, to the management of Mr. Payroll, (d) the transfer of all of the tangible assets of InnoVisions to Wells Fargo, (e) the contribution to Mr. Payroll by Wells Fargo of (i) no less than $20,000,000 in cash and (ii) the assets received from InnoVisions, together representing a gross investment value of no less than $24,000,000, in consideration for the issuance of convertible preferred stock 2 representing at least a 40% equity ownership interest in Mr. Payroll and having the same terms and conditions as the convertible preferred stock issued to the Company, with the total contribution of assets and cash by Wells Fargo at least equal to the Company's Investment in the convertible preferred stock of Mr. Payroll received by the Company in the Wells-Mr. Payroll Transaction, (f) the change of the corporate name of Mr. Payroll to "InnoVisions, Inc." and (g) the closing of the transaction on or before January 31, 1999. "Wells-Mr. Payroll Transaction Letters" means the letter dated December 1, 1998 from David J. Clay of the Company to Diane Hom of Teachers, describing the Wells-Mr. Payroll Transaction, and the letter, dated December 14, 1998, from David J. Clay of the Company to Diane Hom of Teachers, which attaches a forecasted December 31, 1998 pro forma balance sheet of the Company reflecting the consummation of the Wells-Mr. Payroll Transaction. 2. Amendment to Section 8.01 of the Note Agreement. Section 8.01 of the Note Agreement is hereby amended by changing the paragraph heading of (k) to "(m)" and by adding new Sections 8.01(k) and (l) to read in their entirety as follows: (k) if, as, and when made available to the Company by Mr. Payroll, a balance sheet of Mr. Payroll (in reasonable detail) as of the end of each Fiscal Quarter and the related statements of income, stockholders' equity and cash flows of Mr. Payroll (in reasonable detail) for such Fiscal Quarter and for the portion of the current Fiscal Year ending on the last day of such Fiscal Quarter, in each case (i) prepared in accordance with GAAP and (ii) setting forth in comparative form the figures for the corresponding period of the preceding Fiscal Year, it being understood that (1) such statements shall be in the same scope, form and substance as those furnished to the Company, and (2) such statements need not be provided if, pursuant to the terms of any written confidentiality agreement entered into between the Company and Mr. Payroll (other than any confidentiality agreement entered into in contemplation of avoiding the disclosure requirements herein contained), the Company is prohibited from providing such statements; (l) if, as, and when made available to the Company by Mr. Payroll, a balance sheet of Mr. Payroll (in reasonable detail) as of the end of each Fiscal Year and the related statements of income, stockholders' equity and cash flows of Mr. Payroll (in reasonable detail) for such Fiscal Year, in each case (i) prepared in conformity with GAAP and (ii) setting forth in comparative form the figures for the preceding Fiscal Year, it being understood that (1) such statements shall be in the same scope, form and substance as those furnished to the Company, and (2) such statements need not be provided if, pursuant to the terms of any written confidentiality agreement entered into between the Company and Mr. Payroll (other than any confidentiality agreement entered into in contemplation of avoiding the disclosure requirements herein contained), the Company is prohibited from providing such statements; and -2- 3 3. Amendment to Section 9.11 of the Note Agreement. Section 9.11 of the Note Agreement is hereby amended by changing the paragraph heading of (l) to "(m)," by changing the paragraph heading of (m) to "(n)," and by adding a new Section 9.11(l) to read in its entirety as follows: (l) the initial Investment in Mr. Payroll Corporation resulting from the consummation of the Wells-Mr. Payroll Transaction; 4. Amendment to Section 9.14 of the Note Agreement. Section 9.14 of the Note Agreement is hereby amended by adding a new Section 9.14(c) to read in its entirety as follows: (c) Notwithstanding the above, the consummation of the Wells-Mr. Payroll Transaction shall not constitute a violation of this Section 9.14. 5. Amendment to Section 9.16 of the Note Agreement. Section 9.16 is hereby amended by changing the paragraph heading of (c) to "(d)," by changing the paragraph heading of (d) to "(e)," and by adding a new Section 9.16(c) to read in its entirety as follows: (c) the Company and Mr. Payroll Corporation may consummate the Wells-Mr. Payroll Transaction; 6. Release of Mr. Payroll Corporation. Teachers hereby agrees that, effective upon the consummation of the Wells-Mr. Payroll Transaction, Mr. Payroll is released from the Guaranty, shall have no further liability or obligation whatsoever under the Guaranty and shall no longer be considered a Guarantor under the Note Agreement or the Guaranty for any purpose whatsoever. 7. Definitions. All capitalized terms used herein and not otherwise specifically defined shall have the respective meanings set forth in the Note Agreement, as amended by this Seventh Supplement. 8. Representations and Warranties. To induce Teachers to execute and deliver this Seventh Supplement (which representations shall survive the execution and delivery of this Seventh Supplement), the Company represents and warrants to Teachers that: (a) The Wells-Mr. Payroll Transaction Letters (a) fairly describe, in all material respects, the Wells-Mr. Payroll Transaction to be entered into by the Company and (b) do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made; and (b) Upon consummation of the Wells-Mr. Payroll Transaction, the conversion of the common stock and preferred stock of Mr. Payroll owned by the Company into a new class of convertible preferred stock pursuant to the Wells-Mr. Payroll Transaction will have been consummated upon terms no less favorable to the Company than would be obtainable in a similar transaction consummated at arms'-length with Persons which are not Affiliates of the Company. -3- 4 9. Condition to Effectiveness of this Seventh Supplement. This Seventh Supplement shall not become effective until, and shall become effective upon, the consummation of the Wells-Mr. Payroll Transaction. 10. Payment of Teachers' Counsel Fees and Expenses. The Company agrees to pay upon demand, the reasonable fees and expenses of Chapman and Cutler, counsel to Teachers, in connection with the negotiation, preparation, approval, execution and delivery of this Seventh Supplement. 11. Ratification of Note Agreement. Except as specified hereinabove, all other terms of the Note Agreement shall remain unchanged and are hereby ratified and confirmed. All references to "this Agreement" or "the Agreement" appearing in the Note Agreement, and all references to the Note Agreement appearing in any other instrument or document, shall be deemed to refer to the Note Agreement as supplemented and amended by this Seventh Supplement. 12. Counterparts. This Seventh Supplement may be executed in any number of counterparts and by the parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all the counterparts shall together constitute one and the same instrument. By signing below where indicated, the undersigned, CASH AMERICA, INC. OF SOUTH CAROLINA, FLORIDA CASH AMERICA, INC., GEORGIA CASH AMERICA, INC., CASH AMERICA, INC. OF LOUISIANA, CASH AMERICA, INC. OF NORTH CAROLINA, CASH AMERICA, INC. OF TENNESSEE, CASH AMERICA, INC. OF OKLAHOMA, CASH AMERICA, INC. OF KENTUCKY, CASH AMERICA PAWN, INC. OF OHIO, CASH AMERICA MANAGEMENT L.P., CASH AMERICA PAWN L.P., CASH AMERICA HOLDING, INC., EXPRESS CASH INTERNATIONAL CORPORATION, CASH AMERICA, INC. OF ALABAMA, CASH AMERICA, INC. OF COLORADO, CASH AMERICA, INC. OF INDIANA, CASH AMERICA, INC., CASH AMERICA OF MISSOURI, INC., VINCENT'S JEWELERS AND LOAN, INC., MR. PAYROLL CORPORATION, CASH AMERICA, INC. OF UTAH, CASH AMERICA FRANCHISING, INC., CASH AMERICA, INC. OF ILLINOIS, UPTOWN CITY PAWNERS, INC., DOC HOLLIDAY'S PAWNBROKERS & JEWELERS, INC., LONGHORN PAWN & GUN, INC., BRONCO PAWN & GUN, INC., BUFFALO PAWN & GUN, INC., GAMECOCK PAWN & GUN, INC., HORNET PAWN & GUN, INC., TIGER PAWN & GUN, INC., and RENT-A-TIRE, INC. as Guarantors, do each acknowledge and approve the Note Agreement, as amended by this Seventh Supplement, and the other Loan Documents, and the terms thereof, and specifically agree to comply with all provisions therein and herein which refer to or affect such Guarantors. -4- 5 IN WITNESS WHEREOF, the undersigned have executed this Seventh Supplement to 1993 Note Agreement as of the date first written above. CASH AMERICA INTERNATIONAL, INC. By: /s/ David J. Clay ------------------------------------- David J. Clay Vice President and Treasurer TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA By: /s/ Diane Hom ------------------------------------- Diane Hom Its Director-Private Placements -5- 6 GUARANTORS CASH AMERICA, INC. OF SOUTH CAROLINA FLORIDA CASH AMERICA, INC. GEORGIA CASH AMERICA, INC. CASH AMERICA, INC. OF LOUISIANA CASH AMERICA, INC. OF NORTH CAROLINA CASH AMERICA, INC. OF TENNESSEE CASH AMERICA, INC. OF OKLAHOMA CASH AMERICA, INC. OF KENTUCKY CASH AMERICA PAWN, INC. OF OHIO CASH AMERICA MANAGEMENT L.P., a Delaware limited partnership, by its general partner, Cash America Holding, Inc. CASH AMERICA PAWN L.P., a Delaware limited partnership, by its general partner, Cash America Holding, Inc. CASH AMERICA HOLDING, INC. EXPRESS CASH INTERNATIONAL CORPORATION CASH AMERICA, INC. OF ALABAMA CASH AMERICA, INC. OF COLORADO CASH AMERICA, INC. OF INDIANA CASH AMERICA, INC. CASH AMERICA OF MISSOURI, INC. VINCENT'S JEWELERS AND LOAN, INC. MR. PAYROLL CORPORATION CASH AMERICA, INC. OF UTAH CASH AMERICA FRANCHISING, INC. CASH AMERICA, INC. OF ILLINOIS UPTOWN CITY PAWNERS, INC. DOC HOLLIDAY'S PAWNBROKERS & JEWELERS, INC. LONGHORN PAWN & GUN, INC. BRONCO PAWN & GUN, INC. BUFFALO PAWN & GUN, INC. GAMECOCK PAWN & GUN, INC. HORNET PAWN & GUN, INC. TIGER PAWN & GUN, INC. By: /s/ David J. Clay --------------------------------- David J. Clay, Treasurer for All RENT-A-TIRE, INC. By: /s/ Thomas A. Bessant, Jr. --------------------------------- Thomas A. Bessant, Jr., Treasurer -6- EX-10.23 4 4TH SUPPLEMENT TO 1995 NOTE AGREEMENT 1 EXHIBIT 10.23 FOURTH SUPPLEMENT TO 1995 NOTE AGREEMENT This Fourth Supplement to 1995 Note Agreement (the "Fourth Supplement") is made and entered into as of the 31st day of December, 1998, by and between Cash America International, Inc. (the "Company") and Teachers Insurance and Annuity Association of America ("Teachers"). RECITALS: WHEREAS, the parties hereto have entered into a Note Agreement dated as of July 7, 1995, pursuant to which the Company issued and Teachers purchased $20,000,000 aggregate principal amount of the Company's 8.14% Senior Notes Due July 7, 2007, and the parties have amended said Note Agreement by entering into a First Supplement to 1995 Note Agreement dated as of November 10, 1995, a Second Supplement to 1995 Note Agreement dated as of December 30, 1996, and a Third Supplement to 1995 Note Agreement dated as of December 30, 1997 (said Note Agreement, as amended, being referred to hereafter as the "Note Agreement"); and WHEREAS, the Company and Teachers desire to amend certain provisions of the Note Agreement. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Teachers hereby agree as follows: 1. Amendment to Section 2.01 of the Note Agreement. Section 2.01 of the Note Agreement is hereby amended by adding in alphabetical order the following new definitions: "Mr. Payroll" means Mr. Payroll Corporation, a Texas corporation. "Wells-Mr. Payroll Transaction" means a transaction pursuant to a definitive written agreement among the Company, Mr. Payroll, Wells Fargo Bank, N.A. ("Wells Fargo"), and InnoVisions, LLC, a Delaware limited liability company owned in part by Mr. Payroll and in part by Wells Fargo ("InnoVisions") containing the following material elements: (a) the transfer to a newly formed or existing Wholly-Owned Subsidiary of substantially all of Mr. Payroll's assets relating to its manned check cashing business, (b) the conversion of the common stock and preferred stock of Mr. Payroll owned by the Company into a new class of convertible preferred stock representing at least a 40% equity ownership in Mr. Payroll, (c) the issuance of common stock of Mr. Payroll, representing a 10% to 20% equity ownership interest in Mr. Payroll, to the management of Mr. Payroll, (d) the transfer of all of the tangible assets of InnoVisions to Wells Fargo, (e) the contribution to Mr. Payroll by Wells Fargo of (i) no less than $20,000,000 in cash and (ii) the assets received from InnoVisions, together representing a gross investment value of no less than $24,000,000, in consideration for the issuance of convertible preferred stock representing at least a 40% equity ownership interest in Mr. Payroll and having the 2 same terms and conditions as the convertible preferred stock issued to the Company, with the total contribution of assets and cash by Wells Fargo at least equal to the Company's Investment in the convertible preferred stock of Mr. Payroll received by the Company in the Wells-Mr. Payroll Transaction, (f) the change of the corporate name of Mr. Payroll to "InnoVisions, Inc." and (g) the closing of the transaction on or before January 31, 1999. "Wells-Mr. Payroll Transaction Letters" means the letter dated December 1, 1998 from David J. Clay of the Company to Diane Hom of Teachers, describing the Wells-Mr. Payroll Transaction, and the letter, dated December 14, 1998, from David J. Clay of the Company to Diane Hom of Teachers, which attaches a forecasted December 31, 1998 pro forma balance sheet of the Company reflecting the consummation of the Wells-Mr. Payroll Transaction. 2. Amendment to Section 8.01 of the Note Agreement. Section 8.01 of the Note Agreement is hereby amended by changing the paragraph heading of (k) to "(m)" and by adding new Sections 8.01(k) and (l) to read in their entirety as follows: (k) if, as, and when made available to the Company by Mr. Payroll, a balance sheet of Mr. Payroll (in reasonable detail) as of the end of each Fiscal Quarter and the related statements of income, stockholders' equity and cash flows of Mr. Payroll (in reasonable detail) for such Fiscal Quarter and for the portion of the current Fiscal Year ending on the last day of such Fiscal Quarter, in each case (i) prepared in accordance with GAAP and (ii) setting forth in comparative form the figures for the corresponding period of the preceding Fiscal Year, it being understood that (1) such statements shall be in the same scope, form and substance as those furnished to the Company, and (2) such statements need not be provided if, pursuant to the terms of any written confidentiality agreement entered into between the Company and Mr. Payroll (other than any confidentiality agreement entered into in contemplation of avoiding the disclosure requirements herein contained), the Company is prohibited from providing such statements; (l) if, as, and when made available to the Company by Mr. Payroll, a balance sheet of Mr. Payroll (in reasonable detail) as of the end of each Fiscal Year and the related statements of income, stockholders' equity and cash flows of Mr. Payroll (in reasonable detail) for such Fiscal Year, in each case (i) prepared in conformity with GAAP and (ii) setting forth in comparative form the figures for the preceding Fiscal Year, it being understood that (1) such statements shall be in the same scope, form and substance as those furnished to the Company, and (2) such statements need not be provided if, pursuant to the terms of any written confidentiality agreement entered into between the Company and Mr. Payroll (other than any confidentiality agreement entered into in contemplation of avoiding the disclosure requirements herein contained), the Company is prohibited from providing such statements; and -2- 3 3. Amendment to Section 9.11 of the Note Agreement. Section 9.11 of the Note Agreement is hereby amended by changing the paragraph heading of (l) to "(m)," by changing the paragraph heading of (m) to "(n)," and by adding a new Section 9.11(l) to read in its entirety as follows: (l) the initial Investment in Mr. Payroll Corporation resulting from the consummation of the Wells-Mr. Payroll Transaction; 4. Amendment to Section 9.14 of the Note Agreement. Section 9.14 of the Note Agreement is hereby amended by adding a new Section 9.14(c) to read in its entirety as follows: (c) Notwithstanding the above, the consummation of the Wells-Mr. Payroll Transaction shall not constitute a violation of this Section 9.14. 5. Amendment to Section 9.16 of the Note Agreement. Section 9.16 is hereby amended by changing the paragraph heading of (c) to "(d)," by changing the paragraph heading of (d) to "(e)," and by adding a new Section 9.16(c) to read in its entirety as follows: (c) the Company and Mr. Payroll Corporation may consummate the Wells-Mr. Payroll Transaction; 6. Release of Mr. Payroll Corporation. Teachers hereby agrees that, effective upon the consummation of the Wells-Mr. Payroll Transaction, Mr. Payroll is released from the Guaranty, shall have no further liability or obligation whatsoever under the Guaranty and shall no longer be considered a Guarantor under the Note Agreement or the Guaranty for any purpose whatsoever. 7. Definitions. All capitalized terms used herein and not otherwise specifically defined shall have the respective meanings set forth in the Note Agreement, as amended by this Fourth Supplement. 8. Representations and Warranties. To induce Teachers to execute and deliver this Fourth Supplement (which representations shall survive the execution and delivery of this Fourth Supplement), the Company represents and warrants to Teachers that: (a) The Wells-Mr. Payroll Transaction Letters (a) fairly describe, in all material respects, the Wells-Mr. Payroll Transaction to be entered into by the Company and (b) do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made; and (b) Upon consummation of the Wells-Mr. Payroll Transaction, the conversion of the common stock and preferred stock of Mr. Payroll owned by the Company into a new class of convertible preferred stock pursuant to the Wells-Mr. Payroll Transaction will have been consummated upon terms no less favorable to the Company than would be obtainable in a similar transaction consummated at arms'-length with Persons which are not Affiliates of the Company. -3- 4 9. Condition to Effectiveness of this Fourth Supplement. This Fourth Supplement shall not become effective until, and shall become effective upon, the consummation of the Wells-Mr. Payroll Transaction. 10. Payment of Teachers' Counsel Fees and Expenses. The Company agrees to pay upon demand, the reasonable fees and expenses of Chapman and Cutler, counsel to Teachers, in connection with the negotiation, preparation, approval, execution and delivery of this Fourth Supplement. 11. Ratification of Note Agreement. Except as specified hereinabove, all other terms of the Note Agreement shall remain unchanged and are hereby ratified and confirmed. All references to "this Agreement" or "the Agreement" appearing in the Note Agreement, and all references to the Note Agreement appearing in any other instrument or document, shall be deemed to refer to the Note Agreement as supplemented and amended by this Fourth Supplement. 12. Counterparts. This Fourth Supplement may be executed in any number of counterparts and by the parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all the counterparts shall together constitute one and the same instrument. By signing below where indicated, the undersigned, CASH AMERICA, INC. OF SOUTH CAROLINA, FLORIDA CASH AMERICA, INC., GEORGIA CASH AMERICA, INC., CASH AMERICA, INC. OF LOUISIANA, CASH AMERICA, INC. OF NORTH CAROLINA, CASH AMERICA, INC. OF TENNESSEE, CASH AMERICA, INC. OF OKLAHOMA, CASH AMERICA, INC. OF KENTUCKY, CASH AMERICA PAWN, INC. OF OHIO, CASH AMERICA MANAGEMENT L.P., CASH AMERICA PAWN L.P., CASH AMERICA HOLDING, INC., EXPRESS CASH INTERNATIONAL CORPORATION, CASH AMERICA, INC. OF ALABAMA, CASH AMERICA, INC. OF COLORADO, CASH AMERICA, INC. OF INDIANA, CASH AMERICA, INC., CASH AMERICA OF MISSOURI, INC., VINCENT'S JEWELERS AND LOAN, INC., MR. PAYROLL CORPORATION, CASH AMERICA, INC. OF UTAH, CASH AMERICA FRANCHISING, INC., CASH AMERICA, INC. OF ILLINOIS, UPTOWN CITY PAWNERS, INC., DOC HOLLIDAY'S PAWNBROKERS & JEWELERS, INC., LONGHORN PAWN & GUN, INC., BRONCO PAWN & GUN, INC., BUFFALO PAWN & GUN, INC., GAMECOCK PAWN & GUN, INC., HORNET PAWN & GUN, INC., TIGER PAWN & GUN, INC., and RENT-A-TIRE, INC. as Guarantors, do each acknowledge and approve the Note Agreement, as amended by this Fourth Supplement, and the other Loan Documents, and the terms thereof, and specifically agree to comply with all provisions therein and herein which refer to or affect such Guarantors. -4- 5 IN WITNESS WHEREOF, the undersigned have executed this Fourth Supplement to 1995 Note Agreement as of the date first written above. CASH AMERICA INTERNATIONAL, INC. B: /s/ David J. Clay -------------------------------------- David J. Clay Vice President and Treasurer TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA By: /s/ Diane Hom ------------------------------------- Diane Hom Its Director-Private Placements -5- 6 GUARANTORS CASH AMERICA, INC. OF SOUTH CAROLINA FLORIDA CASH AMERICA, INC. GEORGIA CASH AMERICA, INC. CASH AMERICA, INC. OF LOUISIANA CASH AMERICA, INC. OF NORTH CAROLINA CASH AMERICA, INC. OF TENNESSEE CASH AMERICA, INC. OF OKLAHOMA CASH AMERICA, INC. OF KENTUCKY CASH AMERICA PAWN, INC. OF OHIO CASH AMERICA MANAGEMENT L.P., a Delaware limited partnership, by its general partner, Cash America Holding, Inc. CASH AMERICA PAWN L.P., a Delaware limited partnership, by its general partner, Cash America Holding, Inc. CASH AMERICA HOLDING, INC. EXPRESS CASH INTERNATIONAL CORPORATION CASH AMERICA, INC. OF ALABAMA CASH AMERICA, INC. OF COLORADO CASH AMERICA, INC. OF INDIANA CASH AMERICA, INC. CASH AMERICA OF MISSOURI, INC. VINCENT'S JEWELERS AND LOAN, INC. MR. PAYROLL CORPORATION CASH AMERICA, INC. OF UTAH CASH AMERICA FRANCHISING, INC. CASH AMERICA, INC. OF ILLINOIS UPTOWN CITY PAWNERS, INC. DOC HOLLIDAY'S PAWNBROKERS & JEWELERS, INC. LONGHORN PAWN & GUN, INC. BRONCO PAWN & GUN, INC. BUFFALO PAWN & GUN, INC. GAMECOCK PAWN & GUN, INC. HORNET PAWN & GUN, INC. TIGER PAWN & GUN, INC. By: /s/ David J. Clay --------------------------------- David J. Clay, Treasurer for All RENT-A-TIRE, INC. By: /s/ Thomas A. Bessant, Jr. --------------------------------- Thomas A. Bessant, Jr., Treasurer -6- EX-10.27 5 3RD & 4TH AMENDMENT TO AMEND/RESTATED CREDIT AGMNT 1 EXHIBIT 10.27 THIRD AMENDMENT TO AMENDED AND RESTATED SENIOR REVOLVING CREDIT FACILITY AGREEMENT THIS THIRD AMENDMENT TO AMENDED AND RESTATED SENIOR REVOLVING CREDIT FACILITY AGREEMENT (this "Third Amendment"), dated as of December 11, 1998, is entered into among CASH AMERICA INTERNATIONAL, INC., a Texas corporation (the "Borrower"), the lenders listed on the signature pages hereof (the "Lenders"), NATIONSBANK, N.A. (successor by merger to NationsBank of Texas, N.A.), as Administrative Agent (in said capacity, the "Administrative Agent"). BACKGROUND A. Borrower, the Lenders, and the Administrative Agent are parties to that certain Amended and Restated Senior Revolving Credit Facility Agreement, dated as of June 19, 1996, as amended by that certain First Amendment to Amended and Restated Senior Revolving Credit Facility Agreement, dated as of December 11, 1997, and that certain Second Amendment to Amended and Restated Senior Revolving Credit Facility Agreement, dated as of June 24, 1998 (said Amended and Restated Senior Revolving Credit Facility Agreement, as amended, the "Credit Agreement"; the terms defined in the Credit Agreement and not otherwise defined herein shall be used herein as defined in the Credit Agreement). B. The Borrower, the Lenders, and the Administrative Agent desire to amend the Credit Agreement to permit the Borrower to dispose of all of its common and preferred capital stock in Mr. Payroll Corporation, a Texas corporation ("Mr. Payroll"), in exchange for convertible preferred capital stock of Mr. Payroll. NOW, THEREFORE, in consideration of the covenants, conditions and agreements hereafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are all hereby acknowledged, the Borrower, the Lenders, and the Administrative Agent covenant and agree as follows: 1. AMENDMENTS TO CREDIT AGREEMENT. (a) Section 1.1 of the Credit Agreement is hereby amended by adding the defined term "Mr. Payroll Disposition and Investment" thereto in proper alphabetical order to read as follows: "Mr. Payroll Disposition and Investment" means the disposition by Borrower of all of its common and preferred capital stock in Mr. Payroll Corporation, a Texas corporation ("Mr. Payroll"), in exchange for convertible preferred capital stock of Mr. Payroll, after which (a) the automated check cashing assets of Mr. Payroll will remain in Mr. Payroll, (b) the manned check cashing assets of Mr. Payroll will be transferred to an existing or newly-formed, wholly-owned Subsidiary of Borrower, and (c) Borrower shall own at all times less 2 than 50% of the capital stock of Mr. Payroll having the power to elect the majority of the Board of Directors of Mr. Payroll, thereby resulting in Mr. Payroll no longer being a Subsidiary of Borrower. (b) Section 6.3 of the Credit Agreement is hereby amended by (i) deleting "and" at the end of clause (viii) thereof, (ii) renumbering clause (ix) thereof as clause "(x)", and (iii) adding a new clause (ix) thereto to read as follows: "(ix) the Mr. Payroll Disposition and Investment, and" (c) Section 6.7 of the Credit Agreement is hereby amended by amending clause (iv) thereof to read as follows: "(iv) sell, transfer, lease or otherwise dispose of any of its property or assets (including Stock of any Subsidiary) or business except (A) in the ordinary course of business; (B) the Borrower may sell any tract or other parcel of real estate having a net book value of $10,000,000 or less, (C) the Mr. Payroll Disposition and Investment, (D) other assets, the aggregate net book value of which sold during any Fiscal Year shall not exceed 1.5% of Consolidated Tangible Assets as of the last day of the immediately preceding Fiscal Year, and (E) the foregoing shall not operate to prevent mergers or consolidations of any wholly-owned Subsidiary into the Borrower or into a Guarantor or a sale, transfer or lease of assets by any wholly-owned Subsidiary to the Borrower or to a Guarantor." 2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its execution and delivery hereof, the Borrower represents and warrants that, as of the date hereof and after giving effect to the amendment contemplated by the foregoing Section 1: (a) the representations and warranties contained in the Credit Agreement are true and correct on and as of the date hereof as if made on and as of such date; (b) no event has occurred and is continuing which constitutes a Default or an Event of Default; -2- 3 (c) the Borrower has full power and authority to execute and deliver this Third Amendment, and this Third Amendment and the Credit Agreement, as amended hereby, constitute the legal, valid and binding obligations of the Borrower, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable debtor relief laws and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and except as rights to indemnity may be limited by federal or state securities law; (d) neither the execution, delivery and performance of this Third Amendment or the Credit Agreement, as amended hereby, nor the consummation of any transactions contemplated herein or therein, will conflict with any Law to which the Borrower or any Subsidiary is subject, or any indenture, agreement or other instrument to which the Borrower or any Subsidiary or any of their respective property is subject; and (e) no authorization, approval, consent, or other action by, notice to, or filing with, any governmental authority or other Person (including the Board of Directors of the Borrower), is required for the execution, delivery or performance by the Borrower of this Third Amendment or the acknowledgment of this Third Amendment by each Guarantor. 3. CONDITIONS OF EFFECTIVENESS. This Third Amendment shall be effective as of December 11, 1998, subject to the following: (a) the Administrative Agent shall have received counterparts of this Third Amendment executed by each of the Lenders; (b) the Administrative Agent shall have received counterparts of this Third Amendment executed by the Borrower and acknowledged by each Guarantor; (c) the representations and warranties set forth in Section 2 of this Third Amendment shall be true and correct; and (d) the Administrative Agent shall have received, in form and substance satisfactory to the Administrative Agent and its counsel, such other documents, certificates and instruments as the Administrative Agent shall require. 4. TERMINATION OF AMENDMENT. This Third Amendment shall terminate and be of no further force or effect without any action by the Administrative Agent or any Lender if Wells Fargo Bank, N.A. or an affiliate thereof shall fail to make a cash contribution of at least $20,000,000 to Mr. Payroll by January 31, 1999. 5. RELEASE OF MR. PAYROLL. Upon satisfaction of the conditions of effectiveness set forth in Section 3 of this Third Amendment and without any action by the Administrative Agent or any Lender, the Guaranty Agreement of Mr. Payroll shall terminate and no longer be of any force -3- 4 or effect and Mr. Payroll shall be released of all of its obligations and liabilities under its Guaranty Agreement. 6. GUARANTORS ACKNOWLEDGMENT. By signing below, each of the Guarantors (a) acknowledges and consents to the execution, delivery and performance by the Borrower of this Third Amendment, (b) agrees that its obligations in respect of its Guaranty Agreement are not released, modified, impaired or affected in any manner by this Third Amendment or any of the provisions contemplated herein (including, but not limited to, the release of Mr. Payroll provided herein) and (c) acknowledges that it has no claims or offsets against, or defenses or counterclaims to, its Guaranty Agreement. 7. REFERENCE TO THE CREDIT AGREEMENT. (a) Upon the effectiveness of this Third Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", or words of like import shall mean and be a reference to the Credit Agreement, as affected and amended by this Third Amendment. (b) The Credit Agreement, as amended by this Third Amendment, and all other Loan Papers shall remain in full force and effect and are hereby ratified and confirmed. 8. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on demand all costs and expenses of the Administrative Agent in connection with the preparation, reproduction, execution and delivery of this Third Amendment and the other instruments and documents to be delivered hereunder (including the reasonable fees and out-of-pocket expenses of counsel for the Administrative Agent with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under the Credit Agreement, as amended by this Third Amendment). 9. EXECUTION IN COUNTERPARTS. This Third Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. 10. GOVERNING LAW; BINDING EFFECT. This Third Amendment shall be governed by and construed in accordance with the laws of the State of Texas and shall be binding upon the Borrower, each Lender, and the Administrative Agent and their respective successors and assigns. 11. HEADINGS. Section headings in this Third Amendment are included herein for convenience of reference only and shall not constitute a part of this Third Amendment for any other purpose. 12. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS THIRD AMENDMENT, AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AS TO THE SUBJECT MATTER -4- 5 THEREIN AND HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. ================================================================================ REMAINDER OF PAGE LEFT INTENTIONALLY BLANK ================================================================================ -5- 6 IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment as of the date first above written. CASH AMERICA INTERNATIONAL, INC. By: /s/ David J. Clay ------------------------------------- David J. Clay Vice President and Treasurer NATIONSBANK, N.A., as Administrative Agent and as a Lender By: /s/ Todd Shipley ------------------------------------- Todd Shipley Senior Vice President WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, as Documentation Agent and as a Lender By: /s/ Susan B. Sheffield ------------------------------------- Susan B. Sheffield Vice President BANK ONE, TEXAS, N.A. By: /s/ Barry Kromann ------------------------------------- Barry Kromann Vice President -6- 7 THE BANK OF TOKYO-MITSUBISHI, LTD. By: /s/ John M. Mearns ------------------------------------- John M. Mearns Vice President and Manager CHASE BANK OF TEXAS, NATIONAL ASSOCIATION By: /s/ B. B. Wuthrich ------------------------------------- B. B. Wuthrich Vice President COMERICA BANK-TEXAS By: /s/ Timothy C. Vela ------------------------------------- Timothy C. Vela Vice President -7- 8 ACKNOWLEDGED AND AGREED: CASH AMERICA, INC. OF SOUTH CAROLINA FLORIDA CASH AMERICA, INC. GEORGIA CASH AMERICA, INC. CASH AMERICA, INC. OF LOUISIANA CASH AMERICA, INC. OF NORTH CAROLINA CASH AMERICA, INC. OF TENNESSEE CASH AMERICA, INC. OF OKLAHOMA CASH AMERICA, INC. OF KENTUCKY CASH AMERICA PAWN, INC. OF OHIO CASH AMERICA MANAGEMENT L.P., a Delaware limited partnership, by its general partner, Cash America Holding, Inc. CASH AMERICA PAWN L.P., a Delaware limited partnership, by its general partner, Cash America Holding, Inc. CASH AMERICA HOLDING, INC. EXPRESS CASH INTERNATIONAL CORPORATION CASH AMERICA, INC. OF ALABAMA CASH AMERICA, INC. OF COLORADO CASH AMERICA, INC. OF INDIANA CASH AMERICA, INC. CASH AMERICA OF MISSOURI, INC. VINCENT'S JEWELERS AND LOAN, INC. CASH AMERICA, INC. OF UTAH CASH AMERICA FRANCHISING, INC. CASH AMERICA, INC. OF ILLINOIS UPTOWN CITY PAWNERS, INC. DOC HOLLIDAY'S PAWN BROKERS & JEWELERS, INC. LONGHORN PAWN & GUN, INC. BRONCO PAWN & GUN, INC. HORNET PAWN & GUN, INC. TIGER PAWN & GUN, INC. RENT-A-TIRE, INC. By: /s/ David J. Clay ------------------------------- David J. Clay Treasurer -8- 9 FOURTH AMENDMENT TO AMENDED AND RESTATED SENIOR REVOLVING CREDIT FACILITY AGREEMENT THIS FOURTH AMENDMENT TO AMENDED AND RESTATED SENIOR REVOLVING CREDIT FACILITY AGREEMENT (this "Fourth Amendment"), dated as of February 17, 1999 (but effective as of December 31, 1998), is entered into among CASH AMERICA INTERNATIONAL, INC., a Texas corporation (the "Borrower"), the lenders listed on the signature pages hereof (the "Lenders"), NATIONSBANK, N.A. (successor by merger to NationsBank of Texas, N.A.), as Administrative Agent (in said capacity, the "Administrative Agent"). BACKGROUND A. Borrower, the Lenders, and the Administrative Agent are parties to that certain Amended and Restated Senior Revolving Credit Facility Agreement, dated as of June 19, 1996, as amended by that certain First Amendment to Amended and Restated Senior Revolving Credit Facility Agreement, dated as of December 11, 1997, that certain Second Amendment to Amended and Restated Senior Revolving Credit Facility Agreement, dated as of June 24, 1998, and that certain Third Amendment to Amended and Restated Senior Revolving Credit Facility Agreement, dated as of December 11, 1998 (the "Third Amendment") (said Amended and Restated Senior Revolving Credit Facility Agreement, as amended, the "Credit Agreement"; the terms defined in the Credit Agreement and not otherwise defined herein shall be used herein as defined in the Credit Agreement). B. The Borrower, the Lenders, and the Administrative Agent desire to amend the Credit Agreement. NOW, THEREFORE, in consideration of the covenants, conditions and agreements hereafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are all hereby acknowledged, the Borrower, the Lenders, and the Administrative Agent covenant and agree as follows: 1. AMENDMENTS TO CREDIT AGREEMENT. (a) The definition of "Consolidated Funded Debt" set forth in Section 1.1 of the Credit Agreement is hereby amended to read as follows: "'Consolidated Funded Debt' means, as of any date, the sum of (a) the principal amount of all interest bearing indebtedness of the Borrower and its Consolidated Subsidiaries, whether current or funded, and whether secured or unsecured, incurred in connection with borrowings evidenced by a note, bond, indenture or similar instrument, plus (b) all Capital Leases of the Borrower and its Consolidated Subsidiaries, minus (c) cash of the Borrower and its Consolidated Subsidiaries." (b) Section 5.14(f) of the Credit Agreement is hereby amended to read as follows: 10 "(f) Consolidated Funded Debt to Consolidated EBITDA. The Borrower shall not permit the ratio of (i)(A) Consolidated Funded Debt as of the end of the fiscal quarter ending December 31, 1998 to (B) Consolidated EBITDA for the most recent four (4) fiscal quarters of the Borrower ending on December 31, 1998 to be greater than 3.60 to 1.0 and (ii)(A) Consolidated Funded Debt as of the end of any other fiscal quarter to (B) Consolidated EBITDA for the most recent four (4) fiscal quarters of the Borrower ending on such fiscal quarter to be greater than 3.50 to 1." (c) Exhibit F to the Credit Agreement is hereby amended to be in the form of Exhibit F to this Fourth Amendment. 2. CALCULATION OF CONSOLIDATED ADJUSTED NET INCOME, CONSOLIDATED ADJUSTED NET LOSS AND CONSOLIDATED EBITDA. If the Mr. Payroll Distribution and Investment occurs prior to or on March 31, 1999, there shall be excluded from the calculation of Consolidated Adjusted Net Income, Consolidated Adjusted Net Loss and Consolidated EBITDA, without duplication, any components thereof that relate to Mr. Payroll for any fiscal quarter period included within such calculation prior to and including the fiscal quarter ending March 31, 1999. 3. EXTENSION OF THIRD AMENDMENT. Notwithstanding anything in Section 4 of the Third Amendment to the contrary, the Third Amendment shall terminate and be of no further force or effect without any action by the Administrative Agent or any Lender if Wells Fargo Bank, N.A. or an affiliate thereof shall fail to make a cash contribution of at least $20,000,000 to Mr. Payroll by March 31, 1999. 4. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its execution and delivery hereof, the Borrower represents and warrants that, as of the date hereof and after giving effect to the amendments contemplated by the foregoing Section 1: (a) the representations and warranties contained in the Credit Agreement are true and correct on and as of the date hereof as if made on and as of such date; (b) no event has occurred and is continuing which constitutes a Default or an Event of Default; (c) the Borrower has full power and authority to execute and deliver this Fourth Amendment, and this Fourth Amendment and the Credit Agreement, as amended hereby, constitute the legal, valid and binding obligations of the Borrower, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable debtor relief laws and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and except as rights to indemnity may be limited by federal or state securities law; -2- 11 (d) neither the execution, delivery and performance of this Fourth Amendment or the Credit Agreement, as amended hereby, nor the consummation of any transactions contemplated herein or therein, will conflict with any Law to which the Borrower or any Subsidiary is subject, or any indenture, agreement or other instrument to which the Borrower or any Subsidiary or any of their respective property is subject; and (e) no authorization, approval, consent, or other action by, notice to, or filing with, any governmental authority or other Person (including the Board of Directors of the Borrower), is required for the execution, delivery or performance by the Borrower of this Fourth Amendment or the acknowledgment of this Fourth Amendment by each Guarantor. 5. CONDITIONS OF EFFECTIVENESS. This Fourth Amendment shall be effective as of December 31, 1998, subject to the following: (a) the Administrative Agent shall have received counterparts of this Fourth Amendment executed by the Determining Lenders; (b) the Administrative Agent shall have received counterparts of this Fourth Amendment executed by the Borrower and acknowledged by each Guarantor; (c) the representations and warranties set forth in Section 4 of this Fourth Amendment shall be true and correct; and (d) the Administrative Agent shall have received, in form and substance satisfactory to the Administrative Agent and its counsel, such other documents, certificates and instruments as the Administrative Agent shall require. 6. GUARANTORS ACKNOWLEDGMENT. By signing below, each of the Guarantors (a) acknowledges and consents to the execution, delivery and performance by the Borrower of this Fourth Amendment, (b) agrees that its obligations in respect of its Guaranty Agreement are not released, modified, impaired or affected in any manner by this Fourth Amendment or any of the provisions contemplated herein and (c) acknowledges that it has no claims or offsets against, or defenses or counterclaims to, its Guaranty Agreement. 7. REFERENCE TO THE CREDIT AGREEMENT. (a) Upon the effectiveness of this Fourth Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", or words of like import shall mean and be a reference to the Credit Agreement, as affected and amended by this Fourth Amendment. (b) The Credit Agreement, as amended by this Fourth Amendment, and all other Loan Papers shall remain in full force and effect and are hereby ratified and confirmed. -3- 12 8. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on demand all costs and expenses of the Administrative Agent in connection with the preparation, reproduction, execution and delivery of this Fourth Amendment and the other instruments and documents to be delivered hereunder (including the reasonable fees and out-of-pocket expenses of counsel for the Administrative Agent with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under the Credit Agreement, as amended by this Fourth Amendment). 9. EXECUTION IN COUNTERPARTS. This Fourth Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument. 10. GOVERNING LAW; BINDING EFFECT. This Fourth Amendment shall be governed by and construed in accordance with the laws of the State of Texas and shall be binding upon the Borrower, each Lender, and the Administrative Agent and their respective successors and assigns. 11. HEADINGS. Section headings in this Fourth Amendment are included herein for convenience of reference only and shall not constitute a part of this Fourth Amendment for any other purpose. 12. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FOURTH AMENDMENT, AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AS TO THE SUBJECT MATTER THEREIN AND HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. ================================================================================ REMAINDER OF PAGE LEFT INTENTIONALLY BLANK ================================================================================ -4- 13 IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment as of the date first above written. CASH AMERICA INTERNATIONAL, INC. By: /s/ David J. Clay ------------------------------------- David J. Clay Vice President and Treasurer NATIONSBANK, N.A., as Administrative Agent and as a Lender By: /s/ Shelly K. Harper ------------------------------------- Shelly K. Harper Vice President WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, as Documentation Agent and as a Lender By: /s/ Susan B. Sheffield ------------------------------------- Susan B. Sheffield Vice President BANK ONE, TEXAS, N.A. By: /s/ Barry Kromann ------------------------------------- Barry Kromann Vice President -5- 14 THE BANK OF TOKYO-MITSUBISHI, LTD. By: /s/ John M. Mearns ------------------------------------- John M. Mearns Vice President and Manager CHASE BANK OF TEXAS, NATIONAL ASSOCIATION By: /s/ B. B. Wuthrich ------------------------------------- B. B. Wuthrich Vice President COMERICA BANK-TEXAS By: /s/ Timothy C. Vela ------------------------------------- Timothy C. Vela Vice President -6- 15 ACKNOWLEDGED AND AGREED: CASH AMERICA, INC. OF SOUTH CAROLINA FLORIDA CASH AMERICA, INC. GEORGIA CASH AMERICA, INC. CASH AMERICA, INC. OF LOUISIANA CASH AMERICA, INC. OF NORTH CAROLINA CASH AMERICA, INC. OF TENNESSEE CASH AMERICA, INC. OF OKLAHOMA CASH AMERICA, INC. OF KENTUCKY CASH AMERICA PAWN, INC. OF OHIO CASH AMERICA MANAGEMENT L.P., a Delaware limited partnership, by its general partner, Cash America Holding, Inc. CASH AMERICA PAWN L.P., a Delaware limited partnership, by its general partner, Cash America Holding, Inc. CASH AMERICA HOLDING, INC. EXPRESS CASH INTERNATIONAL CORPORATION CASH AMERICA, INC. OF ALABAMA CASH AMERICA, INC. OF COLORADO CASH AMERICA, INC. OF INDIANA CASH AMERICA, INC. CASH AMERICA OF MISSOURI, INC. VINCENT'S JEWELERS AND LOAN, INC. CASH AMERICA, INC. OF UTAH CASH AMERICA FRANCHISING, INC. CASH AMERICA, INC. OF ILLINOIS UPTOWN CITY PAWNERS, INC. DOC HOLLIDAY'S PAWN BROKERS & JEWELERS, INC. LONGHORN PAWN & GUN, INC. BRONCO PAWN & GUN, INC. HORNET PAWN & GUN, INC. TIGER PAWN & GUN, INC. RENT-A-TIRE, INC. By: /s/ David J. Clay ------------------------------- David J. Clay Treasurer -7- EX-10.29 6 1ST SUPPLEMENT TO NOTE AGREEMENT - DECEMBER 1 1997 1 EXHIBIT 10.29 FIRST SUPPLEMENT TO 1997 NOTE AGREEMENT This First Supplement to 1997 Note Agreement (the "First Supplement") is made and entered into as of the 31st day of December, 1998, by and between Cash America International, Inc. (the "Company") and each of the institutions which is a signatory to this First Supplement (collectively, the "Noteholders"). RECITALS: WHEREAS, the parties hereto have entered into a Note Agreement dated as of December 1, 1997, pursuant to which the Company issued and the Noteholders purchased $30,000,000 aggregate principal amount of the Company's 7.10% Senior Notes Due January 2, 2008 (said Note Agreement being referred to hereafter as the "Note Agreement"); and WHEREAS, the Company and the Noteholders desire to amend certain provisions of the Note Agreement. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Noteholders hereby agree as follows: 1. Amendment to Section 2.01 of the Note Agreement. Section 2.01 of the Note Agreement is hereby amended by adding in alphabetical order the following new definitions: "Mr. Payroll" means Mr. Payroll Corporation, a Texas corporation. "Wells-Mr. Payroll Transaction" means a transaction pursuant to a definitive written agreement among the Company, Mr. Payroll, Wells Fargo Bank, N.A. ("Wells Fargo"), and InnoVisions, LLC, a Delaware limited liability company owned in part by Mr. Payroll and in part by Wells Fargo ("InnoVisions") containing the following material elements: (a) the transfer to a newly formed or existing Wholly-Owned Subsidiary of substantially all of Mr. Payroll's assets relating to its manned check cashing business, (b) the conversion of the common stock and preferred stock of Mr. Payroll owned by the Company into a new class of convertible preferred stock representing at least a 40% equity ownership in Mr. Payroll, (c) the issuance of common stock of Mr. Payroll, representing a 10% to 20% equity ownership interest in Mr. Payroll, to the management of Mr. Payroll, (d) the transfer of all of the tangible assets of InnoVisions to Wells Fargo, (e) the contribution to Mr. Payroll by Wells Fargo of (i) no less than $20,000,000 in cash and (ii) the assets received from InnoVisions, together representing a gross investment value of no less than $24,000,000, in consideration for the issuance of convertible preferred stock representing at least a 40% equity ownership interest in Mr. Payroll and having the 2 same terms and conditions as the convertible preferred stock issued to the Company, with the total contribution of assets and cash by Wells Fargo at least equal to the Company's Investment in the convertible preferred stock of Mr. Payroll received by the Company in the Wells-Mr. Payroll Transaction, (f) the change of the corporate name of Mr. Payroll to "InnoVisions, Inc." and (g) the closing of the transaction on or before January 31, 1999. "Wells-Mr. Payroll Transaction Letters" means the letters dated December 2, 1998 from David J. Clay of the Company to the Noteholders, describing the Wells-Mr. Payroll Transaction, and the letters, dated December 14, 1998, from David J. Clay of the Company to the Noteholders, which attaches a forecasted December 31, 1998 pro forma balance sheet of the Company reflecting the consummation of the Wells-Mr. Payroll Transaction. 2. Amendment to Section 8.01 of the Note Agreement. Section 8.01 of the Note Agreement is hereby amended by changing the paragraph heading of (k) to "(m)" and by adding new Sections 8.01(k) and (l) to read in their entirety as follows: (k) if, as, and when made available to the Company by Mr. Payroll, a balance sheet of Mr. Payroll (in reasonable detail) as of the end of each Fiscal Quarter and the related statements of income, stockholders' equity and cash flows of Mr. Payroll (in reasonable detail) for such Fiscal Quarter and for the portion of the current Fiscal Year ending on the last day of such Fiscal Quarter, in each case (i) prepared in accordance with GAAP and (ii) setting forth in comparative form the figures for the corresponding period of the preceding Fiscal Year, it being understood that (1) such statements shall be in the same scope, form and substance as those furnished to the Company, and (2) such statements need not be provided if, pursuant to the terms of any written confidentiality agreement entered into between the Company and Mr. Payroll (other than any confidentiality agreement entered into in contemplation of avoiding the disclosure requirements herein contained), the Company is prohibited from providing such statements; (l) if, as, and when made available to the Company by Mr. Payroll, a balance sheet of Mr. Payroll (in reasonable detail) as of the end of each Fiscal Year and the related statements of income, stockholders' equity and cash flows of Mr. Payroll (in reasonable detail) for such Fiscal Year, in each case (i) prepared in conformity with GAAP and (ii) setting forth in comparative form the figures for the preceding Fiscal Year, it being understood that (1) such statements shall be in the same scope, form and substance as those furnished to the Company, and (2) such statements need not be provided if, pursuant to the terms of any written confidentiality agreement entered into between the Company and Mr. Payroll (other than any confidentiality agreement entered into in contemplation of avoiding the disclosure requirements herein contained), the Company is prohibited from providing such statements; and -2- 3 3. Amendment to Section 9.11 of the Note Agreement. Section 9.11 of the Note Agreement is hereby amended by changing the paragraph heading of (k) to "(l)," by changing the paragraph heading of (l) to "(m)," and by adding a new Section 9.11(k) to read in its entirety as follows: (k) the initial Investment in Mr. Payroll Corporation resulting from the consummation of the Wells-Mr. Payroll Transaction; 4. Amendment to Section 9.14 of the Note Agreement. Section 9.14 of the Note Agreement is hereby amended by adding a new Section 9.14(c) to read in its entirety as follows: (c) Notwithstanding the above, the consummation of the Wells-Mr. Payroll Transaction shall not constitute a violation of this Section 9.14. 5. Amendment to Section 9.16 of the Note Agreement. Section 9.16 is hereby amended by changing the paragraph heading of (c) to "(d)," by changing the paragraph heading of (d) to "(e)," and by adding a new Section 9.16(c) to read in its entirety as follows: (c) the Company and Mr. Payroll Corporation may consummate the Wells-Mr. Payroll Transaction; 6. Release of Mr. Payroll Corporation. The Noteholders hereby agrees that, effective upon the consummation of the Wells-Mr. Payroll Transaction, Mr. Payroll is released from the Guaranty, shall have no further liability or obligation whatsoever under the Guaranty and shall no longer be considered a Guarantor under the Note Agreement or the Guaranty for any purpose whatsoever. 7. Definitions. All capitalized terms used herein and not otherwise specifically defined shall have the respective meanings set forth in the Note Agreement, as amended by this First Supplement. 8. Representations and Warranties. To induce the Noteholders to execute and deliver this First Supplement (which representations shall survive the execution and delivery of this First Supplement), the Company represents and warrants to the Noteholders that: (a) The Wells-Mr. Payroll Transaction Letters (a) fairly describe, in all material respects, the Wells-Mr. Payroll Transaction to be entered into by the Company and (b) do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made; and (b) Upon consummation of the Wells-Mr. Payroll Transaction, the conversion of the common stock and preferred stock of Mr. Payroll owned by the Company into a new class of convertible preferred stock pursuant to the Wells-Mr. Payroll Transaction will have been -3- 4 consummated upon terms no less favorable to the Company than would be obtainable in a similar transaction consummated at arms'-length with Persons which are not Affiliates of the Company. 9. Condition to Effectiveness of this First Supplement. This First Supplement shall not become effective until, and shall become effective upon, the consummation of the Wells-Mr. Payroll Transaction. 10. Payment of the Noteholders' Counsel Fees and Expenses. The Company agrees to pay upon demand, the reasonable fees and expenses of Chapman and Cutler, counsel to the Noteholders, in connection with the negotiation, preparation, approval, execution and delivery of this First Supplement. 11. Ratification of Note Agreement. Except as specified hereinabove, all other terms of the Note Agreement shall remain unchanged and are hereby ratified and confirmed. All references to "this Agreement" or "the Agreement" appearing in the Note Agreement, and all references to the Note Agreement appearing in any other instrument or document, shall be deemed to refer to the Note Agreement as supplemented and amended by this First Supplement. 12. Counterparts. This First Supplement may be executed in any number of counterparts and by the parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all the counterparts shall together constitute one and the same instrument. By signing below where indicated, the undersigned, CASH AMERICA, INC. OF SOUTH CAROLINA, FLORIDA CASH AMERICA, INC., GEORGIA CASH AMERICA, INC., CASH AMERICA, INC. OF LOUISIANA, CASH AMERICA, INC. OF NORTH CAROLINA, CASH AMERICA, INC. OF TENNESSEE, CASH AMERICA, INC. OF OKLAHOMA, CASH AMERICA, INC. OF KENTUCKY, CASH AMERICA PAWN, INC. OF OHIO, CASH AMERICA MANAGEMENT L.P., CASH AMERICA PAWN L.P., CASH AMERICA HOLDING, INC., EXPRESS CASH INTERNATIONAL CORPORATION, CASH AMERICA, INC. OF ALABAMA, CASH AMERICA, INC. OF COLORADO, CASH AMERICA, INC. OF INDIANA, CASH AMERICA, INC., CASH AMERICA OF MISSOURI, INC., VINCENT'S JEWELERS AND LOAN, INC., MR. PAYROLL CORPORATION, CASH AMERICA, INC. OF UTAH, CASH AMERICA FRANCHISING, INC., CASH AMERICA, INC. OF ILLINOIS, UPTOWN CITY PAWNERS, INC., DOC HOLLIDAY'S PAWNBROKERS & JEWELERS, INC., LONGHORN PAWN & GUN, INC., BRONCO PAWN & GUN, INC., BUFFALO PAWN & GUN, INC., GAMECOCK PAWN & GUN, INC., HORNET PAWN & GUN, INC., TIGER PAWN & GUN, INC., and RENT-A-TIRE, INC. as Guarantors, do each acknowledge and approve the Note Agreement, as amended by this First Supplement, and the other Loan Documents, and the terms thereof, and specifically agree to comply with all provisions therein and herein which refer to or affect such Guarantors. -4- 5 IN WITNESS WHEREOF, the undersigned have executed this First Supplement to 1997 Note Agreement as of the date first written above. CASH AMERICA INTERNATIONAL, INC. By /s/ David J. Clay -------------------------------------- David J. Clay Vice President and Treasurer Accepted and Agreed to: THE TRAVELERS INSURANCE COMPANY By: /s/ A. William Carnduff -------------------------------------- A. William Carnduff Its 2nd Vice President THE TRAVELERS LIFE AND ANNUITY COMPANY By: /s/ A. William Carnduff -------------------------------------- A. William Carnduff Its 2nd Vice President PRIMERICA LIFE INSURANCE COMPANY By: /s/ Jordan M. Stitzer -------------------------------------- Jordan M. Stitzer Its Vice President -5- 6 NATIONWIDE LIFE INSURANCE COMPANY By: /s/ Mark W. Poeppelman -------------------------------------- Mark W. Poeppelman Its Investment Officer EMPLOYERS LIFE INSURANCE COMPANY OF WAUSAU By: /s/ Mark W. Poeppelman -------------------------------------- Mark W. Poeppelman Its Investment Officer OHIO NATIONAL LIFE ASSURANCE CORPORATION By: /s/ B. Douglas Hundley -------------------------------------- B. Douglas Hundley Its Investment Officer MINNESOTA LIFE INSURANCE COMPANY By: Advantus Capital Management, Inc. By: /s/ Loren A. Haugland -------------------------------------- Loren A. Haugland Its Vice President -6- 7 GUARANTORS CASH AMERICA, INC. OF SOUTH CAROLINA FLORIDA CASH AMERICA, INC. GEORGIA CASH AMERICA, INC. CASH AMERICA, INC. OF LOUISIANA CASH AMERICA, INC. OF NORTH CAROLINA CASH AMERICA, INC. OF TENNESSEE CASH AMERICA, INC. OF OKLAHOMA CASH AMERICA, INC. OF KENTUCKY CASH AMERICA PAWN, INC. OF OHIO CASH AMERICA MANAGEMENT L.P., a Delaware limited partnership, by its general partner, Cash America Holding, Inc. CASH AMERICA PAWN L.P., a Delaware limited partnership, by its general partner, Cash America Holding, Inc. CASH AMERICA HOLDING, INC. EXPRESS CASH INTERNATIONAL CORPORATION CASH AMERICA, INC. OF ALABAMA CASH AMERICA, INC. OF COLORADO CASH AMERICA, INC. OF INDIANA CASH AMERICA, INC. CASH AMERICA OF MISSOURI, INC. VINCENT'S JEWELERS AND LOAN, INC. MR. PAYROLL CORPORATION CASH AMERICA, INC. OF UTAH CASH AMERICA FRANCHISING, INC. CASH AMERICA, INC. OF ILLINOIS UPTOWN CITY PAWNERS, INC. DOC HOLLIDAY'S PAWNBROKERS & JEWELERS, INC. LONGHORN PAWN & GUN, INC. BRONCO PAWN & GUN, INC. BUFFALO PAWN & GUN, INC. GAMECOCK PAWN & GUN, INC. HORNET PAWN & GUN, INC. TIGER PAWN & GUN, INC. By: /s/ David J. Clay --------------------------------- David J. Clay, Treasurer for All RENT-A-TIRE, INC. By: /s/ Thomas A. Bessant, Jr. --------------------------------- Thomas A. Bessant, Jr., Treasurer -7- EX-13 7 ANNUAL REPORT TO SECURITY HOLDERS 1 EXHIBIT 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION ================================================================================ GENERAL - -------------------------------------------------------------------------------- The Company is a diversified provider of specialty financial services to individuals in the United States, United Kingdom and Sweden. The Company offers secured non-recourse loans, commonly referred to as pawn loans, to individuals through its lending operations. Pawn loans earn finance and service charge revenue. The disposition of merchandise, primarily collateral from unredeemed pawn loans, is a related but secondary source of net revenue from the Company's lending function. The Company also provides check cashing services through its subsidiary, Mr. Payroll Corporation (Mr. Payroll) and rental of tires and wheels through its subsidiary, Rent-A-Tire, Inc. (Rent-A-Tire). The Company expanded its lending operations during the three years ended December 31, 1998, by adding a net ninety-one locations. Seventy-seven operating units were acquired, twenty-eight locations were established, and fourteen locations were combined or closed. As of December 31, 1998, the Company operated 464 lending units 414 in sixteen states in the United States, thirty-nine jewelry-only units in the United Kingdom, and eleven loan-only and primarily jewelry-only units in Sweden. During the two years ended December 31, 1998, Mr. Payroll has focused on the development of its automated check cashing machine. The first two machines were installed in June 1997, and ninety-one units were in operation as of December 31, 1998, including thirty-eight machines that were owned and operated by Mr. Payroll. Seventy machines were installed during 1998. As of December 31, 1998, Mr. Payroll also had 127 franchised and ten company owned manned check cashing centers in twenty states compared to 145 franchised centers as of December 31, 1997. Through January 31, 1998, the Company had a 49% ownership interest in Express Rent A Tire, Ltd. (Express) that was accounted for by the equity method of accounting, whereby the Company recorded its 49% share of earnings or losses in its consolidated financial statements. Effective February 1, 1998, the Company increased its ownership interest to 99.9% and reorganized the operations of Express into Rent-A-Tire. The acquisition of additional interests has been accounted for as a purchase and, accordingly, the assets and liabilities of Rent-A-Tire and the results of its operations have been included in the consolidated financial statements since February 1, 1998. As of December 31, 1998, Rent-A-Tire owned and operated four tire and wheel rental stores and managed fourteen additional tire and wheel rental stores under the Rent-A-Tire name. RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- YEAR ENDED 1998 COMPARED TO YEAR ENDED 1997 NET REVENUE: CONSOLIDATED. Consolidated net revenue increased 12.7% to $200.6 million during 1998 from $178.1 million during 1997. Of the 12.7% increase, 7.8% was attributable to the net addition of sixty-three lending locations during the year, 3.1% was attributable to gains from same unit lending operations (those in operation for more than one year), and 1.8% was attributable to increases in the check cashing and rental segments of the Company. NET REVENUE: LENDING ACTIVITIES. Net revenue from lending operations increased $19.3 million to $194.8 million during 1998 from $175.5 million during 1997. The lending locations added during the year contributed $13.9 million of the increase. The principal components of lending operations net revenue are finance and service charges, which accounted for $13.0 million of the total increase, and net revenue from the disposition of merchandise, which accounted for $5.5 million of the total increase. The remaining component, foreign check cashing operations, commenced in the third quarter of 1997 and accounted for $.8 million of the total increase. Finance and service charges are affected by changes in both the average outstanding amount of pawn loans and the annualized yield on such loans. Finance and service charges increased $13.0 million, or 12.4%, in 1998 over 1997. Same units contributed $6.2 million of the increase. An 11.4% increase in the average outstanding pawn loan balances, which occurred as a result of an 8.5% increase in the average number of outstanding loans coupled with a 2.7% increase in the average loan amount, accounted for $11.9 million of the increase in finance and service charges. The consolidated annualized loan yields, which represents a weighted average of the distinctive loan yields realized in the three countries in which the Company operates, increased to 96% in 1998 from 95% in 1997 resulting in a $1.1 million increase in finance and service charges. The domestic annualized loan yield was 122% in 1998 compared to 124% for 1997. The decrease in domestic loan yield can be partially attributed to a 17.7% increase in domestic pawn loans at December 31, 1998, over the same date in 1997, which can have the effect of moderating the loan yield until revenues from these loans are fully realized. The net addition of sixty-two domestic lending locations accounted for 12.3% of the loan balance increase, while same units contributed the remaining 5.4%. The remainder of the domestic loan yield decrease occurred as a result of expansion in lower-yielding markets. The blended yield on average foreign pawn loans outstanding was 53% for 1998 compared to 52% in the prior year. The increase resulted from slightly higher loan yields on redeemed loans that were offset by slightly lower returns on the disposition of unredeemed collateral at auction. Net revenue from the disposition of merchandise represents the proceeds received from the disposition of merchandise in excess of the cost of merchandise disposed. Proceeds from the disposition of merchandise in 1998 were $20.4 million, or 10.4%, higher than 1997 primarily due to the impact of the new lending locations. Same unit increases, which the Company believes is attributable to stronger customer demand, accounted for $5.2 million of the $20.4 million increase. The margin on disposition of merchandise declined to 35.5% in 1998 from 36.4% during the prior year. Excluding the effect of the disposition of scrap jewelry, the margin on disposition of merchandise fell to 36.9% for the current year from 37.9% in the prior year due to the Company's emphasis on maintaining desirable levels of merchandise held for disposition combined with a higher average cost of items disposed. The net result was a $5.5 million, or 7.8%, increase in net revenue from the disposition of merchandise. The merchandise turnover rate declined slightly to 2.4 times compared to 2.5 times during 1997. NET REVENUE: OTHER ACTIVITIES. Net revenue of Mr. Payroll in 1998 increased 30.1% over 1997. Check cashing royalties and fees earned from the operations of check cashing machines, as well as the owned and franchised check cashing centers, increased 52.7% and represented 94% and 80% of Mr. Payroll's net revenue in the current and prior years, respectively. Gross profit realized on check cashing machine sales accounted for 4% of net revenue in the current year as compared to 3% in the prior year. A reduction in the amount of franchise fees, which accounted for virtually all of the remaining net revenue in both years, reflected Mr. Payroll's emphasis on the development of the check cashing machine. Rent-A-Tire contributed net revenue of $2.5 million in 1998. Prior to February 1, 1998, the Company's 49% share of earnings or losses of Rent-A-Tire's predecessor was recorded in Other (income) expense. OPERATIONS AND ADMINISTRATION EXPENSES. Consolidated operations and administration expenses as a percentage of net revenue were 74.1% in 1998 compared to 69.6% for 1997. Total operations and administration expenses increased 14 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - CONTINUED ================================================================================ $24.8 million, or 20.0%, in the current year as compared to the prior year. Domestic lending operations contributed $12.8 million of the increase primarily due to higher personnel, occupancy, and office expenses mostly attributable to new lending locations that accounted for $10.1 million of the domestic increase. Foreign lending operations contributed $1.5 million of the increase. Mr. Payroll accounted for $7.8 million of the increase, primarily due to increased personnel, communications, and travel expenses related to the development and marketing of the check cashing machine. The expenses of Rent-A-Tire, which was not consolidated prior to February 1, 1998, accounted for the remaining $2.7 million of the increase. DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses as a percentage of net revenue remained constant at 9.0% during 1998 when compared to 1997. Depreciation and amortization expenses increased 13.6% principally due to the effect of the increase in additional lending locations during the year. INTEREST EXPENSE. Net interest expense as a percentage of net revenue increased to 6.8% in the current year from 6.5% in the prior year. The amount increased $1.9 million, or 16.4%, primarily due to the effect of a higher average debt level related to the Company's growth in lending locations and continued investment in the development of its check cashing operations. Average debt outstanding increased 17.6% to $181.2 million during 1998 from $154.0 million during 1997. The effective blended borrowing cost decreased to 7.4% in 1998 from 7.6% in 1997. OTHER (INCOME) EXPENSE. Other (income) expense represents the net effect of various items including operating losses attributable to the Company's 49% equity interest in Express through January 1998, rental income, gains and losses on disposition of certain non-operating assets and other miscellaneous items. The Company's 49% equity interest in the losses of Express decreased $.5 million in 1998 as compared to 1997 which accounted for most of the net change in other (income) expense. INCOME TAXES. The Company's consolidated effective income tax rate increased to 38.0% for 1998 from 36.6% for 1997 due primarily to higher non-deductible intangible asset amortization. The favorable effects of lower foreign tax rates in 1998 were offset by other miscellaneous items. NET INCOME. Consolidated net income as a percentage of net revenue was 6.3% in 1998, compared to 9.3% in 1997. Diluted net income per share was $.48 for 1998 compared to $.66 for 1997. YEAR ENDED 1997 COMPARED TO YEAR ENDED 1996 NET REVENUE: CONSOLIDATED. Consolidated net revenue increased 9.0% to $178.1 million during 1997 from $163.4 million during 1996. Of the 9% increase, 4.3% was attributable to gains from same unit lending locations, 3.2% was attributable to the net addition of nineteen lending locations during 1997 and 1.5% was attributable to check cashing royalties and fees from Mr. Payroll which was not consolidated prior to December 31, 1996. NET REVENUE: LENDING ACTIVITIES. Net revenue from lending operations increased $12.1 million to $175.5 million during 1997 from $163.4 million during 1996. The principal components of lending operations net revenue are finance and service charges, which accounted for $11.5 million of the total increase, and net revenue from the disposition of merchandise, which accounted for $.6 million of the total increase. Finance and service charges are affected by changes in both the average outstanding amount of pawn loans and the annualized yield on such loans. Finance and service charges increased $11.5 million, or 12.5%, in 1997 over 1996. A 13.7% increase in the average outstanding pawn loan balances was partially offset by a slight decrease in the annualized loan yield. The consolidated annualized loan yield, which represents a weighted average of the distinctive loan yields realized in the three countries in which the Company operates, decreased to 95% in 1997 from 96% in 1996. The average loan balance per average location in operation increased in all three countries in which the Company operates. A 4.4% increase in the number of outstanding loans as of December 31, 1997, compared to December 31, 1996, signified a higher customer demand for pawn loans in both domestic and foreign markets. While the consolidated average pawn loan amount remained constant at $99, the domestic pawn loan amount increased 5% to $78. The foreign average pawn loan decreased 8% to $174, primarily due to the strengthening of the U.S. dollar against the Swedish kronor. Net revenue from the disposition of merchandise represents the proceeds received from the disposition of merchandise in excess of the cost of merchandise disposed. Proceeds from the disposition of merchandise in 1997 were $7.6 million, or 4.0%, higher than 1996 primarily due to the combined effects of a 4% increase in same unit dispositions, a $3.7 million decrease in proceeds from the disposition of scrap jewelry, an increase in units in operation and a 9% increase in the merchandise turnover rate to 2.5 times in 1997, from 2.3 times in 1996. The Company believes that its continued emphasis on maximizing cash returns on capital employed resulted in increased revenue, an increased merchandise turnover rate, a reduction in the average level of merchandise held for disposition, and the achievement of increased net revenue. As a result of this focus and lower prices realized on the sale of pure gold in the open market, the margin on disposition of merchandise declined to 36.4% in 1997 from 37.6% in 1996. The net result of the increased proceeds and the lower margin was a $.6 million, or .9%, increase in net revenue from the disposition of merchandise. NET REVENUE: OTHER ACTIVITIES. Check cashing royalties and fees of $2.5 million were generated from the Company's check cashing operations, and consisted of franchise fees for new check cashing franchises, royalties based on a percentage of check cashing fees from existing franchise operations and check verification fees in connection with check cashing machines. The sale of check cashing machines that began in mid-1997 provided $.1 million of additional net revenue. OPERATIONS AND ADMINISTRATION EXPENSES. Consolidated operations and administration expenses, as a percentage of net revenue, were 69.6% in 1997, compared to 68.5% for 1996. Total operations and administration expenses increased $12.0 million, or 10.7%, in 1997 as compared to 1996. Domestic lending operations contributed $7.8 million of the increase, due to the net addition of eighteen new locations, higher personnel costs, higher occupancy costs, and the development of a franchise program, while foreign lending operations contributed $.5 million. The expenses of Mr. Payroll accounted for the remaining $3.7 million of the increase. DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses as a percentage of net revenue, decreased to 9.0% in 1997, from 9.9% in 1996, due primarily to a moderation in the Company's unit expansion since December 31, 1994. 15 3 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - CONTINUED ================================================================================ INTEREST EXPENSE. Net interest expense as a percentage of net revenue increased to 6.5% in 1997 from 5.8% in 1996. The amount increased $2.2 million, or 23.5%, to $11.6 million in 1997 from $9.4 million in 1996, due to additional debt incurred in the fourth quarter of 1996 to repurchase 4.5 million shares of the Company's common stock and additional investments in subsidiary and affiliate businesses during 1997. Weighted average debt outstanding increased 27.4% to $154.0 million in 1997 from $120.9 million in 1996. The effective blended borrowing cost decreased to 7.6% in 1997 from 8.0% in 1996. OTHER (INCOME) EXPENSE. Other (income) expense represents the net effect of various items including operating losses from the Company's equity interest in affiliates, rental income, gains and losses on disposition of certain non-operating assets and other miscellaneous items. Other expense decreased by $.4 million in 1997 from 1996. In 1997, the Company recorded a $.5 million loss from Express compared to combined losses totaling $1.0 million in 1996 from Express and Mr. Payroll. Since the Company attained 100% ownership of Mr. Payroll on December 31, 1996, Mr. Payroll's 1997 results of operations are included in the Company's consolidated results of operations. INCOME TAXES. The Company's consolidated effective income tax rate decreased to 36.6% for 1997 from 37.5% for 1996, due to a reduced foreign tax rate. NET INCOME. Consolidated net income as a percentage of net revenue was 9.3% in 1997, compared to 9.6% in 1996. Diluted net income per share was $.66 for 1997 compared to $.54 for 1996. LIQUIDITY AND CAPITAL RESOURCES - -------------------------------------------------------------------------------- In management's opinion, the Company's cash flow and liquidity remains strong. Net cash provided by operating activities was $20.6 million, $24.4 million and $41.9 million for 1998, 1997 and 1996, respectively. During 1998, the Company invested $9.6 million to increase its pawn loan portfolio, $23.1 million to acquire sixty-one lending locations and to repurchase ten manned check cashing locations, and $.1 million in advances to Express prior to its consolidation. The Company also invested $22.4 million in purchases of property and equipment. Of this amount $18.2 million was for property improvements, equipment for startup locations, remodeling selected operating units and additions to computer systems. Approximately $4.2 million was for the development of Mr. Payroll's automated check cashing system. During the year, the Company also made a scheduled payment of $4.3 million on its 8.33% senior unsecured notes, paid $6.7 million of debt obligations in connection with acquisitions and capital leases, paid $1.2 million in dividends, and purchased $.4 million of treasury shares for the Company's Nonqualified Savings Plan. These activities were funded primarily from the cash flow generated internally by operating activities and net borrowings of $45.7 million under the Company's bank lines of credit. Additional funding was provided by the issuance of $2.2 million of capital lease obligations, $1.5 million from the issuance of common shares pursuant to the Company's stock option plans, and $1.1 million of proceeds from the sale of property and equipment. At December 31, 1998, $95.5 million was outstanding on the Company's $150 million revolving line of credit. In addition, the Company's 10 million pounds sterling line of credit in the United Kingdom had a balance outstanding of 3.5 million pounds sterling (approximately $5.8 million) and the Company's Swedish lines of credit totaling SEK 215 million had a combined balance outstanding of SEK 151.5 million (approximately $18.7 million). In 1999, the Company entered into an agreement with Wells Fargo Bank, N.A. (Wells Fargo) that provides for Wells Fargo to contribute approximately $21 million of cash and all of the assets of an existing network of 200 automated teller machines, valued at approximately $6 million, to Mr. Payroll to be used for the continued development and deployment of Mr. Payroll's fully automated check cashing and financial services machine. The Company will retain a minority equity interest and have no obligation to fund the future operations of Mr. Payroll. The Company will retain sole ownership of Mr. Payroll's manned check cashing operation. Mr. Payroll will continue to market and enhance its automated check cashing system. The Company anticipates that Mr. Payroll will incur future losses until sufficient revenues are generated from the sale and operation of check cashing machines and the operation of automated teller machines. The Company plans to add approximately 25 to 45 new lending locations in 1999 at an estimated cost of $250,000 per new location. These additions will likely occur through the opening of new locations or the acquisition of existing locations. On January 22, 1997, the Company announced that its Board of Directors had authorized management to purchase up to one million shares of its common stock in the open market. During 1998, the Company made no purchases under the program. Purchases may be made from time to time in the open market and it is expected that funding of the program will come from operating cash flow and existing bank facilities. Management believes that borrowings available under its revolving credit facilities, cash generated from operations and current working capital of $213.6 million should be sufficient to meet the Company's anticipated future capital requirements. IMPACT OF FOREIGN CURRENCY EXCHANGE RATES - -------------------------------------------------------------------------------- The Company is subject to the risk of unexpected changes in foreign currency exchange rates by virtue of its operations in the United Kingdom and Sweden. In accordance with generally accepted accounting principles, the Company's foreign assets, liabilities, and earnings are converted into U.S. dollars for consolidation into the Company's financial statements. At December 31, 1998, the Company had recorded a cumulative other comprehensive loss of $2.4 million as a result of fluctuations in foreign currency exchange rates. Net income from foreign operations during 1998, 1997 and 1996 translated to $6.7 million, $6.0 million and $5.9 million, respectively. Future earnings and comparisons with prior periods reported by the Company may fluctuate depending on applicable currency exchange rates in effect during the periods. COMPUTER SYSTEMS THE YEAR 2000 ISSUE - -------------------------------------------------------------------------------- BACKGROUND. Many computer systems and equipment with embedded computer chips in use today were designed and developed using two digits, rather than four, to specify the year. As a result, such systems and equipment may recognize a date using 00 as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations. THE company's YEAR 2000 EFFORTS. In 1997, the Company began formulating a comprehensive plan to assess the actions and resources needed to address its Year 2000 issues. The plan provides for the identification and assessment of the Year 2000 issues for the Company's various internal systems and equipment; necessary remediation, including modification, upgrading and replacement of hardware and software; and adequate testing to ensure Year 2000 compliance. The plan involves the utilization of both internal and external resources, including the engagement of an independent expert to assist in the evaluation of the various Year 2000 issues and efforts. The Company is applying all aspects of this plan to both its informa- 16 4 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - CONTINUED ================================================================================ tion technology ("IT") systems and non-IT systems. Computer equipment and software commonly thought of as IT systems include point-of-sale, accounting, data processing, telephone, and other miscellaneous systems. Non-IT systems include alarm systems, security observation equipment, HVAC units, fax machines, and other miscellaneous systems. The Company believes that it has identified the internal business systems that are susceptible to system failures or processing errors as a result of the Year 2000 issue. Those systems considered most critical to continuing operations have received the highest priority. Currently, the Company anticipates that its Year 2000 identification, assessment, and remediation efforts will be completed by June 30, 1999. While the majority of the testing efforts should be completed by then, the Company anticipates that additional testing will occur after June 30, 1999. The Company believes that its pawnshop operating systems constitute its only critical internal business systems. The Company's proprietary pawnshop operating system used in its domestic lending business has been upgraded for Year 2000 compliance and is currently being tested. The Company is in the process of upgrading its Sweden pawnshop operating system for Year 2000 compliance. The company expects to complete the upgrade and testing of this system by June 30, 1999. A proprietary pawnshop operating system for the Company's United Kingdom lending operations is under development. The Company expects to complete the implementation and testing of this system by June 30, 1999. The Company also believes that its accounting applications, human resources, and payroll software systems are Year 2000 compliant, and testing to ensure compliance is scheduled to be completed by May 31, 1999. The Company is still in the assessment phase with respect to its non-IT systems issues, and it currently estimates that all necessary non-IT system remediation and testing efforts should be completed by September 30, 1999. THIRD PARTIES. The Company is reviewing, and has initiated formal communications with, critical third parties that provide services or goods that are essential to its operations in order to: (1) determine the extent to which the Company is vulnerable to any failure by such third parties to remediate their respective Year 2000 problems; and (2) resolve such problems to the extent practicable. These third parties include financial institutions, utility suppliers, and providers of communication services and equipment. However, the responses of third parties are beyond the control of the Company. In the event that the Company is unable to obtain satisfactory assurance that a critical third party provider has successfully and timely achieved Year 2000 compliance, and the Company is unable to replace such a provider with an alternative provider, the Company's operations could be adversely impacted. ESTIMATED YEAR 2000 COSTS. The Company currently estimates that its total Year 2000 project cost will be approximately $1.9 million to $2.3 million. Through December 31, 1998, the Company has expended approximately $1.2 million. Costs to replace computerized systems, hardware or equipment (currently estimated to be approximately $1.2 million to $1.5 million) are included in the above estimate. The remaining costs include estimated internal and external costs to repair software problems, test all systems, and acquire license upgrades that have been accelerated due to Year 2000 issues. No major non-Year 2000 projects have been deferred because of Year 2000 activities. The Company has funded, and expects to continue to fund, the expenditures related to its Year 2000 initiatives either through cash generated from operations and current working capital, or its existing revolving credit facilities. RISKS OF YEAR 2000 PROBLEMS. Based on the progress it has made in addressing its Year 2000 issues and its plan and timetable to complete its compliance program, the Company does not currently foresee significant risks associated with its Year 2000 issues. However, management believes that it is not possible to determine with complete certainty that all Year 2000 problems affecting the Company have been identified or will be corrected. Likewise, because of its constant progress in addressing its various Year 2000 issues, the Company has not yet determined the most reasonably likely worst case scenario relating to Year 2000 problems. Nevertheless, management expects that the Company could suffer the following consequences: (1) a significant number of operational inconveniences and inefficiencies for the Company and its customers that could divert managements time and attention and financial and human resources from its ordinary business activities; and (2) a lesser number of serious system failures that may require significant efforts by the Company to prevent or alleviate material business disruptions. CONTINGENCY PLANNING. The Company has not yet completed a comprehensive contingency plan with respect to the Year 2000 issue, but intends to do so during 1999. The company's lending operations can operate, if necessary, on a manual, non-computerized basis. Due to the widespread nature of potential Year 2000 issues, the contingency planning process is an ongoing one which will require further modifications as the Company obtains additional information regarding (1) the Company's progress on critical internal business systems during the remediation and testing phases; and (2) the status of third party Year 2000 readiness. Depending on the systems affected, these plans could include accelerated replacement of affected software or equipment, increased work hours for Company personnel or contract personnel to accelerate remediation efforts, or development of manual workarounds for information systems. If the Company is required to implement any of these contingency plans, the implementation could have an adverse effect on the Company's financial condition and results of operations. CAUTIONARY STATEMENT REGARDING RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS - -------------------------------------------------------------------------------- This Annual Report to Shareholders contains forward-looking statements about the business, financial condition and prospects of the Company. The actual results of the Company could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties including, without limitation, changes in demand for the Company's services, changes in competition, the ability of the Company to open new operating units in accordance with its plans, economic conditions, real estate market fluctuations, interest rate fluctuations, changes in the capital markets, changes in tax and other laws and governmental rules and regulations applicable to the Company's business, and other risks indicated in the Company's filings with the Securities and Exchange Commission. Certain risks and uncertainties relating specifically to the Company's Year 2000 efforts include, but are not limited to, the availability of qualified personnel and other information technology resources; the ability to identify and remediate all date sensitive lines of computer code or to replace embedded computer chips in affected systems or equipment; and the actions of various third parties with respect to Year 2000 problems. These risks and uncertainties are beyond the ability of the Company to control, and, in many cases, the Company cannot predict all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this Annual Report to Shareholders, the words believes, estimates, plans, expects, anticipates and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements. 17 5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - CONTINUED ================================================================================ (Dollars in thousands - December 31) SUMMARY The Company has expanded its lending operations over the past three years by increasing from 373 operating locations at December 31, 1995, to 464 operating locations at December 31, 1998. The growth in lending locations is attributable to acquisitions and the start-up of new Company units. Effective upon the close of business on December 31, 1996, the Company purchased the remaining 51% interest in Mr. Payroll Corporation, a franchiser of check cashing kiosks and service centers. Mr. Payroll has expanded its check cashing and servicing operations in 1998 from 152 units at December 31, 1996, to 228 units at December 31, 1998. Effective February 1, 1998, the Company increased its interest from 49% to 99.9% in Express Rent A Tire, Ltd., a provider of tire and wheel rentals, and reorganized it into Rent-A-Tire, Inc. Rent-A-Tire owns and operates four tire and wheel rental stores and manages 14 additional stores under its name. Selected consolidated and operations data for the three years ended December 31, 1998, are presented below. 1998 1997 1996 ------------ ------------ ------------ REVENUE Finance and service charges $ 117,078 $ 104,138 $ 092,591 Proceeds from disposition of merchandise 216,422 195,978 188,377 Check cashing machine sales 2,022 750 -- Check cashing royalties and fees 4,008 2,500 -- Rental operations 3,346 -- -- ------------ ------------ ------------ TOTAL REVENUE 342,876 303,366 280,968 ============ ============ ============ COSTS OF REVENUE Disposed merchandise 139,502 124,616 117,585 Cost of check cashing machines sold 1,895 668 -- Rental operations 832 -- -- ------------ ------------ ------------ NET REVENUE $ 200,647 $ 178,082 $ 163,383 ============ ============ ============ OTHER DATA CONSOLIDATED OPERATIONS: Net revenue contribution by source -- Finance and service charges 58.3% 58.5% 56.7% Margin on disposition of merchandise 38.3% 40.1% 43.3% Check cashing operations 2.1% 1.4% -- Rental operations 1.3% -- -- Expenses as a percentage of net revenue Operations and administration 74.1% 69.6% 68.5% Depreciation and amortization 9.0% 9.0% 9.9% Interest, net 6.8% 6.5% 5.8% Income from operations before depreciation and amortization as a percentage of total revenue 15.1% 17.9% 18.3% Income before income taxes as a percentage of total revenue 5.9% 8.6% 8.9% ------------ ------------ ------------ CONSOLIDATED LENDING OPERATIONS: Annualized yield on loans 96% 95% 96% Average loan balance per average location in operation $ 276 $ 279 $ 255 Average loan amount at year-end (not in thousands) $ 102 $ 99 $ 99 Margin on disposition of merchandise as a percentage of proceeds from disposition of merchandise 35.5% 36.4% 37.6% Average annualized merchandise turnover 2.4X 2.5x 2.3x Average merchandise held for disposition per average location $ 133 $ 129 $ 138 Locations in operation Beginning of year 401 382 373 Acquired 61 10 6 Start-ups 7 13 8 Combined or closed (5) (4) (5) End of year 464 401 382 Average number of locations in operation 441 392 377 ------------ ------------ ------------ CHECK CASHING OPERATIONS: Franchised and owned check cashing centers Centers in operation at end of year 137 145 -- Average centers in operation for the year 143 150 -- Automated check cashing machines in service Machines in service at end of year 91 21 -- Average machines in service for the year 53 5 -- ------------ ------------ ------------ RENTAL OPERATIONS: Rental agreements outstanding at end of year $ 1,231 Average balance per rental agreement at end of year (not in thousands) 834 -- -- ------------ ------------ ------------
18 6 SEVEN YEAR SUMMARY OF SELECTED FINANCIAL DATA ================================================================================ (Dollars in thousands, except per share data)
1998 1997 1996 1995 1994 1993 1992 ---------- ---------- ---------- ---------- ---------- ---------- ---------- OPERATIONS - years ended December 31 Total revenue $ 342,876 $ 303,366 $ 280,968 $ 253,579 $ 262,105 $ 224,700 $ 185,410 Income from operations 33,777 38,214 35,313 31,493 31,370 25,262 21,694 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Income before income taxes and cumulative effect of change in accounting principle 20,364 26,157 25,108 20,616 24,958 21,766 20,348 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Income before cumulative effect of change in accounting principle 12,624 16,579 15,684 12,849 15,498 13,839 13,006 Cumulative effect on prior years of change in accounting principle -- -- -- (19,772) -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net income (loss) $ 12,624 $ 16,579 $ 15,684 $ (6,923) $ 15,498 $ 13,839 $ 13,006 ========== ========== ========== ========== ========== ========== ========== Net income (loss) per share: Basic - Income before cumulative effect of change in accounting principle $ .51 $ .68 $ .55 $ .45 $ .55 $ .49 $ .47 Cumulative effect of change in accounting principle -- -- -- (.69) -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net income (loss) $ .51 $ .68 $ .55 $ (.24) $ .55 $ .49 $ .47 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Diluted - Income before cumulative effect of change in accounting principle $ .48 $ .66 $ .54 $ .45 $ .54 $ .48 $ .45 Cumulative effect of change in accounting principle -- -- -- (.69) -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net income (loss) $ .48 $ .66 $ .54 $ (.24) $ .54 $ .48 $ .45 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Dividends per share $ .05 $ .05 $ .05 $ .05 $ .05 $ .05 $.04 3/4 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Weighted average shares: Basic 24,829 24,281 28,703 28,633 28,410 28,289 27,701 Diluted 26,226 25,158 28,806 28,863 28,930 28,938 28,698 ========== ========== ========== ========== ========== ========== ========== PRO FORMA AMOUNTS: (a) (a) (a) (a) Total revenue $ 342,876 $ 303,366 $ 280,968 $ 253,579 $ 221,950 $ 191,851 $ 157,302 Income from operations 33,777 38,214 35,313 31,493 25,181 21,275 17,609 Net income 12,624 16,579 15,684 12,849 11,599 11,327 10,432 Net income per share - Basic $ .51 $ .68 $ .55 $ .45 $ .41 $ .40 $ .38 Net income per share - Diluted $ .48 $ .66 $ .54 $ .45 $ .40 $ .39 $ .36 ========== ========== ========== ========== ========== ========== ========== 1998 1997 1996 1995 1994(a) 1993(a) 1992(a) ---------- ---------- ---------- ---------- ---------- ---------- ---------- FINANCIAL POSITION - at December 31 Loans $ 128,637 $ 112,240 $ 107,679 $ 87,782 $ 78,095 $ 49,089 $ 46,926 Merchandise held for disposition, net 65,417 53,468 48,777 56,647 58,079 43,865 40,110 Working capital 213,612 176,582 163,948 160,701 146,843 101,854 96,541 Total assets 410,823 340,254 324,032 313,275 302,891 229,220 203,088 Total debt 193,974 150,428 150,365 123,462 119,796 64,000 50,000 Stockholders' equity 187,444 167,296 152,977 174,120 162,068 150,849 140,585 Current ratio 7.9x 7.6x 7.6x 11.2x 8.0x 8.2x 8.7x Debt to equity ratio 103.5% 89.9% 98.3% 70.9% 73.9% 42.4% 35.6% ========== ========== ========== ========== ========== ========== ========== LOCATIONS - at year-end Lending operations 464 401 382 373 340 280 249 Check cashing operations 228 166 152 -- -- -- -- Rental operations 4 -- -- -- -- -- -- ========== ========== ========== ========== ========== ========== ==========
(a) Unaudited pro forma amounts assuming retroactive application of change in accounting principle regarding the Company's method of income recognition on pawn loans. The unaudited pro forma amounts reflect the effects of retroactive application of the change on finance and service charges, costs of disposed merchandise, provisions for related income taxes and the carrying value of merchandise held for disposition, net. 19 7 CONSOLIDATED BALANCE SHEETS - December 31 ================================================================================ (In thousands, except share data)
1998 1997 ---------- ---------- ASSETS Current assets: Cash and cash equivalents $ 4,417 $ 1,119 Loans 128,637 112,240 Merchandise held for disposition, net 65,417 53,468 Inventories 3,093 2,130 Finance and service charges receivable 19,733 17,414 Prepaid expenses and other 7,129 4,498 Income taxes recoverable 5,870 -- Deferred tax assets 10,134 12,529 Total current assets 244,430 203,398 ---------- ---------- Property and equipment, net 73,347 64,258 Intangible assets, net 88,284 64,977 Other assets 4,762 7,621 ---------- ---------- Total assets $ 410,823 $ 340,254 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 19,848 $ 14,971 Customer deposits 4,151 3,740 Income taxes currently payable 2,133 3,819 Current portion of long-term debt 4,686 4,286 ---------- ---------- Total current liabilities 30,818 26,816 Deferred tax liabilities 3,273 -- Long-term debt 189,288 146,142 ---------- ---------- Commitments and contingencies (Note 12) Stockholders' equity: Common stock, $.10 par value per share, 80,000,000 shares authorized; 30,235,164 shares issued in 1998 and 1997 3,024 3,024 Paid in surplus 126,615 122,155 Retained earnings 102,722 91,337 Accumulated other comprehensive loss (2,414) (2,458) Notes receivable - stockholders (3,263) (2,362) ---------- ---------- 226,684 211,696 Less - shares held in treasury, at cost (5,114,218 in 1998 and 5,812,519 in 1997) (39,240) (44,400) ---------- ---------- Total stockholders' equity 187,444 167,296 ---------- ---------- Total liabilities and stockholders' equity $ 410,823 $ 340,254 ========== ==========
See notes to consolidated financial statements. 20 8 CONSOLIDATED STATEMENTS OF INCOME - Years Ended December 31 ================================================================================ (In thousands, except per share data)
1998 1997 1996 ---------- ---------- ---------- REVENUE Finance and service charges $ 117,078 $ 104,138 $ 92,591 Proceeds from disposition of merchandise 216,422 195,978 188,377 Check cashing machine sales 2,022 750 -- Check cashing royalties and fees 4,008 2,500 -- Rental operations 3,346 -- -- ---------- ---------- ---------- TOTAL REVENUE 342,876 303,366 280,968 ---------- ---------- ---------- COSTS OF REVENUE Disposed merchandise 139,502 124,616 117,585 Cost of check cashing machines sold 1,895 668 -- Rental operations 832 -- -- ---------- ---------- ---------- NET REVENUE 200,647 178,082 163,383 ========== ========== ========== OPERATING EXPENSES Lending operations 113,696 98,669 92,270 Check cashing operations 7,182 2,549 -- Rental operations 1,389 -- -- Administration 26,494 22,703 19,680 Depreciation 13,935 12,659 12,573 Amortization 4,174 3,288 3,547 ---------- ---------- ---------- Total operating expenses 166,870 139,868 128,070 ---------- ---------- ---------- INCOME FROM OPERATIONS 33,777 38,214 35,313 Interest expense, net 13,557 11,644 9,429 Other (income) expense (144) 413 776 ---------- ---------- ---------- Income before income taxes 20,364 26,157 25,108 Provision for income taxes 7,740 9,578 9,424 ---------- ---------- ---------- NET INCOME $ 12,624 $ 16,579 $ 15,684 ========== ========== ========== Net income per share: Basic $ .51 $ .68 $ .55 Diluted $ .48 $ .66 $ .54 ---------- ---------- ---------- Weighted average shares: Basic 24,829 24,281 28,703 Diluted 26,226 25,158 28,806 ========== ========== ==========
See notes to consolidated financial statements. 21 9 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - Years Ended December 31 ================================================================================ (In thousands, except share data)
Accumulated Common Stock Other -------------------------- Paid In Retained Comprehensive Comprehensive Shares Amount Surplus Earnings Income Income (Loss) ------------ ------------ ------------ ------------ ------------ ------------ Balance at December 31, 1995 30,235,164 $ 3,024 $ 121,840 $ 61,727 $ (3,834) Comprehensive income: Net income 15,684 $ 15,684 ------------ Other comprehensive income - Foreign currency translation adjustments 3,448 3,448 ------------ Comprehensive income $ 19,132 ------------ Dividends declared - $.05 per share (1,438) Treasury shares purchased Treasury shares reissued 27 Tax benefit from exercise of option shares 11 Change in notes receivable - stockholders ------------ ------------ ------------ ------------ ------------ ------------ Balance at December 31, 1996 30,235,164 3,024 121,878 75,973 (386) Comprehensive income: Net income 16,579 $ 16,579 ------------ Other comprehensive income - Foreign currency translation adjustments (2,072) (2,072) ------------ Comprehensive income $ 14,507 ------------ Dividends declared - $.05 per share (1,215) Treasury shares purchased Treasury shares reissued (71) Tax benefit from exercise of option shares 348 Changes in notes receivable - stockholders ------------ ------------ ------------ ------------ ------------ ------------ Balance at December 31, 1997 30,235,164 3,024 122,155 91,337 (2,458) Comprehensive income: Net income 12,624 $ 12,624 ------------ Other comprehensive income - Foreign currency translation adjustments 44 44 ------------ Comprehensive income $ 12,668 ------------ Dividends declared - $.05 per share (1,239) Treasury shares purchased Treasury shares reissued 3,864 Tax benefit from exercise of option shares 596 Changes in notes receivable - stockholders ------------ ------------ ------------ ------------ ------------ ------------ BALANCE AT DECEMBER 31, 1998 30,235,164 $ 3,024 $ 126,615 $ 102,722 $ (2,414) ------------ ------------ ------------ ------------ ------------ ------------ Notes Receivable- Treasury Stock Stock- --------------------------- holders Shares Amount ------------ ------------ ------------ Balance at December 31, 1995 $ (1,903) 1,495,285 $ (6,734) Comprehensive income: Net income Other comprehensive income - Foreign currency translation adjustments Comprehensive income Dividends declared - $.05 per share Treasury shares purchased 4,500,000 (38,750) Treasury shares reissued (19,615) 87 Tax benefit from exercise of option shares Change in notes receivable - stockholders (212) ------------ ------------ ------------ Balance at December 31, 1996 (2,115) 5,975,670 (45,397) Comprehensive income: Net income Other comprehensive income - Foreign currency translation adjustments Comprehensive income Dividends declared - $.05 per share Treasury shares purchased 147,811 (1,375) Treasury shares reissued (310,962) 2,372 Tax benefit from exercise of option shares Changes in notes receivable - stockholders (247) ------------ ------------ ------------ Balance at December 31, 1997 (2,362) 5,812,519 (44,400) Comprehensive income: Net income Other comprehensive income - Foreign currency translation adjustments Comprehensive income Dividends declared - $.05 per share Treasury shares purchased 27,475 (380) Treasury shares reissued (725,776) 5,540 Tax benefit from exercise of option shares Changes in notes receivable - stockholders (901) ------------ ------------ ------------ BALANCE AT DECEMBER 31, 1998 $ (3,263) 5,114,218 $ (39,240) ------------ ------------ ------------
See notes to consolidated financial statements. 22 10 CONSOLIDATED STATEMENTS OF CASH FLOWS - Year Ended December 31 ================================================================================ (In thousands)
1998 1997 1996 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 12,624 $ 16,579 $ 15,684 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 13,935 12,659 12,573 Amortization 4,174 3,288 3,547 Changes in operating assets and liabilities - Merchandise held for disposition and inventories (7,829) (6,037) 8,520 Finance and service charges receivable (1,572) (2,576) (2,897) Prepaid expenses and other (4,306) (370) 237 Accounts payable and accrued expenses 3,348 838 2,147 Customer deposits, net 45 742 (611) Current income taxes (5,748) 479 1,038 Deferred taxes, net 5,885 (1,223) 1,625 ------------ ------------ ------------ Net cash provided by operating activities 20,556 24,379 41,863 ------------ ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Loans forfeited and transferred to merchandise held for disposition 134,414 118,263 97,903 Loans repaid or renewed 291,371 265,662 250,438 Loans made, including loans renewed (435,341) (391,216) (365,852) ------------ ------------ ------------ Net increase in loans (9,556) (7,291) (17,511) ------------ ------------ ------------ Acquisitions, net of cash acquired (23,090) (5,324) (3,401) Advances to affiliates (120) (1,195) (3,250) Purchases of property and equipment (22,412) (14,262) (7,206) Proceeds from sales of property and equipment 1,142 22 145 ------------ ------------ ------------ Net cash used by investing activities (54,036) (28,050) (31,223) ------------ ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings (payments) under bank lines of credit 45,670 (21,751) 27,347 Proceeds from issuance of long-term debt -- 30,000 -- Proceeds from capital lease obligations 2,183 -- -- Payments on notes payable, capital leases and other obligations (10,978) (4,286) -- Change in notes receivable - stockholders (46) 409 15 Net proceeds from reissuance of treasury shares 1,512 1,786 114 Treasury shares purchased (349) (1,375) (38,750) Dividends paid (1,239) (1,215) (1,438) ------------ ------------ ------------ Net cash provided (used) by financing activities 36,753 3,568 (12,712) ------------ ------------ ------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH 25 (112) (29) ------------ ------------ ------------ CHANGE IN CASH AND CASH EQUIVALENTS 3,298 (215) (2,101) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,119 1,334 3,435 ------------ ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF YEAR $ 4,417 $ 1,119 $ 1,334 ------------ ------------ ------------ SUPPLEMENTAL DISCLOSURES NONCASH INVESTING AND FINANCING ACTIVITIES: Purchase transactions - Treasury shares reissued $ 7,131 Liabilities assumed and notes payable issued 8,815 $ 167 $ 47 Loans to stockholders for exercise of stock options 730 515 -- ============ ============ ============
See notes to consolidated financial statements. 23 11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ 1. NATURE OF THE COMPANY History and Operations o Cash America International, Inc. ("the Company") is a diversified provider of specialty financial services to individuals in the United States, United Kingdom, and Sweden. The Company offers secured non-recourse loans, commonly referred to as pawn loans, to individuals through its lending operations. The disposition of merchandise, primarily collateral from unredeemed pawn loans, is a related but secondary activity of the Company's lending function. The Company also provides check cashing services through its wholly owned subsidiary, Mr. Payroll Corporation ("Mr. Payroll"), and rental of tires and wheels through its subsidiary, Rent-A-Tire, Inc. ("Rent-A-Tire"). As of December 31, 1998, the Company's lending operations consisted of 414 United States pawn units and 50 foreign pawn units. Mr. Payroll had 127 franchised and 10 owned check cashing centers in operation and had 91 automated check cashing machines in service. Rent-A-Tire owned and operated four tire rental stores and managed 14 additional stores under the Rent-A-Tire name. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation o The consolidated financial statements include the accounts of the Company's majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Through January 31, 1998, the Company had a 49% ownership interest in Express Rent A Tire, Ltd. ("Express") that was accounted for by the equity method of accounting, whereby the Company recorded its 49% share of earnings or losses in its consolidated financial statements. Effective February 1, 1998, the Company increased its ownership interest in Express to 99.9% and reorganized it into Rent-A-Tire, a new corporation (see Note 3). The acquisition of additional interests has been accounted for as a purchase and, accordingly, the assets and liabilities of Rent-A-Tire and the results of its operations have been included in the consolidated financial statements since February 1, 1998. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. FOREIGN CURRENCY TRANSLATION o The functional currencies for the Company's foreign subsidiaries are the local currencies. The assets and liabilities of those subsidiaries are translated into U.S. dollars at the exchange rates in effect at the balance sheet date, and resulting adjustments are accumulated in other comprehensive income (loss) as a separate component of stockholders' equity. Revenue and expenses are translated at the monthly average exchange rates occurring during the year. CASH AND CASH EQUIVALENTS o The Company considers cash on hand in units, deposits in banks and short-term marketable securities with original maturities of 90 days or less as cash and cash equivalents. REVENUE RECOGNITION o Pawn loans ("loans") are made on the pledge of tangible personal property. The Company accrues finance and service charge revenue on all loans that the Company deems collection is probable based on historical loan redemption statistics. For loans not repaid, the carrying value of the forfeited collateral ("merchandise held for disposition") is stated at the lower of cost (cash amount loaned) or market. Revenue is recognized at the time of disposition of merchandise. Interim customer payments for layaway sales are recorded as deferred revenue and subsequently recognized as revenue during the period in which final payment is received. Check cashing machine sales revenue is recorded upon installation and activation of the machine. The Company records fees derived from its owned check cashing locations and all check cashing machines in the period in which the service is provided. Royalties derived from franchised locations are recorded on the accrual basis. Tire and wheel rentals are paid on a weekly basis in advance and receipts are recorded on the cash basis. Customers may return the tires and wheels at any time and have no obligation to complete the rental agreement. Rent-A-Tire has also entered into agreements to operate and manage stores for unrelated investors. The investors own the stores and incur all costs to operate them. Management fees earned by Rent-A-Tire are recorded in revenue on a straight-line basis over the life of the agreement. In addition, Rent-A-Tire receives compensation for its efforts in constructing and opening each store. MERCHANDISE HELD FOR DISPOSITION AND COST OF DISPOSED MERCHANDISE o Merchandise held for disposition includes merchandise acquired from unredeemed loans, merchandise purchased directly from the public, and merchandise purchased from vendors. Merchandise held for disposition is stated at the lower of cost (specific identification) or market. The Company provides an allowance for shrinkage and valuation based on management's evaluation of the merchandise. The allowance deducted from the carrying value of merchandise held for disposition amounted to $2,163,000 and $2,158,000 at December 31, 1998 and 1997, respectively. The cost of merchandise, computed on the specific identification basis, is removed from merchandise held for disposition and recorded as a reduction of revenue at the time of disposition. PROPERTY AND EQUIPMENT o Property and equipment are recorded at cost. Depreciation expense is generally provided on a straight-line basis, using estimated useful lives of 10 to 30 years for buildings and 3 to 10 years for equipment and leasehold improvements. The cost of property retired or sold and the related accumulated depreciation is removed from the accounts, and any resulting gain or loss is recognized in the income statement. SOFTWARE DEVELOPMENT COSTS o The Company develops computer software for internal use. Internal and external costs incurred for the development of computer applications, as well as for upgrades and enhancements that result in additional functionality of the applications, are capitalized. Internal and external training and maintenance costs are charged to expense as incurred. When an application is placed in service, the Company begins amortizing the related capitalized software costs using the straight-line method and an estimated useful life varying from three to five years. 24 12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued ================================================================================ INTANGIBLE ASSETS o Approximately 92% of net intangible assets consists of excess purchase price over net assets acquired. Amortization is recorded on a straight-line basis over the expected periods of benefit, generally 25 to 40 years. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Pre-opening costs associated with the establishment of new operating units are capitalized and expensed during the twelve months following the date of opening. Pre-opening costs remaining to be amortized totaled $138,000 and $104,000 at December 31, 1998 and 1997, respectively. Accumulated amortization of intangible assets was $22,393,000 and $19,216,000 at December 31, 1998 and 1997, respectively. INCOME TAXES o The provision for income taxes is based on income before income taxes as reported for financial statement purposes. Deferred income taxes are provided in accordance with the assets and liability method of accounting for income taxes to recognize the tax effects of temporary differences between financial statement and income tax accounting. Deferred federal income taxes are not provided on the undistributed earnings of foreign subsidiaries to the extent the Company intends to indefinitely reinvest such earnings. FAIR VALUES OF FINANCIAL INSTRUMENTS o Pawn loans have relatively short maturity periods depending on local regulations, generally 90 days or less in the United States and 180 days or less in the United Kingdom and Sweden. Finance and service charge rates are determined by regulations and bear no valuation relationship to capital markets' interest rate movements. Generally, pawn loans may only be resold to a licensed pawnbroker. For these reasons, management believes that the carrying value of pawn loans approximates the fair value. The Company's bank credit facilities bear interest at rates that are frequently adjusted on the basis of market rate changes. Accordingly, management believes that the carrying value of such debt approximates its fair value. The fair values of the remaining long-term debt instruments are estimated based on market values for debt issues with similar characteristics or rates currently available for debt with similar terms. Management believes that the carrying values of those instruments approximate their fair values. The Company's interest rate cap agreements are repriced in specific three month intervals. Therefore, management believes their carrying values approximate their fair values. HEDGING AND DERIVATIVES ACTIVITY o As a policy, the Company does not engage in speculative or leveraged transactions, nor does it hold or issue financial instruments for trading purposes. The Company does use derivative financial instruments, such as interest rate cap agreements, for the purpose of managing interest rate exposures that exist from ongoing business operations. Amounts expected to be paid or received on such agreements are recognized as adjustments to interest expense during the term of the agreements. The Company may also periodically enter into forward sale contracts with a major bullion bank to sell fine gold that is produced in the normal course of business from the Company's liquidation of forfeited gold merchandise. In addition, the Company transfers funds between currencies from time-to-time and may concurrently enter into short-term currency swaps to eliminate the risk of currency fluctuations. ADVERTISING COSTS o Costs of advertising are expensed at the time of first occurrence. Advertising expense was $3,685,000, $3,444,000 and $3,395,000 for the years ended December 31, 1998, 1997 and 1996, respectively. STOCK-BASED COMPENSATION o The Company applies the intrinsic value based method of accounting for the costs of its stock-based employee compensation plans and, accordingly, discloses the pro forma effect on net income and net income per share as if the fair value based method of accounting for the cost of such plans had been applied. NET INCOME PER SHARE o Basic net income per share is computed by dividing net income by the weighted average number of shares outstanding during the year. Diluted net income per share is calculated by giving effect to the potential dilution that could occur if securities or other contracts to issue common shares were exercised and converted into common shares during the year. The reconciliation of basic and diluted weighted average common shares outstanding for the three years ended December 31, 1998 is as follows (in thousands):
1998 1997 1996 ---------- ---------- ---------- Weighted average shares - Basic 24,829 24,281 28,703 Effect of shares applicable to stock option plans 1,368 871 103 Effect of shares applicable to nonqualified savings plan 29 6 -- ---------- ---------- ---------- Weighted average shares - Diluted 26,226 25,158 28,806 ========== ========== ==========
YEAR 2000 EXPENSES o The costs of identifying, correcting, reprogramming and testing of computer systems for Year 2000 compliance are recorded as expenses when incurred. NEW ACCOUNTING STANDARDS o In February 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 132 "Employers' Disclosures about Pensions and Other Postretirement Benefits - an amendment of FASB Statements Number 87, 88, and 106" ("SFAS 132") that is effective for reporting periods beginning after December 15, 1997. The required disclosures have been made and adoption of SFAS 132 had no effect on the Company's consolidated financial position or results of operations in 1998. In March 1998, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants ("AcSEC") issued Statement of Position 98-1 "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use" ("SOP 98-1") that is effective for reporting periods beginning after December 15, 1998, but provides for earlier application if certain conditions are met. The Company has applied the provisions of SOP 98-1 in its financial statements for the year ended December 31, 1998 and its adoption had no material effect on the Company's consolidated financial position or results of operations. In April 1998, the AcSEC issued Statement of Position 98-5 "Reporting on the Costs of Start-Up Activities" ("SOP 98-5") that is effective for reporting periods beginning after December 15, 1998. In June 1998, the FASB issued Statement of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") that is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. The Company will implement the provisions 25 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued ================================================================================ of SOP 98-5 and SFAS 133 as required. The future adoption of SOP 98-5 and SFAS 133 is not expected to have a material effect on the Company's consolidated financial position or results of operations. CONSOLIDATED STATEMENTS OF CASH FLOWS o The Company has chosen to use the indirect method to report consolidated cash flows for each of the three years ended December 31, 1998. The Company previously used the direct method of presentation. The change of reporting method had no effect on the amount of net cash provided by operating activities. RECLASSIFICATIONS o Certain amounts in the consolidated financial statements for 1997 and 1996 have been reclassified to conform to the presentation format adopted in 1998. These reclassifications have no effect on the net income previously reported. 3. ACQUISITIONS During 1998, the Company acquired sixty-one pawnshops in purchase transactions for an aggregate purchase price of $37,636,000 consisting of $21,690,000 in cash, $500,000 in notes issued, the assumption of $8,315,000 of liabilities, and the issuance of 475,391 shares of the Company's common stock valued at $7,131,000. The Company also purchased ten manned check cashing centers for an aggregate cash consideration of $1,400,000 during 1998. The Company acquired a total of ten pawnshops for an aggregate cash consideration of $5,324,000 in purchase transactions during 1997. The excess of the aggregate purchase price over the aggregate fair market value of net assets acquired of approximately $22,282,000 and $2,425,000 during 1998 and 1997, respectively, is being amortized over periods ranging from 30 to 40 years. The related assets and liabilities and results of operations have been included in the Company's financial statements from the dates of acquisition. In September 1995, the Company acquired, for a nominal amount, a 49% interest in Express. The Company also acquired an option for $1,000,000 to purchase an additional 41% interest. Effective February 1, 1998, in a series of transactions accounted for as a purchase, the Company exercised its option and increased its ownership interest in Express from 49% to 90%. In conjunction with the reorganization of Express into Rent-A-Tire, the Company also acquired an additional 9.9% ownership interest. The aggregate purchase price of the additional 41% interest will be paid in four annual installments in an amount equal to .5835 times the defined after-tax net income of Express for the 1997 fiscal year and Rent-A-Tire for the 1998, 1999 and 2000 fiscal years, respectively. No consideration was payable based on Express' results of operations in 1997 and Rent-A-Tire's results of operations in 1998. The sellers have an option to repurchase 9.9% of Rent-A-Tire for a nominal amount. The option is exercisable upon sixty days written notice. The Company paid $2 million to acquire a 49% interest in Mr. Payroll in 1994. Effective at the close of business on December 31, 1996, the Company acquired, in a purchase transaction, the remaining 51% interest in Mr. Payroll. The aggregate purchase price of the 51% interest was payable in three annual installments in an amount equal to .9775 times the defined after-tax net income of Mr. Payroll for each of the 1996, 1997 and 1998 fiscal years. No consideration was ultimately determined to be payable based on Mr. Payroll's results of operations in each of the three years. The sellers have an option to repurchase 10% of Mr. Payroll for a nominal amount subject to certain conditions. Mr. Payroll's assets and liabilities and its results of operations have been included in the Company's financial statements since acquisition. 4. CONSOLIDATED BALANCE SHEET DETAILS
PROPERTY AND EQUIPMENT At December 31, 1998 1997 ------------ ------------ (In thousands) Land $ 4,504 $ 4,715 Buildings and leasehold improvements 66,481 60,076 Furniture, fixtures and equipment 68,738 54,976 ------------ ------------ Total 139,723 119,767 Less - accumulated depreciation 66,376 55,509 ------------ ------------ Property and equipment - net $ 73,347 $ 64,258 ============ ============ ACCOUNTS PAYABLE AND ACCRUED EXPENSES Trade accounts payable $ 4,234 $ 2,920 Accrued taxes, other than income taxes 4,007 3,485 Accrued payroll and fringe benefits 6,156 5,278 Accrued interest payable 2,070 1,090 Other accrued liabilities 3,381 2,198 ------------ ------------ Total $ 19,848 $ 14,971 ============ ============
At December 31, 1998, property and equipment included $2,183,000 of cost and $185,000 of accumulated depreciation relating to assets held under capital leases. 5. LONG-TERM DEBT The Company's long-term debt instruments and balances outstanding at December 31, 1998 and 1997 are as follows (in thousands):
1998 1997 ---------- ---------- U.S. Line of Credit up to $150,000 due June 30, 2003 $ 95,500 $ 51,000 U.K. Line of Credit up to L.10,000 due April 30, 2000 5,808 2,146 Swedish Lines of Credit up to SEK 215,000 18,676 21,567 8.33% senior unsecured notes due 2003 21,429 25,715 8.14% senior unsecured notes due 2007 20,000 20,000 7.10% senior unsecured notes due 2008 30,000 30,000 Capital lease obligations payable 2,061 -- 6.25% subordinated unsecured notes due 2004 500 -- ---------- ---------- 193,974 150,428 Less current portion 4,686 4,286 ---------- ---------- Total long-term debt $ 189,288 $ 146,142 ========== ==========
Interest on the U.S. Line of Credit is charged, at the Company's option, at either a margin over LIBOR (1.0% at December 31, 1998) or at the Agent's base rate. The Company pays a fee of .25% per annum on the unused portion. The Company has interest rate cap agreements totaling $40,000,000 which limit the maximum LIBOR rate to 6%. $20,000,000 will expire in December 1999, and $20,000,000 will expire in September 2000. During the year ended December 31, 1998, the weighted average amount outstanding on the line of credit 26 14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued ================================================================================ was $82,320,000 and the effective interest rate was 7.02% after taking into account the cost of interest rate cap agreements. Interest on the U.K. Line of Credit (approximately $16,595,000 as of December 31, 1998) is charged at the Bank's cost of funds plus a margin of 60 basis points for borrowings less than 14 days, and a margin of 55 basis points for borrowings of 14 days or more. The Company pays a fee of .25% per annum on the unused portion. During the year ended December 31, 1998, the weighted average amount outstanding was (pound)2,666,000 (approximately $4,423,000), and the effective interest rate was 7.91%. The Company has an SEK 185,000,000 ($22,811,000 as of December 31, 1998) line of credit maturing September 30, 2002. Interest is charged at the Stockholm InterBank Offered Rate ("STIBOR") plus a margin of 1.0%. The Company pays a fee of .25% per annum on the unused portion. The Company also has an SEK 30,000,000 ($3,699,000 as of December 31, 1998) line of credit with a commercial bank maturing January 1, 2000. Interest is charged at the Bank's base funding rate plus 1.0%. The Company pays a fee of .375% per annum on the unused portion. As of December 31, 1998, amounts outstanding under the lines of credit were SEK 150,000,000 ($18,496,000), and SEK 1,461,000 ($180,000), respectively. The Company has an interest rate cap agreement for SEK 100,000,000 ($12,330,000 as of December 31, 1998) that limits the maximum STIBOR rate to 5.5%. During the year ended December 31, 1998, the weighted average amount outstanding under the lines of credit was SEK 165,760,000 (approximately $20,858,000), and the effective interest rate was 7.93%. All debt instruments are unsecured and governed by agreements that have provisions that require the Company to maintain certain financial ratios and limit specific payments and equity distributions. Annual maturities of long-term debt (including capital lease obligations) through 2003 are: 1999 - $4,686,000; 2000 - $10,803,000; 2001 - $4,842,000; 2002 - - $27,507,000; and 2003 - $108,608,000. Cash payments for interest on long-term debt were $12,576,000, $12,005,000 and $9,500,000 in 1998, 1997 and 1996, respectively. 6. INCOME TAXES The components of the Company's deferred tax assets and liabilities as of December 31 are as follows (in thousands):
1998 1997 ---------- ---------- Deferred tax assets: Provision for valuation of merchandise held for disposition $ 529 $ 527 Tax over book accrual of finance and service charges 9,070 12,125 Property and equipment -- 911 Deferred compensation 520 189 Net operating loss carryforwards 1,516 1,210 Other 1,011 644 Total deferred tax assets 12,646 15,606 ---------- ---------- Valuation allowance for deferred tax assets (1,482) (405) ---------- ---------- Net deferred tax assets $ 11,164 $ 15,201 ========== ========== Deferred tax liabilities: Property and equipment $ 1,863 $ -- Deferred acquisition and start-up costs 172 207 Amortization of acquired intangibles 1,039 763 Foreign tax reserves 838 681 Other 391 398 ---------- ---------- Total deferred tax liabilities 4,303 2,049 ---------- ---------- Net deferred tax assets $ 6,861 $ 13,152 ========== ========== Balance sheet classification: Current deferred tax assets $ 10,134 $ 12,529 Non-current deferred tax liabilities (3,273) -- Included in non-current assets -- 623 ---------- ---------- Net deferred tax assets $ 6,861 $ 13,152 ========== ==========
The components of the provision for income taxes and the income to which it relates for the years ended December 31 are shown below (in thousands):
1998 1997 1996 -------- -------- -------- Income before income taxes: Domestic $ 10,531 $ 17,362 $ 16,427 Foreign 9,833 8,795 8,681 -------- -------- -------- $ 20,364 $ 26,157 $ 25,108 ======== ======== ========
Provision for income taxes (in thousands): 1998 1997 1996 -------- -------- -------- Current portion of provision: Federal $ (2,658) $ 7,717 $ 4,906 Foreign 2,797 2,380 2,572 State and local 447 704 440 -------- -------- -------- $ 586 $ 10,801 $ 7,918 ======== ======== ======== Deferred portion of provision (benefit): Federal $ 6,929 $ (1,463) $ 1,376 Foreign 221 409 249 State and local 4 (169) (119) -------- -------- -------- $ 7,154 $ (1,223) $ 1,506 -------- -------- -------- Total provision $ 7,740 $ 9,578 $ 9,424 ======== ======== ========
The effective tax rate differs from the federal statutory rate for the following reasons (in thousands):
1998 1997 1996 ---------- ---------- ---------- Tax provision computed at the statutory federal income tax rate $ 7,127 $ 9,155 $ 8,788 Non-deductible amortization of intangible assets 617 517 465 Foreign tax rate difference (621) (530) (240) Other 617 436 411 ---------- ---------- ---------- Total provision $ 7,740 $ 9,578 $ 9,424 ---------- ---------- ---------- Effective tax rate 38.0% 36.6% 37.5% ========== ========== ==========
As of December 31, 1998, the Company has net operating loss carryforwards of $4,373,000 for U.S. income tax purposes. This amount consists of $3,170,000 from the 1996 acquisition of Mr. Payroll and $1,203,000 from the 1998 acquisition of Doc Holliday's Pawnbrokers and Jewellers, Inc. ("Doc Holliday's"). The loss carryforwards attributable to Mr. Payroll expire from 2009 through 2011, while the loss carryforwards of Doc Holliday's expire from 2010 27 15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued ================================================================================ through 2012. The losses can be used to offset future taxable income of the companies that incurred such losses. The amount of the Doc Holliday's loss carryforwards that the Company can utilize each year is limited to approximately $721,000. The valuation allowances relate to loss carryforwards of Mr. Payroll and Doc Holliday's and to preacquisition deductible temporary differences of Doc Holliday's. When realized, the tax benefits from these items will be applied to reduce goodwill of the acquired companies. Domestic income taxes have not been provided on undistributed earnings of foreign subsidiaries to the extent that it is the Company's intent to reinvest these earnings overseas indefinitely. Upon distribution of accumulated earnings of all foreign subsidiaries, the Company would be subject to U.S. income taxes (net of foreign tax credits) of approximately $575,000. Cash payments for income taxes were $7,599,000, $10,322,000 and $6,761,000 in 1998, 1997 and 1996, respectively. 7. EMPLOYEE BENEFIT PLANS The Cash America International, Inc. 401(k) Savings Plan was amended July 1, 1996, to expand eligibility and increase benefit levels. The 401(k) Savings Plan is open to substantially all domestic employees after six months of employment. The Cash America International, Inc. Nonqualified Savings Plan, that commenced on July 1, 1996, is available to certain members of management. Participants may contribute up to 15% of their earnings to these plans. The Company makes matching contributions of 50% of each participant's contributions, based on participant contributions of up to 5% of compensation. Company contributions vest at the rate of 20% each year after one year of service; thus a participant is 100% vested after five years of service. The Company provides benefits under separate retirement plans for eligible employees in foreign countries. Total Company contributions to retirement plans were $681,000, $575,000 and $367,000 in 1998, 1997 and 1996, respectively. 8. STOCKHOLDERS' EQUITY During 1998, the Company purchased 25,693 shares of the Company's common stock for $349,000 for the Nonqualified Savings Plan and received 1,782 shares of the Company's common stock valued at $31,000 as partial payment for shares issued under stock option plans. In January 1997, the Board of Directors authorized the purchase of up to 1,000,000 shares of the Company's common stock and 119,900 shares were purchased during 1997 for an aggregate amount of $1,081,000. During 1997, the Company also purchased 13,236 shares of the Company's common stock for the Nonqualified Savings Plan for $136,000 and received 14,675 shares of the Company's common stock valued at $158,000 as partial payment for shares issued under stock option plans. In December 1996, the Company purchased 4,500,000 shares of its common stock in a "Dutch Auction" tender offer for $38,250,000 plus $500,000 in expenses related to the offer. The Board of Directors adopted an officer stock loan program (the "Program") in 1994 and modified it in 1996. Program participants may utilize loan proceeds to acquire and hold the Company's common stock by means of stock option exercises or otherwise. Common stock held as a result of the loan must be pledged to the Company to secure the obligation. Interest accrues at the "applicable Federal rate" as published periodically by the Internal Revenue Service, is payable annually and may be paid with additional loan proceeds. Each loan has a one year maturity and is renewable for successive one year terms subject to the discretion of the Executive Compensation Committee of the Board of Directors. Amounts due from officers under the Program are reflected as a reduction of stockholders' equity in the Company's Consolidated Balance Sheets. 9. STOCK PURCHASE RIGHTS In August 1997, the Board of Directors declared a dividend distribution of one Common Stock Purchase Right (the "Right") for each outstanding share of its common stock. The Rights become exercisable in the event a person or group acquires 15% or more of the Company's common stock or announces a tender offer, the consummation of which would result in ownership by a person or group of 15% or more of the common stock. If any person becomes a 15% or more shareholder of the Company, each Right (subject to certain limits) will entitle its holder (other than such person or members of such group) to purchase, for $37.00, the number of shares of the Company's common stock determined by dividing $74.00 by the then current market price of the common stock. The rights will expire on August 5, 2007. 10. STOCK OPTIONS Under various plans (the "Plans") it sponsors, the Company is authorized to issue 5,900,000 shares of Common Stock pursuant to "Awards" granted as incentive stock options (intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended) and nonqualified stock options. During 1998, 1997, and 1996, the Company granted nonqualified stock options to employees and directors. The stock options granted have contractual terms of 5 to 15 years. All of the options have an exercise price equal to or greater than the fair market value of the stock at grant date. Options granted during 1998 become fully vested on either the first or third anniversary of the grant date. Some options granted during 1997 become fully vested on the seventh anniversary of the grant date, but vesting will accelerate if specified share price appreciation criteria are met. Other 1997 options vest on the third anniversary of the grant date. Most of the options granted in 1996 vest ratably over a four-year period beginning on the first anniversary of the grant date. 28 16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued ================================================================================ A summary of the Company's stock option activity during the three-year periods ending December 31, is as follows (shares in thousands):
1998 1997 1996 --------------------------- --------------------------- --------------------------- WEIGHTED WEIGHTED WEIGHTED AVERAGE AVERAGE AVERAGE EXERCISE EXERCISE EXERCISE SHARES PRICES SHARES PRICES SHARES PRICES ------------ ------------ ------------ ------------ ------------ ------------ Outstanding at beginning of year 4,434 $ 7.40 3,759 $ 6.63 3,959 $ 6.76 Granted 87 $ 13.80 1,028 $ 10.17 25 $ 6.63 Exercised 250 $ 9.07 311 $ 7.40 -- NA Forfeited 43 $ 8.94 24 $ 9.38 39 $ 7.24 Expired -- -- 18 $ 7.75 186 $ 9.30 ------------ ------------ ------------ ------------ ------------ ------------ Outstanding at end of year 4,228 $ 7.41 4,434 $ 7.40 3,759 $ 6.63 ------------ ------------ ------------ ------------ ------------ ------------ Exercisable at end of year 3,427 $ 6.85 3,189 $ 6.53 3,351 $ 6.58 ------------ ------------ ------------ ------------ ------------ ------------ Weighted average fair value of options granted $ 5.61 $ 4.03 $ 1.96
The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions for grants during the three-year periods ending December 31:
1998 1997 1996 ------------ ------------ ------------ Expected term (years) 8.0 7.2 4.5 Risk-free interest rate 5.50% 6.21% 6.51% Expected dividend yield 0.61% 0.50% 0.75% Expected volatility 27.3% 23.5% 23.5%
Stock options outstanding as of December 31, 1998 are summarized below (shares in thousands):
Options Outstanding Options Exercisable - ----------------------------------------------------------------- ----------------------------- Weighted Average Years Weighted of Remaining Weighted Range of Number Average Contractual Number Average Exercise Exercise Prices Outstanding Exercise Price Life Exercisable Price - --------------- ----------- -------------- ------------- ----------- ---------------- $ 5.63 to $ 7.00 2,860 $ 6.32 5.7 2,815 $ 6.33 $ 7.01 to $10.81 1,293 $ 9.45 6.4 612 $ 9.24 $10.82 to $16.69 75 $ 13.97 9.1 -- -- - ---------------- ----- --------- --- ----- -------- $ 5.63 to $16.69 4,228 $ 7.41 5.9 3,427 $ 6.85 - ---------------- ----- --------- --- ----- --------
The Company applies the intrinsic value based method of accounting for the Plans and, accordingly, no compensation cost has been recognized. If compensation costs for the Company's stock options had been determined on the fair value based method of accounting, the Company's net income, net income per share basic and diluted for each of the years ended December 31 would have been reported as follows (in thousands except per share amounts):
1998 1997 1996 ------------ ------------ ------------ Net income As reported $ 12,624 $ 16,579 $ 15,684 Pro forma $ 11,989 $ 16,299 $ 15,675 ------------ ------------ ------------ Net income per share Basic: As reported $ .51 $ .68 $ .55 Pro forma $ .48 $ .67 $ .55 Diluted: As reported $ .48 $ .66 $ .54 Pro forma $ .46 $ .65 $ .54 ------------ ------------ ------------
The effects of applying the fair value based method of accounting in the pro forma amounts above are not indicative of future effects and its application does not apply to awards granted prior to 1995. 29 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued ================================================================================ 11. OPERATING SEGMENT INFORMATION The Company has two reportable operating segments in the lending industry and one each in the check cashing and rental industries. The United States and foreign lending segments offer secured non-recourse pawn loans to individuals. In the United States segment, loan terms are generally for one month with provisions for renewals and extensions and they average approximately forty-five days in length. The loan collateral includes a wide variety of personal property items. However, in the foreign segment, loan terms are six months, the loan amounts are generally larger, and the collateral consists predominately of jewelry. The check cashing segment provides check cashing services to individuals through personal and automated service centers. The rental segment rents vehicle tires and wheels to individuals. The accounting policies of the segments are the same as those described in Note 2. Management of the Company evaluates performance based on income or loss from operations before net interest expense, other miscellaneous items of income or expense, and the provision for income taxes. There are no intersegmental sales. The United States and foreign lending segments offer the same services, however, each is managed separately due to the different operational strategies required. The check cashing and rental operations offer different services and products, each of which requires its own technical, marketing and operational strategy. Information concerning the segments is set forth below (in thousands):
LENDING ------------------------------------- UNITED STATES FOREIGN TOTAL CHECK CASHING RENTAL CONSOLIDATED ------------- ---------- ---------- ------------- ---------- ------------ 1998 ---------- ---------- ---------- ---------- ---------- ---------- Total revenue $ 305,981 $ 28,294 $ 334,275 $ 5,255 $ 3,346 $ 342,876 Depreciation and amortization 15,420 1,427 16,847 894 368 18,109 Income (loss) from operations 31,587 11,774 43,361 (9,011) (573) 33,777 Total assets at December 31 294,717 78,122 372,839 32,099 5,885 410,823 Expenditures for property and equipment 11,624 1,413 13,037 6,889 2,486 22,412 1997 ---------- ---------- ---------- ---------- ---------- ---------- Total revenue 275,775 24,341 300,116 3,250 N/A 303,366 Depreciation and amortization 14,090 1,297 15,387 560 N/A 15,947 Income (loss) from operations 28,837 11,059 39,896 (1,682) N/A 38,214 Total assets at December 31 256,431 70,522 326,953 13,301 N/A 340,254 Expenditures for property and equipment 8,878 890 9,768 4,494 N/A 14,262 1996 ---------- ---------- ---------- ---------- ---------- ---------- Total revenue 257,381 23,587 280,968 N/A N/A 280,968 Depreciation and amortization 15,002 1,118 16,120 N/A N/A 16,120 Income from operations 24,058 11,255 35,313 N/A N/A 35,313 Total assets at December 31 243,434 73,616 317,050 6,982 N/A 324,032 Expenditures for property and equipment 5,867 1,339 7,206 N/A N/A 7,206 ---------- ---------- ---------- ---------- ---------- ----------
The geographic distribution of property and equipment at December 31, follows (in thousands):
UNITED STATES FOREIGN CONSOLIDATED ------------- ------------ ------------ 1998 $ 68,056 $ 5,291 $ 73,347 1997 59,454 4,804 64,258 1996 57,787 5,031 62,818
12. COMMITMENTS AND CONTINGENCIES The Company leases certain of its facilities under operating leases with terms ranging from three to ten years, with certain rights to extend for additional periods. Future minimum rentals due under non-cancelable leases are as follows for each of the years ending December 31 (in thousands): 1999 $ 18,168 2000 13,779 2001 10,847 2002 7,453 2003 3,877 Thereafter 10,578 ------------ Total $ 64,702 ============
30 18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued ================================================================================ Rent expense was $18,567,000, $15,949,000 and $14,936,000 for 1998, 1997 and 1996, respectively. The Company is party to a number of lawsuits arising in the normal course of business. In the opinion of management, the resolution of these matters will not have a material adverse effect on the Company's financial position, results of operations or liquidity. 13. SUBSEQUENT EVENT The Company entered into an agreement with Wells Fargo Bank, N.A. ("Wells Fargo") that provides for Wells Fargo to contribute approximately $21 million of cash and all of the assets of an existing network of 200 automated teller machines, valued at approximately $6 million, to Mr. Payroll to be used for the continued development and deployment of Mr. Payroll's fully automated check cashing and financial services machine. The Company will retain sole ownership of Mr. Payroll's manned check cashing operation. The Company and Wells Fargo will receive equal shares of senior convertible preferred stock of Mr. Payroll. The Company will retain a minority equity interest and will have no obligation to fund the future operations of Mr. Payroll. Pursuant to the option granted in connection with the Company's original acquisition of Mr. Payroll, the sellers of Mr. Payroll will receive 10% of the Company's shares. REPORT OF INDEPENDENT ACCOUNTANTS ================================================================================ TO THE BOARD OF DIRECTORS AND STOCKHOLDERS CASH AMERICA INTERNATIONAL, INC. In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income and stockholders' equity and of cash flows present fairly, in all material respects, the financial position of Cash America International, Inc. and its subsidiaries at December 31, 1998 and 1997, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICEWATERHOUSECOOPERS LLP Fort Worth, Texas January 26, 1999 31 19 INCOME STATEMENT QUARTERLY DATA (Unaudited) ================================================================================ (In thousands, except per share data)
FIRST SECOND THIRD FOURTH 1998 QUARTER QUARTER QUARTER QUARTER ------------ ------------ ------------ ------------ Total revenue $ 84,194 $ 78,252 $ 80,512 $ 99,918 Costs of revenue $ 35,496 $ 31,512 $ 31,715 $ 43,506 Net income $ 4,534 $ 1,634 $ 2,097 $ 4,359 Net income per share - Diluted $ .18 $ .06 $ .08 $ .17 Weighted average shares - Diluted 25,633 26,398 26,417 26,346 1997 ------------ ------------ ------------ ------------ Total revenue $ 76,519 $ 69,419 $ 70,311 $ 87,117 Costs of revenue $ 32,461 $ 27,738 $ 27,174 $ 37,911 Net income $ 3,790 $ 3,011 $ 3,442 $ 6,336 Net income per share - Diluted $ .15 $ .12 $ .14 $ .25 Weighted average shares - Diluted 24,875 24,949 25,224 25,568
COMMON STOCK DATA ================================================================================ The New York Stock Exchange is the principal exchange on which Cash America International, Inc. common stock is traded. There were 977 stockholders of record (not including individual participants in security listings) as of February 2,1999. The high and low sales prices of common stock as quoted on the composite tape of the New York Stock Exchange and cash dividends per share during 1998 and 1997 were as follows:
FIRST SECOND THIRD FOURTH 1998 QUARTER QUARTER QUARTER QUARTER ------------ ------------ ------------ ------------ High $ 16.75 $ 20.88 $ 20.50 $ 16.88 Low 10.63 14.56 10.38 9.00 Close 16.25 15.25 11.13 15.19 Cash dividend per share $.01 1/4 $.01 1/4 $.01 1/4 $.01 1/4 1997 ------------ ------------ ------------ ------------ High $ 10.50 $ 10.50 $ 11.75 $ 13.75 Low 8.00 8.50 9.50 10.88 Close 9.75 10.50 11.25 12.94 Cash dividend per share $ .01 1/4 $ .01 1/4 $ .01 1/4 $ .01 1/4
32 20 CASH AMERICA INTERNATIONAL, INC. 1600 WEST 7TH STREET FORT WORTH, TEXAS 76102 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 20, 1999 To Our Shareholders: The Annual Meeting of Shareholders of Cash America International, Inc. (the "Company") will be held at the Fort Worth Club, 12th Floor, Fort Worth Club Building, 306 West 7th Street, Fort Worth, Texas on Tuesday, April 20, 1999 at 9:00 a.m., Fort Worth Time, for the following purposes: (1) To elect eleven (11) persons to serve as directors of the Company to hold office until the next annual meeting of shareholders or until their successors are duly elected and qualified; (2) To consider and act upon a proposal to ratify the appointment of PricewaterhouseCoopers LLP as independent auditors of the Company for the year 1999; (3) To consider and act upon a proposal to amend the Company's 1994 Long-Term Incentive Plan; and (4) To transact such other business as may properly come before the meeting or any adjournments thereof. Only holders of record of the Common Stock of the Company at the close of business on March 2, 1999 are entitled to notice of and to vote at the Annual Meeting. The presence, in person or by proxy, of the holders of a majority of the issued and outstanding Common Stock entitled to vote at the meeting is required for a quorum to transact business. The stock transfer books will not be closed. Management sincerely desires your presence at the meeting. However, so that we may be sure that your shares are represented and voted in accordance with your wishes, please sign and date the enclosed proxy and return it promptly in the enclosed stamped envelope. If you attend the meeting, you may revoke your proxy and vote in person. By Order of the Board of Directors, HUGH A. SIMPSON Secretary Fort Worth, Texas March 23, 1999 21 CASH AMERICA INTERNATIONAL, INC. 1600 WEST 7TH STREET FORT WORTH, TEXAS 76102 (PRINCIPAL EXECUTIVE OFFICES) PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS APRIL 20, 1999 SOLICITATION OF PROXIES The proxy statement and accompanying proxy are furnished in connection with the solicitation by the Board of Directors of Cash America International, Inc., a Texas corporation (the "Company"), of proxies to be voted at the Annual Meeting of Shareholders (the "Annual Meeting") to be held at the Fort Worth Club located on the 12th Floor of the Fort Worth Club Building, 306 West 7th Street, Fort Worth, Texas on Tuesday, April 20, 1999 at 9:00 a.m., Fort Worth Time and at any recess or adjournment thereof. The solicitation will be by mail, and this Proxy Statement and the accompanying form of proxy will be mailed to shareholders on or about March 23, 1999. The enclosed proxy, even though executed and returned, may be revoked at any time prior to the voting of the proxy by giving written notice of revocation to the Secretary of the Company at its principal executive offices or by executing and delivering a later-dated proxy or by attending the Annual Meeting and voting in person. However, no such revocation shall be effective until such notice has been received by the Company at or before the Annual Meeting. Such revocation will not affect a vote on any matters taken prior to receipt of such revocation. Mere attendance at the Annual Meeting will not of itself revoke the proxy. The expense of such solicitation will be borne by the Company and will include reimbursement paid to brokerage firms and other custodians, nominees and fiduciaries for their expenses in forwarding solicitation material regarding the meeting to beneficial owners. The Company has retained Kissel-Blake Inc. to assist in the solicitation of proxies from shareholders, and will pay such firm a fee for its services of approximately $5,000.00. Further solicitation of proxies may be made by telephone or other electronic communication following the original solicitation by directors, officers and regular employees of the Company or by its transfer agent who will not be additionally compensated therefor, but will be reimbursed by the Company for out-of-pocket expenses. A copy of the Annual Report to Shareholders of the Company for its fiscal year ended December 31, 1998 is being mailed with this Proxy Statement to all shareholders entitled to vote, but it does not form any part of the information for solicitation of proxies. VOTING SECURITIES OUTSTANDING; QUORUM The record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting was the close of business on March 2, 1999 (the "Record Date"). At the close of business on March 2, 1999, there were 25,180,149 shares of Common Stock, par value $.10 per share, issued and outstanding, each of which is entitled to one vote on all matters properly brought before the meeting. There are no cumulative voting rights. The presence in person or by proxy of the holders of a majority of the issued and outstanding shares of Common Stock on the Record Date is necessary to constitute a quorum at the Annual Meeting. Assuming the presence of a quorum, the affirmative vote of a majority of the shares of Common Stock present, or represented by proxy, and entitled to vote at the Annual Meeting is necessary for the election of directors, for ratification of the appointment of independent auditors, and for approval of the proposed amendment to the Company's 1994 Long-Term Incentive Plan. Shares voted for a proposal and 22 shares represented by returned proxies that do not contain instructions to vote against a proposal or to abstain from voting will be counted as shares cast for the proposal. Shares will be counted as cast against the proposal if the shares are voted either against the proposal or to abstain from voting. Broker non-votes will not change the number of votes for or against the proposal and will not be treated as shares entitled to vote, but such shares will be counted for purposes of determining the presence of a quorum. PURPOSES OF THE ANNUAL MEETING At the Annual Meeting, the shareholders of the Company will consider and vote on the following matters: (1) Election of eleven (11) persons to serve as directors of the Company to hold office until the next annual meeting of shareholders or until their successors are duly elected and qualified; (2) Ratification of the appointment of PricewaterhouseCoopers LLP as independent auditors of the Company for the year 1999; (3) A proposal to amend the Company's 1994 Long-Term Incentive Plan; and (4) Such other business as may properly come before the meeting or any adjournments thereof. ELECTION OF DIRECTORS The Company's Board of Directors for the ensuing year will consist of eleven (11) members who are to be elected for a term expiring at the next annual meeting of shareholders or until their successors shall be elected and shall have qualified. The following slate of eleven nominees has been chosen by the Board of Directors and the Board recommends that each be elected. Unless otherwise indicated in the enclosed form of Proxy, the persons named in such proxy intend to nominate and vote for the election of the following nominees for the office of director. All of such nominees are presently serving as directors.
PRINCIPAL OCCUPATION DIRECTOR NAME AND AGE DURING PAST FIVE YEARS SINCE ------------ ---------------------- -------- Jack Daugherty (51) Chairman of the Board and Chief Executive Officer of 1983 the Company since its inception. Mr. Daugherty has owned and operated pawnshops since 1971. A. R. Dike (63) Mr. Dike has owned and served as Chairman of the 1988 Board and Chief Executive Officer of The Dike Co., Inc. (a private insurance agency) for over twenty years. He has served as Chairman of Willis Corroon Life, Inc. of Texas since 1991. Daniel R. Feehan (48) President and Chief Operating Officer of the Company 1984 since January 1990. (Chairman and Co-Chief Executive Officer of the check cashing company Mr. Payroll Corporation, formerly a wholly-owned subsidiary of the Company, from February 1998 to February 1999.) James H. Graves (50) Managing Director of J. C. Bradford & Co., a 1996 Nashville based securities firm, where he has worked for more than five years. B. D. Hunter (69) Mr. Hunter is the founder of Huntco, Inc., an 1984 intermediate steel processing company, and for more than five years has served as its Chairman of the Board and Chief Executive Officer.
2 23
PRINCIPAL OCCUPATION DIRECTOR NAME AND AGE DURING PAST FIVE YEARS SINCE ------------ ---------------------- -------- Timothy J. McKibben (50) Chairman of the Board of Ancor Holdings, a private 1996 investment firm, since 1993, and prior to that, Chairman of the Board and President of Anago Incorporated, a medical products manufacturing company that he co-founded in 1978. Alfred M. Micallef (56) President since 1974, and currently Chief Executive 1996 Officer, of JMK International, Inc., a holding company of rubber and plastics manufacturing businesses. Clifton H. Morris, Jr. (63) Chairman of the Board and Chief Executive Officer of 1998 AmeriCredit Corp., a national automobile consumer finance company, since July 1988. (Mr. Morris served as a director of the Company from 1984 to 1996.) Carl P. Motheral (72) Mr. Motheral has served over twenty-five years as 1983 President and Chief Executive Officer and also Director of Motheral Printing Company (a commercial printing company). Samuel W. Rizzo (63) Consultant and private investor since 1995, and 1984 prior to that Executive Vice President of Service Corporation International ("SCI"), a publicly held company that owns and operates funeral homes and related businesses, since February 1990. Rosalin Rogers (48) Private investor since 1986, and prior to that a 1996 principal with the brokerage firm of Financial First, Inc. in New York, New York.
Each nominee for election as a director has consented to serve if elected. The Board of Directors does not contemplate that any of the above-named nominees for director will be unable to accept election as a director of the Company. Should any of them become unavailable for election as a director of the Company then the persons named in the enclosed form of proxy intend to vote such shares represented in such proxy for the election of such other person or persons as may be nominated or designated by the Board of Directors. Certain nominees for director of the Company hold directorships in companies with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934. Mr. Hunter is a director of Celebrity, Inc., SCI, and Huntco Inc. Messrs. Daugherty, Rizzo and Graves are directors of Hallmark Financial Services, Inc. Mr. Feehan is a director of KBK Capital Corporation. Mr. Morris is a director of AmeriCredit Corp. and SCI. MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS The Board of Directors held five meetings during the fiscal year ended December 31, 1998. Standing committees of the Board include the Executive Committee, Audit Committee, Executive Compensation Committee, and Stock Option Committee. The Company does not have a Nominating Committee. The Executive Committee did not meet during fiscal 1998. The Audit Committee's principal responsibilities consist of (a) recommending the selection of independent accountants, (b) reviewing the scope of the audit conducted by such auditors, as well as the audit itself, and (c) reviewing the Company's internal audit activities and matters concerning financial reporting, accounting and audit procedures, and policies generally. Its members are Messrs. Rizzo and Morris and Ms. Rogers. The Audit Committee held three meetings during fiscal 1998. The Executive Compensation Committee oversees and administers the Company's executive compensation program and administers the Company's 1994 Long-Term Incentive Plan. Its decisions relating to 3 24 executive compensation are reviewed by the full Board of Directors. Its members are Messrs. Hunter, Dike, Graves and Morris. The Committee held two meetings during fiscal 1998. The Stock Option Committee has the general duty to administer the Company's 1987 Stock Option Plan (with Stock Appreciation Rights) and the 1989 Key Employee Plan. Its members are Messrs. Dike, McKibben, Micallef and Motheral. The Stock Option Committee held no meetings during fiscal 1998. All directors attended 75% or more of the total number of meetings of the Board and of committees on which they serve. DIRECTORS' COMPENSATION Directors each receive a retainer of $2,500 per quarter. In addition, Board members receive $2,500 per Board meeting attended, Executive Committee members receive $1,500 for each Executive Committee meeting attended, and all other committee members receive $1,000 for each committee meeting attended. Effective October 25, 1989, options to purchase shares of the Company's common stock were granted under the 1989 Non-Employee Director Stock Option Plan (the "Non-Employee Director Plan") in the following amounts (after adjustment for stock splits in 1990 and 1992): 225,000 shares to each non-employee director serving on the Executive Committee of the Board of Directors (i.e., Messrs. Rizzo, Motheral and Morris), 150,000 shares to each other non-employee director with at least each two years of service on the Board of Directors as of the date of grant (i.e., Mr. Hunter) and 120,000 shares to each other non-employee director (i.e., Mr. Dike). The exercise price for all shares underlying such options is $6.33 (after adjustment for stock splits in 1990 and 1992). The options expire October 25, 2004. As a condition to participation in the Non-Employee Director Plan, each director named above in this paragraph entered into a Consultation Agreement with the Company dated as of April 25, 1990. Under these Agreements, the non-employee directors have agreed to serve the Company in an advisory and consultive capacity. They do not receive any additional compensation under these Agreements, however. The Company's 1994 Long-Term Incentive Plan also provides for the grant of stock options to non-employee directors. Under this Plan, non-employee directors receive options to purchase 5,000 shares of the Company's common stock upon joining the Board of Directors. Those directors continuing their service receive options for 2,500 shares at the time of each annual meeting of shareholders. In each case, the exercise price of the options is the closing price of the Company's common stock on the New York Stock Exchange on the day preceding the grant date. The options issued under this Plan vest one year after the grant date and expire upon the earlier of five (5) years after the director's retirement date or ten (10) years after the grant date. 4 25 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The Company has only one outstanding class of equity securities, its Common Stock, par value $.10 per share. The following table sets forth certain information, as of the Record Date, with respect to each person or entity who is known to the Company to be the beneficial owner of more than five percent (5%) of the Company's Common Stock. The information below was derived solely from filings made by such owners with the Securities and Exchange Commission.
AMOUNT OF NAME AND ADDRESS OF BENEFICIAL PERCENT OF BENEFICIAL OWNER OWNERSHIP CLASS ------------------- ---------- ---------- Eagle Asset Management, Inc................................. 2,607,755(1) 10.40% 880 Carillon Parkway St. Petersburg, Florida 33716 David L. Babson & Co., Inc.................................. 2,280,790(2) 9.09% One Memorial Drive Cambridge, Massachusetts 02142 Barry R. Feirstein........................................ 1,337,192(3) 5.30% Feirstein Capital Management, L.L.C. Feirstein Partners, L.P. 767 Third Avenue, 28th Floor New York, New York 10017
- ------------------ (1) Based upon information contained in a Schedule 13G, filed with the Company, which indicates that Eagle Asset Management, Inc. has sole voting power with regard to all 2,607,755 shares and the sole right to dispose of all 2,607,755 shares. (2) Based upon information contained in a Schedule 13G, filed with the Company, which indicates that David L. Babson & Co., Inc. has sole voting power with regard to all 2,280,790 shares and the sole right to dispose of all 2,280,790 shares. (3) Based upon information contained in a Schedule 13G, filed with the Company, which indicates that Barry R. Feirstein has sole voting power and sole dispositive power with regard to 180,000 shares and that all three named owners have shared voting power and shared dispositive power with regard to the other 1,157,192 shares. 5 26 The following table sets forth information with respect to the beneficial ownership of the Company's Common Stock, as of March 2, 1999 by its directors, nominees for election as directors, named executive officers, and all directors and executive officers as a group.
AMOUNT AND NATURE OF PERCENT OF NAME BENEFICIAL OWNERSHIP(1)(2) CLASS ---- -------------------------- ---------- Jack Daugherty....................................... 1,095,652 4.19% A. R. Dike........................................... 138,500 .55% Daniel R. Feehan..................................... 571,072 2.23% James H. Graves...................................... 10,700 * B. D. Hunter......................................... 167,500(3) .67% Timothy J. McKibben.................................. 10,400 * Alfred M. Micallef................................... 17,500 * Clifton H. Morris, Jr. .............................. 232,000(4) .91% Carl P. Motheral..................................... 446,565(5) 1.76% Samuel W. Rizzo...................................... 306,210(6) 1.21% Rosalin Rogers....................................... 17,500 * James H. Kauffman.................................... 98,595 .39% Michael C. Stinson................................... 2,410(7) * Michael D. Gaston.................................... 27,650 .11% All Directors and Executive Officers as a group (18 persons)........................................... 3,245,940(8) 11.74%
- ------------------ * Indicates ownership of less than .1% of the Company's Common Stock. (1) Beneficial ownership as reported in the above table has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended. Unless otherwise indicated, each of the persons named has sole voting and investment power with respect to the shares reported. (2) Except for the percentages of certain parties that are based on options exercisable within sixty days of March 2, 1999, as indicated below, the percentages indicated are based on 25,180,149 shares of Common Stock issued and outstanding on March 2, 1999. In the case of parties holding options, the percentage ownership is calculated on the assumption that the shares presently purchasable or purchasable within the next sixty days underlying such options are outstanding. The shares subject to options that are exercisable within sixty days of March 2, 1999 are as follows: Mr. Daugherty -- 954,172 shares; Mr. Dike -- 122,500 shares; Mr. Feehan -- 405,093 shares; Mr. Hunter -- 152,500 shares; Messrs. Graves and McKibben and Ms. Rogers -- 7,500 shares each; Mr. Micallef -- 2,500 shares; Mr. Morris -- 230,000 shares; Messrs. Motheral and Rizzo -- 227,500 shares each; Mr. Kauffman -- 50,000 shares; and Mr. Gaston -- 20,453 shares. (3) This amount includes 15,000 shares held by a corporation that Mr. Hunter indirectly controls. Mr. Hunter disclaims beneficial ownership of such shares. (4) This amount includes 2,000 shares owned by Mr. Morris' wife. (5) This amount includes 206,250 shares held by a limited partnership that Mr. Motheral indirectly controls. Mr. Motheral disclaims beneficial ownership of such shares. (6) This amount includes 19,500 shares owned by trusts of which Mr. Rizzo is trustee and 4,000 shares owned by Mr. Rizzo's wife. (7) This amount includes 200 shares held in the name of Mr. Stinson's children. (8) This amount includes 2,457,316 shares that directors and executive officers have the right to acquire within the next sixty days through the exercise of stock options. 6 27 COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 The Company's executive officers and directors are required to file under Section 16(a) of the Securities Exchange Act of 1934 reports of ownership and changes of ownership with the Securities and Exchange Commission. Based solely upon its review of the copies of such reports received by it, and written representations from individual directors and executive officers, the Company believes that during the fiscal year ended December 31, 1998 all filing requirements applicable to executive officers and directors have been complied with. EXECUTIVE COMPENSATION The following sets forth information for each of the Company's last three fiscal years concerning the compensation of the Company's Chief Executive Officer and each of the other four most highly compensated executive officers who were serving as executive officers at the end of the last fiscal year. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION -- AWARDS --------------- SECURITIES ANNUAL COMPENSATION UNDERLYING ALL OTHER NAME AND -------------------- OPTIONS/ COMPENSATION PRINCIPAL POSITION YEAR SALARY($) BONUS($) SARS(#) ($)(1) ------------------ ---- --------- -------- --------------- ------------ Jack R. Daugherty, 1998 386,495 -- -- 38,785 Chairman and CEO 1997 395,900 229,939 133,344 40,750 1996 378,000 196,727 -- 40,628 Daniel R. Feehan, 1998 383,438 -- -- 31,963 President and Chief 1997 395,000 229,459 233,486 41,694 Operating Officer(2) 1996 341,750 177,834 -- 30,953 James H. Kauffman, 1998 256,663 43,538 -- 6,772 CEO -- Rent-A-Tire, 1997 238,900 125,640 99,100 12,637 Inc.(3) 1996 112,500 46,840 25,000 4,754 Michael C. Stinson, 1998 246,154 -- -- 4,276 President -- Mr. Payroll 1997 207,692 51,185 54,000 2,217 Corporation(4) Michael D. Gaston, 1998 178,889 -- -- 2,810 Executive Vice 1997 130,576 65,271 40,906 37,230 President(5)
- ------------------ (1) The amounts disclosed in this column for 1998 include: (a) Company contributions of the following amounts under the Company's 401(k) Savings Plan on behalf of Mr. Daugherty: $2,024; Mr. Feehan: $5,018; Mr. Kauffman: $3,434; Mr. Stinson: $3,844; and Mr. Gaston: $2,435. (b) Payment by the Company of premiums for term life insurance on behalf of Mr. Daugherty: $1,760; Mr. Feehan: $1,945; Mr. Kauffman: $3,338; Mr. Stinson: $432; and Mr. Gaston: $374. (c) Annual premium payments under split-dollar life insurance policies on Mr. Feehan ($25,000) and on Mr. Daugherty's spouse ($35,000). (2) Mr. Feehan served as Chairman and Co-Chief Executive Officer of Mr. Payroll Corporation from February 1998 to February 1999 before returning to the position of President and Chief Operating Officer of the Company. (3) Mr. Kauffman joined the Company on July 1, 1996. (4) Mr. Stinson became an executive officer in 1997. (5) Mr. Gaston joined the Company on April 1, 1997. The amount in the last column for 1997 includes $36,749.63 for moving and temporary living expenses. 7 28 The following table provides information concerning option exercises in fiscal 1998 and the value of unexercised options held by each of the named executive officers at the end of the Company's last fiscal year. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED UNEXERCISED IN-THE-MONEY OPTIONS/SARS AT OPTIONS/SARS AT FY-END(#)(1) FY-END($)(2) --------------- -------------------- SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/ NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE ---- --------------- ----------- --------------- -------------------- Jack R. Daugherty 25,500 156,060 954,172/104,172 7,949,964/570,604 Daniel R. Feehan 20,500 125,460 405,093/198,393 3,127,559/1,209,742 James H. Kauffman -- -- 50,000/74,100 271,094/435,275 Michael C. Stinson 27,000 177,187 -0-/27,000 -0-/118,125 Michael D. Gaston -- -- 20,453/20,453 89,482/89,482
- ------------------ (1) These figures reflect the appropriate adjustments for the Company's three-for-two stock split in May 1990 and the two-for-one stock split in April 1992. (2) Values stated are based upon the closing price of $15.1875 per share of the Company's Common Stock on the New York Stock Exchange on December 31, 1998, the last trading day of the fiscal year. COMPENSATION COMMITTEE REPORT - -- OVERALL EXECUTIVE COMPENSATION POLICIES The basic philosophy of the Company's executive compensation program is to link the compensation of its executive officers to their contribution toward the enhancement of shareholder value. Consistent with that philosophy, the program is designed to meet the following policy objectives: - Attracting and retaining qualified executives critical to the long-term success of the Company. - Tying executive compensation to the Company's general performance and specific attainment of long-term strategic goals. - Rewarding executives for contributions to strategic management designed to enhance long-term shareholder value. - Providing incentives that align the executive's interest with those of the Company's shareholders. - -- ELEMENTS OF EXECUTIVE COMPENSATION The Company's executive compensation program consists of the following elements designed to meet the policy objectives set out above: Base Salary The Committee sets the annual salary of the Company's Chief Executive Officer and the President and reviews the annual salaries of the Company's other executive officers. In setting appropriate annual salaries, the Committee takes into consideration the minimum salaries set forth in certain executives' employment contracts (described elsewhere in this Proxy Statement), the level and scope of responsibility, experience, and performance of the executive, the internal fairness and equity of the Company's overall compensation structure, and the relative compensation of executives in similar positions in the marketplace. The Committee relies on information supplied by an outside compensation consulting firm pertaining to competitive compensation. The Company's executive compensation program is designed to position base salary at the 50th percentile of the competitive market and total cash compensation, including annual performance incentives, at 8 29 the 75th percentile of the competitive market. The Committee believes that very few of the companies in the peer groups described below under "Performance Graph" are included in the surveys used for compensation comparisons. Those surveys represent a much broader collection of U.S. companies. Annual Incentive Compensation The Company's executive compensation program consists of both short-term and long-term incentive components. a. Short-Term Component Under this component, the Company's executive officers are eligible to receive annual incentive cash bonuses equal to certain percentages of their annual base salaries. The bonus percentage varies depending upon the officer's position with the Company, and the percentages increase if the Company's earnings per share performance exceeds the financial plan. b. Long-Term Component Under this component, the Company's executive officers are eligible to receive long-term incentive grants in the form of restricted stock and/or stock options, with the number of shares of stock and/or options to equal certain percentages of the officers' annual base salaries. The applicable percentage varies depending upon the officer's position with the Company. The allocation between restricted stock and stock options is determined by the Committee at its discretion. The Company's 1994 Long-Term Incentive Plan (the "1994 Plan"), approved by the shareholders of the Company at the April 1994 Annual Meeting, allows for these forms of stock-based long-term incentive compensation awards. This long-term incentive component is designed to further the objective of fostering and promoting improvement in long-term financial results and increases in shareholder value. The Company has granted options to its executive officers in recent years at an exercise price equal to the closing price of the Company's common stock on the New York Stock Exchange on the day preceding the date of grant. This arrangement rewards effective management that results in long-term increases in the Company's stock price. The options granted to certain of the Company's executive officers in October 1997 vest seven years after the date of grant. However, vesting will accelerate if the Company's stock price hits certain target levels: the options vest 50% if the stock price equals or exceeds 150% of the exercise price for twenty consecutive calendar days, and the options vest 100% if the stock price equals or exceeds 200% of the exercise price for twenty consecutive calendar days. Those executive officers covered by this grant would be scheduled to receive a comparable grant of options three years after the grant date or upon 100% vesting of the options, whichever comes first. With this grant, the Company further strengthened the link between its senior management's interests and those of the Company's shareholders. Deductibility Cap on Executive Compensation A federal tax law enacted in 1994 disallows corporate deductibility for certain compensation paid in excess of $1,000,000 to the Chief Executive Officer and the four other most highly paid executive officers. "Performance-based compensation," as defined in the tax law, is not subject to the deductibility limitation, provided certain shareholder approval and other requirements are met. Although the cash compensation paid to the Company's Chief Executive Officer and the four other most highly paid executive officers is well below the $1,000,000 level in each case, the Committee determined that the Company should seek to ensure that future stock option and performance award compensation under the 1994 Plan qualifies as "performance-based compensation." Accordingly, the 1994 Plan is intended to meet the requirements of this tax law and thereby preserve full deductibility of both stock option and stock-based performance award compensation expense. 9 30 - -- CEO'S COMPENSATION FOR FISCAL 1998 The fiscal 1998 salary of Mr. Jack R. Daugherty, Chief Executive Officer of the Company, was based primarily on his rights under his ten-year employment agreement with the Company, which is described elsewhere in this Proxy Statement. Under that agreement, Mr. Daugherty's minimum base salary is $386,000. The Committee believes that the total cash compensation paid to Mr. Daugherty was appropriate in light of the Company's accomplishments in 1998, most notably the significant growth in the Company's core lending business. These 1998 accomplishments also support the Committee's belief that the fiscal 1998 cash compensation of the Company's other executive officers was set at appropriate levels. EXECUTIVE COMPENSATION COMMITTEE B. D. Hunter, Chairman A. R. Dike James H. Graves Clifton H. Morris, Jr. Notwithstanding anything to the contrary set forth in any of the Company's previous filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that might incorporate future filings, including this Proxy Statement, in whole or in part, the preceding report and the Performance Graph on Page 11 shall not be incorporated by reference into any such filings. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION None of the members of the Executive Compensation Committee of the Company's Board of Directors is an officer, former officer, or employee of the Company or any subsidiary of the Company. EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS As a condition to receiving grants of options under the 1989 Key Employee Stock Option Plan for Cash America International, Inc., Messrs. Daugherty and Feehan entered into employment agreements with the Company dated April 25, 1990. Effective August 1, 1997, Messrs. Daugherty and Feehan entered into amended and restated employment agreements with the Company. The initial term of each of these agreements expires July 31, 2002. Under these agreements, compensation is determined annually by the Company's Board of Directors, subject to minimum annual compensation of $386,000 for each of Messrs. Daugherty and Feehan. Included in each agreement is a covenant of the employee not to compete with the Company during the term of his employment and for a period of three years thereafter. The employment agreements also provide that if the employee is terminated by the Company other than for cause, the Company will pay to the employee the remainder of his current year's salary plus an amount equal to the employees' salary, at the then current rate, for a period equal to the greater of three years or the remainder of the term of the agreement, with that amount payable in thirty-six equal monthly installments. In the event the employee resigns or is terminated other than for cause within twelve months after a "change in control" of the Company (as that term is defined in the employment agreement), the employee will be entitled to earned and vested bonuses at the date of termination plus the remainder of his current year's salary (undiscounted) plus the present value (employing an interest rate of 8%) of five additional years' salary (for which purpose "salary" includes the annual rate of compensation immediately prior to the "change in control" plus the average annual cash bonus for the immediately preceding three year period). 10 31 PERFORMANCE GRAPH The following Performance Graph shows the changes over the past five year period in the value of $100 invested in: (1) the Company's Common Stock, (2) the Standard & Poor's 500 Index, and (3) the common stock of a peer group of companies whose returns are weighted according to their respective market capitalizations. The values of each investment as of the beginning of each year are based on share price appreciation and the reinvestment of dividends. The peer group consists of the other companies in the pawnbroking industry with publicly traded common stock. TOTAL RETURN PERFORMANCE [PERFORMANCE CHART]
CASH AMERICA MEASUREMENT PERIOD INTERNATIONAL, (FISCAL YEAR COVERED) INC. S&P 500 PEER GROUP 12/31/93 100 100 100 12/31/94 105.98 101.32 68.62 12/31/95 59.47 139.39 37.80 12/31/96 92.64 171.26 56.12 12/31/97 141.70 228.42 85.53 12/31/98 166.94 293.69 78.91 1997 1998
TRANSACTIONS WITH MANAGEMENT The Board of Directors of the Company adopted an officer stock loan program in 1994 and modified the program in 1996. The purpose of the program is (i) to facilitate and encourage the ownership of Company common stock by the officers of the Company and (ii) to establish the terms for stock loan transactions with officers. Participants in the program can utilize loan proceeds to acquire and hold common stock of the Company by means of option exercises or otherwise. The stock to be held as a result of the loan must be pledged to the Company to secure the obligation to repay the loan. Under the terms of the loan, interest accrues at the "applicable Federal rate" for loans of this type, as published by the Internal Revenue Service from time to time. Interest is payable annually and may be paid with additional loan proceeds. Each loan has a one year maturity and is renewable thereafter for successive one year terms, except that the Committee could notify the borrower during any renewal term that the loan would not renew again after the next succeeding renewal term. The aggregate principal balance of all outstanding loans under the program may not exceed $5,000,000 at any time. As of December 31, 1998, Messrs. Daugherty and Feehan had stock loans outstanding under this program in the aggregate principal amounts of $1,219,732, and $1,490,720, respectively. 11 32 PROPOSAL TO APPROVE AMENDMENT TO THE 1994 LONG-TERM INCENTIVE PLAN INTRODUCTION At the Annual Meeting, the Company's shareholders will be requested to consider and act upon a proposal to amend Section 5 of the Company's 1994 Long-Term Incentive Plan (the "Plan"). The amendment provides for the authorization of an additional 1,200,000 shares available for issuance under and in accordance with the terms of the Plan. On January 26, 1999, the Board of Directors adopted the proposed amendment to the Plan, subject to approval by the Company's shareholders. The purpose of the amendment is to authorize sufficient shares for issuance under the Plan to meet the needs of the Company's executive compensation program for a period of approximately four to five years. The Board of Directors believes that the proposed amendment is desirable since it will serve to promote the Company's interests and those of its shareholders by strengthening the Company's ability to attract and retain key employees who can make substantial contributions to the success of the Company. The operation of the Plan will also facilitate equity ownership of the Company by its officers, key management, and other employees, thereby providing them with a direct personal interest in the Company's continued success and progress, and in the market price of its stock. If the proposed amendment to the Plan is approved by shareholders, the Board of Directors intends, with respect to future grants, to utilize the remaining shares previously authorized in respect of the Plan for future grants before utilizing the additional shares recommended for approval at the 1999 Annual Meeting. DESCRIPTION Set forth below is a summary of certain important features of the Plan and the proposed amendment to it. This description is qualified in its entirety by reference to the complete text of the Plan, including the proposed amendment, which is set forth as Appendix A to this Proxy Statement and entitled the "Cash America International, Inc. 1994 Long-Term Incentive Plan." PLAN PROVISIONS The Plan provides that it shall be administered by the Executive Compensation Committee of the Board of Directors, who shall be "disinterested persons" within the meaning of the Securities Exchange Act of 1934, as amended to administer the Plan (the "Committee"). Employees of the Company and its affiliates are eligible for grants under the Plan. Such grants may consist of stock options, restricted stock, restricted stock units, performance shares, or other stock-based grants, on terms and conditions determined by the Committee, including such terms and conditions as the number of shares subject to the grant, and the exercise price (if applicable), vesting schedule, and forfeiture provisions of the grant. Awards of restricted stock and restricted units must bear a restriction for such period as may be determined by the Committee at its discretion. The Committee also has sole and complete authority to set performance cycles and performance goals for any performance shares granted. Grants under the Plan have generally taken the form of stock options. Outside directors of the Company are also eligible to receive grants of stock options under the Plan. (See "ELECTION OF DIRECTORS -- Directors' Compensation.") The options granted under the Plan are "non-qualified options" under the federal income tax laws. The recipients of options incurred no tax upon the grant of the options, and the Company received no expense deduction. At the time of the exercise of an option, the excess of the fair market value over the exercise price will constitute ordinary income to the holder, and the Company will be allowed a deduction in the same amount. (On March 2, 1999, the closing price per share of the Company's common stock on the New York Stock Exchange was $13.50.) The total number of shares authorized for issuance pursuant to the Plan was set at 1,400,000 in 1994, when it was approved by shareholders; as of December 31, 1998, 33,412 shares remained available for grants of new awards under the Plan. 12 33 NEW PLAN BENEFITS It cannot be determined at this time what grants, if any, will be made to any person or group of persons under the Plan if the amendment is approved by shareholders. If the amendment had been in effect for the last fiscal year, the amount of grants under the Plan would not have differed from the grants actually made. VOTE REQUIRED Approval of the amendment to the Plan required the affirmative vote of a majority of votes cast by the holders of common stock of the Company present or represented by proxy and entitled to vote at the Annual Meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSED AMENDMENT TO THE 1994 LONG-TERM INCENTIVE PLAN. INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP of Fort Worth, Texas served as independent public accountants for the Company for fiscal 1998 and has reported on the Company's financial statements. The Board of Directors of the Company has selected PricewaterhouseCoopers LLP to audit the accounts of the Company for the fiscal year ending December 31, 1999 and recommends to the shareholders that they ratify this selection for the ensuing fiscal year ending December 31, 1999. The Company has been advised that PricewaterhouseCoopers LLP has no relationship with the Company or its subsidiaries other than that arising from the firm's employment as auditors. The affirmative vote of a majority of the outstanding shares of Common Stock present at the Annual Meeting in person or by proxy is necessary for the ratification of the appointment of PricewaterhouseCoopers LLP as independent public accountants. A representative of PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting and will be afforded an opportunity to make a statement and will be available to respond to appropriate questions at such meeting. While shareholder ratification is not required for the selection of PricewaterhouseCoopers LLP since the Board of Directors has the responsibility for the selection of the Company's independent public accountants, the selection is being submitted for ratification at the Annual Meeting with a view towards soliciting the shareholders' opinion thereon, which opinion will be taken into consideration in future deliberations. THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE 1999 FISCAL YEAR. OTHER BUSINESS Any proposal to be presented by a shareholder at the Company's 2000 Annual Meeting of Shareholders must be presented to the Company by no later than November 12, 1999. It is important that proxies be returned promptly to avoid unnecessary expense. Therefore, shareholders are urged, regardless of the number of shares of stock owned, to date, sign and return the enclosed proxy in the enclosed reply envelope. By Order of the Board of Directors HUGH A. SIMPSON Secretary March 23, 1999 13 34 APPENDIX A CASH AMERICA INTERNATIONAL, INC. 1994 LONG-TERM INCENTIVE PLAN SECTION 1. PURPOSE The purpose of the Cash America International, Inc. 1994 Long-Term Incentive Plan (the "Plan") is to promote the interests of the Company and its shareholders by (i) attracting and retaining executive personnel and other key employees of outstanding ability; (ii) motivating executive personnel and other key employees, by means of performance-related incentives, to achieve longer-range performance goals; and (iii) enabling such employees to participate in the long-term growth and financial success of the Company. SECTION 2. DEFINITIONS "Act" shall mean the Securities Exchange Act of 1934, as amended. "Affiliate" shall mean any corporation or other entity which is not a Subsidiary but as to which the Company possesses a direct or indirect ownership interest and has representation on the board of directors or any similar governing body. "Award" shall mean a grant or award under Section 6 through 12, inclusive, of the Plan, as evidenced in a written document delivered to a recipient of an Award as provided in Section 13(b). "Board of Directors" shall mean the Board of Directors of the Company. "Change in Control" shall be deemed to have occurred if (i) any person(s) (as such term is used in Sections 13(d) and 14(d)2 of the Act) or party becomes the beneficial owner (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities, or (ii) the stockholders of the Company approve a merger, consolidation, sale or disposition of all or substantially all of the Company's assets or plan of liquidation. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Committee" shall mean the Executive Compensation Committee of the Board of Directors. The committee shall be made up of at least three outside directors, and only outside directors may serve on the Committee. The outside director cannot be a former officer of the company or a former employee receiving deferred compensation. The director cannot be an employee or 5% shareholder of another company that receives more than 5% of its gross receipts or $60,000 worth of business from the Company, whichever is less. The director cannot receive any remuneration, other than directors' fees, from the Company or any Subsidiary, nor can the director beneficially own more than 50% of an entity that receives any remuneration from the Company or any Subsidiary. "Common Stock" or "Stock" shall mean the Common Stock of the Company. "Company" shall mean Cash America International, Inc. "Designated Beneficiary" shall mean the beneficiary designated by the Participant, in a manner determined by the Committee, to receive amounts due the Participant in the event of the Participant's death. In the absence of an effective designation by the Participant, Designated Beneficiary shall mean the Participant's estate. "Employee" shall mean any key employee of the Employer. "Employer" shall mean the Company and any Subsidiary or Affiliate. "Fair Market Value" shall mean the closing price of the Stock on the last day prior to the date in question on which the Stock was traded. "Fiscal Year" shall mean the fiscal year of the Company. A-1 35 "Incentive Stock Option" shall mean a stock option granted under Section 6 which is intended to meet the requirements of Section 422 of the Code. "Non-Stock Based Incentive Compensation" refers to incentive compensation whose value is not based in whole or in part on the value of Common Stock. "Nonqualified Stock Option" shall mean a stock option granted under Section 6 which is not intended to be an Incentive Stock Option. "Option" shall mean an Incentive Stock Option or a Nonqualified Stock Option. "Outside Director" shall mean a member of the Board of Directors who is not an Employee. "Participant" shall mean an individual who is selected by the Committee to receive an Award under the Plan. "Payment Value" shall mean the dollar amount assigned to a Performance Share which shall be equal to the Fair Market Value of the Common Stock on the day of the Committee's determination under Section 8(c)(1) with respect to the applicable Performance Cycle. "Performance Cycle" or "Cycle" shall mean the period of years selected by the Committee during which the performance is measured for the purpose of determining the extent to which an award of Performance Shares has been earned. "Performance Goals" shall mean the objectives established by the Committee for a Performance Cycle, for the purpose of determining the extent to which Performance Shares which have been contingently awarded for such Cycle are earned. "Performance Share" shall mean an award granted pursuant to Section 8 of the Plan expressed as a share of Common Stock. "Restricted Period" shall mean the period of years selected by the Committee during which a grant of Restricted Stock or Restricted Stock Units may be forfeited to the Company. "Restricted Stock" shall mean shares of Common Stock contingently granted to a Participant under Section 9 of the Plan. "Restricted Stock Unit" shall mean a fixed or variable dollar denominated unit contingently awarded under Section 9 of the Plan. "Stock Appreciation Right" shall mean a right granted under Section 7. "Stock Exchange" shall mean the national securities exchange on which the Common Stock is traded as of the particular time in question. "Stock Unit Award" shall mean an award of Common Stock or units granted under Section 10. "Stockholders Meeting" shall mean the annual meeting of stockholders of the Company in each year. "Subsidiary" shall mean any business entity in which the Company possesses directly or indirectly fifty percent (50%) or more of the total combined voting power. SECTION 3. ADMINISTRATION The Plan shall be administered by the Committee. The Committee shall have sole and complete authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the operation of the Plan as it shall from time to time deem advisable, and to interpret the terms and provisions of the Plan. The Committee may delegate to one or more executive officers of the Company the power to make Awards to Participants who are not executive officers or directors of the Company, provided the Committee shall fix the maximum amount of such Awards for the group and a maximum for any one Participant. The Committee's decisions shall be binding upon all persons, including the Company, stockholders, an Employer, Employees, Participants and Designated Beneficiaries. A-2 36 SECTION 4. ELIGIBILITY All Employees and non-employee consultants and advisors (other than members of the Committee) who, in the opinion of the Committee, have the capacity for contributing in a substantial measure to the successful performance of the Company are eligible to be Participants in the Plan. SECTION 5. MAXIMUM AMOUNT AVAILABLE FOR AWARDS (a) The maximum number of shares of Stock in respect of which Awards may be made under the Plan shall be a total of 2,600,000 shares of Common Stock. In addition, no Employee may be granted Options for more than 700,000 shares of Common Stock in the aggregate during the ten-year period beginning on the effective date of the Plan. Shares of Common Stock may be made available from the authorized but unissued shares of the Company or from shares reacquired by the Company, including shares purchased in the open market. In the event that (i) an Option or Stock Appreciation Right is settled for cash or expires or is terminated unexercised as to any shares of Common Stock covered thereby, or (ii) any Award in respect of shares is canceled or forfeited for any reason under the Plan without the delivery of shares of Common Stock, such shares shall thereafter be again available for award pursuant to the Plan. In the event that any Option or other Award granted hereunder is exercised through the delivery of shares of Common Stock, the number of shares of Common Stock available for Awards under the Plan shall be increased by the number of shares so surrendered, to the extent permissible under Rule 16b-3, as promulgated under the Act and as interpreted from time to time by the Securities and Exchange Commission or its staff. (b) In the event that the Committee shall determine that any stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Common Stock at a price substantially below fair market value, or other similar corporate event affects the Common Stock such that an adjustment is required in order to preserve the benefits or potential benefits intended to be made available under this Plan, then the Committee shall adjust appropriately any or all of (1) the number and kind of shares which thereafter may be awarded or optioned and sold or made the subject of Stock Appreciation Rights under the Plan, (2) the number and kind of shares subject of Stock Options and other Awards, and (3) the grant, exercise or conversion price with respect to any of the foregoing and/or, if deemed appropriate, make provision for cash payment to a Participant or a person who has an outstanding Option or other Award; provided, however, that the number of shares subject to any Option or other Award shall always be a whole number. SECTION 6. STOCK OPTIONS (a) Grant. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Employees to whom Options shall be granted, the number of shares to be covered by each Option, the option price therefor and the conditions and limitations applicable to the exercise of the Option. The Committee shall have the authority to grant Incentive Stock Options, or to grant Nonqualified Stock Options, or to grant both types of options. In the case of Incentive Stock Options, the terms and conditions of such grants shall be subject to and comply with such rules as may be prescribed by Section 422 of the Code, as from time to time amended, and any implementing regulations. (b) Option Price. The Committee shall, in its discretion, establish the option price at the time each Option is granted, which for Incentive Stock Options shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant. A-3 37 (c) Exercise. (1) Each Option shall be exercisable at such times and subject to such terms and conditions as the Committee may, in its sole discretion, specify in the applicable Award or thereafter; provided, however, that in no event may any Option granted hereunder be exercisable after the expiration of ten years from the date of such grant. The Committee may impose such conditions with respect to the exercise of Options, including without limitation, any relating to the application of federal or state securities laws, as it may deem necessary or advisable. (2) No shares shall be delivered pursuant to any exercise of an Option until payment in full of the option price therefor is received by the Company. Such payment may be made in cash, or its equivalent, or, if and to the extent permitted by the Committee, by exchanging shares of Common Stock owned by the optionee (which are not the subject of any pledge or other security interest), or by a combination of the foregoing, provided that the combined value of all cash and cash equivalents and the Fair Market Value of any such Common Stock so tendered to the Company, valued as of the date of such tender, is at least equal to such option price. (3) The Company, in its sole discretion, may lend money to an Employee, guarantee a loan to an Employee or otherwise assist an Employee to obtain the cash necessary to exercise all or any portion of an Option granted under the Plan. SECTION 7. STOCK APPRECIATION RIGHTS (a) The Committee may, with sole and complete authority, grant Stock Appreciation Rights in tandem with an Option, in addition to an Option, or freestanding and unrelated to an Option. Stock Appreciation Rights granted in tandem with or in addition to an Option may be granted either at the same time as the Option or at a later time. Stock Appreciation Rights shall not be exercisable earlier than six months after grant, shall not be exercisable after the expiration of ten years from the date of grant and shall have an exercise price of not less than 100% of the Fair Market Value of the Common Stock on the date of grant. (b) A Stock Appreciation Right shall entitle the Participant to receive from the Company an amount equal to the excess of the Fair Market Value of a share of Common Stock on the exercise of the Stock Appreciation Right over the exercise price thereof, provided that the Committee may for administrative convenience determine that, for any Stock Appreciation Right which is not related to an Incentive Stock Option which Stock Appreciation Right can only be exercised during limited periods of time in order to satisfy the conditions of certain rules of the Securities and Exchange Commission, the exercise of any Stock Appreciation Right for cash during such limited period shall be deemed to occur for all purposes hereunder on the day during such limited period on which the Fair Market Value of the Stock is the highest. Any such determination by the Committee may be changed by the Committee from time to time and may govern the exercise of Stock Appreciation Rights granted prior to such determination as well as Stock Appreciation Rights thereafter granted. The Committee shall determine upon the exercise of a Stock Appreciation Right whether such Stock Appreciation Right shall be settled in cash, shares of Common Stock, Stock Options, or a combination thereof. (c) A Limited SAR related to an Option which can only be exercised during limited periods following a Change in Control of the Company, may entitle the Participant to receive an amount based upon the highest price paid or offered for Common Stock in any transaction relating to the Change in Control or paid during the thirty-day period immediately preceding the occurrence of the Change in Control in any transaction reported on the Stock Exchange. SECTION 8. PERFORMANCE SHARES (a) The Committee shall have sole and complete authority to determine the Employees who shall receive Performance Shares, the number of such shares for each Performance Cycle, the Performance Goals on which each Award shall be contingent, the duration of each Performance Cycle, and the value of each A-4 38 Performance Share. There may be more than one Performance Cycle in existence at any one time, and the duration of Performance Cycle may differ from each other. (b) The Committee shall establish Performance Goals for each Cycle on the basis of such criteria and to accomplish such objectives as the Committee may from time to time select. During any Cycle, the Committee may adjust the Performance Goals for such Cycle as it deems equitable in recognition of unusual or non-recurring events affecting the Company, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine. (c) (1) As soon as practicable after the end of a Performance Cycle, the Committee shall determine the number of Performance Shares which have been earned on the basis of performance in relation to the established Performance Goals. (2) Payment Values of earned Performance Shares shall be distributed to the Participant or, if the Participant has died, to the Participant's Designated Beneficiary, as soon as practicable after the expiration of the Performance Cycle and the Committee's determination under paragraph (1), above. The Committee shall determine whether Payment Values are to be distributed in the form of cash or shares of Common Stock. SECTION 9. RESTRICTED STOCK AND RESTRICTED STOCK UNITS (a) Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Employees to whom shares of Restricted Stock and Restricted Stock Units shall be granted, the number of shares of Restricted Stock and the number of Restricted Stock Units to be granted to each Participant, the duration of the Restricted Period during which, and the conditions under which, the Restricted Stock and Restricted Stock Units may be forfeited to the Company, and the other terms and conditions of such awards. The Restricted Period may be shortened, lengthened or waived by the Committee at any time in its discretion with respect to one or more Participants or Awards outstanding. (b) Shares of Restricted Stock and Restricted Stock Units may not be sold, assigned, transferred, pledged or otherwise encumbered, except as herein provided, during the Restricted Period. Certificates issued in respect of shares of Restricted Stock shall be registered in the name of the Participant and deposited by such Participant, together with a stock power endorsed in blank, with the Company. At the expiration of the Restricted Period, the Company shall deliver such certificates to the Participant or the Participant's legal representative, except to the extent such Restricted Stock or Restricted Stock Units have been forfeited to the Company under the terms and conditions of the Award. Payment for Restricted Stock Units shall be made to the Company in cash and/or shares of Common Stock, as determined at the sole discretion of the Committee. SECTION 10. OTHER STOCK BASED AWARDS (a) In addition to granting Options, Stock Appreciation Rights, Performance Shares, Restricted Stock and Restricted Stock Units, the Committee shall have authority to grant to Participants Stock Unit Awards which can be in the form of Common Stock or units, the value of which is based, in whole or in part, on the value of Common Stock. Subject to the provisions of the Plan, including Section 13(b) below, Stock Unit Awards shall be subject to such terms, restrictions, conditions, vesting requirements and payment rules (all of which are sometimes hereinafter collectively referred to as "rules") as the Committee may determine in its sole and complete discretion at the time of grant. The rules need not be identical for each Stock Unit Award. (b) In the sole and complete discretion of the Committee, a Stock Unit Award may be granted subject to the following rules: (1) Any shares of Common Stock which are part of a Stock Unit Award may not be assigned, sold, transferred, pledged or otherwise encumbered prior to the date on which the shares are issued or, if later, the date provided by the Committee at the time of grant of the Stock Unit Award. (2) Stock Unit Awards may provide for the payment of cash consideration by the person to whom such Award is granted or provide that the Award, and any Common Stock to be issued in connection therewith, if applicable, shall be delivered without the payment of cash consideration, provided that for A-5 39 any Common Stock to be purchased in connection with a Stock Unit Award the purchase price shall be at least 50% of the Fair Market Value of such Common Stock on the date such Award is granted. (3) Stock Unit Awards may relate in whole or in part to certain performance criteria established by the Committee at the time of grant. (4) Stock Unit Awards may provide for deferred payment schedules and/or vesting over a specified period of employment. (5) In such circumstances as the Committee may deem advisable, the Committee may waive or otherwise remove, in whole or in part, any restriction or limitation to which a Stock Unit Award was made subject at the time of grant. (c) In the sole and complete discretion of the Committee, an Award, whether made as a Stock Unit Award under this Section 10 or as an Award granted pursuant to Sections 6 through 9, may provide the Participant with (i) dividends or dividend equivalents (payable on a current or deferred basis) and (ii) cash payments in lieu of or in addition to an Award. SECTION 11. OUTSIDE DIRECTORS' OPTIONS. (a) Grant of Options. Each Outside Director who joins the Board of Directors after 1994 shall automatically be granted an Option to purchase 5,000 shares of the common stock of the Company, $.10 par value; and on the date of each Stockholders Meeting after the 1997 Stockholders Meeting, each Outside Director shall automatically be granted an Option to purchase 2,500 shares of the common stock of the Company. All such options shall be Nonqualified Stock Options. The price at which each share of common stock covered by such Options may be purchased shall be one hundred percent (100%) of the Fair Market Value of the stock on the date the Option is granted. (b) Exercise of Options. Except as set forth in this Section 11, an Option granted to an Outside Director shall become exercisable one year after date the option is granted. Any Option that has been outstanding for more than six (6) months shall immediately become exercisable in the event of a Change in Control. The Option may be exercised by the Outside Director during the period that the Outside Director remains a member of the Board of Directors and for a period of five (5) years following retirement, provided that only those Options exercisable at the date of the Outside Director's retirement may be exercised during the period following retirement and, provided further, that in no event shall the Option be exercisable more than ten (10) years after the date of grant. Shares issued upon the exercise of Options granted under this Section 11 will be issued from the Company's treasury shares. In the event of the death of an Outside Director, the Option shall be exercisable only within the twelve (12) months next succeeding the date of death, and then only (i) by the executor or administrator of the Outside Director's estate, by the person or persons to whom the Outside Director's rights under the Option shall pass by the Outside Director's will or the laws of descent and distribution or, by the Outside Director's designated beneficiary, and (ii) if and to the extent that the Outside Director was entitled to exercise the Option at the date of the Outside Director's death, provided that in no event shall the Option be exercisable more than ten (10) years after the date of grant. (c) Payment. An Option granted to an Outside Director shall be exercisable only upon payment to the Company of the full exercise price of the shares with respect to which the Option is being exercised. Payment for the shares shall be in United States dollars, payable in cash or by check. A-6 40 SECTION 12. OUTSIDE DIRECTORS' SHARES. Outside Directors may elect, on an annual basis, to purchase shares of common stock of the Company from the Company in lieu of receiving all or part (in 10% increments) of their annual retainer, meeting fees and committee meeting fees in cash. The purchase price of such shares shall be the Fair Market Value of the stock for the last trading day of the month in which the retainer, meeting fees, and committee meeting fees are earned. Commencing January 1, 1998, the annual retainer, meeting fees and committee meeting fees payable to each Outside Director for service on the Board of Directors may, at the election of the Outside Director (the "Annual Election"), be payable to a trust in shares of common stock of the Company. The Annual Election: (i) shall be irrevocable in respect of the one-year period to which it pertains (the "Plan Year") and shall specify the applicable percentage (in increments of 10%) of such annual retainer and meeting fees that such Outside Director wishes to direct to the trust; (ii) must be received in writing by the administrator of the Plan by the established enrollment deadline of any year in which this Plan is in effect in order to cause the next succeeding Plan Year's annual retainer and fees to be subject to the provisions of this Plan; and (iii) must specify whether the ultimate distribution of the shares of common stock to the Outside Directors will be paid, following the Outside Director's death or termination of Board service, in a lump sum or in equal annual payments over a period of two to twenty years. The shares shall be purchased from the Company at the Fair Market Value of the stock for the last trading day of the month in which the fees are earned and shall be credited by the trustee to the account of the Outside Director. The certificates for common stock shall be issued in the name of the trustee of the trust and shall be held by such trustee in trust for the benefit of the Outside Directors; provided, however, that each Outside Director shall be entitled to vote the shares. The trustee shall retain all dividends (which shall be reinvested in shares of common stock) and other distributions paid or made with respect thereto in the trust. The shares credited to the account of an Outside Director shall remain subject to the claims of the Company's creditors, and the interests of the Outside Director in the trust may not be sold, hypothecated or transferred (including, without limitation, transferred by gift or donation) while such shares are held in the trust. If the Outside Director elects to receive a lump sum distribution, the trustee of the trust shall distribute such shares of common stock free of restrictions within 60 days after the Outside Director's termination date or a later date elected by the Outside Director (no later than the mandatory retirement age of the Outside Director). If the Outside Director elects to receive a lump sum distribution, the Outside Director may, by delivering notice in writing to the administrator of the Plan no later than December 31 of the year prior to the year in which the Outside Director terminates service as a Director, elect to receive any portion or all of the common stock in the form of cash determined by reference to the Fair Market Value of the common stock as of the termination date. Any such notice to the administrator must specify whether the distribution will be entirely in cash or whether the distribution will be in a combination of common stock and cash (in which case the applicable percentage must be specified). In the case of termination of the Outside Director's service as a result of his death, payment of the Outside Director's account shall be in shares of common stock and not in cash. If an Outside Director elects to receive payments in installments, the distribution will commence within 60 days after the Outside Director's termination date and will be made in shares of common stock and not in cash. Notwithstanding anything to the contrary contained herein, any fractional shares of common stock shall be distributed in cash to the Outside Director. SECTION 13. GENERAL PROVISIONS (a) Withholding. The Employer shall have the right to deduct from all amounts paid to a Participant in cash (whether under this Plan or otherwise) any taxes required by law to be withheld in respect of Awards under this Plan. In the case of payments of incentive awards in the form of Common Stock, the Employer may require the Participant to pay to the Employer the amount of any taxes required to be withheld with respect to such Common Stock. However, the Participant may pay all or any portion of the taxes required to be withheld by the Employer or paid by the Participant with respect to such Common Stock by electing to have the Employer A-7 41 withhold shares of Common Stock, or by delivering previously owned shares of Common Stock, having a Fair Market Value equal to the amount required to be withheld or paid. The Participant must make the foregoing election on or before the date that the amount of tax to be withheld is determined ("Tax Date"). Any such election is irrevocable and subject to disapproval by the Committee. If the Participant is subject to the short-swing profits recapture provisions of Section 16(b) of the Exchange Act, any such election shall be subject to the following additional restrictions: (i) Such election may not be made within six months of the grant of the Award, provided that this limitation shall not apply in the event of death or disability, and (ii) Such election must be made either six months or more prior to the Tax Date or in a Window Period (as hereinafter defined). Where the Tax Date in respect of the exercise of all or any portion of an Option is deferred until after such exercise and the Participant elects Common Stock withholding, the full amount of shares of Common Stock will be issued or transferred to the Participant upon exercise of the Option, but the Participant shall be unconditionally obligated to tender back to the Employer on the Tax Date the number of shares of Common Stock necessary to discharge with respect to such Option exercise the greater of (i) the Employer's withholding obligation and (ii) all or any portion of the holder's federal and state tax obligation attributable to the Option exercise. A "Window Period" is any period commencing on the third business day following the Company's release of a quarterly or annual summary statement of sales and earnings and ending on the twelfth business day following such release. (b) Awards. Each Award hereunder shall be evidenced in writing, delivered to the Participant or Outside Director and shall specify the terms and conditions thereof and any rules applicable thereto, including but not limited to the effect on such Award of the death, retirement, or other termination of employment of the Participant or Outside Director and the effect thereon, if any, of a Change in Control of the Company. (c) Nontransferability. No Award shall be assignable or transferable except by will or the laws of descent and distribution, and no right or interest of any Participant shall be subject to any lien, obligation or liability of the Participant. Notwithstanding the above, in the discretion of the Committee, awards may be transferable pursuant to a Qualified Domestic Relations Order ("QDRO"), as determined by the Committee or its designee. (d) No Right to Employment. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Employer. Further, the Employer expressly reserves the right at any time to dismiss a Participant free from any liability, or any claim under the Plan, except as provided herein or in any agreement entered into with respect to an Award. (e) No Rights as Stockholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed under the Plan until he or she has become the holder thereof. Notwithstanding the foregoing, in connection with each grant of Restricted Stock or Stock Unit Award hereunder, the applicable Award shall specify if and to what extent the Participant shall not be entitled to the rights of a stockholder in respect of such Restricted Stock or Stock Unit Award. (f) Construction of the Plan. The validity, construction, interpretation, administration and effect of the Plan and of its rules and regulations, and rights relating to the Plan, shall be determined solely in accordance with the laws of the State of Texas. A-8 42 (g) Effective Date. Subject to the approval of the stockholders of the Company, the Plan shall be effective on April 27, 1994. No Options or Awards may be granted under the Plan after April 26, 2004; however, all previous awards made that have not expired under their original terms at the time the Plan expires will remain outstanding. (h) Amendment of Plan. The Board of Directors may amend, suspend or terminate the Plan or any portion thereof at any time, provided that no amendment shall be made without stockholder approval if such approval is necessary to comply with any tax or regulatory requirement, including for these purposes any approval requirement which is a prerequisite for exemptive relief under Section 16(b) of the Act. Notwithstanding anything to the contrary contained herein, the Committee may amend the Plan in such manner as may be necessary so as to have the Plan conform with local rules and regulations. (i) Amendment of Award. The Committee may amend, modify or terminate any outstanding Award without the Participant's consent at any time prior to payment or exercise in any manner not inconsistent with the terms of the Plan, including without limitation, (i) to change the date or dates as of which (A) an Option or Stock Appreciation Right becomes exercisable; (B) a Performance Share is deemed earned; (C) Restricted Stock becomes nonforfeitable; or (ii) to cancel and reissue an Award under such different terms and conditions as it determines appropriate. (j) Change in Control In order to preserve a Participant's rights under an Award in the event of a Change in Control of the Company, the Committee in its discretion may, at the time an Award is made or any time thereafter, take one or more of the following actions: (i) provide for the acceleration of any time period relating to the exercise of the Award, (ii) provide for the purchase of the Award upon the Participant's request for an amount of cash or other property that could have been received upon the exercise or realization of the Award had the Award been currently exercisable or payable, (iii) adjust the terms of the Award in a manner determined by the Committee to reflect the Change in Control, (iv) cause the Award to be assumed, or new rights substituted therefor, by another entity, or (v) make such other provision as the Committee may consider equitable and in the best interests of the Company. A-9 43 CASH AMERICA INTERNATIONAL, INC. PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY FOR ANNUAL MEETING APRIL 20, 1999 The undersigned hereby constitutes and appoints Jack R. Daugherty, Daniel R. Feehan and Hugh A. Simpson, and each of them, my true and lawful attorneys and proxies, with power of substitution, to represent the undersigned and vote at the annual meeting of shareholders of Cash America International, Inc. (the "Company") to be held in Fort Worth, Texas on April 20, 1999, and at any adjournment thereof, all of the stock of the Company standing in my name as of the record date of March 2, 1999 on all matters coming before said meeting. (CHANGE OF ADDRESS) ---------------------------------------- ---------------------------------------- ---------------------------------------- (If you have written in the above space, please mark the corresponding box on the reverse side of this card). YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD. 44 PLEASE MARK YOUR VOTES AS INDICATED IN THIS EXAMPLE [X] FOR WITHHELD 1. Election of Directors, Nominees: Jack R. Daugherty, A.R. Dike, Daniel R. Feehan, James H. Graves, [ ] [ ] B.D. Hunter, Timothy J. McKibben, Alfred M. Micallef, Carl P. Motheral, Samuel W. Rizzo, Rosalin Rogers, Clifton H. Morris, Jr. except vote withheld from the following nominee(s). - --------------------------------------------------- FOR AGAINST ABSTAIN 2. Ratification of the appointment of PricewaterhouseCoopers LLP as independent auditors for the year 1999. [ ] [ ] [ ] 3. Approval of the proposed amendment to the Company's 1994 Long-Term Incentive Plan. [ ] [ ] [ ] 4. In their discretion the proxies are authorized to vote upon such other matters as may come before the meeting or any adjournments thereof. [ ] CHANGE OF [ ] ADDRESS SIGNATURE SIGNATURE DATE --------------------------------------------- ------------------------------------------ -------------------- NOTE: PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
FOLD AND DETACH HERE EX-21 8 SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21 Jurisdiction of Name Incorporation ---- ------------- Cash America International, Inc. Texas Cash America, Inc. Delaware Cash America, Inc. of Louisiana Delaware Rent-A-Tire, Inc. Texas Cash America, Inc. of Tennessee Tennessee Cash America, Inc. of Oklahoma Oklahoma Cash America, Inc. of Kentucky Kentucky Cash America, Inc. of South Carolina South Carolina Florida Cash America, Inc. Florida Georgia Cash America, Inc. Georgia Cash America, Inc. of North Carolina North Carolina Cash America Pawn, Inc. of Ohio Ohio Cash America, Inc. of Alabama Alabama Cash America, Inc. of Colorado Colorado Cash America, Inc. of Indiana Indiana Cash America Pawn L.P. Delaware Cash America Management L.P. Delaware Cash America Holding, Inc. Delaware Harvey & Thompson Limited England Express Cash International Corporation Delaware CAII Pantbelaning AB Sweden Cash America of Missouri, Inc. Missouri Vincent's Jewelers and Loan, Inc. Missouri Mr. Payroll Corporation Delaware Cash America, Inc. of Utah Utah Cash America Franchising, Inc. Delaware Cash America, Inc. of Illinois Illinois Uptown City Pawners, Inc. Illinois Doc Holliday's Pawnbrokers & Jewelers, Inc. Delaware Longhorn Pawn & Gun, Inc. Texas Bronco Pawn & Gun, Inc. Oklahoma Gamecock Pawn & Gun, Inc. South Carolina Hornet Pawn & Gun, Inc. North Carolina Tiger Pawn & Gun, Inc. Tennessee EX-23 9 CONSENT OF PRICEWATERHOUSECOOPERS LLP 1 EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the three separate registration statements of Cash America International, Inc. on Form S-8, (File No. 33-29658, File No. 33-36430 and File No. 33-59733) of our reports dated January 26, 1999, on our audits of the consolidated financial statements and financial statement schedule of Cash America International, Inc. as of December 31, 1998 and 1997, and for each of the three years in the period ended December 31, 1998, which reports are included or incorporated by reference in this Annual Report on Form 10-K. PRICEWATERHOUSECOOPERS LLP Fort Worth, Texas March 30, 1999 EX-27 10 FINANCIAL DATA SCHEDULE
5 1,000 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 4,417 0 148,370 0 68,510 244,430 139,723 66,376 410,823 30,818 189,288 0 0 3,024 184,420 410,823 218,444 342,876 141,397 264,496 44,603 0 13,557 20,364 7,740 12,624 0 0 0 12,624 0.51 0.48
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