CASH AMERICA INTERNATIONAL INC - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

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 (I.R.S. Employer
of incorporation or organization Identification No.)

1600 West 7th Street
Fort Worth, Texas 76102
(Address of principal executive offices) (Zip Code)

(817) 335-1100
(Registrant's telephone number, including area code)

N/A
(Former name, former address and former fiscal year,
if changed since last report.)

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 [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS:
24,490,634 common shares, $.10 par value, were outstanding as of July 31, 2002.

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CASH AMERICA INTERNATIONAL, INC.

INDEX TO FORM 10-Q

PART I. FINANCIAL STATEMENTS

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

See notes to consolidated financial statements.

Page 1

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

See notes to consolidated financial statements.

Page 2

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2002 AND 2001

See notes to consolidated financial statements.

Page 3

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

See notes to consolidated financial statements.

Page 4

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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1. BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Cash America
International, Inc. (the "Company") and its majority owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation.

In September 2001, the Company announced plans to exit the rent-to-own
business in order to focus on its core business of lending activities. In June
2002, the Company sold the remaining assets of its rent-to-own business. The
consolidated financial statements of the Company have been reclassified to
reflect the disposal of the rental business segment. See Note 3.

The financial statements as of June 30, 2002 and 2001, and for the
three month and six month periods then ended are unaudited but, in management's
opinion, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for such interim
periods. Operating results for the three month and six month periods are not
necessarily indicative of the results that may be expected for the full fiscal
year.

Certain amounts in the consolidated financial statements for the three
month and six month periods ended June 30, 2001, have been reclassified to
conform to the presentation format adopted in 2002. These reclassifications have
no effect on the net income previously reported.

These financial statements and related notes should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's 2001 Annual Report to Stockholders.

2. REVENUE RECOGNITION

Lending Operations o Pawn loans ("loans") are made on the pledge of tangible
personal property. The Company accrues finance and service charges revenue on
all loans that the Company deems collectible 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.

Small consumer cash advances ("advances") provide customers with cash
in exchange for a promissory note or other repayment agreement supported by that
customer's check for the amount of the cash advanced plus a service fee. The
Company holds the check for a short period, typically less than 17 days. To
repay the advance, customers may redeem their checks by paying cash or they may
allow the checks to be processed for collection. The Company accrues fees and
finance charge revenue on advances on a constant yield basis ratably over the
period of the advance. For those locations that offer small consumer cash
advances from a third-party financial

Page 5

institution (the "Bank"), the Company receives an administrative service fee for
services provided on the Bank's behalf. These fees are recorded in revenue when
earned.

Check Cashing Operations o The Company records fees derived from its owned check
cashing locations in the period in which the service is provided. Royalties
derived from franchise locations are recorded on the accrual basis.

3. DISCONTINUED OPERATIONS

In September 2001, the Company adopted a formal plan to exit the rent-to-own
business (the "Plan") in order to focus on its core business of lending
activities. The Company's subsidiary, Rent-A-Tire, Inc. ("Rent-A-Tire"), offered
new tires and wheels under a rent-to-own format to customers seeking an
alternative to a direct purchase. The Company closed 21 Rent-A-Tire operating
locations and held the remaining 22 locations for sale. In conjunction with the
Plan, a pre-tax charge of $10,961,000 ($7,553,000 after income tax benefit) was
recorded in the quarter ended September 30, 2001 to establish a reserve for the
estimated loss on disposal of the rental business segment. This charge included
a provision of $4,472,000 for operating losses subsequent to September 1, 2001,
the effective date of the Plan, and a provision of $6,489,000 for the estimated
loss on the sale of remaining assets.

On June 14, 2002, the Company sold the assets of 22 Rent-A-Tire stores
for proceeds of approximately $3,000,000 in cash. During the quarter ended June
30, 2002, the Company recorded a $1,214,000 ($800,000 after income tax)
reduction in the original charge to the reserve, due to both a decrease in the
Company's expected future operating lease obligations (net of sublease income)
for closed stores and proceeds from the sale of assets in excess of the original
estimate. The remaining balance of the reserve and the activity for the six
month period ended June 30, 2002 is presented below (in thousands):

Under the terms of the asset sale agreement with the buyer, the
Company's contingent obligation under certain operating leases for the premises
related to the 22 Rent-A-Tire stores continues in the event that the buyer is
unable to perform under the operating leases. The maximum aggregate potential
obligation under these guarantees is approximately $1.5 million. This amount is
reduced over time by the amounts paid on these operating leases by the buyer. In
the event that the buyer fails to perform and the Company is required, as the
guarantor, to make payments under these leases, the Company would seek to
mitigate its losses by subleasing the properties.

Page 6

Pursuant to Accounting Principles Board Opinion No. 30 "Reporting the
Results of Operations -- Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," the consolidated financial statements of the Company have been
reclassified to reflect the disposal of the rental business segment.
Accordingly, the revenues, costs and expenses, assets, and cash flows of
Rent-A-Tire have been segregated in the consolidated balance sheets,
consolidated statements of operations and consolidated statements of cash flows.
The net operating results, net assets and net cash flows of this business
segment have been reported as "discontinued operations" in the accompanying
consolidated financial statements. The loss from discontinued operations does
not include interest expense since debt was not assumed by the buyer.

4. SMALL CONSUMER CASH ADVANCES AND ALLOWANCE FOR LOSSES

Small consumer cash advances are generally offered for a term of 7 to 31 days,
depending on the customer's next payday. In addition to the advances originated
by the Company in some of its locations, advances are offered in other locations
by a third-party financial institution (the "Bank"). Under the terms of the
August 2001 amendment to the Company's agreement with the Bank, the Bank assigns
each advance that remains unpaid after its maturity date to the Company at a
discount from the amount owed by the borrower, and the Company undertakes the
collection activity on the account.

Balances associated with the Company's small consumer cash advance
portfolio are included in "Other receivables and prepaid expenses" in the
accompanying consolidated balance sheets. The balances outstanding at June 30,
2002 and 2001 were as follows (in thousands):

Page 7

Changes in the allowance for losses for the periods ended June 30, follow (in
thousands):

5. WEIGHTED AVERAGE SHARES

The reconciliation of basic and diluted weighted average common shares
outstanding for the periods ended June 30, follows (in thousands):

6. ACQUISITIONS

During the six months ended June 30, 2002, the Company acquired two U.S.
pawnshops in purchase transactions for an aggregate cash consideration of
$1,044,000. The excess of the aggregate purchase price over the aggregate fair
market value of assets acquired was approximately $555,000.

7. GOODWILL AND OTHER INTANGIBLE ASSETS - ADOPTION OF SFAS 142

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No.
142, "Goodwill and Other Intangible Assets." Goodwill and other intangible
assets having an indefinite useful life acquired in business combinations
completed after June 30, 2001, are no longer subject to amortization to
earnings. Effective January 1, 2002, all goodwill and other intangible assets
having an indefinite useful life are no longer amortized to earnings. The useful
lives of other intangible assets must be reassessed and the remaining
amortization periods adjusted accordingly. Goodwill and other intangible assets
having an indefinite useful life will be tested for impairment annually, or more
frequently if events or changes in circumstances indicate that the assets might
be impaired, using a two-step impairment assessment. The first step of the
goodwill impairment test, used to identify potential impairment, compares the
fair value of a reporting unit with its carrying amount, including goodwill. If
the fair value of a reporting unit exceeds its carrying amount, goodwill of the
reporting unit is considered not impaired, and the second step of the impairment
test is not necessary. If the carrying amount of a reporting unit exceeds its
fair value, the second step of the goodwill impairment test is performed to
measure the amount of impairment loss, if any.

Page 8

The Company adopted the provisions of SFAS No. 142 on January 1, 2002
and completed the first step of the two-step impairment test during the quarter
ended June 30, 2002. Based on the results of this test, Management determined
there was no impairment as of January 1, 2002.

Goodwill o The changes in the carrying value of goodwill for the six months
ended June 30, 2002, follows (in thousands):

Transitional Disclosures o Net income and net income per share excluding the
after-tax effect of amortization expense related to goodwill for the periods
ended June 30, were as follows (in thousands, except per share amounts; due to
rounding, per share amounts may not total):

Acquired Intangible Assets o Acquired intangible assets that are subject to
amortization as of June 30, 2002 are as follows (in thousands):

Noncompetition agreements are amortized over the applicable period of the
contract.

Page 9

Amortization o Amortization expense for the acquired intangible assets above is
as follows (in thousands):

Actual amortization expense
For the three months ended June 30, 2002 $ 124
For the six months ended June 30, 2002 278

Estimated amortization expense For the years ended December 31,:

2002 $ 478
2003 188
2004 84
2005 81
2006 76

8. LONG-TERM DEBT

The Company's long-term debt instruments and balances outstanding at June 30,
2002 and 2001 were as follows (in thousands):

During August 2002, the Company issued $42,500,000 of 7.20% senior unsecured
notes, due August 2009. The notes are payable in five equal annual payments
beginning August 2005. The Company also refinanced its U.S. line of credit
during August 2002, with a $90,000,000 senior unsecured revolving line of credit
maturing August 2005. Interest on the line of credit will be charged at the
Company's option at either LIBOR (1.875% at June 30, 2002) plus a margin or at
the Agent's base rate. The margin on the line of credit varies from 1.25% to
2.50%, depending on the Company's ratio of indebtedness to cash flow as defined
in the agreement. Net proceeds received under these agreements will be used to
reduce existing indebtedness, and for general

Page 10

corporate purposes. The Company is in compliance with all covenants or other
requirements set forth in the debt agreements.

The Company has received a commitment to extend its multi-currency line
of credit for one year to April 30, 2004. The terms of this line of credit
remain essentially unchanged, with the exception of a reduction in the maximum
amount to (pound)15,000,000 (approximately $23.0 million at June 30, 2002) from
(pound)20,000,000 (approximately $30.6 million at June 30, 2002).

9. OPERATING SEGMENT INFORMATION

The Company has two reportable operating segments in the lending industry and
one in the check cashing industry. While the United States and foreign lending
segments offer the same services, each is managed separately due to the
different operational strategies required. The check cashing operation offers
different services and products thus requiring its own technical, marketing and
operational strategy.

As described in Note 3, the Company has reclassified the results of
operations of Rent-A-Tire as discontinued operations. This business was
previously reported as a separate operating segment. The segment data included
below has been restated to exclude amounts related to Rent-A-Tire.

Information concerning the segments is set forth below (in thousands):

Page 11

10. LITIGATION

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.

Page 12

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

SUMMARY CONSOLIDATED FINANCIAL DATA

SECOND QUARTER ENDED JUNE 30, 2002 vs. SECOND QUARTER ENDED JUNE 30, 2001
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(Dollars in thousands)

The following table sets forth selected consolidated financial data with
respect to the Company and its lending and check cashing operations as of June
30, 2002 and 2001, and for the three months then ended.

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(a) Includes advances made by the Company and advances made by a third-party
financial institution.

(b) Amounts recorded in the Company's consolidated financial statements.

Page 13

SIX MONTHS ENDED JUNE 30, 2002 vs. SIX MONTHS ENDED JUNE 30, 2001
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(Dollars in thousands)

The following table sets forth selected consolidated financial data with
respect to the Company and its lending and check cashing operations as of June
30, 2002 and 2001, and for the six months then ended.

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(a) Includes advances made by the Company and advances made by a third-party
financial institution.

(b) Amounts recorded in the Company's consolidated financial statements.

Page 14

GENERAL
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The Company is a 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 pawn loan portfolio generates finance and service
charges revenue. A related but secondary source of revenue is the disposition of
merchandise, primarily collateral from unredeemed pawn loans. As an alternative
to a pawn loan, the Company offers small consumer cash advances in selected
lending locations and on behalf of a third-party financial institution in other
locations. The Company also provides check cashing services through its
franchised and company owned Mr. Payroll(R) manned check cashing centers.

As of June 30, 2002, the Company's lending operations consisted of 467
lending units (454 owned units and 13 franchised units in 18 states in the
United States, 45 jewelry-only units in the United Kingdom, and 11 loan-only and
primarily jewelry-only units in Sweden). The number of owned lending locations
declined by 9 during the 18 months ended June 30, 2002 as the Company acquired 7
operating units, established 2 locations, and combined or closed 18 locations.
In addition, one franchise unit was opened and 4 units were closed.

As of June 30, 2002, Mr. Payroll operated 128 franchised and 7 company
owned manned check cashing centers in 20 states.

In September 2001, the Company announced plans to exit the rent-to-own
business in order to focus on its core business of lending activities. In June
2002, the Company sold the remaining assets of its rent-to-own business. See
Note 3 of Notes to Consolidated Financial Statements.

RESULTS OF OPERATIONS
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SECOND QUARTER ENDED JUNE 30, 2002, COMPARED TO THE
SECOND QUARTER ENDED JUNE 30, 2001

CONSOLIDATED NET REVENUE. Consolidated net revenue increased $4.7 million, or
10.0%, to $51.8 million during the second quarter ended June 30, 2002 (the
"current quarter") from $47.1 million during the second quarter ended June 30,
2001 (the "prior year quarter"). The following table sets forth net revenue
results by operating segment for the three month periods ended June 30 ($ in
millions):

The Company's domestic lending operations generated the majority of the
increase in consolidated net revenue. Higher disposition of merchandise and
higher revenue from the Company's small consumer cash advance product accounted
for the increase in net revenue.

The components of net revenue are finance and service charges from pawn
loans, which remained unchanged; net revenue from the disposition of
merchandise, which increased $1.2

Page 15

million; cash advance fees, which increased $3.4 million; and check cashing fees
and royalties, which increased $.1 million. Management believes that the trend
of higher cash advance fees will continue during 2002 as customers may choose to
use both pawn and cash advance products. This will likely cause a more moderate
increase, or potentially a decrease, in finance and service charges in 2002 that
should be offset by higher cash advance fees.

FINANCE AND SERVICE CHARGES. The following is a summary of finance and service
charges related to pawn loans by operating segment for the three months ended
June 30 ($ in millions):

Variations in finance and service charges on pawn loans are caused by
changes in the average balance of pawn loans outstanding, the annualized yield
of the pawn loan portfolio, and the effects of translation of foreign currency
amounts into United States dollars. The following table demonstrates how each of
these factors affected the total change in finance and service charges on pawn
loans ($ in millions):

Excluding the favorable impact of foreign currency translation
adjustments, the company-wide average balance of pawn loans outstanding was 2.6%
lower during the current quarter than the prior year quarter. On a segment
basis, the average balances of pawn loans were 5.2% lower and 2.2% higher for
the domestic and foreign lending operations, respectively. The decrease in the
average balance of domestic pawn loans outstanding was driven by a 6.4% decline
in the average number of pawn loans outstanding during the current quarter,
partially offset by a 1.4% increase in the average amount per loan. Management
believes that the decrease in the number of domestic pawn loans was partly
attributable to some customers choosing to satisfy their short-term borrowing
needs through a cash advance instead of through a pawn loan. Also, pawn loan
balances at the beginning of the current quarter were lower on a year-over-year
basis due to larger than usual per capita tax refunds believed to have been
received by pawn loan customers in the first quarter of 2002. Management
believes that this trend will continue throughout the remainder of 2002. The
average balance of pawn loans outstanding denominated in their local currencies
increased 6.9% and decreased 4.9% in the United Kingdom and Sweden,
respectively. Foreign loan demand was mixed as the average number of pawn loans
outstanding in the United Kingdom and Sweden increased 4.5% and decreased 7.2%,
respectively. Average amounts per loan were higher for both the United Kingdom
and Sweden by 2.3% and 2.5%, respectively.

Excluding the favorable impact of foreign currency translation
adjustments, the consolidated annualized loan yield, which represents the
blended result derived from the distinctive loan yields realized from operations
in the three countries, was 98.4% in the current year quarter, compared to 96.4%
in the prior year quarter. There was an increase in the domestic annualized loan
yield to 122.8% for the current year quarter, compared to 119.5% for the prior
year quarter. A slightly higher concentration of extended or renewed loans in
the portfolio and

Page 16

higher redemption rates have contributed to the higher domestic yield. The
blended yield on average foreign pawn loans outstanding increased to 55.5% in
the current year quarter compared to 52.7% in the prior year quarter. The
increase in the blended foreign yield was caused by a combination of higher loan
redemption rates and higher yield on the disposition of unredeemed collateral at
auction.

Foreign source finance and service charges increased $.2 million in the
current quarter due to favorable currency translation adjustments resulting from
the weakening of the United States dollar against the British pound and Swedish
kronor. The weighted average exchange rates used for translating earnings into
United States dollars for the pound and kronor were 3.0% and 4.7% higher,
respectively, during the current quarter compared to the prior year quarter.
Management anticipates a continued favorable translation adjustment for both the
pound and the kronor for the remainder of 2002.

NET REVENUE FROM THE DISPOSITION OF MERCHANDISE. Net revenue from the
disposition of merchandise represents the proceeds received from the disposition
of merchandise in excess of the cost of merchandise sold. The combination of a
13.9% increase in proceeds offset by slightly lower margins resulted in a $1.2
million, or 6.6%, increase in net revenue from the disposition of merchandise.
The following table summarizes by operating segment the change in the proceeds
from the disposition of merchandise and the related net margin for the current
quarter compared to the prior year quarter ($ in millions):

Proceeds from the disposition of merchandise were $7.1 million, or
13.9%, higher than in the prior year quarter, primarily due to an increase in
volume of items sold and an increase in the disposition of scrap gold jewelry.
The consolidated merchandise turnover rate increased to 3.0 times during the
current quarter as compared to 2.5 times during the prior year quarter, and the
margin on disposition of merchandise decreased to 32.8% in the current quarter
from 35.0% in the prior year quarter. Excluding the effect of the disposition of
scrap jewelry, the margin on disposition of merchandise decreased slightly to
36.7% in the current quarter from 37.2% in the prior year quarter due to lower
average proceeds of merchandise sold. The margin on disposition of scrap jewelry
was 12.1% in the current quarter compared to 9.0% in the prior year quarter due
to the prevailing higher price of gold which resulted in a higher settlement
price per ounce.

CASH ADVANCE FEES. Cash advance fees increased $3.4 million to $4.2 million in
the current quarter as compared to $.8 million in the prior year quarter. The
increase resulted from higher demand for the small consumer cash advance product
that the Company began offering and promoting in 2000. The product was available
in 390 domestic lending units at June 30, 2002, including 321 units that offer
the product on behalf of a third-party financial institution (the "Bank"), which
pays the Company a fee for its administrative services. Cash advance fees
includes revenue from the advance portfolio owned by the Company and fees for
administrative services performed for the Bank. (Although these cash advance
transactions may take the form of loans or deferred check deposit transactions,
the transactions are referred to throughout this discussion as "advances" for
convenience.)

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Advances written increased $18.2 million to $26.3 million in the
current quarter from $8.1 million in the prior year quarter. The $26.3 million
in advances written in the current quarter includes $22.4 million extended to
customers by the Bank. The average amount per advance increased to $280 from
$243 and the combined portfolio of advances generated $4.6 million in revenue
during the current quarter compared to $1.2 million in the prior year quarter.
The outstanding combined Company and Bank portfolio of short-term advances
increased $4.8 million to $7.5 million at June 30, 2002 from $2.7 million at
June 30, 2001. Included in these amounts are $2.7 million and $.7 million for
2002 and 2001, respectively, that are included in the Company's consolidated
balance sheets. An allowance for losses of $1.3 million and $.1 million has been
provided in the consolidated financial statements for June 30, 2002 and 2001,
respectively, which offsets the outstanding advance amounts. The net balance is
carried in "Other receivables and prepaid expenses" on the consolidated balance
sheets.

CHECK CASHING ROYALTIES AND FEES. Check cashing revenue remained unchanged for
both Mr. Payroll and the United Kingdom operations in the current quarter at $.8
million and $.2 million, respectively.

OPERATIONS AND ADMINISTRATION EXPENSES. Consolidated operations and
administration expense as a percentage of net revenue was 77.7% in the current
quarter compared to 79.8% in the prior year quarter. These expenses increased
$2.6 million, or 7.1%, in the current quarter compared to the prior year
quarter. Domestic lending expenses increased $2.1 million, primarily as a result
of higher health insurance costs and higher incentive expenses associated with
the improvement in operating results. Foreign lending operations expenses
increased $.6 million primarily due to an increase in the number of locations in
the United Kingdom. Mr. Payroll's expenses remained unchanged.

CASH ADVANCE LOSS PROVISION. Cash advance loss provision for domestic lending
operations increased $1.4 million to $1.6 million in the current quarter as
compared to $.2 million in the prior year quarter due to the increase in the
size of the portfolio. The Company's cash advance product primarily services a
customer base of non-prime borrowers. The Company maintains an allowance for
losses on its advances at a level estimated to be adequate to absorb future
credit losses inherent in the outstanding advance portfolio. The cash advance
loss provision is utilized to increase the allowance carried against the
outstanding receivables portfolio. In addition to the advances originated by the
Company in some of its locations, advances are offered in other locations by a
third-party financial institution (the "Bank"). Under the terms of the August
2001 amendment to the Company's agreement with the Bank, the Bank assigns each
advance that remains unpaid after its maturity date to the Company at a discount
from the amount owed by the borrower and the Company undertakes the collection
activity on the account. One of the reasons for this practice is to benefit from
the use of the Company's collections resources and proficiency. As a result,
future losses on cash advances assigned to the Company that prove uncollectible
are the sole responsibility of the Company. Therefore, when establishing the
Company's overall allowance for losses, management includes estimates for these
cash advance losses, while active in the Bank's portfolio, at a level estimated
to be adequate to absorb credit losses. Loss provision as a percentage of cash
advance fees increased to 37.5% in the current quarter from 21.3% in the prior
year quarter. This increase reflects the changes made to the Company's agreement
with the Bank in August 2001. While the new agreement provided for a higher
administrative fee, the cash advance loss provision increased as the Company
began providing for estimated losses on active advances and advances assigned to
the Company for collection.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense as a
percentage of net revenue was 7.1% in the current quarter compared to 8.9% in
the prior year quarter. Total

Page 18

depreciation and amortization expenses decreased $.5 million, or 11.8%.
Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets". Under SFAS
No. 142, the Company ceased amortizing all goodwill and other intangible assets
having an indefinite useful life. See Note 7 of Notes to Consolidated Financial
Statements. A $.8 million decline in amortization due to the adoption of SFAS
142 was partially offset by an increase in depreciation expense associated with
the reconstruction of the Company's corporate headquarters that was severely
damaged by a tornado in March 2000.

INTEREST EXPENSE. Net interest expense as a percentage of net revenue declined
to 4.0% in the current quarter from 5.5% in the prior year quarter. The amount
decreased a net $.5 million, or 19.7%, due to the effect of lower blended
borrowing costs accompanied by a 2.9% reduction in the Company's average debt
balance. The effective blended borrowing cost decreased to 5.2% in the current
quarter from 6.2% in the prior year quarter. The average amount of debt
outstanding decreased during the current quarter to $161.0 million from $165.8
million during the prior year quarter.

LOSS FROM DERIVATIVE VALUATION FLUCTUATIONS. Effective January 1, 2001, the
Company implemented SFAS No. 133 "Accounting for Derivative Instruments and
Hedging Activities" and its corresponding amendments under SFAS No. 138. The
adjustments to fair values of interest rate cap agreements during the current
quarter resulted in a slight loss compared to a gain of $.1 million in the prior
year quarter.

INCOME TAXES. The Company's effective tax rate for the quarter ended June 30,
2002 was 35.7% as compared to 42.3% for the quarter ended June 30, 2001.
Excluding goodwill amortization and the related tax effects in the prior year
quarter, the Company's comparable consolidated effective tax rate was 36.2% for
the prior year quarter.

Page 19

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SIX MONTHS ENDED JUNE 30, 2002, COMPARED TO THE
SIX MONTHS ENDED JUNE 30, 2001

CONSOLIDATED NET REVENUE. Consolidated net revenue increased $9.3 million, or
9.4%, to $108.6 million during the six months ended June 30, 2002 (the "current
period") from $99.3 million during the six months ended June 30, 2001 (the
"prior year period"). The following table sets forth net revenue results by
operating segment for the six month periods ended June 30 ($ in millions):

The Company's domestic lending operations generated the majority of the
increase in consolidated net revenue. Higher disposition of merchandise and
higher revenue from the Company's small consumer cash advance product accounted
for this increase.

Finance and service charges from pawn loans decreased $.1 million; net
revenue from the disposition of merchandise increased $3.0 million; cash advance
fees increased $6.3 million; and check cashing fees and royalties increased $.1
million. Management believes that the trend of higher cash advance fees will
continue during 2002 as customers may choose to use both pawn and cash advance
products. This will likely cause a more moderate increase, or potentially a
decrease, in finance and service charges for the remainder of 2002 that should
be offset by higher cash advance fees.

FINANCE AND SERVICE CHARGES. The following is a summary of finance and service
charges related to pawn loans by operating segment for the six months ended June
30 ($ in millions):

The following table demonstrates how each of these factors affected the
total change in finance and service charges on pawn loans ($ in millions):

Excluding the effects of foreign currency translation adjustments, the
company-wide average balance of pawn loans outstanding was 1.6% lower during the
current period than the prior year period. On a segment basis, the average
balances of pawn loans were 3.3% lower and

Page 20

1.4% higher for the domestic and foreign lending operations, respectively. The
decrease in the average balance of domestic pawn loans outstanding was driven by
a 4.1% decline in the average number of pawn loans outstanding during the
current period, partially offset by a .8% increase in the average amount per
loan. Management believes that the decrease in the number of domestic pawn loans
was partly attributable to some customers choosing to satisfy their short-term
borrowing needs through a cash advance instead of through a pawn loan and also
due to larger than usual per capita tax refunds believed to have been received
by pawn loan customers in the first quarter of 2002. Management believes that
this trend will continue throughout the remainder of 2002. The average balance
of pawn loans outstanding denominated in their local currencies increased 5.7%
and decreased 4.9% in the United Kingdom and Sweden, respectively. Foreign loan
demand was mixed as the average number of pawn loans outstanding in the United
Kingdom and Sweden increased 3.5% and decreased 6.9%, respectively. Average
amounts per loan were 2.1% higher for both the United Kingdom and Sweden.

Excluding the effects of foreign currency translation adjustments, the
consolidated annualized loan yield was 100.9% in the current year period,
compared to 99.5% in the prior year period. There was an increase in the
domestic annualized loan yield to 127.2% for the current year period, compared
to 125.2% for the prior year period. A slightly higher concentration of extended
or renewed loans in the portfolio and higher redemption rates have contributed
to the higher domestic loan yield. The blended yield on average foreign pawn
loans outstanding increased to 55.4% in the current year period compared to
52.6% in the prior year period. The increase in the blended foreign yield was
caused by a combination of higher loan redemption rates and higher yield on the
disposition of unredeemed collateral at auction.

While foreign source finance and service charges were not significantly
impacted during the current period by currency translation adjustments, based on
current trends in exchange rates Management anticipates a favorable translation
adjustment for both the British pound and the Swedish kronor for the remainder
of 2002. The weighted average exchange rates used for translating earnings into
United States dollars for the pound and the kronor were .6% higher and .9%
lower, respectively, during the current period compared to the prior year
period.

NET REVENUE FROM THE DISPOSITION OF MERCHANDISE. The combination of increased
proceeds and a slightly higher margin resulted in a $3.0 million, or 7.6%,
increase in net revenue from the disposition of merchandise. The following table
summarizes by operating segment the change in the proceeds from the disposition
of merchandise and the related net margin for the current period compared to the
prior year period ($ in millions):

Proceeds from the disposition of merchandise were $11.3 million, or
10.0%, higher than in the prior year period, primarily due to an increase in
volume of items sold and an increase in the disposition of scrap gold jewelry.
The consolidated merchandise turnover rate increased to 3.0 times during the
current period as compared to 2.7 times during the prior year period, and the
margin on disposition of merchandise decreased to 33.7% in the current period
from 34.5% in the prior year period. Excluding the effect of the disposition of
scrap jewelry, the margin on disposition of merchandise remained virtually
unchanged at 36.3% in the current period compared

Page 21

to 36.4% in the prior year period. The margin on disposition of scrap jewelry
was 14.1% in the current period compared to 6.9% in the prior year period due to
the prevailing higher price of gold which resulted in a higher settlement price
per ounce.

CASH ADVANCE FEES. Cash advance fees increased $6.3 million to $7.7 million in
the current period as compared to $1.4 million in the prior year period. The
increase resulted from higher demand for the small consumer cash advance product
that the Company began offering and promoting in 2000.

Advances written increased $34.0 million to $48.0 million in the
current period from $14.0 million in the prior year period. The $48.0 million in
advances written in the current period includes $40.9 million extended to
customers by the Bank. The average amount per advance increased to $282 from
$231 and the combined portfolio of advances generated $8.5 million in revenue
during the current period compared to $2.1 million in the prior year period.

CHECK CASHING ROYALTIES AND FEES. Check cashing revenue for Mr. Payroll
increased $.1 million, or 7.6%, in the current period, while check cashing fees
for the United Kingdom operations remained unchanged at $.4 million for the same
period.

OPERATIONS AND ADMINISTRATION EXPENSES. Consolidated operations and
administration expense as a percentage of net revenue was 75.7% in the current
period compared to 77.2% in the prior year period. These expenses increased $5.5
million, or 7.2%, in the current period compared to the prior year period.
Domestic lending expenses increased $4.5 million, primarily as a result of
higher health insurance costs and higher incentive expenses associated with the
improvement in operating results. Foreign lending operations expenses increased
$.9 million primarily due to an increase in the number of locations in the
United Kingdom and higher administration costs. Mr. Payroll's expenses increased
$.1 million in the current period compared to the prior year period, primarily
due to higher marketing and occupancy costs.

CASH ADVANCE LOSS PROVISION. Cash advance loss provision for domestic lending
operations increased $2.1 million to $2.5 million in the current period as
compared to $.4 million in the prior year period due to the increase in the size
of the portfolio. Loss provision as a percentage of cash advance fees increased
to 31.9% in the current period from 27.3% in the prior year period.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense as a
percentage of net revenue was 6.7% in the current period compared to 8.5% in the
prior year period. Total depreciation and amortization expenses decreased $1.1
million, or 13.6%. A $1.6 million decline in amortization due to the adoption of
SFAS 142 was partially offset by an increase in depreciation expense associated
with the reconstruction of the Company's corporate headquarters that was
severely damaged by a tornado in March 2000.

INTEREST EXPENSE. Net interest expense as a percentage of net revenue declined
to 4.0% in the current period from 5.5% in the prior year period. The amount
decreased a net $1.1 million, or 20.3%, due to the effect of lower blended
borrowing costs accompanied by a 2.0% reduction in the Company's average debt
balance. The effective blended borrowing cost decreased to 5.3% in the current
period from 6.6% in the prior year period. The average amount of debt
outstanding decreased during the current period to $163.1 million from $166.5
million during the prior year period.

Page 22

LOSS FROM DERIVATIVE VALUATION FLUCTUATIONS. The adjustments to fair values of
interest rate cap agreements during the current period resulted in a loss of $.1
million compared to a loss of $.4 million in the prior year period.

INCOME TAXES. The Company's effective tax rate for the period ended June 30,
2002 was 35.9% as compared to 40.3% for the period ended June 30, 2001.
Excluding goodwill amortization and the related tax effects in the prior year
period, the Company's comparable consolidated effective tax rate was 36.2% for
the prior year period.

LIQUIDITY AND CAPITAL RESOURCES
- --------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES. Net cash provided by operating activities
of continuing operations was $24.9 million for the six months ended June 30,
2002 (the "current period").

CASH FLOWS FROM INVESTING ACTIVITIES. An increase in the Company's investment in
pawn loans and cash advances during the current quarter required $1.9 million of
cash. Additionally, the Company invested $5.8 million in purchases of property
and equipment during the current period for property improvements, the
remodeling of selected operating units and additions to computer systems for
lending operations. During the current period, the Company acquired two lending
locations for $1.0 million.

Management anticipates that capital expenditures for the remainder of
2002 will be approximately $6.0 million. These expenditures will primarily
relate to an estimated 5 to 10 new lending locations, the remodeling of selected
operating units, and enhancements to information systems. The new lending
locations will mostly occur through the acquisition of existing locations.

CASH FLOWS FROM FINANCING ACTIVITIES. The Company used cash to make payments of
$17.7 million on debt obligations in connection with unsecured notes and capital
leases, $.6 million for dividends, and $1.2 million for the purchase of treasury
shares. On October 26, 2000, the Company announced that its Board of Directors
authorized management to purchase up to one million shares of its common stock
in the open market. Under this authorization, the Company purchased 176,700
shares for an aggregate amount of $1.2 million during the current period. On
July 25, 2002, the Company announced that its Board of Directors had authorized
management to repurchase up to one million shares of its stock on the open
market. Purchases will be made from time to time and it is expected that funding
will come from operating cash flow.

At June 30, 2002, $95 million was outstanding on the Company's $150
million U.S. line of credit. In addition, the Company's (pound)20 million
(approximately $30.6 million at June 30, 2002) multi-currency line of credit in
the United Kingdom had balances outstanding of (pound)2.8 million (approximately
$4.2 million at June 30, 2002) and SEK 53.5 million (approximately $5.8 million
at June 30, 2002) related to operations in the United Kingdom and Sweden,
respectively.

During August 2002, the Company issued $42,500,000 of 7.20% senior
unsecured notes, due August 2009. The notes are payable in five equal annual
payments beginning August 2005. The Company also refinanced its U.S. line of
credit during August 2002, with a $90,000,000 senior unsecured revolving line of
credit maturing August 2005. Interest on the line of credit will be charged at
the Company's option at either LIBOR (1.875% at June 30, 2002) plus a margin or
at the Agent's base rate. The margin on the line of credit varies from 1.25% to
2.50%, depending on the Company's ratio of indebtedness to cash flow as defined
in the agreement. Net proceeds received under these agreements will be used to
reduce existing indebtedness, and for general

Page 23

corporate purposes. The Company is in compliance with all covenants or other
requirements set forth in the debt agreements.

The Company has received a commitment to extend its multi-currency line
of credit for one year to April 30, 2004. The terms of this line of credit
remain essentially unchanged, with the exception of a reduction in the maximum
amount to L.15,000,000 (approximately $23.0 million at June 30, 2002) from
L.20,000,000 (approximately $30.6 million at June 30, 2002).

Management believes that borrowings available under these credit
facilities, cash generated from operations and current working capital of $177.7
million should be sufficient to meet the Company's anticipated future capital
requirements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- --------------------------------------------------------------------------------

Market risks relating to the Company's operations result primarily from
changes in interest rates, foreign exchange rates, and gold prices. The Company
does not engage in speculative or leveraged transactions, nor does it hold or
issue financial instruments for trading purposes. There have been no material
changes to the Company's exposure to market risks since December 31, 2001.

Page 24

DOMESTIC LENDING OPERATIONS
- --------------------------------------------------------------------------------
(Dollars in thousands)

The following table sets forth selected financial data for the Company's
domestic lending operations as of June 30, 2002 and 2001, and for the three
months then ended.

Page 25

DOMESTIC LENDING OPERATIONS
- --------------------------------------------------------------------------------
(Dollars in thousands)

The following table sets forth selected financial data for the Company's
domestic lending operations as of June 30, 2002 and 2001, and for the six months
then ended.

Page 26

FOREIGN LENDING OPERATIONS
- --------------------------------------------------------------------------------
(Dollars in thousands)

The following table sets forth selected consolidated financial data in U.S.
dollars for Harvey & Thompson, Ltd. and Svensk Pantbelaning as of June 30, 2002
and 2001, and for the three months then ended, using the following currency
exchange rates:

Page 27

FOREIGN LENDING OPERATIONS
- --------------------------------------------------------------------------------
(Dollars in thousands)

The following table sets forth selected consolidated financial data in U.S.
dollars for Harvey & Thompson, Ltd. and Svensk Pantbelaning as of June 30, 2002
and 2001, and for the six months then ended, using the following currency
exchange rates:

Page 28

CAUTIONARY STATEMENT REGARDING RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE
RESULTS
- --------------------------------------------------------------------------------

This quarterly report, including management's discussion and analysis, contains
statements that are forward-looking, as that term is defined by the Private
Securities Litigation Reform Act of 1995 or by the Securities and Exchange
Commission in its rules. The Company intends that all forward-looking statements
be subject to the safe harbors created by these laws and rules. When used in
this quarterly report, the words "believes", "estimates", "plans", "expects",
"anticipates", and similar expressions as they related to the Company or its
management are intended to identify forward-looking statements. All
forward-looking statements are based on current expectations regarding important
risk factors. 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 expressed in the forward-looking statements. Accordingly, actual
results may differ materially from those expressed in the forward-looking
statements, and such statements should not be regarded as a representation by
the Company or any other person that the results expressed in the statements
will be achieved. Important risk factors include, but are not limited to, the
following:

o Changes in customer demand for the Company's products and specialty
financial services;

o The actions of third-parties who offer products and services at the
Company's locations;

o The ability of the Company to open and acquire new operating units in
accordance with its plans;

o Changes in competition from various sources such as banks, savings and
loans, short-term consumer lenders, and other similar financial
services entities, as well as retail businesses that offer products
and services offered by the Company;

o Changes in economic conditions;

o Real estate market fluctuations;

o Interest rate fluctuations;

o Changes in the capital markets;

o Changes in tax and other laws and governmental rules and regulations
applicable to the specialty financial services industry;

o Other risks indicated in the Company's filings with the Securities and
Exchange Commission; and

o Other factors discussed under Quantitative and Qualitative Disclosures
about Market Risk in the Company's 2001 Annual Report to Stockholders.

Page 29

PART II

Item 1. LEGAL PROCEEDINGS

See Note 10 of Notes to Consolidated Financial Statements

Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Not Applicable

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On April 24, 2002, the Company's Annual Meeting of Shareholders was
held. All of the nominees for director identified in the Company's Proxy
Statement, filed pursuant to Regulation 14A under the Securities Exchange Act of
1934, were elected at the meeting to hold office until the next Annual Meeting
or until their successors are duly elected and qualified. The shareholders
ratified the Company's selection of independent auditors. There was no other
business brought before the meeting that required shareholder approval. Votes
were cast in the matters described below as follows (there were no broker
non-votes or abstentions other than those listed below):

(a) Election of directors

Page 30

(b) Ratification of Independent Auditors

For - 22,017,406
Against - 262,787
Abstain - 4,631

Item 5. OTHER INFORMATION

Not Applicable

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

None

(b) Reports on Form 8-K

None

Page 31

SIGNATURE

Pursuant to the requirements 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.

CASH AMERICA INTERNATIONAL, INC.
--------------------------------------
(Registrant)

By: /s/ Thomas A. Bessant, Jr.
----------------------------------
Thomas A. Bessant, Jr.
Executive Vice President and
Chief Financial Officer

Date: August 14, 2002

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