Cash America 2015 Annual Report Download - page 23

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This decrease significantly reduced the proceeds and gross profit from the disposition of gold through commercial
sales, and, as a result, the Company has shifted its strategy to place a greater emphasis on retail disposition of
merchandise and now relies less on the disposition of commercial merchandise due to the prevailing lower market
price for gold. An additional significant and sustained decline in gold prices could result in decreases in the value of
collateral securing outstanding pawn loans, in the balance of pawn loans secured by gold jewelry, in inventory
valuations, and in commercial merchandise sales and could have a Material Adverse Effect.
Negative public perception of the Company’s business and its business practices could cause demand for the
Company’s products to significantly decrease.
In recent years, consumer advocacy groups and some media reports have advocated governmental action to
prohibit or place severe restrictions on consumer loans. The fees and/or interest charged by the Company for
consumer loans and others in the industry attract media publicity about the industry and can be perceived as
controversial because the focus is typically on the Annual Percentage Rate charged to a consumer for these types of
loans, which is compared unfavorably to the interest typically charged by banks to consumers with top-tier credit
histories. If the negative characterization of the types of loans that the Company offers becomes increasingly
accepted by consumers, demand for any or all of the Company’s loan products could significantly decrease, which
could have a Material Adverse Effect. Additionally, if the negative characterization of these types of loans is
accepted by legislators and regulators, even if such negative perceptions are inaccurate, attributable to conduct by
third parties not affiliated with the Company (such as other industry members), or attributable to matters not specific
to the industry, the Company could become subject to more restrictive laws and regulations applicable to the
consumer loan products offered by the Company that could impair the Company’s ability to offer consumer loans.
In addition, the Company’s ability to attract and retain customers is highly dependent upon the external
perceptions of its business, including its level of service, trustworthiness, business practices, financial condition and
other subjective qualities. Negative perceptions or publicity regarding these or other similar matters-even if related
to seemingly isolated incidents or to practices not specific to pawn loans or consumer loans, such as debt collection,
could erode trust and confidence and damage the Company’s reputation among existing and potential customers,
which could make it difficult for the Company to attract new customers and retain existing customers and could
significantly decrease the demand for the Company’s products or services, any of which could have a Material
Adverse Effect.
Some of the Company’s debt agreements contain financial covenants and other restrictions that may limit the
Company’s ability to operate its business, and failure to satisfy the Company’s debt obligations could have a
Material Adverse Effect.
As of December 31, 2015, the Company had $211.6 million total debt outstanding, as more fully described
under “Item 8. Financial Statements and Supplementary Data—Note 11.” Some of the Company’s debt agreements
contain various restrictive covenants, compliance with which is essential to continued credit availability. If the
Company is unable to generate sufficient cash flow or otherwise obtain funds necessary to make required payments
on these debt obligations or if it is in breach of the covenants contained in the debt agreements, it would default
under the terms of the applicable agreement or indenture. These restrictive covenants, among other things, restrict
the Company’s ability to:
• incur additional debt;
• incur or permit certain liens to exist;
• make certain investments;
• merge or consolidate with or into, or convey, transfer, lease or dispose of all or substantially all of its
assets to, another company;
• make certain dispositions;
• make certain payments; and
• engage in certain transactions.
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