Cash America 2015 Annual Report Download - page 95

and the Company’s call centers for customer service and collections. Administration expenses include expenses
related to corporate service functions. Operations and administration expenses include expenses incurred for
personnel, occupancy and other charges. Personnel expenses include salaries and wages, payroll taxes, incentive
expenses and health insurance. Occupancy expenses include rent, property taxes, insurance, utilities, data
communication expense and maintenance. Other expenses include marketing, legal, selling, travel and other office
expenses.
Beginning in the first quarter of 2015, costs related to corporate office-based management supervision of
the Company’s locations were reclassified from operations expense to administration expense to better align
expenses with the Company’s current operating structure. Amounts in all prior periods have been reclassified to
conform to this current presentation.
Marketing expenses consist of marketing costs such as television, radio and print advertising and other
marketing costs. Marketing costs, including the production costs associated with other marketing initiatives are
expensed as incurred. These expenses are included in “Operations and administration expenses” in the consolidated
statementsofincome.Marketingexpenseswere$6.3million,$8.0millionand$12.4million,respectively, for the
yearsendedDecember31,2015,2014and2013,respectively.
Stock-Based Compensation
The Company accounts for its stock-based employee compensation plans in accordance with ASC 718,
Compensation—Stock Compensation (“ASC 718”). The Company recognizes compensation expense over the
requisite service period, which is in line with the applicable vesting period for each stock-based award. For
performance-basedstockawards,compensationexpenseisoriginallybasedonthenumberofsharesthatwouldvest
if the Company achieved the level of performance that management estimates is the most probable outcome at the
grant date. Throughout the requisite service period, management monitors the probability of achievement of the
performance condition and adjusts stock-based compensation expense if necessary.
Income Taxes
The provision for income taxes is based on income before income taxes as reported for financial statement
purposes. Deferred income taxes are provided for in accordance with the assets and liability method of accounting
for income taxes in order to recognize the tax effects of temporary differences between financial statement and
income tax accounting.
The Company performs an evaluation of the recoverability of its deferred tax assets on a quarterly basis.
The Company establishes a valuation allowance if it is more likely than not (greater than 50 percent) that all or
some portion of the deferred tax asset will not be realized. The Company analyzes several factors, including the
nature and frequency of operating losses, the Company’s carryforward period for any losses, the reversal of future
taxable temporary differences, the expected occurrence of future income or loss and the feasibility of available tax
planning strategies to protect against the loss of deferred tax assets.
The Company accounts for uncertainty in income taxes in accordance with ASC 740, Accounting for
Uncertainty in Income Taxes (“ASC 740”). ASC 740 requires that a more-likely-than-not threshold be met before
the benefit of a tax position may be recognized in the consolidated financial statements and prescribes how such
benefit should be measured. It also provides guidance on recognition adjustment, classification, accrual of interest
and penalties, accounting in interim periods, disclosure and transition. See Note 12 for further discussion.
It is the Company’s policy to classify interest and penalties on income tax liabilities as interest expense and
operations and administration expense, respectively.
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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