Cash America 2007 Annual Report Download - page 71

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the future. The Company does not anticipate a significant decline in demand for its services and has
historically been successful in maintaining compliance with and renewing its debt agreements.
The following table summarizes the Company’s contractual obligations of its continuing operations
at December 31, 2007, and the effect such obligations are expected to have on its liquidity and cash flow in
future periods (in thousands):
2008 2009 2010 2011 2012 Thereafter Total
Bank line of credit ......... $ ņ $ ņ $ ņ $ ņ $ 171,777 $ ņ $ 171,777
Other long-term debt...... 8,500 8,500 6,667 8,939 15,939 68,455 117,000
Interest on other long-
term debt (1) ................ 7,356 6,744 6,132 5,724 5,175 13,062 44,193
Non-cancelable leases.... 36,461 29,498 19,688 14,252 8,886 23,856 132,641
Total........................... $ 52,317 $ 44,742 $ 32,487 $ 28,915 $ 201,777 $ 105,373 $ 465,611
(1) Excludes interest obligations under the line of credit agreement. See Note 8 of Notes to Consolidated Financial Statements.
Management believes that the borrowings available ($75.4 million at December 31, 2007) under the
credit facilities, including the flexibility to increase its bank line of credit by $50.0 million, cash generated
from operations and current working capital of $302.3 million should be sufficient to meet the Company’s
anticipated capital requirements. Management intends to monitor the magnitude of the potential earn-out
payments related to the CashNetUSA acquisition and may defer certain non-essential capital investments
until after 2008.
Off-Balance Sheet Arrangements with Third-Party Lenders
The Company arranges for consumers to obtain cash advance products from multiple independent
third-party lenders through the CSO program. As of December 31, 2007, the CSO program was available to
consumers in 319 of the Company’s lending locations and online borrowers located in the states of Florida
and Texas. When a consumer executes a credit services agreement with the Company, the Company agrees,
for a fee payable to the Company by the consumer, to provide a variety of credit services to the consumer,
one of which is to guarantee the consumer’s obligation to repay the loan received by the consumer from the
third-party lender if the consumer fails to do so. The Company discontinued the CSO program in Michigan
in February 2007, and has since offered only cash advances underwritten by the Company to customers in
that state. In January of 2008, the Company began offering a CSO program in the state of Maryland through
its online platform.
For cash advance products originated by third-party lenders, each lender is responsible for
evaluating each of its customers’ applications, determining whether to approve a cash advance based on an
application and determining the amount of the cash advance. The Company is not involved in the lenders’
cash advance approval processes or in determining the lenders’ approval procedures or criteria. At
December 31, 2007, the outstanding amount of active cash advances originated by third-party lenders was
$34.6 million.
Since the Company may not be successful in collecting all amounts funded under the terms of its
guaranty, the Company’s cash advance loss provision includes amounts estimated to be adequate to absorb
credit losses from cash advances in the aggregate cash advance portfolio, including those expected to be
assigned to the Company or acquired by the Company as a result of its guaranty obligations. Accrued losses
of $1.8 million on portfolios owned by the third-party lenders are included in “Accounts payable and
accrued expenses” in the consolidated balance sheets. The Company believes that this amount is adequate
to absorb credit losses from cash advances expected to be assigned to the Company or acquired by the
Company as a result of its guaranty obligations.