Cash America 2009 Annual Report Download - page 148

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
120
18. Fair Values of Financial Instruments
The carrying amounts and estimated fair values of financial instruments at December 31, 2009 and
2008 were as follows (in thousands):
2009 2008
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
Financial assets:
Cash and cash equivalents $46,004 $46,004 $30,005 $30,005
Pawn loans 188,312 188,312 168,747 168,747
Cash advances, net 108,789 108,789 83,850 83,850
Interest rate cap 143 143 69 69
Financial liabilities:
Bank lines of credit 189,663 185,623 281,654 281,654
Senior unsecured notes 138,000 133,370 156,500 146,351
2009 Convertible Notes 101,520 178,825 - -
Cash and cash equivalents bear interest at market rates and have maturities of less than 90 days.
Pawn loans have relatively short maturity periods depending on local regulations, generally 90 days or less.
Cash advance loans generally have a loan term of seven to 45 days. Since cash and cash equivalents, pawn
loans and cash advance loans have maturities of less than 90 days, their fair value approximates their carrying
value. Finance and service charge rates are determined by regulations and bear no valuation relationship to
the capital markets’ interest rate movements. Generally, pawn loans may only be resold to a licensed
pawnbroker.
The fair values of the Company’s 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. The
Company’s senior unsecured notes have a lower fair market value than the carrying value due to the
difference in yield when compared to recent issuances of similar senior unsecured notes. The 2009
Convertible notes have a higher fair value than carrying value due to the Company’s stock price as of
December 31, 2009 exceeding the applicable conversion price for the 2009 Convertible Notes, thereby
increasing the value of the instrument for bondholders.
19. Fair Value Measurements
The Company adopted the provisions of ASC 820-10, Fair Value Measurements and Disclosures, on
January 1, 2008 for financial assets and liabilities, and on January 1, 2009 for non-financial assets that are
recognized or disclosed in the financial statements on a nonrecurring basis. The adoption of this
pronouncement did not have a material effect on the Company’s financial position or results of operations.
ASC 820-10-05, Overview and Background, defines fair value to be the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date and emphasizes that fair value is a market-based measurement, not an entity-specific measurement. It
establishes a fair value hierarchy and expands disclosures about fair value measurements in both interim and
annual periods. ASC 820-10-50, Disclosure (“ASC 820-10-50”), enables the reader of the financial
statements to assess the inputs used to develop fair value measurements by establishing a hierarchy for
ranking the quality and reliability of the information used to determine fair values. ASC 820-10-50 requires