Cash America 2009 Annual Report Download - page 48

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conditions deteriorate in any of these countries, the Company’s ability to continue making short-term
unsecured cash advance loans in such countries could be limited and could reduce the profitability of those
foreign operations.
A decreased demand for the Company’s products and specialty financial services and failure of the
Company to adapt to such decrease could adversely affect results of operations and financial condition.
Although the Company’s products and services are a staple of its customer base, the demand for a
particular product or service may decrease due to a variety of factors, such as regulatory restrictions that
reduce customer access to particular products, the availability of competing products or changes in customers’
financial conditions. Should the Company fail to adapt to a significant change in its customers’ demand for,
or access to, its products, the Company’s revenues could decrease significantly. Even if the Company does
make adaptations or introduce new products to fulfill customer demand, customers may resist or may reject
products whose adaptations make them less attractive or less available. In any event, the effect of any product
change on the results of the Company’s business may not be fully ascertainable until the change has been in
effect for some time. In particular, the Company has changed, and will continue to change, some of the cash
advance operations of the Company and the products it offers.
The failure of third-parties who provide products, services or support to the Company to maintain their
products, services or support could disrupt Company operations or result in a loss of revenue.
The Company’s cash advance revenues depend in part on the willingness and ability of unaffiliated
third-party lenders to make loans to customers and with other third parties to provide services to facilitate
lending and loan underwriting in both the storefront and internet cash advance channels. The loss of the
relationship with any of these third parties, and an inability to replace them or the failure of these third parties
to maintain quality and consistency in their programs or services, could cause the Company to lose customers
and substantially decrease the revenues and earnings of the Company’s cash advance business. The Company
makes other non-cash advance products and services provided by various third-party vendors available to its
customers. If a third-party provider fails to provide its product or service or to maintain its quality and
consistency, the Company could lose customers and related revenue from those products or services. The
Company also uses third parties to support and maintain certain of its communication systems and
computerized point-of-sale and information systems. The failure of such third parties to fulfill their support
and maintenance obligations could disrupt the Company’s operations.
If the Company’s allowance for losses and accruals for losses on third-party lender-owned cash advances
are not adequate to absorb losses, the Company’s results of operations and financial condition may be
adversely affected.
As more fully described under “Item 8. Financial Statements and Supplementary Data—Note 4,” the
Company utilizes a variety of underwriting criteria, monitors the performance of its cash advance portfolios
and maintains either an allowance or accrual for losses on cash advances (including fees and interest) at a
level estimated to be adequate to absorb credit losses inherent in the receivables portfolio and expected losses
from CSO guarantees. The allowance deducted from the carrying value of cash advances was $27.4 million
at December 31, 2009, and the accrual for losses on third-party lender-owned cash advances was $2.9 million
at December 31, 2009. These reserves are estimates, and if actual loan losses are materially greater than the
Company’s reserves, the Company’s results of operations and financial condition could be adversely affected.