Cash America 2009 Annual Report Download - page 51

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are beyond the Company’s control. The failure to execute this expansion strategy would adversely affect the
Company’s ability to expand its business and could materially adversely affect its business, prospects, results
of operations and financial condition.
The Company’s earnings and financial position are subject to changes in the value of gold. A significant
or sudden decline in the price of gold could materially affect the Company’s earnings.
A significant portion of the Company’s pawn loans are secured by gold jewelry. The Company’s
pawn service charges, sales proceeds and ability to dispose of excess jewelry inventory at an acceptable
margin depend on the value of gold. A significant decline in gold prices could result in decreases in
merchandise sales margins, in inventory valuations, in the value of collateral securing outstanding pawn
loans, and in the balance of pawn loans secured by gold jewelry. Any such change in the value of gold could
materially adversely affect the Company’s business, prospects, results of operations and financial condition.
Increased competition from banks, savings and loans, other short-term consumer lenders, and other
entities offering similar financial services, as well as retail businesses that offer products and services
offered by the Company, could adversely affect the Company’s results of operations.
The Company has many competitors to its core lending and merchandise disposition operations. Its
principal competitors are other pawnshops, cash advance companies, credit service organizations, internet
lenders, consumer finance companies and other financial institutions that serve the Company’s primary
customer base. Many other financial institutions or other businesses that do not now offer products or
services directed toward the Company’s traditional customer base, many of whom may be much larger than
the Company, could begin doing so. Significant increases in the number and size of competitors for the
Company’s business could result in a decrease in the number of cash advances or pawn loans that the
Company writes, resulting in lower levels of revenues and earnings in these categories. Furthermore, the
Company has many competitors to its retail operations, such as retailers of new merchandise, retailers of pre-
owned merchandise, other pawnshops, thrift shops, internet retailers and internet auction sites. Increased
competition or aggressive marketing and pricing practices by these competitors could result in decreased
revenues, margins and turnover rates in the Company’s retail operations.
The Company is subject to impairment risk.
At December 31, 2009, the Company had goodwill totaling $493.5 million, consisting of $206.6
million related to the pawn lending segment, $281.5 million related to the cash advance segment and $5.3
million related to the check cashing segment, on its Consolidated Balance Sheets, all of which represent assets
capitalized in connection with the Company’s acquisitions and business combinations. Accounting for
intangible assets requires significant management estimates and judgment. The Company may not realize the
value of these intangible assets. Management performs periodic reviews of the carrying values of the
intangible assets to determine whether events and circumstances indicate that an impairment in value may
have occurred. A variety of factors could cause the carrying value of an intangible asset to become impaired.
Should a review indicate impairment, a write-down of the carrying value of the intangible asset would occur,
resulting in a non-cash charge, which would adversely affect our results of operations and could also lead to
our inability to comply with certain covenants in our financing documents, which could cause a default under
those agreements.
The Company’s foreign operations subject the Company to foreign exchange risk.
The Company is subject to the risk of unexpected changes in foreign currency exchange rates by
virtue of its loans to residents of Australia, Canada and the United Kingdom and its operations in Mexico. Our
results of operations and certain of our intercompany balances associated with the Company’s Australia,
Canada, United Kingdom and Mexico loans are denominated in their respective currencies and are, as a result,
exposed to foreign exchange rate fluctuations. Upon consolidation, as exchange rates vary, net sales and other