Cash America 2010 Annual Report Download - page 50

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The Company may be unable to protect its proprietary technology or keep up with that of its competitors.
The success of the Company’s business, particularly its online lending business, depends to a significant
degree upon the protection of its software and other proprietary intellectual property rights. The Company may be
unable to deter misappropriation of its proprietary information, detect unauthorized use or take appropriate steps to
enforce its intellectual property rights. In addition, competitors could, without violating the Company’s proprietary
rights, develop technologies that are as good as or better than its technology. The Company’s failure to protect its
software and other proprietary intellectual property rights or to develop technologies that are as good as its
competitors’ could put the Company at a disadvantage to its competitors. Any such failures could have a material
adverse effect on the Company’s business.
Some of the Company’s debt agreements contain financial covenants and other restrictions that may limit its ability
to operate its business.
Some of the Company’s debt agreements contain various restrictive covenants, compliance with which is
essential to continued credit availability. These restrictive covenants, among other things, restrict the Company’s
ability to:
•incur additional debt;
•incur or permit certain liens to exist;
•make certain investments;
•merge or consolidate with, or convey, transfer, lease or dispose of all of its assets to, another company;
•make certain dispositions;
•make certain payments, including dividend payments; and
•engage in certain transactions with affiliates.
Some of the Company’s debt agreements also require the Company to maintain certain financial ratios. The
covenants and restrictions contained in the debt agreements could limit the Company’s ability to fund its business,
make capital expenditures, and make acquisitions or other investments in the future. Any failure to comply with any of
these financial and other affirmative and negative covenants would constitute an event of default under the debt
agreements, entitling the lenders to, among other things, terminate future credit availability under the agreement,
and/or increase the interest rate on outstanding debt, and/or accelerate the maturity of outstanding obligations under
that agreement. Any such default could materially adversely affect the Company’s business, prospects, results of
operations and financial condition and could impair the Company’s ability to continue current operations.
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. The Company’s results
of operations and certain of its 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 operating results may differ
materially from expectations, and the Company may record significant gains or losses on the remeasurement of
intercompany balances.
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