Cash America 2011 Annual Report Download - page 122

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
91
Operations and Administration Expenses
Operations expenses include expenses incurred for occupancy, marketing and other charges that are directly
related to the retail services and e-commerce operations. These costs are incurred within the retail services locations
and the Company’s call centers for customer service and collections. In addition, costs related to management
supervision, oversight of locations and other costs for the oversight of the Company’s retail services locations are
included in operations expenses. Administration expenses include expenses incurred for personnel and related
expenses for more general activities, such as accounting, information systems management, government relations,
regulatory oversight and compliance and legal directly related to corporate administrative functions.
Marketing Expenses
Marketing expense consists of online marketing costs such as sponsored search and advertising on social
networking sites, and offline marketing costs such as television, radio and print advertising. In addition, marketing
expense includes lead purchase costs paid to marketers in exchange for providing leads to potential customers
interested in using the Company’s services. Online marketing and lead purchase costs are expensed as incurred. The
production costs associated with offline marketing are expensed as incurred. Other offline marketing costs are
expensed over the media campaign period. The Company also has an agreement with an independent third party
pursuant to which it pays a portion of the revenue received from the customers referred to the Company by such third
party. These expenses are included in “Operating expenses” on the consolidated statements of income.
Stock-Based Compensation
The Company accounts for its stock-based employee compensation plans in accordance with ASC 718-10-30,
Compensation – Stock Compensation (“ASC 718-10-30”). In accordance with ASC 718-10-30, the Company
recognizes compensation expense over the remaining vesting periods for stock-based awards. For performance-
based stock awards, compensation expense is originally based on the number of shares that would vest if the Company
achieved the level of performance that management estimates is the most probable outcome at the grant date.
Throughout the requisite service period, management monitors the probability of achievement of the performance
condition and adjusts stock-based compensation expense if necessary.
Equity Securities
The Company accounts for its marketable and non-marketable equity securities in accordance with ASC 323-
10, Investments – Equity Method and Joint Ventures and ASC 325-20, Investments – Other – Cost Method
Investments. The Company’s marketable securities are classified as available-for-sale and unrecognized gains and
losses, net of tax, are recorded in “Accumulated other comprehensive income (loss)” in the consolidated statements of
equity. The Company’s non-marketable equity securities are recorded on a cost basis. The Company evaluates
marketable and non-marketable equity securities for impairment whenever the facts or circumstances indicate that the
carrying value may be impaired. If an impairment of an equity security is determined to be other than temporary, the
cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-
than-temporary-impairment is identified. Marketable securities are held in “Prepaid expenses and other assets” and
non-marketable equity securities are held in “Other assets” in the consolidated balance sheets.
Investments in Unconsolidated Subsidiaries
The Company records investments in unconsolidated companies initially at cost and subsequently adjusts them
for equity in earnings and cash contributions and distributions. Earnings on unconsolidated investments are recorded
under the equity method of accounting, in “Equity in loss (income) of unconsolidated subsidiary” in the consolidated
statements of income. Investments in unconsolidated subsidiaries are held in “Other assets” in the consolidated
balance sheets.