Cash America 2011 Annual Report Download - page 56

25
jewelry. Any such change in the value of gold could materially adversely affect the Company’s business, prospects,
results of operations and financial condition.
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 consumer loan 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 online lending consumer loan 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 or to have the ability to provide their products and services, could cause the
Company to lose customers and substantially decrease the revenues and earnings of the Company’s consumer loan
business. The Company offers other services provided by various third-party vendors available to its customers. If a
third-party provider fails to provide its product or service, does not maintain its quality and consistency or fails to have
the ability to provide their products and services, 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.
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 consumer loan operations of the Company and the products it offers.
If the Company’s allowance for losses and liability for estimated losses on third-party lender-owned consumer loans
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 5,” the Company
utilizes a variety of underwriting criteria, monitors the performance of its consumer loan portfolios and maintains either
an allowance or liability for estimated losses on consumer loans (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 consumer loans was $63.1 million at December 31, 2011, and the
liability for estimated losses on third-party lender-owned consumer loans was $3.1 million at December 31, 2011. 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.
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, consumer loan companies, credit service organizations, online lenders, consumer
finance companies and other financial institutions that serve the Company’s primary customer base. Many other