Cash America 2011 Annual Report Download - page 58

27
A sustained deterioration in the economy could reduce demand for the Company’s products and services and result
in reduced earnings.
A sustained deterioration in the economy could cause deterioration in the performance of the Company’s pawn
loan or consumer loan portfolios and in consumer demand for pre-owned merchandise such as the merchandise sold in
the Company’s pawnshops. An economic slowdown could result in a decreased number of consumer loans being made
to customers due to higher unemployment or an increase in loan defaults in the Company’s consumer loan products.
During an economic slowdown, the Company could be required to tighten its underwriting standards, which would
likely reduce consumer loan balances, and could face more difficulty in collecting defaulted consumer loans, which
could lead to an increase in loan losses. While the credit risk for much of the Company’s pawn lending is mitigated by
the collateralized nature of pawn lending, a sustained deterioration in the economy could reduce the demand and resale
value of pre-owned merchandise and reduce the amount that the Company could effectively lend on an item of
collateral. Such reductions could adversely affect pawn loan balances, pawn loan redemption rates, inventory balances,
inventory mixes and gross profit margins.
Changes in the Company’s financial condition or a potential disruption in the capital markets could reduce available
capital.
In the past, the Company has accessed the debt capital markets to refinance existing debt obligations and to
obtain capital to finance growth. Efficient access to these markets is critical to the Company’s ongoing financial
success; however, the Company’s future access to the debt capital markets could become restricted due to a variety of
factors, including a deterioration of the Company’s earnings, cash flows, balance sheet quality, or overall business or
industry prospects, a disruption or deterioration in the state of the capital markets or a negative bias toward the
Company’s industry by market participants. Disruptions and volatility in the capital markets may cause banks and other
credit providers to restrict availability of new credit facilities and require higher pricing upon renewal of existing credit
facilities. The Company’s ability to obtain additional financing in the future will depend in part upon prevailing capital
market conditions, and a potential disruption in the capital markets may adversely affect the Company’s efforts to
arrange additional financing on terms that are satisfactory to the Company. If adequate funds are not available, or are not
available on acceptable terms, the Company may not be able to make future investments, take advantage of potential
acquisitions or other opportunities, or respond to competitive challenges and this, in turn, could adversely affect the
Company’s ability to advance its strategic plans. Additionally, if the capital and credit markets experience volatility and
the availability of funds is limited, third parties with whom the Company does business may incur increased costs or
business disruption and this could adversely affect the Company’s business relationships with such third parties.