Cash America 2012 Annual Report Download - page 113

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LIQUIDITY AND CAPITAL RESOURCES
The Company manages its liquidity and capital positions to satisfy three primary objectives. First, near-term
liquidity is managed to ensure that adequate resources are available to fund the Company’s seasonal working capital
growth, which is driven by demand for the Company’s loan products. Second, longer-term refinancing strategies are
used to manage the Company’s debt refinancing risk, and third, long-term capital strategies are used to provide the
capital necessary to fund the Company’s long-term strategic growth objectives. Near-term liquidity is provided through
operating cash flows and the utilization of borrowings under the Company’s unsecured bank line of credit. Long-term
liquidity is provided through long-term debt financing and the issuance of debt securities. Long-term capital needs are
managed by assessing the growth capital needs of the Company over time and balancing those needs against the internal
and external capital resources available. Longer-term refinancing risk is managed by staggering the Company’s debt
maturities and issuing new long-term debt securities from time to time as market conditions permit.
During 2013, the Company’s Domestic and Multi-currency Line amount will decrease by $100.0 million, from
$380.0 million to $280.0 million. The decrease is scheduled to occur on May 29, 2013. However, the Company is
assessing its long-term debt needs with respect to its line of credit and may obtain additional financing, by entering into
a new domestic line of credit or otherwise, to preserve this additional debt capacity and accommodate new growth.
The Company historically has generated significant cash flow through normal operating activities for funding
both long-term and short-term needs. As a result, operating cash flow is expected to meet the needs of near-term
operating objectives without reliance on short-term credit instruments such as warehouse lines of credit, asset-backed
securities or commercial paper. Management considers additional sources of long-term funding when strategic
transactions, such as large scale acquisitions, are necessary or desirable. Historically, funding for long-term strategic
transactions has been supplemented by the Company’s long-term unsecured bank line of credit or other long-term
security issuances.
As of December 31, 2012, 2011 and 2010, the Company was in compliance with all financial ratios, covenants
and other requirements set forth in its debt agreements. A significant decline in demand for the Company’s products and
services or other unexpected changes in financial condition may result in a violation of the Company’s debt agreements
that could result in an acceleration of the Company’s debt, increase the Company’s borrowing costs, and possibly
adversely affect the Company’s ability to renew its existing bank line of credit or obtain new credit on favorable terms in
the future. The Company does not anticipate a significant decline in demand for its services and has historically been
successful in maintaining compliance with, and renewing, its debt agreements. To the extent the Company experiences
short-term or long-term funding disruptions; the Company has the ability to address these risks through a variety of
adjustments related to the current assets of the business, which predominately have short durations. Such actions could
include the immediate liquidation of jewelry inventory, which is comprised primarily of gold items that would be refined
into pure gold and sold on the open market and adjustments to short-term lending to consumers that would reduce cash
outflow requirements while increasing cash inflows through repayments of consumer loans. Additional alternatives may
include the sale of assets, reductions in capital spending and/or the issuance of debt or equity securities, all of which
could be expected to generate additional liquidity.