Cash America 2012 Annual Report Download - page 152

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
127
As of December 31, 2012, borrowings under the Company’s Domestic and Multi-currency Line consisted of
three pricing tranches with maturity dates ranging from two to 31 days, and as of December 31, 2011, borrowings
under the Company’s Domestic and Multi-currency Line consisted of multiple pricing tranches with maturity dates
ranging from three to 31 days. However, the Company routinely refinances borrowings pursuant to the terms of its
Domestic and Multi-currency Line. Therefore, these borrowings are reported as part of the applicable line of credit and
as long-term debt.
In connection with the Domestic and Multi-currency Line and the 2015 Variable Rate Notes, the Company
incurred approximately $2.6 million for issuance costs in 2011, which primarily consisted of underwriting fees, legal
and other professional expenses. These costs are being amortized over a period of three years and are included in
“Other assets” in the Company’s consolidated balance sheets.
Series A and Series B Notes
On August 28, 2012, the Company issued and sold a total of $52.0 million in long-term notes in two series,
including $47.0 million aggregate principal amount of its 6.00% Series A Senior Notes due August 28, 2019 (the
“Series A Notes”) and $5.0 million aggregate principal amount of its 6.58% Series B Senior Notes due August 28,
2022 (the “Series B Notes,” and together with the Series A Notes, the “Notes”). The Notes were sold in a private
placement pursuant to a Note Purchase Agreement dated August 28, 2012 by and among the Company and certain
purchasers listed therein. The Notes are senior unsecured obligations of the Company. The Series A Notes are payable
in five annual installments of $9.4 million beginning August 28, 2015, and the Series B Notes are payable in seven
annual installments of approximately $0.7 million beginning August 28, 2016. In addition, the Company may, at its
option, prepay all or a minimum portion of $1.0 million of the Notes at a price equal to the principal amount thereof
plus a make-whole premium and accrued interest. The Notes are guaranteed by all of the Company’s U.S. subsidiaries.
The Company used a portion of the net proceeds of the offering to repay existing indebtedness, including outstanding
balances under the Domestic and Multi-Currency Line, and used the remaining portion for general corporate purposes.
2009 Convertible Notes
On May 19, 2009, the Company completed the offering of $115.0 million aggregate principal amount of
5.25% Convertible Senior Notes due May 15, 2029 (the “2009 Convertible Notes”). The 2009 Convertible Notes are
senior unsecured obligations of the Company. The 2009 Convertible Notes bear interest at a rate of 5.25% per year,
payable semi-annually on May 15 and November 15 of each year. The 2009 Convertible Notes will be convertible, in
certain circumstances, at an initial conversion rate of 39.2157 shares per $1,000 aggregate principal amount of 2009
Convertible Notes (which is equivalent to a conversion price of approximately $25.50 per share), subject to adjustment
upon the occurrence of certain events, into either, at the Company’s election: (i) shares of common stock or (ii) cash up
to their principal amount and shares of its common stock with respect to the remainder, if any, of the conversion value
in excess of the principal amount. The Company may not redeem the 2009 Convertible Notes prior to May 14, 2014.
The Company may, at its option, redeem some or all of the 2009 Convertible Notes on or after May 15, 2014 solely for
cash. Holders of the 2009 Convertible Notes will have the right to require the Company to repurchase some or all of
the outstanding 2009 Convertible Notes, solely for cash, on May 15, 2014, May 15, 2019 and May 15, 2024 at a price
equal to 100% of the principal amount plus any accrued and unpaid interest.
As of December 31, 2012 and 2011, the carrying amount of the 2009 Convertible Notes was $110.2 million
and $107.1 million, respectively, and the unamortized discount was $4.8 million and $7.9 million, respectively. The
discount is being amortized to interest expense over a period of five years, through the first redemption date of May
19, 2014. The total interest expense recognized was $9.2 million, $8.9 million and $8.7 million for the years ended
December 31, 2012, 2011 and 2010, respectively, of which $3.2 million, $2.9 million and $2.7 million represented the
non-cash amortization of the discount, and $6.0 million, $6.0 million and $6.0 million represented the contractual
interest expense for the years ended December 31, 2012, 2011 and 2010, respectively. The 2009 Convertible Notes
have an effective interest rate of 8.46% at both December 31, 2012 and 2011, respectively. As of December 31, 2012,
the if-converted value of the 2009 Convertible Notes exceeds the principal amount by approximately $59.7 million.