Cash America 2012 Annual Report Download - page 169

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
144
Carrying Value Estimated Fair Value
December 31, December 31, Fair Value Measurement Using
2011 2011 Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents $ 62,542 $ 62,542 $ 62,542 $ - $ -
Pawn loans 253,519 253,519 - - 253,519
Consumer loans, net 222,778 222,778 - - 222,778
Pawn loan fees and service
charges receivable 48,003 48,003 - - 48,003
Total $ 586,842 $ 586,842 $ 62,542 $ - $ 524,300
Financial liabilities:
Domestic and Multi-currency
Line of credit $ 280,839 $ 291,983 $ - $ 291,983 $ -
Senior unsecured notes 149,394 147,721 - 147,721 -
2009 Convertible Notes 107,058 220,642 - 220,642 -
Total $ 537,291 $ 660,346 $ - $ 660,346 $ -
Cash and cash equivalents bear interest at market rates and have maturities of less than 90 days.
Pawn loans generally have maturity periods of less than 90 days. If a pawn loan defaults, the Company
disposes of the collateral. Historically, collateral has sold for an amount in excess of the principal amount of the loan.
Consumer loans are carried in the consolidated balance sheet net of the allowance for estimated loan losses,
which is calculated by applying historical loss rates combined with recent default trends to the gross consumer loan
balance. The unobservable inputs used to calculate the carrying value of consumer loans include historical loss rates
and recent default trends. Consumer loans have relatively short maturity periods that are generally 12 months or less.
Pawn loan fees and service charges receivable are accrued ratably over the term of the loan based on the
portion of these pawn loans deemed collectible. The Company uses historical performance data to determine
collectability of pawn loan fees and service charges receivable. Additionally, pawn loan fee and service charge rates
are determined by regulations and bear no valuation relationship to the capital markets’ interest rate movements.
The Company measures the fair value of long-term debt instruments using Level 2 inputs. The fair values of
the Company’s long-term debt instruments are estimated based on market values for debt issues with similar
characteristics or rates currently available for debt with similar terms. As of December 31, 2012, the Company’s
Domestic and Multi-currency Line of credit had a higher fair market value than the carrying value due to the difference
in yield when compared to recent issuances of similar types of credit. As of December 31, 2012, the Company’s senior
unsecured notes had a lower fair market value than the carrying value due to the difference in yield when compared to
recent issuances of similar senior unsecured notes. As of December 31, 2012, the 2009 Convertible Notes had a higher
fair value than carrying value due to the Company’s stock price as of each period presented above exceeding the
applicable conversion price for the 2009 Convertible Notes, thereby increasing the value of the instrument for
bondholders.
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23. Quarterly Financial Data (Unaudited)
The Company’s operations are subject to seasonal fluctuations. Net income tends to be highest during the first
and fourth calendar quarters. The first quarters benefit from the heavy repayment of pawn loans and consumer loans
plus the associated interest and fees on both with tax refund proceeds received by customers in the first quarter each
year, and an increase in merchandise disposition activities. The fourth quarter benefits from the seasonally highest