Cash America 2012 Annual Report Download - page 58

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•incur or permit certain liens to exist;
•make certain investments;
•merge or consolidate with or into, or convey, transfer, lease or dispose of all or substantially all of its assets
to, another company;
•make certain dispositions;
•make certain payments; and
•engage in certain transactions with affiliates.
Some of the Company’s debt agreements also require the Company to maintain certain financial ratios. The
covenants and restrictions contained in the debt agreements could limit the Company’s ability to fund its business, make
capital expenditures, and make acquisitions or other investments in the future. Any failure to comply with any of these
financial and other affirmative and negative covenants could constitute an event of default under the debt agreements,
entitling the lenders to, among other things, terminate future credit availability under the agreement, and/or increase the
interest rate on outstanding debt, and/or accelerate the maturity of outstanding obligations under that agreement. Any
such default could materially adversely affect the Company’s business, prospects, results of operations and financial
condition and could impair the Company’s ability to continue current operations.
Failure to satisfy the Company’s debt obligations could have a material adverse effect on the Company’s business.
As of December 31, 2012, the Company had $578.3 million total debt outstanding, including the Company’s
line of credit, senior unsecured notes and 2009 Convertible Notes as more fully described under “Item 8. Financial
Statements and Supplementary Data — Note 13.” If the Company is unable to generate sufficient cash flow or otherwise
obtain funds necessary to make required payments on these debt obligations or if it is in breach of the covenants
contained in the debt agreements it would default under the terms of the applicable agreement or indenture. Any such
default could result in an acceleration of the repayment obligations to such lenders as well as the lenders under any of its
other debt agreements under applicable cross default provisions. Any such default could materially adversely affect the
Company’s business, prospects, results of operations and financial conditionand could impair the Company’s ability to
continue current operations.
The Company is subject to impairment risk.
At December 31, 2012, the Company had goodwill totaling $608.2 million, consisting of $397.8 million related
to the retail services segment and $210.4 million related to the e-commerce segment, on its consolidated balance sheets,
all of which represent assets capitalized in connection with the Company’s acquisitions and business combinations. In
addition, at December 31, 2012, the Company had intangible assets, net of accumulated amortization, of $36.5 million,
consisting of $36.3 million related to its retail services segment and $0.2 million related to the e-commerce segment.
Accounting for goodwill and intangible assets requires significant management estimates and judgment. Events may
occur in the future and the Company may not realize the value of its goodwill or intangible assets. Management
performs periodic reviews of the carrying values of its goodwill and intangible assets to determine whether events and
circumstances indicate that an impairment in value may have occurred. A variety of factors could cause the carrying
value of goodwill or an intangible asset to become impaired. Should a review indicate impairment, a write-down of the
carrying value of the goodwill or intangible asset would occur, resulting in a non-cash charge, which could adversely
affect the Company’s results of operations and could also lead to the Company’s inability to comply with certain
covenants in the Company’s financing documents, which could cause a default under those agreements.
The Company may be unable to protect its proprietary technology or keep up with that of its competitors.
The success of the Company’s business, particularly its online lending business, depends to a significant degree
upon the protection of its software and other proprietary intellectual property rights. The Company may be unable to
deter misappropriation of its proprietary information, detect unauthorized use or take appropriate steps to enforce its
intellectual property rights. In addition, competitors could, without violating the Company’s proprietary rights, develop