Cash America 2013 Annual Report Download - page 178

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
153
Carrying Value Estimated Fair Value
December 31, December 31, Fair Value Measurement Using
2012 2012 Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents $ 63,134 $ 63,134 $ 63,134 $ - $ -
Pawn loans 244,640 244,640 - - 244,640
Short-term loans and
line of credit accounts, net(a) 184,908 184,908 - - 184,908
Installment loans, net(a) 104,510 104,510 - - 104,510
Pawn loan fees and service
charges receivable 48,991 48,991 - - 48,991
Total $ 646,183 $ 646,183 $ 63,134 $ - $ 583,049
Financial liabilities:
Liability for estimated
losses on consumer loans
guaranteed by the Company $ 3,498 $ 3,498 $ - $ - $ 3,498
Domestic and Multi-currency
Line of credit 301,011 309,969 - 309,969 -
Senior unsecured notes 167,122 165,961 - 165,961 -
2029 Convertible Notes 110,197 186,300 - 186,300 -
Total $ 581,828 $ 665,728 $ - $ 662,230 $ 3,498
(a)a
a
Short-term loans, line of credit accounts and installment loans are included in "Consumer loans, net" on the consolidated
balance sheets.
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.
Short-term loans, line of credit accounts and installment 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 fair value of these loans include
historical loss rates, recent default trends and estimated remaining loan terms; therefore, the carrying value approximated
the fair value. Short-term loans and line of credit accounts have relatively short maturity periods that are generally 12
months or less. The fair value of unsecured and secured installment loans are estimated using a discounted cash flow
analysis, which considers interest rates offered for loans with similar terms to borrowers of similar credit quality. The
carrying values of the Company’s installment loans approximate the fair value of these loans.
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.
In connection with its CSO programs, the Company guarantees consumer loan payment obligations to unrelated
third-party lenders for short-term loans and secured auto-equity loans and is required to purchase any defaulted loans it has
guaranteed. The estimated fair value of the liability for estimated losses on consumer loans guaranteed by the Company of
$3.1 million and $3.5 million as of December 31, 2013 and 2012, respectively. The Company measures the fair value of its