Cash America 2013 Annual Report Download - page 179

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
154
liability for third-party lender-owned consumer loans under Level 3 inputs. The fair value of these liabilities 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 of these liabilities approximated the fair value.
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, 2013, 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, 2013, 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, 2013, the 2029 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 2029
Convertible Notes, thereby increasing the value of the instrument for noteholders.
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22. Closure of Short-term Consumer Loan Retail Services Locations in Texas
Since 2011, restrictive City ordinances that have been passed have had the effect of reducing the profitability and
the volume of short-term consumer loans the Company offers to customers in Texas, and the Company has experienced a
related decline in consumer loans in many of the Company’s Texas retail services locations that offer this product as their
primary source of revenue. As a result, the Company decided to close a total of 36 of these retail services locations (the
“Texas Consumer Loan Store Closures”). The Texas Consumer Loan Store Closures were completed as of December 31,
2013. The Company incurred charges of approximately $1.4 million for the year ended December 31, 2013 in connection
with these closures.
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23. Reorganization of Mexico-based Pawn Operations and Purchase of Noncontrolling Interest
On September 24, 2012, the Company's Board of Directors approved a plan to significantly modify the business
plan and strategy of the Company's Mexico-based pawn operations, which comprise the foreign component of its retail
services segment. The Company reorganized these operations to include only full-service pawn locations that offer pawn
loans based on the pledge of general merchandise and jewelry-based collateral and discontinued the operations of 148 of its
Mexico-based pawn locations that primarily offered pawn loans based on the pledge of jewelry-based collateral (“the
Mexico Reorganization”). The Mexico Reorganization was substantially completed as of December 31, 2012. As of
December 31, 2013, the Company was operating 47 full-service pawn locations in Mexico. The Mexico Reorganization
reflects management’s decision to modify its strategy in Mexico to achieve profitability in its Mexico-based pawn
operations and to evaluate the potential to expand its services to customers in Latin American markets.
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In connection with the Mexico Reorganization, the Company incurred charges for employee termination costs, lease
termination costs, asset impairments, loss on sale of assets, the recognition of a deferred tax asset valuation allowance,
uncollectible receivables and other charges. The Company recognized $28.9 million of charges related to the Mexico
Reorganization during the year ended December 31, 2012.