Cash America 2013 Annual Report Download - page 61

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failure to execute this expansion strategy would adversely affect the Company’s ability to expand its business and could
materially adversely affect its business, prospects, results of operations, financial condition and cash flows.
The Company’s foreign operations subject the Company to foreign exchange risk.
The Company is subject to the risk of unexpected changes in foreign currency exchange rates by virtue of its
loans to residents of Australia, Canada and the United Kingdom and its operations in Mexico. The Company’s results of
operations and certain of its intercompany balances associated with the Company’s Australia, Canada, United Kingdom
and Mexico loans are denominated in their respective currencies and are, as a result, exposed to foreign exchange rate
fluctuations. Upon consolidation, as exchange rates vary, net sales and other operating results may differ materially from
expectations, and the Company may record significant gains or losses on the remeasurement of intercompany balances.
A sustained deterioration in the economy could reduce demand for the Company’s products and services and result
in reduced earnings.
A sustained deterioration in the economy could cause deterioration in the performance of the Company’s pawn
loan or consumer loan portfolios and in consumer demand for pre-owned merchandise such as the merchandise sold in
the Company’s pawnshops. An economic slowdown could result in a decreased number of consumer loans being made
to customers due to higher unemployment or an increase in loan defaults in the Company’s consumer loan products.
During an economic slowdown, the Company could be required to tighten its underwriting standards, which would
likely reduce consumer loan balances, and could face more difficulty in collecting defaulted consumer loans, which
could lead to an increase in loan losses. While the credit risk for much of the Company’s pawn lending is mitigated by
the collateralized nature of pawn lending, a sustained deterioration in the economy could reduce the demand for and
resale value of pre-owned merchandise and reduce the amount that the Company could effectively lend on an item of
collateral. Such reductions could adversely affect pawn loan balances, pawn loan redemption rates, inventory balances,
inventory mixes and gross profit margins.
An inability to access the debt capital markets or obtain financing could reduce available capital.
In the past, the Company has accessed the debt capital markets or utilized its line of credit with banks to obtain
capital, to finance growth and to refinance existing debt obligations. Efficient access to this capital is critical to the
Company’s ongoing financial success; however, the Company’s future access to debt capital could become restricted
due to a variety of factors, such as a deterioration of the Company’s earnings, cash flows, balance sheet quality, or
overall business or industry prospects, a disruption or deterioration in the state of the capital markets or a negative bias
toward the Company’s industry. Banks and other credit providers could restrict available lines of credit and require
higher pricing upon renewal of the Company’s existing line of credit. The Company’s ability to obtain additional
financing in the future will depend in part upon prevailing capital market conditions, and a potential disruption in the
capital markets may adversely affect the Company’s efforts to arrange additional financing on terms that are satisfactory
to the Company. If adequate funds are not available, or are not available on acceptable terms, the Company may not be
able to grow its business, make future investments, take advantage of potential acquisitions or other opportunities, or
respond to competitive challenges and this, in turn, could adversely affect the Company’s ability to advance its strategic
plans. Additionally, if the capital and credit markets experience volatility and the availability of funds is limited, third
parties with whom the Company does business may incur increased costs or business disruption and this could adversely
affect the Company’s business relationships with such third parties. If the Company is unable to obtain financing it
could have a material adverse effect on its business, prospects, results of operations, financial condition and cash flows.
Some of the Company’s debt agreements contain financial covenants and other restrictions that may limit the
Company’s ability to operate its business.
Some of the Company’s debt agreements contain various restrictive covenants, compliance with which is
essential to continued credit availability. These restrictive covenants, among other things, restrict the Company’s ability
to:
•incur additional debt;
•incur or permit certain liens to exist;
•make certain investments;