Cash America 2014 Annual Report Download - page 106

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
91
temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the
period the other-than-temporary-impairment is identified.
Operations and Administration Expenses
Operations expenses include expenses incurred for personnel, occupancy, marketing and other charges that
are directly related to the Company’s business. Operations expenses are incurred at the Company’s storefront
locations and the Company’s call centers for customer service and collections. In addition, costs related to
management supervision, oversight of locations and other costs for the oversight of the Company’s locations are
included in operations expenses. Administration expenses include expenses related to corporate service functions,
such as legal, occupancy, executive oversight, insurance and risk management, public and government relations,
internal audit, treasury, payroll, compliance and licensing, finance, accounting, tax and information systems.
Marketing expenses consist of marketing costs such as television, radio and print advertising and other
marketing costs. Marketing costs, including the production costs associated with other marketing initiatives are
expensed as incurred. These expenses are included in “Operations and administration expenses” in the consolidated
statements of income.
Stock-Based Compensation
The Company accounts for its stock-based employee compensation plans in accordance with ASC 718. In
accordance with ASC 718, the Company recognizes compensation expense over the vesting periods for stock-based
awards. For performance-based stock awards, compensation expense is originally based on the number of shares
that would vest if the Company achieved the level of performance that management estimates is the most probable
outcome at the grant date. Throughout the requisite service period, management monitors the probability of
achievement of the performance condition and adjusts stock-based compensation expense if necessary.
Income Taxes
The provision for income taxes is based on income before income taxes as reported for financial statement
purposes. Deferred income taxes are provided for in accordance with the assets and liability method of accounting
for income taxes in order to recognize the tax effects of temporary differences between financial statement and
income tax accounting.
The Company performs an evaluation of the recoverability of its deferred tax assets on a quarterly basis.
The Company establishes a valuation allowance if it is more likely than not (greater than 50 percent) that all or
some portion of the deferred tax asset will not be realized. The Company analyzes several factors, including the
nature and frequency of operating losses, the Company’s carryforward period for any losses, the reversal of future
taxable temporary differences, the expected occurrence of future income or loss and the feasibility of available tax
planning strategies to protect against the loss of deferred tax assets.
The Company accounts for uncertainty in income taxes in accordance with ASC 740. ASC 740 requires that
a more-likely-than-not threshold be met before the benefit of a tax position may be recognized in the consolidated
financial statements and prescribes how such benefit should be measured. It also provides guidance on recognition
adjustment, classification, accrual of interest and penalties, accounting in interim periods, disclosure and transition.
See Note 12 for further discussion.
It is the Company’s policy to classify interest and penalties on income tax liabilities as interest expense and
operations and administration expense, respectively.