Cash America 2014 Annual Report Download - page 138

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
123
Carrying Value Estimated Fair Value
December 31, December 31, Fair Value Measurement Using
2013 2013 Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents $19,748 $19,748 $19,748 $
—
$
—
Restricted cash 8,000 8,000 8,000
—
—
Pawn loans 261,148
261,148
—
—
261,148
Short-term loans, net 45,896 45,896
—
—
45,896
Installment loans, net 8,836 8,836
—
—
8,836
Pawn loan fees and service charges
receivable 53,438 53,438
—
—
53,438
Total $397,066 $
397,066
$27,748 $
—
$369,318
Financial liabilities:
Liability for estimated losses on
consumer loans guaranteed by the
Company $1,030 $1,030 $
—
$
—
$1,030
Domestic and Multi-currency Line of
Credit 193,717
207,426
—
207,426
—
Senior unsecured notes 444,515
430,554
—
430,554
—
2029 Convertible Notes 101,757
155,788
—
155,788
—
Total $741,019 $
794,798
$
—
$793,768 $1,030
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 and installment loans, collectively, represent “Consumer loans, net” on the consolidated
balance sheet and are carried 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 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 revenue is accrued ratably over the term of the loan for the portion of
those pawn loans estimated to be 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, unsecured installment loans and installment loans secured by the
customer’s vehicle and is required to purchase any defaulted loans it has guaranteed. The Company measures the
fair value of its 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.