Cash America 2015 Annual Report Download - page 75

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Equity Securities
The Company has marketable equity securities that are held in its Nonqualified Savings Plan, marketable
equity securities for its retained shares of Enova common stock, and a cost-method investment, each as described
further below. The Company accounts for its marketable equity securities and its cost-method investment in
accordance with ASC 323, Investments—Equity Method and Joint Ventures, and ASC 325, Investments—Other—
Cost Method Investments, respectively.
The Company holds marketable equity securities in its Nonqualified Savings Plan for certain employees.
See “Item 8. Financial Statements and Supplementary Data—Note 15” for a description of that plan. The securities
are classified as trading securities, but the unrealized gains and losses on these securities offset and have no net
impact on the Company's net income. These securities are recorded at fair value and have an offsetting liability of
equal amount. The plan costs associated with these securities are included in “Operations and administration
expenses” in the consolidated statements of income. The assets related to the Nonqualified Saving Plan are held in
“Other Assets,” and the offsetting liability is held in “Accounts payable and accrued expenses” in the consolidated
balance sheets.
The Company retained approximately 20% of the outstanding shares of Enova common stock after the
Enova Spin-off. The shares of Enova common stock held by the Company are classified as available-for-sale, and
unrecognized gains and losses, net of tax, are recorded in “Accumulated other comprehensive income (loss)” in the
consolidated statements of equity. As a result of the registration of these shares with the SEC in September 2015,
these shares are carried on the consolidated balance sheet as of December 31, 2015 based on the market-determined
stock price of Enova. Prior to September 2015, as the Enova shares were not-yet-registered securities with the SEC,
these shares were not carried at the fair value of the quoted Enova stock prices, but rather the Company valued these
shares using the market-determined stock price of Enova, less an adjustment factor due to the unregistered nature of
these shares.
The Company has an investment in a non-publicly traded entity that is not controlled by the Company, and
over which the Company does not exercise significant influence. The investment is recorded using the cost method,
under which the investment is carried at initial value, is adjusted for cash contributions and distributions and is
subjecttoevaluationforimpairment.Thecost-methodinvestmentisincludedin“Otherassets”ontheCompany’s
consolidated balance sheets.
The Company evaluates its marketable securities and its cost-method investment for impairment if
circumstances arise that indicate that an impairment may exist. If an impairment of an equity security is determined
to be other than 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.
Income Taxes
As part of the process of preparing its consolidated financial statements, the Company is required to
estimate income taxes in each of the jurisdictions in which it operates. This process involves estimating the actual
current tax expense together with assessing temporary differences in recognition of income for tax and accounting
purposes. These differences result in deferred tax assets and liabilities and are included within the consolidated
balance sheets. Management must then assess the likelihood that the deferred tax assets will be recovered from
future taxable income and, to the extent it believes that recovery is not likely, it must establish a valuation
allowance. An expense or benefit is included within the tax provision in the consolidated statement of income for
any increase or decrease in the valuation allowance for a given period.
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
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