Edgar Filing: CASH AMERICA INTERNATIONAL INC

Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended June 30, 2013

		OR

¨		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from to

		Commission File Number 1-9733



		(Exact name of registrant as specified in its charter)


Texas		75-2018239
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification No.)
1600 West 7^th Street Fort Worth, Texas		76102
(Address of principal executive offices)		(Zip Code)

(817) 335-1100

(Registrant’s telephone number, including area code)

NONE

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No þ

APPLICABLE ONLY TO CORPORATE ISSUERS:

28,159,548 of the Registrants’ common shares, $.10 par value, were issued and outstanding as of July 22, 2013.

CASH AMERICA INTERNATIONAL, INC.

INDEX TO FORM 10-Q


PART I. FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets – June 30, 2013 and 2012 and December 31, 2012	1
	Consolidated Statements of Income – Three and Six Months Ended June 30, 2013 and 2012	2
	Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2013 and 2012	3
	Consolidated Statements of Equity – June 30, 2013 and 2012	4
	Consolidated Statements of Cash Flows – Six Months Ended June 30, 2013 and 2012	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 4.	Controls and Procedures	59

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	59
Item 1A.	Risk Factors	59
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3.	Defaults upon Senior Securities	60
Item 4.	Mine Safety Disclosures	60
Item 5.	Other Information	60
Item 6.	Exhibits	61

SIGNATURES		62

CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You should not place undue reliance on these statements. These forward-looking statements give current expectations or forecasts of future events and reflect the views and assumptions of senior management of Cash America International, Inc. and its subsidiaries (the “Company”) with respect to the business, financial condition and prospects of the Company. When used in this report, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “anticipates,” “may,” “forecast,” “project” and similar expressions or variations as they relate to the Company or its management are intended to identify forward-looking statements. Forward-looking statements address matters that involve risks and uncertainties that are beyond the ability of the Company to control and, in some cases, predict. Accordingly, there are or will be important factors that could cause the Company’s actual results to differ materially from those indicated in these statements. Key factors that could cause the Company’s actual financial results, performance or condition to differ from the expectations expressed or implied in such forward-looking statements include, but are not limited to, the following:

•

changes in domestic and foreign pawn, consumer credit, tax and other laws and government rules and regulations applicable to the Company’s business, or changes in the interpretation or enforcement thereof, and the anticipated regulation of consumer financial products and services by the Consumer Financial Protection Bureau;

•

public perception of the Company’s business, including its consumer loan business and its business practices;

•

the deterioration of the political, regulatory or economic environment in foreign countries where the Company operates or in the future may operate;

•

fluctuations, including a sustained decrease, in the price of gold or a deterioration in economic conditions;

•

the effect of any current or future litigation proceedings and any judicial decisions or rule-making that affect the Company, its products or the legality or enforceability of its arbitration agreements;

•

the actions of third parties who provide, acquire or offer products and services to, from or for the Company;

•

the ability of the Company to maintain an allowance or liability for estimated losses on consumer loans that are adequate to absorb credit losses;

•

changes in demand for the Company’s services and changes in competition in the Company’s online channel;

•

the ability of the Company to attract and retain qualified executive officers;

•

a prolonged interruption in the Company’s operations of its facilities, systems and business functions, including its information technology and other business systems;

•

the ability of the Company to open new locations in accordance with plans or to successfully integrate newly acquired businesses into the Company’s operations;

•

interest rate and foreign currency exchange rate fluctuations;

•

changes in the capital markets, including the debt and equity markets;

•

changes in the Company’s ability to satisfy its debt obligations or to refinance existing debt obligations or obtain new capital to finance growth;

•

cyber attacks or security breaches;

•

acts of God, war or terrorism, pandemics and other events;

•

the effect of any of the above changes on the Company’s business or the markets in which the Company operates; and

•

other risks and uncertainties described in this report or from time to time in the Company’s filings with the Securities and Exchange Commission (the “SEC”).

The foregoing list of factors is not exhaustive and new factors may emerge or changes to these factors may occur that would impact the Company’s business. Additional information regarding these and other factors may be contained in the Company’s filings with the SEC, especially on Forms 10-K, 10-Q and 8-K. If one or more events related to these or other risks or uncertainties materialize, or if management’s underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. The Company disclaims any intention or obligation to update or revise any forward-looking statements to reflect events or circumstances occurring after the date of this report. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(Unaudited)


	June 30,						December 31,
	2013			2012			2012
Assets
Current assets:
Cash and cash equivalents	$	131,905		$	68,939		$	63,134
Pawn loans		229,574			232,909			244,640
Consumer loans, net		287,127			226,364			289,418
Merchandise held for disposition, net		155,112			144,814			167,409
Pawn loan fees and service charges receivable		45,566			44,606			48,991
Income taxes receivable		25,495			—			—
Prepaid expenses and other assets		30,985			34,578			35,605
Deferred tax assets		43,628			37,846			48,992

Total current assets		949,392			790,056			898,189
Property and equipment, net		250,842			255,685			261,771
Goodwill		608,242			564,313			608,216
Intangible assets, net		34,067			32,819			36,473
Other assets		21,571			15,503			13,609

Total assets	$	1,864,114		$	1,658,376		$	1,818,258

Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses	$	123,037		$	93,569		$	126,664
Customer deposits		12,962			11,537			11,420
Income taxes currently payable		—			2,135			5,922
Current portion of long-term debt		22,606			35,939			43,617

Total current liabilities		158,605			143,180			187,623
Deferred tax liabilities		103,759			93,930			101,711
Noncurrent income tax payable		36,834			2,449			2,703
Other liabilities		1,609			1,137			888
Long-term debt		547,218			438,462			534,713

Total liabilities	$	848,025		$	679,158		$	827,638

Equity:
Cash America International, Inc. equity:
Common stock, $0.10 par value per share, 80,000,000 shares authorized, 30,235,164 shares issued and outstanding		3,024			3,024			3,024
Additional paid-in capital		156,349			166,135			157,613
Retained earnings		946,483			845,292			879,434
Accumulated other comprehensive (loss) income		(362	)		(3,988	)		3,128
Treasury shares, at cost (2,107,082 shares, 929,223 shares and 1,351,712 shares as of June 30, 2013 and 2012, and as of December 31, 2012, respectively)		(89,405	)		(34,861	)		(51,304	)

Total Cash America International, Inc. shareholders’ equity		1,016,089			975,602			991,895
Noncontrolling interest		—			3,616			(1,275	)

Total equity		1,016,089			979,218			990,620

Total liabilities and equity	$	1,864,114		$	1,658,376		$	1,818,258

See notes to consolidated financial statements.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Revenue
Pawn loan fees and service charges	$	72,728		$	72,051		$	148,642		$	144,950
Proceeds from disposition of merchandise		131,532			155,956			310,249			364,339
Consumer loan fees		202,431			180,722			412,636			353,562
Other		4,260			2,915			7,552			6,281

Total Revenue		410,951			411,644			879,079			869,132

Cost of Revenue
Disposed merchandise		88,961			105,639			210,296			243,960
Consumer loan loss provision		77,229			72,397			152,081			134,780

Total Cost of Revenue		166,190			178,036			362,377			378,740

Net Revenue		244,761			233,608			516,702			490,392

Expenses
Operations and administration		177,513			164,190			354,337			334,345
Depreciation and amortization		18,000			15,187			35,531			29,808

Total Expenses		195,513			179,377			389,868			364,153

Income from Operations		49,248			54,231			126,834			126,239
Interest expense		(8,903	)		(6,693	)		(16,348	)		(13,869	)
Interest income		5			28			68			57
Foreign currency transaction gain (loss)		65			(252	)		(312	)		(165	)
Equity in loss of unconsolidated subsidiary		(25	)		(31	)		(136	)		(148	)

Income before Income Taxes		40,390			47,283			110,106			112,114
Provision for income taxes		14,946			18,063			40,740			42,371

Net Income		25,444			29,220			69,366			69,743
Net (income) loss attributable to the noncontrolling interest		(312	)		600			(308	)		1,544

Net Income Attributable to Cash America International, Inc.	$	25,132		$	29,820		$	69,058		$	71,287

Earnings Per Share:
Net Income attributable to Cash America International, Inc. common shareholders:
Basic	$	0.88		$	1.01		$	2.39		$	2.41
Diluted	$	0.81		$	0.94		$	2.23		$	2.24
Weighted average common shares outstanding:
Basic		28,721			29,645			28,910			29,631
Diluted		30,845			31,822			31,023			31,867
Dividends declared per common share	$	0.035		$	0.035		$	0.070		$	0.070

See notes to consolidated financial statements.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollars in thousands)

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Net income	$	25,444		$	29,220		$	69,366		$	69,743
Other comprehensive (loss) gain, net of tax:
Unrealized derivatives gain ^(a)		—			—			—			12
Foreign currency translation (loss) gain^(b)		(3,781	)		(7,241	)		(3,347	)		2,374
Marketable securities^(c)		(895	)		(206	)		(254	)		544

Total other comprehensive (loss) gain, net of tax		(4,676	)		(7,447	)		(3,601	)		2,930

Comprehensive income	$	20,768		$	21,773		$	65,765		$	72,673
Net (income) loss attributable to the noncontrolling interest		(312	)		600			(308	)		1,544
Foreign currency translation loss (gain), net of tax, attributable to the noncontrolling interest		112			(1	)		111			(22	)

Comprehensive (income) loss attributable to the noncontrolling interest		(200	)		599			(197	)		1,522

Comprehensive income attributable to Cash America International, Inc.	$	20,568		$	22,372		$	65,568		$	74,195

^(a)	Net of tax provision of $6 for the six months ended June 30, 2012.

^(b)	Net of tax benefit (provision) of $319 and $1,052 for the three months ended June 30, 2013 and 2012, respectively, and $1,739 and $(53) for the six months ended June 30, 2013 and 2012, respectively.

^(c)	Net of tax benefit (provision) of $481 and $111 for the three months ended June 30, 2013 and 2012, respectively, and $136 and $(292) for the six months ended June 30, 2013 and 2012, respectively.

See notes to consolidated financial statements.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(dollars in thousands, except per share data)

(Unaudited)


	Common Stock				Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss)			Treasury shares, at cost						Total share- holders’ equity			Non- controlling interest			Total Equity
	Shares		Amount											Shares			Amount
Balance as of January 1, 2012		30,235,164	$	3,024	$	167,683		$	776,060		$	(6,896	)		(1,011,356	)	$	(37,419	)	$	902,452		$	5,138		$	907,590
Shares issued under stock-based plans						(5,915	)								170,670			6,414			499						499
Stock-based compensation expense						3,079															3,079						3,079
Income tax benefit from stock-based compensation						1,288															1,288						1,288
Net income attributable to Cash America International, Inc.									71,287												71,287						71,287
Dividends paid									(2,055	)											(2,055	)					(2,055	)
Unrealized derivatives gain, net of tax												12									12						12
Foreign currency translation gain, net of tax												2,352									2,352			22			2,374
Marketable securities unrealized gain, net of tax												544									544						544
Purchases of treasury shares															(88,537	)		(3,856	)		(3,856	)					(3,856	)
Loss attributable to the noncontrolling interest																					—			(1,544	)		(1,544	)

Balance as of June 30, 2012		30,235,164	$	3,024	$	166,135		$	845,292		$	(3,988	)		(929,223	)	$	(34,861	)	$	975,602		$	3,616		$	979,218


Balance as of January 1, 2013		30,235,164	$	3,024	$	157,613		$	879,434		$	3,128			(1,351,712	)	$	(51,304	)	$	991,895		$	(1,275	)	$	990,620
Shares issued under stock-based plans						(4,833	)								124,108			4,833			—						—
Stock-based compensation expense						2,791															2,791						2,791
Income tax benefit from stock-based compensation						569															569						569
Net income attributable to Cash America International, Inc.									69,058												69,058						69,058
Dividends paid									(2,009	)											(2,009	)					(2,009	)
Foreign currency translation loss, net of tax												(3,236	)								(3,236	)		(111	)		(3,347	)
Marketable securities, net of tax												(254	)								(254	)					(254	)
Purchases of treasury shares															(879,478	)		(42,934	)		(42,934	)					(42,934	)
Income from noncontrolling interest																					—			308			308
Purchase of noncontrolling interest						209															209			1,078			1,287

Balance as of June 30, 2013		30,235,164	$	3,024	$	156,349		$	946,483		$	(362	)		(2,107,082	)	$	(89,405	)	$	1,016,089		$	—		$	1,016,089

See notes to consolidated financial statements.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)


	Six Months Ended
	June 30,
	2013			2012
Cash Flows from Operating Activities
Net Income	$	69,366		$	69,743
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expenses		35,531			29,808
Amortization of debt discount and issuance costs		3,055			1,874
Consumer loan loss provision		152,081			134,780
Stock-based compensation		2,791			3,079
Deferred income taxes, net		9,287			1,127
Excess income tax benefit from stock-based compensation		(569	)		(1,288	)
Other		1,954			2,924
Changes in operating assets and liabilities, net of assets acquired:
Merchandise other than forfeited		9,252			11,392
Pawn loan fees and service charges receivable		3,454			3,519
Finance and service charges on consumer loans		(344	)		571
Prepaid expenses and other assets		318			(5,446	)
Accounts payable and accrued expenses		(555	)		(10,678	)
Current and noncurrent income taxes		3,380			(9,143	)
Other operating assets and liabilities		1,536			1,600

Net cash provided by operating activities		290,537			233,862

Cash Flows from Investing Activities
Pawn loans made		(350,648	)		(370,825	)
Pawn loans repaid		219,807			225,138
Principal recovered through dispositions of forfeited pawn loans		146,618			170,339
Consumer loans made or purchased		(958,816	)		(873,535	)
Consumer loans repaid		806,397			731,686
Acquisitions, net of cash acquired		(923	)		(4,720	)
Purchases of property and equipment		(22,392	)		(36,713	)
Proceeds from sale of marketable securities		6,616			—
Other investing activities		297			(397	)

Net cash used in investing activities		(153,044	)		(159,027	)

Cash Flows from Financing Activities
Net payments under bank lines of credit		(301,011	)		(56,925	)
Issuance of long-term debt		300,000			—
Net proceeds from re-issuance of treasury shares		—			499
Debt issuance costs paid		(9,862	)		—
Payments on notes payable		(9,167	)		(7,502	)
Excess income tax benefit from stock-based compensation		569			1,288
Treasury shares purchased		(42,934	)		(3,680	)
Dividends paid		(2,009	)		(2,055	)
Purchase of noncontrolling interest		(4	)		—

Net cash used in financing activities		(64,418	)		(68,375	)

Effect of exchange rates on cash		(4,304	)		(63	)

Net increase in cash and cash equivalents		68,771			6,397
Cash and cash equivalents at beginning of year		63,134			62,542

Cash and cash equivalents at end of period	$	131,905		$	68,939

Supplemental Disclosures
Non-cash investing and financing activities
Pawn loans forfeited and transferred to merchandise held for disposition	$	145,986		$	166,789
Pawn loans renewed	$	127,314		$	135,620
Consumer loans renewed	$	333,526		$	316,599

See notes to consolidated financial statements.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.	Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include all of the accounts of Cash America International, Inc. and its subsidiaries (the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation.

The financial statements as of June 30, 2013 and 2012 and for the three- and six-month periods then ended are unaudited but, in management’s opinion, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for such interim periods. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). Operating results for the three- and six-month periods are not necessarily indicative of the results that may be expected for the full fiscal year.

These financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Through April 2013, the Company had a contractual relationship with a third party entity, Huminal, S.A. de C.V., a Mexican sociedad anónima de capital variable (“Huminal”). The Company qualified as the primary beneficiary of Huminal in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation (“ASC 810”). Therefore, the results and balances of Huminal were consolidated and allocated to net income attributable to noncontrolling interests. In May 2013, the Company acquired the remaining outstanding common stock of Huminal to increase its ownership to 100% of Huminal and, as a result, Huminal became a wholly-owned subsidiary of the Company as of that date. The Company accounted for this transaction as a change in ownership interests that does not result in a change in control.

Cash and Cash Equivalents

The Company considers cash on hand in operating locations, deposits in banks and short-term investments with original maturities of 90 days or less as cash and cash equivalents. Cash equivalents are principally invested in short-term money market funds.

Goodwill and Other Indefinite-Lived Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. In accordance with ASC 350-20-35, Goodwill – Subsequent Measurement, the Company tests goodwill and intangible assets with an indefinite life for potential impairment annually as of June 30 and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

The Company uses the income approach to complete its annual goodwill assessment. The income approach uses future cash flows and estimated terminal values for each of the Company’s reporting units that are discounted using a market participant perspective to determine the fair value of each reporting unit, which is then compared to the carrying value of that reporting unit to determine if there is impairment. The income approach includes assumptions about revenue growth rates, operating margins and terminal growth rates discounted by an estimated weighted-average cost of capital derived from other publicly-traded companies that are similar but not identical from an operational and economic standpoint. The Company completed its annual assessment of goodwill as of June 30, 2013 and determined that the fair value of its goodwill is in excess of carrying value, and, as a result, no impairment existed at that date.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The Company performed its annual indefinite-lived intangible asset impairment test as of June 30, 2013. The Company elected to perform a qualitative assessment in accordance with Accounting Standards Update (“ASU”) No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”) and determined that it was not more likely than not that the indefinite-lived intangible assets are impaired. Therefore, no further quantitative assessment was required.

Adopted Accounting Standards

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220) — Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”), which improves the reporting of reclassifications out of accumulated other comprehensive income. ASU 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income by the respective line items on the consolidated statements of income that compose net income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. For other amounts that are not required under GAAP to be reclassified in their entirety from accumulated other comprehensive income to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. The Company adopted ASU 2013-02 on January 1, 2013, and the adoption did not have a material effect on its financial position, results of operations or other comprehensive income. See Note 6 for further discussion.

In July 2012, the FASB issued ASU 2012-02. ASU 2012-02 provides companies with the option to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not (a likelihood of more than 50 percent) that the indefinite-lived intangible asset is impaired. If a company concludes that it is more likely than not that the asset is impaired, it is required to determine the fair value of the intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying value in accordance with ASC 350, Intangibles—Goodwill and Other. If a company concludes otherwise, no further quantitative assessment is required. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, although early adoption is permitted. The Company adopted ASU 2012-02 on January 1, 2013, and the adoption did not have a material effect on its financial position or results of operations.

In December 2011, the FASB issued ASU No. 2011-11, Disclosures about Offsetting Assets and Liabilities (Topic 210) (“ASU 2011-11”). ASU 2011-11 requires a company to provide enhanced disclosures about financial instruments and derivative instruments that are either presented on a net basis in the statement of financial position or are subject to an enforceable master netting or similar arrangement. In January 2013, the FASB issued ASU No. 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities (“ASU 2013-01”), which limits the scope of ASU 2011-11 by requiring additional disclosure about financial instruments and derivative instruments that are either offset in the statement of financial position or subject to an enforceable master netting arrangement. ASU 2013-01 requires retrospective disclosure for all comparative periods. ASU 2011-11 and ASU 2013-01 are effective for annual and interim reporting periods beginning January 1, 2013. The Company adopted ASU 2011-11 and ASU 2013-01 on January 1, 2013, and the adoption of these standards did not have a material effect on its financial position or results of operations. See Note 12 for further discussion.

Accounting Standards to be Adopted in Future Periods

In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”), which provides guidance on the presentation of unrecognized tax benefits when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. The amendments in this update are effective for fiscal years (and interim periods within those years) beginning after December 15, 2013. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The Company does not expect ASU 2013-11 to have a material effect on the Company’s financial condition, results of operations, or other comprehensive income.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (a consensus of the FASB Emerging Issues Task Force) (“ASU 2013-05”), which applies to the release of the cumulative translation adjustment into net income when a parent either sells all or a part of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity. ASU 2013-05 is effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The Company does not expect ASU 2013-05 to have a material effect on the Company’s financial condition, results of operations, or other comprehensive income.

2.	Credit Quality Information on Pawn Loans

The Company manages its pawn loan portfolio by monitoring the type and adequacy of collateral compared to historical gross profit margins. If a pawn loan defaults, the Company relies on the disposition of pawned property to recover the principal amount of an unpaid pawn loan, plus a yield on the investment, because the Company’s pawn loans are non-recourse against the customer. In addition, the customer’s creditworthiness does not affect the Company’s financial position or results of operations. Generally, forfeited merchandise has historically sold for an amount in excess of the cost of goods sold (which is the lower of cost, or the cost basis in the loan or amount paid for purchased merchandise, or fair value). Goods pledged to secure pawn loans are tangible personal property items such as jewelry, tools, televisions and other electronics, musical instruments and other miscellaneous items. A pawn loan is considered delinquent if the customer does not repay or, where allowed by law, renew or extend the loan on or prior to its contractual maturity date plus any applicable grace period. Pawn loan fees and service charges do not accrue on delinquent pawn loans. When a pawn loan is considered delinquent, any accrued pawn loan fees and service charges are reversed and no additional pawn loan fees and service charges are accrued. As of June 30, 2013 and 2012 and December 31, 2012, the Company had current pawn loans outstanding of $222.9 million, $228.4 million and $235.3 million, respectively, and delinquent pawn loans outstanding of $6.7 million, $4.5 million and $9.3 million, respectively.

3.	Consumer Loans, Credit Quality Information on Consumer Loans, Allowance and Liability for Estimated Losses on Consumer Loans and Guarantees of Consumer Loans

Consumer loan fee revenue generated from the Company’s consumer loans for the three and six months ended June 30, 2013 and 2012 was as follows (dollars in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Interest and fees on short-term loans	$	126,560	$	137,940	$	266,775	$	274,582
Interest and fees on line of credit accounts		28,283		14,270		51,517		25,921
Interest and fees on installment loans		47,588		28,512		94,344		53,059

Total consumer loan revenue	$	202,431	$	180,722	$	412,636	$	353,562

Current and Delinquent Consumer Loans

The Company classifies its consumer loans as either current or delinquent. Short-term loans are considered delinquent when payment of an amount due is not made as of the due date. If a line of credit account or installment loan customer misses one payment, that payment is considered delinquent. If a line of credit account or installment loan customer does not make two consecutive payments, the entire account or loan is classified as delinquent. The Company allows for normal payment processing time before considering a loan delinquent but does not provide for any additional grace period.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

The Company generally does not accrue interest on delinquent consumer loans and does not resume accrual of interest unless a loan is returned to current status. In addition, generally delinquent consumer loans may not be renewed, and if, during its attempt to collect on a delinquent consumer loan, the Company allows additional time for payment through a payment plan or a promise to pay, it is still considered delinquent. All payments received are first applied against accrued but unpaid interest and fees and then against the principal balance of the loan.

Allowance and Liability for Estimated Losses on Consumer Loans

The Company monitors the performance of its consumer loan portfolio and maintains either an allowance or liability for estimated losses on consumer loans (including fees and interest) at a level estimated to be adequate to absorb credit losses inherent in the portfolio. The allowance for losses on the Company’s owned consumer loans reduces the outstanding loan balance in the consolidated balance sheets. The liability for estimated losses related to loans guaranteed by the Company under its credit services organization programs (“CSO programs”), which approximates the fair value of the liability, is included in “Accounts payable and accrued expenses” in the consolidated balance sheets.

In determining the allowance or liability for estimated losses on consumer loans, the Company applies a documented systematic methodology. In calculating the allowance or liability for loan losses, outstanding loans are divided into discrete groups of short-term loans, line of credit accounts and installment loans and are analyzed as current or delinquent. Increases in either the allowance or the liability, net of charge-offs and recoveries, are recorded as a “Consumer loan loss provision” in the consolidated statements of income.

The allowance or liability for short-term loans classified as current is based on historical loss rates adjusted for recent default trends in current loans. For delinquent short-term loans, the allowance or liability for estimated losses is based on a six-month rolling average of loss rates by stage of collection. For line of credit accounts and installment loan portfolios, the Company generally uses a migration analysis to estimate losses inherent in the portfolio. The allowance or liability calculation under the migration analysis is based on historical charge-off experience and the loss emergence period, which represents the average amount of time between the first occurrence of a loss event to the charge-off of a loan. The factors the Company considers to assess the adequacy of the allowance or liability include past due performance, historical behavior of monthly vintages, underwriting changes and recent trends in delinquency in the migration analysis.

The Company fully reserves and generally charges off consumer loans once the loan or a portion of the loan has been classified as delinquent for 60 consecutive days. If a loan is deemed uncollectible before it is fully reserved, it is charged off at that point. Consumer loans classified as delinquent generally have an age of one to 59 days from the date any portion of the loan became delinquent, as defined above. Recoveries on loans previously charged to the allowance are credited to the allowance when collected.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

The components of Company-owned consumer loan portfolio receivables as of June 30, 2013 and 2012 and December 31, 2012 were as follows (dollars in thousands):


	As of June 30, 2013
	Short-term Loans			Line of Credit Accounts			Installment Loans			Total
Current loans	$	119,084		$	51,508		$	124,126		$	294,718
Delinquent loans		49,074			6,563			16,635			72,272

Total consumer loans, gross		168,158			58,071			140,761			366,990
Less: allowance for losses		(42,068	)		(10,649	)		(27,146	)		(79,863	)

Consumer loans, net	$	126,090		$	47,422		$	113,615		$	287,127


	As of June 30, 2012
	Short-term Loans			Line of Credit Accounts			Installment Loans			Total
Current loans	$	123,261		$	27,440		$	76,644		$	227,345
Delinquent loans		53,494			3,155			12,941			69,590

Total consumer loans, gross		176,755			30,595			89,585			296,935
Less: allowance for losses		(45,409	)		(5,243	)		(19,919	)		(70,571	)

Consumer loans, net	$	131,346		$	25,352		$	69,666		$	226,364


	As of December 31, 2012
	Short-term Loans			Line of Credit Accounts			Installment Loans			Total
Current loans	$	146,732		$	36,603		$	117,641		$	300,976
Delinquent loans		52,565			6,097			15,483			74,145

Total consumer loans, gross		199,297			42,700			133,124			375,121
Less: allowance for losses		(45,982	)		(11,107	)		(28,614	)		(85,703	)

Consumer loans, net	$	153,315		$	31,593		$	104,510		$	289,418

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

Changes in the allowance for losses for the Company-owned loans and the liability for estimated losses on the Company’s guarantees of third-party lender-owned loans during the three and six months ended June 30, 2013 and 2012 were as follows (dollars in thousands):


	Three Months Ended June 30, 2013
	Short-term Loans			Line of Credit Accounts			Installment Loans			Total
Allowance for losses for Company-owned consumer loans:
Balance at beginning of period	$	42,570		$	8,064		$	27,033		$	77,667
Consumer loan loss provision		42,039			9,919			24,319			76,277
Charge-offs		(52,852	)		(8,874	)		(27,731	)		(89,457	)
Recoveries		10,311			1,540			3,525			15,376

Balance at end of period	$	42,068		$	10,649		$	27,146		$	79,863

Liability for third-party lender-owned consumer loans:
Balance at beginning of period	$	1,547		$	—			548		$	2,095
Increase in liability		892			—			60			952

Balance at end of period	$	2,439		$	—			608		$	3,047


	Three Months Ended June 30, 2012
	Short-term Loans			Line of Credit Accounts			Installment Loans			Total
Allowance for losses for Company-owned consumer loans:
Balance at beginning of period	$	39,907		$	3,518		$	15,288		$	58,713
Consumer loan loss provision		49,774			5,185			16,636			71,595
Charge-offs		(53,558	)		(3,735	)		(13,206	)		(70,499	)
Recoveries		9,286			275			1,201			10,762

Balance at end of period	$	45,409		$	5,243		$	19,919		$	70,571

Liability for third-party lender-owned consumer loans:
Balance at beginning of period	$	1,630		$	—		$	363		$	1,993
Increase in liability		787			—			15			802

Balance at end of period	$	2,417		$	—		$	378		$	2,795


	Six Months Ended June 30, 2013
	Short-term Loans			Line of Credit Accounts			Installment Loans			Total
Allowance for losses for Company-owned consumer loans:
Balance at beginning of period	$	45,982		$	11,107		$	28,614		$	85,703
Consumer loan loss provision		88,592			16,472			47,468			152,532
Charge-offs		(113,642	)		(20,076	)		(55,475	)		(189,193	)
Recoveries		21,136			3,146			6,539			30,821

Balance at end of period	$	42,068		$	10,649		$	27,146		$	79,863

Liability for third-party lender-owned consumer loans:
Balance at beginning of period	$	2,934		$	—		$	564		$	3,498
(Decrease) increase in liability		(495	)		—			44			(451	)

Balance at end of period	$	2,439		$	—		$	608		$	3,047

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)


	Six Months Ended June 30, 2012
	Short- term Loans			Line of Credit Accounts			Installment Loans			Total
Allowance for losses for Company-owned consumer loans:
Balance at beginning of period	$	46,406		$	3,723		$	12,943		$	63,072
Consumer loan loss provision		95,307			8,606			31,134			135,047
Charge-offs		(114,814	)		(7,755	)		(26,543	)		(149,112	)
Recoveries		18,510			669			2,385			21,564

Balance at end of period	$	45,409		$	5,243		$	19,919		$	70,571

Liability for third-party lender-owned consumer loans:
Balance at beginning of period	$	2,617		$	—		$	445		$	3,062
Decrease in liability		(200	)		—			(67	)		(267	)

Balance at end of period	$	2,417		$	—		$	378		$	2,795

Guarantees of Consumer Loans

In connection with its CSO programs, the Company guarantees consumer loan payment obligations to unrelated third-party lenders and is required to purchase any defaulted loans it has guaranteed. The guarantee represents an obligation to purchase specific loans that go into default. Short-term loans that are guaranteed generally have terms of less than 90 days. Secured auto equity loans, which are included in the Company’s installment loan portfolio, that are guaranteed typically have an average term of less than 24 months, with available terms of up to 42 months. As of June 30, 2013 and 2012 and December 31, 2012, the amount of consumer loans guaranteed by the Company was $50.9 million, $54.0 million and $64.7 million, respectively, representing amounts due under consumer loans originated by third-party lenders under the CSO programs. The estimated fair value of the liability for estimated losses on consumer loans guaranteed by the Company of $3.0 million, $2.8 million and $3.5 million, as of June 30, 2013 and 2012 and December 31, 2012, respectively, is included in “Accounts payable and accrued expenses” in the accompanying consolidated balance sheets.

4.	Merchandise Held for Disposition

Merchandise held for disposition and the related allowance as of June 30, 2013 and 2012 and December 31, 2012 associated with the Company’s domestic and foreign retail services operations were as follows (dollars in thousands):


	As of June 30,														As of December 31,
	2013							2012							2012
	Total		Allowance			Net		Total		Allowance			Net		Total		Allowance			Net
Domestic	$	150,084	$	(840	)	$	149,244	$	133,458	$	(700	)	$	132,758	$	162,495	$	(840	)	$	161,655
Foreign		5,977		(109	)		5,868		12,056		—			12,056		5,765		(11	)		5,754

Total	$	156,061	$	(949	)	$	155,112	$	145,514	$	(700	)	$	144,814	$	168,260	$	(851	)	$	167,409

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

5.	Long-Term Debt

The Company’s long-term debt instruments and balances outstanding as of June 30, 2013 and 2012 and December 31, 2012 were as follows (dollars in thousands):


	Balance as of
	June 30,				December 31,
	2013		2012		2012
Domestic and multi-currency line of credit due 2018	$	—	$	223,914	$	301,011
6.12% senior unsecured notes due 2012		—		13,333		—
6.09% senior unsecured notes due 2016		28,000		35,000		28,000
7.26% senior unsecured notes due 2017		20,000		25,000		25,000
Variable rate senior unsecured notes due 2018		37,500		45,833		41,667
5.75% senior unsecured notes due 2018		300,000		—		—
6.00% Series A senior unsecured notes due 2019		47,000		—		47,000
6.21% senior unsecured notes due 2021		20,455		22,727		20,455
6.58% Series B senior unsecured notes due 2022		5,000		—		5,000
5.25% convertible senior notes due 2029		111,869		108,594		110,197

Total debt	$	569,824	$	474,401	$	578,330
Less current portion		22,606		35,939		43,617

Total long-term debt	$	547,218	$	438,462	$	534,713

Domestic and Multi-Currency Line

The Company’s domestic and multi-currency line of credit, which includes the ability to borrow up to $50.0 million in specified foreign currencies or U.S. dollars (the “Domestic and Multi-currency Line”), was amended by the Company on May 10, 2013. The primary provisions of the amendment to the Domestic and Multi-currency Line include an extension of the maturity date from March 31, 2015 to March 31, 2018 and a decrease in the total credit available from $380.0 million to $280.0 million, subject to an accordion feature whereby the revolving line of credit may be increased up to an additional $100.0 million with the consent of any increasing lenders. Interest on the Domestic and Multi-currency Line is charged, at the Company’s option, at either the London Interbank Offered Rate for one-, two-, three- or six-month periods, as selected by the Company for the first interest rate period, and for subsequent interest rate periods, one week or two weeks or one-, two-, three- or six-month periods, as selected by the Company (“LIBOR”), plus a margin varying from 2.00% to 3.25% or at the agent’s base rate plus a margin varying from 0.50% to 1.75%. The margin for the Domestic and Multi-currency Line is dependent on the Company’s cash flow leverage ratios as defined in the credit agreement entered into in connection with the Domestic and Multi-currency Line. The Company also pays a fee on the unused portion of the Domestic and Multi-currency Line ranging from 0.25% to 0.50% (0.38% as of June 30, 2013) based on the Company’s cash flow leverage ratios. The weighted average interest rate (including margin) on the Domestic and Multi-currency Line was 2.77% and 3.06% as of June 30, 2012 and December 31, 2012, respectively.

As of June 30, 2013, the Company had no outstanding borrowings under its Domestic and Multi-currency Line. As of June 30, 2012, borrowings under the Company’s Domestic and Multi-currency Line consisted of three pricing tranches with maturity dates ranging from one to six days. The Company routinely refinances borrowings pursuant to the terms of its Domestic and Multi-currency Line; therefore, these borrowings are reported as part of the applicable line of credit and as long-term debt.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

Variable Rate Senior Unsecured Notes

When the Company amended its Domestic and Multi-currency Line, it also extended the maturity date of its $50.0 million variable rate term loan facility (the “2018 Variable Rate Notes”) from March 31, 2015 to March 31, 2018. The 2018 Variable Rate Notes are payable in equal quarterly principal installments of $2.1 million with any outstanding principal remaining due at maturity on March 31, 2018. Interest on the 2018 Variable Rate Notes is charged, at the Company’s option, at either LIBOR (as defined above) plus a margin of 3.50% or at the agent’s base rate plus a margin of 2.00%. The weighted average interest rate (including margin) on the 2018 Variable Rate Notes was 3.75% as of each of June 30, 2013 and 2012 and December 31, 2012.

In connection with the amendment of the Domestic and Multi-currency Line and the 2018 Variable Rate Notes, the Company incurred debt issuance costs of approximately $1.8 million during the six months ended June 30, 2013, which primarily consisted of commitment fees, legal and other professional expenses. These costs are being amortized over a period of five years and are included in “Other assets” in the Company’s consolidated balance sheet.

$300.0 Million 5.75% Senior Unsecured Notes

On May 15, 2013, the Company issued and sold $300.0 million in aggregate principal amount of 5.75% Senior Notes due 2018 (the “2018 Senior Notes”). The Company offered and sold the 2018 Senior Notes to initial purchasers in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”). The initial purchasers then resold the 2018 Senior Notes pursuant to the exemptions from registration under the Securities Act in reliance on Rule 144A and Regulation S. The 2018 Senior Notes bear interest at a rate of 5.75% annually on the principal amount of the 2018 Senior Notes, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2013. The 2018 Senior Notes will mature on May 15, 2018. The 2018 Senior Notes are senior unsecured debt obligations of the Company and are guaranteed by all of the Company’s domestic subsidiaries.

The 2018 Senior Notes are redeemable at the Company’s option, in whole or in part, at any time at 100% of the aggregate principal amount of 2018 Senior Notes redeemed plus the applicable “make whole” redemption price specified in the Indenture that governs the 2018 Senior Notes (the “2018 Senior Notes Indenture”), plus accrued and unpaid interest, if any, to the redemption date. In addition, if a change of control occurs, as that term is defined in the 2018 Senior Notes Indenture, the holders of 2018 Senior Notes will have the right, subject to certain conditions, to require the Company to repurchase their 2018 Senior Notes at a purchase price equal to 101% of the aggregate principal amount of 2018 Senior Notes repurchased plus accrued and unpaid interest, if any, as of the date of repurchase.

In addition, on May 15, 2013 the Company entered into a registration rights agreement with the initial purchasers (the “Registration Rights Agreement”) of the 2018 Senior Notes, pursuant to which the Company agreed to use commercially reasonable efforts to issue in exchange for the 2018 Senior Notes, on or prior to the 270th day following the closing date of the issuance and sale of the 2018 Senior Notes, identical new notes registered under the Securities Act. In certain circumstances, the Company may be required to file a shelf registration statement to cover resales of the 2018 Senior Notes. If the Company does not comply with certain covenants set forth in the Registration Rights Agreement, it must pay liquidated damages to holders of the 2018 Senior Notes.

In the second quarter of 2013, the Company used a portion of the net proceeds from the 2018 Senior Notes issuance to repay all outstanding balances under its Domestic and Multi-currency Line, which were $202.0 million on May 15, 2013. The Company intends to use the remaining net proceeds from the issuance to repay other outstanding indebtedness and for general corporate purposes.

In connection with the issuance of the 2018 Senior Notes, the Company incurred debt issuance costs of approximately $8.1 million during the six months ended June 30, 2013, which primarily consisted of underwriting fees, legal and other professional expenses. These costs are being amortized over a period of five years and are included in “Other assets” in the Company’s consolidated balance sheet.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

Other

When the Company entered into its Domestic and Multi-currency Line, it also entered into a separate credit agreement for the issuance of up to $20.0 million in letters of credit (the “Letter of Credit Facility”). When the Company amended its Domestic and Multi-currency Line, it also extended the maturity date of its Letter of Credit Facility from March 31, 2015 to March 31, 2018. The Company had standby letters of credit of $16.3 million under its Letter of Credit Facility as of June 30, 2013.

The Company’s debt agreements for its Domestic and Multi-currency Line and its senior unsecured notes require the Company to maintain certain financial ratios. As of June 30, 2013, the Company was in compliance with all covenants or other requirements set forth in its debt agreements.

6.	Reclassification out of Accumulated Other Comprehensive Income

In accordance with ASU 2013-02, the reclassification adjustments from Accumulated other comprehensive income (“AOCI”) to Net income for the three and six months ended June 30, 2013 were as follows (dollars in thousands):

Three Months Ended June 30, 2013

Six Months Ended June 30, 2013

Foreign
currency
translation
gain (loss), net
of tax

Marketable
securities, net
of tax

Total

Foreign
currency
translation
gain (loss), net
of tax

Marketable
securities, net
of tax

Total

Balance at the beginning of period

3,307

895

4,202

2,874

254

3,128

Other comprehensive income before reclassifications

(3,669

)

(268

)

(3,937

)

(3,236

)

373

(2,863

)

Amounts reclassified from AOCI^(a)

—

(627

)

(627

)

—

(627

)

(627

)

Net change in AOCI

(3,669

)

(895

)

(4,564

)

(3,236

)

(254

)

(3,490

)

Balance at the end of period

(362

)

—

(362

)

(362

)

—

(362

)

^(a)

The gain on marketable securities reclassified out of AOCI for the three and six months ended June 30, 2013 is composed of a $964 gain and income tax expense of $337. The gain and income tax expense are included in “Other revenue” and “Provision for income taxes,” respectively, in the consolidated statements of income.

7.	Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share is calculated by giving effect to the potential dilution that could occur if securities or other contracts to issue common shares were exercised and converted into common shares during the period. Restricted stock units issued under the Company’s stock-based employee compensation plans are included in diluted shares upon the granting of the awards even though the vesting of shares will occur over time. Performance-based awards are included in diluted shares based on 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, if material, adjusts the number of shares included in diluted shares accordingly.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

The following table sets forth the reconciliation of numerators and denominators of basic and diluted net income per share computations for the three and six months ended June 30, 2013 and 2012 (dollars and shares in thousands, except per share amounts):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Numerator:
Net income attributable to Cash America International, Inc.	$	25,132	$	29,820	$	69,058	$	71,287

Denominator:
Total weighted average basic shares ^(a)		28,721		29,645		28,910		29,631
Shares applicable to stock-based compensation^(b)		75		285		89		290
Convertible debt^(c)		2,049		1,892		2,024		1,946

Total weighted average diluted shares ^(d)		30,845		31,822		31,023		31,867

Net income – basic	$	0.88	$	1.01	$	2.39	$	2.41

Net income – diluted	$	0.81	$	0.94	$	2.23	$	2.24

^(a)

Includes vested and deferred restricted stock units of 313 and 284, as well as 31 and 31 shares held in the Company’s nonqualified deferred compensation plan for the three months ended June 30, 2013 and 2012, respectively, and vested and deferred restricted stock units of 312 and 282, as well as 31 and 32 shares held in the Company’s nonqualified deferred compensation plan for the six months ended June 30, 2013 and 2012, respectively.

^(b)

For the three and six months ended June 30, 2013, includes shares related to unvested restricted stock unit awards. For the three and six months ended June 30, 2012, includes shares related to outstanding option awards that are exercisable and shares related to unvested restricted stock unit awards.

^(c)

The shares issuable with respect to the Company’s senior unsecured convertible notes due 2029 (the “2029 Convertible Notes”) have been calculated using the treasury stock method. The Company intends to settle the principal portion of the convertible debt in cash; therefore, only the shares related to the conversion spread have been included in weighted average diluted shares.

^(d)	There were 5 and 46 anti-dilutive shares for the three and six months ended June 30, 2013, respectively, and no anti-dilutive shares for the three and six months ended June 30, 2012.

8.	Income Taxes

During 2012, the Company’s Mexico-based pawn operations that operated under the name Prenda Fácil were owned by Creazione Estilo, S.A. de C.V., a Mexican sociedad anónima de capital variable (“Creazione”). In January 2013, the Company’s Mexico-based pawn operations were sold by Creazione to another wholly-owned subsidiary of the Company, CA Empeños Mexico, S. de R.L. de C.V., and began operating exclusively under the name “Cash America casa de empeño.” The Company intends to liquidate the remaining assets of Creazione, which are insignificant, during 2013. In connection with the final liquidation of Creazione, the Company intends to claim a worthless stock deduction for tax purposes on its 2013 federal income tax return for its tax basis in the stock of Creazione. The Company could realize an income tax benefit of $33.2 million as a result of the worthless stock deduction. The Company intends to treat the deduction as an ordinary loss. However, the Internal Revenue Service could challenge the characterization of the loss. If the deduction is ultimately determined to be a capital loss, the tax benefit may not be realized. As of December 31, 2012, the Company had recorded an income tax benefit of $9.3 million and an offsetting valuation allowance associated with the Company’s excess tax basis over its basis for financial purposes in the stock of Creazione. During the six months ended June 30, 2013, the Company recorded an additional income tax benefit of $23.9 million associated with its remaining tax basis in the stock of Creazione. In addition, the Company released the valuation allowance recorded in 2012 of $9.3 million and recorded a $33.2 million liability for uncertain tax benefits. As a result, there was no impact on the income tax provision for the six months ended June 30, 2013 related to the potential benefit for the Creazione worthless stock deduction.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

The balance of the Company’s liability for unrecognized tax benefits as of June 30, 2013 was $35.0 million. The Company believes that it is reasonably possible that the entire amount of its unrecognized tax benefits will be recognized in 2013. The unrecognized tax benefit associated with the Creazione worthless stock deduction could be recognized in 2013 if the Company receives a favorable ruling on this matter. In addition, the Company’s unrecognized tax benefits associated with the pre-acquisition tax matters of Prenda Fácil could be recognized as a result of the lapse of the statute of limitations.

9.	Operating Segment Information

The Company has two reportable operating segments: retail services and e-commerce. The retail services segment includes all of the operations of the Company’s Retail Services Division, which is composed of both domestic and foreign storefront locations that offer some or all of the following services: pawn loans, consumer loans, the purchase and sale of merchandise, check cashing and other ancillary services such as money orders, wire transfers, prepaid debit cards, tax filing services and auto insurance. Most of these ancillary services offered in the retail services segment are provided through third-party vendors. The e-commerce segment includes the operations of the Company’s E-Commerce Division, which is composed of the Company’s domestic and foreign online lending channels through which the Company offers consumer loans. In the e-commerce segment, certain administration expenses are allocated between the domestic and foreign components based on the amount of loans written and renewed. The Company reports corporate operations separately from its retail services and e-commerce segment information. Corporate operations primarily include corporate expenses, such as legal, occupancy, and other costs related to corporate service functions, such as executive oversight, insurance and risk management, public and government relations, internal audit, treasury, payroll, compliance and licensing, finance, accounting, tax and information systems (except for online lending systems, which are included in the e-commerce segment). Corporate income includes miscellaneous income not directly attributable to the Company’s segments. Corporate assets primarily include corporate property and equipment, nonqualified savings plan assets, marketable securities, foreign exchange forward contracts and prepaid insurance.

The following tables contain operating segment data for the three and six months ended June 30, 2013 and 2012 by segment, for the Company’s corporate operations and on a consolidated basis (dollars in thousands):

Retail Services

E-Commerce

Domestic

Foreign

Total

Domestic

Foreign

Total

Corporate

Consolidated

Three Months Ended June 30, 2013

Revenue

Pawn loan fees and service charges

70,802

1,926

72,728

—

72,728

Proceeds from disposition of merchandise

127,214

4,318

131,532

—

131,532

Consumer loan fees

26,647

—

26,647

87,502

88,282

175,784

—

202,431

Other

1,918

829

2,747

361

377

1,136

4,260

Total revenue

226,581

7,073

233,654

87,863

88,298

176,161

1,136

410,951

Cost of revenue

Disposed merchandise

85,352

3,609

88,961

—

88,961

Consumer loan loss provision

7,112

—

7,112

33,343

36,774

70,117

—

77,229

Total cost of revenue

92,464

3,609

96,073

33,343

36,774

70,117

—

166,190

Net revenue

134,117

3,464

137,581

54,520

51,524

106,044

1,136

244,761

Expenses

Operations and administration

89,487

3,569

93,056

30,489

34,618

65,107

19,350

177,513

Depreciation and amortization

8,900

430

9,330

3,750

835

4,585

4,085

18,000

Total expenses

98,387

3,999

102,386

34,239

35,453

69,692

23,435

195,513

Income (loss) from operations

35,730

(535

)

35,195

20,281

16,071

36,352

(22,299

)

49,248

As of June 30, 2013

Total assets

1,023,015

123,601

1,146,616

389,155

195,532

584,687

132,811

1,864,114

Goodwill

397,876

210,366

608,242

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)


	Retail Services							E-Commerce
	Domestic		Foreign			Total		Domestic		Foreign		Total		Corporate			Consolidated
Three Months Ended June 30, 2012
Revenue
Pawn loan fees and service charges	$	68,185	$	3,866		$	72,051	$	—	$	—	$	—	$	—		$	72,051
Proceeds from disposition of merchandise		144,484		11,472			155,956		—		—		—		—			155,956
Consumer loan fees		28,579		—			28,579		73,802		78,341		152,143		—			180,722
Other		2,185		211			2,396		288		11		299		220			2,915

Total revenue		243,433		15,549			258,982		74,090		78,352		152,442		220			411,644

Cost of revenue
Disposed merchandise		95,345		10,294			105,639		—		—		—		—			105,639
Consumer loan loss provision		6,603		—			6,603		30,643		35,151		65,794		—			72,397

Total cost of revenue		101,948		10,294			112,242		30,643		35,151		65,794		—			178,036

Net revenue		141,485		5,255			146,740		43,447		43,201		86,648		220			233,608

Expenses
Operations and administration		88,204		7,822			96,026		25,773		27,778		53,551		14,613			164,190
Depreciation and amortization		7,514		1,121			8,635		2,727		300		3,027		3,525			15,187

Total expenses		95,718		8,943			104,661		28,500		28,078		56,578		18,138			179,377

Income (loss) from operations	$	45,767	$	(3,688	)	$	42,079	$	14,947	$	15,123	$	30,070	$	(17,918	)	$	54,231

As of June 30, 2012
Total assets	$	900,302	$	113,498		$	1,013,800	$	360,912	$	152,888	$	513,800	$	130,776		$	1,658,376
Goodwill						$	353,945					$	210,368				$	564,313

Retail Services

E-Commerce

Domestic

Foreign

Total

Domestic

Foreign

Total

Corporate

Consolidated

Six Months Ended June 30, 2013

Revenue

Pawn loan fees and service charges

144,976

3,666

148,642

—

148,642

Proceeds from disposition of merchandise

301,364

8,885

310,249

—

310,249

Consumer loan fees

54,969

—

54,969

178,143

179,524

357,667

—

412,636

Other

4,418

922

5,340

802

825

1,387

7,552

Total revenue

505,727

13,473

519,200

178,945

179,547

358,492

1,387

879,079

Cost of revenue

Disposed merchandise

203,039

7,257

210,296

—

210,296

Consumer loan loss provision

13,890

—

13,890

63,166

75,025

138,191

—

152,081

Total cost of revenue

216,929

7,257

224,186

63,166

75,025

138,191

—

362,377

Net revenue

288,798

6,216

295,014

115,779

104,522

220,301

1,387

516,702

Expenses

Operations and administration

180,189

7,172

187,361

61,244

69,445

130,689

36,287

354,337

Depreciation and amortization

17,701

829

18,530

7,633

1,395

9,028

7,973

35,531

Total expenses

197,890

8,001

205,891

68,877

70,840

139,717

44,260

389,868

Income (loss) from operations

90,908

(1,785

)

89,123

46,902

33,682

80,584

(42,873

)

126,834

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)


	Retail Services							E-Commerce
	Domestic		Foreign			Total		Domestic		Foreign		Total		Corporate			Consolidated
Six Months Ended June 30, 2012
Revenue
Pawn loan fees and service charges	$	137,598	$	7,352		$	144,950	$	—	$	—	$	—	$	—		$	144,950
Proceeds from disposition of merchandise		340,470		23,869			364,339		—		—		—		—			364,339
Consumer loan fees		57,951		—			57,951		142,926		152,685		295,611		—			353,562
Other		5,147		260			5,407		453		5		458		416			6,281

Total revenue		541,166		31,481			572,647		143,379		152,690		296,069		416			869,132

Cost of revenue
Disposed merchandise		222,473		21,487			243,960		—		—		—		—			243,960
Consumer loan loss provision		11,069		—			11,069		52,597		71,114		123,711		—			134,780

Total cost of revenue		233,542		21,487			255,029		52,597		71,114		123,711		—			378,740

Net revenue		307,624		9,994			317,618		90,782		81,576		172,358		416			490,392

Expenses
Operations and administration		179,463		16,016			195,479		49,589		54,501		104,090		34,776			334,345
Depreciation and amortization		14,646		2,249			16,895		5,339		563		5,902		7,011			29,808

Total expenses		194,109		18,265			212,374		54,928		55,064		109,992		41,787			364,153

Income (loss) from operations	$	113,515	$	(8,271	)	$	105,244	$	35,854	$	26,512	$	62,366	$	(41,371	)	$	126,239

10.

Litigation

On August 6, 2004, James E. Strong filed a purported class action lawsuit in the State Court of Cobb County, Georgia against Georgia Cash America, Inc., Cash America International, Inc. (together with Georgia Cash America, Inc., “Cash America”), Daniel R. Feehan, and several unnamed officers, directors, owners and “stakeholders” of Cash America. In August 2006, James H. Greene and Mennie Johnson were permitted to join the lawsuit as named plaintiffs, and in June 2009, the court agreed to the removal of James E. Strong as a named plaintiff. The lawsuit alleges many different causes of action, among the most significant of which is that Cash America made illegal short-term loans in Georgia in violation of Georgia’s usury law, the Georgia Industrial Loan Act and Georgia’s Racketeer Influenced and Corrupt Organizations Act (“RICO”). First National Bank of Brookings, South Dakota (“FNB”) and Community State Bank of Milbank, South Dakota (“CSB”) for some time made loans to Georgia residents through Cash America’s Georgia operating locations. The complaint in this lawsuit claims that Cash America was the true lender with respect to the loans made to Georgia borrowers and that FNB and CSB’s involvement in the process is “a mere subterfuge.” Based on this claim, the suit alleges that Cash America was the “de facto” lender and was illegally operating in Georgia. The complaint seeks unspecified compensatory damages, attorney’s fees, punitive damages and the trebling of any compensatory damages. In November 2009 the case was certified as a class action lawsuit. In August 2011, Cash America filed a motion for summary judgment, and in October 2011, the plaintiffs filed a cross-motion for partial summary judgment. Hearings on the motions were held in October and November 2011, and the trial court entered an order granting summary judgment in favor of Cash America on one of the plaintiff’s claims, denying the remainder of Cash America’s motion and granting the plaintiff’s cross-motion for partial summary judgment. Cash America filed a notice of appeal with the Georgia Court of Appeals in December 2011 on the grant of plaintiff’s partial summary judgment, and on November 6, 2012, the Georgia Court of Appeals reversed the trial court’s grant of partial summary judgment to plaintiffs and affirmed the trial court’s denial of Cash America’s motion for summary judgment. Cash America filed a Petition for Certiorari with the Supreme Court of Georgia to appeal the decision of the Georgia Court of Appeals regarding Cash America’s motion for summary judgment on November 26, 2012, which was denied on February 18, 2013. This lawsuit is scheduled to go to trial in November 2013. The Company is currently unable to estimate a range of reasonably possible losses, as defined by ASC 450-20-20, Contingencies—Loss Contingencies—Glossary, for this litigation. Cash America believes that the Plaintiffs’ claims in this suit are without merit and is vigorously defending this lawsuit.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

The Company is also a defendant in certain routine litigation matters encountered in the ordinary course of its business. Certain of these matters are covered to an extent by insurance. In the opinion of management, the resolution of these matters is not expected to have a material adverse effect on the Company’s financial position, results of operations or liquidity.

11.

Fair Value Measurements

Recurring Fair Value Measurements

In accordance with ASC 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”), certain of the Company’s assets and liabilities, which are carried at fair value, are classified in one of the following three categories:

Level

1: Quoted market prices in active markets for identical assets or liabilities.

Level

2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level

3: Unobservable inputs that are not corroborated by market data.

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2013 and 2012 and December 31, 2012 are as follows (dollars in thousands):


	June 30,			Fair Value Measurements Using
	2013			Level 1		Level 2			Level 3
Financial assets (liabilities):
Forward currency exchange contracts	$	454		$	—	$	454		$	—
Nonqualified savings plan assets ^(a)		13,336			13,336		—			—

Total	$	13,790		$	13,336	$	454		$	—


	June 30,			Fair Value Measurements Using
	2012			Level 1		Level 2			Level 3
Financial assets (liabilities):
Forward currency exchange contracts	$	(20	)	$	—	$	(20	)	$	—
Nonqualified savings plan assets ^(a)		10,339			10,339		—			—
Marketable securities^(b)		5,247			5,247		—			—

Total	$	15,566		$	15,586	$	(20	)	$	—


	December 31,			Fair Value Measurements Using
	2012			Level 1		Level 2			Level 3
Financial assets (liabilities):
Forward currency exchange contracts	$	(406	)	$	—	$	(406	)	$	—
Nonqualified savings plan assets ^(a)		11,347			11,347		—			—
Marketable securities^(b)		6,042			6,042		—			—

Total	$	16,983		$	17,389	$	(406	)	$	—

^(a)	The nonqualified savings plan assets have an offsetting liability of equal amount, which is included in “Accounts payable and accrued expenses” in the Company’s consolidated balance sheets.

^(b)

Cumulative unrealized total gains/(losses), net of tax, on these equity securities of ($0.3) million and $0.3 million as of June 30, 2012 and December 31, 2012, respectively, are recorded in “Accumulated other comprehensive income (loss)” in the Company’s consolidated statements of equity. These marketable securities were sold during the three months ended June 30, 2013. See Note 6 for further discussion.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

The Company measures the fair value of its forward currency exchange contracts under Level 2 inputs as defined by ASC 820-10. For these forward currency exchange contracts, standard valuation models are used to determine fair value. The significant inputs used in these models are derived from observable market rates. During the six months ended June 30, 2013 and 2012, there were no transfers of assets in or out of Level 1 or Level 2 fair value measurements.

Financial Assets and Liabilities Not Measured at Fair Value

The Company’s financial assets and liabilities as of June 30, 2013 and 2012 and December 31, 2012 that are not measured at fair value in the consolidated balance sheets are as follows (dollars in thousands):


	Carrying Value		Estimated Fair Value
	June 30,		June 30,		Fair Value Measurement Using
	2013		2013		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	131,905	$	131,905	$	131,905	$	—	$	—
Pawn loans		229,574		229,574		—		—		229,574
Consumer loans, net		287,127		287,127		—		—		287,127
Pawn loan fees and service charges receivable		45,566		45,566		—		—		45,566

Total	$	694,172	$	694,172	$	131,905	$	—	$	562,267

Financial liabilities:
Senior unsecured notes		457,955		443,480		—		443,480		—
2029 Convertible Notes		111,869		207,863		—		207,863		—

Total	$	569,824	$	651,343	$	—	$	651,343	$	—


	Carrying Value		Estimated Fair Value
	June 30,		June 30,		Fair Value Measurement Using
	2012		2012		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	68,939	$	68,939	$	68,939	$	—	$	—
Pawn loans		232,909		232,909		—		—		232,909
Consumer loans, net		226,364		226,364		—		—		226,364
Pawn loan fees and service charges receivable		44,606		44,606		—		—		44,606

Total	$	572,818	$	572,818	$	68,939	$	—	$	503,879

Financial liabilities:
Domestic and Multi-currency line of credit	$	223,914	$	230,451	$	—	$	230,451	$	—
Senior unsecured notes		141,893		142,593		—		142,593		—
2029 Convertible Notes		108,594		208,294		—		208,294		—

Total	$	474,401	$	581,338	$	—	$	581,338	$	—

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)


	Carrying Value		Estimated Fair Value
	December 31,		December 31,		Fair Value Measurement Using
	2012		2012		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	63,134	$	63,134	$	63,134	$	—	$	—
Pawn loans		244,640		244,640		—		—		244,640
Consumer loans, net		289,418		289,418		—		—		289,418
Pawn loan fees and service charges receivable		48,991		48,991		—		—		48,991

Total	$	646,183	$	646,183	$	63,134	$	—	$	583,049

Financial liabilities:
Domestic and Multi-currency line of credit	$	301,011	$	309,969	$	—	$	309,969	$	—
Senior unsecured notes		167,122		165,961		—		165,961		—
2029 Convertible Notes		110,197		186,300		—		186,300		—

Total	$	578,330	$	662,230	$	—	$	662,230	$	—

Cash and cash equivalents bear interest at market rates and have maturities of less than 90 days. Included in the Company’s cash equivalents balances as of June 30, 2013 were $34.0 million in money market funds, which are highly liquid investments with maturities of three months or less. These assets are classified within Level 1 of the fair value hierarchy, as the money market funds are valued using quoted market prices in active markets.

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.

Consumer loans are carried in the consolidated balance sheet 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 carrying value of consumer loans include historical loss rates and recent default trends. Consumer loans have relatively short maturity periods that are generally 12 months or less.

Pawn loan fees and service charges receivable are accrued ratably over the term of the loan based on the portion of these pawn loans deemed 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.

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 June 30, 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 June 30, 2013, the 2029 Convertible Notes had a higher fair value than carrying value due to the Company’s stock price as of June 30, 2013 exceeding the applicable conversion price for the 2029 Convertible Notes, thereby increasing the value of the instrument for noteholders.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

12.

Derivative Instruments

The Company periodically uses derivative instruments to manage risk from changes in market conditions that may affect the Company’s financial performance. The Company primarily uses derivative instruments to manage its primary market risks, which are interest rate risk and foreign currency exchange rate risk.

The Company uses forward currency exchange contracts to hedge foreign currency risk in the United Kingdom and Australia. The Company’s forward currency exchange contracts are non-designated derivatives. Any gain or loss resulting from these contracts is recorded as income or loss and is included in “Foreign currency transaction gain (loss)” in the Company’s consolidated statements of income.

The Company’s derivative instruments are presented in its financial statements on a net basis. The following table presents information related to the Company’s derivative instruments as of June 30, 2013 and 2012 and December 31, 2012 (dollars in thousands):


Assets	As of June 30, 2013
Non-designated derivatives:	Notional Amount		Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheet^(a)			Net Amounts of Assets Presented in the Consolidated Balance Sheet^(b)
Forward currency exchange contracts	$	87,553	$	454	$	—		$	454


Assets	As of June 30, 2012
Non-designated derivatives:	Notional Amount		Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheet^(a)			Net Amounts of Assets Presented in the Consolidated Balance Sheet^(b)
Forward currency exchange contracts	$	88,351	$	—	$	(20	)	$	(20	)


Assets	As of December 31, 2012
Non-designated derivatives:	Notional Amount		Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheet^(a)			Net Amounts of Assets Presented in the Consolidated Balance Sheet^(b)
Forward currency exchange contracts	$	93,813	$	—	$	(406	)	$	(406	)

^(a)

As of June 30, 2013, the Company had no gross amounts of recognized derivative instruments that the Company makes an accounting policy election not to offset. In addition, there is no financial collateral related to the Company’s derivatives. The Company has no liabilities that are subject to an enforceable master netting agreement or similar arrangement.

^(b)	Represents the fair value of forward currency exchange contracts, which is recorded in “Prepaid expenses and other assets” in the consolidated balance sheets.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

The following table presents information on the effect of derivative instruments on the consolidated results of operations and AOCI for the three and six months ended June 30, 2013 and 2012 (dollars in thousands):


	Gains (Losses) Recognized in Income						Gains Recognized in AOCI				Gains (Losses) Reclassified From AOCI into Income
	Three Months Ended June 30,						Three Months Ended June 30,				Three Months Ended June 30,
	2013			2012			2013		2012		2013		2012
Non-designated derivatives:
Forward currency exchange contracts^(a)	$	(66	)	$	1,889		$	—	$	—	$	—	$	—

Total	$	(66	)	$	1,889		$	—	$	—	$	—	$	—


	Gains (Losses) Recognized in Income						Gains Recognized in AOCI				Gains (Losses) Reclassified From AOCI into Income
	Six Months Ended June 30,						Six Months Ended June 30,				Six Months Ended June 30,
	2013			2012			2013		2012		2013		2012
Derivatives designated as hedges:
Interest rate contracts	$	—		$	—		$	—	$	12	$	—	$	—

Total	$	—		$	—		$	—	$	12	$	—	$	—

Non-designated derivatives:
Forward currency exchange contracts^(a)	$	5,251		$	(1,021	)	$	—	$	—	$	—	$	—

Total	$	5,251		$	(1,021	)	$	—	$	—	$	—	$	—

^(a)	The gains/(losses) on these derivatives substantially offset the (losses)/gains on the hedged portion of foreign intercompany balances.

13.

Acquisition of 41 Pawn Lending Locations in Texas

In June 2013, the Company’s wholly-owned subsidiary, Cash America Pawn L.P., signed an asset purchase agreement for the acquisition of a 41-store chain of pawn lending locations in Texas owned by TDP Superstores Corp. The Company estimates the aggregate purchase price of the acquisition to be approximately $102.5 million, which may be increased or decreased depending on the pawn loan balance and aggregate value of the merchandise held for disposition at closing. The acquisition is expected to be completed during the third quarter of 2013.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of financial condition, results of operations, liquidity and capital resources and certain factors that may affect future results, including economic and industry-wide factors, of Cash America International, Inc. and its subsidiaries (the “Company”) should be read in conjunction with the Company’s consolidated financial statements and accompanying notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

GENERAL

The Company provides specialty financial services to individuals through retail services locations and through electronic distribution platforms known as e-commerce activities.

The Company offers secured non-recourse loans, commonly referred to as pawn loans. Pawn loans are short-term loans (generally 30 to 90 days) made on the pledge of tangible personal property. Pawn loan fees and service charges revenue is generated from the Company’s pawn loan portfolio. A related activity of the pawn lending operations is the disposition of collateral from unredeemed pawn loans and the liquidation of a smaller volume of merchandise purchased directly from customers or from third parties.

The Company originates, guarantees or purchases consumer loans (collectively referred to as “consumer loans” throughout this discussion). Consumer loans provide customers with cash, typically in exchange for an obligation to repay the amount advanced plus fees and any applicable interest. Consumer loans include short-term loans (commonly referred to as payday loans), line of credit accounts and installment loans.

Short-term loans include unsecured short-term loans written by the Company or by a third-party lender through the Company’s credit services organization programs (“CSO programs” as further described below) that the Company guarantees. Line of credit accounts include draws made through the Company’s line of credit product. Installment loans are longer-term multi-payment loans that generally require the pay-down of portions of the outstanding principal balance in multiple installments and include unsecured loans and auto equity loans, which are secured by a customer’s vehicle, that are written by the Company or by a third-party lender through the Company’s CSO programs that the Company guarantees.

Through the Company’s CSO programs the Company provides services related to a third-party lender’s consumer loan products in some markets by acting as a credit services organization or credit access business on behalf of consumers in accordance with applicable state laws. Services offered under the CSO programs include credit-related services such as arranging loans with independent third-party lenders and assisting in the preparation of loan applications and loan documents (“CSO loans”). Under the CSO programs, the Company guarantees consumer loan payment obligations to the third-party lender in the event that the customer defaults on the loan. CSO loans are not included in the Company’s financial statements, but the Company has established a liability for the estimated losses in support of the guarantee on these loans in its consolidated balance sheets.

In addition, the Company provides check cashing and other ancillary services through many of its retail services locations and through its franchised check cashing centers. The ancillary services provided mainly include money orders, wire transfers, prepaid debit cards, tax filing services and auto insurance. Most of these ancillary services are provided through third-party vendors.

channels through which the Company offers consumer loans. The Company reports corporate operations separately from its retail services and e-commerce segment information. Corporate operations primarily include corporate expenses, such as legal, occupancy, and other costs related to corporate service functions, such as executive oversight, insurance and risk management, public and government relations, internal audit, treasury, payroll, compliance and licensing, finance, accounting, tax and information systems (except for online lending systems, which are included in the e-commerce segment). Corporate income includes miscellaneous income not directly attributable to the Company’s segments. Corporate assets primarily include corporate property and equipment, nonqualified savings plan assets, marketable securities, foreign exchange forward contracts and prepaid insurance.

Retail Services Segment

The following table sets forth the number of domestic and foreign Company-owned and franchised locations in the Company’s retail services segment offering pawn lending, consumer lending, and other ancillary services as of June 30, 2013 and 2012. The Company’s domestic retail services locations operate under the names “Cash America Pawn,” “SuperPawn,” “Cash America Payday Advance,” “Cashland” and “Mr. Payroll.” In addition, certain domestic retail services locations acquired in late 2012 operate under various names that are expected to be changed to “Cash America Pawn” during 2013. The Company’s foreign retail services locations operate under the name “Cash America casa de empeño.”


	As of June 30,
	2013						2012
	Domestic^(a)		Foreign		Total		Domestic^(a)(b)		Foreign		Total
Retail services locations offering:
Both pawn and consumer lending		581		—		581		577		—		577
Pawn lending only		169		47		216		130		195		325
Consumer lending only		77		—		77		83		—		83
Other ^(c)		90		—		90		101		—		101

Total retail services		917		47		964		891		195		1,086

^(a)	Except as described in (c) below, includes locations operating in 22 and 23 states in the United States as of June 30, 2013 and 2012, respectively.

^(b)	Includes one unconsolidated franchised location operating under the name “Cash America Pawn” as of June 30, 2012.

^(c)

As of June 30, 2013 and 2012, includes 90 and 95 unconsolidated franchised check cashing locations, respectively, and as of June 30, 2012, includes six consolidated Company-owned check cashing locations. As of June 30, 2013 and 2012, includes locations operating in 14 and 16 states in the United States, respectively.

E-Commerce Segment

As of June 30, 2013 and 2012, the Company’s e-commerce segment operated in 32 states in the United States and in three foreign countries:

•

in the United States at http://www.cashnetusa.com and http://www.netcredit.com,

•

in the United Kingdom at http://www.quickquid.co.uk and http://www.poundstopocket.co.uk,

•

in Australia at http://www.dollarsdirect.com.au, and

•

in Canada at http://www.dollarsdirect.ca.

During 2013, the e-commerce segment also offered a line of credit product in Mexico under the trade name “Debit Plus.” The Company stopped offering this line of credit product in Mexico during the second quarter of 2013. The results of operations associated with this product are not material to the e-commerce segment or to the Company.

The Company’s internet websites and the information contained therein or connected thereto are not intended to be incorporated by reference into this Quarterly Report on Form 10-Q.

Recent Developments

CRITICAL ACCOUNTING POLICIES

Except as described below, since December 31, 2012, there have been no changes in critical accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Goodwill and Other Indefinite-Lived Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. In accordance with Accounting Standards Codification (“ASC”) 350-20-35, Goodwill – Subsequent Measurement, the Company tests goodwill and intangible assets with an indefinite life for potential impairment annually as of June 30 and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

The Company performed its annual indefinite-lived intangible asset impairment test as of June 30, 2013. The Company elected to perform a qualitative assessment in accordance with Financial Accounting Standards Board Accounting Standards Update (“ASU”) No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”) and determined that it was not more likely than not that the indefinite-lived intangible assets are impaired. Therefore, no further quantitative assessment was required.

RESULTS OF CONTINUING OPERATIONS

Overview and Highlights

The Company’s financial results for the three months ended June 30, 2013 (the “current quarter”) are summarized below.

•

Consolidated total revenue was $411.0 million, representing a slight decrease of $0.7 million, or 0.2%, for the current quarter compared to the three months ended June 30, 2012 (the “prior year quarter”).

•

Consolidated net revenue increased $11.2 million, or 4.8%, to $244.8 million for the current quarter from $233.6 million for the prior year quarter.

•

Consumer loan net revenue, which consists of consumer loan fees, net of consumer loan loss provision, increased 15.6%, or $16.9 million, in the current quarter compared to the prior year quarter.

•

Net revenue from pawn-related activities, which is the sum of pawn loan fees and service charges and the net proceeds from the disposition of merchandise, decreased 5.8%, or $7.1 million, in the current quarter compared to the prior year quarter.

•

Consolidated income from operations decreased 9.2%, to $49.2 million in the current quarter compared to $54.2 million in the prior year quarter.

•

Consolidated net income was $25.1 million in the current quarter compared to $29.8 million in the prior year quarter.

•

Consolidated diluted net income per share decreased 13.8%, or $0.13 per share, to $0.81 in the current quarter compared to $0.94 in the prior year quarter.

OVERVIEW

Consolidated Net Revenue

Consolidated net revenue is composed of total revenue less cost of disposed merchandise and consumer loan loss provision. Net revenue is the income available to satisfy all remaining expenses and is the measure management uses to evaluate top-line performance.

The following tables show the components of net revenue for the current quarter and prior year quarter for the Company’s retail services and e-commerce segments, for the Company’s corporate operations and on a consolidated basis (dollars in thousands):

Three Months Ended June 30, 2013

Retail Services

E-Commerce

Corporate

Consolidated

% of

Amount

Total

Amount

Total

Amount

Total

Amount

Total

Pawn loan fees and service charges

72,728

52.9

—

72,728

29.7

Proceeds from disposition of merchandise,

net of cost of disposed merchandise

42,571

30.9

—

42,571

17.4

Pawn related

115,299

83.8

—

115,299

47.1

Consumer loan fees, net of loss provision

19,535

14.2

105,667

99.6

—

125,202

51.2

Other revenue

2,747

2.0

377

0.4

1,136

100.0

4,260

1.7

Net revenue

137,581

100.0

106,044

100.0

1,136

100.0

244,761

100.0


	Three Months Ended June 30, 2012
	Retail Services					E-Commerce					Corporate					Consolidated
			% of					% of					% of					% of
	Amount		Total			Amount		Total			Amount		Total			Amount		Total
Pawn loan fees and service charges	$	72,051		49.1	%	$	—		—	%	$	—		—	%	$	72,051		30.9	%
Proceeds from disposition of merchandise, net of cost of disposed merchandise		50,317		34.3	%		—		—	%		—		—	%		50,317		21.5	%

Pawn related	$	122,368		83.4	%	$	—		—	%	$	—		—	%	$	122,368		52.4	%

Consumer loan fees, net of loss provision	$	21,976		15.0	%	$	86,349		99.7	%	$	—		—	%	$	108,325		46.4	%

Other revenue		2,396		1.6	%		299		0.3	%		220		100.0	%		2,915		1.2	%

Net revenue	$	146,740		100.0	%	$	86,648		100.0	%	$	220		100.0	%	$	233,608		100.0	%


	Six Months Ended June 30, 2013
	Retail Services					E-Commerce					Corporate					Consolidated
			% of					% of					% of					% of
	Amount		Total			Amount		Total			Amount		Total			Amount		Total
Pawn loan fees and service charges	$	148,642		50.4	%	$	—		—	%	$	—		—	%	$	148,642		28.8	%
Proceeds from disposition of merchandise, net of cost of disposed merchandise		99,953		33.9	%		—		—	%		—		—	%		99,953		19.3	%

Pawn related	$	248,595		84.3	%	$	—		—	%	$	—		—	%	$	248,595		48.1	%

Consumer loan fees, net of loss provision	$	41,079		13.9	%	$	219,476		99.6	%	$	—		—	%	$	260,555		50.4	%

Other revenue		5,340		1.8	%		825		0.4	%		1,387		100.0	%		7,552		1.5	%

Net revenue	$	295,014		100.0	%	$	220,301		100.0	%	$	1,387		100.0	%	$	516,702		100.0	%


	Six Months Ended June 30, 2012
	Retail Services					E-Commerce					Corporate					Consolidated
			% of					% of					% of					% of
	Amount		Total			Amount		Total			Amount		Total			Amount		Total
Pawn loan fees and service charges	$	144,950		45.6	%	$	—		—	%	$	—		—	%	$	144,950		29.6	%
Proceeds from disposition of merchandise net of cost of disposed merchandise		120,379		37.9	%		—		—	%		—		—	%		120,379		24.5	%

Pawn related	$	265,329		83.5	%	$	—		—	%	$	—		—	%	$	265,329		54.1	%

Consumer loan fees, net of loss provision	$	46,882		14.8	%	$	171,900		99.7	%	$	—		—	%	$	218,782		44.6	%

Other revenue		5,407		1.7	%		458		0.3	%		416		100.0	%		6,281		1.3	%

Net revenue	$	317,618		100.0	%	$	172,358		100.0	%	$	416		100.0	%	$	490,392		100.0	%

For the current quarter, consolidated net revenue increased $11.2 million, or 4.8%, to $244.8 million from $233.6 million for the prior year quarter. Consumer loan net revenue accounted for 51.2% and 46.4% of total consolidated net revenue for the current quarter and prior year quarter, respectively. Consumer loan net revenue increased $16.9 million, to $125.2 million during the current quarter, mainly due to an increase in consumer loan fees that resulted from an increase in consumer loans written and renewed in the e-commerce segment and a decrease in the loss provision as a percentage of consumer loan fees.

Pawn-related net revenue accounted for 47.1% and 52.4% of total consolidated net revenue for the current quarter and prior year quarter, respectively. Pawn-related net revenue decreased $7.1 million, to $115.3 million during the current quarter from $122.4 million in the prior year quarter. The decrease in pawn-related net revenue was primarily attributable to a decrease in gross profit, due to lower commercial sales, a decrease in gross profit margin on the disposition of merchandise from commercial sales and a decrease in foreign pawn loan fees and services charges, primarily due to lower pawn loan balances. The decrease in pawn loan balances was primarily due to the net closure of 148 pawn lending locations as a result of the reorganization of the Company’s Mexico-based pawn lending operations during 2012 (the “Mexico Reorganization”). This decrease was partially offset by an increase in pawn loan fees and service charges in the Company’s domestic operations, primarily due to an increase in pawn loan yield and higher average pawn loan balances.

For the six-month period ended June 30, 2013 (the “current six-month period”), consolidated net revenue increased $26.3 million, or 5.4%, to $516.7 million from $490.4 million for the same period in 2012 (the “prior year six-month period”). Consumer loan net revenue accounted for 50.4% and 44.6% of total consolidated net revenue for the current six-month period and prior year six-month period, respectively. Consumer loan net revenue increased $41.8 million to $260.6 million during the current six-month period, mainly due to an increase in consumer loan fees that resulted from an increase in consumer loans written and renewed in the e-commerce segment and a decrease in the loss provision as a percentage of consumer loan fees.

Pawn-related net revenue accounted for 48.1% and 54.1% of consolidated net revenue for the current six-month period and prior year six-month period, respectively. Pawn-related net revenue decreased $16.7 million, to $248.6 million during the current six-month period from $265.3 million in the prior year six-month period. The decrease in pawn-related net revenue was primarily attributable to a decrease in gross profit, due to lower commercial sales, a decrease in gross profit margin on the disposition of merchandise from commercial sales and a decrease in foreign pawn loan fees and services charges resulting from lower pawn loan balances due to the closure of 148 foreign retail services locations as a result of the Mexico Reorganization. This decrease was partially offset by an increase in pawn loan fees and service charges in the Company’s domestic operations, primarily due to an increase in pawn loan yield and higher average pawn loan balances.

Non-GAAP Disclosure

In addition to the financial information prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”), the Company provides historical non-GAAP financial information. Management believes that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of the Company’s operations. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s business that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.

Management provides non-GAAP financial information for informational purposes and to enhance understanding of the Company’s GAAP consolidated financial statements. Readers should consider the information in addition to, but not instead of or superior to, its financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.

Adjusted Earnings and Adjusted Earnings Per Share

In addition to reporting financial results in accordance with GAAP, the Company has provided adjusted earnings and adjusted earnings per share, which are non-GAAP measures. Management believes that the presentation of these measures provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments and amortization methods, which provides a more complete understanding of the Company’s financial performance, competitive position and prospects for the future. Management also believes that investors regularly rely on non-GAAP financial measures, such as adjusted earnings and adjusted earnings per share, to assess operating performance and that such measures may highlight trends in the Company’s business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP.

The following table provides a reconciliation for the three and six months ended June 30, 2013 and 2012 between net income attributable to the Company and diluted earnings per share calculated in accordance with GAAP to adjusted earnings and adjusted earnings per share, respectively, which are shown net of tax (dollars in thousands, except per share data):


	Three Months Ended June 30,									Six Months Ended June 30,
	2013					2012				2013				2012
	$			Per Diluted Share^(a)		$		Per Diluted Share^(a)		$		Per Diluted Share^(a)		$		Per Diluted Share^(a)
Net income and diluted earnings per share attributable to Cash America International, Inc.	$	25,132		$	0.81	$	29,820	$	0.94	$	69,058	$	2.23	$	71,287	$	2.24
Adjustments (net of tax):
Intangible asset amortization		828			0.03		664		0.02		1,661		0.05		1,403		0.04
Non-cash equity-based compensation		770			0.03		942		0.03		1,758		0.05		1,915		0.06
Convertible debt non-cash interest and issuance cost amortization		637			0.02		583		0.02		1,263		0.04		1,166		0.04
Foreign currency transaction loss (gain)		(41	)		—		156		—		197		0.01		103		—

Adjusted earnings and adjusted earnings per share	$	27,326		$	0.89	$	32,165	$	1.01	$	73,937	$	2.38	$	75,874	$	2.38

^(a)	Diluted shares are calculated by giving effect to the potential dilution that could occur if securities or other contracts to issue common shares were exercised and converted into common shares during the period.

Adjusted EBITDA

The table below shows adjusted EBITDA, a non-GAAP measure that the Company defines as earnings excluding depreciation, amortization, interest, foreign currency transaction gains or losses, equity in earnings or loss of unconsolidated subsidiary and provision for income taxes and including the net income or loss attributable to noncontrolling interests. Management believes adjusted EBITDA is used by investors to analyze operating performance and evaluate the Company’s ability to incur and service debt and its capacity for making capital expenditures. Adjusted EBITDA is also useful to investors to help assess the Company’s liquidity and estimated enterprise value. In addition, management believes that the adjustments shown below, especially the adjustments for charges related to events that occurred during the third and fourth quarters of 2012, such as the withdrawn proposed initial public offering (“IPO”) of the Company’s wholly-owned subsidiary, Enova International, Inc. (“Enova”), the Mexico Reorganization, and the voluntary reimbursements to Ohio customers (the “Ohio Reimbursements”) are useful to investors in order to allow them to compare the Company’s financial results for the current and prior year trailing 12 months. The computation of adjusted EBITDA as presented below may differ from the computation of similarly-titled measures provided by other companies (dollars in thousands):


	Trailing 12 Months Ended
	June 30,
	2013			2012
Net income attributable to Cash America International, Inc.	$	105,241		$	143,891
Adjustments:
Charges related to withdrawn proposed Enova IPO^(a)		3,112			767
Charges related to Mexico Reorganization^(b)		28,873			—
Charges related to Ohio Reimbursements^(c)		13,400			—
Depreciation and amortization expenses		68,587	^(d)		59,207
Interest expense, net		31,455			27,859
Foreign currency transaction loss		460			1,149
Equity in loss of unconsolidated subsidiary		283			216
Provision for income taxes		75,864	^(e)		86,428
Net loss attributable to the noncontrolling interest		(3,954	)^(f)		(2,014	)

Adjusted EBITDA	$	323,321		$	317,503

Adjusted EBITDA margin calculated as follows:
Total revenue	$	1,810,377		$	1,741,393
Adjusted EBITDA	$	323,321		$	317,503

Adjusted EBITDA as a percentage of total revenue		17.9	%		18.2	%

^(a)	Represents charges directly related to the proposed Enova IPO that was withdrawn in July 2012, before tax benefit of $1.1 million and $0.3 million for the trailing twelve months ended June 30, 2013 and 2012, respectively.

^(b)

Represents charges related to the Mexico Reorganization, before tax benefit of $1.2 million and noncontrolling interest of $2.3 million. Includes $12.6 million and $7.2 million of depreciation and amortization expenses and charges for the recognition of a deferred tax asset valuation allowance, respectively, as noted in (d) and (e) below.

^(c)	Represents charges related to the Ohio Reimbursements, before tax benefit of $5.0 million.

^(d)	Excludes $12.6 million of depreciation and amortization expenses, which are included in “Charges related to the Mexico Reorganization” in the table above.

^(e)	Excludes a $7.2 million charge for the recognition of a deferred tax asset valuation allowance, which is included in “Charges related to the Mexico Reorganization” in the table above. Includes an income tax benefit related to the Mexico Reorganization of $1.2 million.

^(f)	Includes $2.3 million of noncontrolling interests related to the Mexico Reorganization.

QUARTER ENDED JUNE 30, 2013 COMPARED TO QUARTER ENDED JUNE 30, 2012

Pawn Lending Activities

Pawn lending activities consist of pawn loan fees and service charges from the retail services segment during the period and the profit on disposition of collateral from unredeemed pawn loans, as well as the sale of merchandise acquired from customers directly or from third parties.

The following table sets forth selected data related to the Company’s pawn lending activities as of and for the three months ended June 30, 2013 and 2012 (dollars in thousands except where otherwise noted):


	As of June 30,
	2013			2012			Change			% Change
Ending pawn loan balances
Domestic retail services	$	224,622		$	221,572		$	3,050			1.4	%
Foreign retail services		4,952			11,337			(6,385	)		(56.3	)%

Consolidated pawn loan balances	$	229,574		$	232,909		$	(3,335	)		(1.4	)%

Ending merchandise balance, net
Domestic retail services	$	149,244		$	132,758		$	16,486			12.4	%
Foreign retail services		5,868			12,056			(6,188	)		(51.3	)%

Consolidated merchandise balance, net	$	155,112		$	144,814		$	10,298			7.1	%


	Three Months Ended June 30,
	2013			2012			Change			% Change
Pawn loan fees and service charges
Domestic retail services	$	70,802		$	68,185		$	2,617			3.8	%
Foreign retail services		1,926			3,866			(1,940	)		(50.2	)%

Consolidated pawn loan fees and service charges	$	72,728		$	72,051		$	677			0.9	%

Average pawn loan balance outstanding
Domestic retail services	$	211,195		$	207,195		$	4,000			1.9	%
Foreign retail services		5,237			13,661			(8,424	)		(61.7	)%

Consolidated average pawn loans outstanding	$	216,432		$	220,856		$	(4,424	)		(2.0	)%

Amount of pawn loans written and renewed
Domestic retail services	$	234,327		$	231,354		$	2,973			1.3	%
Foreign retail services		15,166			32,240			(17,074	)		(53.0	)%

Consolidated amount of pawn loans written and renewed	$	249,493		$	263,594		$	(14,101	)		(5.3	)%

Average amount per pawn loan (in ones)
Domestic retail services	$	126		$	129		$	(3	)		(2.3	)%
Foreign retail services	$	89		$	84		$	5			6.0	%
Consolidated average amount per pawn loan (in ones)	$	123		$	121		$	2			1.7	%

Annualized yield on pawn loans
Domestic retail services		134.5	%		132.4	%
Foreign retail services		147.5	%		113.8	%
Consolidated annualized yield on pawn loans		134.8	%		131.2	%

Gross profit margin on disposition of merchandise
Domestic retail services		32.9	%		34.0	%
Foreign retail services		16.4	%		10.3	%
Gross profit margin on disposition of merchandise		32.4	%		32.3	%

Merchandise turnover
Domestic retail services		2.4			2.9
Foreign retail services		2.6			3.5
Consolidated merchandise turnover		2.4			3.0

Pawn Loan Fees and Service Charges

Consolidated pawn loan balances as of June 30, 2013 were $229.6 million, which was $3.3 million, or 1.4%, lower than as of June 30, 2012, due primarily to the reduction in business activities in the Company’s foreign pawn operations in 2012 as a result of the Mexico Reorganization and an overall decrease in demand for pawn loans. The average consolidated balance of pawn loans outstanding during the current quarter decreased by $4.4 million, or 2.0%, compared to the prior year quarter.

Domestic Pawn Loan Balances

The average balance of domestic pawn loans outstanding during the current quarter increased by $4.0 million, or 1.9%, compared to the prior year quarter, primarily due to an increase in the loan balances as a result of the addition of 38 domestic retail services locations, net of closures, through organic growth and acquisitions since the prior year quarter. The increase was partially offset by lower ending pawn loan balances in same-store domestic retail services locations, which decreased 3.6% in the current quarter compared to the prior year quarter, primarily due to lower demand for pawn loans.

Domestic pawn loan fees and service charges increased $2.6 million, or 3.8%, to $70.8 million in the current quarter from $68.2 million in the prior year quarter. The increase was primarily due to higher annualized pawn loan yields but also benefited from a slight increase in the average domestic pawn loan balances during the current quarter. The increase in annualized yield was primarily due to lower forfeitures in the current quarter compared to the prior year quarter and a greater mix of pawn loans in markets with higher statutory lending rates on pawn loans, mainly due to the addition of new domestic retail services locations acquired in late 2012.

Foreign Pawn Loan Balances

Pawn loan balances in foreign locations as of June 30, 2013 were $5.0 million, which was $6.4 million, or 56.3%, lower than as of June 30, 2012. The decrease was mainly due to the net closure of 148 pawn lending locations, which primarily offered jewelry-based pawn loans, in 2012 as part of the Mexico Reorganization. Consequently, foreign pawn loan fees and service charges decreased $2.0 million, or 50.2%, to $1.9 million in the current quarter from $3.9 million in the prior year quarter.

Proceeds from Disposition of Merchandise

Profit from the disposition of merchandise represents the proceeds received from the disposition of merchandise in excess of the cost of disposed merchandise, which is the Company’s cost basis in the pawn loan or the amount paid for purchased merchandise. The following table summarizes the proceeds from the disposition of merchandise and the related profit for the current quarter and the prior year quarter (dollars in thousands):


	Three Months Ended June 30,
	2013									2012
	Retail			Commercial			Total			Retail			Commercial			Total
Proceeds from disposition	$	89,836		$	41,696		$	131,532		$	83,623		$	72,333		$	155,956
Gross profit on disposition	$	33,385		$	9,186		$	42,571		$	31,701		$	18,616		$	50,317
Gross profit margin		37.2	%		22.0	%		32.4	%		37.9	%		25.7	%		32.3	%
Percentage of total gross profit		78.4	%		21.6	%		100.0	%		63.0	%		37.0	%		100.0	%

As the table above indicates, the Company is placing a greater emphasis on retail disposition of merchandise in its retail services locations and shifting away from dispositions of commercial merchandise due to lower market prices for gold. Going forward, management expects this trend to continue and will focus on the aggregate profit on the disposition of merchandise. This shift will result in higher levels of merchandise available for disposition balances and a moderation in inventory turnover ratio as more goods will be available in retail services locations to increase customer choices of merchandise.

The total proceeds from disposition of merchandise decreased $24.4 million, or 15.7%, in the current quarter compared to the prior year quarter. Total gross profit from the disposition of merchandise decreased $7.7 million, or 15.4%, during the current quarter compared to the prior year quarter. The consolidated merchandise turnover decreased to 2.4 times during the current quarter compared to 3.0 times in the prior year quarter, primarily due to a decrease in commercial sales in the current quarter since commercial merchandise typically has a higher turnover rate than retail merchandise.

Proceeds from retail dispositions of merchandise increased $6.2 million, or 7.4%, during the current quarter compared to the prior year quarter. Proceeds from retail dispositions in domestic retail operations increased $7.7 million, primarily due to the addition of retail services locations through organic growth and acquisitions. Offsetting this increase was a $1.5 million decrease in retail sales proceeds from foreign retail operations, mainly due to the closure of pawn lending locations in Mexico as part of the Mexico Reorganization. Consolidated gross profit from retail dispositions increased to 78.4% of total gross profit compared to 63.0% in the prior year quarter, primarily due to the shift to emphasize more retail disposition activity. Consolidated gross profit from retail dispositions increased $1.7 million, composed of a $2.1 million increase from domestic operations, offset by a decrease of $0.4 million from foreign operations. The consolidated gross profit margin on the retail disposition of merchandise decreased slightly to 37.2% in the current quarter compared to 37.9% in the prior year quarter, but was in line sequentially to the 37.4% gross profit margin in the first quarter of 2013.

Proceeds from commercial dispositions decreased $30.6 million, or 42.4%, during the current quarter compared to the prior year quarter. Proceeds from commercial dispositions at domestic operations decreased by $25.0 million, primarily due to a decrease in the volume of gold sold, mainly due to a shift to place a greater emphasis on retail disposition activity, but also due to lower amounts of jewelry forfeitures of collateral and purchases directly from customers. Foreign operations contributed $5.6 million of the decrease, primarily due to the closure of pawn lending locations in Mexico as part of the Mexico Reorganization. Consolidated gross profit from commercial dispositions decreased $9.4 million, mainly due to lower gross profit at domestic operations. Approximately half of the decrease in consolidated gross profit was predominately due to the decrease in the volume of gold sold, and approximately half was predominately due to the higher cost of gold sold relative to the market price per ounce of gold sold, which also led to a lower gross profit margin. The consolidated gross profit margin on commercial sales decreased to 22.0% in the current quarter compared to 25.7% in the prior year quarter.

In future quarters, management expects to reduce the ratio of commercial sales to total sales as part of the Company’s initiative to increase retail sales of jewelry, which typically have a higher gross profit margin than commercial sales, in its retail services locations. Management expects to experience lower levels of gross profit margin on retail dispositions, particularly in some categories such as consumer electronics, which could reduce retail gross profit margins in future periods. Management also expects gross profit margin on commercial dispositions to be lower than current levels in future periods, mainly due to lower prevailing market prices for gold compared to the prior year. The combination of these factors are expected to lead to lower overall gross profit margin in future periods.

The table below summarizes the age of merchandise held for disposition related to the Company’s pawn lending operations before valuation allowance of $0.9 million and $0.7 million as of June 30, 2013 and 2012, respectively (dollars in thousands):


	As of June 30,
	2013				2012
	Amount		%		Amount		%
Jewelry - held for one year or less	$	90,105		57.8	$	89,125		61.3
Other merchandise - held for one year or less		56,398		36.1		49,666		34.1

Total merchandise held for one year or less		146,503		93.9		138,791		95.4

Jewelry - held for more than one year		3,856		2.4		2,562		1.8
Other merchandise - held for more than one year		5,702		3.7		4,161		2.8

Total merchandise held for more than one year		9,558		6.1		6,723		4.6

Total merchandise held for disposition	$	156,061		100.0	$	145,514		100.0

Consumer Loan Activities

Consumer Loan Fees

Consumer loan fees increased $21.7 million, or 12.0%, to $202.4 million in the current quarter compared to $180.7 million in the prior year quarter. The increase in consumer loan fees is primarily due to growth in consumer loans written and renewed in the e-commerce segment, with domestic e-commerce operations contributing $13.7 million and foreign e-commerce operations contributing $10.0 million of the consolidated increase. Offsetting the increase from the e-commerce segment was a $2.0 million decrease in consumer loan fees in the retail services segment, primarily due to a decrease in consumer loan demand in the Company’s storefront operations.

Consumer loan fees from the foreign component of the e-commerce segment were 50.2% of consumer loan fees for the e-commerce segment and 43.6% of consolidated consumer loan fees in the current quarter, compared to 51.5% of the e-commerce segment and 43.3% of consolidated consumer loan fees in the prior year quarter.

Consumer Loan Loss Provision

The consumer loan loss provision increased by $4.8 million, or 6.6%, to $77.2 million in the current quarter from $72.4 million in the prior year quarter primarily as a result of growth in consumer loans written and renewed in the Company’s domestic and foreign e-commerce operations. The loss provision as a percentage of consumer loan fees decreased to 38.2% in the current quarter compared to 40.1% in the prior year quarter, primarily due to a decrease in the loss provision as a percentage of consumer loan fees in the Company’s domestic and foreign e-commerce operations, as newer product portfolios, such as installment and line of credit, mature and have a higher percentage of customers with established payment histories. This decrease was partially offset by an increase in the loss provision as a percentage of consumer loan fees at the Company’s retail services segment. Management expects that future loss rates will continue to be influenced by the mix of new customers to existing customers (because new customers tend to have a higher risk of default than customers with a history of successfully repaying loans) and the mix of short-term, line of credit and installment loan products in the Company’s domestic and foreign operations because installment loans have a higher loss provision as a percentage of consumer loan fees than short-term loans and line of credit accounts.

The following table sets forth consumer loan fees by segment, adjusted for the deduction of the consumer loan loss provision for the current quarter and the prior year quarter (dollars in thousands):


	Three Months Ended June 30,
	2013									2012
	Retail Services			E-Commerce			Total			Retail Services			E-Commerce			Total
Interest and fees on short-term loans	$	23,529		$	103,031		$	126,560		$	25,894		$	112,046		$	137,940
Interest and fees on line of credit accounts		—			28,283			28,283			—			14,270			14,270
Interest and fees on installment loans		3,118			44,470			47,588			2,685			25,827			28,512

Consumer loan fees	$	26,647		$	175,784		$	202,431		$	28,579		$	152,143		$	180,722
Consumer loan loss provision		7,112			70,117			77,229			6,603			65,794			72,397

Consumer loan fees, net of loss provision	$	19,535		$	105,667		$	125,202		$	21,976		$	86,349		$	108,325

Year-over-year change - $	$	(2,441	)	$	19,318		$	16,877		$	(588	)	$	21,628		$	21,040
Year-over-year change - %		(11.1	)%		22.4	%		15.6	%		(2.6	)%		33.4	%		24.1	%
Consumer loan loss provision as a % of consumer loan fees		26.7	%		39.9	%		38.2	%		23.1	%		43.2	%		40.1	%

Combined Consumer Loans

In addition to reporting consumer loans owned by the Company and consumer loans guaranteed by the Company, which are either GAAP items or disclosures required by GAAP, the Company has provided combined consumer loans, which is a non-GAAP measure. In addition, the Company has reported consumer loans written and renewed, which is statistical data that is not included in the Company’s financial statements. The Company also reports allowances and liabilities for estimated losses on consumer loans individually and on a combined basis, which are GAAP measures that are included in the Company’s financial statements.

Management believes these measures provide investors with important information needed to evaluate the magnitude of potential loan losses and the opportunity for revenue performance of the consumer loan portfolio on an aggregate basis. Management believes the comparison of the aggregate amounts from period to period is more meaningful than comparing only the residual amount on the Company’s balance sheet since both revenue and the consumer loan loss provision are impacted by the aggregate amount of loans owned by the Company and those guaranteed by the Company as reflected in its financial statements.

Consumer Loan Balances

The outstanding combined portfolio balance of consumer loans, net of allowances and liability for estimated losses, increased $57.4 million, or 20.7%, to $335.0 million as of June 30, 2013 from $277.6 million as of June 30, 2012, primarily due to increased demand for the line of credit and installment loan products from the e-commerce segment in both domestic and foreign markets.

The combined consumer loan balance includes $367.0 million and $296.9 million as of June 30, 2013 and 2012, respectively, of Company-owned consumer loan balances before the allowance for losses of $79.9 million and $70.6 million provided in the consolidated financial statements for June 30, 2013 and 2012, respectively. The combined consumer loan balance also includes $50.9 million and $54.0 million as of June 30, 2013 and 2012, respectively, of consumer loan balances that are guaranteed by the Company, which are not included in the Company’s financial statements, before the liability for estimated losses of $3.0 million and $2.8 million provided in the consolidated financial statements for June 30, 2013 and 2012, respectively.

The following table summarizes consumer loan balances outstanding as of June 30, 2013 and 2012 (dollars in thousands):


	As of June 30,
	2013									2012
	Company Owned^(a)			Guaranteed by the Company^(a)			Combined^(b)			Company Owned^(a)			Guaranteed by the Company^(a)			Combined^(b)
Ending consumer loan balances:
Retail Services
Short-term loans	$	45,324		$	5,338		$	50,662		$	46,700		$	7,055		$	53,755
Installment loans		9,819			10,131			19,950			9,146			6,296			15,442

Total Retail Services, gross		55,143			15,469			70,612			55,846			13,351			69,197

E-Commerce
Domestic
Short-term loans		31,594			35,115			66,709			35,644			37,093			72,737
Line of credit accounts		47,368			—			47,368			30,595			—			30,595
Installment loans		44,509			—			44,509			25,795			—			25,795

Total Domestic, gross		123,471			35,115			158,586			92,034			37,093			129,127

Foreign
Short-term loans		91,240			301			91,541			94,411			3,541			97,952
Line of credit accounts		10,703			—			10,703			—			—			—
Installment loans		86,433			—			86,433			54,644			—			54,644

Total Foreign, gross		188,376			301			188,677			149,055			3,541			152,596

Total E-Commerce, gross		311,847			35,416			347,263			241,089			40,634			281,723

Total ending loan balance, gross		366,990			50,885			417,875			296,935			53,985			350,920
Less: Allowance and liabilities for losses		(79,863	)		(3,047	)		(82,910	)		(70,571	)		(2,795	)		(73,366	)

Total ending loan balance, net	$	287,127		$	47,838		$	334,965		$	226,364		$	51,190		$	277,554

Allowance and liability for losses as a % of consumer loan balances, gross^(c)		21.8	%		6.0	%		19.8	%		23.8	%		5.2	%		20.9	%

^(a)

GAAP measure. The consumer loan balances guaranteed by the Company represent loans originated by third-party lenders through the CSO programs, so these balances are not recorded in the Company’s financial statements. However, the Company has established a liability for estimated losses in support of its guarantee of these loans, which is reflected in the table above and included in its consolidated balance sheets.

^(b)	Except for allowance and liability for estimated losses, amounts represent non-GAAP measures.

^(c)	Non-GAAP measure.

Consumer Loans Written and Renewed

The amount of combined consumer loans written and renewed was $834.3 million in the current quarter, an increase of $7.9 million, or 1.0%, from $826.4 million in the prior year quarter, mainly due to an increase in demand for line of credit and installment loan products in domestic and foreign markets in the e-commerce segment.

References throughout this discussion to renewed consumer loans include both renewals and extensions made by customers to their existing loans as discussed below. Where permitted by law and as long as a loan is not considered delinquent, a customer may choose to renew a short-term loan or installment loan or extend the due date on a short-term loan. In order to renew or extend a short-term loan, a customer must agree to pay the current finance charge for the right to make a later payment of the outstanding principal balance plus an additional finance charge. In some instances, customers agree to repay a new short-term loan in two or three payments, and in these cases the Company considers the obligation to make the first payment a new loan and the obligation to make the second and third payments renewals or extensions of that loan because the customer pays the finance charge due at the time of each payment, similar to a loan that has been renewed or extended. In order to renew an installment loan, the customer enters into a new installment loan contract and agrees to pay the principal balance and finance charge in accordance with the terms of the new loan contract.

The following table summarizes the consumer loans written and renewed for the current quarter and the prior year quarter (dollars in thousands):


	Three Months Ended June 30,
	2013						2012
	Company Owned^(a)		Guaranteed by the Company^(a)(b)		Combined^(a)		Company Owned^(a)		Guaranteed by the Company^(a)(b)		Combined^(a)
Amount of consumer loans written and renewed (dollars in thousands):
Retail Services
Short-term loans	$	167,896	$	26,446	$	194,342	$	177,924	$	35,295	$	213,219
Installment loans		2,051		5,274		7,325		2,153		4,296		6,449

Total Retail Services		169,947		31,720		201,667		180,077		39,591		219,668

E-Commerce
Domestic
Short-term loans		71,507		163,236		234,743		85,007		181,120		266,127
Line of credit accounts		37,649		—		37,649		29,136		—		29,136
Installment loans		31,385		—		31,385		16,101		—		16,101

Total Domestic		140,541		163,236		303,777		130,244		181,120		311,364

Foreign
Short-term loans		249,953		739		250,692		246,373		17,251		263,624
Line of credit accounts		13,484		—		13,484		—		—		—
Installment loans		64,665		—		64,665		31,728		—		31,728

Total Foreign		328,102		739		328,841		278,101		17,251		295,352

Total E-Commerce		468,643		163,975		632,618		408,345		198,371		606,716

Total amount of consumer loans written and renewed	$	638,590	$	195,695	$	834,285	$	588,422	$	237,962	$	826,384

Number of consumer loans written and renewed (in ones):
Retail Services
Short-term loans		354,546		51,763		406,309		381,179		64,945		446,124
Installment loans		1,798		928		2,726		1,943		567		2,510

Total Retail Services		356,344		52,691		409,035		383,122		65,512		448,634

E-Commerce
Domestic
Short-term loans		242,617		227,956		470,573		270,049		250,776		520,825
Line of credit accounts		139,550		—		139,550		100,144		—		100,144
Installment loans		30,229		—		30,229		15,796		—		15,796

Total Domestic		412,396		227,956		640,352		385,989		250,776		636,765

Foreign
Short-term loans		454,293		919		455,212		473,060		23,144		496,204
Line of credit accounts		30,748		—		30,748		—		—		—
Installment loans		56,679		—		56,679		28,421		—		28,421

Total Foreign		541,720		919		542,639		501,481		23,144		524,625

Total E-Commerce		954,116		228,875		1,182,991		887,470		273,920		1,161,390

Total number of consumer loans written and renewed		1,310,460		281,566		1,592,026		1,270,592		339,432		1,610,024

^(a)	The disclosure regarding the amount and number of consumer loans written and renewed is statistical data that is not included in the Company’s financial statements.

^(b)	Loans guaranteed by the Company represent loans originated by third-party lenders through the CSO programs.

The average amount per consumer loan is calculated as the total amount of combined consumer loans written and renewed for the period divided by the total number of combined consumer loans written and renewed for the period. The following table shows the average amount per consumer loan by product for the current quarter compared to the prior year quarter:


	Three Months Ended June 30,
	2013		2012
Average amount per consumer loan (in ones)^(a)
Retail Services
Short-term loans	$	478	$	478
Installment loans		2,687		2,569
E-Commerce
Domestic
Short-term loans	$	499	$	511
Line of credit accounts		270		291
Installment loans		1,038		1,019
Foreign
Short-term loans	$	551	$	531
Line of credit accounts		439		—
Installment loans		1,141		1,116
Consolidated
Short-term loans	$	510	$	508
Line of credit accounts		300		291
Installment loans		1,153		1,162
Total consumer loans		524		513

^(a)	The disclosure regarding the average amount per consumer loan is statistical data that is not included in the Company’s financial statements.

The average amount per consumer loan increased to $524 from $513 during the current quarter compared to the prior year quarter, mainly due to a greater mix of longer-term multi-payment installment loans in the current quarter, which typically have a higher average loan amount than short-term loans. Management expects the average amount per consumer loan to increase throughout 2013 due to the continued growth in installment lending.

Consumer Loans Written to New and Existing Customers in the E-commerce Segment

For its e-commerce segment, the Company measures the amount and number of consumer loans written and renewed that are Company-owned or guaranteed by the Company, as well as the mix between transactions with new customers and existing customers with whom it has a previous relationship. The amount and number of loans written to new customers reflect the Company’s ability to acquire customers through its marketing programs and by providing new products, in addition to its ability to enter new markets. The amount and number of loans written to existing customers reflect the Company’s ability to retain its customer base through high levels of customer service and customer satisfaction with the products offered by the Company. Loans written to existing customers include both loans with customers who have borrowed from the Company’s e-commerce segment before, either in the current year or in prior years (including customers who may have borrowed through different consumer loan products or brands offered by the e-commerce segment), and loan renewals.

The following table shows, for the e-commerce segment, loans written and renewed to new customers and to existing customers for the current quarter and prior year quarter (dollars in thousands):


	Three Months Ended June 30,
	2013									2012
	Company Owned^(a)			Guaranteed by the Company^(a)(b)			Combined^(a)			Company Owned^(a)			Guaranteed by the Company^(a)(b)			Combined^(a)
Amount of consumer loans written and renewed to:
New customers	$	61,953		$	11,755		$	73,708		$	58,473		$	17,734		$	76,207
% of total		9.8	%		1.9	%		11.7	%		9.7	%		2.9	%		12.6	%
Existing customers		406,690			152,220			558,910			349,872			180,637			530,509
% of total		64.3	%		24.0	%		88.3	%		57.6	%		29.8	%		87.4	%

Total amount of consumer loans written and renewed	$	468,643		$	163,975		$	632,618		$	408,345		$	198,371		$	606,716

Number of consumer loans written and renewed to (in ones):
New customers		124,912			20,878			145,790			127,186			31,666			158,852
% of total		10.6	%		1.7	%		12.3	%		11.0	%		2.7	%		13.7	%
Existing customers		829,204			207,997			1,037,201			760,284			242,254			1,002,538
% of total		70.1	%		17.6	%		87.7	%		65.5	%		20.8	%		86.3	%

Total number of consumer loans written and renewed		954,116			228,875			1,182,991			887,470			273,920			1,161,390

^(a)	The disclosure regarding the amount and number of consumer loans written and renewed is statistical data that is not included in the Company’s financial statements.

^(b)	Loans guaranteed by the Company represent loans originated by third-party lenders through the CSO programs.

Consumer Loan Loss Experience

The Company monitors the performance of its consumer loan portfolio and maintains either an allowance or liability for estimated losses on consumer loans (including fees and interest) at a level estimated to be adequate to absorb credit losses inherent in the portfolio. The allowance for losses on the Company’s owned consumer loans reduces the outstanding loan balance in the consolidated balance sheets. The liability for estimated losses related to loans guaranteed by the Company under its CSO programs, which approximates the fair value of the liability, is included in “Accounts payable and accrued expenses” in the consolidated balance sheets.

The combined allowance and liability for estimated losses as a percentage of combined consumer loans and fees receivable decreased as of the end of the current quarter to 19.8% from 20.9% for the prior year quarter, primarily due to improved performance of the consumer loan portfolios, partially related to the maturing of newer product offerings, such as installment loans and line of credit accounts, to include a higher percentage of customers with established payment histories in the e-commerce segment, as discussed in the “Consumer loan loss provision” section above.

The consumer loan loss provision for the current quarter compared to the prior year quarter was $77.2 million and $72.4 million, respectively, which was composed of $76.3 million and $71.6 million related to the Company-owned consumer loans, respectively, and included $0.9 million and $0.8 million related to loans guaranteed by the Company through the CSO programs, respectively. Consolidated charge-offs, net of recoveries, were $74.1 million and $59.7 million in the current quarter and prior year quarter, respectively.

The following table shows consumer loan balances and fees and the relationship of the allowance for losses to the combined balances of consumer loans for each of the last five quarters (dollars in thousands):


	2012									2013
	Second Quarter			Third Quarter			Fourth Quarter			First Quarter			Second Quarter
Consumer loan balances and fees receivable:
Gross - Company owned	$	296,938		$	336,071		$	375,121		$	331,468		$	366,990
Gross - Guaranteed by the Company^(a)		53,985			55,271			64,736			43,906			50,885

Combined consumer loans and fees receivable, gross^(b)	$	350,923		$	391,342		$	439,857		$	375,374		$	417,875
Allowance and liability for losses on consumer loans		73,366			82,683			89,201			79,762			82,910

Combined consumer loans and fees receivable, net^(b)	$	277,557		$	308,659		$	350,656		$	295,612		$	334,965

Allowance and liability for losses as a % of combined consumer loans and fees receivable, gross^(b)		20.9	%		21.1	%		20.3	%		21.2	%		19.8	%

^(a)	Represents loans originated by third-party lenders through the CSO programs, which are not included in the Company’s financial statements.

^(b)	Non-GAAP measure.

Due to the nature of the short-term loan product and the high velocity of loans written and renewed, seasonal trends are evidenced in quarter-to-quarter performance. In the typical business cycle, the combined consumer loan loss provision as a percent of combined consumer loans written and renewed is usually lowest in the first quarter and increases throughout the year, with the final two quarters generally combining for the peak levels of loss provision expense. The loss provision as a percentage of combined consumer loans written and renewed increased to 9.3% in the current quarter compared to 8.8% in the prior year quarter, primarily due to installment and line of credit loans representing a higher proportion of the total combined loans written and renewed in the current quarter as compared to the prior year quarter. These loans generally have higher loss rates as a percentage of loans written and renewed than short-term loans.

The following tables show the Company’s loss experience relative to the volume of consumer loans for each of the last five quarters (dollars in thousands):


	2012									2013
	Second Quarter			Third Quarter			Fourth Quarter			First Quarter			Second Quarter
Consumer loans written and renewed:^(a)
Company owned	$	588,422		$	627,297		$	663,021		$	606,383		$	638,590
Guaranteed by the Company^(b)		237,962			256,438			269,542			219,536			195,695

Combined consumer loans written and renewed	$	826,384		$	883,735		$	932,563		$	825,919		$	834,285

Combined consumer loan loss provision as a % of combined consumer loans written and renewed^(a)		8.8	%		9.5	%		10.4	%		9.1	%		9.3	%
Charge-offs (net of recoveries) as a % of combined consumer loans written and renewed^(a)		7.2	%		8.5	%		9.7	%		10.2	%		8.9	%
Combined consumer loan loss provision as a % of consumer loan fees		40.1	%		41.1	%		43.6	%		35.6	%		38.2	%

^(a)	The disclosure regarding the amount of consumer loans written and renewed is statistical data that is not included in the Company’s financial statements.

^(b)	Represents loans originated by third-party lenders through the CSO programs, which are not included in the Company’s financial statements.

Total Expenses

The table below shows total expenses by segment, for corporate operations and by significant category for the current quarter and the prior year quarter (dollars in thousands):


	Three Months Ended June 30,
	2013												2012
	Retail Services			E-Commerce			Corporate			Total			Retail Services			E-Commerce			Corporate			Total
Operations and administration:
Personnel	$	52,195		$	22,869		$	12,984		$	88,048		$	53,612		$	17,183		$	8,339		$	79,134
Occupancy		27,630			2,925			569			31,124			26,668			2,276			1,017			29,961
Marketing		3,498			30,050			47			33,595			3,571			26,623			29			30,223
Other		9,733			9,263			5,750			24,746			12,175			7,469			5,228			24,872

Total operations and administration		93,056			65,107			19,350			177,513			96,026			53,551			14,613			164,190
Depreciation and amortization		9,330			4,585			4,085			18,000			8,635			3,027			3,525			15,187

Total expenses	$	102,386		$	69,692		$	23,435		$	195,513		$	104,661		$	56,578		$	18,138		$	179,377

Year-over-year change - $
Operations and administration	$	(2,970	)	$	11,556		$	4,737		$	13,323		$	6,318		$	13,912		$	(3,756	)	$	16,474
Depreciation and amortization		695			1,558			560			2,813			951			245			1,683			2,879

Total	$	(2,275	)	$	13,114		$	5,297		$	16,136		$	7,269		$	14,157		$	(2,073	)	$	19,353

Year-over-year change - %		(2.2	%)		23.2	%		29.2	%		9.0	%		7.5	%		33.4	%		(10.3	%)		12.1	%

Consolidated total expenses increased $16.1 million, or 9.0%, to $195.5 million in the current quarter compared to $179.4 million in the prior year quarter. Total expenses for the retail services segment decreased $2.3 million, or 2.2%, to $102.4 million during the current quarter compared to $104.7 million in the prior year quarter. Total expenses for the e-commerce segment increased $13.1 million, or 23.2%, to $69.7 million in the current quarter.

Operations and Administration Expenses

Operations and administration expenses for the retail services segment decreased $3.0 million, or 3.1%, to $93.1 million during the current quarter compared to the prior year quarter. Personnel expenses for the retail services segment decreased $1.4 million, or 2.6%, primarily due to lower short-term incentives and the reduction in business activities in the Company’s foreign pawn operations in 2012 as a result of the Mexico Reorganization. Occupancy expenses, which include rent, property taxes, insurance, utilities and maintenance, increased $1.0 million, or 3.6%, primarily due to normal rent increases, organic growth and the locations acquired during 2012. Other expenses decreased $2.4 million, primarily due to a reduction in costs from foreign retail services locations due to the Mexico Reorganization, decreased collection costs as a result of a decrease in loans written and lower processing charges that are related to the disposition of commercial merchandise.

Operations and administration expenses for the e-commerce segment increased $11.6 million, or 21.6%, to $65.1 million during the current quarter compared to the prior year quarter. Personnel expenses increased $5.7 million, or 33.1%, primarily due to incentive accruals due to the strong performance of the e-commerce segment and the addition of new personnel to support the e-commerce segment’s growth. Marketing expenses consist of online marketing costs, such as sponsored search and advertising on social networking sites, and other marketing costs such as television, radio and print advertising. In addition, marketing expenses include lead purchase costs paid to marketers in exchange for providing leads to potential customers interested in using the Company’s services. Marketing expenses increased $3.4 million, or 12.9%, to $30.1 million in the current quarter compared to the prior year quarter. The increase in other expenses was primarily due to an increase in loan processing, legal and consulting expenses.

Corporate administration expense increased $4.7 million, or 32.4%, to $19.4 million in the current quarter, primarily due to increases in personnel and health insurance expenses and a decrease in capitalized wages related to system development efforts.

Depreciation and Amortization Expenses

Consolidated depreciation and amortization expenses increased $2.8 million, or 18.5%, primarily due to acquisitions in the third and fourth quarters of 2012 in the retail services segment and increased costs in the e-commerce segment mainly as a result of increased capitalized software and equipment to support the e-commerce segment’s growth. Depreciation and amortization expenses at the retail services segment increased $0.7 million, or 8.0%, to $9.3 million. Depreciation and amortization expenses at the e-commerce segment increased $1.6 million, or 51.5%, to $4.6 million, which included acceleration of depreciation related to the phase-out of certain loan platforms in the current quarter. Depreciation and amortization expenses for corporate operations increased $0.6 million, or 15.9%, to $4.1 million.

Interest Expense

Interest expense increased $2.2 million, or 33.0%, to $8.9 million in the current quarter as compared to $6.7 million in the prior year quarter. During the current quarter, the average amount of debt outstanding increased $60.4 million, to $519.5 million from $459.1 million during the prior year quarter, primarily due to an increase in debt outstanding as a result of acquisitions that occurred during the third and fourth quarters of 2012 and due to the issuance of $300.0 million of senior unsecured notes due 2018 (the “2018 Senior Notes”) in May 2013. Following the issuance of the 2018 Senior Notes, the Company paid down all of the outstanding indebtedness under its domestic and multi-currency line of credit (the “Domestic and Multi-currency Line”), which was at a lower effective interest rate. As a result, the Company’s effective blended borrowing cost increased to 5.8% in the current quarter compared to 5.0% in the prior year quarter. Management expects that the issuance of the 2018 Senior Notes will result in an increase in the Company’s effective blended borrowing cost for the remainder of 2013 as compared to 2012. Also contributing to the increase in interest expense was $0.3 million of debt extinguishment costs in the current quarter related to the amendments to the Domestic and Multi-currency Line and its $50.0 million variable rate term loan facility (the “2018 Variable Rate Notes”).

Income Taxes

The Company’s effective tax rate decreased to 37.0% for the current quarter from 38.2% for the prior year quarter. The decreased overall effective tax rate in the current quarter was primarily due to higher earnings at the Company’s e-commerce segment, which has a lower state effective tax rate. In addition, the effective tax rate for the prior year was negatively impacted by significant losses in the Company’s Mexico-based pawn operations, which were taxed at a lower rate than the domestic operations.

Net (Income) Loss Attributable to the Noncontrolling Interest

Net (income) loss attributable to the noncontrolling interest improved by $0.9 million to net income attributable to the noncontrolling interest of $0.3 million for the current quarter compared to net loss attributable to the noncontrolling interest of $0.6 million for the prior year quarter. As of June 30, 2012, the Company’s Mexico-based pawn operations were owned by Creazione Estilo, S.A. de C.V., a Mexican sociedad anónima de capital variable (“Creazione”). Prior to September 26, 2012, the Company owned 80% of the outstanding stock of Creazione. On September 26, 2012, the Company acquired all outstanding shares of Creazione that were held by minority shareholders (approximately 20% of the outstanding shares), and, as a result, Creazione became a wholly-owned subsidiary of the Company as of that date. The purchase of this minority interest in Creazione was the primary reason for the decrease in net loss attributable to the noncontrolling interest. The Company intends to liquidate the remaining assets of Creazione in 2013.

Through April 2013, the Company had a contractual relationship with a third party entity, Huminal, S.A. de C.V., a Mexican sociedad anónima de capital variable (“Huminal”). The Company qualified as the primary beneficiary of Huminal in accordance ASC 810, Consolidation (“ASC 810”). Therefore, the results and balances of Huminal were consolidated and allocated to net income attributable to noncontrolling interests. In May 2013, the Company acquired the remaining outstanding common stock of Huminal to increase its ownership to 100% of Huminal and, as a result, Huminal became a wholly-owned subsidiary of the Company as of that date. The Company accounted for this transaction as a change in ownership interests that does not result in a change in control.

SIX MONTHS ENDED JUNE 30, 2013 COMPARED TO SIX MONTHS ENDED JUNE 30, 2012

Pawn Lending Activities

The following table sets forth selected data related to the Company’s pawn lending activities as of and for the six-month periods ended June 30, 2013 and 2012 (dollars in thousands except where otherwise noted):


	Six Months Ended June 30,
	2013			2012			Change			% Change
Pawn loan fees and service charges
Domestic retail services	$	144,976		$	137,598		$	7,378			5.4	%
Foreign retail services		3,666			7,352			(3,686	)		(50.1	)%

Consolidated pawn loan fees and service charges	$	148,642		$	144,950		$	3,692			2.5	%

Average pawn loan balance outstanding
Domestic retail services	$	219,709		$	214,058		$	5,651			2.6	%
Foreign retail services		4,858			14,613			(9,755	)		(66.8	)%

Consolidated average pawn loans outstanding	$	224,567		$	228,671		$	(4,104	)		(1.8	)%

Amount of pawn loans written and renewed
Domestic retail services	$	449,703		$	436,809		$	12,894			3.0	%
Foreign retail services		28,259			69,636			(41,377	)		(59.4	)%

Consolidated amount of pawn loans written and renewed	$	477,962		$	506,445		$	(28,483	)		(5.6	)%

Average amount per pawn loan (in ones)
Domestic retail services	$	128		$	130		$	(2	)		(1.5	)%
Foreign retail services	$	87		$	92		$	(5	)		(5.4	)%
Consolidated average amount per pawn loan (in ones)	$	124		$	123		$	1			0.8	%

Annualized yield on pawn loans
Domestic retail services		133.1	%		129.3	%
Foreign retail services		152.2	%		101.2	%
Consolidated annualized yield on pawn loans		133.5	%		127.5	%

Gross profit margin on disposition of merchandise
Domestic retail services		32.6	%		34.7	%
Foreign retail services		18.3	%		10.0	%
Consolidated gross profit margin on disposition of merchandise		32.2	%		33.0	%

Merchandise turnover
Domestic retail services		2.7			3.2
Foreign retail services		2.6			3.8
Consolidated merchandise turnover		2.7			3.3

Pawn Loan Fees and Service Charges

The average consolidated balance of pawn loans outstanding during the current six-month period decreased by $4.1 million, or 1.8%, compared to the prior year six-month period.

Domestic Pawn Loan Balances

The average balance of domestic pawn loans outstanding during the current six-month period increased by $5.7 million, or 2.6%, compared to the prior year six-month period, primarily due to an increase in the loan balances as a result of the addition of 38 domestic retail services locations, net of closures, through organic growth and acquisitions since the prior year six-month period. The increase was partially offset by lower ending pawn loan balances in same-store domestic retail services locations, which decreased 3.6% in the current six-month period compared to the prior year six-month period, primarily due to lower demand for pawn loans.

Domestic pawn loan fees and service charges increased $7.4 million, or 5.4%, to $145.0 million in the current six-month period from $137.6 million in the prior year six-month period. The increase is primarily due to higher average domestic pawn loan balances and higher annualized pawn loan yields during the current six-month period. The increase in annualized yield was primarily due to lower forfeitures in the current six-month period compared to the prior year six-month period and a greater mix of pawn loans in markets with higher statutory lending rates on pawn loans, primarily due to the addition of new domestic retail services locations acquired in late 2012.

Foreign Pawn Loan Balances

The average balance of foreign pawn loans outstanding during the current six-month period decreased by $9.8 million, or 66.8%, compared to the prior year six-month period. The substantial decrease was mainly due to the net closure of 148 pawn lending locations, which primarily offered jewelry-based pawn loans, in 2012 as part of the Mexico Reorganization. Consequently, foreign pawn loan fees and service charges decreased $3.7 million, or 50.1%, to $3.7 million in the current six-month period from $7.4 million in the prior year six-month period.

Proceeds from Disposition of Merchandise

The following table summarizes the proceeds from the disposition of merchandise and the related profit for the current six-month period and the prior year six-month period (dollars in thousands):


	Six Months Ended June 30,
	2013									2012
	Retail			Commercial			Total			Retail			Commercial			Total
Proceeds from disposition	$	202,246		$	108,003		$	310,249		$	195,655		$	168,684		$	364,339
Gross profit on disposition	$	75,375		$	24,578		$	99,953		$	73,447		$	46,932		$	120,379
Gross profit margin		37.3	%		22.8	%		32.2	%		37.5	%		27.8	%		33.0	%
Percentage of total gross profit		75.4	%		24.6	%		100.0	%		61.0	%		39.0	%		100.0	%

The total proceeds from disposition of merchandise decreased $54.1 million, or 14.8%, in the current six-month period compared to the prior year six-month period. Total gross profit from the disposition of merchandise decreased $20.4 million, or 17.0%, during the current six-month period compared to the prior year six-month period. The overall gross profit margin percentage decreased to 32.2% in the current six-month period compared to 33.0% in the prior year six-month period, primarily due to a decrease in gross profit margin on commercial sales. The consolidated merchandise turnover decreased to 2.7 times during the current six-month period compared to 3.3 times in the prior year six-month period, primarily due to a decrease in commercial sales in the current six-month period since commercial merchandise typically has a higher turnover rate than retail merchandise.

Proceeds from retail dispositions of merchandise increased $6.6 million, or 3.4%, during the current six-month period compared to the prior year six-month period. Proceeds from retail dispositions in domestic retail operations increased $9.5 million, primarily due to the addition of retail services locations through organic growth and acquisitions. Offsetting this increase was a $2.9 million decrease in retail sales proceeds from foreign retail operations, mainly due to the closure of pawn lending locations in Mexico as part of the Mexico Reorganization. Consolidated gross profit from retail dispositions increased $1.9 million, which was composed of a $2.6 million increase from domestic operations offset by a $0.7 million decrease from foreign operations. Consolidated gross profit from retail dispositions increased to 75.4% of total gross profit compared to 61.0% in the prior year six-month period, primarily due to the shift to emphasize more retail disposition activity.

Proceeds from commercial dispositions decreased $60.7 million, or 36.0%, during the current six-month period compared to the prior year six-month period. Proceeds from commercial dispositions from domestic operations decreased by $48.7 million, primarily due to a decrease in the volume of gold sold, mainly due to the shift to place a greater emphasis on retail disposition activity, but also due to lower amounts of jewelry forfeitures of collateral and lower amounts purchased directly from customers. Foreign operations contributed $12.1 million of the decrease, primarily due to the closure of pawn lending locations in Mexico as part of the Mexico Reorganization. Consolidated

gross profit from commercial dispositions decreased $22.4 million, mainly due to lower gross profit from domestic operations. Approximately half of the decrease in consolidated gross profit was predominantly due to the decrease in the volume of gold sold, and approximately half was predominantly due to the higher cost of gold sold relative to the market price per ounce of gold sold, which also led to a lower gross profit margin. The consolidated gross profit margin on commercial sales decreased to 22.8% in the current six-month period compared to 27.8% in the prior year six-month period.

Consumer Loan Activities

Consumer Loan Fees

Consumer loan fees increased $59.0 million, or 16.7%, to $412.6 million in the current six-month period compared to $353.6 million in the prior year six-month period. The increase in consumer loan fees was primarily due to growth in consumer loans written and renewed in the e-commerce segment, with domestic e-commerce operations contributing $35.2 million and foreign e-commerce operations contributing $26.8 million of the consolidated increase. Offsetting the increase from the e-commerce segment was a $3.0 million decrease in consumer loan fees in the retail services segment, primarily due to a decrease in consumer loan demand in the Company’s storefront operations.

Consumer loan fees from the foreign component of the e-commerce segment were 50.2% of consumer loan fees for the e-commerce segment and 43.5% of consolidated consumer loan fees in the current six-month period, compared to 51.7% of the e-commerce segment and 43.2% of consolidated consumer loan fees in the prior year six-month period.

Consumer Loan Loss Provision

The consumer loan loss provision increased $17.3 million, or 12.8%, to $152.1 million in the current six-month period from $134.8 million in the prior year six-month period, primarily as a result of growth in consumer loans written and renewed in the Company’s domestic and foreign e-commerce operations. The loss provision as a percentage of consumer loan fees decreased to 36.9% in the current six-month period compared to 38.1% in the prior year six-month period, primarily due to a decrease in the loss provision as a percentage of consumer loan fees in the Company’s domestic and foreign e-commerce operations, as newer product portfolios, such as installment and line of credit, mature and begin to have a higher percentage of customers with established payment histories. This decrease was partially offset by an increase in the loss provision as a percentage of consumer loan fees at the Company’s retail services operations.

The following table sets forth consumer loan fees by segment adjusted for the deduction of the loan loss provision for the current and the prior year six-month periods (dollars in thousands):


	Six Months Ended June 30,
	2013									2012
	Retail Services			E-Commerce			Total			Retail Services			E-Commerce			Total
Interest and fees on short-term loans	$	48,736		$	218,039		$	266,775		$	52,805		$	221,777		$	274,582
Interest and fees on line of credit accounts		—			51,517			51,517			—			25,921			25,921
Interest and fees on installment loans		6,233			88,111			94,344			5,146			47,913			53,059

Consumer loan fees	$	54,969		$	357,667		$	412,636		$	57,951		$	295,611		$	353,562
Consumer loan loss provision		13,890			138,191			152,081			11,069			123,711			134,780

Consumer loan fees, net of loss provision	$	41,079		$	219,476		$	260,555		$	46,882		$	171,900		$	218,782

Year-over-year change - $	$	(5,803	)	$	47,576		$	41,773		$	1,666		$	46,204		$	47,870
Year-over-year change - %		(12.4	)%		27.7	%		19.1	%		3.7	%		36.8	%		28.0	%
Consumer loan loss provision as a % of consumer loan fees		25.3	%		38.6	%		36.9	%		19.1	%		41.8	%		38.1	%

Combined Consumer Loans

Consumer Loans Written and Renewed

The amount of combined consumer loans written and renewed was $1.66 billion in the current six-month period, an increase of $60.8 million, or 3.8%, from $1.60 billion in the prior year six-month period, mainly due to an increase in demand for line of credit and installment loan products in domestic and foreign markets in the e-commerce segment.

The following table summarizes the consumer loans written and renewed for the current and the prior year six-month periods (dollars in thousands):


	Six Months Ended June 30,
	2013						2012
	Company Owned^(a)		Guaranteed by the Company^(a)(b)		Combined^(a)		Company Owned^(a)		Guaranteed by the Company^(a)(b)		Combined^(a)
Amount of consumer loans written and renewed (dollars in thousands):
Retail Services
Short-term loans	$	339,816	$	54,772	$	394,588	$	353,598	$	72,662	$	426,260
Installment loans		3,497		8,986		12,483		3,664		6,156		9,820

Total Retail Services		343,313		63,758		407,071		357,262		78,818		436,080

E-Commerce
Domestic
Short-term loans		144,135		337,502		481,637		166,688		343,402		510,090
Line of credit accounts		66,455		—		66,455		47,513		—		47,513
Installment loans		56,056		—		56,056		27,367		—		27,367

Total Domestic		266,646		337,502		604,148		241,568		343,402		584,970

Foreign
Short-term loans		516,280		13,971		530,251		486,895		35,048		521,943
Line of credit accounts		13,484		—		13,484		—		—		—
Installment loans		105,250		—		105,250		56,410		—		56,410

Total Foreign		635,014		13,971		648,985		543,305		35,048		578,353

Total E-Commerce		901,660		351,473		1,253,133		784,873		378,450		1,163,323

Total amount of consumer loans written and renewed:	$	1,244,973	$	415,231	$	1,660,204	$	1,142,135	$	457,268	$	1,599,403

Number of consumer loans written and renewed (in ones):
Retail Services
Short-term loans		709,859		105,752		815,611		750,563		131,676		882,239
Installment loans		3,194		1,562		4,756		3,480		844		4,324

Total Retail Services		713,053		107,314		820,367		754,043		132,520		886,563

E-Commerce
Domestic
Short-term loans		485,865		463,178		949,043		515,493		469,902		985,395
Line of credit accounts		251,201		—		251,201		171,085		—		171,085
Installment loans		53,414		—		53,414		25,811		—		25,811

Total Domestic		790,480		463,178		1,253,658		712,389		469,902		1,182,291

Foreign
Short-term loans		921,197		18,235		939,432		925,263		46,499		971,762
Line of credit accounts		30,748		—		30,748		—		—		—
Installment loans		89,754		—		89,754		50,203		—		50,203

Total Foreign		1,041,699		18,235		1,059,934		975,466		46,499		1,021,965

Total E-Commerce		1,832,179		481,413		2,313,592		1,687,855		516,401		2,204,256

Total number of consumer loans written and renewed		2,545,232		588,727		3,133,959		2,441,898		648,921		3,090,819

^(a)	The disclosure regarding the amount and number of consumer loans written and renewed is statistical data that is not included in the Company’s financial statements.

^(b)	Loans guaranteed by the Company represent loans originated by third-party lenders through the CSO programs.


	Six Months Ended June 30,
	2013		2012
Average amount per consumer loan (in ones)^(a)
Retail Services
Short-term loans	$	484	$	483
Installment loans		2,625		2,271
E-Commerce
Domestic
Short-term loans	$	507	$	518
Line of credit accounts		265		278
Installment loans		1,049		1,060
Foreign
Short-term loans	$	564	$	537
Line of credit accounts		439		—
Installment loans		1,173		1,124
Consolidated
Short-term loans	$	520	$	514
Line of credit accounts		284		278
Installment loans		1,175		1,165
Total consumer loans		530		517

^(a)	The disclosure regarding the average amount per consumer loan is statistical data that is not included in the Company’s financial statements.

The average amount per consumer loan increased to $530 from $517 during the current six-month period compared to the prior year six-month period, mainly due to a greater mix of longer-term multi-payment installment loans in the current six-month period, which typically have a higher average loan amount than short-term loans.

Consumer Loans Written to New and Existing Customers in the E-commerce Segment

The following table shows, for the e-commerce segment, loans written and renewed to new customers and to existing customers for the current and prior year six-month period (dollars in thousands):


	Six Months Ended June 30,
	2013									2012
	Company Owned^(a)			Guaranteed by the Company^(a)(b)			Combined^(a)			Company Owned^(a)			Guaranteed by the Company^(a)(b)			Combined^(a)
Amount of consumer loans written and renewed to:
New customers	$	117,077		$	22,288		$	139,365		$	102,415		$	28,272		$	130,687
% of total		9.3	%		1.8	%		11.1	%		8.8	%		2.4	%		11.2	%
Existing customers		784,583			329,185			1,113,768			682,458			350,178			1,032,636
% of total		62.6	%		26.3	%		88.9	%		58.7	%		30.1	%		88.8	%

Total amount of consumer loans written and renewed	$	901,660		$	351,473		$	1,253,133		$	784,873		$	378,450		$	1,163,323

Number of consumer loans written and renewed to (in ones):
New customers		237,326			39,859			277,185			230,592			50,441			281,033
% of total		10.3	%		1.7	%		12.0	%		10.4	%		2.3	%		12.7	%
Existing customers		1,594,853			441,554			2,036,407			1,457,263			465,960			1,923,223
% of total		68.9	%		19.1	%		88.0	%		66.2	%		21.1	%		87.3	%

Total number of consumer loans written and renewed		1,832,179			481,413			2,313,592			1,687,855			516,401			2,204,256

^(a)	The disclosure regarding the amount and number of consumer loans written and renewed is statistical data that is not included in the Company’s financial statements.

^(b)	Loans guaranteed by the Company represent loans originated by third-party lenders through the CSO programs.

Consumer Loan Loss Experience

The consumer loan loss provision for the current six-month period compared to the prior year six-month period was $152.1 million and $134.8 million, respectively, which was composed of $152.5 million and $135.0 million related to the Company-owned consumer loans, respectively, offset by $0.4 million and $0.2 million related to loans guaranteed by the Company through the CSO programs, respectively. Consolidated charge-offs, net of recoveries, were $158.4 million and $127.5 million in the current year six-month period and prior year six-month period, respectively.

Total Expenses

The table below shows total expense by segment, for corporate operations and by significant category for the current six-month period and the prior year six-month period (dollars in thousands):


	Six Months Ended June 30,
	2013												2012
	Retail Services			E-Commerce			Corporate			Total			Retail Services			E-Commerce			Corporate			Total
Operations and administration:
Personnel	$	106,326		$	48,444		$	24,492		$	179,262		$	111,622		$	37,473		$	21,457		$	170,552
Occupancy		54,501			5,397			1,671			61,569			52,740			4,131			2,075			58,946
Marketing		6,549			58,068			78			64,695			6,694			46,825			65			53,584
Other		19,985			18,780			10,046			48,811			24,423			15,661			11,179			51,263

Total operations and administration		187,361			130,689			36,287			354,337			195,479			104,090			34,776			334,345
Depreciation and amortization		18,530			9,028			7,973			35,531			16,895			5,902			7,011			29,808

Total expenses	$	205,891		$	139,717		$	44,260		$	389,868		$	212,374		$	109,992		$	41,787		$	364,153

Year-over-year change - $
Operations and administration	$	(8,118	)	$	26,599		$	1,511		$	19,992		$	13,949		$	30,232		$	1,990		$	46,171
Depreciation and amortization		1,635			3,126			962			5,723			1,655			180			3,223			5,058

Total	$	(6,483	)	$	29,725		$	2,473		$	25,715		$	15,604		$	30,412		$	5,213		$	51,229

Year-over-year change - %		(3.1	%)		27.0	%		5.9	%		7.1	%		7.9	%		38.2	%		14.3	%		16.4	%

Consolidated total expenses increased $25.7 million, or 7.1%, to $389.9 million in the current six-month period compared to $364.2 million in the prior year six-month period. Total expenses for the retail services segment decreased $6.5 million, or 3.1%, to $205.9 million during the current six-month period compared to $212.4 million in the prior year six-month period. Total expenses for the e-commerce segment increased $29.7 million, or 27.0%, to $139.7 million in the current six-month period.

Operations and Administration Expenses

Operations and administration expenses for the retail services segment decreased $8.1 million, or 4.2%, to $187.4 million during the current six-month period compared to the prior year six-month period. Personnel expenses for the retail services segment decreased $5.3 million, or 4.7%, primarily due to lower short-term incentives and the reduction in business activities in the Company’s foreign pawn operations in 2012 as a result of the Mexico Reorganization. Occupancy expenses, which include rent, property taxes, insurance, utilities and maintenance, increased $1.8 million, or 3.3%, primarily due to normal rent increases, organic growth and the locations acquired during 2012. Other expenses decreased $4.4 million, primarily due to cost reductions as a result of the Mexico Reorganization, decreased collection costs as a result of a decrease in loans written, lower processing charges which are related to the disposition of commercial merchandise and lower underwriting costs related to a decrease in loans written in the current six-month period.

Operations and administration expenses for the e-commerce segment increased $26.6 million, or 25.6%, to $130.7 million during the current six-month period compared to the prior year six-month period. Personnel expenses increased $11.0 million, or 29.3%, primarily due to incentive accruals due to the strong performance of the e-commerce segment and the addition of new personnel to support the e-commerce segment’s growth. Marketing expenses increased $11.2 million, or 24.0%, to $58.1 million in the current six-month period compared to the prior year six-month period. Marketing expenses consist of online marketing costs, such as sponsored search and advertising on social networking sites, and other marketing costs such as television, radio and print advertising. In addition, marketing expenses include lead purchase costs paid to marketers in exchange for providing leads to potential customers interested in using the Company’s services. The increase in other expenses was primarily due to increased software maintenance expenses and an increase in loan underwriting and processing expenses.

Corporate administration expense increased $1.5 million, or 4.3%, to $36.3 million in the current six-month period, primarily due to increases in personnel and health insurance expenses, partially offset by a decrease in other expenses related to an abandoned acquisition opportunity in the prior year six-month period.

Depreciation and Amortization Expenses

Consolidated depreciation and amortization expenses increased $5.7 million, or 19.2%, primarily due to acquisitions in the third and fourth quarters of 2012 in the retail services segment and increased costs in the e-commerce segment mainly as a result of increased capitalized software and equipment to support this segment’s growth. Depreciation and amortization expenses at the retail services segment increased $1.6 million, or 9.7%, to $18.5 million. Depreciation and amortization expenses at the e-commerce segment increased $3.1 million, or 53.0%, to $9.0 million, which included acceleration of depreciation related to the phase-out of certain loan platforms in the current period. Depreciation and amortization expenses for corporate operations increased $1.0 million, or 13.7%, to $8.0 million.

Interest Expense

Interest expense increased $2.4 million, or 17.9%, to $16.3 million in the current six-month period as compared to $13.9 million in the prior year six-month period. During the current six-month period, the average amount of debt outstanding increased $51.7 million, to $531.5 million from $479.8 million during the prior year six-month period, primarily due to an increase in debt outstanding as a result of acquisitions that occurred during the third and fourth quarters of 2012 and due to the issuance of the 2018 Senior Notes in May 2013. Following the issuance of the 2018 Senior Notes, the Company paid down all of the outstanding indebtedness under its Domestic and Multi-currency Line, which was at a lower effective interest rate. As a result, the Company’s effective blended borrowing cost increased to 5.3% in the current six-month period compared to 4.9% in the prior year six-month period. Also contributing to the increase in interest expense was $0.3 million of debt extinguishment costs in the current six-month period related to amendments to the Domestic and Multi-currency Line and the 2018 Variable Rate Notes.

Income Taxes

The Company’s effective tax rate was 37.0% in the current six-month period compared to 37.8% in the prior year six-month period. The decreased overall effective tax rate in the current quarter was primarily due to higher earnings at the Company’s e-commerce segment, which has a lower state effective tax rate. In addition, the effective tax rate for the prior year was negatively impacted by significant losses in the Company’s Mexico-based pawn operations, which were taxed at a lower rate than the domestic operations.

During 2012, the Company’s Mexico-based pawn operations that operated under the name Prenda Fácil were owned by Creazione. In January 2013, the Company’s Mexico-based pawn operations were sold by Creazione to another wholly-owned subsidiary of the Company, CA Empeños Mexico, S. de R.L. de C.V., and began operating exclusively under the name “Cash America casa de empeño.” The Company intends to liquidate the remaining assets of Creazione, which are insignificant, during 2013. In connection with the final liquidation of Creazione, the Company intends to claim a worthless stock deduction for tax purposes on its 2013 federal income tax return for its tax basis in the stock of Creazione. The Company could realize an income tax benefit of $33.2 million as a result of the worthless stock deduction. The Company intends to treat the deduction as an ordinary loss. However, the IRS could challenge the characterization of the loss. If the deduction is ultimately determined to be a capital loss, the tax benefit may not be realized. As of December 31, 2012, the Company had recorded an income tax benefit of $9.3 million and an offsetting valuation allowance associated with the Company’s excess tax basis over its basis for financial purposes in the stock of Creazione. During the current six-month period, the Company recorded an additional income tax benefit of $23.9 million associated with its remaining tax basis in the stock of Creazione. In addition, the Company released the valuation allowance recorded in 2012 of $9.3 million and recorded a $33.2 million liability for uncertain tax benefits.

Net (Income) Loss Attributable to the Noncontrolling Interest

Net (income) loss attributable to the noncontrolling interest improved by $1.8 million from the prior year six-month period from a net loss attributable to the noncontrolling interest of $1.5 million in the prior year six-month period to net income attributable to the noncontrolling interest of $0.3 million for the current year six-month period, primarily due to the Company’s purchase of the outstanding shares held by minority shareholders in Creazione in September 2012.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows Highlights

The Company’s cash flows and other key indicators of liquidity are summarized as follows (dollars in thousands):


	Six Months Ended June 30,
	2013			2012
Cash flows provided by operating activities	$	290,537		$	233,862

Cash flows used in investing activities
Pawn activities	$	15,777		$	24,652
Consumer loan activities		(152,419	)		(141,849	)
Acquisitions		(923	)		(4,720	)
Property and equipment additions		(22,392	)		(36,713	)
Proceeds from sale of marketable securities		6,616			—
Other investing		297			(397	)

Total cash flows used in investing activities	$	(153,044	)	$	(159,027	)

Cash flows used in financing activities	$	(64,418	)	$	(68,375	)

Working capital	$	790,787		$	646,876
Current ratio		6.0	x		5.5	x
Merchandise turnover		2.7	x		3.3	x
Debt to Adjusted EBITDA ratio^(a)		1.9	x		1.5	x

^(a)	Non-GAAP measure. See “Overview—Adjusted EBITDA” section above for a reconciliation of adjusted EBITDA to net income attributable to the Company.

Cash Flows from Operating Activities

Net cash provided by operating activities increased $56.6 million, or 24.2%, from $233.9 million in the prior year six-month period to $290.5 million in the current six-month period. The significant components of the increase in net cash provided by operating activities included a $20.7 million increase in cash provided by income taxes payable and deferred income taxes payable, primarily related to lower payments for estimated taxes during the current six-month period compared to the prior year six-month period, and a $17.3 million increase in the consumer loan loss provision, a non-cash expense, primarily as a result of growth in the e-commerce segment. Another component of the increase was a $10.1 million decrease in the use of cash for accounts payable and accrued expenses, primarily due to decreased incentive payments of approximately $12.3 million and increased accruals for interest and other expenses of approximately $5.0 million during the current six-month period compared to the prior year six-month period. This increase was partially offset by payments during the current six-month period of approximately $7.2 million related to the Ohio Reimbursements.

In connection with the final liquidation of Creazione, the Company intends to take a worthless stock deduction for tax purposes on its 2013 federal income tax return for its tax basis in the stock of Creazione of approximately $33.2 million. Management believes that the deduction may be treated as an ordinary loss, which would reduce its cash taxes paid in 2013. However, if the deduction is determined to be a capital loss, and the Company does not have capital gains to offset the loss, the Company’s cash paid for income taxes will not be reduced. The Company is pursuing a Private Letter Ruling with the IRS to confirm that the deduction should be treated as an ordinary loss.

Management believes that its expected cash flows from operations and available cash balances and borrowings will be sufficient to fund the Company’s operating liquidity needs.

Cash Flows from Investing Activities

Net cash used in investing activities decreased $6.0 million, or 3.8%, from $159.0 million in the prior year six-month period to $153.0 million in the current six-month period. During the current six-month period, purchases of property and equipment decreased by $14.3 million, primarily due to lower systems development costs in both of the Company’s segments. The Company also received $6.6 million of proceeds from the sale of marketable securities during the current six-month period. Offsetting these amounts was a $10.6 million increase in cash used for consumer loan activities, primarily as a result of growth in loans written from the Company’s e-commerce segment. In addition, cash provided by pawn lending activities decreased by $8.9 million, primarily as a result of lower sales of forfeited merchandise through commercial channels, offset by a decrease in loans written in foreign retail services operations as a result of the Mexico Reorganization during the third and fourth quarters of 2012.

Management anticipates that expenditures for property and equipment related to its domestic and foreign operations for the remainder of 2013 will be between $45 million and $55 million, excluding acquisitions, primarily for the remodeling of stores, facility upgrades, technology infrastructure and for the establishment of approximately five new retail services locations.

Cash Flows from Financing Activities

Net cash used by financing activities decreased $4.0 million, or 5.8%, from $68.4 million in the prior year six-month period to $64.4 million in the current six-month period. The decrease was primarily due to the issuance and sale of the 2018 Senior Notes, which is discussed in greater detail below. Offsetting this source of cash was a $255.6 million increase in cash used in the current six-month period to repay all outstanding balances under the Company’s Domestic and Multi-currency Line, to pay down other existing indebtedness and to pay loan acquisition costs incurred in conjunction with the issuance of the new debt.

Additionally, the Company used $39.3 million more in the current six-month period than in the prior year six-month period for repurchases of shares of Company common stock through open market transactions pursuant to a 2013 authorization by the Company’s Board of Directors. See “Share Repurchases” section below for additional information.

On May 15, 2013, the Company issued and sold the 2018 Senior Notes for an aggregate principal amount of $300.0 million. The Company offered and sold the 2018 Senior Notes to initial purchasers in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”). The initial purchasers then resold the 2018 Senior Notes pursuant to the exemptions from registration under the Securities Act in reliance on Rule 144A and Regulation S. The 2018 Senior Notes will bear interest at a rate of 5.75% per year on the principal amount of the 2018 Senior Notes, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2013. The 2018 Senior Notes will mature on May 15, 2018. The 2018 Senior Notes are senior unsecured debt obligations of the Company. The 2018 Senior Notes are guaranteed by all of the Company’s domestic subsidiaries.

In addition, on May 10, 2013, the Company entered into an agreement to amend the terms of its Domestic and Multi-currency Line. The primary provisions of the amendment to the Domestic and Multi-currency Line include an extension of the maturity date from March 31, 2015 to March 31, 2018 and a decrease in the total credit available from $380.0 million to $280.0 million, subject to an accordion feature whereby the revolving line of credit may be increased up to an additional $100.0 million with the consent of any increasing lenders. When the Company amended its Domestic and Multi-currency Line, it also extended the maturity date of its 2018 Variable Rate Notes and its letter of credit facility (each of which were entered into originally on the same date as the Domestic and Multi-currency Line) from March 31, 2015 to March 31, 2018.

The Company’s debt agreements require the Company to maintain certain financial ratios. As of June 30, 2013, the Company was in compliance with all covenants and other requirements set forth in its debt agreements. As of June 30, 2013, the Company’s available borrowings under its Domestic and Multi-currency Line were $280.0 million. Management believes that the borrowings available under the Company’s Domestic and Multi-currency Line, anticipated cash generated from operations and current working capital of $790.8 million is sufficient to meet the Company’s anticipated capital requirements for its business. Should the Company experience a significant decline in demand for the Company’s products and services or other unexpected changes in financial condition, management would evaluate several alternatives to ensure that it is in a position to meet liquidity requirements. The Company’s strategies to generate additional liquidity may include the sale of assets, reductions in capital spending, changes to the issuance of debt or equity securities and/or its management of its current assets. The characteristics of the Company’s current assets, specifically the ability to rapidly liquidate gold jewelry inventory and adjust outflows of cash in its lending practices, gives the Company flexibility to quickly modify its business strategy to increase cash flow from its business, if necessary.

The Company had standby letters of credit of $16.3 million issued under its $20.0 million letter of credit facility as of June 30, 2013.

Share Repurchases

On January 24, 2013, the Board of Directors of the Company authorized a new share repurchase program for the repurchase of up to 2.5 million shares of its common stock and cancelled the Company’s previous share repurchase authorization from January 2011. During the current six-month period, the Company purchased 846,700 shares in open market transactions under this authorization for a total investment of $41.4 million, including commissions. Management anticipates that it will periodically purchase shares under this authorization based on its assessment of market characteristics, the liquidity position of the Company and alternative prospects for the investment of capital to expand the business and pursue strategic objectives.

Shelf Registration Statement

On August 24, 2012, the Company filed an automatic Shelf Registration Statement on Form S-3 (“the Shelf Registration Statement”) with the Securities and Exchange Commission (“SEC”) which permits the Company or its selling securityholders to offer from time to time shares of the Company’s common stock, par value $0.10 per share, debt securities, depositary shares, warrants, stock purchase contracts, units, and subscription rights as described in the accompanying prospectus. Pursuant to Rule 462(e) of the Securities Act, the Shelf Registration Statement became effective automatically upon filing with the SEC. Management believes the Shelf Registration Statement will provide the Company with additional flexibility with regard to potential financings that it may undertake when market conditions permit or the Company’s financial condition may require.

Off-Balance Sheet Arrangements

In certain markets, the Company arranges for consumers to obtain consumer loan products from one of several independent third-party lenders through the CSO programs. For consumer loan products originated by third-party lenders under the CSO programs, each lender is responsible for providing the criteria by which the consumer’s application is underwritten and, if approved, determining the amount of the consumer loan. The Company in turn is responsible for assessing whether or not the Company will guarantee such loans. When a consumer executes an agreement with the Company under the CSO programs, the Company agrees, for a fee payable to the Company by the

consumer, to provide certain services to the consumer, one of which is to guarantee the consumer’s obligation to repay the loan received by the consumer from the third-party lender if the consumer fails to do so. The guarantee represents an obligation to purchase specific loans if they go into default. Short-term loans that are guaranteed generally have terms of less than 90 days. Secured auto equity loans, which are included in the Company’s installment loan portfolio, that are guaranteed typically have an average term of less than 24 months, with available terms of up to 42 months. As of June 30, 2013 and 2012, the gross amount of active consumer loans originated by third-party lenders under the CSO programs were $50.9 million and $54.0 million, respectively, which were guaranteed by the Company. The estimated fair value of the liability for estimated losses on consumer loans guaranteed by the Company was $3.0 million and $2.8 million as of June 30, 2013 and 2012, respectively.

Regulatory Developments

Texas

The Company offers short-term consumer loans in Texas through its CSO programs in both its retail services segment and its e-commerce segment. On April 22, 2013, the Texas Senate passed a bill that, if enacted into law, could have adversely affected the Company’s CSO program in Texas. The bill was not passed or enacted into law, and the next regular session of the Texas legislature will be held in 2015.

U.K. Office of Fair Trading and Competition Commission

The Company offers consumer loans over the internet in the United Kingdom where the Company must follow the Irresponsible Lending Guidance of the Office of Fair Trading (the “OFT”) and the Consumer Credit Act of 1974 that was amended by the Consumer Credit Act of 2006 (collectively, the “CCA”), among other rules and regulations. In February 2012, the OFT announced that it had launched a review of the payday lending sector in the United Kingdom to assess the sector’s compliance with the CCA, the OFT’s Irresponsible Lending Guidelines and other relevant guidance and legal obligations. The OFT had previously announced that this review could be used to assess a licensee’s fitness to hold a consumer credit license and could result in formal enforcement action where appropriate.

The OFT announced the findings of its review during the first quarter of 2013 and enumerated a number of expectations it has for payday lenders related to affordability assessments, rollovers, advertising, debt collection and consumer disclosures, among other expectations. Since that time, the OFT has been contacting the larger U.K. payday lenders to communicate the findings of its industry review and individual company examinations, and on May 3, 2013, the OFT sent the Company a letter of findings related to its examination of the Company’s U.K. payday lending business. In that letter, the OFT indicated that the Company may not be complying fully with all aspects of the Irresponsible Lending Guidelines, the CCA and other relevant laws and guidance. This letter indicated the OFT’s general and specific concerns in the following categories: advertising and marketing, pre-contract information and explanations, affordability assessments, rollovers, including deferred refinance and extended loans, forbearance and debt collection, and regulatory and other compliance issues. The OFT has asked the Company to provide an independent audit of its compliance in relation to each concern identified in the letter by July 29, 2013. The Company is addressing the concerns identified by the OFT and expects to provide this audit, which will evidence how the Company has rectified the areas of concern identified by the OFT, to the OFT by that date. The Company does not expect any of the changes that it implements in its business in response to the OFT’s concerns to have a material adverse effect on its future operations and financial condition. However, the Company can provide no assurance as to whether it will successfully resolve the concerns expressed by the OFT or whether, in addressing these concerns, it will need to further change its business processes or payday lending products in the United Kingdom in a manner that could materially adversely affect its future operations and financial condition.

In addition, in June 2013, the OFT expressed concerns regarding the payday lending industry in the United Kingdom and referred the industry to the Competition Commission for review. The Competition Commission will conduct a detailed investigation of the U.K. payday lending industry to determine whether certain features of the payday lending industry prevent, restrict or distort competition and, if so, what remedial action should be taken. The Competition Commission is required to complete its report by June 26, 2015, although it has stated that it aims to complete the investigation in a shorter period. If the investigation finds remedial action is necessary, the Competition Commission will decide whether to order such remedial action itself or whether it should recommend certain actions or remedies be taken by the industry regulator, which is likely to be the Financial Conduct Authority (which will take over responsibility for regulating consumer credit from the OFT in April 2014).

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to the Company’s operations result primarily from changes in interest rates, foreign exchange rates, and gold prices. The Company does not engage in speculative or leveraged transactions, nor does it hold or issue financial instruments for trading purposes. There have been no material changes to the Company’s exposure to market risks since December 31, 2012.

ITEM 4.

CONTROLS AND PROCEDURES

Under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, management of the Company has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or the “Exchange Act”) as of June 30, 2013 (the “Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective and provide reasonable assurance (i) to ensure that information required to be disclosed in reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms; and (ii) to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

There was no change in the Company’s internal control over financial reporting during the quarter ended June 30, 2013 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or internal controls will prevent or detect all possible misstatements due to error or fraud. The Company’s disclosure controls and procedures and internal controls are, however, designed to provide reasonable assurance of achieving their objectives, and the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective at that reasonable assurance level.

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

See Note 10 of Part I, “Item 1 Financial Statements.”

ITEM 1A.

RISK FACTORS

Except as set forth on Exhibit 99.1 to the Current Report on Form 8-K dated and filed on May 8, 2013 and incorporated herein by reference, there have been no material changes from the Risk Factors described in Part I “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides the information with respect to purchases made by the Company of shares of its common stock, par value $0.10 per share, during each of the months in the first six months of 2013:


Period	Total Number of Shares Purchased^(a)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan ^(b)		Maximum Number of Shares that May Yet Be Purchased Under the Plan ^(b)
January 1 to January 31		10,608	$	47.81		10,000		2,490,000
February 1 to February 28		302,147	$	49.22		270,000		2,220,000
March 1 to March 31		155,000	$	51.54		155,000		2,065,000
April 1 to April 30		20,000	$	52.40		20,000		2,045,000
May 1 to May 31		185,023	$	46.49		185,000		1,860,000
June 1 to June 30		206,700	$	47.97		206,700		1,653,300

Total		879,478	$	48.82		846,700

^(a)

Includes the following: shares withheld from employees as partial tax payments for shares issued under the Company’s stock-based compensation plans of 608 and 32,126 shares for the months of January and February, respectively; and the reinvestment of dividends in the Company’s nonqualified deferred compensation plan for its directors, which resulted in the purchase of 21 and 23 shares for the months of February and May.

^(b)

On January 24, 2013, the Board of Directors authorized the Company’s repurchase of up to a total of 2,500,000 shares of the Company’s common stock. This repurchase authorization cancelled and replaced the Company’s previous authorization for the repurchase of up to a total of 2,500,000 shares of the Company’s common stock that was approved by the Board of Directors on January 26, 2011.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

Incorporated by Reference

Exhibit No.

Exhibit Description

Form

File No.

Exhibit

Filing
Date

Filed
Herewith

2.1

Asset Purchase Agreement dated June 20, 2013 by and among Cash America Pawn L.P. and TDP Superstores Corp.

8-K

001-09733

2.1

06/24/13

4.1

Indenture, dated May 15, 2013, between Cash America International, Inc., the domestic subsidiaries of Cash America International, Inc. as guarantors, and Wells Fargo Bank, National Association, as trustee

8-K

001-09733

4.1

05/15/13

10.1

Form of 2013 Restricted Stock Unit Award Agreement for Directors under the Cash America International, Inc. First Amended and Restated 2004 Long-Term Incentive Plan, as amended

10.2

Third Amendment to Credit Agreement dated as of May 10, 2013 among Cash America International, Inc., the Guarantors, Wells Fargo Bank, National Association and certain lenders named therein

10.3

First Amendment to Standby Letter of Credit Agreement dated as of May 10, 2013 among Cash America International, Inc., the Guarantors and Wells Fargo Bank, National Association

10.4

Cash America International, Inc. Severance Pay Plan for Executives effective April 24, 2013

10.5

Registration Rights Agreement dated May 15, 2013, between Cash America International, Inc., the domestic subsidiaries of Cash America International, Inc. as guarantors, Jefferies LLC and JMP Securities LLC

8-K

001-09733

10.1

05/15/13

31.1

Certification of Chief Executive Officer

31.2

Certification of Chief Financial Officer

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.1

Subsection of the “Risk Factors” section of the Preliminary Offering Memorandum

8-K

001-09733

99.1

05/08/13

101.INS ⁽¹⁾

XBRL Instance Document

X⁽²⁾

101.SCH ⁽¹⁾

XBRL Taxonomy Extension Schema Document

X⁽²⁾

101.CAL ⁽¹⁾

XBRL Taxonomy Extension Calculation Linkbase Document

X⁽²⁾

101.DEF ⁽¹⁾

XBRL Taxonomy Extension Definition Linkbase Document

X⁽²⁾

101.LAB ⁽¹⁾

XBRL Taxonomy Label Linkbase Document

X⁽²⁾

101.PRE ⁽¹⁾

XBRL Taxonomy Extension Presentation Linkbase Document

X⁽²⁾

(1)

Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2013, June 30, 2012 and December 31, 2012; (ii) Consolidated Statements of Income for the three and six months ended June 30, 2013 and June 30, 2012; (iii) Consolidated Statements of Equity as of June 30, 2013 and June 30, 2012; (iv) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2013 and June 30, 2012; (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and June 30, 2012; and (vi) Notes to Consolidated Financial Statements.

(2)	Submitted electronically herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: July 26, 2013	CASH AMERICA INTERNATIONAL, INC.

	By:	/s/ Thomas A. Bessant, Jr.
		Thomas A. Bessant, Jr.
		Executive Vice President and Chief Financial Officer
		(On behalf of the Registrant and as Principal Financial Officer)

EXHIBIT INDEX

Incorporated by Reference

Exhibit No.

Exhibit Description

Form

File No.

Exhibit

Filing
Date

Filed
Herewith

2.1

Asset Purchase Agreement dated June 20, 2013 by and among Cash America Pawn L.P. and TDP Superstores Corp.

8-K

001-09733

2.1

06/24/13

4.1

8-K

001-09733

4.1

05/15/13

10.1

Form of 2013 Restricted Stock Unit Award Agreement for Directors under the Cash America International, Inc. First Amended and Restated 2004 Long-Term Incentive Plan, as amended

10.2

Third Amendment to Credit Agreement dated as of May 10, 2013 among Cash America International, Inc., the Guarantors, Wells Fargo Bank, National Association and certain lenders named therein

10.3

First Amendment to Standby Letter of Credit Agreement dated as of May 10, 2013 among Cash America International, Inc., the Guarantors and Wells Fargo Bank, National Association

10.4

Cash America International, Inc. Severance Pay Plan for Executives effective April 24, 2013

10.5

8-K

001-09733

10.1

05/15/13

31.1

Certification of Chief Executive Officer

31.2

Certification of Chief Financial Officer

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.1

Subsection of the “Risk Factors” section of the Preliminary Offering Memorandum

8-K

001-09733

99.1

05/08/13

101.INS ⁽¹⁾

XBRL Instance Document

X⁽²⁾

101.SCH ⁽¹⁾

XBRL Taxonomy Extension Schema Document

X⁽²⁾

101.CAL ⁽¹⁾

XBRL Taxonomy Extension Calculation Linkbase Document

X⁽²⁾

101.DEF ⁽¹⁾

XBRL Taxonomy Extension Definition Linkbase Document

X⁽²⁾

101.LAB ⁽¹⁾

XBRL Taxonomy Label Linkbase Document

X⁽²⁾

101.PRE ⁽¹⁾

XBRL Taxonomy Extension Presentation Linkbase Document

X⁽²⁾

(1)

(2)	Submitted electronically herewith.