Fair Value Measurements

9 Months Ended

Sep. 30, 2013

12. 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 September 30, 2013 and 2012 and December 31, 2012 are as follows (dollars in thousands):

		September 30,		Fair Value Measurements Using
		2013		Level 1		Level 2		Level 3
	Financial assets (liabilities):
	Forward currency exchange contracts	$	(790)	$	-	$	(790)	$	-
	Nonqualified savings plan assets ^(a)		13,455		13,455		-		-
	Total	$	12,665	$	13,455	$	(790)	$	-

		September 30,		Fair Value Measurements Using
		2012		Level 1		Level 2		Level 3
	Financial assets (liabilities):
	Forward currency exchange contracts	$	(307)	$	-	$	(307)	$	-
	Nonqualified savings plan assets ^(a)		10,990		10,990		-		-
	Marketable securities^(b)		6,426		6,426		-		-
	Total	$	17,109	$	17,416	$	(307)	$	-

		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)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)a a a	Cumulative unrealized total gains, net of tax, on these equity securities of $0.5 million and $0.3 million as of September 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 second quarter of 2013. See Note 7 for further discussion.

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, current market rates are used to determine fair value. The significant inputs used in these models are derived from observable market rates. During the nine months ended September 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 September 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
	September 30,		September 30,		Fair Value Measurement Using
	2013		2013		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	84,096	$	84,096	$	84,096	$	-	$	-
Pawn loans		253,678		253,678		-		-		253,678
Consumer loans, net		328,281		328,281		-		-		328,281
Pawn loan fees and service charges receivable		50,090		50,090		-		-		50,090
Total	$	716,145	$	716,145	$	84,096	$	-	$	632,049

Financial liabilities:
Domestic and Multi-currency Line of credit	$	120,225	$	126,260	$	-	$	126,260	$	-
Senior unsecured notes		455,872		445,888		-		445,888		-
2029 Convertible Notes		106,752		195,612		-		195,612		-
Total	$	682,849	$	767,760	$	-	$	767,760	$	-

	Carrying Value		Estimated Fair Value
	September 30,		September 30,		Fair Value Measurement Using
	2012		2012		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	78,663	$	78,663	$	78,663	$	-	$	-
Pawn loans		254,077		254,077		-		-		254,077
Consumer loans, net		256,825		256,825		-		-		256,825
Pawn loan fees and service charges receivable		48,771		48,771		-		-		48,771
Total	$	638,336	$	638,336	$	78,663	$	-	$	559,673

Financial liabilities:
Domestic and Multi-currency Line of credit	$	288,266	$	295,747	$	-	$	295,747	$	-
Senior unsecured notes		191,810		190,574		-		190,574		-
2029 Convertible Notes		109,387		184,431		-		184,431		-
Total	$	589,463	$	670,752	$	-	$	670,752	$	-

	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.

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 September 30, 2013, the Company's Domestic and Multi-currency Line of Credit had a higher fair market value than the carrying value due to the difference in yield when compared to recent issuances of similar lines of credit. As of September 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 September 30, 2013, the 2029 Convertible Notes had a higher fair value than carrying value due to the Company's stock price as of September 30, 2013 exceeding the applicable conversion price for the 2029 Convertible Notes, thereby increasing the value of the instrument for noteholders.

- Definition

The entire disclosure of the fair value measurement of assets and liabilities, which includes financial instruments measured at fair value that are classified in shareholders' equity, which may be measured on a recurring or nonrecurring basis.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 33

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 32

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 10

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 3

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19279-110258

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19190-110258

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 2

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19207-110258

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 6

-Footnote 4

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details