Cash America 2007 Annual Report Download - page 101

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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November 2005 through June 2006, the Company’s Chief Executive Officer exercised stock options and
sold Company shares under the Plan. The Chief Executive Officer used proceeds from the sale of shares
under the Plan to fully repay his pre-2003 secured loan under the Company’s now discontinued officer stock
loan program and accrued interest thereon totaling $2.1 million. In 2006, the Company’s Chief Financial
Officer and another executive officer also paid a total of $985,000 (including accrued interest) to fully repay
similar officer stock loans.
12. Employee Benefit Plans
The Cash America International, Inc. 401(k) Savings Plan is open to substantially all employees.
Beginning January 1, 2006, new employees are automatically enrolled in this plan unless they elect not to
participate. The Cash America International, Inc. Nonqualified Savings Plan is available to certain members
of management. Participants may contribute up to 50% of their earnings to these plans subject to regulatory
restrictions. The Company makes matching cash contributions of 50% of each participant’s contributions,
based on participant contributions of up to 5% of compensation. Company contributions vest at the rate of
20% each year after one year of service; thus a participant is 100% vested after five years of service. The
Company’s total contributions to the 401(k) Savings Plan and the Nonqualified Savings Plan were $2.3
million, $1.6 million and $1.1 million in 2007, 2006 and 2005, respectively.
In addition to the plans mentioned above, the Company established a Supplemental Executive
Retirement Plan (“SERP”) for its officers in 2003. Under this defined contribution plan, the Company
makes an annual discretionary cash contribution to the SERP based on the objectives of the plan as
approved by the Management Development and Compensation Committee of the Board of Directors. The
Company recorded compensation expense of $730,000, $561,000 and $510,000 for contributions to the
SERP during 2007, 2006 and 2005, respectively.
Amounts included in the consolidated balance sheets relating to the Nonqualified Savings Plan and
the SERP were as follows (in thousands):
As of December 31,
2007 2006
Other receivables and prepaid expenses...................................................... $ 7,994 $ 7,211
Accounts payable and accrued expenses ..................................................... 8,725 7,764
Other liabilities............................................................................................ 972 913
Treasury shares............................................................................................ 1,017 950
13. Derivative Instruments and Hedging Activities
In 2007, the Company entered into foreign currency contracts totaling 1.0 million British pounds
(approximately $2.0 million at maturity), to minimize the effect of market fluctuations. Under the contracts, the
Company will receive fixed total payments of $2.0 million and will pay the counter parties a total of 1.0 million
British pounds upon maturity (January 28, 2008) unless the contracts are effectively extended through the
establishment of a new contract maturing in the future. Any gain and loss related to this forward contract will
be netted in the foreign currency transaction gain (loss) in the consolidated statements of income.
On December 27, 2007, the Company entered into an interest rate cap agreement with a notional
amount of $10.0 million of the Company’s outstanding floating rate line of credit for a term of 24 months at
a fixed rate of 4.75%. This interest rate cap agreement has been determined to be a perfectly effective cash
flow hedge. For derivatives designated as cash flow hedges, the effective portions of changes in fair value
of the derivative are reported in other comprehensive income and are subsequently reclassified into earnings