Cash America 2007 Annual Report Download - page 73

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53
customers unable or unwilling to provide additional collateral would receive lower loan amounts, possibly
resulting in a lower balance of pawn loans outstanding for the Company.
Foreign Currency Exchange Risk. The Company is subject to the risk of an unexpected change in British
pound exchange rates as a result of its loans to residents of the United Kingdom. As a result of fluctuations
in the British pound, the Company recorded foreign currency transaction losses of $87,000 in 2007.
Forward contracts in the amount of 1.0 million British pounds were established in 2007 to minimize the
effect of market fluctuations. A hypothetical 10% decline in the exchange rate of the British pound at
December 31, 2007 would have decreased net income by $171,000.
In addition, the notes receivable received in the sale of the Company’s foreign operations subjected
the Company to the risk of unexpected changes in Swedish kronor exchange rates. The Company recorded
a net gain of $63,000 as a result of fluctuations in the Swedish kronor during 2007. These notes receivable
were sold in August 2007.