Cash America 2008 Annual Report Download - page 124

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
101
SFAS 157 defines fair value to be the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date and emphasizes that
fair value is a market-based measurement, not an entity-specific measurement. It establishes a fair value
hierarchy and expands disclosures about fair value measurements in both interim and annual periods. SFAS
157 enables the reader of the financial statements to assess the inputs used to develop fair value
measurements by establishing a hierarchy for ranking the quality and reliability of the information used to
determine fair values. FSP FAS 157-2 defers the effective date of SFAS 157 until January 2009 for
nonfinancial assets and nonfinancial liabilities that are recognized or disclosed in the financial statements on
a nonrecurring basis. SFAS 157 requires that assets and liabilities carried at fair value will be classified and
disclosed 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 December 31, 2008 are as follows (in thousands):
December
31, Fair Value Measurements Using
2008 Level 1 Level 2 Level 3
Financial assets:
Interest rate cap ................................... $ 69 $ ņ$ 69 $ ņ
Nonqualified savings plan assets ........ 6,759 6,759 ņ ņ
Total ........................................................ $ 6,828 $ 6,759 $ 69 $ ņ
The Company measures the value of its interest rate cap under Level 2 inputs as defined by SFAS
157. The Company relies on a mark to market valuation based on yield curves using observable market
interest rates for the interest rate cap. The fair value of the nonqualified savings plan assets are measured
under a Level 1 input. These assets are publicly traded equity securities for which market prices are readily
observable.
22. Gain on Sale of Foreign Notes
In August 2007, the Company received gross proceeds in the amount of $16.8 million on the sale of
notes receivable that it had received in 2004 as part of the proceeds from its sale of Svensk Pantbelåning, its
former Swedish pawn lending subsidiary. In September 2004, the Company sold Svensk Pantbelåning to
Rutland Partners LLP for cash and two subordinated notes receivable. One of the notes receivable was
convertible into approximately 27.7% of the parent company of Svensk Pantbelåning on a fully-diluted
basis. In August 2007, Rutland Partners LLP sold Svensk Pantbelåning to a third-party who also purchased
the notes receivable from the Company. The Company’s total proceeds of $16.8 million represent $12.4
million in the repayment of the face value of the principal, including $0.3 million of accrued interest owed
on notes receivable and $4.4 million for the value of its conversion rights under the convertible note. For the
year ended December 31, 2007, the Company recognized a pre-tax gain of approximately $6.3 million from
the sale of the notes and related rights.