Cash America 2009 Annual Report Download - page 136

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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compensation expense of $0.8 million, $0.7 million and $0.7 million for contributions to the SERP during
2009, 2008 and 2007, respectively.
The Nonqualified Savings Plan and the SERP are non-qualified tax-deferred plans. Benefits under
the Nonqualified Savings Plan and the SERP are unfunded. The Company holds securities, including shares
of the Company’s common stock, in a rabbi trust to pay benefits under these plans. The securities other than
Company stock are classified as trading securities and the unrealized gains and losses on these securities are
netted with the costs of the plans in administration expenses in the consolidated statements of income. The
Company’s common stock held in the plan is included in treasury shares.
Amounts included in the consolidated balance sheets relating to the Nonqualified Savings Plan and
the SERP were as follows (in thousands):
2009 2008
Other receivables and prepaid expenses $5,159 $6,759
Accounts payable and accrued expenses 5,941 7,479
Other liabilities 600 1,114
Treasury shares 659 1,167
13. Derivative Instruments
The Company periodically uses derivative financial instruments, such as interest rate cap agreements,
for the purpose of managing interest rate exposures that exist from ongoing business operations. For
derivatives designated as cash flow hedges, the effective portions of changes in the estimated fair value of the
derivative are reported in other comprehensive income and are subsequently reclassified into earnings when
the hedged item affects earnings. The change in the estimated fair value of the ineffective portion of the
hedge, if any, will be recorded as income or expense. The estimated fair values of the interest rate cap
agreements and net investment hedge in foreign operations are included in "Other receivables and prepaid
expenses" and “Long-term debt,” respectively, of the accompanying consolidated balance sheets.
On December 3, 2008, the Company entered into an interest rate cap agreement with a notional
amount of $15.0 million to hedge the Company's outstanding floating rate line of credit for a term of 36
months at a fixed rate of 3.25%. On March 27, 2009, the Company entered into an interest rate cap
agreement with a notional amount of $15.0 million to hedge the Company’s outstanding floating rate line of
credit for a term of 36 months at a fixed rate of 3.25%. These interest rate cap agreements have been
determined to be perfectly effective cash flow hedges, pursuant to ASC 815-20-25, Derivatives and Hedging
– Recognition at inception and on an ongoing basis.
In May 2008, the Company entered into a line of credit facility of £7.5 million with a foreign
commercial bank and designated the debt as a foreign currency hedging instrument of the Company’s net
investment in its subsidiary that offers cash advances to residents of the United Kingdom. On October 28,
2009, the Company repaid the outstanding balance of £5.3 million (approximately $8.6 million).
The Company periodically uses forward currency exchange contracts and foreign debt instruments to
minimize risk of foreign currency exchange rate fluctuations. During 2009, the Company hedged an average
amount of MXN 70.4 million to manage its advances denominated in Mexican pesos to its Mexico based
pawn operations. The average exchange rate of the hedged transactions represented $5.2 million. As of
December 31, 2009, the total amount hedged through forward contracts was MXN 116.9 million, with an