Cash America 2010 Annual Report Download - page 125

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
96
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 $0.8 million
for contributions to the SERP for each of the years ended December 31, 2010 and 2009 and $0.7 million for the year
ended December 31, 2008, 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):
As of December 31,
2010 2009
Other receivables and prepaid expenses $7,073 $5,159
Accounts payable and accrued expenses 7,918 5,941
Other liabilities 616 600
Treasury shares 679 659
15. Derivative Instruments
The Company periodically uses derivative instruments to manage risk from changes in market conditions that
may affect the Company’s financial performance. The Company primarily uses derivative instruments to manage its
primary market risks, which are interest rate risk and foreign currency exchange rate risk.
The Company uses interest rate cap agreements for the purpose of managing interest rate exposure on its
floating rate debt. For derivatives designated as cash flow hedges, the effective portions of changes in the estimated
fair value of the derivative are reported in “Accumulated other comprehensive income (loss)” (or “OCI”) 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.
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 contracts have been determined to be perfectly effective cash flow hedges, pursuant to ASC
815-20-25, Derivatives and Hedging – Recognition (“ASC 815”) at inception and on an ongoing basis.
The Company periodically uses forward currency exchange contracts and foreign debt instruments to
minimize risk of foreign currency exchange rate fluctuations in the United Kingdom, Mexico and Australia. The
Company’s forward currency exchange contracts are non-designated derivatives. Any gain or loss resulting from these
contracts is recorded as income or loss and is included in “Foreign currency transaction gain (loss)” in the Company’s
consolidated statements of income. The Company does not currently manage its exposure to risk from foreign
currency exchange rate fluctuations through the use of forward currency exchange contracts in Canada. As the