Cash America 2011 Annual Report Download - page 109

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78
Foreign Currency Exchange Risk. The Company periodically uses forward currency exchange contracts to
minimize risk of foreign currency exchange rate fluctuations in the United Kingdom and Australia. The Company’s
forward currency exchange contracts are non-designated derivatives. Any gain or loss resulting from these forward
contracts is recorded as income or loss and is included in “Foreign currency transaction gain (loss)” in the Company’s
consolidated statement of income. The following table sets forth, by each foreign currency hedged, the notional
amounts of forward currency exchange contracts as of December 31, 2011, the total gains or losses recorded in 2011,
and sensitivity analysis of hypothetical 10% declines in the exchange rates of the currencies (US Dollars in thousands).
Notional amount of
outstanding contracts
as of December 31,
2011
Gain/(loss)
recorded in
2011(a)
Sensitivity
Analysis (b)
British pound $ 77,364 $ 2,035 $ $5,010
Mexican peso - 1,303 -
Australian dollar 3,011 (179) 198
Total $ 80,375 $ 3,159 $ $5,208
(a)
a The gains (losses) on these derivatives substantially offset the (losses) gains on the hedged portion of foreign
intercompany balances.
(b)
a
a
a
Represents the decrease to net income attributable to the Company due to a hypothetical 10% strengthening of the foreign
currency against the U.S. dollar.
As of September 30, 2011, the Company designated the intercompany balance related to its Mexico operations
as long-term and no longer maintains forward currency exchange contracts to minimize the risk of foreign currency
exchange rate fluctuations in Mexico. Gains and losses related to the translation of the intercompany balance beginning
on September 30, 2011 were recognized in “Accumulated other comprehensive income (loss)”. The Company is also
subject to currency exchange rate fluctuations in Canada. The Company does not currently manage its exposure to risk
from foreign currency exchange rate fluctuations through the use of foreign exchange forward contracts in Canada. As
the Company’s Canadian operations continue to grow, management will continue to evaluate and implement foreign
exchange rate risk management strategies. See “Item 8. Financial Statements and Supplementary Data—Note 16.”