Cash America 2012 Annual Report Download - page 135

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
110
Long-Lived Assets Other Than Goodwill and Other Intangible Assets
An evaluation of the recoverability of property and equipment and intangible assets subject to
amortization is performed whenever the facts and circumstances indicate that the carrying value may be impaired. An
impairment loss is recognized if the future undiscounted cash flows associated with the asset and the estimated fair
value of the asset are less than the asset’s corresponding carrying value. The amount of the impairment loss, if any, is
the excess of the asset’s carrying value over its estimated fair value. See “Impairment Testing Related to the Mexico
Reorganization” in Note 4 for a discussion of the goodwill assessment completed in September 2012 as a result of the
Mexico Reorganization.
The Company amortizes intangible assets subject to amortization on the basis of their expected periods of
benefit, generally three to ten years. The costs of start-up activities and organization costs are charged to expense as
incurred.
Hedging and Derivatives Activity
As a policy, the Company does not hold, issue or trade derivative instruments for speculative purposes. The
Company does periodically use derivative financial instruments, such as interest rate cap agreements and foreign
currency forward contracts for hedging purposes. Prior to 2012, the Company used interest rate cap agreements for the
purpose of managing interest rate exposures that exist from ongoing business operations. During the year ended
December 31, 2009, the Company entered into an interest rate cap agreement that was determined to be a perfectly
effective cash flow hedge, pursuant to ASC 815-20-25, Derivatives and Hedging—Recognition (“ASC 815-20-25”), at
inception and on an ongoing basis. The fair value of this interest rate cap agreement was recognized in “Other assets”
in the accompanying consolidated balance sheets and changes in fair value were recognized in “Accumulated other
comprehensive income (loss)” in the accompanying consolidated statements of equity. This interest rate cap agreement
terminated in March 2012. The Company uses foreign currency forward contracts to minimize the effects of foreign
currency risk in the United Kingdom, Australia and, prior to 2012, in Mexico. See Note 18. The Company may
periodically enter into forward sale contracts with a major gold bullion bank to sell refined gold that is acquired in the
normal course of business from the Company’s liquidation of forfeited gold merchandise. These contracts are not
accounted for as derivatives because they meet the criteria for the normal purchases and normal sales scope exception
in ASC 815-20-25.
Equity Securities
The Company accounts for its marketable and non-marketable equity securities in accordance with ASC 323-
10, Investments—Equity Method and Joint Ventures and ASC 325-20, Investments—Other—Cost Method Investments,
respectively. The Company’s marketable securities, except for marketable securities related to the Company’s
Nonqualified Savings Plan, which are described below, are classified as available-for-sale and unrecognized gains and
losses, net of tax, are recorded in “Accumulated other comprehensive income (loss)” in the consolidated statements of
equity. The Company’s non-marketable equity securities are recorded on a cost basis. The Company evaluates
marketable and non-marketable equity securities for impairment on a quarterly basis. If an impairment of an equity
security is determined to be other than temporary, the cost basis of the investment will be reduced and the resulting
loss recognized in net income in the period the other-than-temporary-impairment is identified. Marketable and non-
marketable equity securities are held in “Other assets” in the consolidated balance sheets.
The Company also holds marketable securities related to its Nonqualified Savings Plan. See Note 16 for a
description of the Nonqualified Savings Plan. The securities are classified as trading securities and the unrealized gains
and losses on these securities are netted with the costs of the plans in “Operations and administration expenses” on the
consolidated statements of income. These marketable securities are recorded at fair value and have an offsetting
liability of equal amount. The Nonqualified Savings Plan assets are held in “Other Assets” and the offsetting liability is
held in “Accounts payable and accrued expenses" in the Company's consolidated balance sheets.