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Strategic Investments and Fair Value of Financial Instruments | 3 Months Ended
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Mar. 31, 2012
Strategic Investments and Fair Value of Financial Instruments [Abstract] |
Strategic Investments and Fair Value of Financial Instruments | Note D: Strategic Investments and Fair Value of Financial Instruments At March 31, 2012, we owned 16,644,640 ordinary shares of Albemarle & Bond Holdings, PLC, representing almost 30% of its total outstanding shares. Our total cost for those shares was approximately $27.6 million. Albemarle & Bond is primarily engaged in pawnbroking, retail jewelry sales, check cashing and lending in the United Kingdom. We account for the investment using the equity method. Since Albemarle & Bond’s fiscal year ends three months prior to ours, we report the income from this investment on a three-month lag. Albemarle & Bond files semi-annual financial reports for its fiscal periods ending December 31 and June 30. The income reported for our year-to-date period ended March 31, 2012 represents our percentage interest in the results of Albemarle & Bond’s operations from July 1, 2011 to December 31, 2011. Conversion of Albemarle & Bond’s financial statements into U.S. GAAP resulted in no material differences from those reported by Albemarle & Bond following IFRS. In its functional currency of British pounds, Albemarle & Bond’s total assets increased 12% from December 31, 2010 to December 31, 2011 and its net income for the six months ended December 31, 2011 improved 16%. Below is summarized financial information for Albemarle & Bond’s most recently reported results after translation to U.S. dollars (using the exchange rate as of December 31 of each year for balance sheet items and average exchange rates for the income statement items for the periods indicated):
|  | As of December 31, |
|  | 2011 |  |  | 2010 |
|  | (In thousands) |
Current assets |  | $ | 134,387 |  |  | $ | 121,519 |
Non-current assets |  |  | 65,354 |  |  |  | 56,755 |
Total assets |  | $ | 199,741 |  |  | $ | 178,274 |
Current liabilities |  | $ | 21,021 |  |  | $ | 25,801 |
Non-current liabilities |  |  | 62,169 |  |  |  | 53,497 |
Shareholders’ equity |  |  | 116,551 |  |  |  | 98,976 |
Total liabilities and shareholders’ equity |  | $ | 199,741 |  |  | $ | 178,274 |
|  | Six Months Ended December 31, |
|  | 2011 |  |  | 2010 |
|  | (In thousands) |
Gross revenues |  | $ | 99,804 |  |  | $ | 76,424 |
Gross profit |  |  | 58,165 |  |  |  | 46,745 |
Profit for the year (net income) |  |  | 14,208 |  |  |  | 12,088 |
At March 31, 2012, we owned 124,418,000 shares, or approximately 33% of the total ordinary shares of Cash Converters International Limited, which is a publicly traded company headquartered in Perth, Australia. We acquired the shares between November 2009 and May 2010 for approximately $57.8 million. Cash Converters franchises and operates a worldwide network of over 600 specialty financial services and retail stores that provide pawn loans, short-term unsecured loans and other consumer finance products, and buy and sell second-hand goods. Cash Converters has significant store concentrations in Australia and the United Kingdom. We account for our investment in Cash Converters using the equity method. Since Cash Converters’ fiscal year ends three months prior to ours, we report the income from this investment on a three-month lag. Cash Converters files semi-annual financial reports for its fiscal periods ending December 31 and June 30. Due to the three-month lag, income reported for our year-to-date period ended March 31, 2012 represents our percentage interest in the results of Cash Converters’ operations from July 1, 2011 to December 31, 2011. Conversion of Cash Converters’ financial statements into U.S. GAAP resulted in no material differences from those reported by Cash Converters following IFRS. In its functional currency of Australian dollars, Cash Converters’ total assets increased 17% from December 31, 2010 to December 31, 2011 and its net income decreased 7% for the six months ended December 31, 2011. Below is summarized financial information for Cash Converters’ most recently reported results after translation to U.S. dollars (using the exchange rate as of December 31 of each year for balance sheet items and average exchange rates for the income statement items for the periods indicated):
|  | As of December 31, |
|  | 2011 |  |  | 2010 |
|  | (In thousands) |
Current assets |  | $ | 128,289 |  |  | $ | 104,408 |
Non-current assets |  |  | 121,835 |  |  |  | 109,336 |
Total assets |  | $ | 250,124 |  |  | $ | 213,744 |
Current liabilities |  | $ | 33,290 |  |  | $ | 30,844 |
Non-current liabilities |  |  | 37,797 |  |  |  | 11,970 |
Shareholders’ equity |  |  | 179,037 |  |  |  | 170,930 |
Total liabilities and shareholders’ equity |  | $ | 250,124 |  |  | $ | 213,744 |
|  | Six Months Ended December 31, |
|  | 2011 |  |  | 2010 |
|  | (In thousands) |
Gross revenues |  | $ | 115,256 |  |  | $ | 82,343 |
Gross profit |  |  | 76,405 |  |  |  | 57,038 |
Profit for the year (net income) |  |  | 13,668 |  |  |  | 13,528 |
The table below summarizes the recorded value and fair value of each of these strategic investments at the dates indicated. These fair values are considered Level 1 estimates within the fair value hierarchy of FASB ASC 820-10-50, and were calculated as (a) the quoted stock price on each company’s principal market multiplied by (b) the number of shares we owned multiplied by (c) the applicable foreign currency exchange rate at the dates indicated. We included no control premium for owning a large percentage of outstanding shares.
|  | March 31, |  |  | September 30, |
|  | 2012 |  |  | 2011 |  |  | 2011 |
|  | (In thousands of U.S. dollars) |
Albemarle & Bond: |  |  |  |  |  |  |  |  |  |  |  |
Recorded value |  | $ | 49,175 |  |  | $ | 44,784 |  |  | $ | 48,361 |
Fair value |  |  | 92,868 |  |  |  | 81,655 |  |  |  | 91,741 |
Cash Converters: |  |  |  |  |  |  |  |  |  |  |  |
Recorded value |  | $ | 70,881 |  |  | $ | 67,580 |  |  | $ | 71,958 |
Fair value |  |  | 85,277 |  |  |  | 102,610 |  |  |  | 53,600 |
In August 2011, legislation was proposed in Australia that would, among other things, limit the interest charged on certain consumer loans and prohibit loan extensions and refinancing. If this legislation is enacted in its currently proposed form, Cash Converters’ consumer loan business in Australia may be adversely affected, which could have the effect of decreasing Cash Converters’ revenues and earnings. As of September 30, 2011, the fair value of our investment in Cash Converters (based on the market price of Cash Converters’ stock as of that date) was below our recorded value. In light of Cash Converters’ statements at that time regarding its ability to mitigate the potential impact of the proposed legislation, we considered this loss in value to be temporary. Following a series of representations from Cash Converters, its customers and other industry executives, the Australian Parliament, referred the bill to the Senate Economics committee and to the Joint Committee on Corporations and Financial Services for review. The committees concluded that the proposed legislation did not achieve an appropriate balance between consumer protection and industry viability and recommended that the Australian government revisit key aspects of its reform package with further industry consultation. As of March 31, 2012, the fair value of our investment in Cash Converters was above our recorded value, further supporting our assessment of the loss in value of its stock to be temporary.

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- Definition The entire disclosure for equity investment, or group of investments, for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20 percent of the voting stock and the investment is accounted for using the equity method, and the reasons why it is. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=6903645&loc=d3e32787-111569 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 18 -Paragraph 20 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=6903645&loc=d3e32847-111569 + Details
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