Cash America 2008 Annual Report Download - page 104

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
81
2008 2007 2006
Number of stores acquired:
Pawnshops............................................................... 1 5 19
Purchase price allocated to:
Pawn loans............................................................... $ 159 $ 607 $ 4,365
Finance and service charges receivable................... 18 75 467
Cash advances and fees receivable.......................... ņ 38 810
Merchandise held for disposition, net...................... 44 406 2,885
Property and equipment........................................... 10 47 178
Goodwill.................................................................. 442 1,632 16,668
Intangible assets ...................................................... 55 217 1,475
Other liabilities ........................................................ (3) (65) 367
Total cash paid for acquisitions ........................... $ 725 $ 2,957 $ 27,215
Purchase price adjustments for prior year acquisition. 852 ––
Cash consideration
p
a
y
able......................................... ʊ
–
–
(
1
,
066
)
Total cash paid for acquisitions ........................... $ 725 $ 3,809 $ 26,149
4. Cash Advances, Allowance for Losses and Accruals for Losses on Third-Party Lender-Owned
Cash Advances
The Company offers cash advance products through its cash advance locations, most of its
pawnshops and over the internet. The cash advance products are generally offered as single payment cash
advance loans. These cash advance loans typically have terms of seven to 45 days and are generally payable
on the customer’s next payday. The Company originates cash advances in some of its locations and online.
It arranges for customers to obtain cash advances from independent third-party lenders in other locations
and online. In a cash advance transaction, a customer executes a promissory note or other repayment
agreement typically supported by that customer’s personal check or authorization to debit the customer’s
checking account via an ACH transaction. Customers may repay the amount due with cash, by allowing
their check to be presented for collection, or by allowing their checking account to be debited via an ACH
transaction.
The Company provides services in connection with single payment cash advances originated by
independent third-party lenders, whereby the Company acts as a credit services organization on behalf of
consumers in accordance with applicable state laws (the “CSO program”). The CSO program includes
arranging loans with independent third-party lenders, assisting in the preparation of loan applications and
loan documents, and accepting loan payments. To assist the customer in obtaining a loan through the CSO
program, the Company also, as part of the credit services it provides to the customer, guarantees, on behalf
of the customer, the customer’s payment obligations to the third-party lender under the loan. A customer
who obtains a loan through the CSO program pays the Company a fee for the credit services, including the
guaranty, and enters into a contract with the Company governing the credit services arrangement. Losses on
cash advances acquired by the Company as a result of its guaranty obligations are the responsibility of the
Company. As of December 31, 2008, the CSO program was offered in Texas and Maryland. In July 2008,
the Company discontinued offering the CSO program to customers in Florida and began underwriting its
own loans pursuant to the Florida deferred presentment statute.
If the Company collects a customer’s delinquent payment in an amount that is less than the amount
the Company paid to the third-party lender pursuant to the guaranty, the Company must absorb the shortfall.
If the amount collected exceeds the amount paid under the guaranty, the Company is entitled to the excess
and recognizes the excess amount in income. Since the Company may not be successful in collecting
delinquent amounts, the Company’s cash advance loss provision includes amounts estimated to be adequate
to absorb credit losses from cash advances in the aggregate cash advance portfolio, including those expected