Cash America 2008 Annual Report Download - page 79

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LIQUIDITY AND CAPITAL RESOURCES
The Company’s cash flows and other key indicators of liquidity are summarized as follows (dollars
in thousands):
2008 2007 2006
Operating activities cash flows ....................................... $ 253,580 $ 273,073 $ 161,812
Investing activities cash flows:
Pawn loans ................................................................. (9,887) (21,761) (26,359)
Cash advances............................................................ (133,025) (161,904) (77,349)
Acquisitions ............................................................... (182,356) (82,557) (64,927)
Property and equipment additions.............................. (57,082) (70,097) (46,355)
Proceeds from sale of foreign notes........................... ņ16,589 ņ
Proceeds from insurance claims................................. 1,214 1,416 1,934
Proceeds from termination of contract and
disposition of assets ................................................ ņņ 2,198
Financing activities cash flows ....................................... 136,494 42,218 55,917
Working capital............................................................... $313,834 $302,275 $ 259,813
Current ratio .................................................................... 3.1 x3.8 x 3.2 x
Merchandise turnover...................................................... 2.9 x2.7 x 2.7 x
Cash flows from operating activities. Net cash provided by operating activities was $253.6 million for
2008, a decrease of 7.2% compared to the prior year. Net cash generated by the Company’s pawn lending
operations, cash advance operations and check cashing operations were $74.4 million, $178.4 million and
$0.8 million, respectively.
Historically, the Company’s revenue from loans is highest in the fourth fiscal quarter (October
through December) mainly due to higher average loan balances. Proceeds from the disposition of
merchandise are generally highest in the Company’s fourth and first fiscal quarters (October through March)
primarily due to the holiday season and the impact of tax refunds. The net effect of these factors is that
income typically is highest in the fourth and first fiscal quarters and likewise the Company’s cash flow is
generally greatest in these two fiscal quarters. During 2008, revenue from cash advance loans did not grow
in the fourth quarter due to changes in markets served by the Company, which caused this trend to be
different in 2008. The Company expects this trend to produce lower cash advance revenue in the first
quarter of 2009. The business is expected to return to its typical cycle beginning in the fourth quarter of
2009.
Cash flows from investing activities. The Company’s pawn lending investing activities used cash of $9.9
million and cash advance investing activities used cash of $132.9 million during the current period. The
Company also invested $55.5 million in property and equipment, including $15.1 million toward the
development of a new point-of-sale system and $40.4 million for the development and enhancements to
communications and information systems, establishment of new locations and the remodeling of certain
locations. In addition, $1.2 million of proceeds from various casualty insurance claims were received
during the year.
During the year ended December 31, 2008, the Company completed and made payments on
multiple acquisition transactions. The total amount of acquisition related payments was $226.8 million,
comprised of cash payments of $184.2 million, $7.9 million in common shares of the Company’s stock and
a deferred payment of $34.7 million. Acquisitions of pawn lending businesses, primarily the acquisition of
Prenda Fácil, used cash of $87.4 million. The Company issued 391,236 shares of its common stock as
partial payment for the Prenda Fácil acquisition with a fair value of $7.9 million as of the closing date.
Additionally, the Company made two supplemental payments totaling $132.6 million in connection with the