Cash America 2009 Annual Report Download - page 117

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
89
In December 2009, FASB issued ASC Update No. 2009-17, Improvements to Financial Reporting by
Enterprises Involved with Variable Interest Entities (“ASU 2009-17”), which updates ASC 810-10,
Consolidations. ASU 2009-17 clarifies the definition of a variable interest entity and updates the definition of
the primary beneficiary of a variable interest entity. ASU 2009-17 became effective for the Company for
annual periods beginning after November 15, 2009 and the Company does not expect the adoption of ASU
2009-17 to have a material effect on its financial position or results of operations.
In January 2010, FASB issued ASC Update No. 2010-06, Fair Value Measurements and Disclosures
(“ASU 2010-06”), which updates ASC 820-10-20, Fair Value Measurements and Disclosures. ASU 2010-06
requires new disclosures for fair value measurements and provides clarification for existing disclosure
requirements. More specifically, ASU 2010-06 will require (a) an entity to disclose separately the amounts of
significant transfers in and out of Level 1 and 2 fair value measurements from one measurement date to
another and to describe the reasons for the transfers; and (b) information about purchases, sales, issuances and
settlements to be presented separately (i.e. present the activity on a gross basis rather than net) in the
reconciliation for fair value measurements using significant unobservable inputs (Level 3 inputs). ASU 2010-
06 clarifies existing disclosure requirements for the level of disaggregation used for classes of assets and
liabilities measured at fair value and requires disclosures about the valuation techniques and inputs used to
measure fair value for both recurring and nonrecurring Level 2 and Level 3 fair value measurements. ASU
2010-06 was effective for interim and annual reporting periods beginning on or after December 15, 2009, and
the Company does not anticipate that its adoption will have a material effect on its consolidated financial
statement footnote disclosures.
3. Acquisitions
Prenda Fácil
Pursuant to its business strategy of expanding its reach into new markets with new customers and new
financial services, the Company, through its wholly-owned subsidiary, Cash America of Mexico, Inc.,
completed the Prenda Fácil acquisition in December 2008. The Company paid an aggregate initial
consideration of $90.5 million, net of cash acquired, of which $82.6 million was paid in cash, including
acquisition costs of approximately $3.6 million. The remainder of the initial consideration was paid in the
form of 391,236 shares of the Company’s common stock with a fair value of $7.9 million as of the closing
date. The Company also agreed to pay a supplemental earn-out payment in an amount based on a five times
multiple of the consolidated earnings of Creazione’s business as specifically defined in the Stock Purchase
Agreement (generally Creazione’s earnings before interest, income taxes, depreciation and amortization
expenses) for the twelve-month period ending June 30, 2011, reduced by amounts previously paid. If the
calculation of the supplemental payment produces an amount that is zero or less, there would be no
supplemental payment. This supplemental payment is expected to be paid in cash on or before August 15,
2011. This payment will be accounted for as goodwill. The activities of Creazione are included in the results
of the Company’s pawn lending segment.