Cash America 2009 Annual Report Download - page 118

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
90
In 2009, the Company finalized its allocation of the purchase price to individual assets acquired and
liabilities assumed as a result of the acquisition of Creazione. As of December 31, 2009, the purchase price
of Creazione was allocated as follows (in thousands):
Pawn loans $ 14,670
Finance and service charges receivable 1,581
Property and equipment 1,872
Goodwill 61,272
Intangible assets 13,107
Other assets 2,925
Other (liabilities) (4,933)
Total consideration paid for acquisition $ 90,494
Restricted stock paid for acquisition (7,890)
2009 purchase price adjustments (acquisition costs) 259
Total cash paid for acquisition, net of cash acquired $ 82,863
The goodwill recorded in the acquisition of Prenda Fácil is not deductible for Mexican tax purposes.
Primary Innovations, LLC
Pursuant to its business strategy of expanding its reach into new markets, the Company, through its
wholly-owned subsidiary, Primary Cash Holdings, LLC (now known as Primary Innovations, LLC, or
“Primary Innovations”), on July 23, 2008, purchased substantially all the assets of Primary Business Services,
Inc., Primary Finance, Inc., Primary Processing, Inc. and Primary Members Insurance Services, Inc.
(collectively, “PBSI”), a group of companies in the business of, among other things, providing marketing and
loan processing services for, and participating in receivables associated with, a bank issued line of credit
made available by the bank on certain stored-value debit cards the bank issues. The Company paid
approximately $5.6 million in cash, of which approximately $4.9 million was used to repay a loan that the
Company had made to PBSI, and transaction costs of approximately $0.3 million. The Company also agreed
to pay up to eight supplemental earn-out payments during the four-year period after the closing. The first
supplemental payment of a minimum agreed amount of $2.7 million was made on April 1, 2009. The amount
of each subsequent supplemental payment is to be based on a multiple of 3.5 times the consolidated earnings
attributable to Primary Innovations’ business, as defined in the Asset Purchase Agreement, for a specified
period (generally 12 months) preceding each scheduled supplemental payment measurement date, reduced by
amounts previously paid. Based on the terms of the agreement, no payment was due for the second
supplemental payment calculated for the June 30, 2009 measurement date. The Company expects that
payments will be required at the two measurement dates in 2010 based on the current level of performance.
As of December 31, 2009, the Company has accrued to “Accrued supplemental acquisition payment”
approximately $2.3 million for the supplemental payment based on the December 31, 2009 measurement date.
Substantially all of the supplemental payments associated with the earn-out will be accounted for as goodwill.
The remaining supplemental payments will be calculated as described above based on measurement dates of
each December 31 and June 30 through June 30, 2012, with each payment, if any, due approximately 45 days
after the measurement date. The activities of Primary Innovations are included in the results of the
Company’s cash advance segment.