Cash America 2009 Annual Report Download - page 95

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Management believes cash flows from operations and available cash balances and borrowings will be
sufficient to fund the Company’s operating liquidity needs.
Cash flows from investing activities. Net cash used for investing activities decreased $137.2 million, or
36.0%, in the current year compared to the prior year, mainly due to a $138.7 million decrease in cash used for
acquisitions which decreased from $182.3 million in 2008 to $43.6 million in 2009. Pawn lending investing
activities provided additional cash of $10.4 million when compared to the prior year as increases in pawn loans
repaid and principal recovered from the sale of forfeited merchandise offset the increase in pawn loans made. Cash
advance activities used cash of $24.7 million when compared to the prior year due to a 14.4% increase in cash
advances made, assigned or purchased, which exceeded a 13.9% increase in cash advance repayments during the
period, reflecting the growth in the portfolio. Investments in property and equipment decreased $13.0 million from
$57.1 million in 2008 to $44.1 million in 2009 due to reductions in information technology development activities
and store remodeling. The 2009 expenditures of $44.1 million for property and equipment, included $4.7 million
toward the development of a new point-of-sale system and $39.4 million for the development of and enhancements
to internet product delivery systems, general communications and information systems, the establishment of new
storefront locations and the remodeling of certain existing storefront locations.
Net cash used for investing activities increased $62.8 million, or 19.7%, in 2008 compared to 2007. Cash
used for acquisitions increased $99.8 million from $82.6 million in 2007 to $182.4 million in 2008. Pawn lending
investing activities provided cash of $11.9 million in 2008 when compared to 2007 as increases in pawn loans
repaid and principal recovered from the sale of forfeited merchandise more than offset the increase in pawn loans
made. Cash advance activities provided cash of $28.9 million in 2008 compared to 2007 due to a decrease in cash
advances made, assigned or purchased and reduced balances outstanding. Investments in property and equipment
decreased $13.0 million, from $70.1 million in 2007 to $57.1 million in 2008 due primarily to reduced capital
investments in storefront locations including remodeling. This increase was offset by a decrease in proceeds from
the sale of foreign notes of $16.6 million which occurred in 2007.
Cash used for acquisition activities included a variety of investments including the following details of
various transactions.
On March 31, 2009, the Company made payments totaling $36.0 million in connection with the acquisition
of substantially all of the assets of The Check Giant, LLC (“TCG”), which occurred on September 15, 2006. On
April 27, 2009, the Company paid a final true-up payment of $5.0 million pursuant to an agreement with TCG.
On July 23, 2008, the Company, through a wholly-owned subsidiary, Primary Cash Holdings, LLC (now
known as Primary Innovations, LLC, or “Primary Innovations”), purchased substantially all the assets of Primary
Business Services, Inc., Primary Finance, Inc., Primary Processing, Inc. and Primary Members Insurance Services,
Inc. (collectively, “PBSI”). 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 required a minimum payment of $2.7 million and
was made on April 1, 2009. Based on the terms of the agreement, no payment was due for the second supplemental
payment calculated for the June 30, 2009 measurement date. As of December 31, 2009, the Company has accrued
to “Accumulated supplemental acquisition payment” approximately $2.3 million for the payment based on the
December 31, 2009 measurement date. 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 Company expects that payments will be required
at the two measurement dates in 2010 based on the current level of performance. Substantially all of the
supplemental payments associated with the earn-out will be accounted for as goodwill.
On December 16, 2008, the Company completed the Prenda Fácil acquisition. The Company agreed to pay
one 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. This supplemental payment is expected to be paid in cash on or before