Cash America 2010 Annual Report Download - page 110

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
81
Primary Innovations, LLC
Pursuant to its business strategy of expanding its product offerings and offering new credit alternatives, on
July 23, 2008, the Company, through its 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”), a group of companies in the business of, among other things, providing loan processing services
for, and participating in receivables associated with, a bank issued MLOC 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 prior to the acquisition, 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, with measurement dates of December 31 and June 30 of each
year. Through December 31, 2010, the Company has made supplemental payments of approximately $23.9 million,
and total consideration of $24.9 million as of December 31, 2010. The amount of the February 2010 and August 2010
payments (which were a result of the December 31, 2009 and June 30, 2010 measurement dates) and each subsequent
supplemental payment were and will be based on a multiple of 3.5 times the earnings attributable to Primary
Innovations’ business, as defined in the Asset Purchase Agreement, for the twelve-month period ending on the
scheduled supplemental payment measurement date, reduced by amounts previously paid. As of December 31, 2010,
no additional supplemental payment has been accrued for the December 31, 2010 measurement date based on the
amounts previously paid in connection with the initial purchase price and the previous supplemental payments. All of
the supplemental payments associated with the earn-out will be accounted for as goodwill in the e-commerce segment
and will be payable in cash. The remaining supplemental payments will be calculated as described above based on
measurement dates through June 30, 2012, with each payment, if any, due approximately 45 days after the
measurement date. The total of all payments to the sellers cannot exceed $50.0 million pursuant to the terms of the
asset purchase agreement. The activities of Primary Innovations comprise the Company’s MLOC services channel,
which is included in the results of the Company’s e-commerce segment, as further described in Note 18. MetaBank,
whose iAdvance program has generated earnings for the Company's MLOC services channel, terminated its iAdvance
program as of October 13, 2010. See Note 2 for a discussion of the current status of the Company's MLOC business.
As of December 31, 2010, the purchase price of Primary Innovations was allocated as follows (in thousands):
Consumer loans $ 1,148
Property and equipment  195
Goodwill  3,384
Intangible assets  1,220
Settlement of note receivable  (4,885)
Total cash paid for acquisition, net of cash acquired at December 31, 2008 1,062
2009 purchase price adjustments(a) 2,700
2010 purchase price adjustments(b) 21,162
 Total cash paid for acquisition, net of cash acquired $ 24,924
 
(a) Includes a $2.7 million earn-out payment made in April 2009.  
(b) Includes $2.3 million and $18.9 million earn-out payments made in February 2010 and August 2010, respectively.
CashNetUSA
Pursuant to its business strategy of expanding into new markets, with new product offerings and new credit
alternatives, on September 15, 2006, the Company, through its wholly-owned subsidiary Cash America Net Holdings,