Cash America 2010 Annual Report Download - page 32

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3
Recent Developments
Business Developments
Pursuant to its business strategy of expanding storefront operations in the United States, the Company’s
wholly-owned subsidiary, Cash America, Inc. of Nevada, completed the purchase of substantially all of the assets (the
"Maxit acquisition") of Maxit Financial, LLC ("Maxit") on October 4, 2010. Maxit owned and operated a 39-store
chain of pawn lending locations that operate in Washington and Arizona under the names “Maxit” and “Pawn X-
Change.” Per the terms of the Asset Purchase Agreement, the acquisition consideration consisted of a cash payment of
approximately $58.2 million, which was funded with borrowings under the Company’s line of credit, and 366,097
shares of the Company’s common stock, with a fair value of $10.9 million as of the closing date. In addition, the
Company incurred acquisition costs of $1.5 million related to the acquisition, which are reflected in "Operations
expenses" in the consolidated statements of income.
In addition, see the “Overview” section for a discussion of recent developments in the Company’s MLOC
business.
Recent Regulatory Developments
Due to legislation adopted in Maryland that became effective October 1, 2010, the Company has ceased
offering consumer credit services through the CSO program in Maryland. The Company has developed an alternative
consumer loan product for Maryland customers and is currently assessing its viability.
The legislation under which the Company offered consumer loans over the internet and through its retail
services locations in Arizona expired on July 1, 2010, and the Company has discontinued offering consumer loans in
that state. The Company has continued to serve customers in Arizona by offering pawn loans in its pawn lending
locations in that state.
Recently passed legislation in the States of Colorado and Wisconsin, which became effective in 2010, and
Illinois, which will become effective in early 2011, affect consumer loans offered by the Company in each of those
states. This legislation has reduced or is expected to reduce the profitability and/or the volume of loans written in
these states. In addition, a recently passed referendum in the State of Montana, which became effective in January
2011, caused the Company to discontinue offering consumer loans in that state in December 2010.
The recent regulatory changes in Colorado, Illinois and Wisconsin and the loss of consumer loans in Arizona
and Montana and the CSO program in Maryland have not, individually or in the aggregate, had a material effect on the
Company, including its consolidated revenues or operations during 2010. The offering of alternative products and the
growth in consumer loans from other markets during 2010, including both domestic and foreign markets, helped to
offset a portion of the loss of revenue it has experienced from these losses or changes.
On October 19, 2010, the Pennsylvania Supreme Court upheld the Commonwealth Court of Pennsylvania’s
prior decision from July 2009 against the Company and in favor of the Pennsylvania Department of Banking. As a
result of the initial decision by the Commonwealth Court, the Company ceased offering consumer loans in
Pennsylvania in July 2009. See “Item 8. Financial Statements and Supplementary Data—Note 12” for further
information.
In addition, the United States Congress recently passed the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010. This legislation authorizes the creation of a Consumer Financial Protection Bureau with broad
regulatory powers over consumer credit products such as those offered by the Company. The Company cannot
currently predict whether the Bureau will impose additional regulations that could affect the credit products offered by
the Company. However, if the Bureau were to promulgate regulations that adversely impact the credit products
offered by the Company, such regulations could have a material adverse effect on the Company’s business, prospects,
results of operations and financial condition. See “Item 1A. Risk Factors—Risks Related to the Company’s Business