Cash America 2010 Annual Report Download - page 89

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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 in investing activities increased $128.6 million, or
53.7%, in 2010 compared to 2009. The combination of consumer loans made or purchased and consumer loans repaid
increased the Company’s use of cash by $63.5 million when compared to 2009, due to a 22.7% increase in consumer
loans made or purchased, mostly due to growth in the Company’s e-commerce segment. Cash used in pawn lending
activities increased $4.9 million, or less than 1%.
During 2010, cash used for acquisition activities increased by $38.7 million, to $82.3 million, compared to
$43.6 million in 2009, as explained below.
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. Of the total consideration paid to Maxit,
$26.2 million was accounted for as goodwill. See “Item 8. Financial Statements and Supplementary Data—Note 3.”
Also, during 2010, in addition to the Maxit acquisition, the Company acquired five domestic retail services
locations which primarily operate as pawn lending businesses, for approximately $2.9 million, compared to three such
locations acquired in 2009 for approximately $0.9 million in 2009.
The Company made supplemental payments of $21.2 million in 2010, and approximately $2.7 million in 2009,
in connection with the acquisition of substantially all the assets of Primary Business Services, Inc., Primary Finance,
Inc., Primary Processing, Inc. and Primary Members Insurance Services, Inc. on July 23, 2008. The measurement
dates for the remaining supplemental payments are each December 31 and June 30 through June 30, 2012, with each
payment, if any, due approximately 45 days after the measurement date. 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. The total of all
payments to the sellers cannot exceed $50.0 million pursuant to the terms of the asset purchase agreement. All
supplemental payments were accounted for as goodwill. Through December 31, 2010, the Company has made
supplemental payments totaling $23.9 million. See “Item 8. Financial Statements and Supplementary Data—Note 3.”
During 2010, expenditures for property and equipment used $59.7 million of cash in 2010, compared to $44.1
million in 2009. The $15.6 million additional use of cash primarily related to increased expenditures at the Company’s
retail services locations, including the remodeling of existing locations and the relocation of other retail services
locations. During 2009, expenditures for property and equipment provided $13.0 million of additional cash compared
to 2008.
During 2009, cash used for acquisition activities was $138.7 million less than 2008. During 2008, the
Company used approximately $83.3 million for the acquisition of retail services locations, primarily due to the Prenda
Fácil acquisition, and approximately $99.0 million for acquisitions in the e-commerce segment, primarily due to
supplemental earnout payments related to the acquisition of CashNetUSA. On March 31, 2009, the Company made
supplemental payments totaling $36.0 million, including a deferral fee of approximately $1.3 million that was
recognized as interest expense, in connection with the acquisition of substantially all of the assets of The Check Giant,
LLC, which occurred on September 15, 2006.
Management anticipates that expenditures for property and equipment for 2011 will be between $60.0 million
and $70.0 million, primarily for the remodeling of selected operating units, for the completion and rollout of product
delivery and information systems, including the multi-year project to upgrade the Company’s proprietary point-of-sale