Cash America 2011 Annual Report Download - page 105

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participation interests acquired from a third-party lender through the MLOC channel. These increases were partially
offset by a decrease in current income taxes payable of $17.5 million as a result of the timing of domestic federal income
tax payments that are based upon annualized activity through the end of the third quarter, which may differ from the full
year tax provision settled in the succeeding fiscal year.
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 $109.7 million, or 29.8%,
from $368.2 million for the year ended December 31, 2010 to $477.9 million for the year ended December 31, 2011.
The combination of consumer loans made or purchased net of consumer loans repaid increased the Company’s use of
cash by $80.0 million when compared to 2010, due to increases in consumer loans made or purchased in the foreign
markets of the Company’s e-commerce segment, which more than offset lower consumer loans made or purchased in
domestic markets, and a decrease in loans repaid in the Company’s e-commerce segment. Cash used in pawn lending
activities increased $46.4 million due to growth in the Company’s domestic pawn portfolio.
Net cash used in investing activities increased $128.6 million, or 53.7%, from $239.6 million for the year ended
December 31, 2009 to $368.2 million for the year ended December 31, 2010. 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,
mainly due to increased consumer loans made or purchased primarily related to growth in the Company’s e-commerce
segment. Cash used in pawn lending activities increased $4.9 million.
During 2011, cash used for acquisition activities decreased by $32.7 million, or 39.8%, to $49.5 million in 2011
due to the lower aggregate prices for acquisition made in 2011 compared to 2010. During 2010, cash used for
acquisition activities was $38.6 million more than 2009. Details of the acquisitions that occurred in 2011, 2010 and 2009
are explained below.
During 2011, the Company made the Pawn Partners acquisition. See “Recent Developments—Business
Developments.” As of December 31, 2011, the Company had paid aggregate consideration of $49.3 million with
additional consideration of $4.3 million to be paid following the receipt of applicable licensing and regulatory approvals.
In addition, the Company incurred acquisition costs of $0.1 million related to the acquisition, which are reflected in
“Operations expenses” in the consolidated statements of income. The goodwill of $26.7 million arising from the
acquisition consists largely of the synergies and economies of scale expected from combining the operations of the
Company and Pawn Partners. The activities and goodwill related to the Pawn Partners acquisition are included in the
results of the Company’s retail services segment. See “Item 8. Financial Statements and Supplementary Data—Note 3.”
Also, during 2011, in addition to the Pawn Partners acquisition, the Company acquired one domestic retail
services location, which primarily operates as a pawn lending business, for approximately $0.3 million, compared to five
such locations acquired in 2010 for approximately $2.9 million.
During 2010, the Company used approximately $61.1 million for the acquisition of retail services locations,
primarily due to the Maxit acquisition. 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.”
The Company made supplemental payments of approximately $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. (collectively, “PBSI”) on
July 23, 2008. The measurement dates for the supplemental payments are each December 31 and June 30 through June