Cash America 2011 Annual Report Download - page 127

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
96
Debit Plus, LLC (formerly known as Primary Innovations, LLC)
Pursuant to its business strategy of expanding its electronically based product offerings, on July 23, 2008, the
Company, through its wholly-owned subsidiary, Primary Cash Holdings, LLC (now known as “Debit Plus, LLC,” or
“Debit Plus”), purchased substantially all the assets of Primary Business Services, Inc., Primary Finance, Inc., Primary
Processing, Inc. and Primary Members Insurance Services, Inc. (collectively, “PBSI”). PBSI, among other things,
provided loan processing services for, and participated in receivables associated with, a bank-issued MLOC made
available on certain stored-value debit cards issued by banks. The purchase price consisted of approximately $5.6
million in cash, of which approximately $4.9 million was used to repay a loan 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. The amount of each supplemental
payment was based on a multiple of earnings attributable to the business acquired from PBSI as defined in the
purchase agreement for the twelve months preceding the date of determining each scheduled supplemental payment
less amounts previously paid. Through December 31, 2011, supplemental payments of approximately $23.9 million
had been made and were paid in cash. All of the supplemental payments associated with the earn-out are accounted for
as goodwill, which reflects the expected future benefits to be realized through expansion of the PBSI platform to
expand the customer base and product offering.
No supplemental payment was accrued for the December 31, 2011 measurement date based on the terms of the
agreement. The final supplemental payment, if any, will be calculated in accordance with the terms of the agreement as
of June 30, 2012 and paid 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 Debit Plus comprise the Company’s MLOC channel, which is included in the results of the
Company’s e-commerce segment, as further described in Note 19. The Company stopped providing MLOC services
on behalf of a third-party lender in October 2010 when the lender discontinued offering MLOC advances.
The purchase price of Debit Plus was allocated as follows (dollars in thousands):
Year ended December 31,
2008 2009 2010 Total
Initial goodwill $ 3,384 $ - $ - $ 3,384
Acquisition costs 91 - - 91
Earn-out payments - 2,700 21,162 23,862
Goodwill $ 3,475 $ 2,700 $ 21,162 $ 27,337
Consumer loans 1,148 - - 1,148
Property and equipment 195 - - 195
Intangible assets, net 1,220 - - 1,220
Settlement of note receivable (4,885) - - (4,885)
Other liabilities (91) - - (91)
Total cash paid for acquisition, net of cash acquired $ 1,062 $ 2,700 $ 21,162 $ 24,924