Cash America 2011 Annual Report Download - page 34

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Enova will offer common stock to the public, and the Company will also offer a portion of its interest in Enova to the
public. The Company currently intends to retain 35% to 49% of its ownership interest in Enova immediately following
the IPO. The number of shares of common stock to be offered and the price range for the offering have not yet been
determined. If the offering is completed as currently contemplated, Enova will be deconsolidated, and the Company will
account for its investment in Enova under the equity method of accounting.
At the date of this report, the registration statement is not effective. The completion of the IPO is subject to
numerous conditions, including market conditions, and the Company can provide no assurance that it will be
successfully completed. The securities offered under the registration statement may not be sold, nor may offers to buy be
accepted prior to the time that the registration statement becomes effective. The information contained in this Form 10-K
with respect to this offering shall not constitute an offer to sell or a solicitation of an offer to buy these securities. Upon
completion of the proposed IPO, the Company intends to use the proceeds it receives in the offering and from the
repayment of Enova’s intercompany indebtedness to the Company, which was $410.8 million as of December 31, 2011,
net of applicable taxes, to repay a portion of the amounts outstanding under its domestic line of credit and for other
general corporate purposes, which may include, among other potential uses, funding its strategy of expanding its
storefront business and products in the United States and Latin America and possibly repurchases of its common stock.
Pawn Partners, Inc.
Pursuant to its business strategy of expanding storefront operations in the United States, the Company’s wholly-
owned subsidiary, Cash America, Inc. of Nevada, entered into an agreement to acquire substantially all of the assets of
Pawn Partners, Inc., Pawn Partners -Tucson, Inc., Pawn Partners - Tucson II, Inc., Pawn Partners - Tucson 3, Inc., Pawn
Partners - Tucson 4, Inc. and Pawn Partners - Yuma, Inc. (collectively, "Pawn Partners") on November 22, 2011 (the
"Pawn Partners acquisition"), the final closing for which will occur following receipt of all applicable licensing and
regulatory approvals; however, the Company assumed the economic benefits of these pawnshops by operating them
under a management arrangement that commenced on November 30, 2011. Pawn Partners operated a seven-store chain
of pawn lending locations as franchised Cash America locations under the name “SuperPawn.” The seven locations are
located in Tucson, Flagstaff and Yuma, Arizona. 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.
Recent Regulatory Developments
The State of Illinois passed legislation that became effective in early 2011 that affected consumer loans offered
by the Company and reduced the volume of loans written in that state. In addition, during the first quarter of 2011, the
Mississippi legislature passed legislation that affects consumer loans offered by the Company in that state, which has
caused the Company to modify, and will further cause the Company to modify, certain aspects of its short-term
consumer loan product in that state. This Mississippi legislation also extended the sunset provision of the statute under
which the Company offers consumer loans through 2016. Part of this legislation became effective immediately after
passage, and the remainder became effective on January 1, 2012. Additionally, a ballot initiative that was passed in the
State of Montana became effective in January 2011 and caused the Company to discontinue offering consumer loans in
that state in December 2010.
The recent regulatory changes in Illinois and Mississippi and the loss of consumer loans in Montana have not,
individually or in the aggregate, had a material effect on the Company, including its consolidated revenues or operations
during 2011. The offering of alternative products and the growth in consumer loans from other markets during 2011,
including both domestic and foreign markets, helped to offset a portion of the loss of revenue it has experienced from
these losses or changes.