Cash America 2011 Annual Report Download - page 72

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Recent Developments
Business Developments
Enova International, Inc.
On September 15, 2011, Enova International, Inc. ("Enova"), a wholly-owned subsidiary of the Company that
comprises the Company's e-commerce segment, filed a registration statement on Form S-1 with the Securities and
Exchange Commission in connection with a proposed initial public offering (“IPO”) of its common stock. In the IPO,
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.
CRITICAL ACCOUNTING POLICIES
Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on the
Company’s consolidated financial statements, which have been prepared in accordance with generally accepted
accounting principles in the United States (“GAAP”). The preparation of these financial statements requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure
of contingent assets and liabilities, at the dates of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting periods. On an on-going basis, management evaluates its estimates and