Cash America 2012 Annual Report Download - page 143

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
118
Reorganization reflects management’s decision to modify its strategy in Mexico to achieve profitability in its Mexico-
based pawn operations and to evaluate the potential to expand its services to customers in Latin American markets.
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In connection with the Mexico Reorganization, the Company incurred charges for employee termination costs,
lease termination costs, asset impairments, loss on sale of assets, the recognition of a deferred tax asset valuation
allowance, uncollectible receivables and other charges. The Company recognized $28.9 million of charges related to
the Mexico Reorganization during the year ended December 31, 2012.
The following table summarizes the charges recognized for the year ended December 31, 2012 related to the
Mexico Reorganization (dollars in thousands):
Type of expense Description Amount
Depreciation and amortization expenses Impairment and losses on property and equipment $ 7,478
Provision for income taxes Deferred tax asset valuation allowance 7,161
Depreciation and amortization expenses Impairment of intangible assets 5,086
Operations and administration expenses Employee termination costs 2,424
Operations and administration expenses Inventory shrinkage and loss on sale of assets 2,395
Operations and administration expenses Lease termination costs 1,628
Operations and administration expenses Impairment of other assets 1,211
Operations and administration expenses Other restructuring charges 798
Revenue Uncollectible receivables 692
Total charges related to the Mexico Reorganization $ 28,873
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The following table summarizes the balance of accrued reorganization charges related to the Mexico
Reorganization and the changes in the accrued expenses as of and for the year ended December 31, 2012 (dollars in
thousands):
For the year ended December 31, 2012
Charges
Cash
Payments
Foreign
currency
changes
Non-cash
charges
Accrued
balance as of
December 31,
2012
Employee termination costs $ 2,424 $ (2,427) $ 3 $ - $ -
Lease termination costs 1,628 (597) 7 (929) 109
Total $ 4,052 $ (3,024) $ 10 $ (929) $ 109
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The accrued reorganization charges are included in “Accounts payable and accrued liabilities” in the
Company’s consolidated balance sheets and in “Operations and administration expenses” in the consolidated
statements of income.
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Prior to September 26, 2012, the Company owned 80% of the outstanding stock of Creazione, which owned
the Company's Mexico-based pawn operations. On September 26, 2012, the Company acquired all outstanding shares
of Creazione that were held by minority shareholders (approximately 20% of the outstanding shares), and, as a result,
Creazione became a wholly-owned subsidiary of the Company as of that date. The Company paid approximately $5.6
million in cash and released the minority shareholders from certain contingent obligations estimated at approximately
$2.8 million. The Company accounted for this transaction as an acquisition of the remaining interest of a majority-
owned subsidiary. The purchase resulted in a reduction to additional paid in capital of $7.7 million, representing the
excess of the cash amount paid and the released contingent obligations (totaling $8.4 million) less the carrying amount
of the noncontrolling interest of $0.7 million. In January 2013, the Company’s remaining Mexico-based pawn
operations were sold by Creazione to another wholly-owned subsidiary, CA Empeños Mexico, S. de R.L. de C.V., and
began operating exclusively under the name “Cash America casa de empeño.” In connection with the Mexico