Cash America 2013 Annual Report Download - page 124

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2012 comparison to 2011
Net cash provided by operating activities increased $64.3 million, or 14.2%, from $454.0 million in 2011 to
$518.3 million in 2012. Two significant components of the increase in net cash provided by operating activities during
2012 compared to 2011 were a $33.5 million decrease in net income and a $90.6 million increase in the consumer loan
loss provision, a non-cash expense, primarily as a result of loan growth in the e-commerce segment. In addition,
depreciation and amortization expenses, which are also non-cash expenses, increased $21.3 million, primarily due to the
disposition activities related to the Mexico Reorganization, the implementation of the Company’s domestic point-of-sale
system, which was placed in service in July 2011, and the investments in retail services locations in 2012 and 2011.
Also, a decrease in merchandise purchased from customers and other third parties combined with disposition of these
goods to create an increase in cash provided by operating activities by $17.4 million in 2012 compared to 2011. The
increase in cash provided by operating activities was partially offset by decreases in cash provided by current and
deferred income taxes. Results in 2011 were positively impacted by a $12.3 million and $25.6 million current and
deferred tax benefit, respectively, resulting from a change in the timing of tax deductions for internally-developed
software costs as well as the impact of increased bonus depreciation rules in effect for all of 2011. In addition, the
Company recorded a decrease in deferred income taxes related to the Mexico Reorganization, as described below. The
increase in cash flows from operating activities in 2012 was also offset by a decrease of $33.5 million in net income.
The Company recognized $28.9 million of charges in 2012 related to the Mexico Reorganization, which did not
have a material impact on the Company’s cash flows from operations. The primary components of these charges are
reflected as a $12.6 million increase in depreciation and amortization and a $7.2 million decrease to deferred income
taxes, both of which are non-cash items. The remaining charges are reflected in changes to other operating assets and
liabilities in the consolidated statement of cash flows.
Cash Flows from Investing Activities
2013 comparison to 2012
Net cash used in investing activities increased $146.5 million, or 27.8%, from $526.7 million in 2012 to $673.2
million in 2013. During 2013, the Company used $165.3 million for acquisitions as described below, an increase of
$87.1 million from 2012. In addition, the Company used $45.5 million of additional cash for consumer loan activities in
2013 compared to 2012, primarily as a result of growth in consumer loans written in the Company’s e-commerce
segment. Cash used by pawn lending activities increased by $36.0 million, primarily due to a decrease in the disposition
of merchandise through commercial sales of gold resulting in an increase in merchandise available for disposition in
retail services locations, which is a result of the Company’s strategy to emphasize the sale of gold through retail
channels rather than commercial channels. Offsetting these increases in the use of cash was an $18.1 million decrease in
purchases of property and equipment as described below and a $6.6 million increase in cash from proceeds received
from the sale of marketable securities during 2013.
The Company completed the acquisition of 76 domestic pawn lending locations in 2013, including the
acquisition of a chain of pawn lending locations in Texas that included 41 operating locations and the rights to one
additional Texas pawn lending location (that was under construction but not open for business at the time of the
acquisition) and the acquisition of a 34-store chain of pawn lending locations in Georgia and North Carolina (31
locations in Georgia and three locations in North Carolina). Consideration for these acquisitions was paid in cash and
funded by available cash and through the Company’s Domestic and Multi-currency Line of Credit. See “Recent
Developments—2013 Business Developments” for further discussion of these acquisitions.
During 2013, expenditures for property and equipment used $61.3 million of cash, compared to $79.4 million in
2012. The $18.1 million decrease in the use of cash primarily related to decreased expenditures at the Company’s retail
services locations for the remodeling of existing locations and decreased expenditures related to the expansion of the
Company’s e-commerce offices, which occurred in 2012.
Management anticipates that expenditures for property and equipment related to its domestic and foreign
operations for 2014 will be between $70 million and $80 million, excluding acquisitions of retail services locations,
primarily for the remodeling of stores, facility upgrades, technology infrastructure and the establishment of
approximately 5 to 10 new retail services locations.