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Note 3 - Acquisitions
 3 Months Ended
Jun. 30, 2012
Acquisitions  
Acquisitions

 

Note 3 - Acquisitions

 

Consistent with the Company’s strategy to continue its expansion of pawn stores in selected markets, in June 2012, the Company acquired from Mister Money Investments, Inc., L&W Properties, LLC, Mister Money - - RM, Inc., Mister Money - - KY, Inc., LWC, LLC and MMRD, LLC (collectively “Mister Money”), the operating entities owning the pawn loans, inventory, layaways and other operating assets and liabilities of 24 pawn stores located in Colorado, Kentucky, Wyoming and Nebraska. The purchase price for the all-cash transaction was $25,615,000, net of cash acquired, and was composed of $25,315,000 in cash paid at closing and an additional $300,000 payable to the sellers in December 2012. The acquisition has been accounted for using the purchase method of accounting. Accordingly, the purchase price was allocated to assets and liabilities acquired based upon their estimated fair market values at the date of acquisition. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill of approximately $15,694,000, which is deductible for income tax purposes. The estimated fair values of the goodwill and intangible assets acquired are preliminary, as the Company is gathering information to finalize the valuation of these assets.

 

The allocation of the purchase price is as follows (in thousands):

 

 

 

 

 

 

 

Pawn loans

$

3,357

 

Consumer loans

 

1,202

 

Inventory

 

3,545

 

Other current assets

 

553

 

Property and equipment

 

497

 

Goodwill

 

15,694

 

Intangible assets

 

939

 

Other non-current assets

 

54

 

Current liabilities

 

(226)

 

 

Purchase price

$

25,615

 

The assets, liabilities and results of operations of the locations were included in the Company’s consolidated results as of the acquisition date, June 15, 2012.

 

Consistent with the Company’s strategy to continue its expansion of pawn stores in selected markets, in January 2012, the Company acquired from BBR Unlimited, LLC, the operating entity owning the pawn loans, inventory, layaways and other operating assets and liabilities of 29 pawn stores located in western Mexico. The purchase price for these stores was $46,863,000, net of cash acquired, and was composed of $41,963,000 in cash and a note payable to the seller of $4,900,000. The acquisition has been accounted for using the purchase method of accounting. Accordingly, the purchase price was allocated to assets and liabilities acquired based upon their estimated fair market values at the date of acquisition. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill of $39,386,000, which is deductible for income tax purposes.

 

The allocation of the purchase price is as follows (in thousands):

 

 

 

 

 

 

 

Pawn loans

$

2,246

 

Inventory

 

1,296

 

Other current assets

 

200

 

Property and equipment

 

4,124

 

Goodwill

 

39,386

 

Intangible assets

 

988

 

Other non-current assets

 

38

 

Current liabilities

 

(1,415)

 

 

Purchase price

$

46,863

 

The assets, liabilities and results of operations of the locations were included in the Company’s consolidated results as of the acquisition date, January 10, 2012.

 

During the second quarter of 2012, a single pawn store in Maryland was acquired for a total purchase price of $592,000, net of cash acquired, and was composed of $533,000 in cash and a payable to the seller of $59,000. This acquisition resulted in additional recorded goodwill of $389,000. In addition, certain pawn working capital assets incorporated into an existing Texas store were acquired for a total purchase price of $311,000, net of cash acquired, and resulted in additional recorded goodwill of $182,000. During the first quarter of 2012, three pawn stores in Texas were acquired in two acquisitions for an aggregate purchase price of $2,481,000, net of cash acquired, and resulted in additional recorded goodwill of $1,056,000.

 

During the six months ended June 30, 2012, revenue and after-tax earnings of the 2012 acquisitions since the acquisition dates were $9,333,000 and $1,186,000, respectively. The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if all the 2012 acquisitions had occurred on January 1, 2011. The unaudited pro forma financial information has been prepared for informational purposes only and does not purport to be indicative of what would have resulted had the acquisition occurred on the date indicated or what may result in the future (in thousands, except per share data):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2012

 

 

 

As Reported

 

Pro Forma

 

Total revenue from continuing operations

$

267,894

 

 

$

281,887

 

 

Income from continuing operations

 

33,861

 

 

 

35,294

 

 

Net income

 

33,861

 

 

 

35,294

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations per share:

 

 

 

 

 

 

 

 

 

Basic

$

1.16

 

 

$

1.21

 

 

 

Diluted

 

1.13

 

 

 

1.18

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

Basic

$

1.16

 

 

$

1.21

 

 

 

Diluted

 

1.13

 

 

 

1.18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2011

 

 

 

As Reported

 

Pro Forma

 

Total revenue from continuing operations

$

241,419

 

 

$

262,329

 

 

Income from continuing operations

 

31,109

 

 

 

33,555

 

 

Net income

 

37,894

 

 

 

40,340

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations per share:

 

 

 

 

 

 

 

 

 

Basic

$

1.00

 

 

$

1.08

 

 

 

Diluted

 

0.97

 

 

 

1.05

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

Basic

$

1.21

 

 

$

1.29

 

 

 

Diluted

 

1.18

 

 

 

1.26

 

 

In November 2011, the Company acquired the pawn loans, inventory, layaways and other operating assets of five pawn stores located in Indiana from R&R Pawn, Inc. The purchase price for the all-cash transaction was $3,829,000, net of cash acquired. The acquisition has been accounted for using the purchase method of accounting. Accordingly, the purchase price was allocated to assets and liabilities acquired based upon their estimated fair market values at the date of acquisition. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill of $1,806,000, which is deductible for income tax purposes. The assets, liabilities and results of operations of the locations were included in the Company’s consolidated results as of the acquisition date, November 4, 2011. Pro forma results of consolidated operations, and the revenue and earnings of the acquired operation earned during the year of acquisition, have not been presented because the acquisition was not significant in relation to the Company’s consolidated financial position or results of operations.

 

In February 2011, the Company acquired the pawn loans, inventory, layaways and other operating assets of six pawn stores located in Indiana and Missouri from Cash-N-Pawn of Indiana, Ltd., Cash-N-Pawn of Missouri, Ltd. and Cash-N-Pawn International, Ltd. The purchase price for the all-cash transaction was $3,950,000, net of cash acquired. The acquisition has been accounted for using the purchase method of accounting. Accordingly, the purchase price was allocated to assets and liabilities acquired based upon their estimated fair market values at the date of acquisition. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill of $2,704,000, which is deductible for income tax purposes. The assets, liabilities and results of operations of the locations were included in the Company’s consolidated results as of the acquisition date, February 8, 2011. Pro forma results of consolidated operations, and the revenue and earnings of the acquired operation earned during the year of acquisition, have not been presented because the acquisition was not significant in relation to the Company’s consolidated financial position or results of operations.