Acquisitions

The Company completed acquisitions during the three months ended March 31, 2016, as described below, consistent with its strategy to continue its expansion of pawn stores in selected markets. The purchase price of each acquisition 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. The goodwill arising from these acquisitions consists largely of the synergies and economies of scale expected from combining the operations of the Company and the pawn stores acquired.

Consistent with the Company’s strategy to continue its expansion of pawn stores in Latin America, the Company acquired the operating entity owning the pawn loans, inventory, layaways and other operating assets and liabilities of 166 pawn stores located in Mexico on January 6, 2016 and the assets of 13 pawn stores located in El Salvador on February 2, 2016 in related transactions (collectively the “Latin America Acquisition”). The combined purchase price for the all-cash transaction was $30,123,000, net of cash acquired before certain post-closing adjustments, and was composed of $25,271,000 in cash paid during the three months ended March 31, 2016 and payables to the sellers of $4,852,000. In addition, the Company assumed approximately $6,630,000 in peso-denominated debt from these acquisitions which was repaid in full by the Company in January 2016. The estimated fair values of the assets acquired and liabilities assumed are preliminary, as the Company is gathering information to finalize the valuation of these assets and liabilities. The assets, liabilities and results of operations of the locations are included in the Company’s consolidated results as of the acquisition dates.

During the three months ended March 31, 2016, one pawn store located in the U.S. was acquired by the Company (“U.S. Acquisition”) for an aggregate purchase price of $824,000, net of cash acquired, and was composed of $774,000 in cash paid during the three months ended March 31, 2016 and payables to the sellers of $50,000.

The preliminary allocations of the purchase prices for the Company’s acquisitions during the three months ended March 31, 2016 (the “2016 acquisitions”) are as follows (in thousands):



	Latin America Acquisition			U.S. Acquisition			Total
Pawn loans	$	10,586		$	138		$	10,724
Pawn loan fees and service charges receivable	885			6			891
Inventory	3,351			169			3,520
Other current assets	2,039			—			2,039
Property and equipment	6,950			10			6,960
Goodwill ⁽¹⁾	19,730			509			20,239
Intangible assets ⁽²⁾	405			16			421
Other non-current assets	512			—			512
Deferred tax assets	2,296			—			2,296
Current liabilities	(10,001		)	(24		)	(10,025		)
Notes payable	(6,630		)	—			(6,630		)
Purchase price	$	30,123		$	824		$	30,947


(1)	Substantially all of the goodwill for the U.S. Acquisition is expected to be deductible for U.S. income tax purposes. However, the goodwill for the Latin America Acquisition is not expected to be deductible for Mexico and El Salvador income tax purposes.


(2)	Intangible assets primarily consist of customer relationships, which are included in other non-current assets in the accompanying condensed consolidated balance sheets. Customer relationships are generally amortized over five years.

During the three months ended March 31, 2016, revenue from the 2016 acquisitions since the acquisition dates was $11,330,000. During the three months ended March 31, 2016, the net earnings from the 2016 acquisitions since the acquisition dates (including acquisition and integration costs) was $203,000. Combined transaction and integration costs related to the 2016 acquisitions were approximately $400,000, which are primarily included in administrative expenses in the accompanying condensed consolidated statements of income.

The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if all the above acquisitions had occurred on January 1, 2015. 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):



	Three Months Ended				Three Months Ended
	March 31, 2016				March 31, 2015
	As Reported		Pro Forma		As Reported		Pro Forma
Total revenue	$	183,203	$	184,484	$	176,023	$	189,436
Net income	13,174		13,221		16,788		17,057

Net income per share:
Basic	$	0.47	$	0.47	$	0.59	$	0.60
Diluted	0.47		0.47		0.59		0.60