ACQUISITIONS

2018 Acquisitions

Consistent with the Company’s strategy to continue its expansion of pawn operations in selected markets, during fiscal 2018 the Company acquired 366 pawn stores located in Mexico in six separate transactions and 27 pawn stores located in the U.S. in nine separate transactions. The aggregate purchase prices for these acquisitions totaled $125.4 million, net of cash acquired and subject to future post-closing adjustments. The purchases were composed of $113.7 million in cash paid during fiscal 2018 and remaining short-term amounts payable to the sellers of approximately $11.7 million.

In regard to the Mexico acquisitions, in February 2018 the Company acquired the operating assets of 126 pawn stores operating under the Prendamex brand. The seller of these pawn stores also owned and operated a franchise business whereby independent franchisees entered into individual franchise agreements allowing the franchisee, among other things, the use of the Prendamex brand. Subsequent to the February transaction, the Company entered into five additional asset acquisitions in 2018 of stores owned by certain of the independent Prendamex franchisees, representing aggregate purchases of 240 locations. Each of the five acquisitions involved different independent ownerships groups and were individually negotiated and completed separately during the months of June, August, September, October and November. Also in conjunction with the February transaction, the Company assumed certain of the franchisor rights and obligations from the original Prendamex seller representing a total of 221 franchised store locations under which the Company continues to operate as the franchisor of these locations as of December 31, 2018.

The purchase price of each of the 2018 acquisitions was allocated to assets acquired and liabilities assumed based upon the estimated fair market values at the date of each 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.

The estimated fair value 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 preliminary allocation of the aggregate purchase price of the Company’s individually immaterial acquisitions during fiscal 2018 is as follows (in thousands):



Pawn loans	$	21,391
Pawn loan fees receivable	2,300
Inventories	10,826
Other current assets	991
Property and equipment	3,983
Goodwill ⁽¹⁾	86,968
Intangible assets ⁽²⁾	934
Other non-current assets	168
Current liabilities	(2,171		)
Aggregate purchase price	$	125,390


⁽¹⁾	Goodwill associated with the U.S. operations segment and the Latin America operations segment was $15.5 million and $71.4 million, respectively. Substantially all of the goodwill is expected to be deductible for respective U.S. and Mexico income tax purposes.


⁽²⁾	Intangible assets primarily consist of customer relationships, which are generally amortized over five years.

The results of operations for the acquired stores have been consolidated since the respective acquisition dates. During fiscal 2018, revenue from the acquired stores was $46.0 million and the earnings from the combined acquisitions since the acquisition dates (including approximately $5.0 million of transaction and integration costs) was approximately $0.4 million.

Historical pre-acquisition financial statements of the six separate Mexico acquisitions were created in local country GAAP and the Company did not obtain pre-acquisition financial statements prepared in accordance with U.S. GAAP. As a result, and due to the insignificance of these acquisitions, it is impractical for the Company to adequately present supplemental pro forma information.

2017 Acquisitions

During fiscal 2017, the Company completed the acquisitions of five stores in Mexico and one store in the U.S., which were not material to the Company’s consolidated financial statements.