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Strategic Investments | 12 Months Ended
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Sep. 30, 2014
Equity Method Investments and Joint Ventures [Abstract] |
Strategic Investments | STRATEGIC INVESTMENTS (AS RESTATED) Cash Converters International Limited At September 30, 2014, we owned 136,848,000 shares, or approximately 32%, of Cash Converters International Limited (“Cash Converters International”), a company headquartered in Perth, Australia, publicly traded on the Australian Stock Exchange. Cash Converters International franchises and operates a worldwide network of over 750 specialty financial services and retail stores that provide pawn loans, short-term unsecured loans and other consumer finance products, and buy and sell second-hand goods, with significant store concentrations in Australia and the United Kingdom. Those shares include 12,430,000 shares that we acquired in November 2012 for approximately $11.0 million in cash as part of a share placement. Our total investment in Cash Converters International was acquired between November 2009 and November 2012 for approximately $68.8 million. We account for our investment in Cash Converters International using the equity method. Since Cash Converters International’s fiscal year ends three months prior to ours, we report the income from this investment on a three-month lag. Cash Converters International files semi-annual financial reports with the Australian Securities & Investments Commission for its fiscal periods ending December 3 1 and June 30. Due to the three-month lag, income reported for our fiscal years ended September 30, 2014, 2013 and 2012 represents our percentage interest in the results of Cash Converters International’s operations from July 1, 2013 to June 30, 2014 and July 1, 2012 to June 30, 2013, and July 1, 2011 to June 30, 2012, respectively. In fiscal 2014, 2013 and 2012 our equity in Cash Converters International’s net income was $7.1 million, $11.0 million and $8.5 million, respectively. Additionally, in fiscal 2014, 2013 and 2012 we recorded dividends from Cash Converters International of $5.1 million, $5.1 million and $4.4 million, respectfully. Cash Converters International’s accumulated undistributed after-tax earnings included in our consolidated retained earnings were $19.3 million at September 30, 2014. In its functional currency of Australian dollars, Cash Converters International’s total assets increased 20% from June 30, 2013 to June 30, 2014 and its net income attributable to the owners of the parent decreased 26% for the fiscal year ended June 30, 2014. This decrease is primarily due to a decline in short-term personal lending as a result of regulatory changes in Australia. Cash Converters International sees these regulatory changes as an opportunity to capitalize on their strong compliance culture and critical mass in terms of stores and financing capability. The fiscal year ended June 30, 2014 reflects the continuing upward revenue trend that commenced in the prior year and Cash Converters International expects this trend to continue. The following tables present summary financial information for Cash Converters International’s most recently reported results after translation to U.S. dollars (using the exchange rate as of June 30 of each year for balance sheet items and average exchange rates for the income statement items for the periods indicated):
| June 30,
| 2014 |  | 2013
| (in thousands)
Current assets (1) | $ | 207,415 |  |  | $ | 158,373 |
Non-current assets | 178,764 |  |  | 153,279 |
Total assets | $ | 386,179 |  |  | $ | 311,652 |
Current liabilities (1) | $ | 95,242 |  |  | $ | 90,524 |
Non-current liabilities | 60,441 |  |  | 451 |
Shareholders’ equity: |  |  |
Equity attributable to owners of the parent | $ | 233,788 |  |  | $ | 220,676 |
Non-controlling interest | (3,292 | ) |  | 1 |
Total liabilities and shareholders’ equity | $ | 386,179 |  |  | $ | 311,652 |
(1) Subsequent to the issuance of Cash Converters International’s annual report dated June 30, 2013 and our annual report dated September 30, 2013 an entry was recorded by Cash Converters International reducing the previously reported current assets and current liability balance at June 30, 2013 by $5.2 million. As Cash Converters International is an equity method investment this adjustment had no effect on the results reported in our annual financial statements.
| Fiscal Year Ended June 30,
| 2014 |  | 2013 |  | 2012
| (in thousands)
Gross revenues | $ | 304,432 |  |  | $ | 280,059 |  |  | $ | 241,924 |
Gross profit | 195,325 |  |  | 183,368 |  |  | 162,598 |
Profit attributable to: |  |  |  |  |
Owners of the company | $ | 22,206 |  |  | $ | 33,754 |  |  | $ | 30,366 |
Non-controlling interest | (2,809 | ) |  | — |  |  | — |
Profit for the year (net income) | $ | 19,397 |  |  | $ | 33,754 |  |  | $ | 30,366 |
At September 30, 2014, the recorded balance of our investment in Cash Converters International, accounted for on the equity method, was $91.8 million. Because Cash Converters International publicly reports its financial results only semi-annually as of June 30 and December 31, the latest Cash Converters International figures available are as of June 30, 2014, at which point our equity in net assets of Cash Converters International was $73.6 million. The difference between the recorded balance and our equity in Cash Converters International’s net assets represents the $19.2 million of equity method goodwill, plus the cumulative difference resulting from Cash Converters International’s earnings, dividend payments and translation gains and losses since the dates of investment. Albemarle & Bond Holdings, PLC Prior to its bankruptcy reorganization, Albemarle & Bond Holdings, PLC (“Albemarle & Bond”) was primarily engaged in pawnbroking, retail jewelry sales, check cashing and lending in the United Kingdom. In fiscal year 2014 and 2013 we owned 16,644,640 ordinary shares of Albemarle & Bond, representing almost 30% of its total outstanding shares. We accounted for the investment using the equity method. Albemarle & Bond’s fiscal year ended three months prior to ours; therefore, we reported the income from this investment on a three-month lag. When it was a publicly traded reporting company on the London Stock Exchange, Albemarle & Bond filed semi-annual financial reports for its fiscal periods ending December 31 and June 30. Due to the three-month lag, income reported for our fiscal years ended September 30, 2014, 2013 and 2012 represents our percentage interest in the results of Albemarle & Bond’s operations from July 1, 2013 to June 30, 2014, July 1, 2012 to June 30, 2013 and July 1, 2011 to June 30, 2012, respectively. In fiscal 2014 our equity in Albemarle & Bond’s net loss was $1.2 million. In fiscal year 2013 and 2012, our equity in Albemarle & Bond’s net income was $2.3 million and $7.5 million, respectively. In fiscal 2014 we received no dividends from Albemarle & Bond. In fiscal year 2013 and 2012, we received dividends from Albemarle & Bond of $3.3 million and $3.3 million, respectively. Albemarle & Bond’s accumulated undistributed after-tax earnings included in our consolidated retained earnings were $25.4 million at September 30, 2014. In March 2014, Albemarle & Bond entered into bankruptcy reorganization in the U.K., and on April 15, 2014 Albemarle & Bond announced that the majority of its business and assets had been sold. In fiscal year 2014 and 2013 we recognized other than temporary impairments of $7.9 million (5.4 million, net of taxes) and $42.5 million ($28.7 million, net of taxes) which brought our carrying value of this investment to zero and $9.4 million at September 30, 2014 and 2013 respectively. The table below summarizes the carrying amount and fair value of each of these strategic investments at the dates indicated. These fair values for Cash Converters International at September 30, 2014 and 2013 are considered Level 1 estimates within the fair value hierarchy of FASB ASC 820-10-50, and were calculated as (a) the quoted stock price on the Australian Stock Exchange as of September 30, 2014 and 2013 multiplied by (b) the number of shares we owned as of September 30, 2014 and 2013 multiplied by (c) the applicable foreign currency exchange rate as of September 30, 2014 and 2013. We included no control premium for owning a large percentage of outstanding shares. The fair value for Albemarle & Bond at September 30, 2014 is considered a Level 2 estimate within the fair value hierarchy of FASB ASC 820-10-50. We calculated the fair value based on Albemarle & Bond's announcement of limited, if any, value available to the ordinary shares of its stock, which was considered to be an unobservable input insignificant to the overall determination of the Albemarle & Bond fair value. The fair value for Albemarle & Bond at September 30, 2013 is considered a Level 2 estimate within the fair value hierarchy of FASB ASC 820-10-50. We calculated the fair value based on (a) the quoted average stock price of Albemarle & Bond over the two week period subsequent to the October 2013 announcement multiplied by (b) the number of shares we owned multiplied by (c) the applicable foreign currency exchange rate as of the dates indicated during the post September 30, 2013 measurement date. We believe this measurement date allowed the market to react and adjust to the information released by Albemarle & Bond the first week of October 2013, as previously mentioned, and therefore resulted in a reasonable fair value as of September 30, 2013.
| September 30,
| 2014 |  | 2013
| (in thousands of U.S. dollars)
Albemarle & Bond: |  |  |
Carrying amount | $ | — |  |  | $ | 9,439 |
Fair value | — |  |  | 9,439 |
Cash Converters International: |  |  |
Carrying amount | $ | 91,781 |  |  | $ | 87,646 |
Fair value | 128,956 |  |  | 165,663 |

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=49116238&loc=d3e32847-111569 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=49116238&loc=d3e32787-111569 + Details
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