Goodwill and Other Intangible Assets

9 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

NOTE 6: GOODWILL AND OTHER INTANGIBLE ASSETS

The following table presents the balance of goodwill and each major class of intangible assets as of the specified dates:



	June 30, 2015		June 30, 2014		September 30, 2014

	(in thousands)
Goodwill	$	331,849	$	436,765	$	346,577

Indefinite-lived intangible assets, net:
Pawn licenses	$	8,836	$	8,836	$	8,836
Trade names	6,697		8,281		6,990
Domain name	—		228		13
Total indefinite-lived intangible assets, net	$	15,533	$	17,345	$	15,839

Definite-lived intangible assets, net:
Real estate finders’ fees	$	1,025	$	841	$	787
Non-compete agreements	303		431		391
Favorable lease	452		541		517
Franchise rights	1,062		1,294		1,222
Contractual relationship	10,364		14,164		13,222
Internally developed software	21,257		27,914		18,759
Deferred financing costs	10,434		16,003		15,143
Other	145		212		206
Total definite-lived intangible assets, net	$	45,042	$	61,400	$	50,247

Intangible assets, net	$	60,575	$	78,745	$	66,086

The following tables present the changes in the carrying value of goodwill during the periods presented:



	U.S. & Canada			Latin America			Other International		Consolidated

	(in thousands)
Balances as of September 30, 2014	$	239,179		$	107,398		$	—	$	346,577
Acquisitions	10,710			—			—		10,710
Impairment	(10,550		)	—			—		(10,550		)
Effect of foreign currency translation changes	—			(14,888		)	—		(14,888		)
Balances as of June 30, 2015	$	239,339		$	92,510		$	—	$	331,849



	U.S. & Canada		Latin America		Other International		Consolidated

	(in thousands)
Balances as of September 30, 2013	$	283,199	$	110,209	$	39,892	$	433,300
Effect of foreign currency translation changes	—		1,228		2,237		3,465
Balances as of June 30, 2014	$	283,199	$	111,437	$	42,129	$	436,765

On February 19, 2015, we completed the acquisition of 12 pawn stores in Central Texas doing business under the "Cash Pawn" brand. We recorded $10.7 million in goodwill pertaining to this acquisition. The acquisition was made as part of our continuing strategy to enhance our earnings over the long-term. The factors contributing to the recognition of goodwill were based on several strategic and synergistic benefits we expect to realize from the acquisitions. These benefits include a greater presence in the Central Texas market, as well as the ability to further leverage our expense structure through increased scale. See Note 3 for additional information regarding the acquisition. See Note 18 for discussion of an additional acquisition completed subsequent to June 30, 2015.

In accordance with ASC 350-20-35, Goodwill — Subsequent Measurement, we test goodwill and intangible assets with an indefinite useful life for potential impairment annually, or more frequently when there are events or circumstances that indicate that it is more likely than not that an impairment exists. During the nine-month period ended June 30, 2015, we evaluated such events and circumstances and concluded that there were indicators of impairment under ASC 350-20-35-3C. These indicators of impairment primarily include a continued decline in our stock price in addition to Consumer Financial Protection Bureau proposals issued in March 2015, whose impact was subsequently evaluated by management. We performed a quantitative Step 1 analysis under ASC 350-20-35 and determined that the fair value of each of our reporting units exceeded the carrying value, with the exception of our U.S. Financial Services reporting unit. The fair values of each reporting unit were determined based upon a discounted cash flow approach. We further measured the impairment of goodwill associated with the U.S. Financial Services reporting unit under Step 2 and determined that $10.6 million, the entire amount of goodwill associated with the U.S. Financial Services reporting unit, should be written-off during the three-month period ended June 30, 2015. The impairment was recorded under "Impairment of goodwill" on the condensed consolidated statements of operations under the U.S. and Canada segment. No other long-term assets were determined to be impaired as of June 30, 2015. We will further perform our required annual impairment test in the fourth quarter of our fiscal 2015. See Note 18 for discussion of goodwill and other long-term asset impairment that occurred subsequent to June 30, 2015, including impairments associated with our discontinuance of the U.S. Financial Services business announced in July 2015.

The amortization of most definite-lived intangible assets is recorded as amortization expense. The favorable lease asset and other intangibles are amortized to operations expense (rent expense) over the related lease terms. The deferred financing costs are amortized to interest expense over the life of the related debt instrument.

The following table presents the amount and classification of amortization recognized as expense in each of the periods presented, without regard for any subsequent impairments of intangible assets:



	Three Months Ended June 30,				Nine Months Ended June 30,
	2015		2014		2015		2014

	(in thousands)
Amortization expense in continuing operations	$	1,380	$	1,306	$	4,205	$	4,064
Amortization expense in discontinued operations	—		334		—		1,491
Operations expense	25		30		77		91
Interest expense	798		1,616		3,423		4,166
Total expense from the amortization of definite-lived intangible assets	$	2,203	$	3,286	$	7,705	$	9,812

The following table presents our estimate of the amount and classification of future amortization expense for definite-lived intangible assets, without regard for any subsequent impairments of intangible assets:



Fiscal Years Ended September 30,	Amortization Expense		Operations Expense		Interest Expense

	(in thousands)
2015	$	1,893	$	27	$	438
2016	6,762		106		1,754
2017	6,527		106		1,754
2018	5,556		106		1,754
2019	4,826		78		1,325

As acquisitions and dispositions occur in the future, amortization expense may vary from these estimates.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details