ACQUISITIONS

During the fiscal year ended September 30, 2014, we had no acquisitions accounted for as a business combination.

The following tables provide information related to the acquisitions of domestic and foreign retail and financial services locations during the year ended September 30, 2013:



	Fiscal Year Ended September 30, 2013
	Go Cash	Other Acquisitions
Number of asset purchase acquisitions	1	1
Number of stock purchase acquisitions	—	3

U.S. stores acquired	—	12
Foreign stores acquired	—	26
Total stores acquired	—	38



	Fiscal Year Ended September 30, 2013
	Go Cash		Other Acquisitions
	(in thousands)
Consideration:
Cash	$	—	$	17,980
Equity instruments	27,776		10,929
Deferred consideration	23,000		2,872
Contingent consideration	4,792		2,501
Fair value of total consideration transferred	55,568		34,282
Cash acquired	—		(3,040		)
Total purchase price	$	55,568	$	31,242



	Fiscal Year Ended September 30, 2013
	Go Cash		Other Acquisitions
	(in thousands)
Current assets:
Pawn loans	$	—	$	5,714
Consumer loans, net	—		1,079
Service charges and fees receivable, net	23		399
Inventory, net	—		2,441
Prepaid expenses and other assets	120		508
Total current assets	143		10,141
Property and equipment, net	268		1,078
Goodwill	44,020		17,187
Non-current consumer loans, net	—		3,336
Intangible assets	11,215		2,685
Other assets	124		314
Total assets	$	55,770	$	34,741
Current liabilities:
Accounts payable and other accrued expenses	$	202	$	560
Customer layaway deposits	—		103
Total current liabilities	202		663
Total liabilities	202		663
Redeemable noncontrolling interest	—		2,836
Net assets acquired	$	55,568	$	31,242

Goodwill deductible for tax purposes	$	44,020	$	—
Indefinite-lived intangible assets acquired:
Domain name	$	215	$	—
Definite-lived intangible assets acquired (1):
Internally developed software	$	11,000	$	66
Non-compete agreements	—		30
Contractual relationship	—		2,589

(1) The weighted average useful life of definite-lived intangible assets acquired was five years.

Per FASB ASC 805-10-25, adjustments to provisional purchase price allocation amounts made during the measurement period shall be recorded as if the accounting for the business combination had been completed at the acquisition date. Thus, the acquirer shall revise comparative information for prior periods presented in financial statements. The amounts above and our consolidated balance sheet as of September 30, 2013 reflect all measurement period adjustments recorded during fiscal 2014. During the fiscal year ended September 30, 2013 adjustments included a $4.8 million increase to goodwill, a $2.1 million increase to intangible assets and a $0.1 million net increase to various other assets, offset by a $6.9 million increase to deferred gains and other long-term liability.

Go Cash

On November 20, 2012, we entered into a definitive agreement with Go Cash, LLC and certain of its affiliates ("Go Cash" or "EZCORP Online") to acquire substantially all the assets of Go Cash's online lending business. This acquisition of assets was completed on December 20, 2012 and accounted for as a business combination. No liabilities were assumed other than trade payables and accounts payable incurred prior to closing in the ordinary course of business, which were approximately $0.2 million.

The assets acquired include a proprietary software platform, including a loan management system and a lending decision science engine; an internal customer service and collections call center; a portion of the existing Go Cash multi-state loan portfolio; and related assets, including customer lists, customer data and customer transaction information. We hired substantially all of Go Cash's employees, including the management team, an internal underwriting and customer experience analytics team, and an experienced customer service and collections call center team.

The total purchase price is performance-based and is to be determined over a period of four years following the closing. The total consideration of $55.6 million includes the performance consideration element, which is based on the net income generated by the "Post-Closing Business Unit" (which includes our entire online consumer lending business). Within a specified period after the end of each of the first four years following the closing, we will make a contingent supplemental payment equal to the difference between (a) the adjusted net income for such year, multiplied by 6.0, and (b) all consideration payments previously paid. Each payment may be made, in our sole discretion, in cash or in the form of shares of EZCORP Class A Non-voting Common Stock (“Class A Common Stock”). Of the $50.8 million in non-performance consideration, $27.8 million was paid at closing, $6.0 million was paid on November 12, 2013, $5.0 million was paid on December 19, 2013, and the remaining $12.0 million will be paid in equal installments in November 2014 and November 2015. The initial payment was made in the form of 1,400,198 shares of EZCORP Class A Common Stock, and the November and December 2013 payments were made in cash.

Based on the final purchase price allocation, the contingent consideration was valued at $4.8 million. This amount was calculated using a Monte Carlo simulation, whereby future net income is simulated over the earn-out period. For each simulation path, the earn-out payments were calculated and then discounted to the valuation date. The fair value of the earn-out was then estimated to be the arithmetic average of all paths. The model utilized forecasted net income, and the valuation was performed in a risk-neutral framework. The significant inputs used for the valuation are not observable in the market, and thus this fair value measurement represents a Level 3 measurement within the fair value hierarchy. This contingent consideration element was valued and recorded during the first quarter ended December 31, 2013.

On September 30, 2014, the Company’s Board of Directors, on management’s recommendation, approved a plan to exit our online lending business in the United States and the United Kingdom, and as a result of this plan, our online payday loan operations in Go Cash have been included as discontinued operations as of September 30, 2014. As part of discontinuing the Go Cash business, we reversed the previously recorded $4.8 million liability for contingent consideration. We will continue to make installment payments on the outstanding consideration of $12.0 million as of September 30, 2014. Refer to Note 2 for further detail on discontinued operations.

TUYO

On November 1, 2012, we acquired a 51% interest in Renueva Comercial S.A.P.I. de C.V., a company headquartered in Mexico City and doing business under the name "TUYO", for approximately $1.1 million. On January 1, 2014, we acquired an additional 8% interest in TUYO for $1.1 million, increasing our ownership percentage to 59%. This transaction was treated as an equity transaction and not an adjustment to the purchase price of the initial controlling interest acquisition of TUYO. Refer to Note 11 for further detail. As of September 30, 2014, TUYO owned and operated 19 stores in Mexico City and the surrounding metropolitan area. In these stores, TUYO buys quality used merchandise from customers and then resells that merchandise to other customers. TUYO also sells refurbished or other merchandise acquired in bulk from wholesalers. As this acquisition was individually immaterial, we present its related information, other than information related to the redeemable noncontrolling interest, combined with other immaterial acquisitions.

Pursuant to the acquisition agreement, the sellers have a put option with respect to their remaining shares of TUYO. The sellers have the right to sell their TUYO shares to EZCORP during a specified exercise period, with specified limitations on the number of shares that may be sold within a consecutive 12-month period. Under the guidance in FASB ASC 480-10-S99, securities that are redeemable for cash or other assets are to be classified outside of permanent equity; therefore, we have included the redeemable noncontrolling interest related to TUYO in temporary equity.

The acquisition date fair value of the TUYO redeemable noncontrolling interest was estimated by applying an income and market approach. This fair value measurement was based on significant inputs that are not observable in the market and thus represents a Level 3 measurement. Key assumptions include discount rates of 10% and 18% representing discounts for lack of control and lack of marketability, respectively, that market participants would consider when estimating the fair value of the noncontrolling interest. The fair market value of TUYO was determined using a multiple of future earnings. See Note 21 for additional details relating to the fair value disclosures.

Other - 2013

On April 26, 2013, Grupo Finmart, our 76% owned subsidiary, purchased 100% of the outstanding shares of Fondo ACH, S.A. de C.V., a specialty consumer finance company. The total purchase price is performance-based and will be determined over a period of four years. A minimum of $3.5 million will be paid, of which $2.7 million was paid at closing with the remaining due on January 2, 2017. The performance consideration element will be based on interest income generated by the acquired portfolios and new loans made through Fondo ACH's contractual relationships. The contingent consideration element of the purchase price, which is the amount in excess of the guaranteed $3.5 million, has been preliminarily valued at $2.3 million as of the acquisition date and recorded during the quarter ended March 31, 2014. As this acquisition was individually immaterial, we present its related information combined with other immaterial acquisitions.

The fiscal year ended September 30, 2013, includes the December 2012 acquisition of 12 pawn locations in Arizona, which was a new state of operation for EZCORP. As this acquisition was individually immaterial, we present its related information combined with other immaterial acquisitions.

All acquisitions were made as part of our continuing strategy to enhance and diversify our earnings over the long-term. The factors contributing to the recognition of goodwill were based on several strategic and synergistic benefits we expected to realize from the acquisitions. These benefits include our initial entry into several markets and a greater presence in others, as well as the ability to further leverage our expense structure through increased scale. As of fiscal year ended September 30, 2014 we incurred no transaction related expenses. For the fiscal years ended September 30, 2013 we incurred transaction related expenses of $0.5 million which were expensed as incurred and recorded as operations expense. These amounts exclude costs related to transactions that did not close and future acquisitions. The results of all acquisitions have been consolidated with our results since their respective closing. Pro forma results of operations have not been presented because it is impracticable to do so, as historical audited financial statements in U.S. GAAP are not readily available.