Goodwill and Other Intangible Assets

12 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

The following table presents the balance of each major class of indefinite-lived intangible assets:



	September 30,
	2014		2013
	(in thousands)
Pawn licenses	$	8,836	$	8,836
Trade name	6,990		9,791
Domain name	13		215
Total	$	15,839	$	18,842

The following table presents the changes in the carrying value of goodwill, by segment, during the periods presented:



	U.S. & Canada			Latin America			Other International			Consolidated
	(in thousands)
Balances at September 30, 2012	$	224,306		$	110,401		$	39,956		$	374,663
Acquisitions	54,133			2,282			—			56,415
Measurement period adjustment*	4,792			—			—			4,792
Goodwill impairment	(32		)	—			—			(32		)
Effect of foreign currency translation changes	—			(2,474		)	(64		)	(2,538		)
Balances at September 30, 2013	$	283,199		$	110,209		$	39,892		$	433,300
Goodwill impairment	(44,020		)	—			(40,138		)	(84,158		)
Effect of foreign currency translation changes	—			(2,811		)	246			(2,565		)
Balances at September 30, 2014	$	239,179		$	107,398		$	—		$	346,577

*Measurement period adjustment related to Go Cash acquisition. See Note 3 for details.

The following table presents the gross carrying amount and accumulated amortization for each major class of definite-lived intangible assets:



	September 30,
	2014							2013
	Carrying Amount		Accumulated Amortization			Net Book Value		Carrying Amount		Accumulated Amortization			Net Book Value
	(in thousands)
Real estate finders’ fees	$	1,500	$	(713	)	$	787	$	1,496	$	(594	)	$	902
Non-compete agreements	3,823		(3,432		)	391		4,070		(3,397		)	673
Favorable lease	1,001		(484		)	517		1,001		(387		)	614
Franchise rights	1,432		(210		)	1,222		1,551		(163		)	1,388
Contractual relationship	16,179		(4,419		)	11,760		16,619		(2,580		)	14,039
Internally developed software	23,851		(5,092		)	18,759		26,153		(4,065		)	22,088
Deferred financing costs	19,236		(4,093		)	15,143		11,647		(6,614		)	5,033
Other	547		(341		)	206		541		(315		)	226
Total	$	67,569	$	(18,784	)	$	48,785	$	63,078	$	(18,115	)	$	44,963

In accordance with FASB 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 fourth quarter ended September 30, 2014, we performed our required annual impairment test and evaluated such events and circumstances and concluded that no goodwill or intangible asset impairment existed other than that described below.

At September 30, 2014, the calculated value of each of the reporting units in the U.S. & Canada segment exceeded their carrying values by more than 60%. For our reporting units in the Latin America segment, the calculated value of Grupo Finmart and Tuyo exceeded their carrying values by more than 30% and the calculated value of Empeño Fácil exceeded its carrying value by less than 10%. The carrying amount of Empeño Fácil’s goodwill is $9.3 million and represents 8% of the total goodwill in the Latin America segment at September 30, 2014.

At September 30, 2014, we recorded total pre-tax goodwill impairment charges of $84.2 million, of which $44.0 million ($28.2 million, net of taxes) related to our U.S. and Canada segment and $40.1 million (no tax effect) related to our other international segment as a result of the discontinued operations described in Note 2. At September 30, 2014, we recorded the following pre-tax charges: a $2.8 million (no tax effect) impairment charge to trade names related to our other international segment, a $0.2 million ($0.1 million, net of taxes) impairment charge to domain names related to our U.S. and Canada segment, and a $7.0 million ($4.5 million, net of taxes) and $0.3 million (no tax effect) impairment charge to internally developed software related to our U.S. and Canada and other international segments, respectively. We performed our impairment analysis utilizing the income approach. This approach uses future cash flows and estimated terminal values (discounted using a market participant perspective) to determine the fair value of each intangible asset. These impairment charges were recorded under “Loss from discontinued operations, net of tax” in our consolidated statements of operations.

Additionally, in September 2014, we recorded a $1.6 million impairment of internally developed software, included in “Administrative” expense in our consolidated statements of operations.

All recorded impairment charges are attributable to our fiscal 2014 fourth quarter plan to re-focus on our core businesses and discontinue our online lending business, which was approved by our Board of Directors on September 30, 2014. As a result of this plan, we discontinued our online lending business in the U.K. (conducted under the name “Cash Genie”) and our online lending business in the U.S. (referred to as “EZOnline”). See Note 2 for further detail on discontinued operations.

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 instruments.

The following table presents the amount and classification of amortization recognized as expense in each of the periods presented:



	Fiscal Year Ended September 30,
	2014		2013		2012
	(in thousands)
Amortization expense in continuing operations	$	5,475	$	3,485	$	1,956
Amortization expense in discontinued operations	1,818		1,776		23
Operations expense	111		108		138
Interest expense	5,137		$	3,208	2,478
Total expense from the amortization of definite-lived intangible assets	$	12,541	$	8,577	$	4,595

The following table presents our estimate of future amortization expense for definite-lived intangible assets:



Fiscal Year Ended September 30,	Amortization expense		Operations expense		Interest expense
	(in thousands)
2015	$	6,024	$	109	$	2,460
2016	5,577		106		1,483
2017	5,333		106		865
2018	4,354		106		701
2019	3,653		78		212

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.

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