NOTE 5: STRATEGIC INVESTMENTS

Cash Converters International Limited

As of September 30, 2015, we owned 151,948,000 shares, or approximately 32%, of Cash Converters International Limited. Our total investment in Cash Converters International was acquired between November 2009 and December 2014 for approximately $80.9 million.

In fiscal 2015 our equity in Cash Converters International’s net loss was $5.5 million. In fiscal 2014 and 2013 our equity in Cash Converters International’s net income was $7.1 million and $11.0 million, respectively. Additionally, in fiscal 2015, 2014 and 2013 we recorded dividends from Cash Converters International of $4.8 million, $5.1 million and $5.1 million, respectively. Cash Converters International’s accumulated undistributed after-tax earnings included in our consolidated retained earnings were $8.9 million as of September 30, 2015.

Because Cash Converters International publicly files semi-annual financial reports with the Australian Securities & Investments Commission as of and for the periods ended June 30 and December 31, the latest Cash Converters International figures available are as of June 30, 2015. The following tables present summary financial information for Cash Converters International’s most recently reported results as of September 30, 2015 after translation to United States dollars:



	June 30
	2015		2014

	(in thousands)
Current assets	$	186,472	$	207,415
Non-current assets	151,287		178,764
Total assets	$	337,759	$	386,179

Current liabilities	$	86,374	$	95,242
Non-current liabilities	51,044		60,441
Shareholders’ equity:
Equity attributable to owners of the parent	$	200,340	$	233,788
Noncontrolling interest	1		(3,292		)
Total liabilities and shareholders’ equity	$	337,759	$	386,179



	Fiscal Year Ended June 30,
	2015			2014			2013

	(in thousands)
Gross revenues	$	313,748		$	304,432		$	280,059
Gross profit	197,873			195,325			183,368
(Loss) profit attributable to:
Owners of the company	$	(17,980	)	$	22,206		$	33,754
Noncontrolling interest	(169		)	(2,809		)	—
(Loss) profit for the year	$	(18,149	)	$	19,397		$	33,754

The fair value of Cash Converters International as of September 30, 2015 and 2014 was considered a Level 1 estimate within the fair value hierarchy of FASB ASC 820-10-50, and was calculated as (a) the quoted stock price on the Australian Stock Exchange as of September 30, 2015 and 2014 multiplied by (b) the number of shares we owned as of September 30, 2015 and 2014 multiplied by (c) the applicable foreign currency exchange rate as of September 30, 2015 and 2014. We included no control premium for owning a large percentage of outstanding shares.

The table below summarizes the carrying amount and fair value of Cash Converters International as of the dates indicated after translation to U.S. dollars:



	September 30,
	2015		2014

	(in thousands)
Cash Converters International:
Carrying amount	$	56,182	$	91,781
Fair value	56,182		128,956

As of September 30, 2015, the fair value of our investment in Cash Converters International was below the carrying value. Therefore, we considered the guidance in FASB ASC 320-10-S99-1 and FASB ASC 323-10-35 and determined that this investment was impaired, and that such impairment was other-than-temporary. In reaching this conclusion, we considered all available evidence, including that (i) Cash Converters International had been negatively impacted by current regulatory requirements in the United Kingdom during its fiscal 2015; (ii) Cash Converters International reached an agreement in June 2015 to pay $17.7 million toward settlement of a class-action lawsuit brought by its customers alleging that Cash Converters International charged excessive interest on short-term loans; (iii) Cash Converters International’s primary banking facility, Westpac Banking Corporation, informed Cash Converters International that it was ceasing to provide services to the company in August 2015, and as of September 30, 2015 Cash Converters International had yet to find an alternative funding source; (iv) Cash Converters International failed to declare its final year-end dividend; and (v) there has a been a prolonged drop in Cash Converters International’s stock price primarily as a result of the above aforementioned factors. As a result, we recognized an other-than-temporary impairment in Cash Converters International of $29.2 million ($18.8 million, net of taxes), which caused a difference between the amount at which the investment was carried and the amount of underlying equity in net assets of Cash Converters International. This impairment charge was recorded under “Impairment of investment” in the consolidated statements of operations.

Albemarle & Bond Holdings, PLC

Prior to its bankruptcy reorganization, Albemarle & Bond was primarily engaged in pawnbroking, retail jewelry sales, check cashing and lending in the United Kingdom. In fiscal 2014 we owned 16,644,640 ordinary shares of Albemarle & Bond, representing almost 30% of its total outstanding shares.

In fiscal 2014 our equity in Albemarle & Bond’s net loss was $1.2 million and we received no dividends.

In March 2014, Albemarle & Bond entered into bankruptcy reorganization in the United Kingdom, and on April 15, 2014 Albemarle & Bond announced that the majority of its business and assets had been sold. In fiscal 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), respectively, which brought our carrying value of this investment to zero and $9.4 million as of September 30, 2014 and 2013 respectively.

There was no carrying amount or fair value for Albemarle & Bond as of September 30, 2015 and 2014.