Intangible Assets and Acquisitions

12 Months Ended

Dec. 31, 2012

Intangible Assets and Acquisitions [Abstract]

Note E — Intangible Assets and Acquisitions

Intangible Assets

Amortizable intangible assets consist of the following (in thousands):



		December 31, 2012				December 31, 2011
	Avg. Life (years)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Non-compete agreements	3	$	6,104	$	6,098	$	6,104	$	6,091
Customer relationships	2	71,816		70,001		70,648		65,901
Vendor relationships	11	7,538		1,136		7,538		568
Total		$	85,458	$	77,235	$	84,290	$	72,560

Aggregate amortization expense (in thousands):



Year Ended December 31, 2012	$	4,668
Year Ended December 31, 2011	$	4,285
Year Ended December 31, 2010	$	701

Estimated amortization expense, assuming current intangible balances and no new acquisitions, for each of the years ending December 31, is as follows (in thousands):



	Estimated Amortization Expense
2013	$	2,037
2014	920
2015	568
2016	568
2017	568
Thereafter	3,562
	$	8,223

At December 31, 2012, the amount of goodwill allocated to the Core U.S., RAC Acceptance and International segments was approximately $1,289.2 million, $54.4 million, and $1.1 million, respectively. At December 31, 2011, the amount of goodwill allocated to the Core U.S., RAC Acceptance and International segments was approximately $1,282.6 million, $54.4 million, and $2.1 million, respectively.

During the third quarter of 2012, we recorded a $1.0 million goodwill impairment charge in our International segment as a result of the sustained underperformance of certain stores located in Canada. A summary of the changes in recorded goodwill, the remainder of which were recorded in the Core U.S. segment, follows (in thousands):



	December 31,
	2012			2011
Gross balance as of January 1,	$	1,339,125		$	1,320,467
Additions from acquisitions	6,874			18,755
Goodwill related to stores sold or closed	(1,221		)	(390		)
Post purchase price allocation adjustments	(113		)	293
Balance as of the end of the period	$	1,344,665		$	1,339,125

Acquisitions

The following table provides information concerning the acquisitions made during the years ended December 31, 2012, 2011 and 2010.



	Year Ended December 31,
	2012		2011			2010
	(Dollar amounts in thousands)
Number of stores acquired remaining open	6		26			3
Number of stores acquired that were merged with existing stores	31		71			14
Number of kiosk locations acquired	—		5			158
Number of transactions	19		19			15
Total purchase price	$	13,258	$	26,747		$	74,378		⁽¹⁾
Amounts allocated to:
Goodwill	$	6,874	$	18,755		$	55,922
Non-compete agreements	—		10			—
Customer relationships	1,160		2,843			5,551
Rental merchandise	4,380		6,023			27,325
Property and other assets	845		—			1,740
Liabilities assumed	—		(884		)	(16,160		)

________


⁽¹⁾	Of this amount, $71.0 million, net of cash acquired, was funded in connection with the acquisition of The Rental Store, Inc.

Purchase prices are determined by evaluating the average monthly rental income of the acquired stores and applying a multiple to the total for rent-to-own store acquisitions. Acquired customer relationships are amortized utilizing the straight-line method over a 21 month period, non-compete agreements are amortized using the straight-line method over the contractual life of the agreements, vendor relationships are amortized using the straight-line method over a seven or 15 year period, other intangible assets are amortized using the straight-line method over the life of the asset and goodwill associated with acquisitions is not amortized. The weighted average amortization period was approximately two years for intangible assets added during the year ended December 31, 2012. Additions to goodwill due to acquisitions in 2012 were tax deductible.

All acquisitions have been accounted for as purchases, and the operating results of the acquired stores and accounts have been included in the financial statements since their date of acquisition.

- 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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