Intangible Assets and Acquisitions

12 Months Ended

Dec. 31, 2011

Intangible Assets and Acquisitions [Abstract]

Note E — Intangible Assets and Acquisitions

Intangible Assets

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

			December 31, 2011				December 31, 2010
		Avg.	Gross				Gross
		Life	Carrying		Accumulated		Carrying		Accumulated
		(years)	Amount		Amortization		Amount		Amortization

Non-compete agreements …..		3	$	6,104	$	6,091	$	6,094	$	6,057
Customer relationships ……..		2		70,648		65,901		67,811		62,224
Vendor relationships ……….		11		7,538		568		—		—
	Total …………………..		$	84,290	$	72,560	$	73,905	$	68,281

Aggregate amortization expense (in thousands):

	Year ended December 31, 2011 ………………………………………………	$	4,285
	Year ended December 31, 2010 ………………………………………………	$	701
	Year ended December 31, 2009 ………………………………………………	$	1,291

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

		Estimated
		Amortization Expense
		(In thousands)
2012	………………………………………………………………		$	4,517
2013	………………………………………………………………			1,376
2014	………………………………………………………………			571
2015	………………………………………………………………			568
2016	………………………………………………………………			568
Thereafter	………………………………………………………………			4,130
Total	………………………………………………………………		$	11,730

Unless otherwise noted, substantially all goodwill is recorded in the Core U.S. segment. A summary of the changes in recorded goodwill follows (in thousands):

			December 31,

			2011		2010

Gross balance as of January 1, ………………………………………			$	1,320,467	$	1,268,684
	Additions from acquisitions ………………………………………..			18,755		55,922	⁽¹⁾
	Goodwill related to stores sold or closed………………………….			(390)		(4,320)	⁽²⁾
	Post purchase price allocation adjustments ………………………..			293		181
		Balance as of the end of the period ………………………………	$	1,339,125	$	1,320,467



(1)	Includes $53.9 million of goodwill related to the acquisition of The Rental Store, Inc., which is recorded in the RAC Acceptance segment.

(2)	Includes $1.8 million of goodwill impairment related to the discontinuation of our financial services business.

Acquisitions

The following table provides information concerning the acquisitions made during the years ended December 31, 2011, 2010 and 2009.

		Year Ended December 31,
		2011		2010			2009

		(Dollar amounts in thousands)
Number of stores acquired remaining open ……………………….			26		3			1
Number of stores acquired that were merged with existing stores ..			71		14			26
Number of kiosk locations acquired ……………………..			5		158			—
Number of transactions ……………………………………………			19		15			20
Total purchase price ……………………………………………….		$	26,747	$	74,378	⁽¹⁾	$	7,221
Amounts allocated to:
	Goodwill ………………………………………………………….	$	18,755	$	55,922		$	4,456
	Non-compete agreements …………………………………………		10		—			—
	Customer relationships …………………………………………..		2,843		5,551			554
	Receivables.………………………………………………………		—		—			398
	Rental merchandise ………………………………………………		6,023		27,325			1,813
	Property and other assets …………………………………………		—		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. With respect to the acquisition of The Rental Store, Inc., the purchase price was determined using a pro forma multiple of earnings. The initial accounting for the acquisition was not finalized as of December 31, 2010, due to the timing of the transaction. In the quarter ending June 30, 2011, we recorded an adjustment of $7.5 million from goodwill to vendor relationships after the analysis of acquired intangible assets was completed. 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 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 8 years for intangible assets added during the year ended December 31, 2011. Additions to goodwill due to acquisitions in 2011 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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