Aarons 2013 Annual Report Download - page 62

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52
NOTE 3: GOODWILL AND INTANGIBLE ASSETS
Goodwill
The following table provides information related to the carrying value of the Company’s goodwill by operating segment:
(In Thousands) Sales and Lease
Ownership HomeSmart Total
Balance at January 1, 2012 $ 205,509 $ 13,833 $ 219,342
Additions 14,399 815 15,214
Disposals (361) — (361)
Balance at December 31, 2012 219,547 14,648 234,195
Additions 5,429 — 5,429
Disposals (499) — (499)
Purchase Price Adjustments 46 10 56
Balance at December 31, 2013 $ 224,523 $ 14,658 $ 239,181
Intangible Assets
The following is a summary of the Company’s identifiable intangible assets by category at December 31:
2013 2012
(In Thousands) Gross Accumulated
Amortization Net Gross Accumulated
Amortization Net
Customer Relationships $ 2,282 $ (1,463) $ 819 $ 4,377 $ (2,170) $ 2,207
Non-Compete Agreements 3,265 (2,001) 1,264 3,408 (1,471) 1,937
Acquired Franchise Development Rights 3,529 (2,077) 1,452 4,566 (2,684) 1,882
Total $ 9,076 $ (5,541) $ 3,535 $ 12,351 $ (6,325) $ 6,026
Total amortization expense of intangible assets, included in operating expenses in the accompanying consolidated statements of
earnings, was $3.7 million, $3.7 million and $2.3 million during the years ended December 31, 2013, 2012 and 2011,
respectively. As of December 31, 2013, estimated future amortization expense for the next five years related to identifiable
intangible assets is as follows:
(In Thousands)
2014 $ 1,983
2015 793
2016 367
2017 201
2018 98
NOTE 4: FAIR VALUE MEASUREMENT
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table summarizes financial liabilities measured at fair value on a recurring basis:
December 31, 2013 December 31, 2012
(In Thousands) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Deferred Compensation Liability $ — $ (12,557) $ — $ — $ (9,518) $ —
The Company maintains a deferred compensation plan as described in Note 14 to these consolidated financial statements. The
liability representing benefits accrued for plan participants is valued at the quoted market prices of the participants’ investment
elections, which consist of equity and debt “mirror” funds. As such, the Company has classified the deferred compensation
liability as a Level 2 liability.