Cash America 2015 Annual Report Download - page 93

The Company completed its annual assessment of goodwill as of June 30, 2015 and determined that the fair
value for the Company’s reporting unit exceeded its carrying value, and, as a result, no impairment was indicated at
that date. AsofJune30,2015,theexcessfairvalueoverthecarryingvaluewas9%comparedto3%asof
December 31, 2014, which was shortly after the Enova Spin-off in November 2014. A change in calculation
assumptions, such as an increase in the weighted-average cost of capital, could cause the carrying value of the
reporting unit to exceed its fair value as of June 30, 2015, which could have potentially resulted in an impairment
loss.
As part of the goodwill assessment, the Company also considers the market value of its equity, which is the
observable market value of the Company based on the quoted market prices of the Company’s common stock at the
measurement date. The Company compares the market value of its equity to the carrying value of its equity. As of
June30,2015,themarketvalueoftheCompany’sequitywasobservedtobelowerthanthecarryingvalueof
equity. The Company’s common stock price increased from June 30, 2015 to December 31, 2015, thereby reducing
the difference between the market value of the Company’s equity and the carrying value of equity. Management
continues to acknowledge the need to monitor and re-evaluate any future discrepancies between these values and
consider the implications for an impairment of goodwill in future periods.
The Company is considered to be at risk for a future impairment of its goodwill in the event of a decline in
general economic, market or business conditions, or if there are any significant unfavorable changes in the
Company’s forecasted revenue, expenses, cash flows, weighted-average cost of capital and/or market transaction
multiples. Any of these factors could represent a potential triggering event that would indicate an impairment review
should be performed. There were no changes in the factors described above between the June 30, 2015 assessment
and December 31, 2015 that would significantly impact the fair value of the Company and indicate an impairment
review should be performed. The Company will continue to monitor for events and circumstances that could
negatively impact the key assumptions in determining its fair value.
TheCompanyperformeditsannualindefinite-livedintangibleassetimpairmenttestasofJune30,2015.
The Company’s indefinite-lived intangible assets consist of trademarks, trade names, and licenses and had a
carrying amount of $15.0 million as of June 30, 2015. The Company elected to perform a qualitative assessment in
accordance with Accounting Standards Update (“ASU”) 2012-02, Intangibles-Goodwill and Other (Topic 350):
Testing Indefinite-Lived Intangible Assets for Impairment, and determined that no conditions existed that would
make it more likely than not that the indefinite-lived intangible assets were impaired. Therefore, no further
quantitative assessment was required. There were no triggering events between the June 30, 2015 assessment and
December 31, 2015 that would require a re-assessment of the Company’s indefinite-lived intangible assets.
AsofDecember31,2015,theCompanyhad$488.0millionofgoodwill,ofwhich$356.7millionis
expected to be deductible for tax purposes. See Note 8 for additional discussion of the Company’s goodwill activity.
Long-Lived Assets Other Than Goodwill and Indefinite-Lived Intangible Assets
An evaluation of the recoverability of property and equipment and intangible assets subject to amortization
is performed whenever the facts and circumstances indicate that the carrying value may be impaired. An impairment
loss is recognized if the future undiscounted cash flows associated with the asset and the estimated fair value of the
asset are less than the asset’s corresponding carrying value. The amount of the impairment loss, if any, is the excess
of the asset’s carrying value over its estimated fair value.
The Company amortizes intangible assets subject to amortization on the basis of their expected periods of
benefit, generally three to 10 years. The costs of start-up activities and organization costs are charged to expense as
incurred.
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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