Aarons 2012 Annual Report Download - page 66

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56
intangible asset class for acquisitions completed during 2012, 2011 and 2010 was 2 years for customer
relationships, 3 years for non-compete agreements and a range of 6 years to 6.9 years for acquired franchise
development rights.
2 Goodwill is primarily attributable to synergies expected to arise after the acquisition. All goodwill resulting from
the Company’s 2012, 2011 and 2010 acquisitions is expected to be deductible for tax purposes.
Acquisitions have been accounted for as business combinations, and the results of operations of the acquired
businesses are included in the Company’s results of operations from their dates of acquisition. The effect of these
acquisitions on the 2012, 2011 and 2010 consolidated financial statements was not significant.
Dispositions
The Company periodically sells sales and lease ownership stores to franchisees and third-party operators. The
Company sold three, 25 and 11 of its Aaron’s Sales and Lease Ownership stores in 2012, 2011 and 2010,
respectively. The effect of these sales on the consolidated financial statements was not significant.
The Company began ceasing the operations of the Aaron’s Office Furniture division in June of 2010. The Company
closed 14 of its Aaron’s Office Furniture stores during 2010 and sold the remaining store in August 2012. As a
result, in 2010 the Company recorded $3.3 million in closed store reserves, $4.7 million in lease merchandise write-
downs and other miscellaneous expenses, respectively, totaling $9.0 million. The charges were recorded within
operating expenses on the consolidated statement of earnings and are included in the Other segment. There were no
significant charges related to the closure of this division in 2011 or 2012.
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, 2011
$
202,379
$
-
$
202,379
Additions
9,055
13,833
22,888
Disposals
(5,925)
-
(5,925)
Balance at December 31, 2011
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
Intangible Assets
The following is a summary of the Company’s identifiable intangible assets by category at December 31:
(In Thousands)
2012
2011
Gross
Accumulated
Amortization
Net
Gross
Accumulated
Amortization
Net
Customer Relationships
$ 4,377
$ (2,170)
$ 2,207
$ 3,400
$ (1,001)
$ 2,399
Non-Compete Agreements
3,408
(1,471)
1,937
2,855
(1,062)
1,793
Acquired Franchise Development Rights
4,566
(2,684)
1,882
4,452
(2,578)
1,874
Total
$ 12,351
$ (6,325)
$ 6,026
$ 10,707
$ (4,641)
$ 6,066