Acquisitions and Dispositions

12 Months Ended

Dec. 31, 2011

Acquisitions and Dispositions

Note J: Acquisitions and Dispositions

During 2011, the Company acquired the lease contracts, merchandise and related assets of a net of 52 sales and lease ownership stores for an aggregate purchase price of $41.4 million. Consideration transferred consisted primarily of cash. Fair value of acquired tangible assets included $13.4 million for lease merchandise, $500,000 for fixed assets, and $21,000 for other assets. The excess cost over the fair value of the assets and liabilities acquired in 2011, representing goodwill, was $22.9 million. The fair value of acquired separately identifiable intangible assets included $2.7 million for customer lists, $1.7 million for non-compete intangibles, and $255,000 for acquired franchise development rights. The weighted average amortization period for these intangibles was 2.5 years.

During 2010, the Company acquired the lease contracts, merchandise and other related assets of a net of 14 sales and lease ownership stores for an aggregate purchase price of $17.9 million. Consideration transferred consisted primarily of cash. Fair value of acquired tangible assets included $6.5 million for lease merchandise, $333,000 for fixed assets and $34,000 for other assets. The excess cost over the fair value of the assets and liabilities acquired in 2010, representing goodwill, was $9.2 million. The fair value of acquired separately identifiable intangible assets included $748,000 for customer lists, $541,000 for non-compete intangibles and $496,000 for acquired franchise development rights. The weighted average amortization period for these intangibles was 2.7 years.

During 2009, the Company acquired the lease contracts, merchandise and other related assets of a net of 29 sales and lease ownership stores for an aggregate purchase price of $25.2 million. Consideration transferred consisted primarily of cash. Fair value of acquired tangible assets included $9.5 million for lease merchandise, $712,000 for fixed assets and $28,000 for other assets. The excess cost over the fair value of the assets and liabilities acquired in 2010, representing goodwill, was $12.0 million. The fair value of acquired separately identifiable intangible assets included $1.1 million for customer lists, $695,000 for non-compete intangibles and $477,000 for acquired franchise development rights. The weighted average amortization period for these intangibles was 2.4 years.

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 2011, 2010 and 2009 consolidated financial statements was not significant. The estimated amortization of sales and lease ownership stores customer lists, reacquired franchise development rights and non-compete intangibles in future years approximates $916,000, $728,000, $191,000, $34,000 and $32,000 for 2012, 2013, 2014, 2015 and 2016, respectively. The estimated amortization of HomeSmart customer lists and non-compete intangibles in future years approximates $1.0 million, $826,000, and $202,000 for 2012, 2013, and 2014, respectively. All goodwill acquired in 2011, 2010 and 2009 is expected to be deductible for tax purposes.

The following is a summary of the Aaron’s Sales & Lease Ownership Company-operated stores’ intangible assets by category at December 31:

(In Thousands)	2011			2010			2009
Customer Relationship Intangible, Gross	$	3,698		$	6,675		$	8,267
Accumulated Amortization on Customer Relationship Intangible		(1,827	)		(5,719	)		(6,406	)
Reacquired Franchise Intangible, Gross		1,227			2,814			3,561
Accumulated Amortization on Re-acquired Franchise Rights		(307	)		(862	)		(938	)
Non-Compete Intangible, Gross		2,133			1,402			861
Accumulated Amortization on Non-Compete Intangible		(906	)		(478	)		(145	)

The Company periodically sells sales and lease ownership stores to franchisees and third party operators. The Company sold 25, 11 and 37 of its Aaron’s Sales and Lease Ownership stores in 2011, 2010 and 2009, respectively. The effect of these sales on the consolidated financial statements was not significant.

The following is a summary of the HomeSmart stores’ intangible assets by category:

(In Thousands)	2011
Customer Relationship Intangible, Gross	$	1,402
Accumulated Amortization on Customer Relationship Intangible		(194	)
Reacquired Franchise Intangible, Gross		—
Accumulated Amortization on Re-acquired Franchise Rights		—
Non-Compete Intangible, Gross		957
Accumulated Amortization on Non-Compete Intangible		(117	)

The Company did not sell any of its HomeSmart stores in 2011.