Reorganization of Mexico-based Pawn Operations and Purchase of Noncontrolling Interest

12 Months Ended

Dec. 31, 2013

Restructuring And Related Activities [Abstract]

Reorganization of Mexico-based Pawn Operations [Text Block]

23. Reorganization of Mexico-based Pawn Operations and Purchase of Noncontrolling Interest

On September 24, 2012, the Company's Board of Directors approved a plan to significantly modify the business plan and strategy of the Company's Mexico-based pawn operations, which comprise the foreign component of its retail services segment. The Company reorganized these operations to include only full-service pawn locations that offer pawn loans based on the pledge of general merchandise and jewelry-based collateral and discontinued the operations of 148 of its Mexico-based pawn locations that primarily offered pawn loans based on the pledge of jewelry-based collateral (“the Mexico Reorganization”). The Mexico Reorganization was substantially completed as of December 31, 2012. As of December 31, 2013, the Company was operating 47 full-service pawn locations in Mexico. The Mexico Reorganization reflects management's decision to modify its strategy in Mexico to achieve profitability in its Mexico-based pawn operations and to evaluate the potential to expand its services to customers in Latin American markets.

In connection with the Mexico Reorganization, the Company incurred charges for employee termination costs, lease termination costs, asset impairments, loss on sale of assets, the recognition of a deferred tax asset valuation allowance, uncollectible receivables and other charges. The Company recognized $28.9 million of charges related to the Mexico Reorganization during the year ended December 31, 2012.

The following table summarizes the charges recognized for the year ended December 31, 2012 related to the Mexico Reorganization (dollars in thousands):

Type of expense	Description		Amount
Depreciation and amortization expenses	Impairment and losses on property and equipment	$	7,478
Provision for income taxes	Deferred tax asset valuation allowance		7,161
Depreciation and amortization expenses	Impairment of intangible assets		5,086
Operations and administration expenses	Employee termination costs		2,424
Operations and administration expenses	Inventory shrinkage and loss on sale of assets		2,395
Operations and administration expenses	Lease termination costs		1,628
Operations and administration expenses	Impairment of other assets		1,211
Operations and administration expenses	Other restructuring charges		798
Revenue	Uncollectible receivables		692
Total charges related to the Mexico Reorganization		$	28,873

The following table summarizes the balance of accrued reorganization charges related to the Mexico Reorganization and the changes in the accrued expenses as of and for the years ended December 31, 2013 and 2012 (dollars in thousands):

			For the Year Ended December 31, 2013
	Accrued Balance at Beginning of Year		Charges		Cash Payments		Foreign Currency Changes		Non-Cash Charges		Accrued Balance at End of Year
Lease termination costs	$	109	$	-	$	(106)	$	(3)	$	-	$	-
Total	$	109	$	-	$	(106)	$	(3)	$	-	$	-

			For the Year Ended December 31, 2012
	Accrued Balance at Beginning of Year		Charges		Cash Payments		Foreign Currency Changes			Non-Cash Charges	Accrued Balance at End of Year
Employee termination costs	$	—	$	2,424	$	(2,427)	$	3	$	-	$	-
Lease termination costs		—		1,628		(597)		7		(929)		109
Total	$	—	$	4,052	$	(3,024)	$	10	$	(929)	$	109

The accrued reorganization charges are included in “Accounts payable and accrued liabilities” in the consolidated balance sheets and in “Operations and administration expenses” in the consolidated statements of income.

Prior to September 26, 2012, the Company owned 80% of the outstanding stock of Creazione, which owned the Company's Mexico-based pawn operations. On September 26, 2012, the Company acquired all outstanding shares of Creazione that were held by minority shareholders (approximately 20% of the outstanding shares), and, as a result, Creazione became a wholly-owned subsidiary of the Company as of that date. The Company paid approximately $5.6 million in cash and released the minority shareholders from certain contingent obligations estimated at approximately $2.8 million. The Company accounted for this transaction as an acquisition of the remaining interest of a majority-owned subsidiary. The purchase resulted in a reduction to additional paid in capital of $7.7 million, representing the excess of the cash amount paid and the released contingent obligations (totaling $8.4 million) less the carrying amount of the noncontrolling interest of $0.7 million. In January 2013, the Company's remaining Mexico-based pawn operations were sold by Creazione to another wholly-owned subsidiary, CA Empeños Mexico, S. de R.L. de C.V., and began operating exclusively under the name “Cash America casa de empeño.” See Note 12 for further discussion about the liquidation of Creazione.

Impairment Testing Related to the Mexico Reorganization