Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 26, 2018 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | AAN | |
Entity Registrant Name | AARON'S INC | |
Entity Central Index Key | 706,688 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding (in shares) | 69,175,813 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
ASSETS: | ||
Cash and Cash Equivalents | $ 94,323 | $ 51,037 |
Investments | 0 | 20,385 |
Accounts Receivable (net of allowances of $48,968 in 2018 and $46,946 in 2017) | 84,309 | 99,887 |
Lease Merchandise (net of accumulated depreciation and allowances of $773,211 in 2018 and $760,722 in 2017) | 1,137,428 | 1,152,135 |
Loans Receivable (net of allowances and unamortized fees of $19,278 in 2018 and $19,829 in 2017) | 79,688 | 86,112 |
Property, Plant and Equipment at Cost (net of accumulated depreciation of $262,146 in 2018 and $242,623 in 2017) | 206,984 | 207,687 |
Goodwill | 626,692 | 622,948 |
Other Intangibles (net of accumulated amortization of $114,913 in 2018 and $100,557 in 2017) | 224,513 | 235,551 |
Income Tax Receivable | 45,781 | 100,023 |
Prepaid Expenses and Other Assets | 119,232 | 116,499 |
Total Assets | 2,618,950 | 2,692,264 |
LIABILITIES & SHAREHOLDERS’ EQUITY: | ||
Accounts Payable and Accrued Expenses | 270,963 | 304,810 |
Deferred Income Taxes Payable | 257,620 | 222,592 |
Customer Deposits and Advance Payments | 72,613 | 68,060 |
Debt | 272,941 | 368,798 |
Total Liabilities | 874,137 | 964,260 |
Commitments and Contingencies (Note 5) | ||
SHAREHOLDERS' EQUITY: | ||
Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at June 30, 2018 and December 31, 2017; Shares Issued: 90,752,123 at June 30, 2018 and December 31, 2017 | 45,376 | 45,376 |
Additional Paid-in Capital | 266,275 | 270,043 |
Retained Earnings | 1,904,309 | 1,819,524 |
Accumulated Other Comprehensive (Loss) Income | (238) | 774 |
Stockholders' Equity before Treasury Stock, Total | 2,215,722 | 2,135,717 |
Less: Treasury Shares at Cost | ||
Common Stock: 21,593,100 Shares at June 30, 2018 and 20,733,010 at December 31, 2017 | (470,909) | (407,713) |
Total Shareholders’ Equity | 1,744,813 | 1,728,004 |
Total Liabilities & Shareholders’ Equity | $ 2,618,950 | $ 2,692,264 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 48,968 | $ 46,946 |
Lease Merchandise, accumulated depreciation and allowances | 773,211 | 760,722 |
Loans Receivable, allowances and unamortized fees | 19,278 | 19,829 |
Property, Plant and Equipment at Cost, accumulated depreciation | 262,146 | 242,623 |
Other Intangibles, accumulated amortization | $ 114,913 | $ 100,557 |
Common Stock, Par Value (in dollars per share) | $ 0.50 | $ 0.50 |
Common Stock, Shares Authorized (in shares) | 225,000,000 | 225,000,000 |
Common Stock, Shares Issued (in shares) | 90,752,123 | 90,752,123 |
Treasury Shares (in shares) | 21,593,100 | 20,733,010 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
REVENUES: | ||||
Revenues | $ 927,859 | $ 815,644 | $ 1,882,668 | $ 1,660,198 |
COSTS AND EXPENSES: | ||||
Depreciation of Lease Merchandise | 415,414 | 345,398 | 855,422 | 707,396 |
Operating Expenses | 388,337 | 330,548 | 778,569 | 659,373 |
Restructuring (Reversals) Expenses, Net | (882) | 13,445 | 24 | 13,772 |
Other Operating Income, Net | (165) | (511) | (248) | (1,072) |
Costs and Expenses, Total | 853,928 | 754,638 | 1,738,673 | 1,512,703 |
OPERATING PROFIT | 73,931 | 61,006 | 143,995 | 147,495 |
Interest Income | 154 | 378 | 356 | 1,352 |
Interest Expense | (3,807) | (5,552) | (8,133) | (11,367) |
Impairment of Investment | (20,098) | 0 | (20,098) | 0 |
Other Non-Operating (Expense) Income, Net | (200) | 1,163 | 612 | 2,138 |
EARNINGS BEFORE INCOME TAXES | 49,980 | 56,995 | 116,732 | 139,618 |
INCOME TAXES | 11,479 | 20,660 | 25,985 | 49,983 |
NET EARNINGS | $ 38,501 | $ 36,335 | $ 90,747 | $ 89,635 |
EARNINGS PER SHARE | ||||
Basic (in dollars per share) | $ 0.55 | $ 0.51 | $ 1.30 | $ 1.26 |
Assuming Dilution (in dollars per share) | 0.54 | 0.51 | 1.27 | 1.24 |
CASH DIVIDENDS DECLARED PER SHARE: | ||||
Common Stock (in dollars per share) | $ 0.03 | $ 0.0275 | $ 0.06 | $ 0.0550 |
WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||
Basic (in shares) | 69,645 | 70,686 | 69,875 | 71,001 |
Assuming Dilution (in shares) | 70,837 | 71,697 | 71,428 | 72,040 |
Lease Revenues and Fees | ||||
REVENUES: | ||||
Revenues | $ 845,938 | $ 718,089 | $ 1,716,005 | $ 1,461,711 |
Retail Sales | ||||
REVENUES: | ||||
Revenues | 6,592 | 6,106 | 15,108 | 14,884 |
COSTS AND EXPENSES: | ||||
Cost of Sales | 4,156 | 3,940 | 9,818 | 9,331 |
Non-Retail Sales | ||||
REVENUES: | ||||
Revenues | 53,661 | 69,602 | 106,891 | 138,929 |
COSTS AND EXPENSES: | ||||
Cost of Sales | 47,068 | 61,818 | 95,088 | 123,903 |
Franchise Royalties and Fees | ||||
REVENUES: | ||||
Revenues | 12,125 | 12,824 | 24,987 | 27,025 |
Interest and Fees on Loans Receivable | ||||
REVENUES: | ||||
Revenues | 9,208 | 8,532 | 18,750 | 16,733 |
Other | ||||
REVENUES: | ||||
Revenues | $ 335 | $ 491 | $ 927 | $ 916 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Earnings | $ 38,501 | $ 36,335 | $ 90,747 | $ 89,635 |
Other Comprehensive (Loss) Income: | ||||
Foreign Currency Translation Adjustment | (535) | 446 | (1,012) | 649 |
Total Other Comprehensive (Loss) Income | (535) | 446 | (1,012) | 649 |
Comprehensive Income | $ 37,966 | $ 36,781 | $ 89,735 | $ 90,284 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
OPERATING ACTIVITIES: | ||
Net Earnings | $ 90,747 | $ 89,635 |
Adjustments to Reconcile Net Earnings to Cash Provided by Operating Activities: | ||
Depreciation of Lease Merchandise | 855,422 | 707,396 |
Other Depreciation and Amortization | 44,591 | 40,302 |
Accounts Receivable Provision | 113,077 | 82,106 |
Provision for Credit Losses on Loans Receivable | 9,540 | 9,130 |
Stock-Based Compensation | 15,143 | 11,705 |
Deferred Income Taxes | 39,684 | (16,084) |
Impairment of Investment | 20,098 | 0 |
Other Changes, Net | (1,076) | (3,795) |
Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions: | ||
Additions to Lease Merchandise | (1,034,838) | (905,693) |
Book Value of Lease Merchandise Sold or Disposed | 199,846 | 202,734 |
Accounts Receivable | (97,385) | (71,081) |
Prepaid Expenses and Other Assets | (7,965) | (13,618) |
Income Tax Receivable | 54,242 | (751) |
Accounts Payable and Accrued Expenses | (36,165) | (16,940) |
Customer Deposits and Advance Payments | 1,819 | 562 |
Cash Provided by Operating Activities | 266,780 | 115,608 |
INVESTING ACTIVITIES: | ||
Investments in Loans Receivable | (31,797) | (37,139) |
Proceeds from Loans Receivable | 30,150 | 31,053 |
Proceeds from Investments | 666 | 0 |
Outflows on Purchases of Property, Plant and Equipment | (32,785) | (26,822) |
Proceeds from Property, Plant and Equipment | 4,349 | 7,256 |
Outflows on Acquisitions of Businesses and Customer Agreements, Net of Cash Acquired | (14,401) | (940) |
Proceeds from Dispositions of Businesses and Customer Agreements, Net of Cash Disposed | 318 | 948 |
Cash Used in Investing Activities | (43,500) | (25,644) |
FINANCING ACTIVITIES: | ||
Proceeds from Debt | 0 | 7,000 |
Repayments on Debt | (96,173) | (104,309) |
Dividends Paid | (2,111) | (3,903) |
Acquisition of Treasury Stock | (68,432) | (34,302) |
Issuance of Stock Under Stock Option Plans | 4,134 | 2,982 |
Shares Withheld for Tax Payments | (17,282) | (5,715) |
Debt Issuance Costs | (55) | 0 |
Cash Used in Financing Activities | (179,919) | (138,247) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (75) | 57 |
Increase (Decrease) in Cash and Cash Equivalents | 43,286 | (48,226) |
Cash and Cash Equivalents at Beginning of Period | 51,037 | 308,561 |
Cash and Cash Equivalents at End of Period | $ 94,323 | $ 260,335 |
Basis and Summary of Significan
Basis and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis and Summary of Significant Accounting Policies | BASIS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Aaron's, Inc. (the "Company") is a leading omnichannel provider of lease-purchase solutions. As of June 30, 2018 , the Company's operating segments are Progressive Leasing, Aaron's Business and DAMI. Progressive Leasing is a virtual lease-to-own company that provides lease-purchase solutions in 46 states and the District of Columbia. It does so by purchasing merchandise from third-party retailers desired by those retailers' customers and, in turn, leasing that merchandise to the customers through a lease-to-own transaction. Progressive Leasing consequently has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional retailers. The Aaron's Business offers furniture, consumer electronics, home appliances and accessories to consumers primarily with a month-to-month, lease-to-own agreement with no credit needed through the Company's Aaron's-branded stores in the United States and Canada and e-commerce website. This operating segment also supports franchisees of its Aaron's-branded stores. In addition, the Aaron's Business segment also includes the operations of Woodhaven Furniture Industries, which manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in Company-operated and franchised stores. DAMI partners with merchants to provide a variety of revolving credit products originated through two third-party federally insured banks to customers that may not qualify for traditional prime lending (called "second-look" financing programs). The Company acquired the store operations of five franchisees during the six months ended June 30, 2018 and four franchisees during the year ended December 31, 2017 , which included the Company's largest franchisee. The Company acquired the store operations of three additional franchisees in July 2018. Refer to Note 2 and Note 8 to these condensed consolidated financial statements for additional discussion on these franchisee acquisitions. The following table presents active doors for Progressive Leasing: Active Doors at June 30 (Unaudited) 2018 2017 Progressive Leasing Active Doors 1 20,309 19,148 1 Active doors are comprised of both (i) each retail store location where at least one virtual lease-to-own transaction has been completed during the trailing three month period; and (ii) with respect to an e-commerce merchant, each state where at least one virtual lease-to-own transaction has been completed through that e-commerce merchant during the trailing three month period. The following table presents store count by ownership type for the Aaron's Business operations: Stores as of June 30 (Unaudited) 2018 2017 Company-operated Aaron's Branded Stores 1,179 1,093 Franchised Stores 530 680 Systemwide Stores 1,709 1,773 Basis of Presentation The preparation of the Company's condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. Generally, actual experience has been consistent with management's prior estimates and assumptions. Management does not believe these estimates or assumptions will change significantly in the future absent unidentified and unforeseen events. The accompanying unaudited condensed consolidated financial statements do not include all information required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 (the " 2017 Annual Report") filed with the U.S. Securities and Exchange Commission on March 1, 2018. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of operating results for the full year. Principles of Consolidation The condensed consolidated financial statements include the accounts of Aaron's, Inc. and its subsidiaries, each of which is wholly owned. Intercompany balances and transactions between consolidated entities have been eliminated. Accounting Policies and Estimates See Note 1 to the consolidated financial statements in the 2017 Annual Report. Earnings Per Share Earnings per share is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. The computation of earnings per share assuming dilution includes the dilutive effect of stock options, restricted stock units ("RSUs"), restricted stock awards ("RSAs") and performance share units ("PSUs") (collectively, "share-based awards") as determined under the treasury stock method. The following table shows the calculation of dilutive share-based awards: Three Months Ended Six Months Ended (Shares In Thousands) 2018 2017 2018 2017 Weighted Average Shares Outstanding 69,645 70,686 69,875 71,001 Dilutive Effect of Share-Based Awards 1,192 1,011 1,553 1,039 Weighted Average Shares Outstanding Assuming Dilution 70,837 71,697 71,428 72,040 Approximately 493,000 and 340,000 weighted-average share-based awards were excluded from the computation of earnings per share assuming dilution during the three and six months ended June 30, 2018 , respectively, as the awards would have been anti-dilutive for the periods presented. Approximately 1,000 and 265,000 weighted-average share-based awards were excluded from the computations of earnings per share assuming dilution during the three and six months ended June 30, 2017 , respectively, as the awards would have been anti-dilutive for the periods presented. Revenue Recognition Lease Revenues and Fees The Company provides merchandise, consisting of furniture, consumer electronics, computers, appliances and household accessories, to its customers for lease under certain terms agreed to by the customer. The Company's Aaron's Business stores offer leases with month-to-month terms that can be renewed up to 12 , 18 or 24 months . The Company's Progressive Leasing segment offers virtual lease-purchase solutions, typically over 12 months , to the customers of traditional retailers. The Company does not require deposits upon inception of customer agreements. The customer has the right to acquire ownership either through a purchase option or through payment of all required lease payments. Aaron's Business lease revenues are recognized as revenue net of related sales taxes in the month they are due. Lease payments received prior to the month due are recorded as deferred lease revenue, and this amount is included in customer deposits and advance payments in the accompanying condensed consolidated balance sheets. Progressive Leasing lease revenues are earned prior to the lease payment due date and are recorded net of related sales taxes as earned. Revenue recorded prior to the payment due date results in unbilled accounts receivable in the accompanying condensed consolidated balance sheets. All of the Company's customer agreements are considered operating leases. The Company maintains ownership of the lease merchandise until all payment obligations are satisfied under sales and lease ownership agreements. Initial direct costs related to Progressive Leasing's lease purchase agreements are capitalized as incurred and amortized over the estimated lease term. The capitalized costs have been classified within prepaid expenses and other assets in the accompanying consolidated balance sheets. Initial direct costs related to Aaron's Business customer agreements are expensed as incurred and have been classified as operating expenses in the Company's consolidated statements of earnings. The statement of earnings effects of expensing the initial direct costs of the Aaron's Business as incurred are not materially different from amortizing initial direct costs over the lease term. Retail and Non-Retail Sales Revenues from the sale of merchandise to franchisees are recognized when control transfers to the franchisee, which is upon its receipt of the merchandise. Revenues from the sale of merchandise to other customers are recognized at the time of shipment, at which time control is transferred to the customer. Substantially all of the amounts reported as non-retail sales and non-retail cost of sales in the accompanying condensed consolidated statements of earnings relate to the sale of lease merchandise to franchisees. The Company classifies the sale of merchandise to other customers as retail sales in the consolidated statements of earnings. Franchise Royalties and Fees The Company franchises its Aaron's stores in markets where the Company has no immediate plans to enter. Franchisees pay an ongoing royalty of 6% of the weekly cash revenue collections, which is recognized as the fees become due. In addition, franchisees typically pay a non-refundable initial franchise fee from $15,000 to $50,000 depending upon market size. Franchise fees and area development fees are generated from the sale of rights to develop, own and operate sales and lease ownership stores and pre-opening services provided by Aaron's to assist in the start-up operations of the stores. The Company considers the rights to the intellectual property and the pre-opening services to be a single performance obligation, resulting in the recognition of revenue ratably over time from the store opening date throughout the remainder of the franchise agreement term. The Company believes that this period of time is most representative of the time period in which the customer realizes the benefits of having the right to access the Company's intellectual property. The deferred revenue balance related to initial franchise fees is $2.3 million as of June 30, 2018 and is included in customer deposits and advance payments on the condensed consolidated balance sheets. Revenue related to initial franchise fees recognized during the three and six months ended June 30, 2018 was $0.2 million and $0.5 million respectively. The Company guarantees certain debt obligations of some of the franchisees and receives guarantee fees based on the outstanding debt obligations of such franchisees. The Company recognizes finance fee revenue as the guarantee obligation is satisfied. Refer to Note 5 of these condensed consolidated financial statements for additional discussion of the Company's franchise-related guarantee obligation. The Company also charges fees for advertising efforts that benefit the franchisees. Such fees are recognized at the time the advertising takes place and are presented as franchise royalties and fees in the Company's condensed consolidated statements of earnings. Initial direct costs related to the pre-opening services provided to franchisees are immaterial and are expensed as incurred. These expenses have been classified as operating expenses in the Company's condensed consolidated statements of earnings. Interest and Fees on Loans Receivable DAMI extends or declines credit to an applicant through its bank partners based upon the applicant's credit rating and other factors. Qualifying applicants receive a credit card to finance their initial purchase and to use in subsequent purchases at the merchant or other participating merchants for an initial 24 -month period, which DAMI may renew if the cardholder remains in good standing. DAMI acquires the loan receivable from merchants through its third-party bank partners at a discount from the face value of the loan. The discount is comprised of a merchant fee discount and a promotional fee discount. The merchant fee discount represents a pre-negotiated, nonrefundable discount that generally ranges from 3% to 25% of the loan face value. The discount is designed to cover the risk of loss related to the portfolio of cardholder charges and DAMI's direct origination costs. The merchant fee discount and origination costs are netted on the condensed consolidated balance sheet in loans receivable. Cardholders generally have an initial 24 -month period that the card is active. The merchant fee discount, net of the origination costs, is amortized on a net basis and is recorded as interest and fee revenue on loans receivable in the condensed consolidated statements of earnings on a straight-line basis over the initial 24 -month period. The discount from the face value of the loan on the acquisition of the loan receivable from the merchant through the third-party bank partners also includes a promotional fee discount, which generally ranges from 1% to 8% . The promotional fee discount is intended to compensate the holder of the loan receivable (e.g. DAMI) for deferred or reduced interest rates that are offered to the cardholder for a specified period on the outstanding loan balance (generally for six , 12 or 18 months ). The promotional fee discount is amortized as interest and fee revenue on loans receivable in the condensed consolidated statements of earnings on a straight-line basis over the promotional interest period (i.e., over six , 12 or 18 months , depending on the promotion). The unamortized promotional fee discount is netted on the condensed consolidated balance sheet in loans receivable. The customer is required to make periodic minimum payments of at least 3.5% of the outstanding loan balance, which includes outstanding interest. Fixed and variable interest rates, typically 25% to 34.99% , are compounded daily for cards that do not qualify for deferred or reduced interest promotional periods. Interest income, which is recognized based upon the amount of the loans outstanding, is recognized as interest and fees on loans receivable in the billing period in which they are assessed if collectability is reasonably assured. For credit cards that provide for deferred or reduced interest, if the balance is not paid off during the promotional period, interest is billed to the customers at standard rates and the cumulative amount owed is charged to the cardholder account in the month that the promotional period expires or defaults. The Company recognizes interest revenue during the promotional period based on its historical experience related to cardholders that fail to pay off balances during the promotional period. Annual fees are charged to cardholders at the commencement of the loan and on each subsequent anniversary date. Annual fees are deferred and recognized into revenue on a straight-line basis over a one year period. Under the provisions of the credit card agreements, the Company also may assess fees for service calls or for missed or late payments, which are recognized as revenue in the billing period in which they are assessed if collectability is reasonably assured. Investments At December 31, 2017 , investments classified as held-to-maturity securities consisted of British pound-denominated notes issued by PerfectHome, which is based in the U.K. The PerfectHome Notes ("Notes") consisted of outstanding principal and accrued interest of £15.1 million ( $20.4 million ) at December 31, 2017 . PerfectHome was a variable interest entity ("VIE") because it did not have sufficient equity at risk. However, the Company was not the primary beneficiary and did not consolidate PerfectHome since the Company lacked power through voting or similar rights to direct the activities that most significantly affected PerfectHome's economic performance. During the three months ended June 30, 2018 , PerfectHome's liquidity deteriorated significantly due to continuing operating losses and the senior lender's decision to no longer provide additional funding under a secured revolving debt agreement resulting from PerfectHome's default of certain covenants. Additionally, the senior lender notified PerfectHome in May 2018 of its intent to exercise remedies available under its credit documentation, which included the right to call its outstanding debt. Furthermore, during the three months ended June 30, 2018 , the U.K. governing authority for rent-to-own companies, the Financial Conduct Authority, proposed new regulatory measures which could adversely affect PerfectHome's business. In July 2018, PerfectHome entered into the U.K.’s insolvency process and was subsequently acquired by the senior lender. The Company believes it will not receive any further payments on its subordinated secured Notes. As a result, the Company recorded a full impairment of the PerfectHome investment of $20.1 million during the three months ended June 30, 2018 . Accounts Receivable Accounts receivable consist primarily of receivables due from customers of Progressive Leasing and Company-operated stores, corporate receivables incurred during the normal course of business (primarily for real estate leasing activities and vendor consideration) and franchisee obligations. Accounts receivable, net of allowances, consist of the following: (In Thousands) June 30, 2018 December 31, 2017 Customers $ 48,978 $ 48,661 Corporate 12,860 23,431 Franchisee 22,471 27,795 Accounts Receivable $ 84,309 $ 99,887 The following table shows the amounts recognized for bad debt expense and provision for returns and uncollected payments: Six Months Ended June 30, (In Thousands) 2018 2017 Bad Debt Expense $ 96,651 $ 68,044 Provision for Returns and Uncollected Renewal Payments 16,426 14,062 Accounts Receivable Provision $ 113,077 $ 82,106 Refer to Note 1 to the consolidated financial statements in the 2017 Annual Report for information on the Company's accounting policy for the accounts receivable provision. Lease Merchandise The Company's lease merchandise consists primarily of furniture, consumer electronics, home appliances and accessories and is recorded at the lower of cost or net realizable value. The cost of merchandise manufactured by our Woodhaven Furniture Industries operations is recorded at cost and includes overhead from production facilities, shipping costs and warehousing costs. The Company-operated stores begin depreciating merchandise at the earlier of twelve months and one day or when the item is leased and depreciate merchandise to a 0% salvage value over the lease agreement period when on lease, generally 12 to 24 months , and generally 36 months when not on lease. The Company's Progressive Leasing segment, at which substantially all merchandise is on lease, depreciates merchandise generally over 12 months. Depreciation is accelerated upon early payout. The following is a summary of lease merchandise, net of accumulated depreciation and allowances: (In Thousands) June 30, 2018 December 31, 2017 Merchandise on Lease $ 909,700 $ 908,268 Merchandise not on Lease 227,728 243,867 Lease Merchandise, net of Accumulated Depreciation and Allowances $ 1,137,428 $ 1,152,135 The Company's policies require weekly lease merchandise counts at its store-based operations, which include write-offs for unsalable, damaged, or missing merchandise inventories. In addition to monthly cycle counting, full physical inventories are generally taken at the fulfillment and manufacturing facilities annually and appropriate provisions are made for missing, damaged and unsalable merchandise. In addition, the Company monitors lease merchandise levels and mix by division, store, and fulfillment center, as well as the average age of merchandise on hand. If obsolete lease merchandise cannot be returned to vendors, its carrying amount is adjusted to its net realizable value or written off. All lease merchandise is available for lease or sale. On a monthly basis, all damaged, lost or unsalable merchandise identified is written off. The Company records a provision for write-offs on the allowance method, which estimates the merchandise losses incurred but not yet identified by management as of the end of the accounting period based on historical write-off experience. The provision for write-offs is included in operating expenses in the accompanying condensed consolidated statements of earnings. The following table shows the components of the allowance for lease merchandise write-offs: Six Months Ended June 30, (In Thousands) 2018 2017 Beginning Balance $ 35,629 $ 33,399 Merchandise Written off, net of Recoveries (80,856 ) (61,034 ) Provision for Write-offs 91,420 63,938 Ending Balance $ 46,193 $ 36,303 Loans Receivable, Net Gross loans receivable represents the principal balances of credit card charges at DAMI's participating merchants that remain outstanding to cardholders, plus unpaid interest and fees due from cardholders. The allowances and unamortized fees represents an allowance for uncollectible amounts; merchant fee discounts, net of capitalized origination costs; promotional fee discounts; and deferred annual card fees. Loans acquired in the October 15, 2015 DAMI acquisition (the "Acquired Loans") were recorded at their estimated fair value at the acquisition date. The projected net cash flows from expected payments of principal, interest, fees and servicing costs and anticipated charge-offs were included in the determination of fair value; therefore, an allowance for loan losses and an amount for unamortized fees were not recognized for the Acquired Loans. The difference, or discount, between the expected cash flows to be received and the fair value of the Acquired Loans is accreted to interest and fees on loans receivable based on the effective interest method. At each period end, the Company evaluates the appropriateness of the accretable discount on the Acquired Loans based on actual and revised projected future cash receipts. Losses on loans receivable are recognized when they are incurred, which requires the Company to make its best estimate of probable losses inherent in the portfolio. The Company evaluates loans receivable collectively for impairment. The method for calculating the best estimate of probable losses takes into account the Company's historical experience, adjusted for current conditions and the Company's judgment concerning the probable effects of relevant observable data, trends and market factors. Economic conditions and loan performance trends are closely monitored to manage and evaluate exposure to credit risk. Trends in delinquency ratios are an indicator of credit risk within the loans receivable portfolio, including the migration of loans between delinquency categories over time. Charge-off rates represent another indicator of the potential for future credit losses. The risk in the loans receivable portfolio is correlated with broad economic trends, such as unemployment rates, gross domestic product growth and gas prices, which can have a material effect on credit performance. To the extent that actual results differ from estimates of uncollectible loans receivable, the Company's results of operations and liquidity could be materially affected. The Company calculates the allowance for loan losses based on actual delinquency balances and historical average loss experience on loans receivable by aging category for the prior eight quarters. The allowance for loan losses is maintained at a level considered adequate to cover probable losses of principal, interest and fees on active loans in the loans receivable portfolio. The adequacy of the allowance is evaluated at each period end. Delinquent loans receivable are those that are 30 days or more past due based on their contractual billing dates. The Company places loans receivable on nonaccrual status when they are greater than 90 days past due or upon notification of cardholder bankruptcy, death or fraud. The Company discontinues accruing interest and fees and amortizing merchant fee discounts and promotional fee discounts for loans receivable in nonaccrual status. Loans receivable are removed from nonaccrual status when cardholder payments resume, the loan becomes 90 days or less past due and collection of the remaining amounts outstanding is deemed probable. Payments received on nonaccrual loans are allocated according to the same payment hierarchy methodology applied to loans that are accruing interest. Loans receivable are charged off at the end of the month following the billing cycle in which the loans receivable become 120 days past due. DAMI extends or declines credit to an applicant through its bank partners based upon the applicant's credit rating and other factors. Below is a summary of the credit quality of the Company's loan portfolio as of June 30, 2018 and December 31, 2017 by Fair Isaac and Company (FICO) score as determined at the time of loan origination: FICO Score Category June 30, 2018 December 31, 2017 600 or Less 2.5 % 1.7 % Between 600 and 700 77.4 % 76.5 % 700 or Greater 20.1 % 21.8 % Prepaid Expenses and Other Assets Prepaid expenses and other assets consist of the following: (In Thousands) June 30, 2018 December 31, 2017 Prepaid Expenses $ 39,023 $ 31,509 Prepaid Insurance 33,444 36,735 Assets Held for Sale 9,698 10,118 Deferred Tax Asset 7,556 11,589 Other Assets 29,511 26,548 Prepaid Expenses and Other Assets $ 119,232 $ 116,499 Assets Held for Sale Certain properties, consisting of parcels of land and commercial buildings, met the held for sale classification criteria as of June 30, 2018 and December 31, 2017 . Assets held for sale are recorded at the lower of their carrying value or fair value less estimated cost to sell and are classified within prepaid expenses and other assets in the condensed consolidated balance sheets. Depreciation is suspended on assets upon classification to held for sale. The carrying amount of the properties held for sale as of June 30, 2018 and December 31, 2017 is $9.7 million and $10.1 million , respectively. The Company estimated the fair values of real estate properties using the market values for similar properties. These properties are considered Level 2 assets as defined below. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following: (In Thousands) June 30, 2018 December 31, 2017 Accounts Payable $ 62,314 $ 80,821 Accrued Insurance Costs 39,859 41,680 Accrued Salaries and Benefits 41,903 46,511 Accrued Real Estate and Sales Taxes 31,599 31,054 Deferred Rent 27,816 29,912 Other Accrued Expenses and Liabilities 67,472 74,832 Accounts Payable and Accrued Expenses $ 270,963 $ 304,810 Debt At June 30, 2018 , the Company was in compliance with all covenants related to its outstanding debt. See Note 7 to the consolidated financial statements in the 2017 Annual Report for further information regarding the Company's indebtedness. Income Taxes On December 22, 2017, the President signed the Tax Cuts and Jobs Act (the "Tax Act"). The Tax Act, among other things, (i) lowered the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018; (ii) provided for 100% expense deduction of certain qualified depreciable assets, which includes the Company's lease merchandise inventory, purchased after September 27, 2017 (but would be phased down starting in 2023); and (iii) failed to extend the manufacturing deduction that expired in 2017 under previous tax legislation. Consequently, the Company remeasured its net deferred tax liabilities as of December 31, 2017 using the lower U.S. corporate income tax rate, which resulted in a provisional estimated $140 million non-cash income tax benefit recognized during the year ended December 31, 2017 . In connection with the provisional analysis, the Company recorded additional income tax expense of $0.2 million during the six months ended June 30, 2018 . This estimated tax benefit recorded related to the Tax Act may differ, possibly materially, due to, among other things, further refinement of our federal and state calculations, changes in interpretations and assumptions that we have made, and additional guidance that may be issued by the U.S. Government. We will complete our analysis over a one-year measurement period ending December 22, 2018, and any further adjustments during this measurement period will be included in net earnings as an adjustment to income tax expense (benefit) in the reporting period when such adjustments are determined. Accumulated Other Comprehensive (Loss) Income Changes in accumulated other comprehensive (loss) income for the six months ended June 30, 2018 are as follows: (In Thousands) Foreign Currency Balance at January 1, 2018 $ 774 Other Comprehensive Loss (1,012 ) Balance at June 30, 2018 $ (238 ) There were no reclassifications out of accumulated other comprehensive (loss) income for the six months ended June 30, 2018 . Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets. Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3—Valuations based on unobservable inputs reflecting the Company's own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. The Company measures assets held for sale at fair value on a nonrecurring basis and records impairment charges when they are deemed to be impaired. The Company maintains certain financial assets and liabilities, and fixed-rate long-term debt, that are not measured at fair value but for which fair value is disclosed. The fair values of the Company's other current financial assets and liabilities, including cash and cash equivalents, accounts receivable and accounts payable, approximate their carrying values due to their short-term nature. The fair value for the loans receivable, net of allowances, and the revolving credit borrowings also approximate their carrying amounts. Related Party Transactions Aaron Ventures I, LLC, which we refer to as “Aaron Ventures,” was formed in December 2002 for the purpose of acquiring properties from the Company and leasing them back to the Company and is controlled by certain of the Company’s current and former executives. Aaron Ventures purchased a combined total of 21 properties from the Company in 2002 and 2004, and leased the properties back to the Company. As of June 30, 2018 , the Company had seven remaining capital leases and ten remaining operating leases with Aaron Ventures with lease expiration dates between 2019 and 2026. During late 2017 and early 2018, 16 of the leases were renegotiated with Aaron Ventures. The seven capital leases have aggregate annual rental payments of approximately $0.4 million . The rate of interest implicit in the leases is approximately 9.7% . The land and buildings, associated depreciation expense and lease obligations are recorded in the Company's condensed consolidated financial statements. The ten operating leases have aggregate annual rental payments of approximately $0.8 million . Supplemental Disclosure of Noncash Investing Transactions During the six months ended June 30, 2018 , the Company entered into exchange transactions to acquire and sell certain customer agreements and related lease merchandise with third parties which are accounted for as asset acquisitions and asset disposals. The fair value of the non-cash consideration exchanged in these transactions was $0.6 million . In addition, the purchase price for the acquisition of certain franchisees made during the six months ended June 30, 2018 included the non-cash settlement of pre-existing accounts receivable the franchisees owed the Company of $0.4 million . This non-cash consideration has been excluded from the line "Outflows on Acquisitions of Businesses and Customer Agreements, Net of Cash Acquired" in the investing activities section of the condensed consolidated statement of cash flows. Hurricane Impact During the third and fourth quarters of 2017, Hurricanes Harvey and Irma impacted the Company in the form of: (i) property damages (primarily in-store |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | ACQUISITIONS Franchisee Acquisition On July 27, 2017 , the Company acquired substantially all of the assets and liabilities of the store operations of SEI, the Company's largest franchisee, for approximately $140 million in cash. At the time of the acquisition, those store operations served approximately 90,000 customers through 104 Aaron's-branded stores in 11 states primarily in the Northeast. The acquisition is benefiting the Company's omnichannel platform through added scale, strengthening its presence in certain geographic markets, and enhancing operational control to execute our business transformation initiatives. The acquired operations generated revenues of $58.3 million and earnings before income taxes of $2.5 million from July 27, 2017 through December 31, 2017 . During the three and six months ended June 30, 2018 , the acquired operations generated revenues of $32.6 million and $67.8 million , respectively, and earnings before income taxes of $3.9 million and $8.0 million , respectively, which are included in our condensed consolidated statements of earnings. Included in the earnings before income taxes of the acquired operations are acquisition-related transaction and transition costs, amortization expense of the various intangible assets recorded from the acquisition and restructuring expenses associated with the closure of several acquired stores. The revenues and earnings before income taxes above have not been adjusted for estimated non-retail sales and franchise royalties and fees and related expenses that the Company could have generated from SEI, as a franchisee, from July 27, 2017 through June 30, 2018 had the transaction not been completed. Acquisition Accounting The franchisee acquisition has been accounted for as a business combination, and the results of operations of the acquired business are included in the Company’s results of operations from the date of acquisition. The following table presents a summary of the preliminary and final fair value of the assets acquired and liabilities assumed in the franchisee acquisition, as well as measurement period adjustments made during the three months ended June 30, 2018 : (In Thousands) Amounts Recognized as of Acquisition Date (preliminary) 1 Acquisition Accounting Adjustments 2 Final Amounts Recognized as of Acquisition Date Purchase Price $ 140,000 $ — $ 140,000 Settlement of Pre-existing Accounts Receivable SEI owed Aaron's, Inc. 3,452 — 3,452 Reimbursement for Insurance Costs (100 ) — (100 ) Working Capital Adjustment 188 — 188 Consideration Transferred 143,540 — 143,540 Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed Cash and Cash Equivalents 34 — 34 Receivables 1,448 (103 ) 1,345 Lease Merchandise 40,941 — 40,941 Property, Plant and Equipment 8,832 — 8,832 Other Intangibles 3 13,779 — 13,779 Prepaid Expenses and Other Assets 440 — 440 Total Identifiable Assets Acquired 65,474 (103 ) 65,371 Accounts Payable and Accrued Expenses (6,698 ) — (6,698 ) Customer Deposits and Advance Payments (2,500 ) — (2,500 ) Capital Leases (4,514 ) — (4,514 ) Total Liabilities Assumed (13,712 ) — (13,712 ) Goodwill 4 91,778 103 91,881 Net Assets Acquired $ 51,762 $ (103 ) $ 51,659 1 As previously reported in Note 2 to the condensed consolidated financial statements as of March 31, 2018 . 2 The acquisition accounting adjustments relate to finalizing certain working capital adjustments. 3 Identifiable intangible assets are further disaggregated in the table set forth below. 4 The total goodwill recognized in conjunction with the franchisee acquisition, all of which is expected to be deductible for tax purposes, has been assigned to the Aaron’s Business operating segment. The purchase price exceeded the fair value of the net assets acquired, which resulted in the recognition of goodwill, primarily due to synergies created from the expected future benefits to the Company’s omnichannel platform, implementation of the Company’s operational capabilities, expected inventory supply chain synergies between the Aaron’s Business and Progressive Leasing, and control of the Company’s brand name in new geographic markets. Goodwill also includes certain other intangible assets that do not qualify for separate recognition, such as an assembled workforce. The estimated intangible assets attributable to the franchisee acquisition are comprised of the following: Fair Value (in thousands) Weighted Average Life (in years) Non-compete Agreements $ 1,244 5.0 Customer Lease Contracts 2,154 1.0 Customer Relationships 3,215 2.0 Reacquired Franchise Rights 3,640 4.1 Favorable Operating Leases 3,526 11.3 Total Acquired Intangible Assets 1 $ 13,779 1 Acquired definite-lived intangible assets have a total weighted average life of 5.1 years . The Company incurred $2.0 million of acquisition-related costs in connection with the franchisee acquisition, substantially all of which were incurred during the third quarter of 2017. These costs were included in operating expenses in the condensed consolidated statements of earnings. Other Acquisitions In addition to the acquisition discussed above, the Company acquired the store operations of five franchisees during the six months ended June 30, 2018 and three franchisees during the year ended December 31, 2017 . Net cash outflows related to the acquisitions of other Aaron's franchisees, other rent-to-own store businesses, and customer contracts aggregated to $14.4 million and $0.9 million during the six months ended June 30, 2018 and 2017 , respectively. The effect of these acquisitions on the condensed consolidated financial statements for the six months ended June 30, 2018 and 2017 was not significant. |
Fair Value Measurement
Fair Value Measurement | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | 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: (In Thousands) June 30, 2018 December 31, 2017 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Deferred Compensation Liability $ — $ (12,055 ) $ — $ — $ (12,927 ) $ — The Company maintains the Aaron’s, Inc. Deferred Compensation Plan, which is an unfunded, nonqualified deferred compensation plan for a select group of management, highly compensated employees and non-employee directors. The liability is recorded in accounts payable and accrued expenses in the condensed consolidated balance sheets. 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. Non-Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis The following table summarizes non-financial assets measured at fair value on a nonrecurring basis: (In Thousands) June 30, 2018 December 31, 2017 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets Held for Sale $ — $ 9,698 $ — $ — $ 10,118 $ — Assets classified as held for sale are recorded at the lower of carrying value or fair value less estimated costs to sell, and any adjustment is recorded in other operating income, net or restructuring expenses (if the asset is a part of the 2016 or 2017 restructuring program) in the condensed consolidated statements of earnings. The highest and best use of the assets held for sale is as real estate land parcels for development or real estate properties for use or lease; however, the Company has chosen not to develop or use these properties. Certain Financial Assets and Liabilities Not Measured at Fair Value The following table summarizes the fair value of assets (liabilities) that are not measured at fair value in the condensed consolidated balance sheets, but for which the fair value is disclosed: (In Thousands) June 30, 2018 December 31, 2017 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 PerfectHome Notes 1 $ — $ — $ — $ — $ — $ 20,385 Fixed-Rate Long-Term Debt 2 — (183,559 ) — — (273,476 ) — 1 The PerfectHome notes were carried at cost, which approximated fair value. The Company recorded a full impairment of the PerfectHome investment of $20.1 million during the three months ended June 30, 2018 . Refer to Note 1 to the condensed consolidated financial statements for further discussion of the PerfectHome impairment. 2 The fair value of fixed-rate long-term debt is estimated using the present value of underlying cash flows discounted at a current market yield for similar instruments. The carrying amount of fixed-rate long-term debt was $180.0 million and $265.0 million at June 30, 2018 and December 31, 2017 , respectively. |
Loans Receivable
Loans Receivable | 6 Months Ended |
Jun. 30, 2018 | |
Receivables [Abstract] | |
Loans Receivable | LOANS RECEIVABLE The following is a summary of the Company’s loans receivable, net: (In Thousands) June 30, 2018 December 31, 2017 Credit Card Loans 1 $ 88,947 $ 89,728 Acquired Loans 2 10,019 16,213 Loans Receivable, Gross 98,966 105,941 Allowance for Loan Losses (11,586 ) (11,454 ) Unamortized Fees (7,692 ) (8,375 ) Loans Receivable, Net of Allowances and Unamortized Fees $ 79,688 $ 86,112 1 "Credit Card Loans" are loans originated after the 2015 acquisition of DAMI. 2 "Acquired Loans" are credit card loans the Company purchased in the 2015 acquisition of DAMI. Included in the table below is an aging of the loans receivable, gross balance: (Dollar Amounts in Thousands) Aging Category 1 June 30, 2018 December 31, 2017 30-59 days past due 6.9 % 7.1 % 60-89 days past due 3.1 % 3.6 % 90 or more days past due 3.5 % 4.1 % Past due loans receivable 13.5 % 14.8 % Current loans receivable 86.5 % 85.2 % Balance of Credit Card Loans on Nonaccrual Status $ 1,478 $ 2,016 Balance of Loans Receivable 90 or More Days Past Due and Still Accruing Interest and Fees $ — $ — 1 This aging is based on the contractual amounts outstanding for each loan as of period end, and does not reflect the fair value adjustments for the Acquired Loans. The table below presents the components of the allowance for loan losses: Six Months Ended June 30, (In Thousands) 2018 2017 Beginning Balance 1 $ 11,454 $ 6,624 Provision for Loan Losses 9,540 9,130 Charge-offs (10,210 ) (6,985 ) Recoveries 802 244 Ending Balance $ 11,586 $ 9,013 1 The Company acquired DAMI on October 15, 2015 and recorded $89.1 million of loans receivable as of the acquisition date. No corresponding allowance for loan losses was recorded as the loans receivable were established at fair value in acquisition accounting. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Guarantees The Company has guaranteed certain debt obligations of some of the franchisees under a franchisee loan program with several banks. In the event these franchisees are unable to meet their debt service payments or otherwise experience an event of default, the Company would be unconditionally liable for the outstanding balance of the franchisees’ debt obligations under the franchisee loan program, which would be due in full within 90 days of the event of default. At June 30, 2018 , the maximum amount that the Company would be obligated to repay in the event franchisees defaulted was $43.0 million . The Company has recourse rights to franchisee assets securing the debt obligations, which consist primarily of lease merchandise and fixed assets. Since the inception of the franchisee loan program in 1994, the Company has had no significant associated losses. The Company believes the likelihood of any significant amounts being funded by the Company in connection with these guarantees to be remote. The carrying amount of the franchisee-related borrowings guarantee, which is included in accounts payable and accrued expenses in the condensed consolidated balance sheets, is $0.5 million as of June 30, 2018 . The maximum facility commitment amount under the franchisee loan program is $85.0 million , including a Canadian subfacility commitment amount for loans to franchisee that operate stores in Canada (other than the province of Quebec) of CAD $25.0 million . The Company is subject to financial covenants under the franchisee loan program that are consistent with the Revolving Credit and Term Loan Agreement, which are more fully described in Note 7 to the consolidated financial statements in the 2017 Annual Report. The Company is in compliance with all covenants at June 30, 2018 and believes it will continue to be in compliance in the future. Legal Proceedings From time to time, the Company is party to various legal and regulatory proceedings arising in the ordinary course of business. Some of the proceedings to which the Company is currently a party are described below. The Company believes it has meritorious defenses to all of the claims described below, and intends to vigorously defend against the claims. However, these proceedings are still developing and due to the inherent uncertainty in litigation, regulatory and similar adversarial proceedings, there can be no guarantee that the Company will ultimately be successful in these proceedings, or in others to which it is currently a party. Substantial losses from these proceedings or the costs of defending them could have a material adverse impact upon the Company's business, financial position and results of operations. The Company establishes an accrued liability for legal and regulatory proceedings when it determines that a loss is both probable and the amount of the loss can be reasonably estimated. The Company continually monitors its litigation and regulatory exposure and reviews the adequacy of its legal and regulatory reserves on a quarterly basis. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters. At June 30, 2018 and December 31, 2017 , the Company had accrued $1.8 million and $7.3 million , respectively, for pending legal and regulatory matters for which it believes losses are probable and is the Company's best estimate of its exposure to loss. The Company records these liabilities in accounts payable and accrued expenses in the condensed consolidated balance sheets. The Company estimated that the aggregate range of reasonably possible loss in excess of accrued liabilities for such probable loss contingencies is between $0 and $1.0 million . At June 30, 2018 , the Company estimated that the aggregate range of loss for all material pending legal and regulatory proceedings for which a loss is reasonably possible, but less likely than probable (i.e., excluding the contingencies described in the preceding paragraph), is between $2.0 million and $5.0 million . Those matters for which a reasonable estimate is not possible are not included within estimated ranges and, therefore, the estimated ranges do not represent the Company's maximum loss exposure. The Company’s estimates for legal and regulatory accruals, aggregate probable loss amounts and reasonably possible loss amounts are all subject to the uncertainties and variables described above. Consumer In Margaret Korrow, et al. v. Aaron's, Inc., originally filed in the Superior Court of New Jersey, Middlesex County, Law Division on October 26, 2010, plaintiff filed suit on behalf of herself and others similarly situated alleging that the Company is liable in damages to plaintiff and each class member because the Company's lease agreements issued after March 16, 2006 purportedly violated certain New Jersey state consumer statutes. In December 2016, a class notice was mailed to certain individuals who were customers of Company-operated stores in New Jersey from March 16, 2006 to March 31, 2011. The parties participated in a settlement conference and reached tentative settlement terms in March 2017. On September 15, 2017, the parties submitted the final comprehensive settlement agreement to the Court for approval, which the Court approved during the first quarter of 2018. The final settlement was paid to a third party administrator in the first quarter of 2018. That third party began issuing payments to consumers and will continue payment distributions pursuant to the terms of the settlement agreement. Privacy and Related Matters In Crystal and Brian Byrd v. Aaron's, Inc., Aspen Way Enterprises, Inc., John Does (1-100) Aaron's Franchisees and Designerware, LLC, filed on May 16, 2011, in the United States District Court, Western District of Pennsylvania, plaintiffs allege the Company and its independently owned and operated franchisee Aspen Way Enterprises ("Aspen Way") knowingly violated plaintiffs' privacy in violation of the Electronic Communications Privacy Act ("ECPA") and the Computer Fraud Abuse Act and sought certification of a putative nationwide class. Plaintiffs based these claims on Aspen Way's use of a software program called "PC Rental Agent." Plaintiffs filed an amended complaint, asserting claims under the ECPA, common law invasion of privacy, seeking an injunction, and naming additional independently owned and operated Company franchisees as defendants. Plaintiffs seek monetary damages as well as injunctive relief. In March 2014, the United States District Court dismissed all claims against all franchisees other than Aspen Way Enterprises, LLC, dismissed claims for invasion of privacy, aiding and abetting, and conspiracy against all defendants, and denied plaintiffs’ motion to certify a class action, but denied the Company’s motion to dismiss the claims alleging ECPA violations. In April 2015, the United States Court of Appeals for the Third Circuit reversed the denial of class certification on the grounds stated by the District Court, and remanded the case back to the District Court for further consideration of that and the other elements necessary for class certification. On September 26, 2017, the District Court again denied plaintiffs' motion for class certification. Plaintiffs have filed a petition with the United States Court of Appeals for the Third Circuit for permission to appeal the denial of class certification. The Company is opposing this petition, and a decision remains pending. In March 2018, the District Court granted plaintiff's motion to reconsider the prior dismissal of the Wyoming invasion of privacy claim. That claim is now under evaluation for class certification. The Court also denied the Company's pending motion for summary judgment as moot, but the Company is free to re-file the motion at a future date. In Michael Winslow and Fonda Winslow v. Sultan Financial Corporation, Aaron's, Inc., John Does (1-10), Aaron's Franchisees and Designerware, LLC, filed on March 5, 2013 in the Los Angeles Superior Court, plaintiffs assert claims against the Company and its independently owned and operated franchisee, Sultan Financial Corporation (as well as certain John Doe franchisees), for unauthorized wiretapping, eavesdropping, electronic stalking, and violation of California's Comprehensive Computer Data Access and Fraud Act and its Unfair Competition Law. Each of these claims arises out of the alleged use of PC Rental Agent software. The plaintiffs are seeking injunctive relief and damages as well as certification of a putative California class. In April 2013, the Company removed this matter to federal court. In May 2013, the Company filed a motion to stay this litigation pending resolution of the Byrd litigation, a motion to dismiss for failure to state a claim, and a motion to strike certain allegations in the complaint. The Court subsequently stayed the case. The Company's motions to dismiss and strike certain allegations remain pending. In June 2015, the plaintiffs filed a motion to lift the stay, which was denied in July 2015. In Lomi Price v. Aaron's, Inc. and NW Freedom Corporation , filed on February 27, 2013, in the State Court of Fulton County, Georgia, an individual plaintiff asserts claims against the Company and its independently owned and operated franchisee, NW Freedom Corporation, for invasion of privacy/intrusion on seclusion, computer invasion of privacy and infliction of emotional distress. Each of these claims arises out of the alleged use of PC Rental Agent software. The plaintiff is seeking compensatory and punitive damages. This case has been stayed pending resolution of the Byrd litigation. Securities In Re Aaron's Securities Litigation, f/k/a Arkansas Teacher Retirement System, et al (f/k/a Employees' Retirement System of the City of Baton Rouge) v. Aaron's, Inc., John W. Robinson, III, Ryan K. Woodley, and Gilbert L. Danielson , was filed on June 16, 2017, in the United States District Court for the Northern District of Georgia. The litigation relates to the temporary drop in Aaron’s stock price following the Company’s announcement of 2015 third quarter results. The complaint alleges that during the period from February 6, 2015 through October 29, 2015, Aaron's made misleading public statements about the Company's expected financial results and business prospects. The allegations underlying the lawsuit principally relate to the loss of certain data feeds experienced by Progressive Leasing beginning in February 2015 and the alleged failure to disclose the same in a timely manner, as well as certain software issues that allegedly hindered the identification of delinquent accounts during certain limited times in 2015. The Company filed a motion to dismiss the lawsuit on December 15, 2017. Oral argument on that motion was held on May 18, 2018 and a decision is pending. The Company believes the claims are without merit and intends to vigorously defend against this lawsuit. Regulatory Inquiries In July 2018, the Company received civil investigative demands (“CIDs”) from the Federal Trade Commission (the “FTC”). The CIDs request the production of documents and answers to written questions to determine whether disclosures related to financial products offered by the Company through the Aaron’s Business and Progressive Leasing are in violation of the Federal Trade Commission Act. Although we believe we are in compliance with the FTC Act, these inquiries could lead to an enforcement action and/or a consent order, and substantial costs, including legal fees, fines, penalties, and remediation expenses. The Company is fully cooperating with the FTC in responding to these inquiries. Other Contingencies The Company is a party to various claims and legal proceedings arising in the ordinary course of business. Management regularly assesses the Company’s insurance deductibles, monitors the Company's litigation and regulatory exposure with the Company's attorneys and evaluates its loss experience. The Company also enters into various contracts in the normal course of business that may subject it to risk of financial loss if counterparties fail to perform their contractual obligations. Off-Balance Sheet Risk The Company, through its DAMI business, had unfunded lending commitments totaling $348.9 million and $354.5 million as of June 30, 2018 and December 31, 2017 , respectively. These unfunded commitments arise in the ordinary course of business from credit card agreements with individual cardholders that give them the ability to borrow, against unused amounts, up to the maximum credit limit assigned to their account. While these unfunded amounts represent the total available unused lines of credit, the Company does not anticipate that all cardholders will utilize their entire available line at any given point in time. Commitments to extend unsecured credit are agreements to lend to a cardholder so long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The reserve for losses on unfunded loan commitments is calculated by the Company based on historical usage patterns of cardholders after the initial charge and was approximately $0.7 million and $0.6 million as of June 30, 2018 and December 31, 2017 , respectively. The reserve for losses on unfunded loan commitments is included in accounts payable and accrued expenses in the condensed consolidated balance sheets. See Note 9 to the consolidated financial statements in the 2017 Annual Report for further information. |
Segments
Segments | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Segments | SEGMENTS As of June 30, 2018 , the Company has three operating and reportable segments: Progressive Leasing, Aaron's Business and DAMI. Progressive Leasing is a leading virtual lease-to-own company that provides lease-purchase solutions on a variety of products, including furniture and bedding, consumer electronics, appliances and jewelry. The Aaron's Business offers furniture, consumer electronics, home appliances and accessories to consumers primarily with a month-to-month, lease-to-own agreement with no credit needed through the Company's Aaron's-branded stores in the United States and Canada and e-commerce website. This operating segment also supports franchisees of its Aaron's stores. In addition, the Aaron's Business segment also includes the operations of Woodhaven Furniture Industries, which manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in Company-operated and franchised stores. DAMI offers a variety of second-look financing programs originated through two third-party federally insured banks to customers of participating merchants and, together with Progressive Leasing, allows the Company to provide retail partners with below-prime customers one source for financing and leasing transactions. Disaggregated Revenue The following table presents revenue by source and by segment for the three months ended June 30, 2018 : Three Months Ended June 30, 2018 (In Thousands) Progressive Leasing Aaron's Business DAMI Total Lease Revenues and Fees 1 $ 483,666 $ 362,272 $ — $ 845,938 Retail Sales 2 — 6,592 — 6,592 Non-Retail Sales 2 — 53,661 — 53,661 Franchise Royalties and Fees 2 — 12,125 — 12,125 Interest and Fees on Loans Receivable 3 — — 9,208 9,208 Other — 335 — 335 Total $ 483,666 $ 434,985 $ 9,208 $ 927,859 1 Substantially all lease revenues and fees are within the scope of ASC 840, Leases . The Company had $4.4 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers. 2 Revenue within the scope of ASC 606, Revenue from Contracts with Customers . Of the Franchise Royalties and Fees, $9.1 million is related to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. The remaining revenue is primarily related to fees collected for pre-opening services, which are being deferred and recognized as revenue over the agreement term, and advertising fees charged to franchisees. Retail and non-retail sales are recognized at the point of sale. 3 Revenue within the scope of ASC 310, Credit Card Interest & Fees . The following table presents revenue by source and by segment for the three months ended June 30, 2017 : Three Months Ended June 30, 2017 (In Thousands) Progressive Leasing Aaron's Business DAMI Total Lease Revenues and Fees 1 $ 373,499 $ 344,590 $ — $ 718,089 Retail Sales 2 — 6,106 — 6,106 Non-Retail Sales 2 — 69,602 — 69,602 Franchise Royalties and Fees 2 — 12,824 — 12,824 Interest and Fees on Loans Receivable 3 — — 8,532 8,532 Other — 491 — 491 Total $ 373,499 $ 433,613 $ 8,532 $ 815,644 1 Substantially all revenue is within the scope of ASC 840, Leases . The Company had $0.6 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers. 2 Revenue within the scope of ASC 606, Revenue from Contracts with Customers . Of the Franchise Royalties and Fees, $11.9 million relates to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. Retail and non-retail sales are recognized at the point of sale. 3 Revenue within the scope of ASC 310, Credit Card Interest & Fees. The following table presents revenue by source and by segment for the six months ended June 30, 2018 : Six Months Ended June 30, 2018 (In Thousands) Progressive Leasing Aaron's Business DAMI Total Lease Revenues and Fees 1 $ 970,183 $ 745,822 $ — $ 1,716,005 Retail Sales 2 — 15,108 — 15,108 Non-Retail Sales 2 — 106,891 — 106,891 Franchise Royalties and Fees 2 — 24,987 — 24,987 Interest and Fees on Loans Receivable 3 — — 18,750 18,750 Other — 927 — 927 Total $ 970,183 $ 893,735 $ 18,750 $ 1,882,668 1 Substantially all lease revenues and fees are within the scope of ASC 840, Leases . The Company had $8.4 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers. 2 Revenue within the scope of ASC 606, Revenue from Contracts with Customers . Of the Franchise Royalties and Fees, $19.2 million is related to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. The remaining revenue is primarily related to fees collected for pre-opening services, which are being deferred and recognized as revenue over the agreement term, and advertising fees charged to franchisees. Retail and non-retail sales are recognized at the point of sale. 3 Revenue within the scope of ASC 310, Credit Card Interest & Fees . The following table presents revenue by source and by segment for the six months ended June 30, 2017 : Six Months Ended June 30, 2017 (In Thousands) Progressive Leasing Aaron's Business DAMI Total Lease Revenues and Fees 1 $ 739,614 $ 722,097 $ — $ 1,461,711 Retail Sales 2 — 14,884 — 14,884 Non-Retail Sales 2 — 138,929 — 138,929 Franchise Royalties and Fees 2 — 27,025 — 27,025 Interest and Fees on Loans Receivable 3 — — 16,733 16,733 Other — 916 — 916 Total $ 739,614 $ 903,851 $ 16,733 $ 1,660,198 1 Substantially all revenue is within the scope of ASC 840, Leases . The Company had $1.5 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers. 2 Revenue within the scope of ASC 606, Revenue from Contracts with Customers . Of the Franchise Royalties and Fees, $25.1 million relates to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. Retail and non-retail sales are recognized at the point of sale. 3 Revenue within the scope of ASC 310, Credit Card Interest & Fees. Measurement of Segment Profit or Loss and Segment Assets The Company evaluates performance and allocates resources based on revenue growth and pre-tax profit or loss from operations. Intersegment sales are completed at internally negotiated amounts. Since the intersegment profit affects inventory valuation, depreciation and cost of goods sold are adjusted when intersegment profit is eliminated in consolidation. The Company determines earnings (loss) before income taxes for all reportable segments in accordance with U.S. GAAP. Interest expense is allocated to the Progressive Leasing and DAMI segments based on a percentage of the outstanding balances of their intercompany borrowings and of the debt incurred when they were acquired. The following is a summary of earnings (loss) before income taxes by segment: Three Months Ended Six Months Ended (In Thousands) 2018 2017 2018 2017 Earnings (Loss) Before Income Taxes: Progressive Leasing $ 44,575 $ 38,240 $ 79,554 $ 73,998 Aaron's Business 1 7,697 21,450 40,776 70,080 DAMI (2,292 ) (2,695 ) (3,598 ) (4,460 ) Total Earnings Before Income Taxes $ 49,980 $ 56,995 $ 116,732 $ 139,618 1 Earnings before income taxes for the Aaron's Business during the three months ended June 30, 2018 includes a full impairment of the PerfectHome investment of $20.1 million . This charge is net of restructuring reversals of $0.9 million related to reversals of previously recorded restructuring charges partially offset by charges related to Aaron's contractual lease obligations for closed stores. The following is a summary of total assets by segment and shared corporate-related assets. (In Thousands) June 30, December 31, Assets: Progressive Leasing $ 1,019,520 $ 1,022,413 Aaron's Business 1 1,253,427 1,261,234 DAMI 97,818 108,306 Other 2 248,185 300,311 Total Assets $ 2,618,950 $ 2,692,264 1 Includes inventory (principally raw materials and work-in-process) that has been classified within lease merchandise in the condensed consolidated balance sheets of $15.9 million and $16.3 million as of June 30, 2018 and December 31, 2017 , respectively. 2 Corporate-related assets that benefit multiple segments are reported as other assets. |
Restructuring
Restructuring | 6 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | RESTRUCTURING 2017 and 2016 Restructuring Programs During the year ended December 31, 2017 and 2016, the Company initiated restructuring programs to rationalize its Company-operated Aaron's store base portfolio to better align with marketplace demand. The programs resulted in the closure and consolidation of 139 underperforming Company operated stores throughout 2016, 2017, and 2018. The Company also optimized its home office staff and field support, which resulted in a reduction in employee headcount in those areas to more closely align with current business conditions. As of June 30, 2018 , the Company anticipates closing an additional seven stores during the remainder of 2018 associated with these programs. Total net restructuring reversals of $0.9 million and net charges of less than $0.1 million were recorded for the three and six months ended June 30, 2018 , all of which were incurred within the Aaron's Business segment. Restructuring activity for the three months ended June 30, 2018 was comprised of reversals of previously recorded restructuring charges, partially offset by charges related to Aaron's contractual lease obligations for closed stores and severance charges related to a realignment of the Company's home office organizational structure to more closely realign with current business conditions. These costs were included in restructuring (reversals) expenses in the condensed consolidated statements of earnings. The Company expects to incur approximately $1.0 million of additional charges related to the programs, which are expected to be incurred during the remainder of 2018 . This estimate is subject to change based on future changes in assumptions for the remaining minimum lease obligation for stores closed under the restructuring program, including changes related to sublease assumptions and potential earlier buyouts of leases with landlords. The following table summarizes restructuring charges for the three and six months ended June 30, 2018 and 2017 , respectively, under both plans: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2018 2017 1 2018 2017 1 Contractual Lease Obligations $ 207 $ 11,841 $ 926 $ 11,318 Severance 87 1,144 601 1,590 Other Reversals (1,176 ) — (1,176 ) — Gain on Sale of Closed Store Properties — — (327 ) — Fixed Asset Impairment — 460 — 864 Total Restructuring (Reversals) Expenses, Net $ (882 ) $ 13,445 $ 24 $ 13,772 1 Substantially all restructuring charges incurred during 2017 were incurred within the Aaron's Business segment. The Company also incurred restructuring charges of $0.1 million and $0.2 million during the three and six months ended June 30, 2017 within the DAMI segment related primarily to the segment's relocation efforts. To date, the Company has incurred charges of $38.3 million under the 2016 and 2017 restructuring programs. The following table summarizes the balances of the accruals for the programs, which are recorded in accounts payable and accrued expenses in the condensed consolidated balance sheets, and the activity for the six months ended June 30, 2018 : (In Thousands) Contractual Lease Obligations Severance Balance at January 1, 2018 $ 12,437 $ 2,303 Charges — 601 Adjustments 1 926 — Restructuring Charges 926 601 Payments (3,305 ) (1,571 ) Balance at June 30, 2018 $ 10,058 $ 1,333 1 Adjustments relate to early buyouts of leases, changes in sublease assumptions and interest accretion. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Franchisee Acquisitions During July 2018, the Company acquired 90 Aaron’s-branded franchised stores operated by three franchisees for an aggregated price of approximately $127 million . The acquisitions are expected to benefit the Company’s omnichannel platform through added scale, strengthening its presence in certain geographic markets, and enhanced operational control to execute our business transformation initiatives. The acquisitions will be accounted for as business combinations, and the results of operations of the acquired businesses will be included in the Company’s results of operations from their respective acquisition dates during July 2018. The Company has not yet completed its initial accounting to fair value the acquired assets and liabilities assumed for these acquisitions. |
Basis and Summary of Signific15
Basis and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business Aaron's, Inc. (the "Company") is a leading omnichannel provider of lease-purchase solutions. As of June 30, 2018 , the Company's operating segments are Progressive Leasing, Aaron's Business and DAMI. Progressive Leasing is a virtual lease-to-own company that provides lease-purchase solutions in 46 states and the District of Columbia. It does so by purchasing merchandise from third-party retailers desired by those retailers' customers and, in turn, leasing that merchandise to the customers through a lease-to-own transaction. Progressive Leasing consequently has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional retailers. The Aaron's Business offers furniture, consumer electronics, home appliances and accessories to consumers primarily with a month-to-month, lease-to-own agreement with no credit needed through the Company's Aaron's-branded stores in the United States and Canada and e-commerce website. This operating segment also supports franchisees of its Aaron's-branded stores. In addition, the Aaron's Business segment also includes the operations of Woodhaven Furniture Industries, which manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in Company-operated and franchised stores. DAMI partners with merchants to provide a variety of revolving credit products originated through two third-party federally insured banks to customers that may not qualify for traditional prime lending (called "second-look" financing programs). The Company acquired the store operations of five franchisees during the six months ended June 30, 2018 and four franchisees during the year ended December 31, 2017 , which included the Company's largest franchisee. The Company acquired the store operations of three additional franchisees in July 2018. Refer to Note 2 and Note 8 to these condensed consolidated financial statements for additional discussion on these franchisee acquisitions. |
Basis of Presentation | Basis of Presentation The preparation of the Company's condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. Generally, actual experience has been consistent with management's prior estimates and assumptions. Management does not believe these estimates or assumptions will change significantly in the future absent unidentified and unforeseen events. The accompanying unaudited condensed consolidated financial statements do not include all information required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 (the " 2017 Annual Report") filed with the U.S. Securities and Exchange Commission on March 1, 2018. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of operating results for the full year. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of Aaron's, Inc. and its subsidiaries, each of which is wholly owned. Intercompany balances and transactions between consolidated entities have been eliminated. |
Accounting Policies and Estimates | Accounting Policies and Estimates See Note 1 to the consolidated financial statements in the 2017 Annual Report. |
Earnings Per Share | Earnings Per Share Earnings per share is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. The computation of earnings per share assuming dilution includes the dilutive effect of stock options, restricted stock units ("RSUs"), restricted stock awards ("RSAs") and performance share units ("PSUs") (collectively, "share-based awards") as determined under the treasury stock method. |
Revenue Recognition | Revenue Recognition Lease Revenues and Fees The Company provides merchandise, consisting of furniture, consumer electronics, computers, appliances and household accessories, to its customers for lease under certain terms agreed to by the customer. The Company's Aaron's Business stores offer leases with month-to-month terms that can be renewed up to 12 , 18 or 24 months . The Company's Progressive Leasing segment offers virtual lease-purchase solutions, typically over 12 months , to the customers of traditional retailers. The Company does not require deposits upon inception of customer agreements. The customer has the right to acquire ownership either through a purchase option or through payment of all required lease payments. Aaron's Business lease revenues are recognized as revenue net of related sales taxes in the month they are due. Lease payments received prior to the month due are recorded as deferred lease revenue, and this amount is included in customer deposits and advance payments in the accompanying condensed consolidated balance sheets. Progressive Leasing lease revenues are earned prior to the lease payment due date and are recorded net of related sales taxes as earned. Revenue recorded prior to the payment due date results in unbilled accounts receivable in the accompanying condensed consolidated balance sheets. All of the Company's customer agreements are considered operating leases. The Company maintains ownership of the lease merchandise until all payment obligations are satisfied under sales and lease ownership agreements. Initial direct costs related to Progressive Leasing's lease purchase agreements are capitalized as incurred and amortized over the estimated lease term. The capitalized costs have been classified within prepaid expenses and other assets in the accompanying consolidated balance sheets. Initial direct costs related to Aaron's Business customer agreements are expensed as incurred and have been classified as operating expenses in the Company's consolidated statements of earnings. The statement of earnings effects of expensing the initial direct costs of the Aaron's Business as incurred are not materially different from amortizing initial direct costs over the lease term. Retail and Non-Retail Sales Revenues from the sale of merchandise to franchisees are recognized when control transfers to the franchisee, which is upon its receipt of the merchandise. Revenues from the sale of merchandise to other customers are recognized at the time of shipment, at which time control is transferred to the customer. Substantially all of the amounts reported as non-retail sales and non-retail cost of sales in the accompanying condensed consolidated statements of earnings relate to the sale of lease merchandise to franchisees. The Company classifies the sale of merchandise to other customers as retail sales in the consolidated statements of earnings. Franchise Royalties and Fees The Company franchises its Aaron's stores in markets where the Company has no immediate plans to enter. Franchisees pay an ongoing royalty of 6% of the weekly cash revenue collections, which is recognized as the fees become due. In addition, franchisees typically pay a non-refundable initial franchise fee from $15,000 to $50,000 depending upon market size. Franchise fees and area development fees are generated from the sale of rights to develop, own and operate sales and lease ownership stores and pre-opening services provided by Aaron's to assist in the start-up operations of the stores. The Company considers the rights to the intellectual property and the pre-opening services to be a single performance obligation, resulting in the recognition of revenue ratably over time from the store opening date throughout the remainder of the franchise agreement term. The Company believes that this period of time is most representative of the time period in which the customer realizes the benefits of having the right to access the Company's intellectual property. The deferred revenue balance related to initial franchise fees is $2.3 million as of June 30, 2018 and is included in customer deposits and advance payments on the condensed consolidated balance sheets. Revenue related to initial franchise fees recognized during the three and six months ended June 30, 2018 was $0.2 million and $0.5 million respectively. The Company guarantees certain debt obligations of some of the franchisees and receives guarantee fees based on the outstanding debt obligations of such franchisees. The Company recognizes finance fee revenue as the guarantee obligation is satisfied. Refer to Note 5 of these condensed consolidated financial statements for additional discussion of the Company's franchise-related guarantee obligation. The Company also charges fees for advertising efforts that benefit the franchisees. Such fees are recognized at the time the advertising takes place and are presented as franchise royalties and fees in the Company's condensed consolidated statements of earnings. Initial direct costs related to the pre-opening services provided to franchisees are immaterial and are expensed as incurred. These expenses have been classified as operating expenses in the Company's condensed consolidated statements of earnings. |
Interest and Fees on Loans Receivable | Interest and Fees on Loans Receivable DAMI extends or declines credit to an applicant through its bank partners based upon the applicant's credit rating and other factors. Qualifying applicants receive a credit card to finance their initial purchase and to use in subsequent purchases at the merchant or other participating merchants for an initial 24 -month period, which DAMI may renew if the cardholder remains in good standing. DAMI acquires the loan receivable from merchants through its third-party bank partners at a discount from the face value of the loan. The discount is comprised of a merchant fee discount and a promotional fee discount. The merchant fee discount represents a pre-negotiated, nonrefundable discount that generally ranges from 3% to 25% of the loan face value. The discount is designed to cover the risk of loss related to the portfolio of cardholder charges and DAMI's direct origination costs. The merchant fee discount and origination costs are netted on the condensed consolidated balance sheet in loans receivable. Cardholders generally have an initial 24 -month period that the card is active. The merchant fee discount, net of the origination costs, is amortized on a net basis and is recorded as interest and fee revenue on loans receivable in the condensed consolidated statements of earnings on a straight-line basis over the initial 24 -month period. The discount from the face value of the loan on the acquisition of the loan receivable from the merchant through the third-party bank partners also includes a promotional fee discount, which generally ranges from 1% to 8% . The promotional fee discount is intended to compensate the holder of the loan receivable (e.g. DAMI) for deferred or reduced interest rates that are offered to the cardholder for a specified period on the outstanding loan balance (generally for six , 12 or 18 months ). The promotional fee discount is amortized as interest and fee revenue on loans receivable in the condensed consolidated statements of earnings on a straight-line basis over the promotional interest period (i.e., over six , 12 or 18 months , depending on the promotion). The unamortized promotional fee discount is netted on the condensed consolidated balance sheet in loans receivable. The customer is required to make periodic minimum payments of at least 3.5% of the outstanding loan balance, which includes outstanding interest. Fixed and variable interest rates, typically 25% to 34.99% , are compounded daily for cards that do not qualify for deferred or reduced interest promotional periods. Interest income, which is recognized based upon the amount of the loans outstanding, is recognized as interest and fees on loans receivable in the billing period in which they are assessed if collectability is reasonably assured. For credit cards that provide for deferred or reduced interest, if the balance is not paid off during the promotional period, interest is billed to the customers at standard rates and the cumulative amount owed is charged to the cardholder account in the month that the promotional period expires or defaults. The Company recognizes interest revenue during the promotional period based on its historical experience related to cardholders that fail to pay off balances during the promotional period. Annual fees are charged to cardholders at the commencement of the loan and on each subsequent anniversary date. Annual fees are deferred and recognized into revenue on a straight-line basis over a one year period. Under the provisions of the credit card agreements, the Company also may assess fees for service calls or for missed or late payments, which are recognized as revenue in the billing period in which they are assessed if collectability is reasonably assured. |
Investments | Investments At December 31, 2017 , investments classified as held-to-maturity securities consisted of British pound-denominated notes issued by PerfectHome, which is based in the U.K. The PerfectHome Notes ("Notes") consisted of outstanding principal and accrued interest of £15.1 million ( $20.4 million ) at December 31, 2017 . PerfectHome was a variable interest entity ("VIE") because it did not have sufficient equity at risk. However, the Company was not the primary beneficiary and did not consolidate PerfectHome since the Company lacked power through voting or similar rights to direct the activities that most significantly affected PerfectHome's economic performance. During the three months ended June 30, 2018 , PerfectHome's liquidity deteriorated significantly due to continuing operating losses and the senior lender's decision to no longer provide additional funding under a secured revolving debt agreement resulting from PerfectHome's default of certain covenants. Additionally, the senior lender notified PerfectHome in May 2018 of its intent to exercise remedies available under its credit documentation, which included the right to call its outstanding debt. Furthermore, during the three months ended June 30, 2018 , the U.K. governing authority for rent-to-own companies, the Financial Conduct Authority, proposed new regulatory measures which could adversely affect PerfectHome's business. In July 2018, PerfectHome entered into the U.K.’s insolvency process and was subsequently acquired by the senior lender. The Company believes it will not receive any further payments on its subordinated secured Notes. As a result, the Company recorded a full impairment of the PerfectHome investment of $20.1 million during the three months ended June 30, 2018 . |
Accounts Receivable | Accounts Receivable Accounts receivable consist primarily of receivables due from customers of Progressive Leasing and Company-operated stores, corporate receivables incurred during the normal course of business (primarily for real estate leasing activities and vendor consideration) and franchisee obligations. |
Lease Merchandise | Lease Merchandise The Company's lease merchandise consists primarily of furniture, consumer electronics, home appliances and accessories and is recorded at the lower of cost or net realizable value. The cost of merchandise manufactured by our Woodhaven Furniture Industries operations is recorded at cost and includes overhead from production facilities, shipping costs and warehousing costs. The Company-operated stores begin depreciating merchandise at the earlier of twelve months and one day or when the item is leased and depreciate merchandise to a 0% salvage value over the lease agreement period when on lease, generally 12 to 24 months , and generally 36 months when not on lease. The Company's Progressive Leasing segment, at which substantially all merchandise is on lease, depreciates merchandise generally over 12 months. Depreciation is accelerated upon early payout. The Company's policies require weekly lease merchandise counts at its store-based operations, which include write-offs for unsalable, damaged, or missing merchandise inventories. In addition to monthly cycle counting, full physical inventories are generally taken at the fulfillment and manufacturing facilities annually and appropriate provisions are made for missing, damaged and unsalable merchandise. In addition, the Company monitors lease merchandise levels and mix by division, store, and fulfillment center, as well as the average age of merchandise on hand. If obsolete lease merchandise cannot be returned to vendors, its carrying amount is adjusted to its net realizable value or written off. All lease merchandise is available for lease or sale. On a monthly basis, all damaged, lost or unsalable merchandise identified is written off. The Company records a provision for write-offs on the allowance method, which estimates the merchandise losses incurred but not yet identified by management as of the end of the accounting period based on historical write-off experience. The provision for write-offs is included in operating expenses in the accompanying condensed consolidated statements of earnings. |
Loans Receivable, Net | Loans Receivable, Net Gross loans receivable represents the principal balances of credit card charges at DAMI's participating merchants that remain outstanding to cardholders, plus unpaid interest and fees due from cardholders. The allowances and unamortized fees represents an allowance for uncollectible amounts; merchant fee discounts, net of capitalized origination costs; promotional fee discounts; and deferred annual card fees. Loans acquired in the October 15, 2015 DAMI acquisition (the "Acquired Loans") were recorded at their estimated fair value at the acquisition date. The projected net cash flows from expected payments of principal, interest, fees and servicing costs and anticipated charge-offs were included in the determination of fair value; therefore, an allowance for loan losses and an amount for unamortized fees were not recognized for the Acquired Loans. The difference, or discount, between the expected cash flows to be received and the fair value of the Acquired Loans is accreted to interest and fees on loans receivable based on the effective interest method. At each period end, the Company evaluates the appropriateness of the accretable discount on the Acquired Loans based on actual and revised projected future cash receipts. Losses on loans receivable are recognized when they are incurred, which requires the Company to make its best estimate of probable losses inherent in the portfolio. The Company evaluates loans receivable collectively for impairment. The method for calculating the best estimate of probable losses takes into account the Company's historical experience, adjusted for current conditions and the Company's judgment concerning the probable effects of relevant observable data, trends and market factors. Economic conditions and loan performance trends are closely monitored to manage and evaluate exposure to credit risk. Trends in delinquency ratios are an indicator of credit risk within the loans receivable portfolio, including the migration of loans between delinquency categories over time. Charge-off rates represent another indicator of the potential for future credit losses. The risk in the loans receivable portfolio is correlated with broad economic trends, such as unemployment rates, gross domestic product growth and gas prices, which can have a material effect on credit performance. To the extent that actual results differ from estimates of uncollectible loans receivable, the Company's results of operations and liquidity could be materially affected. The Company calculates the allowance for loan losses based on actual delinquency balances and historical average loss experience on loans receivable by aging category for the prior eight quarters. The allowance for loan losses is maintained at a level considered adequate to cover probable losses of principal, interest and fees on active loans in the loans receivable portfolio. The adequacy of the allowance is evaluated at each period end. Delinquent loans receivable are those that are 30 days or more past due based on their contractual billing dates. The Company places loans receivable on nonaccrual status when they are greater than 90 days past due or upon notification of cardholder bankruptcy, death or fraud. The Company discontinues accruing interest and fees and amortizing merchant fee discounts and promotional fee discounts for loans receivable in nonaccrual status. Loans receivable are removed from nonaccrual status when cardholder payments resume, the loan becomes 90 days or less past due and collection of the remaining amounts outstanding is deemed probable. Payments received on nonaccrual loans are allocated according to the same payment hierarchy methodology applied to loans that are accruing interest. Loans receivable are charged off at the end of the month following the billing cycle in which the loans receivable become 120 days past due. DAMI extends or declines credit to an applicant through its bank partners based upon the applicant's credit rating and other factors. |
Assets Held for Sale | Assets Held for Sale Certain properties, consisting of parcels of land and commercial buildings, met the held for sale classification criteria as of June 30, 2018 and December 31, 2017 . Assets held for sale are recorded at the lower of their carrying value or fair value less estimated cost to sell and are classified within prepaid expenses and other assets in the condensed consolidated balance sheets. Depreciation is suspended on assets upon classification to held for sale. The carrying amount of the properties held for sale as of June 30, 2018 and December 31, 2017 is $9.7 million and $10.1 million , respectively. The Company estimated the fair values of real estate properties using the market values for similar properties. These properties are considered Level 2 assets as defined below. |
Fair Value Measurement | Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets. Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3—Valuations based on unobservable inputs reflecting the Company's own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. The Company measures assets held for sale at fair value on a nonrecurring basis and records impairment charges when they are deemed to be impaired. The Company maintains certain financial assets and liabilities, and fixed-rate long-term debt, that are not measured at fair value but for which fair value is disclosed. The fair values of the Company's other current financial assets and liabilities, including cash and cash equivalents, accounts receivable and accounts payable, approximate their carrying values due to their short-term nature. The fair value for the loans receivable, net of allowances, and the revolving credit borrowings also approximate their carrying amounts. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Adopted Revenue Recognition. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("Topic 606"). ASU 2014-09 replaces substantially all existing revenue recognition guidance with a single, comprehensive revenue recognition model that requires a company to recognize revenue to depict the transfer of promised goods and services to customers at the amount to which it expects to be entitled in exchange for transferring those goods or services. On January 1, 2018, the Company adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning on January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. The standard changed the timing of recognition of store pre-opening revenue from franchisees. Previously, the Company's accounting policy was to recognize initial franchise store pre-opening revenue when earned, which is generally when a new store opens. Under the new standard, the initial franchise pre-opening services are not considered distinct from the continuing franchise services as they would not transfer a benefit to the franchisee directly without use of the franchise license and should be bundled with the franchise license as a single performance obligation. As a result, the pre-opening revenues will be recognized from the store opening date over the remaining life of the franchise license term. The standard also changed the presentation of certain fees charged to franchisees, primarily advertising fees. Previously, there was diversity in practice and advertising fees charged to franchisees were recorded as a reduction to advertising expense, which is classified within operating expenses in the consolidated statements of earnings. The new standard resulted in the presentation of advertising fees charged to franchisees to be reported as franchise royalties and fee revenue in the consolidated statements of earnings, instead of a reduction to advertising expense. The changes associated with the adoption of Topic 606 will not require significant changes to controls and procedures around the revenue recognition process. The Company adopted the standard on January 1, 2018 using the modified retrospective approach and recorded a pre-tax adjustment to opening retained earnings and deferred revenue of $2.4 million on January 1, 2018. The Company expects to recognize such amounts in revenue over an average of the next 5 years . Business Combinations . In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business . The objective of the update is to add guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The Company prospectively adopted this ASU in the first quarter of 2018. The new standard results in certain store acquisitions (or disposals) which do not transfer a substantive process to be accounted for as asset acquisitions (or disposals). The Company has identified a separate "expanded customer base" intangible asset, which is separately valued and recorded in asset acquisitions. The "expanded customer base" represents the estimated fair value of the acquisition purchase price paid by the Company for the ability to advertise and execute lease agreements with a larger pool of customers in the respective markets. This intangible asset was previously subsumed in goodwill under the business combinations accounting guidance. In situations in which the purchase price exceeds the fair value of the assets acquired, any remaining economic goodwill is allocated on a relative fair value basis to all acquired assets, including merchandise inventory. In situations in which the fair value of the assets acquired exceeds the purchase price, the acquisition is treated as a bargain purchase with the excess allocated on a relative fair value basis to all assets. This results in the recognition of the initial asset bases at less than fair value, including merchandise inventory. The Company routinely enters into arrangements to acquire lease merchandise inventory and the related customer lease agreements of a store; however, the arrangement does not transfer a substantive process. Under ASU 2017-01, these acquisitions result in all of the purchase price getting assigned to definite lived assets, instead of a portion going to goodwill. This results in higher depreciation and amortization expense under the new standard for asset acquisitions that would have been accounted for as business combinations under the prior guidance. Transactions that are now accounted for as asset disposals, instead of business disposals, do not result in the write-off of goodwill as part of the disposal. The new standard did not have a material impact to the Company's condensed consolidated financial statements during the first six months of 2018. The future impact of this new standard will depend on the quantity and magnitude of future acquisitions (or disposals) that will be treated as asset acquisitions (or disposals) in accordance with ASU 2017-01. Pending Adoption Leases. In February 2016, the FASB issued ASU 2016-02, Leases , which would require lessees to recognize assets and liabilities for most leases and would change certain aspects of today's lessor accounting, among other things. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. Companies must use a modified retrospective approach to adopt ASU 2016-02. A majority of the Company's revenue generating activities will be within the scope of ASU 2016-02. The Company has preliminarily determined that the new standard will not materially impact the timing of revenue recognition. The new standard will result in the Company classifying bad debt expense incurred within its Progressive Leasing segment as a reduction of lease revenue and fees within the consolidated statements of earnings. The new standard will also impact the Company as a lessee by requiring substantially all of its operating leases to be recognized on the balance sheet as a right-to-use asset and lease liability. The Company plans to elect a package of optional practical expedients which includes the option to retain the current classification of leases entered into prior to January 1, 2019, and thus does not anticipate a material impact to the consolidated statements of earnings or consolidated statements of cash flows. The Company expects to be affected by the transition guidance related to recognition of deferred gains recorded under previous sale and operating leaseback transactions, which requires companies to recognize any deferred gains not resulting from off-market terms as a cumulative-effect adjustment to retained earnings upon adoption of ASU 2016-02. The Company is currently quantifying the impacts of its operating leases to the consolidated financial statements, as well as evaluating other impacts of adopting ASU 2016-02, and intends to adopt the new standard in the first quarter of 2019. Financial Instruments - Credit Losses . In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The main objective of the update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by companies at each reporting date. For trade and other receivables, held to maturity debt securities and other instruments, companies will be required to use a new forward-looking "expected losses" model that generally will result in the recognition of allowances for losses earlier than under current accounting guidance. The standard will be adopted on a prospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The Company has not yet determined the potential effects of adopting ASU 2016-13 on its consolidated financial statements. |
Basis and Summary of Signific16
Basis and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule Of Company Operated Store Activity | The following table presents active doors for Progressive Leasing: Active Doors at June 30 (Unaudited) 2018 2017 Progressive Leasing Active Doors 1 20,309 19,148 1 Active doors are comprised of both (i) each retail store location where at least one virtual lease-to-own transaction has been completed during the trailing three month period; and (ii) with respect to an e-commerce merchant, each state where at least one virtual lease-to-own transaction has been completed through that e-commerce merchant during the trailing three month period. The following table presents store count by ownership type for the Aaron's Business operations: Stores as of June 30 (Unaudited) 2018 2017 Company-operated Aaron's Branded Stores 1,179 1,093 Franchised Stores 530 680 Systemwide Stores 1,709 1,773 |
Calculation of Dilutive Stock Awards | The following table shows the calculation of dilutive share-based awards: Three Months Ended Six Months Ended (Shares In Thousands) 2018 2017 2018 2017 Weighted Average Shares Outstanding 69,645 70,686 69,875 71,001 Dilutive Effect of Share-Based Awards 1,192 1,011 1,553 1,039 Weighted Average Shares Outstanding Assuming Dilution 70,837 71,697 71,428 72,040 |
Accounts Receivable Net of Allowances | Accounts receivable, net of allowances, consist of the following: (In Thousands) June 30, 2018 December 31, 2017 Customers $ 48,978 $ 48,661 Corporate 12,860 23,431 Franchisee 22,471 27,795 Accounts Receivable $ 84,309 $ 99,887 The following is a summary of the Company’s loans receivable, net: (In Thousands) June 30, 2018 December 31, 2017 Credit Card Loans 1 $ 88,947 $ 89,728 Acquired Loans 2 10,019 16,213 Loans Receivable, Gross 98,966 105,941 Allowance for Loan Losses (11,586 ) (11,454 ) Unamortized Fees (7,692 ) (8,375 ) Loans Receivable, Net of Allowances and Unamortized Fees $ 79,688 $ 86,112 1 "Credit Card Loans" are loans originated after the 2015 acquisition of DAMI. 2 "Acquired Loans" are credit card loans the Company purchased in the 2015 acquisition of DAMI. |
Components of the Accounts Receivable Provision | The following table shows the amounts recognized for bad debt expense and provision for returns and uncollected payments: Six Months Ended June 30, (In Thousands) 2018 2017 Bad Debt Expense $ 96,651 $ 68,044 Provision for Returns and Uncollected Renewal Payments 16,426 14,062 Accounts Receivable Provision $ 113,077 $ 82,106 |
Schedule of Lease Merchandise | The following is a summary of lease merchandise, net of accumulated depreciation and allowances: (In Thousands) June 30, 2018 December 31, 2017 Merchandise on Lease $ 909,700 $ 908,268 Merchandise not on Lease 227,728 243,867 Lease Merchandise, net of Accumulated Depreciation and Allowances $ 1,137,428 $ 1,152,135 |
Allowance for Lease Merchandise | The following table shows the components of the allowance for lease merchandise write-offs: Six Months Ended June 30, (In Thousands) 2018 2017 Beginning Balance $ 35,629 $ 33,399 Merchandise Written off, net of Recoveries (80,856 ) (61,034 ) Provision for Write-offs 91,420 63,938 Ending Balance $ 46,193 $ 36,303 |
Loan Portfolio Credit Quality Indicators | Below is a summary of the credit quality of the Company's loan portfolio as of June 30, 2018 and December 31, 2017 by Fair Isaac and Company (FICO) score as determined at the time of loan origination: FICO Score Category June 30, 2018 December 31, 2017 600 or Less 2.5 % 1.7 % Between 600 and 700 77.4 % 76.5 % 700 or Greater 20.1 % 21.8 % |
Schedule of Prepaid Expenses and Other Assets | Prepaid expenses and other assets consist of the following: (In Thousands) June 30, 2018 December 31, 2017 Prepaid Expenses $ 39,023 $ 31,509 Prepaid Insurance 33,444 36,735 Assets Held for Sale 9,698 10,118 Deferred Tax Asset 7,556 11,589 Other Assets 29,511 26,548 Prepaid Expenses and Other Assets $ 119,232 $ 116,499 |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consist of the following: (In Thousands) June 30, 2018 December 31, 2017 Accounts Payable $ 62,314 $ 80,821 Accrued Insurance Costs 39,859 41,680 Accrued Salaries and Benefits 41,903 46,511 Accrued Real Estate and Sales Taxes 31,599 31,054 Deferred Rent 27,816 29,912 Other Accrued Expenses and Liabilities 67,472 74,832 Accounts Payable and Accrued Expenses $ 270,963 $ 304,810 |
Changes in Accumulated Other Comprehensive Income | Changes in accumulated other comprehensive (loss) income for the six months ended June 30, 2018 are as follows: (In Thousands) Foreign Currency Balance at January 1, 2018 $ 774 Other Comprehensive Loss (1,012 ) Balance at June 30, 2018 $ (238 ) |
Schedule of Impact of Adoption of New Revenue Standard | The impact of adoption on the condensed consolidated statements of earnings and balance sheets was as follows: Condensed Consolidated Statements of Earnings Three Months Ended June 30, 2018 (In Thousands) As Reported Balance Without ASC 606 Adoption Effect of Change Higher/(Lower) Franchise Royalties and Fees $ 12,125 $ 10,078 $ 2,047 Operating Expenses 388,337 386,495 1,842 OPERATING PROFIT 73,931 73,726 205 EARNINGS BEFORE INCOME TAXES 49,980 49,775 205 INCOME TAXES 11,479 11,429 50 NET EARNINGS $ 38,501 $ 38,347 $ 154 Six Months Ended June 30, 2018 (In Thousands) As Reported Balance Without ASC 606 Adoption Effect of Change Higher/(Lower) Franchise Royalties and Fees $ 24,987 $ 20,844 $ 4,143 Operating Expenses 778,569 774,891 3,678 OPERATING PROFIT 143,995 143,531 464 EARNINGS BEFORE INCOME TAXES 116,732 116,268 464 INCOME TAXES 25,985 25,871 114 NET EARNINGS $ 90,747 $ 90,396 $ 351 Condensed Consolidated Balance Sheets Balance at June 30, 2018 (In Thousands) As Reported Balance Without ASC 606 Adoption Effect of Change Higher/(Lower) Deferred Income Taxes Payable $ 257,620 $ 258,129 $ (509 ) Customer Deposits and Advance Payments 72,613 70,725 1,888 Total Liabilities 874,137 872,758 1,379 Retained Earnings 1,904,309 1,905,688 (1,379 ) Total Shareholders’ Equity 1,744,813 1,746,192 (1,379 ) Total Liabilities & Shareholders’ Equity $ 2,618,950 $ 2,618,950 $ — Condensed Comprehensive Statements of Income Three Months Ended June 30, 2018 (In Thousands) As Reported Balance Without ASC 606 Adoption Effect of Change Higher/(Lower) Comprehensive Income $ 37,966 $ 37,812 $ 154 Six Months Ended June 30, 2018 (In Thousands) As Reported Balance Without ASC 606 Adoption Effect of Change Higher/(Lower) Comprehensive Income $ 89,735 $ 89,384 $ 351 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table presents a summary of the preliminary and final fair value of the assets acquired and liabilities assumed in the franchisee acquisition, as well as measurement period adjustments made during the three months ended June 30, 2018 : (In Thousands) Amounts Recognized as of Acquisition Date (preliminary) 1 Acquisition Accounting Adjustments 2 Final Amounts Recognized as of Acquisition Date Purchase Price $ 140,000 $ — $ 140,000 Settlement of Pre-existing Accounts Receivable SEI owed Aaron's, Inc. 3,452 — 3,452 Reimbursement for Insurance Costs (100 ) — (100 ) Working Capital Adjustment 188 — 188 Consideration Transferred 143,540 — 143,540 Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed Cash and Cash Equivalents 34 — 34 Receivables 1,448 (103 ) 1,345 Lease Merchandise 40,941 — 40,941 Property, Plant and Equipment 8,832 — 8,832 Other Intangibles 3 13,779 — 13,779 Prepaid Expenses and Other Assets 440 — 440 Total Identifiable Assets Acquired 65,474 (103 ) 65,371 Accounts Payable and Accrued Expenses (6,698 ) — (6,698 ) Customer Deposits and Advance Payments (2,500 ) — (2,500 ) Capital Leases (4,514 ) — (4,514 ) Total Liabilities Assumed (13,712 ) — (13,712 ) Goodwill 4 91,778 103 91,881 Net Assets Acquired $ 51,762 $ (103 ) $ 51,659 1 As previously reported in Note 2 to the condensed consolidated financial statements as of March 31, 2018 . 2 The acquisition accounting adjustments relate to finalizing certain working capital adjustments. 3 Identifiable intangible assets are further disaggregated in the table set forth below. 4 The total goodwill recognized in conjunction with the franchisee acquisition, all of which is expected to be deductible for tax purposes, has been assigned to the Aaron’s Business operating segment. The purchase price exceeded the fair value of the net assets acquired, which resulted in the recognition of goodwill, primarily due to synergies created from the expected future benefits to the Company’s omnichannel platform, implementation of the Company’s operational capabilities, expected inventory supply chain synergies between the Aaron’s Business and Progressive Leasing, and control of the Company’s brand name in new geographic markets. Goodwill also includes certain other intangible assets that do not qualify for separate recognition, such as an assembled workforce. |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | The estimated intangible assets attributable to the franchisee acquisition are comprised of the following: Fair Value (in thousands) Weighted Average Life (in years) Non-compete Agreements $ 1,244 5.0 Customer Lease Contracts 2,154 1.0 Customer Relationships 3,215 2.0 Reacquired Franchise Rights 3,640 4.1 Favorable Operating Leases 3,526 11.3 Total Acquired Intangible Assets 1 $ 13,779 1 Acquired definite-lived intangible assets have a total weighted average life of 5.1 years . |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table summarizes financial liabilities measured at fair value on a recurring basis: (In Thousands) June 30, 2018 December 31, 2017 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Deferred Compensation Liability $ — $ (12,055 ) $ — $ — $ (12,927 ) $ — |
Assets Measured at Fair Value on Nonrecurring Basis | The following table summarizes non-financial assets measured at fair value on a nonrecurring basis: (In Thousands) June 30, 2018 December 31, 2017 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets Held for Sale $ — $ 9,698 $ — $ — $ 10,118 $ — |
Fair Value of Assets (Liabilities) Not Measured at Fair Value In Consolidated Balance Sheets | The following table summarizes the fair value of assets (liabilities) that are not measured at fair value in the condensed consolidated balance sheets, but for which the fair value is disclosed: (In Thousands) June 30, 2018 December 31, 2017 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 PerfectHome Notes 1 $ — $ — $ — $ — $ — $ 20,385 Fixed-Rate Long-Term Debt 2 — (183,559 ) — — (273,476 ) — 1 The PerfectHome notes were carried at cost, which approximated fair value. The Company recorded a full impairment of the PerfectHome investment of $20.1 million during the three months ended June 30, 2018 . Refer to Note 1 to the condensed consolidated financial statements for further discussion of the PerfectHome impairment. 2 The fair value of fixed-rate long-term debt is estimated using the present value of underlying cash flows discounted at a current market yield for similar instruments. The carrying amount of fixed-rate long-term debt was $180.0 million and $265.0 million at June 30, 2018 and December 31, 2017 , respectively. |
Loans Receivable (Tables)
Loans Receivable (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Receivables [Abstract] | |
Schedule of the Components of Loans Receivable, Net | Accounts receivable, net of allowances, consist of the following: (In Thousands) June 30, 2018 December 31, 2017 Customers $ 48,978 $ 48,661 Corporate 12,860 23,431 Franchisee 22,471 27,795 Accounts Receivable $ 84,309 $ 99,887 The following is a summary of the Company’s loans receivable, net: (In Thousands) June 30, 2018 December 31, 2017 Credit Card Loans 1 $ 88,947 $ 89,728 Acquired Loans 2 10,019 16,213 Loans Receivable, Gross 98,966 105,941 Allowance for Loan Losses (11,586 ) (11,454 ) Unamortized Fees (7,692 ) (8,375 ) Loans Receivable, Net of Allowances and Unamortized Fees $ 79,688 $ 86,112 1 "Credit Card Loans" are loans originated after the 2015 acquisition of DAMI. 2 "Acquired Loans" are credit card loans the Company purchased in the 2015 acquisition of DAMI. |
Aging of the Loans Receivable Balance | Included in the table below is an aging of the loans receivable, gross balance: (Dollar Amounts in Thousands) Aging Category 1 June 30, 2018 December 31, 2017 30-59 days past due 6.9 % 7.1 % 60-89 days past due 3.1 % 3.6 % 90 or more days past due 3.5 % 4.1 % Past due loans receivable 13.5 % 14.8 % Current loans receivable 86.5 % 85.2 % Balance of Credit Card Loans on Nonaccrual Status $ 1,478 $ 2,016 Balance of Loans Receivable 90 or More Days Past Due and Still Accruing Interest and Fees $ — $ — 1 This aging is based on the contractual amounts outstanding for each loan as of period end, and does not reflect the fair value adjustments for the Acquired Loans. |
Components of the Allowance for Loan Losses | The table below presents the components of the allowance for loan losses: Six Months Ended June 30, (In Thousands) 2018 2017 Beginning Balance 1 $ 11,454 $ 6,624 Provision for Loan Losses 9,540 9,130 Charge-offs (10,210 ) (6,985 ) Recoveries 802 244 Ending Balance $ 11,586 $ 9,013 1 The Company acquired DAMI on October 15, 2015 and recorded $89.1 million of loans receivable as of the acquisition date. No corresponding allowance for loan losses was recorded as the loans receivable were established at fair value in acquisition accounting. |
Segments (Tables)
Segments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Information on Segments and Reconciliation to Earnings Before Income Taxes from Continuing Operations | The following is a summary of earnings (loss) before income taxes by segment: Three Months Ended Six Months Ended (In Thousands) 2018 2017 2018 2017 Earnings (Loss) Before Income Taxes: Progressive Leasing $ 44,575 $ 38,240 $ 79,554 $ 73,998 Aaron's Business 1 7,697 21,450 40,776 70,080 DAMI (2,292 ) (2,695 ) (3,598 ) (4,460 ) Total Earnings Before Income Taxes $ 49,980 $ 56,995 $ 116,732 $ 139,618 1 Earnings before income taxes for the Aaron's Business during the three months ended June 30, 2018 includes a full impairment of the PerfectHome investment of $20.1 million . This charge is net of restructuring reversals of $0.9 million related to reversals of previously recorded restructuring charges partially offset by charges related to Aaron's contractual lease obligations for closed stores. The following is a summary of total assets by segment and shared corporate-related assets. (In Thousands) June 30, December 31, Assets: Progressive Leasing $ 1,019,520 $ 1,022,413 Aaron's Business 1 1,253,427 1,261,234 DAMI 97,818 108,306 Other 2 248,185 300,311 Total Assets $ 2,618,950 $ 2,692,264 1 Includes inventory (principally raw materials and work-in-process) that has been classified within lease merchandise in the condensed consolidated balance sheets of $15.9 million and $16.3 million as of June 30, 2018 and December 31, 2017 , respectively. 2 Corporate-related assets that benefit multiple segments are reported as other assets. The following table presents revenue by source and by segment for the three months ended June 30, 2018 : Three Months Ended June 30, 2018 (In Thousands) Progressive Leasing Aaron's Business DAMI Total Lease Revenues and Fees 1 $ 483,666 $ 362,272 $ — $ 845,938 Retail Sales 2 — 6,592 — 6,592 Non-Retail Sales 2 — 53,661 — 53,661 Franchise Royalties and Fees 2 — 12,125 — 12,125 Interest and Fees on Loans Receivable 3 — — 9,208 9,208 Other — 335 — 335 Total $ 483,666 $ 434,985 $ 9,208 $ 927,859 1 Substantially all lease revenues and fees are within the scope of ASC 840, Leases . The Company had $4.4 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers. 2 Revenue within the scope of ASC 606, Revenue from Contracts with Customers . Of the Franchise Royalties and Fees, $9.1 million is related to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. The remaining revenue is primarily related to fees collected for pre-opening services, which are being deferred and recognized as revenue over the agreement term, and advertising fees charged to franchisees. Retail and non-retail sales are recognized at the point of sale. 3 Revenue within the scope of ASC 310, Credit Card Interest & Fees . The following table presents revenue by source and by segment for the three months ended June 30, 2017 : Three Months Ended June 30, 2017 (In Thousands) Progressive Leasing Aaron's Business DAMI Total Lease Revenues and Fees 1 $ 373,499 $ 344,590 $ — $ 718,089 Retail Sales 2 — 6,106 — 6,106 Non-Retail Sales 2 — 69,602 — 69,602 Franchise Royalties and Fees 2 — 12,824 — 12,824 Interest and Fees on Loans Receivable 3 — — 8,532 8,532 Other — 491 — 491 Total $ 373,499 $ 433,613 $ 8,532 $ 815,644 1 Substantially all revenue is within the scope of ASC 840, Leases . The Company had $0.6 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers. 2 Revenue within the scope of ASC 606, Revenue from Contracts with Customers . Of the Franchise Royalties and Fees, $11.9 million relates to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. Retail and non-retail sales are recognized at the point of sale. 3 Revenue within the scope of ASC 310, Credit Card Interest & Fees. The following table presents revenue by source and by segment for the six months ended June 30, 2018 : Six Months Ended June 30, 2018 (In Thousands) Progressive Leasing Aaron's Business DAMI Total Lease Revenues and Fees 1 $ 970,183 $ 745,822 $ — $ 1,716,005 Retail Sales 2 — 15,108 — 15,108 Non-Retail Sales 2 — 106,891 — 106,891 Franchise Royalties and Fees 2 — 24,987 — 24,987 Interest and Fees on Loans Receivable 3 — — 18,750 18,750 Other — 927 — 927 Total $ 970,183 $ 893,735 $ 18,750 $ 1,882,668 1 Substantially all lease revenues and fees are within the scope of ASC 840, Leases . The Company had $8.4 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers. 2 Revenue within the scope of ASC 606, Revenue from Contracts with Customers . Of the Franchise Royalties and Fees, $19.2 million is related to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. The remaining revenue is primarily related to fees collected for pre-opening services, which are being deferred and recognized as revenue over the agreement term, and advertising fees charged to franchisees. Retail and non-retail sales are recognized at the point of sale. 3 Revenue within the scope of ASC 310, Credit Card Interest & Fees . The following table presents revenue by source and by segment for the six months ended June 30, 2017 : Six Months Ended June 30, 2017 (In Thousands) Progressive Leasing Aaron's Business DAMI Total Lease Revenues and Fees 1 $ 739,614 $ 722,097 $ — $ 1,461,711 Retail Sales 2 — 14,884 — 14,884 Non-Retail Sales 2 — 138,929 — 138,929 Franchise Royalties and Fees 2 — 27,025 — 27,025 Interest and Fees on Loans Receivable 3 — — 16,733 16,733 Other — 916 — 916 Total $ 739,614 $ 903,851 $ 16,733 $ 1,660,198 1 Substantially all revenue is within the scope of ASC 840, Leases . The Company had $1.5 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers. 2 Revenue within the scope of ASC 606, Revenue from Contracts with Customers . Of the Franchise Royalties and Fees, $25.1 million relates to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. Retail and non-retail sales are recognized at the point of sale. 3 Revenue within the scope of ASC 310, Credit Card Interest & Fees. |
Restructuring (Tables)
Restructuring (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | The following table summarizes restructuring charges for the three and six months ended June 30, 2018 and 2017 , respectively, under both plans: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2018 2017 1 2018 2017 1 Contractual Lease Obligations $ 207 $ 11,841 $ 926 $ 11,318 Severance 87 1,144 601 1,590 Other Reversals (1,176 ) — (1,176 ) — Gain on Sale of Closed Store Properties — — (327 ) — Fixed Asset Impairment — 460 — 864 Total Restructuring (Reversals) Expenses, Net $ (882 ) $ 13,445 $ 24 $ 13,772 |
Schedule of Restructuring Reserve | The following table summarizes the balances of the accruals for the programs, which are recorded in accounts payable and accrued expenses in the condensed consolidated balance sheets, and the activity for the six months ended June 30, 2018 : (In Thousands) Contractual Lease Obligations Severance Balance at January 1, 2018 $ 12,437 $ 2,303 Charges — 601 Adjustments 1 926 — Restructuring Charges 926 601 Payments (3,305 ) (1,571 ) Balance at June 30, 2018 $ 10,058 $ 1,333 1 Adjustments relate to early buyouts of leases, changes in sublease assumptions and interest accretion. |
Basis and Summary of Signific22
Basis and Summary of Significant Accounting Policies - Narrative (Details) | 1 Months Ended | 6 Months Ended | 12 Months Ended |
Jul. 31, 2018franchise | Jun. 30, 2018franchisestate | Dec. 31, 2017franchise | |
Significant Accounting Policies [Line Items] | |||
Number of Businesses Acquired | 5 | 4 | |
Progressive Leasing | |||
Significant Accounting Policies [Line Items] | |||
Number of states in which entity operates | state | 46 | ||
Subsequent Event | |||
Significant Accounting Policies [Line Items] | |||
Number of Businesses Acquired | 3 |
Basis and Summary of Signific23
Basis and Summary of Significant Accounting Policies - Store Count by Ownership Type (Details) - Operating Segments | 6 Months Ended | |
Jun. 30, 2018transactionStorestore | Jun. 30, 2017Storestore | |
Progressive Leasing | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | store | 20,309 | 19,148 |
Number of virtual lease-to-own transactions completed | transaction | 1 | |
Number of virtual lease-to-own transactions completed through e-commerce merchant | transaction | 1 | |
Company-operated Aaron's Branded Stores | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 1,179 | 1,093 |
Franchised Stores | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 530 | 680 |
Systemwide Stores | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 1,709 | 1,773 |
Basis and Summary of Signific24
Basis and Summary of Significant Accounting Policies - Calculation of Dilutive Stock Awards (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Accounting Policies [Abstract] | ||||
Weighted Average Shares Outstanding (in shares) | 69,645 | 70,686 | 69,875 | 71,001 |
Dilutive Effect of Share-Based Awards (in shares) | 1,192 | 1,011 | 1,553 | 1,039 |
Weighted Average Shares Outstanding Assuming Dilution (in shares) | 70,837 | 71,697 | 71,428 | 72,040 |
Anti-dilutive securities excluded from the computation of earnings per share assuming dilution (in shares) | 493 | 1 | 340 | 265 |
Basis and Summary of Signific25
Basis and Summary of Significant Accounting Policies - Revenue Recognition Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Deferred revenue | $ 72,613 | $ 72,613 | $ 68,060 |
Deferred revenue recognized | $ 200 | $ 500 | |
Promotional fees percent promotional interest period one | 6 months | ||
Promotional fees percent promotional interest period two | 12 months | ||
Promotional fees percent promotional interest period three | 18 months | ||
Credit Card Loans | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Privilege period | 24 months | ||
Minimum payment required percentage of outstanding loan balance | 3.50% | 3.50% | |
Initial franchise fees | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Deferred revenue | $ 2,300 | $ 2,300 | |
Minimum | Credit Card Loans | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Merchant fee percent | 3.00% | ||
Promotional fees percent | 1.00% | ||
Interest rate fixed and variable | 25.00% | 25.00% | |
Maximum | Credit Card Loans | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Merchant fee percent | 25.00% | ||
Promotional fees percent | 8.00% | ||
Interest rate fixed and variable | 34.99% | 34.99% | |
Sales And Lease Ownership | Agreement One | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Lease agreement period | 12 months | ||
Sales And Lease Ownership | Agreement Two | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Lease agreement period | 18 months | ||
Sales And Lease Ownership | Agreement Three | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Lease agreement period | 24 months | ||
Progressive Finance Holdings, LLC | Agreement One | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Lease agreement period | 12 months | ||
Sales and Lease Ownership and HomeSmart | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Royalty payment rate | 6.00% | ||
Sales and Lease Ownership and HomeSmart | Minimum | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Initial franchise fees | $ 15 | ||
Sales and Lease Ownership and HomeSmart | Maximum | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Initial franchise fees | $ 50 |
Basis and Summary of Signific26
Basis and Summary of Significant Accounting Policies - Investments (Details) $ in Thousands, £ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2017GBP (£) | Dec. 31, 2017USD ($) | |
Significant Accounting Policies [Line Items] | ||||||
Impairment of Investment | $ (20,098) | $ 0 | $ (20,098) | $ 0 | ||
Variable Interest Entity, Not Primary Beneficiary | ||||||
Significant Accounting Policies [Line Items] | ||||||
Held-to-maturity securities | £ 15.1 | $ 20,400 | ||||
Impairment of Investment | $ (20,100) |
Basis and Summary of Signific27
Basis and Summary of Significant Accounting Policies - Accounts Receivable Net of Allowances (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts Receivable | $ 84,309 | $ 99,887 |
Customers | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts Receivable | 48,978 | 48,661 |
Corporate | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts Receivable | 12,860 | 23,431 |
Franchisee | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts Receivable | $ 22,471 | $ 27,795 |
Basis and Summary of Signific28
Basis and Summary of Significant Accounting Policies - Components of the Accounts Receivable Provision (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Accounting Policies [Abstract] | ||
Bad Debt Expense | $ 96,651 | $ 68,044 |
Provision for Returns and Uncollected Renewal Payments | 16,426 | 14,062 |
Accounts Receivable Provision | $ 113,077 | $ 82,106 |
Basis and Summary of Signific29
Basis and Summary of Significant Accounting Policies - Lease Merchandise (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Significant Accounting Policies [Line Items] | |||
Lease merchandise salvage value percentage | 0.00% | ||
Lease agreement, lease period used as asset useful life | 12 months | ||
Lease Merchandise, net of Accumulated Depreciation and Allowances | $ 1,137,428 | $ 1,152,135 | |
Components of the allowance of leases merchandise write-offs: | |||
Beginning Balance | 35,629 | $ 33,399 | |
Merchandise Written off, net of Recoveries | (80,856) | (61,034) | |
Provision for Write-offs | 91,420 | 63,938 | |
Ending Balance | 46,193 | $ 36,303 | |
Merchandise on Lease | |||
Significant Accounting Policies [Line Items] | |||
Lease Merchandise, net of Accumulated Depreciation and Allowances | $ 909,700 | 908,268 | |
Merchandise on Lease | Minimum | |||
Significant Accounting Policies [Line Items] | |||
Lease merchandise useful life | 12 months | ||
Merchandise on Lease | Maximum | |||
Significant Accounting Policies [Line Items] | |||
Lease merchandise useful life | 24 months | ||
Merchandise not on Lease | |||
Significant Accounting Policies [Line Items] | |||
Lease merchandise useful life | 36 months | ||
Lease Merchandise, net of Accumulated Depreciation and Allowances | $ 227,728 | $ 243,867 |
Basis and Summary of Signific30
Basis and Summary of Significant Accounting Policies - Credit Quality Indicators (Details) | Jun. 30, 2018 | Dec. 31, 2017 |
FICO Score, 600 or Less | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing receivable, percentage of loan portfolio per FICO Score | 2.50% | 1.70% |
FICO Score, Between 600 and 700 | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing receivable, percentage of loan portfolio per FICO Score | 77.40% | 76.50% |
FICO Score, 700 or Greater | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Financing receivable, percentage of loan portfolio per FICO Score | 20.10% | 21.80% |
Basis and Summary of Signific31
Basis and Summary of Significant Accounting Policies - Components of Prepaid Expenses and Other Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Prepaid Expenses | $ 39,023 | $ 31,509 |
Prepaid Insurance | 33,444 | 36,735 |
Assets Held for Sale | 9,698 | 10,118 |
Deferred Tax Asset | 7,556 | 11,589 |
Other Assets | 29,511 | 26,548 |
Prepaid Expenses and Other Assets | $ 119,232 | $ 116,499 |
Basis and Summary of Signific32
Basis and Summary of Significant Accounting Policies - Assets Held for Sale (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Assets Held for Sale | $ 9,698 | $ 10,118 |
Basis and Summary of Signific33
Basis and Summary of Significant Accounting Policies - Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Accounts Payable | $ 62,314 | $ 80,821 |
Accrued Insurance Costs | 39,859 | 41,680 |
Accrued Salaries and Benefits | 41,903 | 46,511 |
Accrued Real Estate and Sales Taxes | 31,599 | 31,054 |
Deferred Rent | 27,816 | 29,912 |
Other Accrued Expenses and Liabilities | 67,472 | 74,832 |
Accounts Payable and Accrued Expenses | $ 270,963 | $ 304,810 |
Basis and Summary of Signific34
Basis and Summary of Significant Accounting Policies - Income Taxes (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Tax Cuts And Jobs Act Of 2017, Income tax expense (benefit) | $ 0.2 | $ (140) |
Basis and Summary of Signific35
Basis and Summary of Significant Accounting Policies - Changes in Accumulated Other Comprehensive Income (Loss) by Component (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Reclassification out of accumulated other comprehensive income (loss) | $ 0 | |||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Beginning balance | 1,728,004,000 | |||
Other Comprehensive Loss | $ (535,000) | $ 446,000 | (1,012,000) | $ 649,000 |
Ending balance | 1,744,813,000 | 1,744,813,000 | ||
Foreign Currency | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Beginning balance | 774,000 | |||
Other Comprehensive Loss | (1,012,000) | |||
Ending balance | $ (238,000) | $ (238,000) |
Basis and Summary of Signific36
Basis and Summary of Significant Accounting Policies - Related Party Transactions (Details) - Related Party $ in Millions | 6 Months Ended | 36 Months Ended |
Jun. 30, 2018USD ($)lease | Dec. 31, 2004Property | |
Related Party Transaction [Line Items] | ||
Sale leaseback, number of properties | Property | 21 | |
Number of capital leases | 7 | |
Number of operating leases | 10 | |
Leases under renegotiation | 16 | |
Capital leases, annual rental payments | $ | $ 0.4 | |
Interest rate in the leases | 9.70% | |
Operating leases, annual rental payments | $ | $ 0.8 |
Basis and Summary of Signific37
Basis and Summary of Significant Accounting Policies - Supplemental Disclosure of Noncash Investing Transactions (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Accounting Policies [Abstract] | |
Asset acquisition, fair value of non-cash consideration | $ 0.6 |
Asset acquisition, non-cash settlement of accounts receivable | $ 0.4 |
Basis and Summary of Signific38
Basis and Summary of Significant Accounting Policies - Hurricane Impact (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Accounting Policies [Abstract] | |
Partial cash payment from insurer | $ 0.4 |
Insurance settlements receivable | $ 3.2 |
Basis and Summary of Signific39
Basis and Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Revenues | $ 927,859 | $ 815,644 | $ 1,882,668 | $ 1,660,198 | ||
Operating Expenses | 388,337 | 330,548 | 778,569 | 659,373 | ||
OPERATING PROFIT | 73,931 | 61,006 | 143,995 | 147,495 | ||
EARNINGS BEFORE INCOME TAXES | 49,980 | 56,995 | 116,732 | 139,618 | ||
INCOME TAXES | 11,479 | 20,660 | 25,985 | 49,983 | ||
NET EARNINGS | 38,501 | 36,335 | 90,747 | 89,635 | ||
Deferred Income Taxes Payable | 257,620 | 257,620 | $ 222,592 | |||
Customer Deposits and Advance Payments | 72,613 | 72,613 | 68,060 | |||
Total Liabilities | 874,137 | 874,137 | 964,260 | |||
Retained Earnings | (1,904,309) | (1,904,309) | (1,819,524) | |||
Total Shareholders’ Equity | 1,744,813 | 1,744,813 | 1,728,004 | |||
Total Liabilities & Shareholders’ Equity | 2,618,950 | 2,618,950 | $ 2,692,264 | |||
Comprehensive Income | 37,966 | 36,781 | 89,735 | 90,284 | ||
ASU 2014-09 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Deferred Revenue, Amortization Period | 5 years | |||||
Balance Without ASC 606 Adoption | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Operating Expenses | 386,495 | 774,891 | ||||
OPERATING PROFIT | 73,726 | 143,531 | ||||
EARNINGS BEFORE INCOME TAXES | 49,775 | 116,268 | ||||
INCOME TAXES | 11,429 | 25,871 | ||||
NET EARNINGS | 38,347 | 90,396 | ||||
Deferred Income Taxes Payable | 258,129 | 258,129 | ||||
Customer Deposits and Advance Payments | 70,725 | 70,725 | ||||
Total Liabilities | 872,758 | 872,758 | ||||
Retained Earnings | (1,905,688) | (1,905,688) | ||||
Total Shareholders’ Equity | 1,746,192 | 1,746,192 | ||||
Total Liabilities & Shareholders’ Equity | 2,618,950 | 2,618,950 | ||||
Comprehensive Income | 37,812 | 89,384 | ||||
Effect of Change Higher/(Lower) | ASU 2014-09 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Operating Expenses | 1,842 | 3,678 | ||||
OPERATING PROFIT | 205 | 464 | ||||
EARNINGS BEFORE INCOME TAXES | 205 | 464 | ||||
INCOME TAXES | 50 | 114 | ||||
NET EARNINGS | 154 | 351 | ||||
Deferred Income Taxes Payable | (509) | (509) | ||||
Customer Deposits and Advance Payments | $ 2,400 | 1,888 | 1,888 | |||
Total Liabilities | 1,379 | 1,379 | ||||
Retained Earnings | $ 2,400 | 1,379 | 1,379 | |||
Total Shareholders’ Equity | (1,379) | (1,379) | ||||
Total Liabilities & Shareholders’ Equity | 0 | 0 | ||||
Comprehensive Income | 154 | 351 | ||||
Franchise Royalties and Fees | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Revenues | 12,125 | $ 12,824 | 24,987 | $ 27,025 | ||
Franchise Royalties and Fees | Balance Without ASC 606 Adoption | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Revenues | 10,078 | 20,844 | ||||
Franchise Royalties and Fees | Effect of Change Higher/(Lower) | ASU 2014-09 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Revenues | $ 2,047 | $ 4,143 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) customer in Thousands, $ in Thousands | Jul. 27, 2017USD ($)customerstate | Jun. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | Jun. 30, 2018USD ($)franchise | Jun. 30, 2017USD ($) | Dec. 31, 2017franchise |
Business Acquisition [Line Items] | |||||||
Number of Businesses Acquired | franchise | 5 | 4 | |||||
Payments to acquire businesses and asset acquisitions | $ 14,401 | $ 940 | |||||
SEI | |||||||
Business Acquisition [Line Items] | |||||||
Purchase price | $ 140,000 | ||||||
Number of customers entity serves | customer | 90 | ||||||
Number of branded stores | state | 104 | ||||||
Number of states in which entity operates | state | 11 | ||||||
Revenue of acquiree since acquisition date | $ 32,600 | $ 58,300 | 67,800 | ||||
Earnings or loss of acquiree since acquisition date | $ 3,900 | $ 2,500 | 8,000 | ||||
Acquisition-related costs | $ 2,000 | ||||||
All Acquisitions Excluding SEI Acquisition | |||||||
Business Acquisition [Line Items] | |||||||
Payments to acquire businesses and asset acquisitions | $ 14,400 | $ 900 |
Acquisitions - Fair Value of As
Acquisitions - Fair Value of Assets and Liabilities Assumed (Details) - USD ($) $ in Thousands | Jul. 27, 2017 | Jun. 30, 2018 | Dec. 31, 2017 |
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed | |||
Goodwill | $ 626,692 | $ 622,948 | |
SEI | |||
Business Acquisition [Line Items] | |||
Purchase Price | $ 140,000 | ||
Settlement of Pre-existing Accounts Receivable SEI owed Aaron's, Inc. | 3,452 | ||
Reimbursement for Insurance Costs | (100) | ||
Working Capital Adjustment | 188 | ||
Consideration Transferred | 143,540 | ||
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed | |||
Cash and Cash Equivalents | 34 | ||
Receivables | 1,345 | ||
Lease Merchandise | 40,941 | ||
Property, Plant and Equipment | 8,832 | ||
Other Intangibles | 13,779 | ||
Prepaid Expenses and Other Assets | 440 | ||
Total Identifiable Assets Acquired | 65,371 | ||
Accounts Payable and Accrued Expenses | (6,698) | ||
Customer Deposits and Advance Payments | (2,500) | ||
Capital Leases | (4,514) | ||
Total Liabilities Assumed | (13,712) | ||
Goodwill | 91,881 | ||
Net Assets Acquired | 51,659 | ||
Amounts Recognized as of Acquisition Date (preliminary) | SEI | |||
Business Acquisition [Line Items] | |||
Purchase Price | 140,000 | ||
Settlement of Pre-existing Accounts Receivable SEI owed Aaron's, Inc. | 3,452 | ||
Reimbursement for Insurance Costs | (100) | ||
Working Capital Adjustment | 188 | ||
Consideration Transferred | 143,540 | ||
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed | |||
Cash and Cash Equivalents | 34 | ||
Receivables | 1,448 | ||
Lease Merchandise | 40,941 | ||
Property, Plant and Equipment | 8,832 | ||
Other Intangibles | 13,779 | ||
Prepaid Expenses and Other Assets | 440 | ||
Total Identifiable Assets Acquired | 65,474 | ||
Accounts Payable and Accrued Expenses | (6,698) | ||
Customer Deposits and Advance Payments | (2,500) | ||
Capital Leases | (4,514) | ||
Total Liabilities Assumed | (13,712) | ||
Goodwill | 91,778 | ||
Net Assets Acquired | 51,762 | ||
Acquisition Accounting Adjustments | SEI | |||
Business Acquisition [Line Items] | |||
Acquisition Accounting Adjustments, Settlement of Pre-existing Accounts Receivable SEI owed Aaron's, Inc. | 0 | ||
Acquisition Accounting Adjustments, Reimbursement for Insurance Costs | 0 | ||
Acquisition Accounting Adjustments, Working Capital Adjustment | 0 | ||
Acquisition Accounting Adjustments, Consideration Transferred | 0 | ||
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed | |||
Acquisition Accounting Adjustments, Cash and Cash Equivalents | 0 | ||
Acquisition Accounting Adjustments, Receivables | (103) | ||
Acquisition Accounting Adjustments, Lease Merchandise | 0 | ||
Acquisition Accounting Adjustments, Property, Plant and Equipment | 0 | ||
Acquisition Accounting Adjustments, Other Intangibles | 0 | ||
Acquisition Accounting Adjustments, Prepaid Expenses and Other Assets | 0 | ||
Acquisition Accounting Adjustments, Total Identifiable Assets Acquired | (103) | ||
Acquisition Accounting Adjustments, Accounts Payable and Accrued Expenses | 0 | ||
Acquisition Accounting Adjustments, Customer Deposits and Advance Payments | 0 | ||
Acquisition Accounting Adjustments, Capital Leases | 0 | ||
Acquisition Accounting Adjustments, Total Liabilities Assumed | 0 | ||
Goodwill | 103 | ||
Net Assets Acquired | $ (103) |
Acquisitions - Intangibles Acqu
Acquisitions - Intangibles Acquired (Details) - SEI $ in Thousands | Jul. 27, 2017USD ($) |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible assets, Fair Value | $ 13,779 |
Weighted Average Life (in years) | 5 years 1 month |
Non-compete Agreements | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible assets, Fair Value | $ 1,244 |
Weighted Average Life (in years) | 5 years |
Customer Lease Contracts | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible assets, Fair Value | $ 2,154 |
Weighted Average Life (in years) | 1 year |
Customer Relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible assets, Fair Value | $ 3,215 |
Weighted Average Life (in years) | 2 years |
Reacquired Franchise Rights | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible assets, Fair Value | $ 3,640 |
Weighted Average Life (in years) | 4 years 1 month 6 days |
Favorable Operating Leases | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible assets, Fair Value | $ 3,526 |
Weighted Average Life (in years) | 11 years 4 months |
Fair Value Measurement - Summar
Fair Value Measurement - Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred Compensation Liability | $ 0 | $ 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred Compensation Liability | (12,055) | (12,927) |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred Compensation Liability | $ 0 | $ 0 |
Fair Value Measurement - Assets
Fair Value Measurement - Assets Measured At Fair Value on Nonrecurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets Held for Sale | $ 9,698 | $ 10,118 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets Held for Sale | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets Held for Sale | 9,698 | 10,118 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets Held for Sale | $ 0 | $ 0 |
Fair Value Measurement - Fair V
Fair Value Measurement - Fair Value of Assets (Liabilities) Not Measured at Fair Value In Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Level 1 | Fixed-Rate Long-Term Debt | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long term debt, fair value | $ 0 | $ 0 |
Level 1 | Perfect Home Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value | 0 | 0 |
Level 2 | Fixed-Rate Long-Term Debt | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long term debt, fair value | (183,559) | (273,476) |
Level 2 | Perfect Home Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value | 0 | 0 |
Level 3 | Fixed-Rate Long-Term Debt | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long term debt, fair value | 0 | 0 |
Level 3 | Perfect Home Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value | $ 0 | $ 20,385 |
Fair Value Measurement - Fair46
Fair Value Measurement - Fair Value of Assets (Liabilities) Not Measured at Fair Value In Consolidated Balance Sheet - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Asset impairment charges | $ 20,098 | $ 0 | $ 20,098 | $ 0 | |
Fixed-Rate Long-Term Debt | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Long term debt, carrying value | 180,000 | $ 180,000 | $ 265,000 | ||
Variable Interest Entity, Not Primary Beneficiary | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Asset impairment charges | $ 20,100 |
Loans Receivable - Components o
Loans Receivable - Components of Loans Receivable, Net (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Loans Receivable, Gross | $ 98,966 | $ 105,941 | ||
Allowance for Loan Losses | (11,586) | (11,454) | $ (9,013) | $ (6,624) |
Unamortized Fees | (7,692) | (8,375) | ||
Loans Receivable, Net of Allowances and Unamortized Fees | 79,688 | 86,112 | ||
Credit Card Loans | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Loans Receivable, Gross | 88,947 | 89,728 | ||
Acquired Loans | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Loans Receivable, Gross | $ 10,019 | $ 16,213 |
Loans Receivable - Aging of the
Loans Receivable - Aging of the Loans Receivable Balance (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past due loans receivable | 13.50% | 14.80% |
Current loans receivable | 86.50% | 85.20% |
Balance of Credit Card Loans on Nonaccrual Status | $ 1,478 | $ 2,016 |
30-59 days past due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past due loans receivable | 6.90% | 7.10% |
60-89 days past due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past due loans receivable | 3.10% | 3.60% |
90 or more days past due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past due loans receivable | 3.50% | 4.10% |
Balance of Loans Receivable 90 or More Days Past Due and Still Accruing Interest and Fees | $ 0 | $ 0 |
Loans Receivable - Components49
Loans Receivable - Components of the Allowance for Loan Losses (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Oct. 15, 2015 | |
Components of the Allowance For Loan Losses: | |||
Beginning Balance | $ 11,454 | $ 6,624 | |
Provision for Loan Losses | 9,540 | 9,130 | |
Charge-offs | (10,210) | (6,985) | |
Recoveries | 802 | 244 | |
Ending Balance | $ 11,586 | $ 9,013 | |
DAMI | Progressive Leasing | Progressive Subsidiary | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Loans Receivable | $ 89,100 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 6 Months Ended | ||
Jun. 30, 2018CAD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) | |
Other Commitments [Line Items] | |||
Event of default, loan due In full, term | 90 days | ||
Portion that company might be obligated to repay in the event franchisees defaulted | $ 43,000,000 | ||
Fair value of franchisee-related borrowings | 500,000 | ||
Loan facility to franchisees, maximum commitment amount | 85,000,000 | ||
Loss contingency accrual | 1,800,000 | $ 7,300,000 | |
Reserve for unfunded loan commitments | 700,000 | 600,000 | |
Unused credit card lines | |||
Other Commitments [Line Items] | |||
Remaining credit available | 348,900,000 | $ 354,500,000 | |
Minimum | |||
Other Commitments [Line Items] | |||
Range of possible loss not accrued | 0 | ||
Loss contingency, estimate of possible loss | 2,000,000 | ||
Maximum | |||
Other Commitments [Line Items] | |||
Range of possible loss not accrued | 1,000,000 | ||
Loss contingency, estimate of possible loss | $ 5,000,000 | ||
Franchise Loan Facility | |||
Other Commitments [Line Items] | |||
Loan facility maximum Canadian sub facility commitment amount | $ 25,000,000 |
Segments - Narrative (Details)
Segments - Narrative (Details) | 6 Months Ended |
Jun. 30, 2018sourcesegments | |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
Number of reportable segments | 3 |
DAMI | Progressive Subsidiary | |
Business Acquisition [Line Items] | |
Sources of financial and leasing transactions acquired | source | 1 |
Segments Segments - Revenue by
Segments Segments - Revenue by source and segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 927,859 | $ 815,644 | $ 1,882,668 | $ 1,660,198 |
Operating Segments | Progressive Leasing | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 483,666 | 373,499 | 970,183 | 739,614 |
Operating Segments | Aaron's Business | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 434,985 | 433,613 | 893,735 | 903,851 |
Operating Segments | DAMI | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 9,208 | 8,532 | 18,750 | 16,733 |
Lease Revenues and Fees | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 845,938 | 718,089 | 1,716,005 | 1,461,711 |
Lease Revenues and Fees | Operating Segments | Progressive Leasing | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 483,666 | 373,499 | 970,183 | 739,614 |
Lease Revenues and Fees | Operating Segments | Aaron's Business | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 362,272 | 344,590 | 745,822 | 722,097 |
Lease Revenues and Fees | Operating Segments | DAMI | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Leases | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 4,400 | 600 | 8,400 | 1,500 |
Franchise Royalties and Fees | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 12,125 | 12,824 | 24,987 | 27,025 |
Franchise Royalties and Fees | Operating Segments | Progressive Leasing | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Franchise Royalties and Fees | Operating Segments | Aaron's Business | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 12,125 | 12,824 | 24,987 | 27,025 |
Franchise Royalties and Fees | Operating Segments | DAMI | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Retail Sales | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 6,592 | 6,106 | 15,108 | 14,884 |
Retail Sales | Operating Segments | Progressive Leasing | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Retail Sales | Operating Segments | Aaron's Business | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 6,592 | 6,106 | 15,108 | 14,884 |
Retail Sales | Operating Segments | DAMI | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Non-Retail Sales | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 53,661 | 69,602 | 106,891 | 138,929 |
Non-Retail Sales | Operating Segments | Progressive Leasing | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Non-Retail Sales | Operating Segments | Aaron's Business | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 53,661 | 69,602 | 106,891 | 138,929 |
Non-Retail Sales | Operating Segments | DAMI | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Interest and Fees on Loans Receivable | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 9,208 | 8,532 | 18,750 | 16,733 |
Interest and Fees on Loans Receivable | Operating Segments | Progressive Leasing | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Interest and Fees on Loans Receivable | Operating Segments | Aaron's Business | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Interest and Fees on Loans Receivable | Operating Segments | DAMI | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 9,208 | 8,532 | 18,750 | 16,733 |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 335 | 491 | 927 | 916 |
Other | Operating Segments | Progressive Leasing | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Other | Operating Segments | Aaron's Business | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 335 | 491 | 927 | 916 |
Other | Operating Segments | DAMI | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Transferred over Time | Franchise Royalties and Fees | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 9,100 | $ 11,900 | $ 19,200 | $ 25,100 |
Segments - Information on Segme
Segments - Information on Segments and Reconciliation to Earnings Before Income Taxes from Continuing Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||||
Total Earnings Before Income Taxes | $ 49,980 | $ 56,995 | $ 116,732 | $ 139,618 | |
Total Assets | 2,618,950 | 2,618,950 | $ 2,692,264 | ||
Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Total Earnings Before Income Taxes | 49,980 | 56,995 | 116,732 | 139,618 | |
Operating Segments | Progressive Leasing | |||||
Segment Reporting Information [Line Items] | |||||
Total Earnings Before Income Taxes | 44,575 | 38,240 | 79,554 | 73,998 | |
Total Assets | 1,019,520 | 1,019,520 | 1,022,413 | ||
Operating Segments | Aaron's Business | |||||
Segment Reporting Information [Line Items] | |||||
Total Earnings Before Income Taxes | 7,697 | 21,450 | 40,776 | 70,080 | |
Total Assets | 1,253,427 | 1,253,427 | 1,261,234 | ||
Operating Segments | DAMI | |||||
Segment Reporting Information [Line Items] | |||||
Total Earnings Before Income Taxes | (2,292) | $ (2,695) | (3,598) | $ (4,460) | |
Total Assets | 97,818 | 97,818 | 108,306 | ||
Operating Segments | Other | |||||
Segment Reporting Information [Line Items] | |||||
Total Assets | $ 248,185 | $ 248,185 | $ 300,311 |
Segments - Information on Seg54
Segments - Information on Segments and Reconciliation to Earnings Before Income Taxes from Continuing Operations- Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||||
Impairment of Investment | $ 20,098 | $ 0 | $ 20,098 | $ 0 | |
Charges | (882) | $ 13,445 | 24 | $ 13,772 | |
Operating Segments | Aaron's Business | |||||
Segment Reporting Information [Line Items] | |||||
Inventory (principally raw materials and work-in-process) | $ 15,900 | 15,900 | $ 16,300 | ||
Restructuring Program 2016 | Operating Segments | Aaron's Business | |||||
Segment Reporting Information [Line Items] | |||||
Charges | $ (900) |
Restructuring - Narrative (Deta
Restructuring - Narrative (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | 30 Months Ended | |||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2018store | Dec. 31, 2017store | Jun. 30, 2018USD ($) | |
Restructuring Cost and Reserve [Line Items] | |||||||
Total Restructuring Expenses | $ (882) | $ 13,445 | $ 24 | $ 13,772 | |||
Restructuring Program 2016 and 2017 | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Total Restructuring Expenses | $ 38,300 | ||||||
Restructuring Program 2017 | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Expected additional restructuring charges | 1,000 | 1,000 | $ 1,000 | ||||
Gain on Sale of Closed Store Properties | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring and related cost, number of store closures | store | 139 | ||||||
Total Restructuring Expenses | $ 0 | $ 0 | (327) | $ 0 | |||
Gain on Sale of Closed Store Properties | Scenario, Forecast | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring and related cost, number of store closures | store | 7 | ||||||
Maximum | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Total Restructuring Expenses | $ 100 |
Restructuring - Summary of Rest
Restructuring - Summary of Restructuring Charges (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Restructuring Cost and Reserve [Line Items] | ||||
Total Restructuring Expenses | $ (882) | $ 13,445 | $ 24 | $ 13,772 |
Contractual Lease Obligations | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total Restructuring Expenses | 207 | 11,841 | 926 | 11,318 |
Employee Severance | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total Restructuring Expenses | 87 | 1,144 | 601 | 1,590 |
Other Reversals | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total Restructuring Expenses | (1,176) | 0 | (1,176) | 0 |
Gain on Sale of Closed Store Properties | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total Restructuring Expenses | 0 | 0 | (327) | 0 |
Fixed Asset Impairment | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total Restructuring Expenses | $ 0 | $ 460 | $ 0 | $ 864 |
Restructuring - Summary of Accr
Restructuring - Summary of Accruals of Restructuring Programs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring (Reversals) Expenses, Net | $ (882) | $ 13,445 | $ 24 | $ 13,772 |
Contractual Lease Obligations | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring (Reversals) Expenses, Net | 207 | 11,841 | 926 | 11,318 |
Restructuring Reserve [Roll Forward] | ||||
Balance at January 1, 2018 | 12,437 | |||
Charges | 0 | |||
Adjustments | 926 | |||
Restructuring Charges | 926 | |||
Payments | (3,305) | |||
Balance at June 30, 2018 | 10,058 | 10,058 | ||
Employee Severance | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring (Reversals) Expenses, Net | 87 | 1,144 | 601 | 1,590 |
Restructuring Reserve [Roll Forward] | ||||
Balance at January 1, 2018 | 2,303 | |||
Charges | 601 | |||
Adjustments | 0 | |||
Restructuring Charges | 601 | |||
Payments | (1,571) | |||
Balance at June 30, 2018 | $ 1,333 | $ 1,333 | ||
DAMI | Restructuring Program 2016 | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring (Reversals) Expenses, Net | $ 100 | $ 200 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Thousands | Jul. 27, 2017USD ($)state | Jul. 31, 2018USD ($)franchisestore | Jun. 30, 2018franchise | Dec. 31, 2017franchise |
Subsequent Event [Line Items] | ||||
Number of Businesses Acquired | franchise | 5 | 4 | ||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Number of Businesses Acquired | franchise | 3 | |||
SEI | ||||
Subsequent Event [Line Items] | ||||
Number of branded stores | state | 104 | |||
Consideration Transferred | $ | $ 143,540 | |||
SEI | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Number of branded stores | store | 90 | |||
Consideration Transferred | $ | $ 127,000 |