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Segment Information
 9 Months Ended
Sep. 30, 2013
Segment Reporting [Abstract]  
Segment Information
Segment Information.
The operating segments reported below are the segments for which separate financial information is available and for which segment results are evaluated by the chief operating decision makers. Our operating segments are organized based on factors including, but not limited to, type of business transactions, geographic location and store ownership. All operating segments offer merchandise from four basic product categories: consumer electronics, appliances, computers, furniture and accessories. Reportable segments and their respective operations are defined as follows.
Our Core U.S. segment primarily operates rent-to-own stores in the United States and Puerto Rico whose customers enter into weekly, semi-monthly or monthly rental purchase agreements, which renew automatically upon receipt of each payment. We retain the title to the merchandise during the term of the rental purchase agreement and ownership passes to the customer if the customer has continuously renewed the rental purchase agreement through the end of the term or exercises a specified early purchase option. This segment also includes the 43 stores operating in two states that utilize a retail model which generates installment credit sales through a retail sale transaction. Segment assets include cash, receivables, rental merchandise, property assets, goodwill and other intangible assets.
Our RAC Acceptance segment operates kiosks within various traditional retailers’ locations where we generally offer the rent-to-own transaction to consumers who do not qualify for financing from the traditional retailer. The transaction offered is generally similar to that of the Core U.S. segment; however, the majority of the customers in this segment enter into monthly rather than weekly agreements. Segment assets include cash, rental merchandise, property assets, goodwill and other intangible assets.
Our International segment consists of our company-owned rent-to-own stores in Mexico and Canada. The nature of this segment’s operations and assets are the same as our Core U.S. segment. At September 30, 2013, we operated 150 stores in Mexico and 18 stores in Canada.
During the third quarter of 2013, ColorTyme, Inc., our franchisor of rent-to-own stores, changed its name to Rent-A-Center Franchising International, Inc., and all future franchises sold will be licensed under the Rent-A-Center name. This segment will be referred to as Franchising in the future. We offered our current franchisees the opportunity to convert their ColorTyme stores to the Rent-A-Center name. Our franchised stores use Rent-A-Center’s or ColorTyme’s trade names, service marks, trademarks and logos, and operate under distinctive operating procedures and standards. Franchising’s primary source of revenue is the sale of rental merchandise to its franchisees who, in turn, offer the merchandise to the general public for rent or purchase under a rent-to-own program. As franchisor, Franchising receives royalties of 2.0% to 6.0% of the franchisees’ monthly gross revenue and initial fees for new locations. Segment assets include cash, franchise fee receivables, property assets and intangible assets.
To facilitate the conversion of ColorTyme branded stores to Rent-A-Center, we will sell some of our company-owned stores to existing franchisees, purchase some of the former ColorTyme stores and either operate them under the Rent-A-Center brand or merge them with existing stores, and some franchised stores will continue to operate under the ColorTyme brand. We will also bear certain re-imaging costs incurred by franchisees who elect to re-brand. We anticipate recording a pre-tax restructuring charge in the fourth quarter of 2013 in connection with this rebranding initiative. No restructuring charges were incurred in the third quarter of 2013.
We incur costs at our corporate headquarters that benefit our Core U.S., RAC Acceptance and International operating segments. Accordingly, we allocate such costs among these segments based on segment revenue to determine segment operating profit. Likewise, certain corporate assets used to support these operating segments, including the land and building in which the corporate headquarters are located and related property assets, cash and prepaid expenses are also allocated to these operating segments based on segment revenue. Because our Franchising segment has maintained a separate, independent corporate office, no additional corporate costs or assets have been allocated to that segment.
Segment information for the three and nine months ended September 30, 2013 and 2012 is as follows (in thousands): 
 
Three Months Ended September 30, 2013
 
Core U.S.
 
RAC Acceptance
 
International
 
Franchising
 
Total
Revenue
$
608,333

 
$
123,798

 
$
14,968

 
$
7,681

 
$
754,780

Gross profit
442,971

 
74,083

 
10,739

 
1,539

 
529,332

Operating profit (loss)
44,943

 
18,855

 
(7,665
)
 
399

 
56,532

Depreciation of property assets
16,401

 
1,323

 
1,677

 
20

 
19,421

Amortization and write-down of intangibles
497

 
142

 
—

 
—

 
639

Capital expenditures
22,340

 
2,819

 
3,781

 
—

 
28,940

 
Three Months Ended September 30, 2012
 
Core U.S.
 
RAC Acceptance
 
International
 
Franchising
 
Total
Revenue
$
634,575

 
$
83,838

 
$
10,871

 
$
10,030

 
$
739,314

Gross profit
460,353

 
49,737

 
7,516

 
1,735

 
519,341

Operating profit (loss)
69,544

 
7,259

 
(9,046
)
 
356

 
68,113

Depreciation of property assets
15,981

 
936

 
1,475

 
20

 
18,412

Amortization and write-down of intangibles
583

 
897

 
967

 
—

 
2,447

Capital expenditures
22,056

 
1,191

 
1,536

 
—

 
24,783

 
Nine Months Ended September 30, 2013
 
Core U.S.
 
RAC Acceptance
 
International
 
Franchising
 
Total
Revenue
$
1,897,586

 
$
368,454

 
$
41,398

 
$
27,134

 
$
2,334,572

Gross profit
1,365,980

 
209,960

 
29,628

 
5,062

 
1,610,630

Operating profit (loss)
179,608

 
52,384

 
(20,384
)
 
1,644

 
213,252

Depreciation of property assets
48,319

 
3,574

 
4,701

 
60

 
56,654

Amortization and write-down of intangibles
2,267

 
427

 
—

 
—

 
2,694

Capital expenditures
57,537

 
7,021

 
9,203

 
—

 
73,761

 
Nine Months Ended September 30, 2012
 
Core U.S.
 
RAC Acceptance
 
International
 
Franchising
 
Total
Revenue
$
2,016,761

 
$
248,626

 
$
27,480

 
$
31,399

 
$
2,324,266

Gross profit
1,444,824

 
137,524

 
19,125

 
5,258

 
1,606,731

Operating profit (loss)
244,215

 
17,024

 
(23,617
)
 
1,552

 
239,174

Depreciation of property assets
47,689

 
2,620

 
4,366

 
69

 
54,744

Amortization and write-down of intangibles
1,606

 
2,690

 
967

 
—

 
5,263

Capital expenditures
59,089

 
3,582

 
10,432

 
—

 
73,103

Segment information – selected balance sheet data (in thousands):
 
 
 
 
 
 
 
September 30, 2013
 
Core U.S.
 
RAC Acceptance
 
International
 
Franchising
 
Total
Rental merchandise, net
 
 
 
 
 
 
 
 
 
On rent
$
574,871

 
$
261,967

 
$
17,742

 
$
—

 
$
854,580

Held for rent
205,674

 
3,579

 
8,135

 
—

 
217,388

Total assets
2,513,251

 
351,407

 
71,443

 
1,209

 
2,937,310

 
December 31, 2012
 
Core U.S.
 
RAC Acceptance
 
International
 
Franchising
 
Total
Rental merchandise, net
 
 
 
 
 
 
 
 
 
On rent
$
597,771

 
$
209,964

 
$
14,152

 
$
—

 
$
821,887

Held for rent
189,526

 
2,979

 
6,412

 
—

 
198,917

Total assets
2,508,370

 
292,070

 
65,954

 
2,711

 
2,869,105