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Segments | 12 Months Ended
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Dec. 31, 2018
Segment Reporting [Abstract] |
Segments | SEGMENTS Description of Products and Services of Reportable Segments As of December 31, 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 appliance, jewelry, mattress, automobile electronics and mobile phones and accessories. 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 includes the operations of Woodhaven, which manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in Company-operated and franchised stores. The HomeSmart operations, prior to the May 2016 disposition, is reflected within the Aaron’s Business segment and offered furniture, electronics, appliances and computers to customers primarily on a weekly payment basis with no credit needed. 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. Factors Used by Management to Identify the Reportable Segments The Company’s reportable segments are based on the operations of the Company that the chief operating decision maker regularly reviews to analyze performance and allocate resources among business units of the Company. Disaggregated Revenue The following table presents revenue by source and by segment for the year ended December 31, 2018:
| Year Ended December 31, 2018
(In Thousands) | Progressive Leasing | Aaron's Business 4 | DAMI | Total
Lease Revenues and Fees 1 | $ | 1,998,981 |  | $ | 1,507,437 |  | $ | — |  | $ | 3,506,418 |
Retail Sales 2 | — |  | 31,271 |  | — |  | 31,271 |
Non-Retail Sales 2 | — |  | 207,262 |  | — |  | 207,262 |
Franchise Royalties and Fees 2 | — |  | 44,815 |  | — |  | 44,815 |
Interest and Fees on Loans Receivable 3 | — |  | — |  | 37,318 |  | 37,318 |
Other | — |  | 1,839 |  | — |  | 1,839 |
Total | $ | 1,998,981 |  | $ | 1,792,624 |  | $ | 37,318 |  | $ | 3,828,923 |
1 Substantially all lease revenues and fees are within the scope of ASC 840, Leases. The Company had $19.8 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, $33.3 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 sales are recognized as revenue at the point of sale. Non-retail sales are recognized as revenue upon delivery of the merchandise. 3 Revenue within the scope of ASC 310, Credit Card Interest & Fees. 4 Includes revenues from Canadian operations of $21.3 million, which are primarily Lease Revenues and Fees. The following table presents revenue by source and by segment for the year ended December 31, 2017:
| Year Ended December 31, 2017
(In Thousands) | Progressive Leasing | Aaron's Business 4 | DAMI | Total
Lease Revenues and Fees 1 | $ | 1,566,413 |  | $ | 1,433,818 |  | $ | — |  | $ | 3,000,231 |
Retail Sales 2 | — |  | 27,465 |  | — |  | 27,465 |
Non-Retail Sales 2 | — |  | 270,253 |  | — |  | 270,253 |
Franchise Royalties and Fees 2 | — |  | 48,278 |  | — |  | 48,278 |
Interest and Fees on Loans Receivable 3 | — |  | — |  | 34,925 |  | 34,925 |
Other | — |  | 2,556 |  | — |  | 2,556 |
Total | $ | 1,566,413 |  | $ | 1,782,370 |  | $ | 34,925 |  | $ | 3,383,708 |
1 Substantially all revenue is within the scope of ASC 840, Leases. The Company had $6.3 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers. 2 Revenue within the scope of ASC 605, Revenue from Contracts with Customers. Of the Franchise Royalties and Fees, $44.6 million relates to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. Retail sales are recognized as revenue at the point of sale. Non-retail sales are recognized as revenue upon delivery of the merchandise. 3 Revenue within the scope of ASC 310, Credit Card Interest & Fees. 4 Includes revenues from Canadian operations of $18.3 million, which are primarily Lease Revenues and Fees. The following table presents revenue by source and by segment for the year ended December 31, 2016:
| Year Ended December 31, 2016
(In Thousands) | Progressive Leasing | Aaron's Business 4 | DAMI | Total
Lease Revenues and Fees 1 | $ | 1,237,597 |  | $ | 1,543,227 |  | $ | — |  | $ | 2,780,824 |
Retail Sales 2 | — |  | 29,418 |  | — |  | 29,418 |
Non-Retail Sales 2 | — |  | 309,446 |  | — |  | 309,446 |
Franchise Royalties and Fees 2 | — |  | 58,350 |  | — |  | 58,350 |
Interest and Fees on Loans Receivable 3 | — |  | — |  | 24,080 |  | 24,080 |
Other | — |  | 5,598 |  | — |  | 5,598 |
Total | $ | 1,237,597 |  | $ | 1,946,039 |  | $ | 24,080 |  | $ | 3,207,716 |
1 Substantially all revenue is within the scope of ASC 840, Leases. The Company had $2.8 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers. 2 Revenue within the scope of ASC 605, Revenue from Contracts with Customers. Of the Franchise Royalties and Fees, $53.7 million relates to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. Retail sales are recognized as revenue at the point of sale. Non-retail sales are recognized as revenue upon delivery of the merchandise. 3 Revenue within the scope of ASC 310, Credit Card Interest & Fees. 4 Includes revenues from Canadian operations of $12.4 million, which are primarily Lease Revenues and 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.
| Year Ended December 31,
(In Thousands) | 2018 |  | 2017 |  | 2016
Earnings (Loss) Before Income Tax (Benefit) Expense: |  |  |  |  |
Progressive Leasing | $ | 175,015 |  |  | $ | 140,224 |  |  | $ | 104,686 |
Aaron’s Business | 84,683 |  |  | 110,642 |  |  | 123,009 |
DAMI | (7,494 | ) |  | (11,289 | ) |  | (9,273 | )
Total Earnings Before Income Tax (Benefit) Expense | $ | 252,204 |  |  | $ | 239,577 |  |  | $ | 218,422 |
Corporate-related assets that benefit multiple segments are reported as other assets in the table below.
| December 31,
(In Thousands) | 2018 |  | 2017
Assets: |  |  |
Progressive Leasing | $ | 1,088,227 |  |  | $ | 1,022,413 |
Aaron’s Business 1 | 1,483,102 |  |  | 1,261,234 |
DAMI | 95,341 |  |  | 108,306 |
Other | 160,022 |  |  | 300,311 |
Total Assets | $ | 2,826,692 |  |  | $ | 2,692,264 |
Assets From Canadian Operations (included in totals above): |  |  |
Aaron’s Business | $ | 25,893 |  |  | $ | 20,223 |
1 Includes inventory (principally raw materials and work-in-process) that has been classified within lease merchandise in the consolidated balance sheets of $15.2 million and $16.3 million as of December 31, 2018 and 2017, respectively.
| Year Ended December 31,
(In Thousands) | 2018 |  | 2017 |  | 2016
Depreciation and Amortization 1: |  |  |  |  |
Progressive Leasing | $ | 27,974 |  |  | $ | 29,048 |  |  | $ | 30,727 |
Aaron’s Business | 64,744 |  |  | 52,251 |  |  | 50,658 |
DAMI | 1,432 |  |  | 1,273 |  |  | 993 |
Total Depreciation and Amortization | $ | 94,150 |  |  | $ | 82,572 |  |  | $ | 82,378 |
Interest Expense: |  |  |  |  |
Progressive Leasing | $ | 16,288 |  |  | $ | 18,577 |  |  | $ | 20,042 |
Aaron’s Business | (2,944 | ) |  | (2,366 | ) |  | (768 | )
DAMI | 3,096 |  |  | 4,327 |  |  | 4,116 |
Total Interest Expense | $ | 16,440 |  |  | $ | 20,538 |  |  | $ | 23,390 |
Capital Expenditures: |  |  |  |  |
Progressive Leasing | $ | 10,711 |  |  | $ | 8,213 |  |  | $ | 6,084 |
Aaron’s Business | 67,099 |  |  | 48,335 |  |  | 50,582 |
DAMI | 1,035 |  |  | 1,425 |  |  | 787 |
Total Capital Expenditures | $ | 78,845 |  |  | $ | 57,973 |  |  | $ | 57,453 |
1 Excludes depreciation of lease merchandise, which is not included in the chief operating decision maker's measure of depreciation and amortization. In 2018, the results of the Company’s operating segments were impacted by the following items:
• | Earnings before income taxes for the Aaron's Business includes a full impairment of the PerfectHome investment of $20.1 million.
• | DAMI's loss before income taxes includes a gain of $0.8 million related to the sale of DAMI's former corporate office building.
In 2017, the results of the Company’s operating segments were impacted by the following items:
• | Aaron's Business earnings before income taxes were impacted by $17.5 million of restructuring charges related to store contractual lease obligations, severance costs and impairment charges in connection with the Company's strategic decision to close Company-operated stores as discussed in Note 10 to these consolidated financial statements.
In 2016, the results of the Company’s operating segments were impacted by the following items:
• | Aaron's Business earnings before income taxes were impacted by $20.2 million of restructuring charges incurred in connection with the Company’s strategic decision to close Company-operated stores as discussed in Note 10 to these consolidated financial statements.
• | Aaron's Business earnings before income taxes includes a loss on the sale of HomeSmart of $4.3 million and additional charges of $1.1 million related to exiting the HomeSmart business.
• | Earnings before income taxes for the Aaron's Business were also impacted by a gain of $11.1 million on the January 2016 sale of the Company’s former corporate office building.
The Company determines earnings (loss) before income taxes for all reportable segments in accordance with U.S. GAAP with the following adjustments:
• | Generally, a predetermined amount of Corporate overhead is allocated to each reportable segment based on segment revenues. Any unallocated Corporate overhead in excess of predetermined amounts is assigned to the Aaron's Business, which is consistent with how the chief operating decision maker regularly reviews the segment results.
• | Interest expense is allocated from Aaron's Business to the Progressive Leasing and DAMI segments based on a percentage of the outstanding balances of its intercompany borrowings and of the debt incurred when it was acquired. Interest expense allocated to Progressive Leasing and DAMI in excess of interest expense incurred by Aaron's Business from third party lenders is reflected in the table above.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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