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Acquisitions | 12 Months Ended
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Dec. 31, 2018
Business Combinations [Abstract] |
Acquisitions | ACQUISITIONS During the years ended December 31, 2018, 2017 and 2016, cash payments, net of cash acquired, related to the acquisitions of businesses and contracts were $189.9 million, $145.6 million and $9.8 million, respectively. Cash payments made during the years ended December 31, 2018, 2017 and 2016 principally relate to the acquisitions of Aaron's-branded franchised stores as described below. The franchisee acquisitions have been accounted for as business combinations and the results of operations of the acquired businesses are included in the Company’s results of operations from their dates of acquisition. The effect of the Company’s other acquisitions of businesses and contracts to the consolidated financial statements for the years ended December 31, 2018, 2017 and 2016 was not significant. Franchisee Acquisitions - 2018 During 2018, the Company acquired 152 Aaron's-branded franchised stores operated by franchisees for an aggregated purchase price of $189.8 million, exclusive of the settlement of pre-existing receivables and post-closing working capital settlements. The acquired operations generated revenues of $72.0 million and earnings before income taxes of $0.8 million from their respective acquisition dates during 2018 through December 31, 2018 which are included in our consolidated statements of earnings. The results of the acquired operations were negatively impacted by acquisition-related transaction and transition costs and amortization expense of the various intangible assets recorded from the acquisitions. The revenues and losses 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 as revenue to the Company from the franchisees during the year ended December 31, 2018 had the transaction not been completed. Acquisition Accounting The 2018 acquisitions are expected to benefit the Company's omnichannel platform through added scale, strengthening its presence in certain geographic markets, and enhancing operational control, including compliance, and by enabling it to execute its business transformation initiatives on a broader scale. The following table presents summaries of the preliminary fair value of the assets acquired and liabilities assumed in the franchisee acquisitions as of the respective acquisition dates:
(in Thousands) | Amounts Recognized as of Acquisition Dates |  | Measurement Period Adjustments 1 |  | Amounts Recognized as of Acquisition Date (as adjusted)
Purchase Price | $ | 189,826 |  |  | $ | — |  |  | $ | 189,826 |
Add: Settlement of Pre-existing Relationship | 5,405 |  |  | — |  |  | 5,405 |
Less: Working Capital Adjustments | 241 |  |  | (86 | ) |  | 155 |
Aggregated Consideration Transferred | 195,472 |  |  | (86 | ) |  | 195,386 |
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed |  |  |  |  |
Cash and Cash Equivalents | 43 |  |  | — |  |  | 43 |
Lease Merchandise | 59,587 |  |  | 29 |  |  | 59,616 |
Property, Plant and Equipment | 5,493 |  |  | 75 |  |  | 5,568 |
Other Intangibles 2 | 25,069 |  |  | (539 | ) |  | 24,530 |
Prepaid Expenses and Other Assets | 1,060 |  |  | 108 |  |  | 1,168 |
Total Identifiable Assets Acquired | 91,252 |  |  | (327 | ) |  | 90,925 |
Accounts Payable and Accrued Expenses | (826 | ) |  | (26 | ) |  | (852 | )
Customer Deposits and Advance Payments | (5,156 | ) |  | — |  |  | (5,156 | )
Total Liabilities Assumed | (5,982 | ) |  | (26 | ) |  | (6,008 | )
Goodwill 3 | 110,202 |  |  | 267 |  |  | 110,469 |
Net Assets Acquired (before Goodwill) | $ | 85,270 |  |  | $ | (353 | ) |  | $ | 84,917 |
1 The acquisition accounting adjustments relate to finalizing information that existed as of the acquisition date regarding the valuation of certain intangible assets and lease merchandise and obtaining additional information regarding acquired other assets. 2 Identifiable intangible assets are further disaggregated in the table set forth below. 3 The total goodwill recognized in conjunction with the franchisee acquisitions, 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 preliminary acquisition accounting presented above is subject to refinement. The Company is still finalizing the valuation of assumed favorable and unfavorable property operating leases, obtaining additional information regarding acquired other assets as well as customer deposits and advance payments, and finalizing certain working capital adjustments. The estimated intangible assets attributable to the franchisee acquisitions are comprised of the following:
| Fair Value (in thousands) |  | Weighted Average Useful Life (in years)
Non-compete Agreements | $ | 1,872 |  |  | 3.0
Customer Contracts | 7,864 |  |  | 1.0
Customer Relationships | 10,131 |  |  | 3.0
Reacquired Franchise Rights | 4,663 |  |  | 3.9
Total Acquired Intangible Assets 1 | $ | 24,530 |  |  |
1 Acquired definite-lived intangible assets have a total weighted average life of 2.5 years. During the year ended December 31, 2018, the Company incurred $1.3 million of acquisition-related costs in connection with the franchisee acquisitions. These costs were included in operating expenses in the consolidated statements of earnings. Franchisee Acquisition - 2017 On July 27, 2017, the Company acquired substantially all of the assets and liabilities of the store operations of a franchisee, SEI, 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, including compliance, and enabling the Company to execute its business transformation initiatives on a broader scale. The acquired operations generated revenues and earnings before income taxes of $58.3 million and $2.5 million from July 27, 2017 through December 31, 2017 and revenues and earnings before income taxes of $129.4 million and $11.0 million for the year ended December 31, 2018, which are included in our 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 December 31, 2018 had the transaction not been completed. Acquisition Accounting The SEI acquisition has been accounted for as a business combination, and the results of operations of the acquired business is included in the Company’s results of operations from the date of acquisition. The following table presents a summary of the fair value of the assets acquired and liabilities assumed in the SEI franchisee acquisition:
(In Thousands) | Final Amounts Recognized as of Acquisition Date
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 1 | 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 2 | 91,881 |
Net Assets Acquired | $ | 51,659 |
1 Identifiable intangible assets are further disaggregated in the table set forth below. 2 The total goodwill recognized in conjunction with the SEI 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 SEI 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 $2.1 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 consolidated statements of earnings.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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- References No definition available. + Details
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