v3.10.0.1
Restructuring
 12 Months Ended
Dec. 31, 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 Aaron's 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.
Total net restructuring expenses of $1.1 million were recorded during the year ended December 31, 2018, which were incurred within the Aaron's Business segment. Restructuring activity for the year ended December 31, 2018 was comprised of expenses to record changes in sublease assumptions related to Aaron’s Business contractual lease obligations for closed stores, which were partially offset by reversals of previously recorded restructuring expenses and gains recorded on the sale of properties closed under the restructuring programs. These costs were included in restructuring expenses in the consolidated statements of earnings. The Company does not expect to incur any material expenses under the 2017 and 2016 restructuring programs during 2019 or future periods. However, 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 the balances of the accruals for both programs, which are recorded in accounts payable and accrued expenses in the consolidated balance sheets, and the activity for the years ended December 31, 2018 and 2017:
(In Thousands)
Contractual Lease Obligations
 
Severance
 
Total
Balance at January 1, 2017
$
10,583

 
$
2,079

 
$
12,662

Charges
13,501

 
3,176

 
16,677

Adjustments1
(69
)
 
—

 
(69
)
Restructuring Charges
13,432

 
3,176

 
16,608

Payments
(11,578
)
 
(2,952
)
 
(14,530
)
Balance at December 31, 2017
12,437

 
2,303

 
14,740

Charges
—

 
601

 
601

Adjustments1
2,057

 
—

 
2,057

Restructuring Charges
2,057

 
601

 
2,658

Payments
(6,022
)
 
(2,253
)
 
(8,275
)
Balance at December 31, 2018
$
8,472

 
$
651

 
$
9,123


1Adjustments relate to changes in sublease assumptions and interest accretion.
The following table summarizes restructuring charges by segment for the years ended:
 
December 31, 2018
 
December 31, 2017
 
December 31, 2016
(In Thousands)
Aaron’s Business
 
Aaron’s Business
 
DAMI
 
Total
 
Aaron’s Business
Contractual Lease Obligations
$
2,057

 
$
13,432

 
$
—

 
$
13,432

 
$
11,589

Severance
601

 
2,705

 
471

 
3,176

 
3,883

Other (Reversals) Expenses
(1,176
)
 
1,386

 
—

 
1,386

 
4,746

Gain on Sale of Closed Store Properties
(377
)
 
—

 
—

 
—

 
—

Total Restructuring Expenses
$
1,105

 
$
17,523

 
$
471

 
$
17,994

 
$
20,218


To date, the Company has incurred charges of $39.3 million under the 2016 and 2017 restructuring programs.
2019 Restructuring Program - Subsequent Event
In January 2019, the Company initiated a restructuring program (the "2019 Restructuring Program") to further align its Company-operated Aaron's store base portfolio with marketplace demand. As a result of management's strategic review of the existing store portfolio, the Company will close and consolidate approximately 85 underperforming Company-operated Aaron's stores during 2019. The Company currently expects to incur $12 million to $15 million of restructuring expenses, which will all be incurred within the Aaron's Business segment during 2019. The restructuring expenses will primarily consist of impairment charges associated with the closed stores.