v3.19.3

Leases | 9 Months Ended
--- | ---
Sep. 30, 2019
Leases [Abstract] |
Leases | LEASES Lessor Information Refer to Note 1 to these condensed consolidated financial statements for further information about the Company's revenue generating activities as a lessor. All of the Company's customer agreements are considered operating leases, and the Company currently does not have any sales-type or direct financing leases. Lessee Information As a lessee, the Company leases retail store and warehouse space for most of its Aaron's Business store-based operations, call center space and hubs for its Progressive Leasing segment, and management and information technology space for corporate functions under operating leases expiring at various times through 2033. To the extent that a leased retail store or warehouse space is vacated prior to the termination of the lease, the Company may sublease these spaces to third parties while maintaining its primary obligation as the lessee in the head lease. The Company leases transportation vehicles under operating and finance leases, most of which generally expire during the next three years. The transportation leases generally include a residual value that is guaranteed to the lessor, which ensures that the vehicles will be returned to the lessor in reasonable working condition. The Company also leases various IT equipment such as printers and computers under operating leases, most of which generally expire during the next three years. For all of its leases in which the Company is a lessee, the Company has elected to include both the lease and non-lease components as a single component and account for it as a lease. Finance lease costs are comprised of the amortization of right-of-use assets and the interest accretion on discounted lease liabilities, which are recorded within operating expenses and interest expense, respectively, in the Company’s condensed consolidated statements of earnings. Operating lease costs are recorded on a straight-line basis within operating expenses. For stores that are related to the Company's restructuring programs as described in Note 8, operating lease costs recorded subsequent to any necessary operating lease right-of-use asset impairment charges are recognized in a pattern that is generally accelerated within restructuring expenses, net in the Company’s condensed consolidated statements of earnings. The Company’s total lease expense is comprised of the following:
| Three Months Ended |  | Nine Months Ended
(In Thousands) | September 30, 2019 |  | September 30, 2019
Finance Lease Cost: |  |  |
Amortization of Right-of-Use Assets | $ | 396 |  |  | $ | 1,302 |
Interest on Lease Liabilities | 83 |  |  | 296 |
Total Finance Lease Cost: | 479 |  |  | 1,598 |
Operating Lease Cost: |  |  |
Operating Lease Cost Classified within Operating Expenses 1 | 27,647 |  |  | 84,789 |
Operating Lease Cost Classified within Restructuring Expenses, Net | 881 |  |  | 2,521 |
Sublease Receipts | (628 | ) |  | (2,399 | )
Total Operating Lease Cost: | 27,900 |  |  | 84,911 |
Total Lease Cost | $ | 28,379 |  |  | $ | 86,509 |
1 Includes short-term and variable lease costs, which are not significant. Additional information regarding the Company’s leasing activities as a lessee is as follows:
| Nine Months Ended
(In Thousands) | September 30, 2019
Cash Paid for Amounts Included in Measurement of Lease Liabilities: |
Operating Cash Flows for Finance Leases | $ | 345 |
Operating Cash Flows for Operating Leases | 91,333 |
Financing Cash Flows for Finance Leases | 1,971 |
Total Cash Paid for Amounts Included in Measurement of Lease Liabilities | 93,649 |
Right-of-Use Assets Obtained in Exchange for New Finance Lease Liabilities | — |
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities, Net of Exercised Early Lease Termination Options | $ | 27,185 |
Supplemental balance sheet information related to leases is as follows:
(In Thousands) |  | Balance Sheet Classification |  | September 30, 2019
Assets |  |  |  |
Operating Lease Assets |  | Operating Lease Right-of-Use Assets |  | $ | 330,508 |
Finance Lease Assets |  | Property, Plant and Equipment, Net |  | 1,018 |
Total Lease Assets |  |  |  | $ | 331,526 |
Liabilities |  |  |  |
Operating Lease Liabilities |  | Operating Lease Liabilities |  | $ | 374,443 |
Finance Lease Liabilities |  | Debt |  | 3,192 |
Total Lease Liabilities |  |  |  | $ | 377,635 |
Most of the Company’s real estate leases contain renewal options for additional periods ranging from one to 20 years or provide for options to purchase the related property at predetermined purchase prices that do not represent bargain purchase options. The Company currently does not have any real estate leases in which it considers the renewal options to be reasonably certain of exercise, as the Company's historical experience indicates that renewal options are not reasonably certain to be exercised. Additionally, the Company's leases contain contractual renewal rental rates that are considered to be in line with market rental rates, and there are not significant economic penalties or business disruptions incurred by not exercising any renewal options. The Company uses its incremental borrowing rate as the discount rate for its leases, as the implicit rate in the lease is not readily determinable. Below is a summary of the weighted-average discount rate and weighted-average remaining lease term for the Company’s finance and operating leases:
| Weighted Average Discount Rate 1 |  | Weighted Average Remaining Lease Term (in years)
Finance Leases | 5.8 | % |  | 1.3
Operating Leases | 3.6 | % |  | 5.0
1 Upon adoption of ASC 842, discount rates for existing operating leases were established as of January 1, 2019. Under the short-term lease exception provided within ASC 842, the Company does not record a lease liability or right-of-use asset for any leases that have a lease term of 12 months or less at commencement, including renewal options that the Company is reasonably certain to exercise, and do not include purchase options. Below is a summary of undiscounted finance and operating lease liabilities that have initial terms in excess of one year as of September 30, 2019. The table also includes a reconciliation of the future undiscounted cash flows to the present value of the finance and operating lease liabilities included in the condensed consolidated balance sheet.
(In Thousands) | Operating Leases |  | Finance Leases |  | Total
2019 | $ | 27,105 |  |  | $ | 561 |  |  | $ | 27,666 |
2020 | 108,113 |  |  | 2,001 |  |  | 110,114 |
2021 | 85,651 |  |  | 841 |  |  | 86,492 |
2022 | 65,160 |  |  | 83 |  |  | 65,243 |
2023 | 44,363 |  |  | — |  |  | 44,363 |
Thereafter | 78,980 |  |  | — |  |  | 78,980 |
Total Undiscounted Cash Flows | 409,372 |  |  | 3,486 |  |  | 412,858 |
Less: Interest | 34,929 |  |  | 294 |  |  | 35,223 |
Present Value of Lease Liabilities | $ | 374,443 |  |  | $ | 3,192 |  |  | $ | 377,635 |
Leases | LEASES Lessor Information Refer to Note 1 to these condensed consolidated financial statements for further information about the Company's revenue generating activities as a lessor. All of the Company's customer agreements are considered operating leases, and the Company currently does not have any sales-type or direct financing leases. Lessee Information As a lessee, the Company leases retail store and warehouse space for most of its Aaron's Business store-based operations, call center space and hubs for its Progressive Leasing segment, and management and information technology space for corporate functions under operating leases expiring at various times through 2033. To the extent that a leased retail store or warehouse space is vacated prior to the termination of the lease, the Company may sublease these spaces to third parties while maintaining its primary obligation as the lessee in the head lease. The Company leases transportation vehicles under operating and finance leases, most of which generally expire during the next three years. The transportation leases generally include a residual value that is guaranteed to the lessor, which ensures that the vehicles will be returned to the lessor in reasonable working condition. The Company also leases various IT equipment such as printers and computers under operating leases, most of which generally expire during the next three years. For all of its leases in which the Company is a lessee, the Company has elected to include both the lease and non-lease components as a single component and account for it as a lease. Finance lease costs are comprised of the amortization of right-of-use assets and the interest accretion on discounted lease liabilities, which are recorded within operating expenses and interest expense, respectively, in the Company’s condensed consolidated statements of earnings. Operating lease costs are recorded on a straight-line basis within operating expenses. For stores that are related to the Company's restructuring programs as described in Note 8, operating lease costs recorded subsequent to any necessary operating lease right-of-use asset impairment charges are recognized in a pattern that is generally accelerated within restructuring expenses, net in the Company’s condensed consolidated statements of earnings. The Company’s total lease expense is comprised of the following:
| Three Months Ended |  | Nine Months Ended
(In Thousands) | September 30, 2019 |  | September 30, 2019
Finance Lease Cost: |  |  |
Amortization of Right-of-Use Assets | $ | 396 |  |  | $ | 1,302 |
Interest on Lease Liabilities | 83 |  |  | 296 |
Total Finance Lease Cost: | 479 |  |  | 1,598 |
Operating Lease Cost: |  |  |
Operating Lease Cost Classified within Operating Expenses 1 | 27,647 |  |  | 84,789 |
Operating Lease Cost Classified within Restructuring Expenses, Net | 881 |  |  | 2,521 |
Sublease Receipts | (628 | ) |  | (2,399 | )
Total Operating Lease Cost: | 27,900 |  |  | 84,911 |
Total Lease Cost | $ | 28,379 |  |  | $ | 86,509 |
1 Includes short-term and variable lease costs, which are not significant. Additional information regarding the Company’s leasing activities as a lessee is as follows:
| Nine Months Ended
(In Thousands) | September 30, 2019
Cash Paid for Amounts Included in Measurement of Lease Liabilities: |
Operating Cash Flows for Finance Leases | $ | 345 |
Operating Cash Flows for Operating Leases | 91,333 |
Financing Cash Flows for Finance Leases | 1,971 |
Total Cash Paid for Amounts Included in Measurement of Lease Liabilities | 93,649 |
Right-of-Use Assets Obtained in Exchange for New Finance Lease Liabilities | — |
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities, Net of Exercised Early Lease Termination Options | $ | 27,185 |
Supplemental balance sheet information related to leases is as follows:
(In Thousands) |  | Balance Sheet Classification |  | September 30, 2019
Assets |  |  |  |
Operating Lease Assets |  | Operating Lease Right-of-Use Assets |  | $ | 330,508 |
Finance Lease Assets |  | Property, Plant and Equipment, Net |  | 1,018 |
Total Lease Assets |  |  |  | $ | 331,526 |
Liabilities |  |  |  |
Operating Lease Liabilities |  | Operating Lease Liabilities |  | $ | 374,443 |
Finance Lease Liabilities |  | Debt |  | 3,192 |
Total Lease Liabilities |  |  |  | $ | 377,635 |
Most of the Company’s real estate leases contain renewal options for additional periods ranging from one to 20 years or provide for options to purchase the related property at predetermined purchase prices that do not represent bargain purchase options. The Company currently does not have any real estate leases in which it considers the renewal options to be reasonably certain of exercise, as the Company's historical experience indicates that renewal options are not reasonably certain to be exercised. Additionally, the Company's leases contain contractual renewal rental rates that are considered to be in line with market rental rates, and there are not significant economic penalties or business disruptions incurred by not exercising any renewal options. The Company uses its incremental borrowing rate as the discount rate for its leases, as the implicit rate in the lease is not readily determinable. Below is a summary of the weighted-average discount rate and weighted-average remaining lease term for the Company’s finance and operating leases:
| Weighted Average Discount Rate 1 |  | Weighted Average Remaining Lease Term (in years)
Finance Leases | 5.8 | % |  | 1.3
Operating Leases | 3.6 | % |  | 5.0
1 Upon adoption of ASC 842, discount rates for existing operating leases were established as of January 1, 2019. Under the short-term lease exception provided within ASC 842, the Company does not record a lease liability or right-of-use asset for any leases that have a lease term of 12 months or less at commencement, including renewal options that the Company is reasonably certain to exercise, and do not include purchase options. Below is a summary of undiscounted finance and operating lease liabilities that have initial terms in excess of one year as of September 30, 2019. The table also includes a reconciliation of the future undiscounted cash flows to the present value of the finance and operating lease liabilities included in the condensed consolidated balance sheet.
(In Thousands) | Operating Leases |  | Finance Leases |  | Total
2019 | $ | 27,105 |  |  | $ | 561 |  |  | $ | 27,666 |
2020 | 108,113 |  |  | 2,001 |  |  | 110,114 |
2021 | 85,651 |  |  | 841 |  |  | 86,492 |
2022 | 65,160 |  |  | 83 |  |  | 65,243 |
2023 | 44,363 |  |  | — |  |  | 44,363 |
Thereafter | 78,980 |  |  | — |  |  | 78,980 |
Total Undiscounted Cash Flows | 409,372 |  |  | 3,486 |  |  | 412,858 |
Less: Interest | 34,929 |  |  | 294 |  |  | 35,223 |
Present Value of Lease Liabilities | $ | 374,443 |  |  | $ | 3,192 |  |  | $ | 377,635 |

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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