v3.19.3

Segments

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segments

SEGMENTS

As of September 30, 2019, 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 bedding, automobile electronics and accessories, mobile phones and accessories, jewelry, consumer electronics and appliances.

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 platform. 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.

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.

Disaggregated Revenue

The following table presents revenue by source and by segment for the three months ended September 30, 2019:

	Three Months Ended September 30, 2019
(In Thousands)	Progressive Leasing			Aaron's Business			DAMI			Total
Lease Revenues and Fees1	$	528,850		$	377,926		$	—		$	906,776
Retail Sales2	—			8,854			—			8,854
Non-Retail Sales2	—			31,085			—			31,085
Franchise Royalties and Fees2	—			8,087			—			8,087
Interest and Fees on Loans Receivable3	—			—			8,687			8,687
Other	—			319			—			319
Total	$	528,850		$	426,271		$	8,687		$	963,808

¹ Substantially all lease revenues and fees are within the scope of ASC 842, Leases. The Company had $7.0 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, $6.3 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.

The following table presents revenue by source and by segment for the three months ended September 30, 2018:

	Three Months Ended September 30, 2018
(In Thousands)	Progressive Leasing			Aaron's Business			DAMI			Total
Lease Revenues and Fees1	$	504,407		$	376,464		$	—		$	880,871
Retail Sales2	—			7,620			—			7,620
Non-Retail Sales2	—			44,368			—			44,368
Franchise Royalties and Fees2	—			10,153			—			10,153
Interest and Fees on Loans Receivable3	—			—			9,508			9,508
Other	—			551			—			551
Total	$	504,407		$	439,156		$	9,508		$	953,071

¹ Substantially all lease revenues and fees are within the scope of ASC 840, Leases. The Company had $5.6 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, $7.4 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.

The following table presents revenue by source and by segment for the nine months ended September 30, 2019:

	Nine Months Ended September 30, 2019
(In Thousands)	Progressive Leasing			Aaron's Business			DAMI			Total
Lease Revenues and Fees1	$	1,568,584		$	1,189,914		$	—		$	2,758,498
Retail Sales2	—			30,561			—			30,561
Non-Retail Sales2	—			102,190			—			102,190
Franchise Royalties and Fees2	—			25,899			—			25,899
Interest and Fees on Loans Receivable3	—			—			25,943			25,943
Other	—			961			—			961
Total	$	1,568,584		$	1,349,525		$	25,943		$	2,944,052

¹ Substantially all lease revenues and fees are within the scope of ASC 842, Leases. The Company had $20.4 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, $19.6 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.

The following table presents revenue by source and by segment for the nine months ended September 30, 2018:

	Nine Months Ended September 30, 2018
(In Thousands)	Progressive Leasing			Aaron's Business			DAMI			Total
Lease Revenues and Fees1	$	1,474,590		$	1,122,286		$	—		$	2,596,876
Retail Sales2	—			22,728			—			22,728
Non-Retail Sales2	—			151,259			—			151,259
Franchise Royalties and Fees2	—			35,140			—			35,140
Interest and Fees on Loans Receivable3	—			—			28,258			28,258
Other	—			1,478			—			1,478
Total	$	1,474,590		$	1,332,891		$	28,258		$	2,835,739

¹ Substantially all lease revenues and fees are within the scope of ASC 840, Leases. The Company had $13.0 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, $26.6 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.

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. The Company determines earnings (loss) before income taxes for all reportable segments in accordance with U.S. GAAP. Interest expense is allocated to the Progressive Leasing and DAMI segments based on a percentage of the outstanding balances of their intercompany borrowings and of the debt incurred when they were acquired. The following is a summary of earnings (loss) before income taxes by segment:

	Three Months Ended September 30,								Nine Months Ended September 30,
(In Thousands)	2019				2018				2019				2018
Earnings (Loss) Before Income Taxes:
Progressive Leasing	$	53,473			$	40,839			$	167,267			$	120,393
Aaron's Business1	932				15,641				18,658				56,417
DAMI	(2,740		)		(3,065		)		(7,133		)		(6,663		)
Total Earnings Before Income Taxes	$	51,665			$	53,415			$	178,792			$	170,147

¹ Earnings before income taxes for the Aaron's Business during the nine months ended September 30, 2019 were impacted by (i) restructuring charges of $37.5 million related to closed store operating lease right-of-use asset impairment and operating lease charges, the impairment of vacant store properties, including the planned exit from one of our store support buildings, workforce reductions, and a loss on sale of six Canadian stores to a third party, of which $5.5 million was incurred during the three months ended September 30, 2019 and (ii) gains on insurance recoveries of $4.5 million recorded during the first and second quarters of 2019 related to payments received from and final settlements reached with insurance carriers for Hurricanes Harvey and Irma property and business interruption claims in excess of the related property insurance receivables.

Earnings before income taxes for the Aaron's Business during the nine months ended September 30, 2018 includes the full impairment of the PerfectHome investment of $20.1 million recorded during the second quarter of 2018.

The following is a summary of total assets by segment and shared corporate-related assets.

(In Thousands)	September 30, 2019				December 31, 2018
Assets:
Progressive Leasing	$	1,128,831			$	1,088,227
Aaron's Business1	1,693,574				1,483,102
DAMI	89,951				95,341
Other2	307,264				160,022
Total Assets	$	3,219,620			$	2,826,692

¹ Includes inventory (principally raw materials and work-in-process) that has been classified within lease merchandise in the condensed consolidated balance sheets of $15.8 million and $15.2 million as of September 30, 2019 and December 31, 2018, respectively.

² Corporate-related assets that benefit multiple segments are reported as other assets.

X

- References

No definition available.

+ Details

Name:	us-gaap_SegmentReportingAbstract
Namespace Prefix:	us-gaap_
Data Type:	xbrli:stringItemType
Balance Type:	na
Period Type:	duration

X

- 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

Name:	us-gaap_SegmentReportingDisclosureTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration