10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 ________________________________

FORM 10-Q

______________________________

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2015

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-13941

 ________________________________

AARON’S, INC.

(Exact name of registrant as specified in its charter)

 _________________________________

Georgia	58-0687630
(State or other jurisdiction of incorporation or organization)	(I. R. S. Employer Identification No.)
309 E. Paces Ferry Road, N.E. Atlanta, Georgia	30305-2377
(Address of principal executive offices)	(Zip Code)

(404) 231-0011

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 ___________________________________

Indicate by check mark whether registrant (l) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of l934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	ý		Accelerated Filer	o
Non-Accelerated Filer	o	(Do not check if a smaller reporting company)	Smaller Reporting Company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o No  ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Title of Each Class	Shares Outstanding as of July 31, 2015
Common Stock, $.50 Par Value	72,578,301

1

AARON’S, INC.

INDEX

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets – June 30, 2015 (Unaudited) and December 31, 2014	3
Condensed Consolidated Statements of Earnings (Unaudited) – Three and Six Months Ended June 30, 2015 and 2014	4
Condensed Consolidated Statements of Comprehensive Income (Unaudited) – Three and Six Months Ended June 30, 2015 and 2014	5
Condensed Consolidated Statements of Cash Flows (Unaudited) – Six Months Ended June 30, 2015 and 2014	6
Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk	32
Item 4. Controls and Procedures	32
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	33
Item 1A. Risk Factors	33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3. Defaults Upon Senior Securities	34
Item 4. Mine Safety Disclosures	34
Item 5. Other Information	34
Item 6. Exhibits	35
Signatures	36

2

PART I—FINANCIAL INFORMATION

Item 1—Financial Statements

AARON’S, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
(In Thousands, Except Share Data)	June 30, 2015			December 31, 2014
ASSETS:
Cash and Cash Equivalents	$	91,144		$	3,549
Investments	22,758			21,311
Accounts Receivable (net of allowances of $29,957 in 2015 and $27,401 in 2014)	94,081			107,383
Lease Merchandise (net of accumulated depreciation of $722,988 in 2015 and $701,822 in 2014)	1,038,133			1,087,032
Property, Plant and Equipment at Cost (net of accumulated depreciation of $220,387 in 2015 and $216,065 in 2014)	211,886			219,417
Goodwill	533,020			530,670
Other Intangibles (net of accumulated amortization of $45,862 in 2015 and $33,250 in 2014)	285,120			297,471
Income Tax Receivable	11,690			124,095
Prepaid Expenses and Other Assets	59,951			59,560
Assets Held For Sale	6,924			6,356
Total Assets	$	2,354,707		$	2,456,844
LIABILITIES & SHAREHOLDERS’ EQUITY:
Accounts Payable and Accrued Expenses	$	271,260		$	270,421
Accrued Regulatory Expense	17,500			27,200
Deferred Income Taxes Payable	198,138			268,551
Customer Deposits and Advance Payments	55,862			61,069
Debt	494,858			606,082
Total Liabilities	1,037,618			1,233,323
Commitments and Contingencies (Note 5)
Shareholders’ Equity:
Common Stock, Par Value $.50 Per Share: Authorized: 225,000,000 Shares at June 30, 2015 and December 31, 2014; Shares Issued: 90,752,123 at June 30, 2015 and December 31, 2014	45,376			45,376
Additional Paid-in Capital	232,964			227,290
Retained Earnings	1,360,685			1,274,233
Accumulated Other Comprehensive Loss	(66		)	(90		)
	1,638,959			1,546,809
Less: Treasury Shares at Cost
Common Stock: 18,174,923 Shares at June 30, 2015 and 18,263,589 at December 31, 2014	(321,870		)	(323,288		)
Total Shareholders’ Equity	1,317,089			1,223,521
Total Liabilities & Shareholders’ Equity	$	2,354,707		$	2,456,844

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

3

AARON’S, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

	Three Months Ended   June 30,						Six Months Ended   June 30,
(In Thousands, Except Per Share Data)	2015			2014			2015			2014
REVENUES:
Lease Revenues and Fees	$	660,472		$	552,494		$	1,355,754		$	1,012,310
Retail Sales	7,073			8,419			19,067			22,929
Non-Retail Sales	84,449			83,893			180,486			175,518
Franchise Royalties and Fees	15,491			16,225			32,495			34,309
Other	1,564			1,459			3,061			2,847
	769,049			662,490			1,590,863			1,247,913
COSTS AND EXPENSES:
Depreciation of Lease Merchandise	294,362			232,715			610,348			400,627
Retail Cost of Sales	4,849			5,478			12,553			14,491
Non-Retail Cost of Sales	76,463			76,227			163,315			159,134
Operating Expenses	325,555			311,116			653,475			573,815
Financial Advisory and Legal Costs	—			12,404			—			13,276
Progressive-Related Transaction Costs	—			5,464			—			6,267
Restructuring Expenses	—			2,264			—			2,264
Other Operating Expense (Income), Net	277			5			(1,183		)	(672		)
	701,506			645,673			1,438,508			1,169,202
OPERATING PROFIT	67,543			16,817			152,355			78,711
Interest Income	792			1,074			1,231			1,827
Interest Expense	(5,622		)	(5,479		)	(11,591		)	(7,012		)
Other Non-Operating Income, Net	1,641			1,150			189			746
EARNINGS BEFORE INCOME TAXES	64,354			13,562			142,184			74,272
INCOME TAXES	23,808			5,057			52,395			27,428
NET EARNINGS	$	40,546		$	8,505		$	89,789		$	46,844
EARNINGS PER SHARE
Basic	$	.56		$	.12		$	1.24		$	.65
Assuming Dilution	$	.56		$	.12		$	1.23		$	.64
CASH DIVIDENDS DECLARED PER SHARE:
Common Stock	$	.023		$	.021		$	.046		$	.042
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic	72,572			72,246			72,544			72,356
Assuming Dilution	72,965			72,598			72,910			72,733

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

4

AARON’S, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended   June 30,				Six Months Ended   June 30,
(In Thousands)	2015		2014		2015		2014
Net Earnings	$	40,546	$	8,505	$	89,789	$	46,844
Other Comprehensive Income:
Foreign Currency Translation Adjustment	21		11		24		7
Total Other Comprehensive Income	21		11		24		7
Comprehensive Income	$	40,567	$	8,516	$	89,813	$	46,851

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

5

AARON’S, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended   June 30,
(In Thousands)	2015			2014
OPERATING ACTIVITIES:
Net Earnings	$	89,789		$	46,844
Adjustments to Reconcile Net Earnings to Cash Provided by Operating Activities:
Depreciation of Lease Merchandise	610,348			400,627
Other Depreciation and Amortization	39,756			38,020
Bad Debt Expense	67,794			28,757
Stock-Based Compensation	6,725			2,312
Deferred Income Taxes	(70,748		)	(63,436		)
Other Changes, Net	(2,825		)	1,034
Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions:
Additions to Lease Merchandise	(801,620		)	(640,866		)
Book Value of Lease Merchandise Sold or Disposed	236,750			208,123
Accounts Receivable	(56,856		)	(11,882		)
Prepaid Expenses and Other Assets	(898		)	(4,750		)
Income Tax Receivable	112,405			(3,186		)
Accounts Payable and Accrued Expenses	3,788			(22,038		)
Accrued Regulatory Expense	(9,700		)	—
Customer Deposits and Advance Payments	(5,361		)	(4,117		)
Cash Provided by (Used in) Operating Activities	219,347			(24,558		)
INVESTING ACTIVITIES:
Proceeds from Maturities and Calls of Investments	—			19,814
Additions to Property, Plant and Equipment	(21,821		)	(24,659		)
Acquisitions of Businesses and Contracts	(9,274		)	(672,454		)
Proceeds from Dispositions of Businesses and Contracts	8,330			15,773
Proceeds from Sale of Property, Plant and Equipment	2,719			2,896
Cash Used in Investing Activities	(20,046		)	(658,630		)
FINANCING ACTIVITIES:
Proceeds from Debt	30,150			584,041
Repayments on Debt	(141,374		)	(114,104		)
Dividends Paid	(1,668		)	(3,121		)
Excess Tax Benefits from Stock-Based Compensation	274			1,458
Issuance of Stock Under Stock Option Plans	912			3,632
Other	—			(2,238		)
Cash (Used in) Provided by Financing Activities	(111,706		)	469,668
Increase (Decrease)in Cash and Cash Equivalents	87,595			(213,520		)
Cash and Cash Equivalents at Beginning of Period	3,549			231,091
Cash and Cash Equivalents at End of Period	$	91,144		$	17,571

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

6

AARON’S, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1: BASIS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Aaron’s, Inc. (the “Company” or “Aaron’s”) is a leading specialty retailer primarily engaged in the business of leasing and selling furniture, consumer electronics, computers, appliances and household accessories throughout the United States and Canada.

On April 14, 2014, the Company acquired a 100% ownership interest in Progressive Finance Holdings, LLC (“Progressive”), a leading virtual lease-to-own company, for merger consideration of $700.0 million, net of cash acquired. Progressive provides lease-purchase solutions through over 16,000 retail locations in 46 states. It does so by purchasing merchandise from third-party retailers desired by those retailers' customers and, in turn, leasing that merchandise to the customers on a lease-to-own basis. Progressive consequently has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional retailers.

Subsequent to the Progressive acquisition, our major operating divisions are the Aaron’s Sales & Lease Ownership division (established as a monthly payment concept), Progressive, HomeSmart (established as a weekly payment concept) and Woodhaven Furniture Industries, which manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in our stores.

The following table presents store count by ownership type for the Company's store-based operations:

Stores (Unaudited)	June 30, 2015	December 31, 2014
Company-operated stores
Sales and Lease Ownership	1,211	1,243
HomeSmart	83	83
Total Company-operated stores	1,294	1,326
Franchised stores	786	782
Systemwide stores	2,080	2,108

Basis of Presentation

The preparation of the Company’s condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information requires management to make estimates and assumptions that affect amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. Generally, actual experience has been consistent with management’s prior estimates and assumptions. Management does not believe these estimates or assumptions will change significantly in the future absent unsurfaced and unforeseen events.

The accompanying unaudited condensed consolidated financial statements do not include all information required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission for the year ended December 31, 2014 (the “2014 Annual Report”). The results of operations for the six months ended June 30, 2015 are not necessarily indicative of operating results for the full year.

Reclassifications

Certain reclassifications have been made to the prior periods to conform to the current period presentation. The condensed consolidated statement of cash flows for the six months ended June 30, 2015 includes a reclassification between additions to lease merchandise and book value of lease merchandise sold or disposed, which reduces both amounts by $39.6 million. This reclassification has no effect on the amounts reported for net earnings or cash provided by operating activities for the three and six months ended March 31, 2015 or June 30, 2015, respectively, or for the balances reported for cash or lease merchandise as of March 31, 2015 or June 30, 2015.

7

The Company presents sales net of related taxes for its traditional lease-to-own (“core”) business. Prior to 2015, Progressive presented lease revenues on a gross basis with sales taxes included. Effective January 1, 2015, Progressive conformed its presentation of sales tax to that of the core business. For the three and six months ended June 30, 2014, reclassification adjustments have been made to present sales net of related taxes on a consolidated basis and those adjustments reduce lease revenues and fees and operating expenses by $10.0 million in each period.

Principles of Consolidation and Variable Interest Entities

The condensed consolidated financial statements include the accounts of Aaron’s, Inc. and its subsidiaries, each of which is wholly owned. Intercompany balances and transactions between consolidated entities have been eliminated.

The Company holds notes issued by Perfect Home Holdings Limited (“Perfect Home”), a privately-held lease-to-own company that is primarily financed by share capital and subordinated debt. Perfect Home is based in the U.K. and operated70retail stores as of June 30, 2015.

Perfect Home is a variable interest entity (“VIE”) because it does not have sufficient equity at risk. However, the Company is not the primary beneficiary and does not consolidate Perfect Home because the Company lacks the power through voting or similar rights to direct the activities that most significantly affect Perfect Home's economic performance. The Company’s maximum exposure to any potential losses associated with this VIE is equal to its total recorded investment, which was$22.8 millionat June 30, 2015.

Accounting Policies and Estimates

See Note 1 to the consolidated financial statements in the 2014 Annual Report.

Income Taxes

The Company files a federal consolidated income tax return in the United States, and the Company and its subsidiaries file in various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to federal, state and local tax examinations by tax authorities for years before 2011.

As of June 30, 2015 and December 31, 2014, the amount of uncertain tax benefits that, if recognized, would affect the effective tax rate is $2.5 million and $2.1 million, respectively, including interest and penalties. The Company recognizes potential interest and penalties related to uncertain tax benefits as a component of income tax expense.

Earnings Per Share

Earnings per share is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. The computation of earnings per share assuming dilution includes the dilutive effect of stock options, restricted stock units (RSUs), restricted stock awards and performance share units (collectively, “share-based awards”) as determined under the treasury stock method. The following table shows the calculation of dilutive share-based awards for the three and six months ended June 30, 2015 and 2014:

	Three Months Ended   June 30,		Six Months Ended   June 30,
(Shares In Thousands)	2015	2014	2015	2014
Weighted average shares outstanding	72,572	72,246	72,544	72,356
Effect of dilutive securities:
Dilutive effect of share-based awards	393	352	366	377
Weighted average shares outstanding assuming dilution	72,965	72,598	72,910	72,733

During the three and six months ended June 30, 2015, there were approximately 545,000 and 507,000 weighted-average share-based awards excluded from the computation for earnings per share assuming dilution because the awards would have been anti-dilutive for the period.

During the three and six months ended June 30, 2014, there were approximately 176,000 and 137,000 weighted-average share-based awards excluded from the computation for earnings per share assuming dilution because the awards would have been anti-dilutive for the period.

8

Lease Merchandise

All lease merchandise is available for lease or sale. On a monthly basis, all damaged, lost or unsalable merchandise identified is written off. The Company records lease merchandise adjustments on the allowance method, which estimates the merchandise losses incurred but not yet identified by management as of the end of the accounting period based on historical write off experience. As of June 30, 2015 and December 31, 2014, the allowance for lease merchandise write-offs was $29.6 million and $27.6 million, respectively.

Lease merchandise write-offs totaled $30.2 millionand $21.0 million for the three months ended June 30, 2015 and 2014, respectively, and $59.5 million and $34.7 million for the six months ended June 30, 2015 and 2014, respectively. Substantially all lease merchandise adjustments are included in operating expenses in the accompanying condensed consolidated statements of earnings.

Cash and Cash Equivalents

The Company classifies highly liquid investments with maturity dates of three months or less when purchased as cash equivalents. The Company maintains its cash and cash equivalents in a limited number of banks. Bank balances typically exceed coverage provided by the Federal Deposit Insurance Corporation. However, due to the size and strength of the banks where the balances are held, such exposure to loss is believed to be minimal.

Investments

On October 14, 2011, the Company purchased 11.5% of the common stock of Perfect Home. As part of the transaction, the Company also received British pound-denominated notes and an option to acquire the remaining interest in Perfect Home at any time through December 31, 2013. In May 2014, subsequent to the Company's decision not to exercise the purchase option, the Company and Perfect Home extended the maturity date of the notes to June 30, 2015, canceled the Company's equity interest in Perfect Home and terminated the option. In June of 2015, the Company and Perfect Home extended the maturity date of the notes to June 30, 2016.

The Perfect Home notes, which totaled£14.2 million ($22.8 million) and £13.7 million ($21.3 million)at June 30, 2015and December 31, 2014, respectively, are classified as held-to-maturity securitiesbecause the Company has the positive intent and ability to hold the investments to maturity. The Perfect Home notes are carried at amortized cost in investments in the condensed consolidated balance sheets. The increase in the carrying amount of the notes during the six months ended June 30, 2015 relates to accretion of the original discount on the notes, which had a face value of £10.0 million.

The Company evaluates held-to-maturity securities for other-than-temporary impairment on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The Company does not intend to sell its remaining securities and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.

Accounts Receivable

Accounts receivable consist primarily of receivables due from customers of Company-operated stores and Progressive, corporate receivables incurred during the normal course of business (primarily for vendor consideration, real estate leasing activities, in-transit credit card transactions and an escrow related to the Progressive acquisition) and franchisee obligations.

Accounts receivable, net of allowances, consist of the following:

(In Thousands)	June 30, 2015		December 31, 2014
Customers	$	34,585	$	30,438
Corporate	26,077		32,572
Franchisee	33,419		44,373
	$	94,081	$	107,383

Assets Held for Sale

Certain properties, primarily consisting of parcels of land and commercial buildings, met the held for sale classification criteria as of June 30, 2015 and December 31, 2014. After adjustment to fair value, the $6.9 millionand $6.4 million carrying value of these properties has been classified as assets held for sale in the condensed consolidated balance sheets as of June 30, 2015 and December 31, 2014, respectively. The Company estimated the fair values of real estate properties using the market values for similar properties. These properties are considered Level 2 assets as described in Note 3.

9

Deferred Compensation

The Company maintains the Aaron’s, Inc. Deferred Compensation Plan, an unfunded, nonqualified deferred compensation plan for a select group of management, highly compensated employees and non-employee directors. On a pre-tax basis, eligible employees can defer receipt of up to 75% of their base compensation and up to 100% of their incentive pay compensation, and eligible non-employee directors can defer receipt of up to 100% of both their cash and stock director fees.

Compensation deferred under the plan is credited to each participant’s deferral account and a deferred compensation liability is recorded in accounts payable and accrued expenses in the condensed consolidated balance sheets. The deferred compensation liability was $12.5 million and $12.7 million as of June 30, 2015 and December 31, 2014, respectively. Liabilities under the plan are recorded at amounts due to participants, based on the fair value of participants’ selected investments. The Company has established a rabbi trust to fund obligations under the plan with Company-owned life insurance. The obligations are unsecured general obligations of the Company and the participants have no right, interest or claim in the assets of the Company, except as unsecured general creditors. The cash surrender value of the insurance contracts totaled $15.0 million as of June 30, 2015 and $14.5 million as of December 31, 2014 and is included in prepaid expenses and other assets in the condensed consolidated balance sheets.

Deferred compensation expense charged to operations for the Company’s matching contributions was not significant during any of the three or six months periods presented. Benefits of $776,000 and $652,000 were paid during the first six months of 2015 and 2014, respectively.

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component for the six months ended June 30, 2015 are as follows:

(In Thousands)	Foreign Currency			Total
Balance at January 1, 2015	$	(90	)	$	(90	)
Other comprehensive income	24			24
Balance at June 30, 2015	$	(66	)	$	(66	)

There were no reclassifications out of accumulated other comprehensive loss for the six months ended June 30, 2015.

Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting the Company's own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

The Company measures assets held for sale at fair value on a nonrecurring basis and records impairment charges when they are deemed to be impaired. The Company maintains certain financial assets and liabilities, including investments and fixed-rate long-term debt, that are not measured at fair value but for which fair value is disclosed.

The fair values of the Company’s other current financial assets and liabilities, including cash and cash equivalents, accounts receivable and accounts payable, approximate their carrying values due to their short-term nature.

10

Recent Accounting Pronouncements

Revenue Recognition. In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2015, the FASB voted to defer the effective date for this ASU by one year, and now the ASU is effective for annual reporting periods, and interim periods within that period, beginning after December 15, 2017. The FASB also voted to permit early adoption of the ASU, but not before the original effective date. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company has not yet determined the potential effects of adopting ASU 2014-09 on its consolidated financial statements.

Debt Issuance Costs. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a deduction from the corresponding debt liability rather than as a separate asset. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company does not expect the provisions of ASU 2015-03 to have a material impact on its consolidated financial statements.

Cloud Computing. In April 2015, the FASB issued ASU No. 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. Among other things, ASU 2015-05 clarifies how a customer in a cloud computing arrangement should determine whether the arrangement includes a software license, and clarifies that the acquisition of a software license must be accounted for in the same manner as other licenses of intangible assets. ASU 2015-05 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company does not expect the provisions of ASU 2015-05 to have a material impact on its consolidated financial statements.

NOTE 2. ACQUISITIONS

During the six months ended June 30, 2015 and 2014, net cash payments related to the acquisitions of businesses and contracts were $9.3 million and $672.5 million, respectively. Cash payments made during the six months ended June 30, 2014 primarily related to the acquisition of Progressive. The effect of the Company's other acquisitions on the condensed consolidated financial statements for the six months ended June 30, 2015 and 2014 was not significant.

Progressive Acquisition

On April 14, 2014, the Company acquired a 100% ownership interest in Progressive. The Company completed the acquisition accounting for this transaction during the three months ended March 31, 2015. The following table presents unaudited consolidated pro forma information as if the acquisition of Progressive had occurred on January 1, 2013:

	Six Months Ended June 30,
	2014
(In Thousands)	As Reported		Pro Forma
Revenues	$	1,247,913	$	1,404,509
Net Earnings	46,844		49,654

The unaudited pro forma financial information presented above does not purport to represent what the actual results of the Company's operations would have been if the acquisition of Progressive had occurred on January 1, 2013, nor is it indicative of future performance. The unaudited pro forma financial information does not reflect the impact of future events that may occur after the acquisition, including, but not limited to, anticipated cost savings from operating synergies.

The unaudited pro forma financial information presented in the table above has been adjusted to give effect to adjustments that are (1) directly related to the business combination; (2) factually supportable; and (3) expected to have a continuing impact. These adjustments include, but are not limited to, amortization related to fair value adjustments to intangible assets and the adjustment of interest expense to reflect the additional borrowings of the Company in conjunction with the acquisition.

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NOTE 3. FAIR VALUE MEASUREMENT

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes financial liabilities measured at fair value on a recurring basis:

(In Thousands)	June 30, 2015							December 31, 2014
	Level 1		Level 2			Level 3		Level 1		Level 2			Level 3
Deferred Compensation Liability	$	—	$	(12,491	)	$	—	$	—	$	(12,677	)	$	—

The Company maintains a deferred compensation plan as described in Note 1 to these condensed consolidated financial statements. The liability representing benefits accrued for plan participants is valued at the quoted market prices of the participants’ investment elections, which consist of equity and debt "mirror" funds. As such, the Company has classified the deferred compensation liability as a Level 2 liability.

Non-Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The following table summarizes non-financial assets measured at fair value on a nonrecurring basis:

(In Thousands)	June 30, 2015						December 31, 2014
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets Held for Sale	$	—	$	6,924	$	—	$	—	$	6,356	$	—

The highest and best use of these assets held for sale is as real estate land parcels for development or real estate properties for use or lease; however, the Company has chosen not to develop or use these properties. Assets held for sale are written down to fair value less cost to sell, and the adjustment is recorded in other operating expense (income), net.

Certain Financial Assets and Liabilities Not Measured at Fair Value

The following table summarizes the fair value of assets (liabilities) that are not measured at fair value in the condensed consolidated balance sheets, but for which the fair value is disclosed:

(In Thousands)	June 30, 2015							December 31, 2014
	Level 1		Level 2			Level 3		Level 1		Level 2			Level 3
Perfect Home Notes1	$	—	$	—		$	22,758	$	—	$	—		$	21,311
Fixed-Rate Long-Term Debt2	—		(399,660		)	—		—		(429,049		)	—

¹  The Perfect Home notes were initially valued at cost. The Company periodically reviews the valuation utilizing company-specific transactions or changes in Perfect Home’s financial performance to determine if fair value adjustments are necessary.

²  The fair value of fixed-rate long-term debt is estimated using the present value of underlying cash flows discounted at a current market yield for similar instruments. The carrying value of fixed-rate long-term debt was $375.0 million and $400.0 million at June 30, 2015 and December 31, 2014, respectively.

At June 30, 2015 and December 31, 2014, investments classified as held-to-maturity securities consisted of the following:

			Gross Unrealized
(In Thousands)	Amortized Cost		Gains		Losses		Fair Value
June 30, 2015
Perfect Home Notes	$	22,758	$	—	$	—	$	22,758
December 31, 2014
Perfect Home Notes	$	21,311	$	—	$	—	$	21,311

The Company has estimated that the carrying amount of its Perfect Home notes approximates fair value and, therefore, no impairment is considered to have occurred as of June 30, 2015.

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NOTE 4. INDEBTEDNESS

See Note 6 to the consolidated financial statements in the 2014 Annual Report.

NOTE 5. COMMITMENTS AND CONTINGENCIES

Leases

The Company leases warehouse and retail store space for most of its store-based operations, call center space for Progressive's operations, and management and information technology space for corporate functions under operating leases expiring at various times through 2033. The Company also leases certain properties under capital leases that are more fully described in Note 6 to the consolidated financial statements in the 2014 Annual Report. Most of the 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. In addition, certain properties occupied under operating leases contain normal purchase options. Leasehold improvements related to these leases are generally amortized over periods that do not exceed the lesser of the lease term or 15 years. While a majority of leases do not require escalating payments, for the leases which do contain such provisions, the Company records the related expense on a straight-line basis over the lease term. The Company also leases computer equipment and transportation vehicles under operating leases expiring during the next four years. Management expects that most leases will be renewed or replaced by other leases in the normal course of business.

Guarantees

The Company has guaranteed certain debt obligations of some of its franchisees under a franchisee loan program with several banks. In the event these franchisees are unable to meet their debt service payments or otherwise experience an event of default, the Company would be unconditionally liable for the outstanding balance of the franchisees’ debt obligations under the franchisee loan program, which would be due in full within 90 days of the event of default. At June 30, 2015, the maximum amount that the Company would be obligated to repay in the event franchisees defaulted was $87.6 million. The Company has recourse rights to franchisee assets securing the debt obligations, which consist primarily of lease merchandise and fixed assets. As a result, the Company has never incurred, nor does management expect to incur, any significant losses under these guarantees. The carrying amount of the franchisee-related borrowings guarantee, which is included in accounts payable and accrued expenses in the condensed consolidated balance sheets, is $656,000 as of June 30, 2015.

The maximum facility commitment amount under the franchisee loan program is $175.0 million, including a Canadian subfacility commitment amount for loans to franchisees that operate stores in Canada of Cdn $50.0 million. The Company remains subject to the financial covenants under the franchisee loan facility.

Legal Proceedings

From time to time, the Company is party to various legal and regulatory proceedings arising in the ordinary course of business.

Some of the proceedings to which we are currently a party are described below. We believe we have defenses to all of the claims described below, and intend to vigorously defend against the claims. However, these proceedings are still developing and due to the inherent uncertainty in litigation, regulatory and similar adversarial proceedings, there can be no guarantee that we will ultimately be successful in these proceedings, or in others to which we are currently a party. Substantial losses from these proceedings or the costs of defending them could have a material adverse impact upon our business, financial position and results of operations.

The Company establishes an accrued liability for legal and regulatory proceedings when it determines that a loss is both probable and the amount of the loss can be reasonably estimated. The Company continually monitors its litigation and regulatory exposure and reviews the adequacy of its legal and regulatory reserves on a quarterly basis. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters.

At June 30, 2015, the Company had accrued $23.4 million for pending legal and regulatory matters for which it believes losses are probable, which is management's best estimate of the Company's exposure to loss, and mostly related to the now-settled regulatory investigation by the California Attorney General described below. The Company estimates that the aggregate range of possible loss in excess of accrued liabilities for such probable loss contingencies is between $0 and $3.0 million.

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At June 30, 2015, the Company estimated that the aggregate range of loss for all material pending legal and regulatory proceedings for which a loss is reasonably possible, but less likely than probable (i.e., excluding the contingencies described in the preceding paragraph), is between $65,000 to $1.2 million. Those matters for which a reasonable estimate is not possible are not included within estimated ranges and, therefore, the estimated ranges do not represent the Company's maximum loss exposure. The Company's estimates as to legal and regulatory accruals, as to aggregate probable loss amounts and as to reasonably possible loss amounts, are all subject to the uncertainties and variables described above.

Consumer

In Margaret Korrow, et al. v. Aaron's, Inc., originally filed in the Superior Court of New Jersey, Middlesex County, Law Division on October 26, 2010, plaintiff filed suit on behalf of herself and others similarly situated alleging that the Company is liable in damages to plaintiff and each class member because the Company's lease agreements issued after March 16, 2006 purportedly violated certain New Jersey state consumer statutes. Plaintiff's complaint seeks treble damages under the New Jersey Consumer Fraud Act, and statutory penalty damages of $100 per violation of all contracts issued in New Jersey, and also claims that there are multiple violations per contract. The Company removed the lawsuit to the United States District Court for the District of New Jersey on December 6, 2010 (Civil Action No.: 10-06317(JAP)(LHG)). Plaintiff on behalf of herself and others similarly situated seeks equitable relief, statutory and treble damages, pre- and post-judgment interest and attorneys' fees. Discovery on this matter is closed. On July 31, 2013, the Court certified a class comprising all persons who entered into a rent-to-own contract with the Company in New Jersey from March 16, 2006 through March 31, 2011. In August 2013, the Court of Appeals denied the Company’s request for an interlocutory appeal of the class certification issue. The Company filed a motion to allow counterclaims against all newly certified class members who may owe legitimate fees or damages to the Company or who failed to return merchandise to the Company prior to obtaining ownership. That motion was denied by the magistrate judge on June 30, 2014, but an appeal of that ruling is pending with the District Court.

Privacy and Related Matters

In Crystal and Brian Byrd v. Aaron's, Inc., Aspen Way Enterprises, Inc., John Does (1-100) Aaron's Franchisees and Designerware, LLC, filed on May 16, 2011, in the United States District Court, Western District of Pennsylvania (Case No. 1:11-CV-00101-SPB), plaintiffs alleged that the Company and its independently owned and operated franchisee Aspen Way Enterprises (“Aspen Way”) knowingly violated plaintiffs' privacy in violation of the Electronic Communications Privacy Act (“ECPA”) and the Computer Fraud Abuse Act and sought certification of a putative nationwide class. Plaintiffs based these claims on Aspen Way's use of a software program called “PC Rental Agent.” Although the District Court dismissed the Company from the original lawsuit on March 20, 2012, after certain procedural motions, on May 23, 2013, the Court granted plaintiffs' motion for leave to file a third amended complaint, which asserts the claims under the ECPA, common law invasion of privacy, added a request for injunction, and named additional independently owned and operated Company franchisees as defendants. Plaintiffs filed the third amended complaint, and the Company moved to dismiss that complaint on substantially the same grounds as it sought to dismiss plaintiffs' prior complaints. Plaintiffs seek monetary damages as well as injunctive relief. Plaintiffs filed their motion for class certification on July 1, 2013, and the Company's response was filed in August 2013. On March 31, 2014, the U.S. District Judge dismissed all claims against all franchisees other than Aspen Way Enterprises, LLC. The Court also dismissed claims for invasion of privacy, aiding and abetting, and conspiracy against all defendants. In addition, the Court denied the plaintiffs’ motion to certify the class. Finally, the Judge denied the Company’s motion to dismiss the violation of ECPA claims. Plaintiffs requested and received immediate appellate review of these rulings by the U.S. Third Circuit Court of Appeals. On April 10, 2015, the U.S. Third Circuit Court of Appeals reversed the denial of class certification on the grounds stated by the District Court, and remanded the case back to the District Court for further consideration of that and the other elements necessary for class certification. The District Court has not issued a new ruling on those matters.

In Michael Winslow and Fonda Winslow v. Sultan Financial Corporation, Aaron's, Inc., John Does (1-10), Aaron's Franchisees and Designerware, LLC, filed on March 5, 2013 in the Los Angeles Superior Court (Case No. BC502304), plaintiffs assert claims against the Company and its independently owned and operated franchisee, Sultan Financial Corporation (as well as certain John Doe franchisees), for unauthorized wiretapping, eavesdropping, electronic stalking, and violation of California's Comprehensive Computer Data Access and Fraud Act and its Unfair Competition Law. Each of these claims arises out of the alleged use of PC Rental Agent software. The plaintiffs are seeking injunctive relief and damages in connection with the allegations of the complaint. Plaintiffs are also seeking certification of a putative California class. Plaintiffs are represented by the same counsel as in the above-described Byrd litigation. In April 2013, the Company timely removed this matter to federal court. On May 8, 2013, the Company filed a motion to stay this litigation pending resolution of the Byrd litigation, a motion to dismiss for failure to state a claim, and a motion to strike certain allegations in the complaint. The Court subsequently stayed the case. The Company's motions to dismiss and strike certain allegations remain pending. On June 6, 2015, the plaintiffs filed a motion to lift the stay. The Company opposed that motion which remains pending.

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In Lomi Price v. Aaron's, Inc. and NW Freedom Corporation, filed on February 27, 2013, in the State Court of Fulton County, Georgia (Case No. 13-EV-016812B), an individual plaintiff asserts claims against the Company and its independently owned and operated franchisee, NW Freedom Corporation, for invasion of privacy/intrusion on seclusion, computer invasion of privacy and infliction of emotional distress. Each of these claims arises out of the alleged use of PC Rental Agent software.  The plaintiff is seeking compensatory and punitive damages of not less than $250,000. On April 3, 2013, the Company filed an answer and affirmative defenses. On that same day, the Company also filed a motion to stay the litigation pending resolution of the Byrd litigation, a motion to dismiss for failure to state a claim and a motion to strike certain allegations in the complaint. The court stayed the proceeding pending rulings on certain motions in the Byrd case, which expired upon remand of the case back to the District Court. On April 24, 2015, the Company filed a renewed motion to stay, which was granted on June 1, 2015.

In Michael Peterson v. Aaron’s, Inc. and Aspen Way Enterprises, Inc., filed on June 19, 2014, in the U.S. District Court for the Northern District of Georgia, several plaintiffs allege that they leased computers for use in their law practice. The plaintiffs claim that the Company and Aspen Way knowingly violated plaintiffs' privacy and the privacy of plaintiff’s legal clients in violation of the ECPA and the Computer Fraud Abuse Act. Plaintiffs seek certification of a putative nationwide class. Plaintiffs based these claims on Aspen Way's use of PC Rental Agent software. The plaintiffs claim that information and data obtained by defendants through PC Rental Agent was attorney-client privileged. The Company has filed a motion to dismiss plaintiffs' amended complaint.

Regulatory Investigations

California Attorney General Investigation. The California Attorney General investigated the Company's retail transactional practices, including various leasing and marketing practices, information security and privacy policies and practices related to the alleged use of PC Rental Agent software by certain independently owned and operated Company franchisees. The Company reached a comprehensive resolution of this matter without litigation. The final settlement and consent order were announced on October 13, 2014. The Court filed the final judgment on February 10, 2015. Payments have begun under the anticipated schedule outlined in the judgment.

Pennsylvania Attorney General Investigation. There is a pending investigation by the Pennsylvania Attorney General relating to the Company's privacy practices in Pennsylvania. The privacy issues are related to the alleged use of PC Rental Agent software by certain independently owned and operated Company franchisees, and the Company's alleged responsibility for that use. The Company cooperated in the investigation and on June 18, 2015, reached a tentative settlement of the matter. Final documentation is pending.

Other Matters

Noncompete Dispute. In January 2014, Aaron’s sold its Company-operated RIMCO stores and the rights to five franchised stores. The acquisition agreement provides that the Company will not compete with the acquiring entity for a specified period of time in certain geographic locations surrounding the purchased stores. In August 2014, the acquiring entity asserted that Aaron’s was violating the noncompete covenant in the acquisition agreement. The Company disputes that the noncompete covenant is being violated, but engaged in discussions to resolve the dispute. The Company reached a settlement for an immaterial amount. The settlement agreement was signed on May 1, 2015, and the parties finalized payment and other agreed upon actions.

Other Commitments

At June 30, 2015, the Company had non-cancelable commitments primarily related to certain advertising and marketing programs of $12.1 million.

The Company is a party to various claims and legal and regulatory proceedings arising in the ordinary course of business. Management regularly assesses the Company’s insurance deductibles, monitors the Company's litigation and regulatory exposure with the Company's attorneys and evaluates its loss experience. The Company also enters into various contracts in the normal course of business that may subject it to risk of financial loss if counterparties fail to perform their contractual obligations.

See Note 8 to the consolidated financial statements in the 2014 Annual Report for further information.

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NOTE 6. RESTRUCTURING

On July 15, 2014, the Company announced that a rigorous evaluation of the Company-operated store portfolio had been performed. As a result of this evaluation and other cost-reduction initiatives, the Company closed 44 underperforming Company-operated stores and restructured its home office and field support under a restructuring plan to more closely align with current business conditions. The restructuring was completed during the third quarter of 2014 and total restructuring charges of $9.1 million were recorded during the year ended December 31, 2014, comprised of $4.8 million related to contractual lease obligations, $3.3 million related to the write-off and impairment of property, plant and equipment, $620,000 related to workforce reductions and $395,000 related to other charges.

During the six months ended June 30, 2014, total restructuring charges were $2.3 million and were included in restructuring expenses in the consolidated statements of earnings.These charges were included in the Sales and Lease Ownership segment. The Company does not currently anticipate any remaining costs related to this restructuring plan to be material.

The following table summarizes the change in the liability associated with the restructuring charges:

(In Thousands)	Contractual Obligations Under Canceled Leases
Balance at January 1, 2015	$	3,227
Payments	(1,266		)
Balance at June 30, 2015	$	1,961

In the ordinary course of business, we continually review, and as appropriate adjust, the amount and mix of Company-operated and franchised stores to help optimize overall performance. Costs incurred to close stores during the six months ended June 30, 2015 were not significant.

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NOTE 7. SEGMENTS

As of June 30, 2015, the Company had five operating and reportable segments: Sales and Lease Ownership, Progressive, HomeSmart, Franchise and Manufacturing. The results of Progressive, which is presented as a reportable segment, have been included in the Company's consolidated results from the April 14, 2014 acquisition date.

The Aaron’s Sales & Lease Ownership division offers furniture, electronics, appliances and computers to consumers primarily on a monthly payment basis with no credit requirements. Progressive is a leading virtual lease-to-own company that provides lease-purchase solutions through over 16,000 retail locations on a variety of products, including furniture and bedding, prepaid wireless phones, consumer electronics, appliances and jewelry. The HomeSmart division offers furniture, electronics, appliances and computers to consumers primarily on a weekly payment basis with no credit requirements. The Company’s Franchise operation awards franchises and supports franchisees of its sales and lease ownership concept. The Manufacturing segment manufactures upholstered furniture and bedding predominantly for use by Company-operated and franchised stores. Therefore, the Manufacturing segment's revenues and earnings before income taxes are primarily the result of intercompany transactions, substantially all of which revenues and earnings are eliminated through the elimination of intersegment revenues and intersegment profit or loss. 

	Three Months Ended   June 30,						Six Months Ended   June 30,
(In Thousands)	2015			2014			2015			2014
Revenues From External Customers:
Sales and Lease Ownership	$	474,346		$	495,049		$	1,010,506		$	1,043,760
Progressive	255,946			128,859			507,565			128,859
HomeSmart	15,275			15,749			32,247			33,153
Franchise	15,491			16,225			32,495			34,309
Manufacturing	25,228			23,743			54,034			54,898
Other	326			367			694			2,265
Revenues of Reportable Segments	786,612			679,992			1,637,541			1,297,244
Elimination of Intersegment Revenues	(24,691		)	(23,404		)	(52,980		)	(53,662		)
Cash to Accrual Adjustments	7,128			5,902			6,302			4,331
Total Revenues from External Customers	$	769,049		$	662,490		$	1,590,863		$	1,247,913
Earnings (Loss) Before Income Taxes:
Sales and Lease Ownership	$	30,859		$	32,132		$	83,434		$	87,751
Progressive	23,314			(323		)	39,144			(323		)
HomeSmart	(126		)	(662		)	411			(731		)
Franchise	11,993			11,073			25,891			25,631
Manufacturing	376			(89		)	1,658			458
Other	(11,668		)	(28,547		)	(23,147		)	(38,474		)
Earnings Before Income Taxes for Reportable Segments	54,748			13,584			127,391			74,312
Elimination of Intersegment (Profit) Loss	(398		)	82			(1,666		)	(427		)
Cash to Accrual and Other Adjustments	10,004			(104		)	16,459			387
Total Earnings Before Income Taxes	$	64,354		$	13,562		$	142,184		$	74,272

Revenues in the Other category are primarily revenues attributable to (i) the RIMCO segment through the date of sale in January 2014, (ii) leasing space to unrelated third parties in the corporate headquarters building and (iii) several minor unrelated activities. The pre-tax losses or earnings in the Other category are the net result of the activity mentioned above, net of the portion of corporate overhead not allocated to the reportable segments for management purposes.

During the six months ended June 30, 2014, the results of the Company's operating segments were impacted by the following:

• Sales and Lease Ownership earnings before income taxes included $2.3 million of restructuring charges related to the Company's strategic decision to close 44 Company-operated stores and restructure its home office and field support.

• The results of the Other category loss before income taxes included $13.3 million in financial and advisory costs related to addressing strategic matters, including proxy contests, of which $12.4 million was incurred during the three months ended June 30, 2014. In addition, the Other category loss included $6.3 million in transaction costs related to the Progressive acquisition, of which $5.5 million was incurred during the three months ended June 30, 2014.

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(In Thousands)	June 30, 2015		December 31, 2014
Assets:
Sales and Lease Ownership	$	1,175,071	$	1,246,325
Progressive	909,440		858,159
HomeSmart	43,950		47,585
Franchise	34,949		46,755
Manufacturing1	24,222		23,050
Other	167,075		234,970
Total Assets	$	2,354,707	$	2,456,844

¹   Includes inventory (principally raw materials and work-in-process) that has been classified within lease merchandise in the condensed consolidated balance sheets of $14.9 millionand $13.2 million as of June 30, 2015 and December 31, 2014, respectively.

Earnings (loss) before income taxes for the Progressive reportable segment are determined in accordance with accounting principles generally accepted in the United States. The Company determines earnings (loss) before income taxes for all other reportable segments in accordance with accounting principles generally accepted in the United States with the following adjustments:

• Revenues in the Sales and Lease Ownership and HomeSmart segments are reported on a cash basis for management reporting purposes.

• A predetermined amount of each reportable segment’s revenues is charged to the reportable segment as an allocation of corporate overhead. This allocation was generally 5% in 2015 and 2014.

• Accruals related to store closures are not recorded on the reportable segments’ financial statements, but are maintained and controlled by corporate headquarters.

• The capitalization and amortization of manufacturing variances are recorded on the consolidated financial statements as part of Cash to Accrual and Other Adjustments and are not allocated to the segment that holds the related lease merchandise.

• Advertising expense in the Sales and Lease Ownership and HomeSmart segments is estimated at the beginning of each year and then allocated to the division ratably over time for management reporting purposes. For financial reporting purposes, advertising expense is recognized when the related advertising activities occur. The difference between these two methods is reflected as part of Cash to Accrual and Other Adjustments.

• Sales and lease ownership lease merchandise write-offs are recorded using the direct write-off method for management reporting purposes and using the allowance method for financial reporting purposes. The difference between these two methods is reflected as part of Cash to Accrual and Other Adjustments.

• Interest on borrowings is estimated at the beginning of each year. Interest is then allocated to the Sales and Lease Ownership and HomeSmart segments based on relative total assets.

NOTE 8. RELATED PARTY TRANSACTIONS

The Company leases certain properties under capital leases from related parties that are described in Notes 6 and 13 to the consolidated financial statements in the 2014 Annual Report.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Note Regarding Forward-Looking Information: Except for historical information contained herein, the matters set forth in this Form 10-Q are forward-looking statements. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from any such statements. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “expect,” “forecast,” “guidance,” “intend,” “believe,” “could,” “project,” “estimate,” “anticipate,” “should,” and similar terminology. These risks and uncertainties include factors such as changes in general economic conditions, competition, pricing, legal and regulatory proceedings, customer privacy, information security, customer demand, the integration of the Progressive acquisition, the execution and results of our new strategies, risks related to Progressive's "virtual" lease-to-own business with which the Company may be unfamiliar and the other risks and uncertainties discussed under Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2014 ("the 2014 Annual Report"), as updated in this Quarterly Report on Form 10-Q, and in our other public filings. Statements in this Quarterly Report that are “forward-looking” include, without limitation, statements regarding the expected results of our new strategy and of the Progressive acquisition. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the filing date of this Quarterly Report. Except as required by law, the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances after the filing date of this Quarterly Report.

The following discussion should be read in conjunction with the condensed consolidated financial statements as of and for the three and six months ended June 30, 2015 and 2014, including the notes to those statements, appearing elsewhere in this report. We also suggest that management’s discussion and analysis appearing in this report be read in conjunction with the management’s discussion and analysis and consolidated financial statements included in our 2014 Annual Report.

Business Overview

Aaron’s, Inc. (“we”, “our”, “us”, “Aaron’s” or the “Company”) is a leading specialty retailer of furniture, consumer electronics, computers, appliances and household accessories. On April 14, 2014, the Company acquired a 100% ownership interest in Progressive Finance Holdings, LLC (“Progressive”), a leading virtual lease-to-own company, for merger consideration of $700.0 million, net of cash acquired. Progressive provides lease-purchase solutions through over 16,000retail locations in 46 states on a variety of products, including furniture and bedding, prepaid wireless phones, consumer electronics, appliances and jewelry. It does so by purchasing merchandise from third-party retailers desired by those retailers' customers, and in turn leasing that merchandise to the customers on a lease-to-own basis. Progressive consequently has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional retailers.

On July 15, 2014, the Company announced that a rigorous evaluation of the Company-operated store portfolio had been performed, which, along with other cost-reduction initiatives, resulted in the closure of 44 underperforming stores and the realignment of home office and field support. In the ordinary course of business, we continually review, and as appropriate adjust, the amount and mix of Company-operated and franchised stores to help optimize overall performance. These adjustments included closing 25 underperforming Company-operated stores during the three months ended June 30, 2015.

Our major operating divisions are the Aaron’s Sales & Lease Ownership division, Progressive, HomeSmart and Woodhaven Furniture Industries, which manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in our stores.

Total revenues increased from $2.213 billion in 2012 to $2.695 billion in 2014, primarily as a result of the Progressive acquisition during 2014.

For the three months ended June 30, 2015, total revenues were $769.0 million, an increase of 16.1%, over the comparable period in 2014. The increase of $106.6 million was due to a $127.1 millionincrease in revenues from Progressive, partially offset by a decrease of $20.5 million in revenues from our traditional lease-to-own (“core”) business primarily resulting from a 4.4%decrease in Company-operated same store revenues. Revenues from franchise royalties and fees for the three months ended June 30, 2015 were $15.5 million, a decrease of $734,000, or 4.5%, from the comparable period in 2014.

For the six months ended June 30, 2015, total revenues were $1.6 billion, an increase of 27.5%, over the comparable period in 2014. The increase of $343.0 million was primarily due to a $378.7 millionincrease in revenues from Progressive, partially offset by a decrease of $35.8 million in revenues from our core business primarily resulting from a 4.7%decrease in Company-operated same store revenues. Revenues from franchise royalties and fees for the six months ended June 30, 2015 were $32.5 million, a decrease of $1.8 million, or 5.3%, from the comparable period in 2014.

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Same Store Revenues. We believe that changes in same store revenues are a key performance indicator of our core business. For the three months ended June 30, 2015, we calculated this amount by comparing revenues for the three months ended June 30, 2015 to revenues for the comparable period in 2014 for all stores open for the entire 15-month period ended June 30, 2015, excluding stores that received lease agreements from other acquired, closed or merged stores. For the six months ended June 30, 2015, we calculated this amount by comparing revenues for the six months ended June 30, 2015 to revenues for the comparable period in 2014 for all stores open for the entire 24-month period ended June 30, 2015, excluding stores that received lease agreements from other acquired, closed or merged stores. During the first quarter of 2015, the Company revised the methodology for calculating same store revenues to reflect a full lifecycle for customer retention after stores are closed. As a result, revenues for stores that have been consolidated/merged are now included in the comparable same store calculation after 24 months. Previously, merged stores were included in the same store calculation after 15 months. The change in the same store calculation had an immaterial impact on comparable store revenues for 2015 and 2014.

Business Environment and Company Outlook

Like many industries, the lease-to-own industry has been transformed by the internet and virtual marketplace. We believe the Progressive acquisition will be strategically transformational for the Company in this respect and will strengthen our business. We also believe the lease-to-own industry has suffered in recent periods due to economic challenges faced by our core customers. In response to these changing market conditions, we are executing a strategic plan for the core business that focuses on the following items and that we believe positions us for success over the long-term:

• Renewing our focus on same store revenue growth for our core portfolio, through improved execution, optimization of merchandising and pricing and an enhanced go-to-market strategy;

• Enhancing and growing our online platform;

• Driving cost efficiency to recapture margin, including through selling, general and administrative cost savings and rationalizing underperforming stores;

• Moderating new Company-operated store growth to result in no net store growth after store closings; and

• Strengthening and growing the franchise store base.

Key Components of Earnings

In this management’s discussion and analysis section we review our consolidated results. For the six months ended June 30, 2015, and the comparable prior year period, some of the key revenue and cost and expense items that affected earnings were as follows:

Revenues. We separate our total revenues into five components: lease revenues and fees, retail sales, non-retail sales, franchise royalties and fees, and other. Lease revenues and fees include all revenues derived from lease agreements at Company-operated stores and retail locations serviced by Progressive. Retail sales represent sales of both new and returned lease merchandise from our Company-operated stores. Non-retail sales mainly represent new merchandise sales to our Aaron’s Sales & Lease Ownership franchisees. Franchise royalties and fees represent fees from the sale of franchise rights and royalty payments from franchisees, as well as other related income from our franchised stores. Other revenues primarily relate to revenues from leasing real estate properties to unrelated third parties, as well as other miscellaneous revenues.

Depreciation of Lease Merchandise. Depreciation of lease merchandise reflects the expense associated with depreciating merchandise held for lease and leased to customers by our Company-operated stores and Progressive.

Retail Cost of Sales. Retail cost of sales represents the original or depreciated cost of merchandise sold through our Company-operated stores.

Non-Retail Cost of Sales. Non-retail cost of sales primarily represents the cost of merchandise sold to our franchisees.

Operating Expenses. Operating expenses include personnel costs, selling costs, occupancy and delivery costs, bad debt expense, and lease merchandise write-offs, among other expenses.

Other Operating Expense (Income), Net. Other operating expense (income), net consists of gains or losses on sales of Company-operated stores and delivery vehicles, fair value adjustments on assets held for sale and gains or losses on other dispositions of property, plant and equipment.

20

Critical Accounting Policies

Refer to the 2014 Annual Report.

Results of Operations

As of June 30, 2015, the Company had five operating and reportable segments: Sales and Lease Ownership, Progressive, HomeSmart, Franchise and Manufacturing. The results of Progressive, which are presented as a reportable segment, have been included in the Company's consolidated results from the April 14, 2014 acquisition date. In January 2014, the Company sold the 27 Company-operated RIMCO stores and the rights to five franchised RIMCO stores, which are included as part of the Other category.

The Company’s Sales and Lease Ownership, Progressive, HomeSmart and Franchise segments accounted for substantially all of the operations of the Company and, therefore, unless otherwise noted, only material changes within these four segments are discussed. The production of our Manufacturing segment, consisting of the Woodhaven Furniture Industries division, is primarily leased or sold through the Company-operated and franchised stores, and consequently, substantially all of that segment’s revenues and earnings before income taxes are eliminated through the elimination of intersegment revenues and intersegment profit or loss.

Results of Operations – Three months ended June 30, 2015 and 2014

	Three Months Ended   June 30,						Change
(In Thousands)	2015			2014			$			%
REVENUES:
Lease Revenues and Fees	$	660,472		$	552,494		$	107,978		19.5	%
Retail Sales	7,073			8,419			(1,346		)	(16.0	)
Non-Retail Sales	84,449			83,893			556			.7
Franchise Royalties and Fees	15,491			16,225			(734		)	(4.5	)
Other	1,564			1,459			105			7.2
	769,049			662,490			106,559			16.1
COSTS AND EXPENSES:
Depreciation of Lease Merchandise	294,362			232,715			61,647			26.5
Retail Cost of Sales	4,849			5,478			(629		)	(11.5	)
Non-Retail Cost of Sales	76,463			76,227			236			.3
Operating Expenses	325,555			311,116			14,439			4.6
Financial Advisory and Legal Costs	—			12,404			(12,404		)	nmf
Progressive-Related Transaction Costs	—			5,464			(5,464		)	nmf
Restructuring Expenses	—			2,264			(2,264		)	nmf
Other Operating Expense, Net	277			5			272			nmf
	701,506			645,673			55,833			8.6
OPERATING PROFIT	67,543			16,817			50,726			301.6
Interest Income	792			1,074			(282		)	(26.3	)
Interest Expense	(5,622		)	(5,479		)	143			2.6
Other Non-Operating Income, Net	1,641			1,150			491			42.7
EARNINGS BEFORE INCOME TAXES	64,354			13,562			50,792			374.5
INCOME TAXES	23,808			5,057			18,751			370.8
NET EARNINGS	$	40,546		$	8,505		$	32,041		376.7	%
nmf - Calculation is not meaningful

21

Revenues

Information about our revenues by reportable segment is as follows:

	Three Months Ended   June 30,						Change
(In Thousands)	2015			2014			$			%
REVENUES:
Sales and Lease Ownership1	$	474,346		$	495,049		$	(20,703	)	(4.2	)%
Progressive2	255,946			128,859			127,087			98.6
HomeSmart1	15,275			15,749			(474		)	(3.0	)
Franchise3	15,491			16,225			(734		)	(4.5	)
Manufacturing	25,228			23,743			1,485			6.3
Other	326			367			(41		)	(11.2	)
Revenues of Reportable Segments	786,612			679,992			106,620			15.7
Elimination of Intersegment Revenues	(24,691		)	(23,404		)	(1,287		)	(5.5	)
Cash to Accrual Adjustments	7,128			5,902			1,226			20.8
Total Revenues from External Customers	$	769,049		$	662,490		$	106,559		16.1	%
1  Segment revenue principally consists of lease revenues and fees, retail sales and non-retail sales, and is presented on a cash basis.
2  Segment revenue consists of lease revenues and fees.
3 Segment revenue consists of franchise royalties and fees.

Sales and Lease Ownership. Sales and Lease Ownership segment revenues decreased$20.7 million to $474.3 million primarily due to a $20.0 milliondecrease in lease revenues and fees and a $1.3 milliondecrease in retail sales, partially offset by a $358,000increase in non-retail sales. Lease revenues and fees within the Sales and Lease Ownership segment decreased due to a 4.4%decrease in same store revenues and the net reduction of 51 Sales and Lease Ownership stores during the 15-month period ended June 30, 2015.

Progressive. Progressive segment revenues increased$127.1 million to $255.9 million primarily due to increases in invoice volumes at existing retail locations as well as a net increase of approximately 1,000 retail locations served over a trailing twelve month period. Progressive segment revenues have been included in the Company's consolidated results from the April 14, 2014 acquisition date.

HomeSmart. HomeSmart segment revenues decreased$474,000 to $15.3 million primarily due to a 2.7%decrease in lease revenues and fees. Lease revenues and fees within the HomeSmart segment decreased due to a 4.0%decrease in same store revenues.

Franchise. Franchise segment revenues decreased$734,000 to $15.5 million due to a 1.6%decrease in same store revenues of existing franchised stores and the impact of the net reduction of one franchised store during the 15-month period ended June 30, 2015.

Other. Revenues in the Other category are primarily revenues attributable to leasing space to unrelated third parties in the corporate headquarters building and revenues from several minor unrelated activities.

Costs and Expenses

Depreciation of lease merchandise. Depreciation of lease merchandise increased$61.6 million, or 26.5%, to $294.4 million during the three months ended June 30, 2015, from $232.7 million during the comparable period in 2014. Levels of merchandise on lease for the Aaron's core business remained consistent year over year, resulting in idle merchandise representing approximately6%of total depreciation expense in 2015 and 2014. As a percentage of total lease revenues and fees, depreciation of lease merchandise increased to 44.6% from 42.1% in the prior year period, primarily due to the inclusion of Progressive's results of operations from the April 14, 2014 acquisition date. Progressive's inclusion increased depreciation as a percentage of lease revenues because, among other factors, its merchandise has a shorter average life on lease and a higher rate of early buyouts than our traditional lease-to-own business.

Retail cost of sales. Retail cost of sales decreased$629,000, or 11.5%, to $4.8 million during the three months ended June 30, 2015, from $5.5 million for the comparable period in 2014, and increased as a percentage of sales to 68.6% from 65.1% due to continued increased discounting of pre-leased merchandise.

22

Non-retail cost of sales. Non-retail cost of sales increased$236,000, or .3%, to $76.5 million during the three months ended June 30, 2015, from $76.2 million for the comparable period in 2014, and as a percentage of non-retail sales, remained consistent at approximately 91% in both 2015 and 2014.

Operating expenses. Operating expenses increased$14.4 million, or 4.6%, to $325.6 million during the three months ended June 30, 2015, from $311.1 million for the comparable period in 2014 due primarily to the consolidation of Progressive's results of operations from the April 2014 acquisition date. As a percentage of total revenues, operating expenses decreased to 42.3% in 2015 from 47.0% in 2014 as a result of cost reductions in personnel, advertising, facility rent, lease merchandise-related costs and other operating costs in Aaron's core business.

Financial advisory and legal costs. Financial advisory and legal costs of $12.4 million were incurred during the three months ended June 30, 2014 related to addressing now-resolved strategic matters, including an unsolicited acquisition offer, two proxy contests and certain other shareholder proposals.

Progressive-related transaction costs. Financial advisory and legal costs of $5.5 million were incurred during the three months ended June 30, 2014 in connection with the acquisition of Progressive.

Restructuring expenses. In connection with the Company's July 15, 2014 announced closure of 44 Company-operated stores and restructuring of its home office and field support, charges of $2.3 million were incurred during the three months ended June 30, 2014 related to the write-off and impairment of property, plant and equipment.

Other Operating Expense, Net

Other operating expense, net consists of gains or losses on sales of Company-operated stores and delivery vehicles, fair value adjustments on assets held for sale and gains or losses on other dispositions of property, plant and equipment. Information about the components of other operating expense, net is as follows:

	Three Months Ended   June 30,
(In Thousands)	2015		2014
Losses (gains) on sales of stores and delivery vehicles	$	103	$	(245	)
Losses on asset dispositions and assets held for sale	174		250
Other operating expense, net	$	277	$	5

Operating Profit

Interest income. Interest income decreased to $792,000 during the three months ended June 30, 2015 compared with $1.1 million for the comparable period in 2014.

Interest expense. Interest expense increased to $5.6 million for the three months ended June 30, 2015 compared with $5.5 million for the comparable period in 2014.

Other non-operating income, net. Other non-operating income, net includes the impact of foreign currency exchange gains and losses, as well as gains and losses resulting from changes in the cash surrender value of Company-owned life insurance related to the Company’s deferred compensation plan. Included in other non-operating income, net were foreign exchange transaction gains of $1.4 million and $862,000 during the three months ended June 30, 2015 and 2014, respectively. Changes in the cash surrender value of Company-owned life insurance resulted in gains of $230,000 and $288,000 during the three months ended June 30, 2015 and June 30, 2014 respectively.

23

Earnings Before Income Taxes

Information about our earnings (loss) before income taxes by reportable segment is as follows:

	Three Months Ended June 30,						Change
							2015 vs. 2014
(In Thousands)	2015			2014			$			%
EARNINGS (LOSS) BEFORE INCOME TAXES:
Sales and Lease Ownership	$	30,859		$	32,132		$	(1,273	)	(4.0	)%
Progressive	23,314			(323		)	23,637			nmf
HomeSmart	(126		)	(662		)	536			81.0
Franchise	11,993			11,073			920			8.3
Manufacturing	376			(89		)	465			522.5
Other	(11,668		)	(28,547		)	16,879			59.1
Earnings Before Income Taxes for Reportable Segments	54,748			13,584			41,164			303.0
Elimination of Intersegment (Profit) Loss	(398		)	82			(480		)	(585.4	)
Cash to Accrual and Other Adjustments	10,004			(104		)	10,108			nmf
Total	$	64,354		$	13,562		$	50,792		374.5	%
nmf - Calculation is not meaningful

Earnings before income taxes for the three months ended June 30, 2014 were impacted by $12.4 million in financial advisory and legal costs related to addressing strategic matters, including proxy contests, and $5.5 million in transaction costs related to the Progressive acquisition, both of which have been included in the Other category. In addition, earnings before income taxes for the three months ended June 30, 2014 included $2.3 million in charges related to the closure of 44 Company-operated stores and restructuring of the Company's home office and field support, which has been included in the Sales and Lease Ownership segment results.

Income Tax Expense

Income tax expense increased$18.8 million to $23.8 million for the three months ended June 30, 2015, compared to $5.1 million for the comparable period in 2014, primarily due to the increase in earnings before income taxes between those two periods. The effective tax rate also decreased to 37.0% for the second quarter of 2015 from 37.3% for the second quarter of 2014.

Net Earnings

Net earnings increased$32.0 million to $40.5 million during the three months ended June 30, 2015 from $8.5 million during the three months ended June 30, 2014. As a percentage of total revenues, net earnings were 5.3% and 1.3% in 2015 and 2014, respectively.

24

Results of Operations – Six months endedJune 30, 2015 and 2014

	Six Months Ended   June 30,						Change
(In Thousands)	2015			2014			$			%
REVENUES:
Lease Revenues and Fees	$	1,355,754		$	1,012,310		$	343,444		33.9	%
Retail Sales	19,067			22,929			(3,862		)	(16.8	)
Non-Retail Sales	180,486			175,518			4,968			2.8
Franchise Royalties and Fees	32,495			34,309			(1,814		)	(5.3	)
Other	3,061			2,847			214			7.5
	1,590,863			1,247,913			342,950			27.5
COSTS AND EXPENSES:
Depreciation of Lease Merchandise	610,348			400,627			209,721			52.3
Retail Cost of Sales	12,553			14,491			(1,938		)	(13.4	)
Non-Retail Cost of Sales	163,315			159,134			4,181			2.6
Operating Expenses	653,475			573,815			79,660			13.9
Financial Advisory and Legal Costs	—			13,276			(13,276		)	nmf
Progressive-Related Transaction Costs	—			6,267			(6,267		)	nmf
Restructuring Expenses	—			2,264			(2,264		)	nmf
Other Operating Income, Net	(1,183		)	(672		)	(511		)	(76.0	)
	1,438,508			1,169,202			269,306			23.0
OPERATING PROFIT	152,355			78,711			73,644			93.6
Interest Income	1,231			1,827			(596		)	(32.6	)
Interest Expense	(11,591		)	(7,012		)	4,579			65.3
Other Non-Operating Income, Net	189			746			(557		)	(74.7	)
EARNINGS BEFORE INCOME TAXES	142,184			74,272			67,912			91.4
INCOME TAXES	52,395			27,428			24,967			91.0
NET EARNINGS	$	89,789		$	46,844		$	42,945		91.7	%
nmf - Calculation is not meaningful

Revenues

Information about our revenues by reportable segment is as follows:

	Six Months Ended   June 30,						Change
(In Thousands)	2015			2014			$			%
REVENUES:
Sales and Lease Ownership1	$	1,010,506		$	1,043,760		$	(33,254	)	(3.2	)%
Progressive2	507,565			128,859			378,706			293.9
HomeSmart1	32,247			33,153			(906		)	(2.7	)
Franchise3	32,495			34,309			(1,814		)	(5.3	)
Manufacturing	54,034			54,898			(864		)	(1.6	)
Other	694			2,265			(1,571		)	(69.4	)
Revenues of Reportable Segments	1,637,541			1,297,244			340,297			26.2
Elimination of Intersegment Revenues	(52,980		)	(53,662		)	682			1.3
Cash to Accrual Adjustments	6,302			4,331			1,971			45.5
Total Revenues from External Customers	$	1,590,863		$	1,247,913		$	342,950		27.5	%
1  Segment revenue principally consists of lease revenues and fees, retail sales and non-retail sales, and is presented on a cash basis.
2  Segment revenue consists of lease revenues and fees.
3 Segment revenue consists of franchise royalties and fees.

25

Sales and Lease Ownership. Sales and Lease Ownership segment revenues decreased$33.3 million to $1.0 billion primarily due to a $35.0 milliondecrease in lease revenues and fees and a $3.7 milliondecrease in retail sales, partially offset by a $5.1 millionincrease in non-retail sales. Lease revenues and fees within the Sales and Lease Ownership segment decreased due to a 4.6%decrease in same store revenues and the net reduction of 24 Sales and Lease Ownership stores during the 24-month period ended June 30, 2015.

Progressive. Progressive segment revenues increased$378.7 million to $507.6 million primarily because Progressive was acquired on April 14, 2014 and its results have been included in the Company's consolidated results only from that date.

HomeSmart. HomeSmart segment revenues decreased$906,000 to $32.2 million primarily due to a 2.7%decrease in lease revenues and fees. Lease revenues and fees within the HomeSmart segment decreased due to a 6.4%decrease in same store revenues, which more than offset the impact of the net addition of five Company-owned stores during the 24-month period ended June 30, 2015.

Franchise. Franchise segment revenues decreased$1.8 million to $32.5 million due to a 2.5%decrease in same store revenues of existing franchised stores, which more than offset the impact of the net addition of 23 franchised stores during the 24-month period ended June 30, 2015.

Other. Revenues in the Other category are primarily revenues attributable to (i) the RIMCO segment through the date of sale in January 2014, (ii) leasing space to unrelated third parties in the corporate headquarters building and (iii) revenues from several minor unrelated activities.

Costs and Expenses

Depreciation of lease merchandise.Depreciation of lease merchandise increased$209.7 million, or 52.3%, to $610.3 million during the six months ended June 30, 2015, from $400.6 million during the comparable period in 2014. Levels of merchandise on lease for the Aaron's core business remained consistent year over year, resulting in idle merchandise representing approximately 6% of total depreciation expense in 2015 and 2014. As a percentage of total lease revenues and fees, depreciation of lease merchandise increased to 45.0% from 39.6% in the prior year period, primarily due to the inclusion of Progressive's results of operations from the April 14, 2014 acquisition date. Progressive's inclusion increased depreciation as a percentage of lease revenues because, among other factors, its merchandise has a shorter average life on lease and a higher rate of early buyouts than our traditional lease-to-own business.

Retail cost of sales. Retail cost of sales decreased$1.9 million, or 13.4%, to $12.6 million during the six months ended June 30, 2015, from $14.5 million for the comparable period in 2014, and as a percentage of retail sales, increased to 65.8% from 63.2% due to continued increased discounting of pre-leased merchandise.

Non-retail cost of sales. Non-retail cost of sales increased$4.2 million, or 2.6%, to $163.3 million during the six months ended June 30, 2015, from $159.1 million for the comparable period in 2014, and as a percentage of non-retail sales, remained consistent at approximately 91% in both periods.

Operating expenses. Operating expenses increased$79.7 million, or 13.9%, to $653.5 million during the six months ended June 30, 2015, from $573.8 million for the comparable period in 2014 due primarily to the consolidation of Progressive's results of operations from the April 2014 acquisition date. As a percentage of total revenues, operating expenses decreased to 41.1% in 2015 from 46.0% in 2014 as a result of cost reductions in personnel, advertising, facility rent, lease merchandise-related costs and other operating costs in Aaron's core business, as well as the acquisition of Progressive in April 2014.

Financial advisory and legal costs. Financial advisory and legal costs of $13.3 million were incurred during the six months ended June 30, 2014 related to addressing now-resolved strategic matters, including an unsolicited acquisition offer, two proxy contests and certain other shareholder proposals.

Progressive-related transaction costs. Financial advisory and legal costs of $6.3 million were incurred during the six months ended June 30, 2014 in connection with the acquisition of Progressive.

Restructuring expenses. In connection with the Company's July 15, 2014 announced closure of 44 Company-operated stores and restructuring of its home office and field support, charges of $2.3 million were incurred during the six months ended June 30, 2014 related to the write-off and impairment of property, plant and equipment.

26

Other Operating Income, Net

Other operating income, net consists of gains or losses on sales of Company-operated stores and delivery vehicles, impairment of property, plant and equipment, fair value adjustments on assets held for sale and gains or losses on other dispositions of property, plant and equipment. Information about the components of other operating income, net is as follows:

	Six Months Ended   June 30,
(In Thousands)	2015			2014
Gains on sales of stores and delivery vehicles	$	(2,290	)	$	(2,050	)
Impairment charges and losses on asset dispositions	1,107			1,378
Other operating income, net	$	(1,183	)	$	(672	)

During the six months ended June 30, 2015, other operating income, net included net gains of $1.3 million from the sale of 19 Aaron’s Sales & Lease Ownership stores. In addition, the Company recognized impairment charges of $793,000 on leasehold improvements related to Company-operated stores that were closed during the period.

During the six months ended June 30, 2014, other operating income, net included $838,000 in losses incurred on the sale of the 27 Company-operated RIMCO stores in January 2014. In addition, the Company recognized gains of $1.5 million from the sale of five Aaron's Sales & Lease Ownership stores during the six months ended June 30, 2014.

Operating Profit

Interest income. Interest income decreased to $1.2 million during the six months ended June 30, 2015 compared with $1.8 million for the comparable period in 2014.

Interest expense. Interest expense increased$4.6 million to $11.6 million for the six months ended June 30, 2015 from $7.0 million in 2014 due primarily to $491.3 million of additional debt financing incurred in connection with the April 2014 Progressive acquisition.

Other non-operating income, net. Other non-operating income, net includes the impact of foreign currency exchange gains and losses, as well as gains and losses resulting from changes in the cash surrender value of Company-owned life insurance related to the Company’s deferred compensation plan. Included in other non-operating income, net were foreign exchange transaction losses of $312,000 and gains of $461,000 during the six months ended June 30, 2015 and 2014, respectively. Gains related to the changes in the cash surrender value of Company-owned life insurance were $501,000 and $285,000 during the six months ended June 30, 2015 and June 30, 2014 respectively.

Earnings Before Income Taxes

Information about our earnings (loss) before income taxes by reportable segment is as follows:

	Six Months Ended June 30,						Change
							2015 vs. 2014
(In Thousands)	2015			2014			$			%
EARNINGS (LOSS) BEFORE INCOME TAXES:
Sales and Lease Ownership	$	83,434		$	87,751		$	(4,317	)	(4.9	)%
Progressive	39,144			(323		)	39,467			nmf
HomeSmart	411			(731		)	1,142			156.2
Franchise	25,891			25,631			260			1.0
Manufacturing	1,658			458			1,200			262.0
Other	(23,147		)	(38,474		)	15,327			39.8
Earnings Before Income Taxes for Reportable Segments	127,391			74,312			53,079			71.4
Elimination of Intersegment Profit	(1,666		)	(427		)	(1,239		)	(290.2	)
Cash to Accrual and Other Adjustments	16,459			387			16,072			nmf
Total	$	142,184		$	74,272		$	67,912		91.4	%
nmf - Calculation is not meaningful

27

Earnings before income taxes for the six months ended June 30, 2014 were impacted by $13.3 million in financial advisory and legal costs related to addressing strategic matters, including proxy contests, and $6.3 million in transaction costs related to the Progressive acquisition, both of which have been included in the Other category. In addition, earnings before income taxes for the six months ended June 30, 2014 included $2.3 million in charges related to the closure of 44 Company-operated stores and restructuring of the Company's home office and field support, which has been included in the Sales and Lease Ownership segment results.

Income Tax Expense

Income tax expense increased$25.0 million to $52.4 million for the six months ended June 30, 2015 compared to $27.4 million for the same period in 2014. The effective tax rate was 36.9% for the six months ended June 30, 2015 and 2014.

Net Earnings

Net earnings increased$42.9 million to $89.8 million during the six months ended June 30, 2015 from $46.8 million during the six months ended June 30, 2014, representing a 91.7%increase. As a percentage of total revenues, net earnings were 5.6% and 3.8% in 2015 and 2014, respectively.

Overview of Financial Position

The major changes in the condensed consolidated balance sheet from December 31, 2014 to June 30, 2015 are as follows:

• Cash and cash equivalents increased$87.6 million to $91.1 million at June 30, 2015 from $3.5 million at December 31, 2014. For additional information, refer to the “Liquidity and Capital Resources” section below.

• Income tax receivable decreased$112.4 million due to the enactment of the Tax Increase Prevention Act of 2014 in December 2014, which extended bonus depreciation on eligible inventory held during 2014. Throughout 2014, the Company made payments based on the previously enacted law, resulting in an overpayment when the current act was signed. During the six months ended June 30, 2015, the Company applied for and received a $100.0 million refund from the Internal Revenue Service (“IRS”).

• Deferred income taxes decreased$70.4 million due primarily to the reversal of accelerated bonus depreciation deductions on lease merchandise that were taken in prior periods.

• Debt decreased$111.2 million due primarily to the net repayment of $81.6 million in revolving credit borrowings and term loans outstanding as of December 31, 2014. Refer to “Liquidity and Capital Resources” below for further details regarding the Company's financing arrangements.

Liquidity and Capital Resources

General

For the six months ended June 30, 2015 and 2014, cash provided by operating activities was $219.3 million and cash used in operating activities was $24.6 million, respectively. The $243.9 millionincrease in operating cash flows during the six months ended June 30, 2015 as compared to the six months ended June 30, 2014 was due primarily to a $115.6 millionincrease related to a reduction in the Company's income tax receivable that existed as of December 31, 2014 and a $77.6 milliondecrease in lease merchandise, net of the effects of acquisitions and dispositions. The change in income tax receivable is due to the enactment of the Tax Increase Prevention Act of 2014 in December 2014, which extended bonus depreciation on eligible inventory held during 2014. Throughout 2014, the Company made payments based on the previously enacted law, resulting in an overpayment when the current act was signed. During the six months ended June 30, 2015, the Company applied for and received a $100.0 million income tax refund from the IRS.

Purchases of sales and lease ownership stores initially have a positive impact on operating cash flows because the lease merchandise, other assets and intangibles acquired are recognized as investing cash outflows in the period of acquisition. However, the initial positive impact may not be indicative of the extent to which these stores will contribute positively to operating cash flows in future periods. The amount of lease merchandise purchased in store acquisitions and shown under investing activities was $3.1 million during the six months ended June 30, 2015. The amount of lease merchandise purchased and shown under investing activities was $141.9 million during the six months ended June 30, 2014, substantially all of which was the direct result of the April 14, 2014 Progressive acquisition.

28

Sales of Company-operated stores are an additional source of investing cash flows, and resulted in net cash proceeds of $8.3 million during the six months ended June 30, 2015. Proceeds from such sales were $15.8 million during the six months ended June 30, 2014 and included cash consideration of $10.0 million from a third party in connection with the sale of the 27 Company-operated RIMCO stores and the rights to five franchised RIMCO stores in January 2014. The amount of lease merchandise sold in these sales and shown under investing activities was $6.5 million and $2.7 million during the six months ended June 30, 2015 and 2014, respectively.

Our primary capital requirements consist of buying lease merchandise for sales and lease ownership stores and Progressive's operations. As we continue to grow, the need for additional lease merchandise is expected to remain our major capital requirement. Other capital requirements include purchases of property, plant and equipment, expenditures for acquisitions and income tax payments. These capital requirements historically have been financed through:

• cash flows from operations;

• trade credit with vendors;

• private debt offerings;

• bank debt;

• proceeds from the sale of lease return merchandise; and

• stock offerings.

Debt Financing

As of June 30, 2015, $109.4 million in term loans were outstanding under the revolving credit agreement. Our current revolving credit facility matures December 9, 2019 and the total available credit on the facility as of June 30, 2015 was $225.0 million.

As of June 30, 2015, the Company had outstanding $300.0 million in aggregate principal amount of senior unsecured notes issued in a private placement in connection with the April 14, 2014 Progressive acquisition. The notes bear interest at the rate of 4.75% per year and mature on April 14, 2021. Payments of interest are due quarterly, commencing July 14, 2014, with principal payments of $60.0 million each due annually commencing April 14, 2017.

As of June 30, 2015, the Company had outstanding $75.0 million in senior unsecured notes originally issued to several insurance companies in a private placement in July 2011. Effective April 28, 2014, the notes bear interest at the rate of 3.95% per year and mature on April 27, 2018. Quarterly payments of interest commenced July 27, 2011, and annual principal payments of $25.0 million commenced April 27, 2014.

Our revolving credit and term loan agreement and senior unsecured notes, and our franchisee loan agreement discussed below, contain certain financial covenants. These covenants include requirements that the Company maintain ratios of (i) EBITDA plus lease expense to fixed charges of no less than 1.75:1.00 through December 31, 2015 and 2.00:1.00 thereafter and (ii) total debt to EBITDA of no greater than 3.25:1.00 through December 31, 2015 and 3.00:1.00 thereafter. In each case, EBITDA refers to the Company’s consolidated earnings before interest and tax expense, depreciation (other than lease merchandise depreciation), amortization expense and other non-cash charges. If we fail to comply with these covenants, we will be in default under these agreements, and all amounts will become due immediately. We were in compliance with all of these covenants at June 30, 2015 and believe that we will continue to be in compliance in the future.

Share Repurchases

We purchase our stock in the market from time to time as authorized by our Board of Directors. As of June 30, 2015, we have the authority to purchase 10,496,421 additional shares.

Dividends

We have a consistent history of paying dividends, having paid dividends for 28 consecutive years. At its November 2014 meeting, our board of directors increased the quarterly dividend by 9.5%, raising it to $.023 per share from $.021 per share.Aggregate dividend payments for the six months ended June 30, 2015 were $1.7 million. Subject to sufficient operating profits, any future capital needs and other contingencies, we currently expect to continue our policy of paying dividends.

If we achieve our expected level of growth in our operations, we anticipate we will supplement our expected cash flows from operations, existing credit facilities, vendor credit and proceeds from the sale of lease return merchandise by expanding our existing credit facilities, by securing additional debt financing, or by seeking other sources of capital to ensure we will be able to fund our capital and liquidity needs for at least the next 12 to 24 months.

29

Commitments

Income Taxes. During the six months ended June 30, 2015, we received income tax refunds, net of payments, of $13.1 million. Within the next six months, we anticipate that we will make cash payments for federal and state income taxes of approximately $113.0 million.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 allowed for deduction of 100% of the adjusted basis of qualified property for assets placed in service after September 8, 2010 and before December 31, 2011. The American Taxpayer Relief Act of 2012 extended bonus depreciation of 50% through the end of 2013. The Tax Increase Prevention Act of 2014 signed into law on December 20, 2014 extended bonus depreciation and reauthorized work opportunity tax credits through the end of 2014. As a result, the Company received a $100.0 million refund from the IRS during the six months ended June 30, 2015. Accordingly, our cash flow benefited from having a lower cash tax obligation, which, in turn, provided additional cash flow from operations. Because of our sales and lease ownership model, in which the Company remains the owner of merchandise on lease, we benefit more from bonus depreciation, relatively, than traditional furniture, electronics and appliance retailers.

In future years, we may have to make increased tax payments on our earnings as a result of expected profitability and the reversal of the accelerated depreciation deductions that were taken in 2014 and prior periods. We estimate that at December 31, 2014, the remaining tax deferral associated with the acts described above was approximately $176.0 million, of which approximately 79% is expected to reverse in 2015 and most of the remainder during 2016 and 2017.

Leases. We lease warehouse and retail store space for most of our store-based operations, call center space for Progressive's operations, and management and information technology space for corporate functions under operating leases expiring at various times through 2033. Most of the 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. We also lease computer equipment and transportation vehicles under operating leases expiring during the next four years. We expect that most leases will be renewed or replaced by other leases in the normal course of business. Approximate future minimum rental payments required under operating leases that have initial or remaining non-cancelable terms in excess of one year as of June 30, 2015 are shown in the table below under “Contractual Obligations and Commitments.”

As of June 30, 2015, we have 20 capital leases, 19 of which are with a limited liability company (“LLC”) whose managers and owners are five current officers (of which four are current executive officers) and six former officers of the Company, with no individual owning more than 13.33% of the LLC. Nine of these related party leases relate to properties purchased from us in October and November of 2004 by the LLC for a total purchase price of $6.8 million. The LLC is leasing back these properties to us for a 15-year term, with a five-year renewal at our option, at an aggregate annual lease amount of $788,000. Another 10 of these related party leases relate to properties purchased from the Company in December 2002 by the LLC for a total purchase price of approximately $5.0 million. The LLC leases back these properties to the Company for a 15-year term at an aggregate annual lease amount of $1.2 million. We do not currently plan to enter into any similar related party lease transactions in the future.

In the past, we financed a small portion of our store expansion through sale-leaseback transactions. The properties were generally sold at net book value and the resulting leases qualified and are accounted for as operating leases. We do not have any retained or contingent interests in the stores nor do we provide any guarantees, other than a corporate level guarantee of lease payments, in connection with the sale-leasebacks. The operating leases that resulted from these transactions are included in the table below under “Contractual Obligations and Commitments.”

Franchise Loan Guaranty. We have guaranteed the borrowings of certain independent franchisees under a franchise loan agreement with several banks. Our franchise loan facility matures December 9, 2015 and the maximum commitment available under the facility as of June 30, 2015 was $175.0 million.

At June 30, 2015, the portion that we might be obligated to repay in the event franchisees defaulted was $87.6 million. However, due to franchisee borrowing limits, we believe any losses associated with any defaults would be mitigated through recovery of lease merchandise and other assets. Since the inception of the franchise loan program in 1994, we have had no significant associated losses. We believe the likelihood of any significant amounts being funded in connection with these commitments to be remote.

30

Contractual Obligations and Commitments. The following table shows the approximate contractual obligations, including interest, and commitments to make future payments as of June 30, 2015:

(In Thousands)	Total		Period Less Than 1 Year		Period 1-3         Years		Period 3-5         Years		Period Over       5 Years
Debt, Excluding Capital Leases	$	484,375	$	31,250	$	195,000	$	198,125	$	60,000
Capital Leases	10,483		2,792		4,608		2,360		723
Interest Obligations	74,015		20,457		33,597		17,202		2,759
Operating Leases	491,612		111,413		164,608		104,774		110,817
Purchase Obligations	12,076		9,932		2,144		—		—
Retirement Obligations	6,255		4,050		2,150		26		29
Regulatory Obligations	17,500		17,500		—		—		—
Total Contractual Cash Obligations	$	1,096,316	$	197,394	$	402,107	$	322,487	$	174,328

For future interest payments on variable-rate debt, which are based on a specified margin plus a base rate (LIBOR), we used the variable rate in effect at June 30, 2015 to calculate these payments. Our variable rate debt at June 30, 2015 consisted of our borrowings under our revolving credit facilities. Future interest payments related to our revolving credit facilities are based on the borrowings outstanding at June 30, 2015 through their respective maturity dates, assuming such borrowings are outstanding at that time. The variable portion of the rate at June 30, 2015 ranged between 2.06% and 2.19% for all of our variable-rate debt. Future interest payments may be different depending on future borrowing activity and interest rates.

The following table shows the Company's approximate commercial commitments as of June 30, 2015:

(In Thousands)	Total Amounts     Committed		Period Less Than 1 Year		Period 1-3 Years		Period 3-5 Years		Period Over 5 Years
Guaranteed Borrowings of Franchisees	$	87,620	$	87,620	$	—	$	—	$	—

Purchase obligations are primarily related to certain advertising and marketing programs. We have no long-term commitments to purchase merchandise nor do we have significant purchase agreements that specify minimum quantities or set prices that exceed our expected requirements for three months.

Retirement obligations primarily represent future payments associated with the retirement of the Company’s founder and Chairman of the Board during the year ended December 31, 2012 and both the Chief Executive Officer and the Chief Operating Officer during year ended December 31, 2014.

Regulatory obligations represent future payments associated with the resolution of the regulatory investigation by the California Attorney General into the Company's leasing, marketing, and privacy practices.

Deferred income tax liabilities as of June 30, 2015 were $198.1 million. This amount does not directly relate to the federal and state income tax payments described above and is not included in the total contractual obligations table because we believe this presentation would not be meaningful. Deferred income tax liabilities are calculated based on temporary differences between the tax basis of assets and liabilities and their respective book basis, which will result in taxable amounts in future years when the liabilities are settled at their reported financial statement amounts. The results of these calculations do not have a direct connection with the amount of cash taxes to be paid in any future periods. As a result, scheduling deferred income tax liabilities as payments due by period could be misleading because this scheduling would not relate to liquidity needs.

Off-Balance Sheet Arrangements

As of June 30, 2015 and December 31, 2014, we had no material off-balance sheet arrangements that had or are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity or capital resources.

Recent Accounting Pronouncements

Refer to Note 1 to the condensed consolidated financial statements for a discussion of recently issued accounting pronouncements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In connection with the Progressive acquisition in April 2014, the Company amended and restated its revolving credit agreement, amended certain financing agreements and entered into two new note purchase agreements, which are discussed in further detail in Note 6 to the consolidated financial statements in the 2014 Annual Report.

As of June 30, 2015, we had $375.0 million of senior unsecured notes outstanding at a weighted-average fixed rate of 4.6%. Amounts outstanding under our revolving credit agreement as of June 30, 2015 consisted of $109.4 million in term loans. Borrowings under the revolving credit agreement are indexed to LIBOR or the prime rate, which exposes us to the risk of increased interest costs if interest rates rise. Based on the Company's variable-rate debt outstanding as of June 30, 2015, a hypothetical 1.0% increase or decrease in interest rates would increase or decrease interest expense by $1.1 million on an annualized basis.

We do not use any significant market risk sensitive instruments to hedge commodity, foreign currency, or other risks, and hold no market risk sensitive instruments for trading or speculative purposes.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.

An evaluation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, was carried out by management, with the participation of the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as of the end of the period covered by this Quarterly Report on Form 10-Q.

No system of controls, no matter how well designed and operated, can provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that the system of controls has operated effectively in all cases. Our disclosure controls and procedures, however, are designed to provide reasonable assurance that the objectives of disclosure controls and procedures are met.

Based on management’s evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of the date of the evaluation to provide reasonable assurance that the objectives of disclosure controls and procedures are met.

Changes in Internal Control Over Financial Reporting.

There were no changes in the Company’s internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, during the six months ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are party to various legal proceedings arising in the ordinary course of business. While any proceedings contain an element of uncertainty, we do not currently believe that any of the outstanding legal proceedings to which we are a party will have a material adverse impact on our business, financial position or results of operations. However, an adverse resolution of a number of these items may have a material adverse impact on our business, financial position or results of operations. For further information, see Note 5 to the consolidated financial statements under the heading “Legal Proceedings,” which discussion is incorporated herein by reference.

ITEM 1A. RISK FACTORS

Aaron's business is subject to certain risks and uncertainties. The Company has added the risk factor below to the list of risk factors previously reported in the 2014 Annual Report. Any of the risk factors disclosed below and in the 2014 Annual Report could cause our actual results to differ materially from historical or anticipated results. These risks and uncertainties are not the only ones we face, but represent the risks that we believe are material. However, there may be additional risks that we currently consider not to be material or of which we are not currently aware, and any of these risks could cause our actual results to differ materially from historical or anticipated results.

We may be subject to new or additional federal and state financial services and consumer protection laws and regulations that could expose us to government investigations, significant compliance costs or burdens or force us to change our business practices in a manner that may be materially adverse to our operations, prospects or financial condition.

Currently, 47 states and the District of Columbia specifically regulate rent-to-own transactions, including states in which we currently operate Aaron’s Sales & Lease Ownership and HomeSmart stores, as well as states in which our Progressive business has retail partners. While no federal law currently specifically regulates the rent-to-own industry, federal legislation to regulate the industry has been proposed in the past and may be proposed in the future. For example, federal and regulatory authorities such as the Consumer Financial Protection Bureau (the “CFPB”) and the Federal Trade Commission (the “FTC”) are increasingly focused on the subprime financial marketplace in which the rent-to-own industry operates, and may propose and adopt new legislation that could result in significant adverse changes in the regulatory landscape for businesses such as ours.

The risks in Progressive’s “virtual” lease-to-own business differ in some potentially significant respects from the risks of Aaron’s store-based lease-to-own business. These risks, whether arising from the offer by third party retailers of Progressive’s lease-purchase solution alongside traditional cash, check or credit payment options or otherwise, may also be materially adverse to our operations, prospects or financial condition. Furthermore, Progressive’s business relies on third party retailers (over whom Progressive cannot exercise the degree of control and oversight that Aaron’s and its franchisees can assert over their own respective employees) for many important business functions, from advertising through lease transaction closing. Accordingly, there is the potential that regulators may target virtual lease-to-own transactions and/or new regulations or legislation could be adopted that negatively impact Progressive’s ability to offer virtual lease-to-own programs through third party retail partners.

In addition, as we execute on our strategic plans, we may expand into complementary businesses that engage in financial, banking or lending services that are subject to a variety of statutes and regulatory requirements in addition to those regulations currently applicable to our legacy operations, which may impose significant costs, limitations or prohibitions on the manner in which we currently conduct our businesses as well as those we may acquire in the future. Any additional laws or regulations may result in changes in the way our operations are regulated, exposing us to increased regulatory oversight, more burdensome regulations and increased litigation risk, each of which could have a material adverse effect on us.

Any proposed rulemaking by the CFPB, the FTC or state regulators or other adverse changes in existing laws, the passage of new adverse legislation by states or the federal government, or the introduction of additional laws or regulations applicable to complementary businesses could materially increase both our costs of complying with laws and the risk that we could be subject to government investigations and subject to sanctions if we are not in compliance. In addition, new burdensome rules or regulations could force us to modify our business model, expose us to increased litigation risk, and might reduce the economic potential of our sales and lease ownership operations.

33

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table presents our share repurchase activity for the three months ended June 30, 2015:

Period	Total Number of Shares Purchased 1	Average Price Paid per Share 2	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs 3
April 1, 2015 through April 30, 2015	—	—	—	10,496,421
May 1, 2015 through May 31, 2015	—	—	—	10,496,421
June 1, 2015 through June 30, 2015	—	—	—	10,496,421
Total	—		—

¹ The total number of shares purchased includes shares surrendered, or deemed surrendered, in satisfaction of the exercise price and/or to satisfy tax withholding obligations in connection with the exercise of stock options and/or the vesting of restricted stock issued to employees.

² Average price paid per share for shares purchased as part of our share repurchase program (includes brokerage commissions).

³ As of June 30, 2015, 10,496,421 shares of common stock remained available for repurchase under the purchase authority approved by the Company's Board of Directors and publicly announced from time-to-time.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

EXHIBIT NO.	DESCRIPTION OF EXHIBIT
10.1*	Amendment No. 4 to the Aaron's, Inc. Employees Retirement Plan and Trust, as amended and restated, dated as of April 23, 2014.
10.2*	Amendment No. 5 to the Aaron's, Inc. Employees Retirement Plan and Trust, as amended and restated, dated as of November 12, 2014.
10.3	Aaron’s, Inc. 2015 Equity and Incentive Plan (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement filed on April 7, 2015).
10.4	Form of Employee Stock Option Award Agreement under the Aaron’s, Inc. 2015 Equity and Incentive Plan (incorporated by reference to Exhibit 99.2 of the Company’s Registration Statement on Form S-8 (333-204014) filed with the SEC on May 8, 2015).
10.5	Form of Executive Performance Share Award Agreement under the Aaron’s, Inc. 2015 Equity and Incentive Plan (incorporated by reference to Exhibit 99.3 of the Company’s Registration Statement on Form S-8 (333-204014) filed with the SEC on May 8, 2015).
10.6*	Amendment to Form of Executive Performance Share Award Agreement under the Aaron's, Inc. 2015 Equity and Incentive Plan.
10.7	Form of Executive Officer Restricted Stock Unit Award Agreement under the Aaron’s, Inc. 2015 Equity and Incentive Plan (incorporated by reference to Exhibit 99.4 of the Company’s Registration Statement on Form S-8 (333-204014) filed with the SEC on May 8, 2015).
10.8*	Amendment to Form of Executive Officer Restricted Stock Unit Award Agreement under the Aaron's, Inc. 2015 Equity and Incentive Plan.
10.9	Form of Director Restricted Stock Unit Award Agreement under the Aaron’s, Inc. 2015 Equity and Incentive Plan (incorporated by reference to Exhibit 99.5 of the Company’s Registration Statement on Form S-8 (333-204014) filed with the SEC on May 8, 2015).
10.10*	Amendment to Form of Option Award Agreement for awards made in or after February 2014.
10.11*	Amendment to Form of Restricted Stock Unit Award Agreement for awards made prior to February 2014.
10.12*	Amendment to Form of Performance Share Award Agreement for awards made in or after February 2014.
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014, (ii) Condensed Consolidated Statements of Earnings for the six months ended June 30, 2015 and 2014, (iii) Condensed Consolidated Statements of Comprehensive Income for the six months ended June 30, 2015 and 2014, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014, and (v) the Notes to Condensed Consolidated Financial Statements.
*Filed herewith.

35

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of l934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		AARON’S, INC.
			(Registrant)
Date:	August 6, 2015	By:	/s/ Gilbert L. Danielson
			Gilbert L. Danielson
			Executive Vice President,
			Chief Financial Officer
Date:	August 6, 2015	By:	/s/ Robert P. Sinclair, Jr.
			Robert P. Sinclair, Jr.
			Vice President,
			Corporate Controller

36

EX-10.1

Exhibit 10.1

AMENDMENT NO. 4

TO THE

AARON’S, INC.

EMPLOYEES RETIREMENT PLAN AND TRUST

This Amendment No. 4 is made and entered into this 23rd day of April, 2014, by Aaron’s, Inc. (the “Company”).

WITNESSETH:

WHEREAS, the Company maintains the Aaron’s, Inc. Employees Retirement Plan and Trust, as amended and restated effective as of December 31, 2010, and as subsequently amended from time to time (the “Plan”), for the exclusive benefit of its employees and their beneficiaries;

WHEREAS, Article X of the Plan permits the Company to amend the Plan from time to time;

WHEREAS, the Company acquired Progressive Finance Holdings, LLC on April 15, 2014;

WHEREAS, in connection with such acquisition, Progressive Finance Holdings, LLC is an Affiliated Employer and an adopting Employer under the terms of the Plan; and

WHEREAS, the Company desires to amend the Plan effective April 15, 2014, to provide certain Employees with service credit for employment with Progressive Finance Holdings, LLC prior to its acquisition.

NOW, THEREFORE, the Plan is hereby amended as follows:

1.    A new paragraph shall be added to the end of Section 12.3 of the Plan, effective as of April 15, 2014, to read as follows:

Notwithstanding the foregoing, in determining Hours of Service, Years of Service and any period of Employment for any purpose under the Plan, the period of a “Progressive Employee’s” employment with Progressive Finance Holdings, LLC prior to its acquisition by the Company shall be counted for all purposes under the Plan. For purposes of this paragraph, a “Progressive Employee” is an Employee who was employed by Progressive Finance Holdings, LLC as of the date the Company acquired Progressive Finance Holdings, LLC.

Except as amended herein, the provisions of the Plan shall remain in full force and effect.

IN WITNESS WHEREOF, the Company has caused this Amendment No. 4 to be executed by its duly authorized corporate officer and its corporate seal to be hereunto affixed.

	AARON’S, INC.
By:	/s/ D. Chad Strickland
	D. Chad Strickland
	Senior Vice President,
	Associate Resources

EX-10.2

Exhibit 10.2

AMENDMENT NO. 5

TO THE

AARON’S, INC.

EMPLOYEES RETIREMENT PLAN AND TRUST

This Amendment No. 5 is made and entered into this 12th day of November, 2014, by Aaron’s, Inc. (the “Company”).

WITNESSETH:

WHEREAS, the Company maintains the Aaron’s, Inc. Employees Retirement Plan and Trust, as amended and restated effective as of December 31, 2010, and as subsequently amended from time to time (the “Plan”), for the exclusive benefit of its employees and their beneficiaries;

WHEREAS, Article X of the Plan permits the Company to amend the Plan from time to time;

WHEREAS, the Company desires to amend the Plan effective January 1, 2015 to (i) change the definition of Permanent and Total Disability; (ii) add a statute of limitations and a forum selection provision relating to civil actions for benefits under the Plan; and (iii) limit Elective Deferrals and Non-Tax-Deductible Voluntary Contributions to 75% of Annual Compensation.

NOW, THEREFORE, the Plan is hereby amended as follows, effective as of January 1, 2015:

1.    Section 1.45 of the Plan shall be amended to read as follows:

1.45    Permanent and Total Disability - The permanent and lasting inability of a Participant, due to illness, accident or other physical or mental incapability, to perform his usual duties and services of his Employment. A Participant shall be considered to have a Permanent and Total Disability only if he is eligible to receive a disability benefit under the terms of the Social Security Act.

2.    Section 3.1(a)(iii) of the Plan shall be amended to read as follows:

(iii)    Pay Transfers - Any Participant may specify an amount of Pay Transfers to be deferred under the Plan which, together with the amount of Roth 401(k) Contributions specified by such Participant, may be up to 75% of such Participant’s Annual Compensation for any pay period. Prior to January 1, 2015 but after April 30, 2010, each Participant was permitted to defer up to 100% of his Annual Compensation as Pay Transfers subject to the limitations contained in Sections 3.3 and 3.4. Prior to May 1, 2010, each Participant was permitted to defer up to 10% of his Annual Compensation as Pay Transfers subject to the limitations contained in Sections 3.3 and 3.4.

3.    Section 3.2(a)(i) of the Plan shall be amended to read as follows:

(i)    Any Participant may, however, if permitted by, and pursuant to and in accordance with such rules and regulations as may be established for that purpose by the Committee and subject to the limitation contained in Section 4.5, contribute to the Trust under the Plan in any fiscal year of the Employer, such amount or amounts in cash up to 75% of his Annual Compensation as he may determine to contribute. Prior to January 1, 2015 but after April 30, 2010, each Participant was permitted to contribute up to 100% of his Annual Compensation to the Trust. Prior to May 1, 2010, the amounts contributed under this Section 3.2(a), when added to all voluntary contributions made by the Participant in prior years under this Plan and under any other qualified retirement plan adopted by

the Employer, were not permitted to cause his total contributions to exceed 10% of the aggregate Annual Compensation paid to him by the Employer during all years that he has been a Participant under the plans. In addition, no voluntary contribution shall be in an amount less than One Hundred Dollars ($100.00) unless such contribution is made through an automatic payroll deduction plan and the aggregate amount contributed in a calendar year is at least $100.00. A Participant may change the amount of his contribution from year to year, provided such amount remains within the minimum and maximum limits hereinabove specified. A contribution by a Participant shall be credited to his Employee Contribution Account.

4.     The first sentence of Section 8.3(b) shall be amended to read as follows:

If the Committee determines that any claim for benefits should be denied in whole or in part, the Committee shall, by written or electronic communication, notify such claimant within a reasonable period of time but not later than 90 days after receipt of such claim that his claim has been denied.

5.     Sections 8.3(f) and 8.3(g) shall be deleted.

6.    Section 8.3(h) shall be renumbered as Section 8.3(f) and amended to read as follows:

(f)    Exhaustion of Administrative Remedies. No civil action for benefits under the Plan shall be brought unless and until the aggrieved person has (a) submitted a timely claim for benefits in accordance with this Section, (b) been notified by the Plan Administrator that the claim has been denied, (c) filed a written request for a review of the claim in accordance with this Section, (d) been notified in writing of an adverse benefit determination on review, and (e) filed the civil action within one year of the date he receives a final adverse determination of his claim on review. The Committee’s determinations made pursuant to this Section shall be final and conclusive on all parties.

7.    A new Section 12.14 shall be added to the Plan to read as follows:

12.14    Judicial Forum - Any action in connection with the Plan by an Employee or Beneficiary may be brought only in the United States District Court for the Northern District of Georgia or Fulton County, Georgia state court (if appropriate).

Except as amended herein, the provisions of the Plan shall remain in full force and effect.

IN WITNESS WHEREOF, the Company has caused this Amendment No. 5 to be executed by its duly authorized corporate officer and its corporate seal to be hereunto affixed.

	AARON’S, INC.
By:	/s/ D. Chad Strickland
	D. Chad Strickland
	Senior Vice President,
	Associate Resources

-2-

EX-10.6

Exhibit 10.6

Grants under 2015 Plan

SCHEDULE 3

Amendment to Executive Performance Share Award Agreement

Section 2.2(c) of the Executive Performance Share Award Agreement is amended to read as follows:

In the event of a Change in Control followed within two years by (A) a termination of the Grantee’s employment by the Company without Cause, or (B) initiation of the Good Reason Process by written notice of a Good Reason condition by the Grantee to the Company which subsequently results in a termination of the Grantee’s employment by the Grantee for Good Reason, in either case prior to the end of the Performance Period or prior to the date the Committee determines the Earned Award, the Grantee shall vest in full in the Target Award as of the date of the Grantee’s termination of employment. In the event of a Change in Control followed within two years by (A) a termination of the Grantee’s employment by the Company without Cause, or (B) initiation of the Good Reason Process by written notice of a Good Reason condition by the Grantee to the Company which subsequently results in a termination of the Grantee’s employment by the Grantee for Good Reason, in either case after the Committee has determined the Earned Award, the Grantee shall vest in the unvested portion of the Earned Award as of the date of the Grantee’s termination of employment. For purposes of this Agreement, (1) Good Reason shall mean that Grantee has complied with the Good Reason Process following the occurrence of any of the following events or actions: (i) any material reduction in Grantee’s base salary, unless a similar reduction is made in the base salary of all similarly situated executives, (ii) any material reduction in Grantee’s authority, duties or responsibilities, (iii) any material change in the geographic location at which Grantee must perform his duties, or (iv) any material breach of any written agreement with the Company by the Company; and (2) Good Reason Process shall mean that (i) Grantee reasonably determines in good faith that a Good Reason condition has occurred, (ii) Grantee notifies the Company in writing of the first occurrence of the Good Reason condition within 60 days of the first occurrence of such condition, (iii) Grantee cooperates in good faith with the Company’s efforts, for a period not less than 30 days following such notice (the “Cure Period”) to remedy the condition, (iv) notwithstanding such efforts, the Good Reason condition continues to exist, and (v) Grantee terminates employment within 60 days after the end of the Cure Period; provided, however, if the Company cures the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

EX-10.8

Exhibit 10.8

Grants under 2015 Plan

SCHEDULE 2

Amendment to Executive Officer Restricted Stock Unit Award Agreement

Section 2.3 of the Executive Officer Restricted Stock Unit Award Agreement is amended to read as follows:

Notwithstanding the other provisions of this Agreement, in the event of a Change in Control followed within two years by (A) a termination of the Grantee’s employment by the Company without Cause prior to the date all RSUs have vested, or (B) initiation of the Good Reason Process by written notice of a Good Reason condition by the Grantee to the Company which subsequently results in a termination of the Grantee’s employment by the Grantee for Good Reason prior to the date all RSUs have vested, the unvested RSUs shall become fully vested and nonforfeitable as of the date of the Grantee’s termination of employment. For purposes of this Agreement, (1) Good Reason shall mean that Grantee has complied with the Good Reason Process following the occurrence of any of the following events or actions: (i) any material reduction in Grantee’s base salary, unless a similar reduction is made in the base salary of all similarly situated executives, (ii) any material reduction in Grantee’s authority, duties or responsibilities, (iii) any material change in the geographic location at which Grantee must perform his duties, or (iv) any material breach of any written agreement with the Company by the Company; and (2) Good Reason Process shall mean that (i) Grantee reasonably determines in good faith that a Good Reason condition has occurred, (ii) Grantee notifies the Company in writing of the first occurrence of the Good Reason condition within 60 days of the first occurrence of such condition, (iii) Grantee cooperates in good faith with the Company’s efforts, for a period not less than 30 days following such notice (the “Cure Period”) to remedy the condition, (iv) notwithstanding such efforts, the Good Reason condition continues to exist, and (v) Grantee terminates employment within 60 days after the end of the Cure Period; provided, however, if the Company cures the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

EX-10.10

Exhibit 10.10

Grants under 2001 Plan

SCHEDULE 1

Amendment to Option Award Agreement

Section 3.6 of your Option Award Agreement is amended to read as follows:

3.6    Change in Control. Notwithstanding Section 3.5 above, in the event of a Change in Control followed within two years by (A) a termination of the Grantee’s employment by the Company without Cause, or (B) initiation of the Good Reason Process by written notice of a Good Reason condition by the Grantee to the Company which subsequently results in a termination of the Grantee’s employment by the Grantee for Good Reason, any unvested portion of the Option shall become immediately vested and exercisable as of the date of the Grantee’s termination of employment. For purposes of this Agreement, (1) Change in Control shall have the meaning set forth in the Plan modified as follows: (i) in Plan Section 2.6(a), “50 percent” shall be replaced by “35 percent”, (ii) the final proviso of Plan Section 2.6(a) that begins “and provided, however” shall be deleted, and (iii) Plan Section 2.6(d) shall be deleted; (2) Good Reason shall mean that Grantee has complied with the Good Reason Process following the occurrence of any of the following events or actions: (i) any material reduction in Grantee’s base salary, unless a similar reduction is made in the base salary of all similarly situated executives, (ii) any material reduction in Grantee’s authority, duties or responsibilities, (iii) any material change in the geographic location at which Grantee must perform his duties, or (iv) any material breach of any written agreement with the Company by the Company; and (3) Good Reason Process shall mean that (i) Grantee reasonably determines in good faith that a Good Reason condition has occurred, (ii) Grantee notifies the Company in writing of the first occurrence of the Good Reason condition within 60 days of the first occurrence of such condition, (iii) Grantee cooperates in good faith with the Company’s efforts, for a period not less than 30 days following such notice (the “Cure Period”) to remedy the condition, (iv) notwithstanding such efforts, the Good Reason condition continues to exist, and (v) Grantee terminates employment within 60 days after the end of the Cure Period; provided, however, if the Company cures the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

EX-10.11

Exhibit 10.11

Grants under 2001 Plan

SCHEDULE 2

Amendment to Restricted Stock Unit Award Agreement

Section 2.3 of the Restricted Stock Unit Award Agreement is amended to read as follows:

Notwithstanding the other provisions of this Agreement, in the event of a Change in Control followed within two years by (A) a termination of the Grantee’s employment by the Company without Cause prior to the date all RSUs have vested, or (B) initiation of the Good Reason Process by written notice of a Good Reason condition by the Grantee to the Company which subsequently results in a termination of the Grantee’s employment by the Grantee for Good Reason prior to the date all RSUs have vested, the unvested RSUs shall become fully vested and nonforfeitable as of the date of the Grantee’s termination of employment. For purposes of this Agreement, (1) Change in Control shall have the meaning set forth in the Plan modified as follows: (i) in Plan Section 2.6(a), “50 percent” shall be replaced by “35 percent”, (ii) the final proviso of Plan Section 2.6(a) that begins “and provided, however” shall be deleted, and (iii) Plan Section 2.6(d) shall be deleted; provided that, if the RSUs are subject to Code Section 409A and a change in the time or form of payment in settlement of the RSUs would occur as a result of a Change in Control, then no Change in Control shall be deemed to have occurred unless the event would also constitute a change in ownership of the Company, a change in effective control of the Company, or a change in ownership of a substantial portion of the Company’s assets under Code Section 409A; (2) Good Reason shall mean that Grantee has complied with the Good Reason Process following the occurrence of any of the following events or actions: (i) any material reduction in Grantee’s base salary, unless a similar reduction is made in the base salary of all similarly situated executives, (ii) any material reduction in Grantee’s authority, duties or responsibilities, (iii) any material change in the geographic location at which Grantee must perform his duties, or (iv) any material breach of any written agreement with the Company by the Company; and (3) Good Reason Process shall mean that (i) Grantee reasonably determines in good faith that a Good Reason condition has occurred, (ii) Grantee notifies the Company in writing of the first occurrence of the Good Reason condition within 60 days of the first occurrence of such condition, (iii) Grantee cooperates in good faith with the Company’s efforts, for a period not less than 30 days following such notice (the “Cure Period”) to remedy the condition, (iv) notwithstanding such efforts, the Good Reason condition continues to exist, and (v) Grantee terminates employment within 60 days after the end of the Cure Period; provided, however, if the Company cures the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

EX-10.12

Exhibit 10.12

Grants under 2001 Plan

SCHEDULE 3

Amendment to Performance Share Award Agreement

Section 2.2(c) of the Performance Share Award Agreement is amended to read as follows:

In the event of a Change in Control followed within two years by (A) a termination of the Grantee’s employment by the Company without Cause, or (B) initiation of the Good Reason Process by written notice of a Good Reason condition by the Grantee to the Company which subsequently results in a termination of the Grantee’s employment by the Grantee for Good Reason, in either case prior to the end of the Performance Period or prior to the date the Committee determines the Earned Award, the Grantee shall vest in full in the Target Award as of the date of the Grantee’s termination of employment. In the event of a Change in Control followed within two years by (A) a termination of the Grantee’s employment by the Company without Cause, or (B) initiation of the Good Reason Process by written notice of a Good Reason condition by the Grantee to the Company which subsequently results in a termination of the Grantee’s employment by the Grantee for Good Reason, in either case after the Committee has determined the Earned Award, the Grantee shall vest in the unvested portion of the Earned Award as of the date of the Grantee’s termination of employment. For purposes of this Agreement, (1) Change in Control shall have the meaning set forth in the Plan modified as follows: (i) in Plan Section 2.6(a), “50 percent” shall be replaced by “35 percent”, (ii) the final proviso of Plan Section 2.6(a) that begins “and provided, however” shall be deleted, and (iii) Plan Section 2.6(d) shall be deleted; provided that, if the Performance Shares are subject to Code Section 409A and a change in the time or form of payment in settlement of the Performance Shares would occur as a result of a Change in Control, then no Change in Control shall be deemed to have occurred unless the event would also constitute a change in ownership of the Company, a change in effective control of the Company, or a change in ownership of a substantial portion of the Company’s assets under Code Section 409A; (2) Good Reason shall mean that Grantee has complied with the Good Reason Process following the occurrence of any of the following events or actions: (i) any material reduction in Grantee’s base salary, unless a similar reduction is made in the base salary of all similarly situated executives, (ii) any material reduction in Grantee’s authority, duties or responsibilities, (iii) any material change in the geographic location at which Grantee must perform his duties, or (iv) any material breach of any written agreement with the Company by the Company; and (3) Good Reason Process shall mean that (i) Grantee reasonably determines in good faith that a Good Reason condition has occurred, (ii) Grantee notifies the Company in writing of the first occurrence of the Good Reason condition within 60 days of the first occurrence of such condition, (iii) Grantee cooperates in good faith with the Company’s efforts, for a period not less than 30 days following such notice (the “Cure Period”) to remedy the condition, (iv) notwithstanding such efforts, the Good Reason condition continues to exist, and (v) Grantee terminates employment within 60 days after the end of the Cure Period; provided, however, if the Company cures the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-

	I, John W. Robinson III, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Aaron's, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
	a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 6, 2015	/s/ John W. Robinson III
		John W. Robinson III
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)

	I, Gilbert L. Danielson, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Aaron's, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
	a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 6, 2015	/s/ Gilbert L. Danielson
		Gilbert L. Danielson
		Executive Vice President,
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, John W. Robinson III Chief Executive Officer of Aaron's, Inc. and subsidiaries (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 that:

The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2015 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 6, 2015	/s/ John W. Robinson III
		John W. Robinson III
		Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Gilbert L. Danielson, Chief Financial Officer of Aaron's, Inc. and subsidiaries (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 that:

The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2015 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 6, 2015	/s/ Gilbert L. Danielson
		Gilbert L. Danielson
		Executive Vice President,
		Chief Financial Officer

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Commitments and Contingencies - Additional Information (Details)		1 Months Ended	6 Months Ended
	Feb. 27, 2013 USD ($)	Jan. 31, 2014 right	Jun. 30, 2015 CAD	Jun. 30, 2015 USD ($)	Oct. 26, 2010 $ / violation
Commitments and Contingencies Disclosure [Line Items]
Leases of warehouse and retail store space under operating lease, expiring time			2033
Lease term (in years)			15 years
Event of default, loan due In full, term (in days)			90 days
Portion that Company might be obligated to repay in the event franchisees defaulted				$ 87,600,000
Fair value of franchise related borrowings				656,000,000
Loan facility to franchisees, maximum commitment amount				175,000,000.0
Loss contingency accrual				23,400,000
Minimum range of possible loss				65,000
Maximum range of possible loss				1,200,000
RIMCO
Commitments and Contingencies Disclosure [Line Items]
Number of franchise rights sold during period | right		5
Marketing and Advertising Expense
Commitments and Contingencies Disclosure [Line Items]
Contractual commitments future minimum payments due				12,100,000
Margaret Korrow
Commitments and Contingencies Disclosure [Line Items]
Statutory penalty damages, per violation (in dollars per violation) | $ / violation					100
Minimum
Commitments and Contingencies Disclosure [Line Items]
Renewal options of leases for additional periods			1 year
Range of possible loss not accrued				0
Maximum
Commitments and Contingencies Disclosure [Line Items]
Renewal options of leases for additional periods			20 years
Leases of transportation and computer equipment under operating leases, expiring period (in years)			4 years
Range of possible loss not accrued				$ 3,000,000
Maximum | Lomi Price
Commitments and Contingencies Disclosure [Line Items]
Loss contingency, damages sought, value (not less than)	$ 250,000
Amendment | Franchise Loan Facility
Commitments and Contingencies Disclosure [Line Items]
Loan facility maximum Canadian sub facility commitment amount | CAD			CAD 50,000,000

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Basis and Summary of Significant Accounting Policies Changes in Accumulated Other Comprehensive Loss by Component (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Accumulated Other Comprehensive Income [Roll Forward]
Beginning Balance			$ (90)
Other comprehensive income	$ 21	$ 11	24	$ 7
Ending Balance	(66)		(66)
Foreign Currency
Accumulated Other Comprehensive Income [Roll Forward]
Beginning Balance			(90)
Other comprehensive income			24
Ending Balance	$ (66)		$ (66)

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Information on Segments and Reconciliation to Earnings Before Income Taxes from Continuing Operations- Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Manufacturing
Segment Reporting Information [Line Items]
Inventory (principally raw materials and work-in-process)	$ 14.9	$ 13.2

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Fair Value Measurement

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurement

FAIR VALUE MEASUREMENT

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes financial liabilities measured at fair value on a recurring basis:

(In Thousands)	June 30, 2015							December 31, 2014
	Level 1		Level 2			Level 3		Level 1		Level 2			Level 3
Deferred Compensation Liability	$	—	$	(12,491	)	$	—	$	—	$	(12,677	)	$	—

The Company maintains a deferred compensation plan as described in Note 1 to these condensed consolidated financial statements. The liability representing benefits accrued for plan participants is valued at the quoted market prices of the participants’ investment elections, which consist of equity and debt "mirror" funds. As such, the Company has classified the deferred compensation liability as a Level 2 liability.

Non-Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The following table summarizes non-financial assets measured at fair value on a nonrecurring basis:

(In Thousands)	June 30, 2015						December 31, 2014
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets Held for Sale	$	—	$	6,924	$	—	$	—	$	6,356	$	—

The highest and best use of these assets held for sale is as real estate land parcels for development or real estate properties for use or lease; however, the Company has chosen not to develop or use these properties. Assets held for sale are written down to fair value less cost to sell, and the adjustment is recorded in other operating expense (income), net.

Certain Financial Assets and Liabilities Not Measured at Fair Value

The following table summarizes the fair value of assets (liabilities) that are not measured at fair value in the condensed consolidated balance sheets, but for which the fair value is disclosed:

(In Thousands)	June 30, 2015							December 31, 2014
	Level 1		Level 2			Level 3		Level 1		Level 2			Level 3
Perfect Home Notes1	$	—	$	—		$	22,758	$	—	$	—		$	21,311
Fixed-Rate Long-Term Debt2	—		(399,660		)	—		—		(429,049		)	—

¹  The Perfect Home notes were initially valued at cost. The Company periodically reviews the valuation utilizing company-specific transactions or changes in Perfect Home’s financial performance to determine if fair value adjustments are necessary.

²  The fair value of fixed-rate long-term debt is estimated using the present value of underlying cash flows discounted at a current market yield for similar instruments. The carrying value of fixed-rate long-term debt was $375.0 million and $400.0 million at June 30, 2015 and December 31, 2014, respectively.

At June 30, 2015 and December 31, 2014, investments classified as held-to-maturity securities consisted of the following:

			Gross Unrealized
(In Thousands)	Amortized Cost		Gains		Losses		Fair Value
June 30, 2015
Perfect Home Notes	$	22,758	$	—	$	—	$	22,758
December 31, 2014
Perfect Home Notes	$	21,311	$	—	$	—	$	21,311

The Company has estimated that the carrying amount of its Perfect Home notes approximates fair value and, therefore, no impairment is considered to have occurred as of June 30, 2015.

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Fair Value Measurement - Assets Measured At Fair Value on Nonrecurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets Held For Sale	$ 6,924	$ 6,356
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets Held For Sale	$ 6,924	$ 6,356

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Fair Value Measurement - Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Level 2
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Deferred Compensation Liability	$ (12,491)	$ (12,677)

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Fair Value Measurement - Fair Value of Assets (Liabilities) Not Measured at Fair Value In Consolidated Balance Sheets (Details) - USD ($) $ in Thousands		Jun. 30, 2015	Dec. 31, 2014
Level 2 | Long-term Debt
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long term debt, fair value	[1]	$ (399,660)	$ (429,049)
Level 3 | Debt Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value	[2]	$ 22,758	$ 21,311

[1] The fair value of fixed-rate long-term debt is estimated using the present value of underlying cash flows discounted at a current market yield for similar instruments. The carrying value of fixed-rate long-term debt was $375.0 million and $400.0 million at June 30, 2015 and December 31, 2014, respectively.

[2] The Perfect Home notes were initially valued at cost. The Company periodically reviews the valuation utilizing company-specific transactions or changes in Perfect Home’s financial performance to determine if fair value adjustments are necessary.

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Fair Value Measurement - Fair Value of Assets (Liabilities) Not Measured at Fair Value In Consolidated Balance Sheet - Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Long-term Debt
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long term debt, carrying value	$ 375.0	$ 400.0

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Acquisitions

6 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Acquisitions

ACQUISITIONS

During the six months ended June 30, 2015 and 2014, net cash payments related to the acquisitions of businesses and contracts were $9.3 million and $672.5 million, respectively. Cash payments made during the six months ended June 30, 2014 primarily related to the acquisition of Progressive. The effect of the Company's other acquisitions on the condensed consolidated financial statements for the six months ended June 30, 2015 and 2014 was not significant.

Progressive Acquisition

On April 14, 2014, the Company acquired a 100% ownership interest in Progressive. The Company completed the acquisition accounting for this transaction during the three months ended March 31, 2015. The following table presents unaudited consolidated pro forma information as if the acquisition of Progressive had occurred on January 1, 2013:

	Six Months Ended June 30,
	2014
(In Thousands)	As Reported		Pro Forma
Revenues	$	1,247,913	$	1,404,509
Net Earnings	46,844		49,654

The unaudited pro forma financial information presented above does not purport to represent what the actual results of the Company's operations would have been if the acquisition of Progressive had occurred on January 1, 2013, nor is it indicative of future performance. The unaudited pro forma financial information does not reflect the impact of future events that may occur after the acquisition, including, but not limited to, anticipated cost savings from operating synergies.

The unaudited pro forma financial information presented in the table above has been adjusted to give effect to adjustments that are (1) directly related to the business combination; (2) factually supportable; and (3) expected to have a continuing impact. These adjustments include, but are not limited to, amortization related to fair value adjustments to intangible assets and the adjustment of interest expense to reflect the additional borrowings of the Company in conjunction with the acquisition.

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Fair Value Measurement - Amortized Cost, Gross Unrealized Gains and Losses, and Fair Value of Investment Securities Held to Maturity (Details) - Perfect Home Bonds - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 22,758	$ 21,311
Fair Value	$ 22,758	$ 21,311

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
ASSETS:
Cash and Cash Equivalents	$ 91,144	$ 3,549
Investments	22,758	21,311
Accounts Receivable (net of allowances of $29,957 in 2015 and $27,401 in 2014)	94,081	107,383
Lease Merchandise (net of accumulated depreciation of $722,988 in 2015 and $701,822 in 2014)	1,038,133	1,087,032
Property, Plant and Equipment at Cost (net of accumulated depreciation of $220,387 in 2015 and $216,065 in 2014)	211,886	219,417
Goodwill	533,020	530,670
Other Intangibles (net of accumulated amortization of $45,862 in 2015 and $33,250 in 2014)	285,120	297,471
Income Tax Receivable	11,690	124,095
Prepaid Expenses and Other Assets	59,951	59,560
Assets Held For Sale	6,924	6,356
Total Assets	2,354,707	2,456,844
LIABILITIES & SHAREHOLDERS’ EQUITY:
Accounts Payable and Accrued Expenses	271,260	270,421
Accrued Regulatory Expense	17,500	27,200
Deferred Income Taxes Payable	198,138	268,551
Customer Deposits and Advance Payments	55,862	61,069
Debt	494,858	606,082
Total Liabilities	$ 1,037,618	$ 1,233,323
Commitments and Contingencies
Shareholders’ Equity:
Common Stock, Par Value $.50 Per Share: Authorized: 225,000,000 Shares at June 30, 2015 and December 31, 2014; Shares Issued: 90,752,123 at June 30, 2015 and December 31, 2014	$ 45,376	$ 45,376
Additional Paid-in Capital	232,964	227,290
Retained Earnings	1,360,685	1,274,233
Accumulated Other Comprehensive Loss	(66)	(90)
Stockholders' Equity before Treasury Stock, Total	1,638,959	1,546,809
Less: Treasury Shares at Cost, Common Stock: 18,174,923 Shares at June 30, 2015 and 18,263,589 at December 31, 2014	(321,870)	(323,288)
Total Shareholders’ Equity	1,317,089	1,223,521
Total Liabilities & Shareholders’ Equity	$ 2,354,707	$ 2,456,844

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
OPERATING ACTIVITIES:
Net Earnings	$ 89,789	$ 46,844
Adjustments to Reconcile Net Earnings to Cash Provided by Operating Activities:
Depreciation of Lease Merchandise	610,348	400,627
Other Depreciation and Amortization	39,756	38,020
Bad Debt Expense	67,794	28,757
Stock-Based Compensation	6,725	2,312
Deferred Income Taxes	(70,748)	(63,436)
Other Changes, Net	(2,825)	1,034
Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions:
Additions to Lease Merchandise	(801,620)	(640,866)
Book Value of Lease Merchandise Sold or Disposed	236,750	208,123
Accounts Receivable	(56,856)	(11,882)
Prepaid Expenses and Other Assets	(898)	(4,750)
Income Tax Receivable	112,405	(3,186)
Accounts Payable and Accrued Expenses	3,788	(22,038)
Accrued Regulatory Expense	(9,700)	0
Customer Deposits and Advance Payments	(5,361)	(4,117)
Cash Provided by (Used in) Operating Activities	219,347	(24,558)
INVESTING ACTIVITIES:
Proceeds from Maturities and Calls of Investments	0	19,814
Additions to Property, Plant and Equipment	(21,821)	(24,659)
Acquisitions of Businesses and Contracts	(9,274)	(672,454)
Proceeds from Dispositions of Businesses and Contracts	8,330	15,773
Proceeds from Sale of Property, Plant and Equipment	2,719	2,896
Cash Used in Investing Activities	(20,046)	(658,630)
FINANCING ACTIVITIES:
Proceeds from Debt	30,150	584,041
Repayments on Debt	(141,374)	(114,104)
Dividends Paid	(1,668)	(3,121)
Excess Tax Benefits from Stock-Based Compensation	274	1,458
Issuance of Stock Under Stock Option Plans	912	3,632
Other	0	(2,238)
Cash (Used in) Provided by Financing Activities	(111,706)	469,668
Increase (Decrease)in Cash and Cash Equivalents	87,595	(213,520)
Cash and Cash Equivalents at Beginning of Period	3,549	231,091
Cash and Cash Equivalents at End of Period	$ 91,144	$ 17,571

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Segments - Additional Information (Details) $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
	Apr. 14, 2014 retail_location	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) segments	Jun. 30, 2014 USD ($) Store	Dec. 31, 2014 USD ($) Store
Segment Reporting Information [Line Items]
Number of operating segments | segments				5
Restructuring Expenses		$ 0	$ 2,264	$ 0	$ 2,264	$ 9,100
Restructuring and related cost, number of store closures | Store					44	44
Financial Advisory and Legal Costs		0	12,404	0	$ 13,276
Progressive-Related Transaction Costs		$ 0	5,464	$ 0	6,267
Approximate percentage of segment revenue charged as an allocation of corporate overhead				5.00%		5.00%
Progressive Finance Holdings, LLC
Segment Reporting Information [Line Items]
Number of retail locations (over 16,000) | retail_location	16,000
Other Segments
Segment Reporting Information [Line Items]
Financial Advisory and Legal Costs			12,400		13,300
Progressive-Related Transaction Costs			$ 5,500		$ 6,300

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Basis and Summary of Significant Accounting Policies - Store Count by Ownership Type (Details) - Operating Segments - Store	Jun. 30, 2015	Dec. 31, 2014
Significant Accounting Policies [Line Items]
Number of retail stores	1,294	1,326
Sales And Lease Ownership Excluding Rimco
Significant Accounting Policies [Line Items]
Number of retail stores	1,211	1,243
HomeSmart
Significant Accounting Policies [Line Items]
Number of retail stores	83	83
Franchise Stores
Significant Accounting Policies [Line Items]
Number of retail stores	786	782
Systemwide Stores
Significant Accounting Policies [Line Items]
Number of retail stores	2,080	2,108

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Information on Segments and Reconciliation to Earnings Before Income Taxes from Continuing Operations (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Segment Reporting Information [Line Items]
Revenues		$ 769,049	$ 662,490	$ 1,590,863	$ 1,247,913
Earnings (Loss) Before Income Taxes		64,354	13,562	142,184	74,272
Assets		2,354,707		2,354,707		$ 2,456,844
Operating Segments
Segment Reporting Information [Line Items]
Revenues		786,612	679,992	1,637,541	1,297,244
Earnings (Loss) Before Income Taxes		54,748	13,584	127,391	74,312
Assets		2,354,707		2,354,707		2,456,844
Operating Segments | Sales and Lease Ownership
Segment Reporting Information [Line Items]
Revenues		474,346	495,049	1,010,506	1,043,760
Earnings (Loss) Before Income Taxes		30,859	32,132	83,434	87,751
Assets		1,175,071		1,175,071		1,246,325
Operating Segments | Progressive Finance Holdings, LLC
Segment Reporting Information [Line Items]
Revenues		255,946	128,859	507,565	128,859
Earnings (Loss) Before Income Taxes		23,314	(323)	39,144	(323)
Assets		909,440		909,440		858,159
Operating Segments | HomeSmart
Segment Reporting Information [Line Items]
Revenues		15,275	15,749	32,247	33,153
Earnings (Loss) Before Income Taxes		(126)	(662)	411	(731)
Assets		43,950		43,950		47,585
Operating Segments | Franchise
Segment Reporting Information [Line Items]
Revenues		15,491	16,225	32,495	34,309
Earnings (Loss) Before Income Taxes		11,993	11,073	25,891	25,631
Assets		34,949		34,949		46,755
Operating Segments | Manufacturing
Segment Reporting Information [Line Items]
Revenues		25,228	23,743	54,034	54,898
Earnings (Loss) Before Income Taxes		376	(89)	1,658	458
Assets	[1]	24,222		24,222		23,050
Operating Segments | Other Segments
Segment Reporting Information [Line Items]
Revenues		326	367	694	2,265
Earnings (Loss) Before Income Taxes		(11,668)	(28,547)	(23,147)	(38,474)
Assets		167,075		167,075		$ 234,970
Intersegment Eliminations
Segment Reporting Information [Line Items]
Revenues		(24,691)	(23,404)	(52,980)	(53,662)
Earnings (Loss) Before Income Taxes		(398)	82	(1,666)	(427)
Segment Reconciling Items
Segment Reporting Information [Line Items]
Revenues		7,128	5,902	6,302	4,331
Earnings (Loss) Before Income Taxes		$ 10,004	$ (104)	$ 16,459	$ 387

[1] Includes inventory (principally raw materials and work-in-process) that has been classified within lease merchandise in the condensed consolidated balance sheets of $14.9 million and $13.2 million as of June 30, 2015 and December 31, 2014, respectively.

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Basis and Summary of Significant Accounting Policies Accounts Receivable Net of Allowances (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable, Impaired [Line Items]
Accounts receivable, net of allowances	$ 94,081	$ 107,383
Customers
Financing Receivable, Impaired [Line Items]
Accounts receivable, net of allowances	34,585	30,438
Corporate
Financing Receivable, Impaired [Line Items]
Accounts receivable, net of allowances	26,077	32,572
Franchisee
Financing Receivable, Impaired [Line Items]
Accounts receivable, net of allowances	$ 33,419	$ 44,373

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Basis and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Basis and Summary of Significant Accounting Policies

BASIS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Aaron’s, Inc. (the “Company” or “Aaron’s”) is a leading specialty retailer primarily engaged in the business of leasing and selling furniture, consumer electronics, computers, appliances and household accessories throughout the United States and Canada.

On April 14, 2014, the Company acquired a 100% ownership interest in Progressive Finance Holdings, LLC (“Progressive”), a leading virtual lease-to-own company, for merger consideration of $700.0 million, net of cash acquired. Progressive provides lease-purchase solutions through over 16,000 retail locations in 46 states. It does so by purchasing merchandise from third-party retailers desired by those retailers' customers and, in turn, leasing that merchandise to the customers on a lease-to-own basis. Progressive consequently has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional retailers.

Subsequent to the Progressive acquisition, our major operating divisions are the Aaron’s Sales & Lease Ownership division (established as a monthly payment concept), Progressive, HomeSmart (established as a weekly payment concept) and Woodhaven Furniture Industries, which manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in our stores.

The following table presents store count by ownership type for the Company's store-based operations:

Stores (Unaudited)	June 30, 2015	December 31, 2014
Company-operated stores
Sales and Lease Ownership	1,211	1,243
HomeSmart	83	83
Total Company-operated stores	1,294	1,326
Franchised stores	786	782
Systemwide stores	2,080	2,108

Basis of Presentation

The preparation of the Company’s condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information requires management to make estimates and assumptions that affect amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. Generally, actual experience has been consistent with management’s prior estimates and assumptions. Management does not believe these estimates or assumptions will change significantly in the future absent unsurfaced and unforeseen events.

The accompanying unaudited condensed consolidated financial statements do not include all information required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission for the year ended December 31, 2014 (the “2014 Annual Report”). The results of operations for the six months ended June 30, 2015 are not necessarily indicative of operating results for the full year.

Reclassifications

Certain reclassifications have been made to the prior periods to conform to the current period presentation. The condensed consolidated statement of cash flows for the six months ended June 30, 2015 includes a reclassification between additions to lease merchandise and book value of lease merchandise sold or disposed, which reduces both amounts by $39.6 million. This reclassification has no effect on the amounts reported for net earnings or cash provided by operating activities for the three and six months ended March 31, 2015 or June 30, 2015, respectively, or for the balances reported for cash or lease merchandise as of March 31, 2015 or June 30, 2015.

The Company presents sales net of related taxes for its traditional lease-to-own (“core”) business. Prior to 2015, Progressive presented lease revenues on a gross basis with sales taxes included. Effective January 1, 2015, Progressive conformed its presentation of sales tax to that of the core business. For the three and six months ended June 30, 2014, reclassification adjustments have been made to present sales net of related taxes on a consolidated basis and those adjustments reduce lease revenues and fees and operating expenses by $10.0 million in each period.

Principles of Consolidation and Variable Interest Entities

The condensed consolidated financial statements include the accounts of Aaron’s, Inc. and its subsidiaries, each of which is wholly owned. Intercompany balances and transactions between consolidated entities have been eliminated.

The Company holds notes issued by Perfect Home Holdings Limited (“Perfect Home”), a privately-held lease-to-own company that is primarily financed by share capital and subordinated debt. Perfect Home is based in the U.K. and operated70retail stores as of June 30, 2015.

Perfect Home is a variable interest entity (“VIE”) because it does not have sufficient equity at risk. However, the Company is not the primary beneficiary and does not consolidate Perfect Home because the Company lacks the power through voting or similar rights to direct the activities that most significantly affect Perfect Home's economic performance. The Company’s maximum exposure to any potential losses associated with this VIE is equal to its total recorded investment, which was$22.8 millionat June 30, 2015.

Accounting Policies and Estimates

See Note 1 to the consolidated financial statements in the 2014 Annual Report.

Income Taxes

The Company files a federal consolidated income tax return in the United States, and the Company and its subsidiaries file in various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to federal, state and local tax examinations by tax authorities for years before 2011.

As of June 30, 2015 and December 31, 2014, the amount of uncertain tax benefits that, if recognized, would affect the effective tax rate is $2.5 million and $2.1 million, respectively, including interest and penalties. The Company recognizes potential interest and penalties related to uncertain tax benefits as a component of income tax expense.

Earnings Per Share

Earnings per share is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. The computation of earnings per share assuming dilution includes the dilutive effect of stock options, restricted stock units (RSUs), restricted stock awards and performance share units (collectively, “share-based awards”) as determined under the treasury stock method. The following table shows the calculation of dilutive share-based awards for the three and six months ended June 30, 2015 and 2014:

	Three Months Ended   June 30,		Six Months Ended   June 30,
(Shares In Thousands)	2015	2014	2015	2014
Weighted average shares outstanding	72,572	72,246	72,544	72,356
Effect of dilutive securities:
Dilutive effect of share-based awards	393	352	366	377
Weighted average shares outstanding assuming dilution	72,965	72,598	72,910	72,733

During the three and six months ended June 30, 2015, there were approximately 545,000 and 507,000 weighted-average share-based awards excluded from the computation for earnings per share assuming dilution because the awards would have been anti-dilutive for the period.

During the three and six months ended June 30, 2014, there were approximately 176,000 and 137,000 weighted-average share-based awards excluded from the computation for earnings per share assuming dilution because the awards would have been anti-dilutive for the period.

Lease Merchandise

All lease merchandise is available for lease or sale. On a monthly basis, all damaged, lost or unsalable merchandise identified is written off. The Company records lease merchandise adjustments on the allowance method, which estimates the merchandise losses incurred but not yet identified by management as of the end of the accounting period based on historical write off experience. As of June 30, 2015 and December 31, 2014, the allowance for lease merchandise write-offs was $29.6 million and $27.6 million, respectively.

Lease merchandise write-offs totaled $30.2 millionand $21.0 million for the three months ended June 30, 2015 and 2014, respectively, and $59.5 million and $34.7 million for the six months ended June 30, 2015 and 2014, respectively. Substantially all lease merchandise adjustments are included in operating expenses in the accompanying condensed consolidated statements of earnings.

Cash and Cash Equivalents

The Company classifies highly liquid investments with maturity dates of three months or less when purchased as cash equivalents. The Company maintains its cash and cash equivalents in a limited number of banks. Bank balances typically exceed coverage provided by the Federal Deposit Insurance Corporation. However, due to the size and strength of the banks where the balances are held, such exposure to loss is believed to be minimal.

Investments

On October 14, 2011, the Company purchased 11.5% of the common stock of Perfect Home. As part of the transaction, the Company also received British pound-denominated notes and an option to acquire the remaining interest in Perfect Home at any time through December 31, 2013. In May 2014, subsequent to the Company's decision not to exercise the purchase option, the Company and Perfect Home extended the maturity date of the notes to June 30, 2015, canceled the Company's equity interest in Perfect Home and terminated the option. In June of 2015, the Company and Perfect Home extended the maturity date of the notes to June 30, 2016.

The Perfect Home notes, which totaled£14.2 million ($22.8 million) and £13.7 million ($21.3 million)at June 30, 2015and December 31, 2014, respectively, are classified as held-to-maturity securitiesbecause the Company has the positive intent and ability to hold the investments to maturity. The Perfect Home notes are carried at amortized cost in investments in the condensed consolidated balance sheets. The increase in the carrying amount of the notes during the six months ended June 30, 2015 relates to accretion of the original discount on the notes, which had a face value of £10.0 million.

The Company evaluates held-to-maturity securities for other-than-temporary impairment on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The Company does not intend to sell its remaining securities and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.

Accounts Receivable

Accounts receivable consist primarily of receivables due from customers of Company-operated stores and Progressive, corporate receivables incurred during the normal course of business (primarily for vendor consideration, real estate leasing activities, in-transit credit card transactions and an escrow related to the Progressive acquisition) and franchisee obligations.

Accounts receivable, net of allowances, consist of the following:

(In Thousands)	June 30, 2015		December 31, 2014
Customers	$	34,585	$	30,438
Corporate	26,077		32,572
Franchisee	33,419		44,373
	$	94,081	$	107,383

Assets Held for Sale

Certain properties, primarily consisting of parcels of land and commercial buildings, met the held for sale classification criteria as of June 30, 2015 and December 31, 2014. After adjustment to fair value, the $6.9 millionand $6.4 million carrying value of these properties has been classified as assets held for sale in the condensed consolidated balance sheets as of June 30, 2015 and December 31, 2014, respectively. The Company estimated the fair values of real estate properties using the market values for similar properties. These properties are considered Level 2 assets as described in Note 3.

Deferred Compensation

The Company maintains the Aaron’s, Inc. Deferred Compensation Plan, an unfunded, nonqualified deferred compensation plan for a select group of management, highly compensated employees and non-employee directors. On a pre-tax basis, eligible employees can defer receipt of up to 75% of their base compensation and up to 100% of their incentive pay compensation, and eligible non-employee directors can defer receipt of up to 100% of both their cash and stock director fees.

Compensation deferred under the plan is credited to each participant’s deferral account and a deferred compensation liability is recorded in accounts payable and accrued expenses in the condensed consolidated balance sheets. The deferred compensation liability was $12.5 million and $12.7 million as of June 30, 2015 and December 31, 2014, respectively. Liabilities under the plan are recorded at amounts due to participants, based on the fair value of participants’ selected investments. The Company has established a rabbi trust to fund obligations under the plan with Company-owned life insurance. The obligations are unsecured general obligations of the Company and the participants have no right, interest or claim in the assets of the Company, except as unsecured general creditors. The cash surrender value of the insurance contracts totaled $15.0 million as of June 30, 2015 and $14.5 million as of December 31, 2014 and is included in prepaid expenses and other assets in the condensed consolidated balance sheets.

Deferred compensation expense charged to operations for the Company’s matching contributions was not significant during any of the three or six months periods presented. Benefits of $776,000 and $652,000 were paid during the first six months of 2015 and 2014, respectively.

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component for the six months ended June 30, 2015 are as follows:

(In Thousands)	Foreign Currency			Total
Balance at January 1, 2015	$	(90	)	$	(90	)
Other comprehensive income	24			24
Balance at June 30, 2015	$	(66	)	$	(66	)

There were no reclassifications out of accumulated other comprehensive loss for the six months ended June 30, 2015.

Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting the Company's own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

The Company measures assets held for sale at fair value on a nonrecurring basis and records impairment charges when they are deemed to be impaired. The Company maintains certain financial assets and liabilities, including investments and fixed-rate long-term debt, that are not measured at fair value but for which fair value is disclosed.

The fair values of the Company’s other current financial assets and liabilities, including cash and cash equivalents, accounts receivable and accounts payable, approximate their carrying values due to their short-term nature.

Recent Accounting Pronouncements

Revenue Recognition. In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2015, the FASB voted to defer the effective date for this ASU by one year, and now the ASU is effective for annual reporting periods, and interim periods within that period, beginning after December 15, 2017. The FASB also voted to permit early adoption of the ASU, but not before the original effective date. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company has not yet determined the potential effects of adopting ASU 2014-09 on its consolidated financial statements.

Debt Issuance Costs. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a deduction from the corresponding debt liability rather than as a separate asset. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company does not expect the provisions of ASU 2015-03 to have a material impact on its consolidated financial statements.

Cloud Computing. In April 2015, the FASB issued ASU No. 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. Among other things, ASU 2015-05 clarifies how a customer in a cloud computing arrangement should determine whether the arrangement includes a software license, and clarifies that the acquisition of a software license must be accounted for in the same manner as other licenses of intangible assets. ASU 2015-05 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company does not expect the provisions of ASU 2015-05 to have a material impact on its consolidated financial statements.

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Accounts receivable, allowances	$ 29,957	$ 27,401
Lease Merchandise, Accumulated depreciation	722,988	701,822
Property, Plant and Equipment at Cost, accumulated depreciation and amortization	220,387	216,065
Other Intangibles, accumulated amortization	$ 45,862	$ 33,250
Common Stock, Par Value (in dollars per share)	$ 0.50	$ 0.50
Common Stock, Shares Authorized	225,000,000	225,000,000
Common Stock, Shares Issued	90,752,123	90,752,123
Treasury Shares	18,174,923	18,263,589

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Acquisitions (Tables)

6 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Business Acquisition, Pro Forma Information

The following table presents unaudited consolidated pro forma information as if the acquisition of Progressive had occurred on January 1, 2013:

	Six Months Ended June 30,
	2014
(In Thousands)	As Reported		Pro Forma
Revenues	$	1,247,913	$	1,404,509
Net Earnings	46,844		49,654

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 31, 2015
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Trading Symbol	AAN
Entity Registrant Name	AARON'S INC
Entity Central Index Key	0000706688
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		72,578,301

XML

Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table summarizes financial liabilities measured at fair value on a recurring basis:

(In Thousands)	June 30, 2015							December 31, 2014
	Level 1		Level 2			Level 3		Level 1		Level 2			Level 3
Deferred Compensation Liability	$	—	$	(12,491	)	$	—	$	—	$	(12,677	)	$	—

Assets Measured at Fair Value on Nonrecurring Basis

The following table summarizes non-financial assets measured at fair value on a nonrecurring basis:

(In Thousands)	June 30, 2015						December 31, 2014
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets Held for Sale	$	—	$	6,924	$	—	$	—	$	6,356	$	—

Fair Value of Assets (Liabilities) Not Measured at Fair Value In Consolidated Balance Sheets

The following table summarizes the fair value of assets (liabilities) that are not measured at fair value in the condensed consolidated balance sheets, but for which the fair value is disclosed:

(In Thousands)	June 30, 2015							December 31, 2014
	Level 1		Level 2			Level 3		Level 1		Level 2			Level 3
Perfect Home Notes1	$	—	$	—		$	22,758	$	—	$	—		$	21,311
Fixed-Rate Long-Term Debt2	—		(399,660		)	—		—		(429,049		)	—

¹  The Perfect Home notes were initially valued at cost. The Company periodically reviews the valuation utilizing company-specific transactions or changes in Perfect Home’s financial performance to determine if fair value adjustments are necessary.

²  The fair value of fixed-rate long-term debt is estimated using the present value of underlying cash flows discounted at a current market yield for similar instruments. The carrying value of fixed-rate long-term debt was $375.0 million and $400.0 million at June 30, 2015 and December 31, 2014, respectively.

Investments Classified as Held to Maturity Securities

At June 30, 2015 and December 31, 2014, investments classified as held-to-maturity securities consisted of the following:

			Gross Unrealized
(In Thousands)	Amortized Cost		Gains		Losses		Fair Value
June 30, 2015
Perfect Home Notes	$	22,758	$	—	$	—	$	22,758
December 31, 2014
Perfect Home Notes	$	21,311	$	—	$	—	$	21,311

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Condensed Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
REVENUES:
Lease Revenues and Fees	$ 660,472	$ 552,494	$ 1,355,754	$ 1,012,310
Retail Sales	7,073	8,419	19,067	22,929
Non-Retail Sales	84,449	83,893	180,486	175,518
Franchise Royalties and Fees	15,491	16,225	32,495	34,309
Other	1,564	1,459	3,061	2,847
Revenues, Total	769,049	662,490	1,590,863	1,247,913
COSTS AND EXPENSES:
Depreciation of Lease Merchandise	294,362	232,715	610,348	400,627
Retail Cost of Sales	4,849	5,478	12,553	14,491
Non-Retail Cost of Sales	76,463	76,227	163,315	159,134
Operating Expenses	325,555	311,116	653,475	573,815
Financial Advisory and Legal Costs	0	12,404	0	13,276
Progressive-Related Transaction Costs	0	5,464	0	6,267
Restructuring Expenses	0	2,264	0	2,264
Other Operating Expense (Income), Net	277	5	(1,183)	(672)
Costs and Expenses, Total	701,506	645,673	1,438,508	1,169,202
OPERATING PROFIT	67,543	16,817	152,355	78,711
Interest Income	792	1,074	1,231	1,827
Interest Expense	(5,622)	(5,479)	(11,591)	(7,012)
Other Non-Operating Income, Net	1,641	1,150	189	746
EARNINGS BEFORE INCOME TAXES	64,354	13,562	142,184	74,272
INCOME TAXES	23,808	5,057	52,395	27,428
NET EARNINGS	$ 40,546	$ 8,505	$ 89,789	$ 46,844
EARNINGS PER SHARE
Basic (in dollars per share)	$ 0.56	$ 0.12	$ 1.24	$ 0.65
Assuming Dilution (in dollars per share)	0.56	0.12	1.23	0.64
CASH DIVIDENDS DECLARED PER SHARE:
Common Stock (in dollars per share)	$ 0.023	$ 0.021	$ 0.046	$ 0.042
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic (in shares)	72,572	72,246	72,544	72,356
Assuming Dilution (in shares)	72,965	72,598	72,910	72,733

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Restructuring

6 Months Ended

Jun. 30, 2015

Restructuring and Related Activities [Abstract]

Restructuring

RESTRUCTURING

On July 15, 2014, the Company announced that a rigorous evaluation of the Company-operated store portfolio had been performed. As a result of this evaluation and other cost-reduction initiatives, the Company closed 44 underperforming Company-operated stores and restructured its home office and field support under a restructuring plan to more closely align with current business conditions. The restructuring was completed during the third quarter of 2014 and total restructuring charges of $9.1 million were recorded during the year ended December 31, 2014, comprised of $4.8 million related to contractual lease obligations, $3.3 million related to the write-off and impairment of property, plant and equipment, $620,000 related to workforce reductions and $395,000 related to other charges.

During the six months ended June 30, 2014, total restructuring charges were $2.3 million and were included in restructuring expenses in the consolidated statements of earnings.These charges were included in the Sales and Lease Ownership segment. The Company does not currently anticipate any remaining costs related to this restructuring plan to be material.

The following table summarizes the change in the liability associated with the restructuring charges:

(In Thousands)	Contractual Obligations Under Canceled Leases
Balance at January 1, 2015	$	3,227
Payments	(1,266		)
Balance at June 30, 2015	$	1,961

In the ordinary course of business, we continually review, and as appropriate adjust, the amount and mix of Company-operated and franchised stores to help optimize overall performance. Costs incurred to close stores during the six months ended June 30, 2015 were not significant.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Leases

The Company leases warehouse and retail store space for most of its store-based operations, call center space for Progressive's operations, and management and information technology space for corporate functions under operating leases expiring at various times through 2033. The Company also leases certain properties under capital leases that are more fully described in Note 6 to the consolidated financial statements in the 2014 Annual Report. Most of the 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. In addition, certain properties occupied under operating leases contain normal purchase options. Leasehold improvements related to these leases are generally amortized over periods that do not exceed the lesser of the lease term or 15 years. While a majority of leases do not require escalating payments, for the leases which do contain such provisions, the Company records the related expense on a straight-line basis over the lease term. The Company also leases computer equipment and transportation vehicles under operating leases expiring during the next four years. Management expects that most leases will be renewed or replaced by other leases in the normal course of business.

Guarantees

The Company has guaranteed certain debt obligations of some of its franchisees under a franchisee loan program with several banks. In the event these franchisees are unable to meet their debt service payments or otherwise experience an event of default, the Company would be unconditionally liable for the outstanding balance of the franchisees’ debt obligations under the franchisee loan program, which would be due in full within 90 days of the event of default. At June 30, 2015, the maximum amount that the Company would be obligated to repay in the event franchisees defaulted was $87.6 million. The Company has recourse rights to franchisee assets securing the debt obligations, which consist primarily of lease merchandise and fixed assets. As a result, the Company has never incurred, nor does management expect to incur, any significant losses under these guarantees. The carrying amount of the franchisee-related borrowings guarantee, which is included in accounts payable and accrued expenses in the condensed consolidated balance sheets, is $656,000 as of June 30, 2015.

The maximum facility commitment amount under the franchisee loan program is $175.0 million, including a Canadian subfacility commitment amount for loans to franchisees that operate stores in Canada of Cdn $50.0 million. The Company remains subject to the financial covenants under the franchisee loan facility.

Legal Proceedings

From time to time, the Company is party to various legal and regulatory proceedings arising in the ordinary course of business.

Some of the proceedings to which we are currently a party are described below. We believe we have defenses to all of the claims described below, and intend to vigorously defend against the claims. However, these proceedings are still developing and due to the inherent uncertainty in litigation, regulatory and similar adversarial proceedings, there can be no guarantee that we will ultimately be successful in these proceedings, or in others to which we are currently a party. Substantial losses from these proceedings or the costs of defending them could have a material adverse impact upon our business, financial position and results of operations.

The Company establishes an accrued liability for legal and regulatory proceedings when it determines that a loss is both probable and the amount of the loss can be reasonably estimated. The Company continually monitors its litigation and regulatory exposure and reviews the adequacy of its legal and regulatory reserves on a quarterly basis. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters.

At June 30, 2015, the Company had accrued $23.4 million for pending legal and regulatory matters for which it believes losses are probable, which is management's best estimate of the Company's exposure to loss, and mostly related to the now-settled regulatory investigation by the California Attorney General described below. The Company estimates that the aggregate range of possible loss in excess of accrued liabilities for such probable loss contingencies is between $0 and $3.0 million.

At June 30, 2015, the Company estimated that the aggregate range of loss for all material pending legal and regulatory proceedings for which a loss is reasonably possible, but less likely than probable (i.e., excluding the contingencies described in the preceding paragraph), is between $65,000 to $1.2 million. Those matters for which a reasonable estimate is not possible are not included within estimated ranges and, therefore, the estimated ranges do not represent the Company's maximum loss exposure. The Company's estimates as to legal and regulatory accruals, as to aggregate probable loss amounts and as to reasonably possible loss amounts, are all subject to the uncertainties and variables described above.

Consumer

In Margaret Korrow, et al. v. Aaron's, Inc., originally filed in the Superior Court of New Jersey, Middlesex County, Law Division on October 26, 2010, plaintiff filed suit on behalf of herself and others similarly situated alleging that the Company is liable in damages to plaintiff and each class member because the Company's lease agreements issued after March 16, 2006 purportedly violated certain New Jersey state consumer statutes. Plaintiff's complaint seeks treble damages under the New Jersey Consumer Fraud Act, and statutory penalty damages of $100 per violation of all contracts issued in New Jersey, and also claims that there are multiple violations per contract. The Company removed the lawsuit to the United States District Court for the District of New Jersey on December 6, 2010 (Civil Action No.: 10-06317(JAP)(LHG)). Plaintiff on behalf of herself and others similarly situated seeks equitable relief, statutory and treble damages, pre- and post-judgment interest and attorneys' fees. Discovery on this matter is closed. On July 31, 2013, the Court certified a class comprising all persons who entered into a rent-to-own contract with the Company in New Jersey from March 16, 2006 through March 31, 2011. In August 2013, the Court of Appeals denied the Company’s request for an interlocutory appeal of the class certification issue. The Company filed a motion to allow counterclaims against all newly certified class members who may owe legitimate fees or damages to the Company or who failed to return merchandise to the Company prior to obtaining ownership. That motion was denied by the magistrate judge on June 30, 2014, but an appeal of that ruling is pending with the District Court.

Privacy and Related Matters

In Crystal and Brian Byrd v. Aaron's, Inc., Aspen Way Enterprises, Inc., John Does (1-100) Aaron's Franchisees and Designerware, LLC, filed on May 16, 2011, in the United States District Court, Western District of Pennsylvania (Case No. 1:11-CV-00101-SPB), plaintiffs alleged that the Company and its independently owned and operated franchisee Aspen Way Enterprises (“Aspen Way”) knowingly violated plaintiffs' privacy in violation of the Electronic Communications Privacy Act (“ECPA”) and the Computer Fraud Abuse Act and sought certification of a putative nationwide class. Plaintiffs based these claims on Aspen Way's use of a software program called “PC Rental Agent.” Although the District Court dismissed the Company from the original lawsuit on March 20, 2012, after certain procedural motions, on May 23, 2013, the Court granted plaintiffs' motion for leave to file a third amended complaint, which asserts the claims under the ECPA, common law invasion of privacy, added a request for injunction, and named additional independently owned and operated Company franchisees as defendants. Plaintiffs filed the third amended complaint, and the Company moved to dismiss that complaint on substantially the same grounds as it sought to dismiss plaintiffs' prior complaints. Plaintiffs seek monetary damages as well as injunctive relief. Plaintiffs filed their motion for class certification on July 1, 2013, and the Company's response was filed in August 2013. On March 31, 2014, the U.S. District Judge dismissed all claims against all franchisees other than Aspen Way Enterprises, LLC. The Court also dismissed claims for invasion of privacy, aiding and abetting, and conspiracy against all defendants. In addition, the Court denied the plaintiffs’ motion to certify the class. Finally, the Judge denied the Company’s motion to dismiss the violation of ECPA claims. Plaintiffs requested and received immediate appellate review of these rulings by the U.S. Third Circuit Court of Appeals. On April 10, 2015, the U.S. Third Circuit Court of Appeals reversed the denial of class certification on the grounds stated by the District Court, and remanded the case back to the District Court for further consideration of that and the other elements necessary for class certification. The District Court has not issued a new ruling on those matters.

In Michael Winslow and Fonda Winslow v. Sultan Financial Corporation, Aaron's, Inc., John Does (1-10), Aaron's Franchisees and Designerware, LLC, filed on March 5, 2013 in the Los Angeles Superior Court (Case No. BC502304), plaintiffs assert claims against the Company and its independently owned and operated franchisee, Sultan Financial Corporation (as well as certain John Doe franchisees), for unauthorized wiretapping, eavesdropping, electronic stalking, and violation of California's Comprehensive Computer Data Access and Fraud Act and its Unfair Competition Law. Each of these claims arises out of the alleged use of PC Rental Agent software. The plaintiffs are seeking injunctive relief and damages in connection with the allegations of the complaint. Plaintiffs are also seeking certification of a putative California class. Plaintiffs are represented by the same counsel as in the above-described Byrd litigation. In April 2013, the Company timely removed this matter to federal court. On May 8, 2013, the Company filed a motion to stay this litigation pending resolution of the Byrd litigation, a motion to dismiss for failure to state a claim, and a motion to strike certain allegations in the complaint. The Court subsequently stayed the case. The Company's motions to dismiss and strike certain allegations remain pending. On June 6, 2015, the plaintiffs filed a motion to lift the stay. The Company opposed that motion which remains pending.

In Lomi Price v. Aaron's, Inc. and NW Freedom Corporation, filed on February 27, 2013, in the State Court of Fulton County, Georgia (Case No. 13-EV-016812B), an individual plaintiff asserts claims against the Company and its independently owned and operated franchisee, NW Freedom Corporation, for invasion of privacy/intrusion on seclusion, computer invasion of privacy and infliction of emotional distress. Each of these claims arises out of the alleged use of PC Rental Agent software.  The plaintiff is seeking compensatory and punitive damages of not less than $250,000. On April 3, 2013, the Company filed an answer and affirmative defenses. On that same day, the Company also filed a motion to stay the litigation pending resolution of the Byrd litigation, a motion to dismiss for failure to state a claim and a motion to strike certain allegations in the complaint. The court stayed the proceeding pending rulings on certain motions in the Byrd case, which expired upon remand of the case back to the District Court. On April 24, 2015, the Company filed a renewed motion to stay, which was granted on June 1, 2015.

In Michael Peterson v. Aaron’s, Inc. and Aspen Way Enterprises, Inc., filed on June 19, 2014, in the U.S. District Court for the Northern District of Georgia, several plaintiffs allege that they leased computers for use in their law practice. The plaintiffs claim that the Company and Aspen Way knowingly violated plaintiffs' privacy and the privacy of plaintiff’s legal clients in violation of the ECPA and the Computer Fraud Abuse Act. Plaintiffs seek certification of a putative nationwide class. Plaintiffs based these claims on Aspen Way's use of PC Rental Agent software. The plaintiffs claim that information and data obtained by defendants through PC Rental Agent was attorney-client privileged. The Company has filed a motion to dismiss plaintiffs' amended complaint.

Regulatory Investigations

California Attorney General Investigation. The California Attorney General investigated the Company's retail transactional practices, including various leasing and marketing practices, information security and privacy policies and practices related to the alleged use of PC Rental Agent software by certain independently owned and operated Company franchisees. The Company reached a comprehensive resolution of this matter without litigation. The final settlement and consent order were announced on October 13, 2014. The Court filed the final judgment on February 10, 2015. Payments have begun under the anticipated schedule outlined in the judgment.

Pennsylvania Attorney General Investigation. There is a pending investigation by the Pennsylvania Attorney General relating to the Company's privacy practices in Pennsylvania. The privacy issues are related to the alleged use of PC Rental Agent software by certain independently owned and operated Company franchisees, and the Company's alleged responsibility for that use. The Company cooperated in the investigation and on June 18, 2015, reached a tentative settlement of the matter. Final documentation is pending.

Other Matters

Noncompete Dispute. In January 2014, Aaron’s sold its Company-operated RIMCO stores and the rights to five franchised stores. The acquisition agreement provides that the Company will not compete with the acquiring entity for a specified period of time in certain geographic locations surrounding the purchased stores. In August 2014, the acquiring entity asserted that Aaron’s was violating the noncompete covenant in the acquisition agreement. The Company disputes that the noncompete covenant is being violated, but engaged in discussions to resolve the dispute. The Company reached a settlement for an immaterial amount. The settlement agreement was signed on May 1, 2015, and the parties finalized payment and other agreed upon actions.

Other Commitments

At June 30, 2015, the Company had non-cancelable commitments primarily related to certain advertising and marketing programs of $12.1 million.

The Company is a party to various claims and legal and regulatory proceedings arising in the ordinary course of business. Management regularly assesses the Company’s insurance deductibles, monitors the Company's litigation and regulatory exposure with the Company's attorneys and evaluates its loss experience. The Company also enters into various contracts in the normal course of business that may subject it to risk of financial loss if counterparties fail to perform their contractual obligations.

See Note 8 to the consolidated financial statements in the 2014 Annual Report for further information.

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Basis and Summary of Significant Accounting Policies Calculation of Dilutive Stock Awards (Detail) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share [Abstract]
Weighted average shares outstanding	72,572	72,246	72,544	72,356
Dilutive effect of share-based awards (in shares)	393	352	366	377
Weighted average shares outstanding assuming dilution	72,965	72,598	72,910	72,733

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Restructuring (Tables)

6 Months Ended

Jun. 30, 2015

Restructuring and Related Activities [Abstract]

Restructuring and Related Costs

The following table summarizes the change in the liability associated with the restructuring charges:

(In Thousands)	Contractual Obligations Under Canceled Leases
Balance at January 1, 2015	$	3,227
Payments	(1,266		)
Balance at June 30, 2015	$	1,961

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Basis and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Description of Business

Description of Business

Aaron’s, Inc. (the “Company” or “Aaron’s”) is a leading specialty retailer primarily engaged in the business of leasing and selling furniture, consumer electronics, computers, appliances and household accessories throughout the United States and Canada.

On April 14, 2014, the Company acquired a 100% ownership interest in Progressive Finance Holdings, LLC (“Progressive”), a leading virtual lease-to-own company, for merger consideration of $700.0 million, net of cash acquired. Progressive provides lease-purchase solutions through over 16,000 retail locations in 46 states. It does so by purchasing merchandise from third-party retailers desired by those retailers' customers and, in turn, leasing that merchandise to the customers on a lease-to-own basis. Progressive consequently has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional retailers.

Subsequent to the Progressive acquisition, our major operating divisions are the Aaron’s Sales & Lease Ownership division (established as a monthly payment concept), Progressive, HomeSmart (established as a weekly payment concept) and Woodhaven Furniture Industries, which manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in our stores.

Basis of Presentation

Basis of Presentation

The preparation of the Company’s condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information requires management to make estimates and assumptions that affect amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. Generally, actual experience has been consistent with management’s prior estimates and assumptions. Management does not believe these estimates or assumptions will change significantly in the future absent unsurfaced and unforeseen events.

The accompanying unaudited condensed consolidated financial statements do not include all information required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission for the year ended December 31, 2014 (the “2014 Annual Report”). The results of operations for the six months ended June 30, 2015 are not necessarily indicative of operating results for the full year.

Reclassifications

Reclassifications

Certain reclassifications have been made to the prior periods to conform to the current period presentation. The condensed consolidated statement of cash flows for the six months ended June 30, 2015 includes a reclassification between additions to lease merchandise and book value of lease merchandise sold or disposed, which reduces both amounts by $39.6 million. This reclassification has no effect on the amounts reported for net earnings or cash provided by operating activities for the three and six months ended March 31, 2015 or June 30, 2015, respectively, or for the balances reported for cash or lease merchandise as of March 31, 2015 or June 30, 2015.

The Company presents sales net of related taxes for its traditional lease-to-own (“core”) business. Prior to 2015, Progressive presented lease revenues on a gross basis with sales taxes included. Effective January 1, 2015, Progressive conformed its presentation of sales tax to that of the core business. For the three and six months ended June 30, 2014, reclassification adjustments have been made to present sales net of related taxes on a consolidated basis and those adjustments reduce lease revenues and fees and operating expenses by $10.0 million in each period.

Principles of Consolidation and Variable Interest Entities

Principles of Consolidation and Variable Interest Entities

The condensed consolidated financial statements include the accounts of Aaron’s, Inc. and its subsidiaries, each of which is wholly owned. Intercompany balances and transactions between consolidated entities have been eliminated.

The Company holds notes issued by Perfect Home Holdings Limited (“Perfect Home”), a privately-held lease-to-own company that is primarily financed by share capital and subordinated debt. Perfect Home is based in the U.K. and operated70retail stores as of June 30, 2015.

Perfect Home is a variable interest entity (“VIE”) because it does not have sufficient equity at risk. However, the Company is not the primary beneficiary and does not consolidate Perfect Home because the Company lacks the power through voting or similar rights to direct the activities that most significantly affect Perfect Home's economic performance. The Company’s maximum exposure to any potential losses associated with this VIE is equal to its total recorded investment, which was$22.8 millionat June 30, 2015.

Accounting Policies and Estimates

Accounting Policies and Estimates

See Note 1 to the consolidated financial statements in the 2014 Annual Report.

Income Taxes

Income Taxes

The Company files a federal consolidated income tax return in the United States, and the Company and its subsidiaries file in various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to federal, state and local tax examinations by tax authorities for years before 2011.

As of June 30, 2015 and December 31, 2014, the amount of uncertain tax benefits that, if recognized, would affect the effective tax rate is $2.5 million and $2.1 million, respectively, including interest and penalties. The Company recognizes potential interest and penalties related to uncertain tax benefits as a component of income tax expense.

Earnings Per Share

Earnings Per Share

Earnings per share is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. The computation of earnings per share assuming dilution includes the dilutive effect of stock options, restricted stock units (RSUs), restricted stock awards and performance share units (collectively, “share-based awards”) as determined under the treasury stock method.

Lease Merchandise

Lease Merchandise

All lease merchandise is available for lease or sale. On a monthly basis, all damaged, lost or unsalable merchandise identified is written off. The Company records lease merchandise adjustments on the allowance method, which estimates the merchandise losses incurred but not yet identified by management as of the end of the accounting period based on historical write off experience. As of June 30, 2015 and December 31, 2014, the allowance for lease merchandise write-offs was $29.6 million and $27.6 million, respectively.

Lease merchandise write-offs totaled $30.2 millionand $21.0 million for the three months ended June 30, 2015 and 2014, respectively, and $59.5 million and $34.7 million for the six months ended June 30, 2015 and 2014, respectively. Substantially all lease merchandise adjustments are included in operating expenses in the accompanying condensed consolidated statements of earnings.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company classifies highly liquid investments with maturity dates of three months or less when purchased as cash equivalents. The Company maintains its cash and cash equivalents in a limited number of banks. Bank balances typically exceed coverage provided by the Federal Deposit Insurance Corporation. However, due to the size and strength of the banks where the balances are held, such exposure to loss is believed to be minimal.

Investments

Investments

On October 14, 2011, the Company purchased 11.5% of the common stock of Perfect Home. As part of the transaction, the Company also received British pound-denominated notes and an option to acquire the remaining interest in Perfect Home at any time through December 31, 2013. In May 2014, subsequent to the Company's decision not to exercise the purchase option, the Company and Perfect Home extended the maturity date of the notes to June 30, 2015, canceled the Company's equity interest in Perfect Home and terminated the option. In June of 2015, the Company and Perfect Home extended the maturity date of the notes to June 30, 2016.

The Perfect Home notes, which totaled£14.2 million ($22.8 million) and £13.7 million ($21.3 million)at June 30, 2015and December 31, 2014, respectively, are classified as held-to-maturity securitiesbecause the Company has the positive intent and ability to hold the investments to maturity. The Perfect Home notes are carried at amortized cost in investments in the condensed consolidated balance sheets. The increase in the carrying amount of the notes during the six months ended June 30, 2015 relates to accretion of the original discount on the notes, which had a face value of £10.0 million.

The Company evaluates held-to-maturity securities for other-than-temporary impairment on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The Company does not intend to sell its remaining securities and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.

Accounts Receivable

Accounts Receivable

Accounts receivable consist primarily of receivables due from customers of Company-operated stores and Progressive, corporate receivables incurred during the normal course of business (primarily for vendor consideration, real estate leasing activities, in-transit credit card transactions and an escrow related to the Progressive acquisition) and franchisee obligations.

Assets Held for Sale

Assets Held for Sale

Certain properties, primarily consisting of parcels of land and commercial buildings, met the held for sale classification criteria as of June 30, 2015 and December 31, 2014. After adjustment to fair value, the $6.9 millionand $6.4 million carrying value of these properties has been classified as assets held for sale in the condensed consolidated balance sheets as of June 30, 2015 and December 31, 2014, respectively. The Company estimated the fair values of real estate properties using the market values for similar properties. These properties are considered Level 2 assets as described in Note 3.

Deferred Compensation

Deferred Compensation

The Company maintains the Aaron’s, Inc. Deferred Compensation Plan, an unfunded, nonqualified deferred compensation plan for a select group of management, highly compensated employees and non-employee directors. On a pre-tax basis, eligible employees can defer receipt of up to 75% of their base compensation and up to 100% of their incentive pay compensation, and eligible non-employee directors can defer receipt of up to 100% of both their cash and stock director fees.

Compensation deferred under the plan is credited to each participant’s deferral account and a deferred compensation liability is recorded in accounts payable and accrued expenses in the condensed consolidated balance sheets. The deferred compensation liability was $12.5 million and $12.7 million as of June 30, 2015 and December 31, 2014, respectively. Liabilities under the plan are recorded at amounts due to participants, based on the fair value of participants’ selected investments. The Company has established a rabbi trust to fund obligations under the plan with Company-owned life insurance. The obligations are unsecured general obligations of the Company and the participants have no right, interest or claim in the assets of the Company, except as unsecured general creditors.

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component for the six months ended June 30, 2015 are as follows:

(In Thousands)	Foreign Currency			Total
Balance at January 1, 2015	$	(90	)	$	(90	)
Other comprehensive income	24			24
Balance at June 30, 2015	$	(66	)	$	(66	)

There were no reclassifications out of accumulated other comprehensive loss for the six months ended June 30, 2015.

Fair Value Measurement

Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting the Company's own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

The Company measures assets held for sale at fair value on a nonrecurring basis and records impairment charges when they are deemed to be impaired. The Company maintains certain financial assets and liabilities, including investments and fixed-rate long-term debt, that are not measured at fair value but for which fair value is disclosed.

The fair values of the Company’s other current financial assets and liabilities, including cash and cash equivalents, accounts receivable and accounts payable, approximate their carrying values due to their short-term nature.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Revenue Recognition. In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2015, the FASB voted to defer the effective date for this ASU by one year, and now the ASU is effective for annual reporting periods, and interim periods within that period, beginning after December 15, 2017. The FASB also voted to permit early adoption of the ASU, but not before the original effective date. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company has not yet determined the potential effects of adopting ASU 2014-09 on its consolidated financial statements.

Debt Issuance Costs. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a deduction from the corresponding debt liability rather than as a separate asset. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company does not expect the provisions of ASU 2015-03 to have a material impact on its consolidated financial statements.

Cloud Computing. In April 2015, the FASB issued ASU No. 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. Among other things, ASU 2015-05 clarifies how a customer in a cloud computing arrangement should determine whether the arrangement includes a software license, and clarifies that the acquisition of a software license must be accounted for in the same manner as other licenses of intangible assets. ASU 2015-05 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company does not expect the provisions of ASU 2015-05 to have a material impact on its consolidated financial statements.

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Segments

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Segments

SEGMENTS

As of June 30, 2015, the Company had five operating and reportable segments: Sales and Lease Ownership, Progressive, HomeSmart, Franchise and Manufacturing. The results of Progressive, which is presented as a reportable segment, have been included in the Company's consolidated results from the April 14, 2014 acquisition date.

The Aaron’s Sales & Lease Ownership division offers furniture, electronics, appliances and computers to consumers primarily on a monthly payment basis with no credit requirements. Progressive is a leading virtual lease-to-own company that provides lease-purchase solutions through over 16,000 retail locations on a variety of products, including furniture and bedding, prepaid wireless phones, consumer electronics, appliances and jewelry. The HomeSmart division offers furniture, electronics, appliances and computers to consumers primarily on a weekly payment basis with no credit requirements. The Company’s Franchise operation awards franchises and supports franchisees of its sales and lease ownership concept. The Manufacturing segment manufactures upholstered furniture and bedding predominantly for use by Company-operated and franchised stores. Therefore, the Manufacturing segment's revenues and earnings before income taxes are primarily the result of intercompany transactions, substantially all of which revenues and earnings are eliminated through the elimination of intersegment revenues and intersegment profit or loss. 

	Three Months Ended   June 30,						Six Months Ended   June 30,
(In Thousands)	2015			2014			2015			2014
Revenues From External Customers:
Sales and Lease Ownership	$	474,346		$	495,049		$	1,010,506		$	1,043,760
Progressive	255,946			128,859			507,565			128,859
HomeSmart	15,275			15,749			32,247			33,153
Franchise	15,491			16,225			32,495			34,309
Manufacturing	25,228			23,743			54,034			54,898
Other	326			367			694			2,265
Revenues of Reportable Segments	786,612			679,992			1,637,541			1,297,244
Elimination of Intersegment Revenues	(24,691		)	(23,404		)	(52,980		)	(53,662		)
Cash to Accrual Adjustments	7,128			5,902			6,302			4,331
Total Revenues from External Customers	$	769,049		$	662,490		$	1,590,863		$	1,247,913
Earnings (Loss) Before Income Taxes:
Sales and Lease Ownership	$	30,859		$	32,132		$	83,434		$	87,751
Progressive	23,314			(323		)	39,144			(323		)
HomeSmart	(126		)	(662		)	411			(731		)
Franchise	11,993			11,073			25,891			25,631
Manufacturing	376			(89		)	1,658			458
Other	(11,668		)	(28,547		)	(23,147		)	(38,474		)
Earnings Before Income Taxes for Reportable Segments	54,748			13,584			127,391			74,312
Elimination of Intersegment (Profit) Loss	(398		)	82			(1,666		)	(427		)
Cash to Accrual and Other Adjustments	10,004			(104		)	16,459			387
Total Earnings Before Income Taxes	$	64,354		$	13,562		$	142,184		$	74,272

Revenues in the Other category are primarily revenues attributable to (i) the RIMCO segment through the date of sale in January 2014, (ii) leasing space to unrelated third parties in the corporate headquarters building and (iii) several minor unrelated activities. The pre-tax losses or earnings in the Other category are the net result of the activity mentioned above, net of the portion of corporate overhead not allocated to the reportable segments for management purposes.

During the six months ended June 30, 2014, the results of the Company's operating segments were impacted by the following:

• Sales and Lease Ownership earnings before income taxes included $2.3 million of restructuring charges related to the Company's strategic decision to close 44 Company-operated stores and restructure its home office and field support.

• The results of the Other category loss before income taxes included $13.3 million in financial and advisory costs related to addressing strategic matters, including proxy contests, of which $12.4 million was incurred during the three months ended June 30, 2014. In addition, the Other category loss included $6.3 million in transaction costs related to the Progressive acquisition, of which $5.5 million was incurred during the three months ended June 30, 2014.

(In Thousands)	June 30, 2015		December 31, 2014
Assets:
Sales and Lease Ownership	$	1,175,071	$	1,246,325
Progressive	909,440		858,159
HomeSmart	43,950		47,585
Franchise	34,949		46,755
Manufacturing1	24,222		23,050
Other	167,075		234,970
Total Assets	$	2,354,707	$	2,456,844

¹   Includes inventory (principally raw materials and work-in-process) that has been classified within lease merchandise in the condensed consolidated balance sheets of $14.9 millionand $13.2 million as of June 30, 2015 and December 31, 2014, respectively.

Earnings (loss) before income taxes for the Progressive reportable segment are determined in accordance with accounting principles generally accepted in the United States. The Company determines earnings (loss) before income taxes for all other reportable segments in accordance with accounting principles generally accepted in the United States with the following adjustments:

• Revenues in the Sales and Lease Ownership and HomeSmart segments are reported on a cash basis for management reporting purposes.

• A predetermined amount of each reportable segment’s revenues is charged to the reportable segment as an allocation of corporate overhead. This allocation was generally 5% in 2015 and 2014.

• Accruals related to store closures are not recorded on the reportable segments’ financial statements, but are maintained and controlled by corporate headquarters.

• The capitalization and amortization of manufacturing variances are recorded on the consolidated financial statements as part of Cash to Accrual and Other Adjustments and are not allocated to the segment that holds the related lease merchandise.

• Advertising expense in the Sales and Lease Ownership and HomeSmart segments is estimated at the beginning of each year and then allocated to the division ratably over time for management reporting purposes. For financial reporting purposes, advertising expense is recognized when the related advertising activities occur. The difference between these two methods is reflected as part of Cash to Accrual and Other Adjustments.

• Sales and lease ownership lease merchandise write-offs are recorded using the direct write-off method for management reporting purposes and using the allowance method for financial reporting purposes. The difference between these two methods is reflected as part of Cash to Accrual and Other Adjustments.

• Interest on borrowings is estimated at the beginning of each year. Interest is then allocated to the Sales and Lease Ownership and HomeSmart segments based on relative total assets.

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Related Party Transactions

6 Months Ended

Jun. 30, 2015

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

The Company leases certain properties under capital leases from related parties that are described in Notes 6 and 13 to the consolidated financial statements in the 2014 Annual Report.

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Basis and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Schedule Of Company Operated Store Activity

The following table presents store count by ownership type for the Company's store-based operations:

Stores (Unaudited)	June 30, 2015	December 31, 2014
Company-operated stores
Sales and Lease Ownership	1,211	1,243
HomeSmart	83	83
Total Company-operated stores	1,294	1,326
Franchised stores	786	782
Systemwide stores	2,080	2,108

Calculation of Dilutive Stock Awards

The following table shows the calculation of dilutive share-based awards for the three and six months ended June 30, 2015 and 2014:

	Three Months Ended   June 30,		Six Months Ended   June 30,
(Shares In Thousands)	2015	2014	2015	2014
Weighted average shares outstanding	72,572	72,246	72,544	72,356
Effect of dilutive securities:
Dilutive effect of share-based awards	393	352	366	377
Weighted average shares outstanding assuming dilution	72,965	72,598	72,910	72,733

Accounts Receivable Net of Allowances

Accounts receivable, net of allowances, consist of the following:

(In Thousands)	June 30, 2015		December 31, 2014
Customers	$	34,585	$	30,438
Corporate	26,077		32,572
Franchisee	33,419		44,373
	$	94,081	$	107,383

Changes in Accumulated Other Comprehensive Loss by Component

Changes in accumulated other comprehensive loss by component for the six months ended June 30, 2015 are as follows:

(In Thousands)	Foreign Currency			Total
Balance at January 1, 2015	$	(90	)	$	(90	)
Other comprehensive income	24			24
Balance at June 30, 2015	$	(66	)	$	(66	)

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Restructuring (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($) Store	Dec. 31, 2014 USD ($) Store
Restructuring Cost and Reserve [Line Items]
Restructuring and related cost, number of store closures | Store				44	44
Restructuring Reserve [Roll Forward]
Restructuring Expenses	$ 0	$ 2,264,000	$ 0	$ 2,264,000	$ 9,100,000
Sales and Lease Ownership
Restructuring Reserve [Roll Forward]
Restructuring Expenses				$ 2,300,000
Contractual Obligations Under Canceled Leases
Restructuring Reserve [Roll Forward]
Balance at January 1, 2015			3,227,000
Restructuring Expenses					4,800,000
Payments			(1,266,000)
Balance at June 30, 2015	$ 1,961,000		$ 1,961,000		3,227,000
Fixed Assets
Restructuring Reserve [Roll Forward]
Restructuring Expenses					3,300,000
Severance
Restructuring Reserve [Roll Forward]
Restructuring Expenses					620,000
Other
Restructuring Reserve [Roll Forward]
Restructuring Expenses					$ 395,000

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Basis and Summary of Significant Accounting Policies - Additional Information (Detail) shares in Thousands, $ in Thousands			3 Months Ended		6 Months Ended
	Apr. 14, 2014 USD ($) retail_location state	Oct. 14, 2011	Jun. 30, 2015 USD ($) shares	Jun. 30, 2014 USD ($) shares	Jun. 30, 2015 USD ($) shares	Jun. 30, 2014 USD ($) shares	Jun. 30, 2015 GBP (£) Store	Jun. 30, 2015 USD ($) Store	Dec. 31, 2014 GBP (£)	Dec. 31, 2014 USD ($)
Significant Accounting Policies [Line Items]
Uncertain tax benefits that, if recognized, would affect effective tax rate								$ 2,500		$ 2,100
Anti-dilutive Securities excluded from the computation of earnings per share assuming dilution (in shares) | shares			545	176	507	137
Inventory Valuation Reserves								29,600		27,600
Lease merchandise adjustments			$ 30,200	$ 21,000	$ 59,500	$ 34,700
Assets Held For Sale								6,924		6,356
Cash surrender value of company-owned life insurance ("COLI") contracts								15,000		14,500
Benefits paid				652		652		776
Level 2
Significant Accounting Policies [Line Items]
Assets Held For Sale								6,924		6,356
Deferred compensation liability								$ 12,491		12,677
Employee
Significant Accounting Policies [Line Items]
Percentage of receipt of base compensation (up to)					75.00%
Percentage of receipt of incentive pay compensation (up to)					100.00%
Non Employee Director
Significant Accounting Policies [Line Items]
Percentage of receipt of base compensation (up to)					100.00%
Percentage of receipt of incentive pay compensation (up to)					100.00%
Variable Interest Entity, Not Primary Beneficiary
Significant Accounting Policies [Line Items]
Number of retail stores | Store							70	70
Maximum exposure to any potential losses associated with VIE								$ 22,800
Percentage of common stock outstanding		11.50%
Held to maturity securities							£ 14,200,000	$ 22,800	£ 13,700,000	$ 21,300
Held to maturity securities, face value | £							£ 10,000,000.0
Progressive Finance Holdings, LLC
Significant Accounting Policies [Line Items]
Business acquisition, percentage of voting interests acquired	100.00%
Acquisitions of businesses, net of cash acquired	$ 700,000
Number of retail locations (over 16,000) | retail_location	16,000
Number of states in which entity operates | state	46
Scenario, Adjustment
Significant Accounting Policies [Line Items]
Quantifying Misstatement in Current Year Financial Statements, Amount					$ 39,600
Reclassification adjustment to present sales net of taxes				$ 10,000		$ 10,000

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Acquisitions - Progressive Acquisition Narrative (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Apr. 14, 2014
Business Acquisition [Line Items]
Acquisitions of businesses and contracts	$ 9,274	$ 672,454
Progressive Finance Holdings, LLC
Business Acquisition [Line Items]
Business acquisition, percentage of voting interests acquired			100.00%

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Statement of Comprehensive Income [Abstract]
Net Earnings	$ 40,546	$ 8,505	$ 89,789	$ 46,844
Other Comprehensive Income:
Foreign Currency Translation Adjustment	21	11	24	7
Total Other Comprehensive Income	21	11	24	7
Comprehensive Income	$ 40,567	$ 8,516	$ 89,813	$ 46,851

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Indebtedness

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Indebtedness

INDEBTEDNESS

See Note 6 to the consolidated financial statements in the 2014 Annual Report.

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Acquisitions - Progressive Acquisition Pro Forma Financial Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Business Acquisition [Line Items]
Revenues, as reported	$ 769,049	$ 662,490	$ 1,590,863	$ 1,247,913
Net earnings, as reported	$ 40,546	$ 8,505	$ 89,789	46,844
Progressive Finance Holdings, LLC
Business Acquisition [Line Items]
Revenues, pro forma				1,404,509
Net earnings, pro forma				$ 49,654

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Segments (Tables)

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Information on Segments and Reconciliation to Earnings Before Income Taxes from Continuing Operations

	Three Months Ended   June 30,						Six Months Ended   June 30,
(In Thousands)	2015			2014			2015			2014
Revenues From External Customers:
Sales and Lease Ownership	$	474,346		$	495,049		$	1,010,506		$	1,043,760
Progressive	255,946			128,859			507,565			128,859
HomeSmart	15,275			15,749			32,247			33,153
Franchise	15,491			16,225			32,495			34,309
Manufacturing	25,228			23,743			54,034			54,898
Other	326			367			694			2,265
Revenues of Reportable Segments	786,612			679,992			1,637,541			1,297,244
Elimination of Intersegment Revenues	(24,691		)	(23,404		)	(52,980		)	(53,662		)
Cash to Accrual Adjustments	7,128			5,902			6,302			4,331
Total Revenues from External Customers	$	769,049		$	662,490		$	1,590,863		$	1,247,913
Earnings (Loss) Before Income Taxes:
Sales and Lease Ownership	$	30,859		$	32,132		$	83,434		$	87,751
Progressive	23,314			(323		)	39,144			(323		)
HomeSmart	(126		)	(662		)	411			(731		)
Franchise	11,993			11,073			25,891			25,631
Manufacturing	376			(89		)	1,658			458
Other	(11,668		)	(28,547		)	(23,147		)	(38,474		)
Earnings Before Income Taxes for Reportable Segments	54,748			13,584			127,391			74,312
Elimination of Intersegment (Profit) Loss	(398		)	82			(1,666		)	(427		)
Cash to Accrual and Other Adjustments	10,004			(104		)	16,459			387
Total Earnings Before Income Taxes	$	64,354		$	13,562		$	142,184		$	74,272

(In Thousands)	June 30, 2015		December 31, 2014
Assets:
Sales and Lease Ownership	$	1,175,071	$	1,246,325
Progressive	909,440		858,159
HomeSmart	43,950		47,585
Franchise	34,949		46,755
Manufacturing1	24,222		23,050
Other	167,075		234,970
Total Assets	$	2,354,707	$	2,456,844

¹   Includes inventory (principally raw materials and work-in-process) that has been classified within lease merchandise in the condensed consolidated balance sheets of $14.9 millionand $13.2 million as of June 30, 2015 and December 31, 2014, respectively.