ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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) |
Large Accelerated Filer | ý | Accelerated Filer | o | ||||
Non-Accelerated Filer | o | (Do not check if a smaller reporting company) | Smaller Reporting Company | o |
Title of Each Class | Shares Outstanding as of May 2, 2016 | |
Common Stock, $.50 Par Value | 72,750,329 |
Item 3. Defaults Upon Senior Securities | |
Item 4. Mine Safety Disclosures | |
Item 5. Other Information | |
(Unaudited) | |||||||
(In Thousands, Except Share Data) | March 31, 2016 | December 31, 2015 | |||||
ASSETS: | |||||||
Cash and Cash Equivalents | $ | 118,905 | $ | 14,942 | |||
Investments | 22,108 | 22,226 | |||||
Accounts Receivable (net of allowances of $30,028 in 2016 and $34,861 in 2015) | 85,203 | 113,439 | |||||
Lease Merchandise (net of accumulated depreciation and allowances of $720,007 in 2016 and $738,657 in 2015) | 1,102,233 | 1,138,938 | |||||
Loans Receivable (net of allowances and unamortized fees of $6,779 in 2016 and $2,971 in 2015) | 83,198 | 85,795 | |||||
Property, Plant and Equipment at Cost (net of accumulated depreciation of $228,941 in 2016 and $222,752 in 2015) | 220,508 | 225,836 | |||||
Goodwill | 524,687 | 539,475 | |||||
Other Intangibles (net of accumulated amortization of $54,932 in 2016 and $48,021 in 2015) | 268,235 | 275,912 | |||||
Income Tax Receivable | 30,034 | 179,174 | |||||
Prepaid Expenses and Other Assets | 93,656 | 59,434 | |||||
Total Assets | $ | 2,548,767 | $ | 2,655,171 | |||
LIABILITIES & SHAREHOLDERS’ EQUITY: | |||||||
Accounts Payable and Accrued Expenses | $ | 244,491 | $ | 300,356 | |||
Accrued Regulatory Expense | — | 4,737 | |||||
Deferred Income Taxes Payable | 306,671 | 307,481 | |||||
Customer Deposits and Advance Payments | 61,642 | 69,233 | |||||
Debt | 518,041 | 606,746 | |||||
Total Liabilities | 1,130,845 | 1,288,553 | |||||
Commitments and Contingencies (Note 6) | |||||||
Shareholders’ Equity: | |||||||
Common Stock, Par Value $.50 Per Share: Authorized: 225,000,000 Shares at March 31, 2016 and December 31, 2015; Shares Issued: 90,752,123 at March 31, 2016 and December 31, 2015 | 45,376 | 45,376 | |||||
Additional Paid-in Capital | 240,750 | 240,112 | |||||
Retained Earnings | 1,450,991 | 1,403,120 | |||||
Accumulated Other Comprehensive Income (Loss) | 76 | (517 | ) | ||||
1,737,193 | 1,688,091 | ||||||
Less: Treasury Shares at Cost | |||||||
Common Stock: 18,002,753 Shares at March 31, 2016 and 18,151,560 at December 31, 2015 | (319,271 | ) | (321,473 | ) | |||
Total Shareholders’ Equity | 1,417,922 | 1,366,618 | |||||
Total Liabilities & Shareholders’ Equity | $ | 2,548,767 | $ | 2,655,171 |
Three Months Ended March 31, | |||||||
(In Thousands, Except Per Share Data) | 2016 | 2015 | |||||
REVENUES: | |||||||
Lease Revenues and Fees | $ | 741,611 | $ | 695,282 | |||
Retail Sales | 10,955 | 11,994 | |||||
Non-Retail Sales | 79,305 | 96,037 | |||||
Franchise Royalties and Fees | 16,295 | 17,004 | |||||
Interest and Fees on Loans Receivable | 4,763 | — | |||||
Other | 1,498 | 1,497 | |||||
854,427 | 821,814 | ||||||
COSTS AND EXPENSES: | |||||||
Depreciation of Lease Merchandise | 348,302 | 315,986 | |||||
Retail Cost of Sales | 7,065 | 7,704 | |||||
Non-Retail Cost of Sales | 71,385 | 86,852 | |||||
Operating Expenses | 348,424 | 327,920 | |||||
Other Operating Income, Net | (6,729 | ) | (1,460 | ) | |||
768,447 | 737,002 | ||||||
OPERATING PROFIT | 85,980 | 84,812 | |||||
Interest Income | 421 | 439 | |||||
Interest Expense | (6,312 | ) | (5,969 | ) | |||
Other Non-Operating Expense, Net | (361 | ) | (1,452 | ) | |||
EARNINGS BEFORE INCOME TAXES | 79,728 | 77,830 | |||||
INCOME TAXES | 30,041 | 28,587 | |||||
NET EARNINGS | $ | 49,687 | $ | 49,243 | |||
EARNINGS PER SHARE | |||||||
Basic | $ | .68 | $ | .68 | |||
Assuming Dilution | $ | .68 | $ | .68 | |||
CASH DIVIDENDS DECLARED PER SHARE: | |||||||
Common Stock | $ | .025 | $ | .023 | |||
WEIGHTED AVERAGE SHARES OUTSTANDING: | |||||||
Basic | 72,634 | 72,517 | |||||
Assuming Dilution | 73,217 | 72,855 |
Three Months Ended March 31, | |||||||
(In Thousands) | 2016 | 2015 | |||||
Net Earnings | $ | 49,687 | $ | 49,243 | |||
Other Comprehensive Income: | |||||||
Foreign Currency Translation Adjustment | 593 | 3 | |||||
Total Other Comprehensive Income | 593 | 3 | |||||
Comprehensive Income | $ | 50,280 | $ | 49,246 |
Three Months Ended March 31, | |||||||
(In Thousands) | 2016 | 2015 | |||||
OPERATING ACTIVITIES: | |||||||
Net Earnings | $ | 49,687 | $ | 49,243 | |||
Adjustments to Reconcile Net Earnings to Cash Provided by Operating Activities: | |||||||
Depreciation of Lease Merchandise | 348,302 | 315,986 | |||||
Other Depreciation and Amortization | 20,743 | 19,944 | |||||
Accounts Receivable Provision | 34,514 | 29,931 | |||||
Provision for Credit Losses on Loans Receivable | 1,798 | — | |||||
Stock-Based Compensation | 5,529 | 3,016 | |||||
Deferred Income Taxes | 1,616 | (32,400 | ) | ||||
Other Changes, Net | (6,100 | ) | (965 | ) | |||
Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions: | |||||||
Additions to Lease Merchandise | (447,382 | ) | (405,270 | ) | |||
Book Value of Lease Merchandise Sold or Disposed | 114,453 | 124,543 | |||||
Accounts Receivable | (6,400 | ) | (23,012 | ) | |||
Prepaid Expenses and Other Assets | (1,327 | ) | 6,535 | ||||
Income Tax Receivable | 149,140 | 117,298 | |||||
Accounts Payable and Accrued Expenses | (57,704 | ) | 24,827 | ||||
Accrued Regulatory Expense | (4,737 | ) | (3,420 | ) | |||
Customer Deposits and Advance Payments | (7,591 | ) | (1,287 | ) | |||
Cash Provided by Operating Activities | 194,541 | 224,969 | |||||
INVESTING ACTIVITIES: | |||||||
Investments in Loans Receivable | (18,706 | ) | — | ||||
Proceeds from Loans Receivable | 18,635 | — | |||||
Additions to Property, Plant and Equipment | (14,088 | ) | (9,758 | ) | |||
Proceeds from Sale of Property, Plant and Equipment | 15,082 | 1,027 | |||||
Acquisitions of Businesses and Contracts | — | (3,623 | ) | ||||
Proceeds from Dispositions of Businesses and Contracts | (32 | ) | — | ||||
Cash Provided by (Used in) Investing Activities | 891 | (12,354 | ) | ||||
FINANCING ACTIVITIES: | |||||||
Proceeds from Debt | 84,133 | 30,150 | |||||
Repayments on Debt | (173,169 | ) | (115,564 | ) | |||
Dividends Paid | (1,816 | ) | (1,668 | ) | |||
Excess Tax Benefits from Stock-Based Compensation | (716 | ) | 53 | ||||
Issuance of Stock Under Stock Option Plans | 99 | 702 | |||||
Cash Used in Financing Activities | (91,469 | ) | (86,327 | ) | |||
Increase in Cash and Cash Equivalents | 103,963 | 126,288 | |||||
Cash and Cash Equivalents at Beginning of Period | 14,942 | 3,549 | |||||
Cash and Cash Equivalents at End of Period | $ | 118,905 | $ | 129,837 |
NOTE 1: | BASIS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Stores as of March 31 (Unaudited) | 2016 | 2015 | |||
Company-operated stores | |||||
Sales and Lease Ownership | 1,223 | 1,235 | |||
HomeSmart | 82 | 83 | |||
Total Company-operated stores | 1,305 | 1,318 | |||
Franchised stores | 729 | 790 | |||
Systemwide stores | 2,034 | 2,108 |
Active Doors at March 31 (Unaudited) | 2016 | 2015 | |||
Progressive Active Doors1 | 13,521 | 11,861 |
Three Months Ended March 31, | |||||
(Shares In Thousands) | 2016 | 2015 | |||
Weighted average shares outstanding | 72,634 | 72,517 | |||
Dilutive effect of share-based awards | 583 | 338 | |||
Weighted average shares outstanding assuming dilution | 73,217 | 72,855 |
(In Thousands) | March 31, 2016 | December 31, 2015 | |||||
Customers | $ | 32,263 | $ | 35,153 | |||
Corporate | 16,046 | 26,175 | |||||
Franchisee | 36,894 | 52,111 | |||||
$ | 85,203 | $ | 113,439 |
(In Thousands) | 2016 | 2015 | |||||
Bad debt expense | $ | 27,939 | $ | 24,141 | |||
Provision for returns and uncollected renewal payments | 6,575 | 5,790 | |||||
Accounts receivable provision | $ | 34,514 | $ | 29,931 |
(In Thousands) | Foreign Currency | Total | |||||
Balance at January 1, 2016 | $ | (517 | ) | $ | (517 | ) | |
Other comprehensive income | 593 | 593 | |||||
Balance at March 31, 2016 | $ | 76 | $ | 76 |
NOTE 2. | ACQUISITIONS |
(In Thousands) | Amounts Recognized as of Acquisition Date1 | Measurement Period Adjustments2 | Amounts Recognized as of Acquisition Date (as adjusted) | ||||||||
Purchase Price | $ | 54,900 | $ | — | $ | 54,900 | |||||
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed | |||||||||||
Cash and Cash Equivalents | 4,185 | — | 4,185 | ||||||||
Loans Receivable3 | 89,186 | (876 | ) | 88,310 | |||||||
Receivables | 45 | — | 45 | ||||||||
Property, Plant and Equipment | 2,754 | — | 2,754 | ||||||||
Other Intangibles | 3,400 | (500 | ) | 2,900 | |||||||
Income Tax Receivable | 728 | — | 728 | ||||||||
Prepaid Expenses and Other Assets | 671 | — | 671 | ||||||||
Deferred Income Tax Assets | 375 | 2,426 | 2,801 | ||||||||
Total Identifiable Assets Acquired | 101,344 | 1,050 | 102,394 | ||||||||
Accounts Payable and Accrued Expenses | (1,709 | ) | (760 | ) | (2,469 | ) | |||||
Debt | (45,025 | ) | — | (45,025 | ) | ||||||
Total Liabilities Assumed | (46,734 | ) | (760 | ) | (47,494 | ) | |||||
Goodwill | 290 | (290 | ) | — | |||||||
Net Assets Acquired | $ | 54,900 | $ | — | $ | 54,900 |
NOTE 3. | FAIR VALUE MEASUREMENT |
(In Thousands) | March 31, 2016 | December 31, 2015 | |||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
Deferred Compensation Liability | $ | — | $ | (11,587 | ) | $ | — | $ | — | $ | (11,576 | ) | $ | — |
(In Thousands) | March 31, 2016 | December 31, 2015 | |||||||||||||||||||||
Level 1 | Level 21 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
Assets Held for Sale | $ | — | $ | 39,059 | $ | — | $ | — | $ | 6,976 | $ | — |
1 | Assets held for sale is presented in the table net of liabilities of $1.1 million associated with the HomeSmart Disposal Group. |
(In Thousands) | March 31, 2016 | December 31, 2015 | |||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
Perfect Home Notes1 | $ | — | $ | — | $ | 22,108 | $ | — | $ | — | $ | 22,226 | |||||||||||
Fixed-Rate Long-Term Debt2 | — | (394,375 | ) | — | — | (395,618 | ) | — |
1 | The Perfect Home notes were initially measured at cost. The Company periodically reviews the carrying amount 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 amount of fixed-rate long-term debt was $375.0 million at March 31, 2016 and December 31, 2015, respectively. |
(In Thousands) | March 31, 2016 | December 31, 2015 | ||||||
Credit Card Loans | $ | 30,456 | $ | 13,900 | ||||
Acquired Loans | 59,521 | 74,866 | ||||||
Loans Receivable, Gross | 89,977 | 88,766 | ||||||
Allowance for Loan Losses | (2,589 | ) | (937 | ) | ||||
Unamortized Fees | (4,190 | ) | (2,034 | ) | ||||
Loans Receivable, Net | $ | 83,198 | $ | 85,795 |
Aging Category | March 31, 2016 | December 31, 2015 | ||||||
30-59 days past due | 5.9 | % | 7.9 | % | ||||
60-89 days past due | 2.5 | % | 3.3 | % | ||||
90 or more days past due | 3.7 | % | 4.1 | % | ||||
Past due loans receivable | 12.1 | % | 15.3 | % | ||||
Current loans receivable | 87.9 | % | 84.7 | % | ||||
Balance of loans receivable 90 or more days past due and still accruing interest and fees | $ | — | $ | — |
NOTE 5. | INDEBTEDNESS |
NOTE 6. | COMMITMENTS AND CONTINGENCIES |
NOTE 7. | SEGMENTS |
Three Months Ended March 31, | |||||||
(In Thousands) | 2016 | 2015 | |||||
Revenues From External Customers: | |||||||
Sales and Lease Ownership | $ | 502,192 | $ | 536,160 | |||
Progressive | 306,665 | 251,619 | |||||
HomeSmart | 17,680 | 16,972 | |||||
DAMI1 | 4,763 | — | |||||
Franchise | 16,295 | 17,004 | |||||
Manufacturing | 24,923 | 28,806 | |||||
Other | 284 | 368 | |||||
Revenues of Reportable Segments | 872,802 | 850,929 | |||||
Elimination of Intersegment Revenues | (23,802 | ) | (28,289 | ) | |||
Cash to Accrual Adjustments | 5,427 | (826 | ) | ||||
Total Revenues from External Customers | $ | 854,427 | $ | 821,814 | |||
Earnings (Loss) Before Income Taxes: | |||||||
Sales and Lease Ownership | $ | 43,562 | $ | 52,575 | |||
Progressive | 21,914 | 15,830 | |||||
HomeSmart2 | (3,229 | ) | 537 | ||||
DAMI | (2,882 | ) | — | ||||
Franchise | 13,119 | 13,898 | |||||
Manufacturing | 868 | 1,282 | |||||
Other3 | (6,156 | ) | (11,479 | ) | |||
Earnings Before Income Taxes for Reportable Segments | 67,196 | 72,643 | |||||
Elimination of Intersegment Profit | (755 | ) | (1,268 | ) | |||
Cash to Accrual and Other Adjustments | 13,287 | 6,455 | |||||
Total Earnings Before Income Taxes | $ | 79,728 | $ | 77,830 |
(In Thousands) | March 31, 2016 | December 31, 2015 | |||||
Assets: | |||||||
Sales and Lease Ownership | $ | 1,249,551 | $ | 1,261,040 | |||
Progressive | 878,204 | 878,457 | |||||
HomeSmart | 38,621 | 44,429 | |||||
DAMI | 93,701 | 97,486 | |||||
Franchise | 39,161 | 53,693 | |||||
Manufacturing1 | 31,538 | 28,986 | |||||
Other | 217,991 | 291,080 | |||||
Total Assets | $ | 2,548,767 | $ | 2,655,171 |
1 | Includes inventory (principally raw materials and work-in-process) that has been classified within lease merchandise in the condensed consolidated balance sheets of $22.1 million and $19.4 million as of March 31, 2016 and December 31, 2015, respectively. |
• | Revenues in the Sales and Lease Ownership and HomeSmart segments are reported on a cash basis for management reporting purposes. |
• | Generally a predetermined amount of each reportable segment’s revenues is charged to the reportable segment as an allocation of corporate overhead. |
• | 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 expense is allocated to the Sales and Lease Ownership and HomeSmart segments based a percentage of their revenues. Interest expense is allocated to the Progressive segment based on a percentage of the outstanding balances of its intercompany borrowings and of the debt incurred when it was acquired. |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Active Doors at March 31 (Unaudited) | 2016 | 2015 | |||
Progressive Active Doors | 13,521 | 11,861 |
For the Three Months Ended March 31 (Unaudited and In Thousands) | 2016 | 2015 | |||||
Progressive Invoice Volume | $ | 218,927 | $ | 197,480 |
Three Months Ended March 31, | Change | |||||||||||||
(In Thousands) | 2016 | 2015 | $ | % | ||||||||||
REVENUES: | ||||||||||||||
Lease Revenues and Fees | $ | 741,611 | $ | 695,282 | $ | 46,329 | 6.7 | % | ||||||
Retail Sales | 10,955 | 11,994 | (1,039 | ) | (8.7 | ) | ||||||||
Non-Retail Sales | 79,305 | 96,037 | (16,732 | ) | (17.4 | ) | ||||||||
Franchise Royalties and Fees | 16,295 | 17,004 | (709 | ) | (4.2 | ) | ||||||||
Interest and Fees on Loans Receivable | 4,763 | — | 4,763 | nmf | ||||||||||
Other | 1,498 | 1,497 | 1 | .1 | ||||||||||
854,427 | 821,814 | 32,613 | 4.0 | |||||||||||
COSTS AND EXPENSES: | ||||||||||||||
Depreciation of Lease Merchandise | 348,302 | 315,986 | 32,316 | 10.2 | ||||||||||
Retail Cost of Sales | 7,065 | 7,704 | (639 | ) | (8.3 | ) | ||||||||
Non-Retail Cost of Sales | 71,385 | 86,852 | (15,467 | ) | (17.8 | ) | ||||||||
Operating Expenses | 348,424 | 327,920 | 20,504 | 6.3 | ||||||||||
Other Operating Income, Net | (6,729 | ) | (1,460 | ) | 5,269 | 360.9 | ||||||||
768,447 | 737,002 | 31,445 | 4.3 | |||||||||||
OPERATING PROFIT | 85,980 | 84,812 | 1,168 | 1.4 | ||||||||||
Interest Income | 421 | 439 | (18 | ) | (4.1 | ) | ||||||||
Interest Expense | (6,312 | ) | (5,969 | ) | 343 | 5.7 | ||||||||
Other Non-Operating Expense, Net | (361 | ) | (1,452 | ) | (1,091 | ) | (75.1 | ) | ||||||
EARNINGS BEFORE INCOME TAXES | 79,728 | 77,830 | 1,898 | 2.4 | ||||||||||
INCOME TAXES | 30,041 | 28,587 | 1,454 | 5.1 | ||||||||||
NET EARNINGS | $ | 49,687 | $ | 49,243 | $ | 444 | .9 | % | ||||||
nmf - Calculation is not meaningful |
Three Months Ended March 31, | Change | |||||||||||||
(In Thousands) | 2016 | 2015 | $ | % | ||||||||||
REVENUES: | ||||||||||||||
Sales and Lease Ownership1 | $ | 502,192 | $ | 536,160 | $ | (33,968 | ) | (6.3 | )% | |||||
Progressive2 | 306,665 | 251,619 | 55,046 | 21.9 | ||||||||||
HomeSmart1 | 17,680 | 16,972 | 708 | 4.2 | ||||||||||
DAMI3 | 4,763 | — | 4,763 | nmf | ||||||||||
Franchise4 | 16,295 | 17,004 | (709 | ) | (4.2 | ) | ||||||||
Manufacturing | 24,923 | 28,806 | (3,883 | ) | (13.5 | ) | ||||||||
Other | 284 | 368 | (84 | ) | (22.8 | ) | ||||||||
Revenues of Reportable Segments | 872,802 | 850,929 | 21,873 | 2.6 | ||||||||||
Elimination of Intersegment Revenues | (23,802 | ) | (28,289 | ) | 4,487 | 15.9 | ||||||||
Cash to Accrual Adjustments | 5,427 | (826 | ) | 6,253 | 757.0 | |||||||||
Total Revenues from External Customers | $ | 854,427 | $ | 821,814 | $ | 32,613 | 4.0 | % | ||||||
nmf - Calculation is not meaningful | ||||||||||||||
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 interest and fees on loans receivable, and excludes the effect of interest expense. | ||||||||||||||
4 Segment revenue consists of franchise royalties and fees. |
Three Months Ended March 31, | |||||||
(In Thousands) | 2016 | 2015 | |||||
Personnel costs | $ | 163,530 | $ | 155,821 | |||
Occupancy costs | 53,484 | 52,054 | |||||
Lease merchandise adjustments | 33,906 | 29,293 | |||||
Bad debt expense | 27,939 | 24,141 | |||||
Advertising | 9,686 | 11,600 | |||||
Other operating expenses | 59,879 | 55,011 | |||||
Operating Expenses | $ | 348,424 | $ | 327,920 |
Three Months Ended March 31, | |||||||
(In Thousands) | 2016 | 2015 | |||||
Losses (gains) on sales of stores | $ | 32 | $ | (2,075 | ) | ||
Net gains on sales of delivery vehicles | (463 | ) | (318 | ) | |||
Impairment charges and net (gains) losses on asset dispositions and assets held for sale | (6,298 | ) | 933 | ||||
Other operating income, net | $ | (6,729 | ) | $ | (1,460 | ) |
Three Months Ended March 31, | Change | |||||||||||||
2016 vs. 2015 | ||||||||||||||
(In Thousands) | 2016 | 2015 | $ | % | ||||||||||
EARNINGS (LOSS) BEFORE INCOME TAXES: | ||||||||||||||
Sales and Lease Ownership | $ | 43,562 | $ | 52,575 | $ | (9,013 | ) | (17.1 | )% | |||||
Progressive | 21,914 | 15,830 | 6,084 | 38.4 | ||||||||||
HomeSmart1 | (3,229 | ) | 537 | (3,766 | ) | (701.3 | ) | |||||||
Franchise | 13,119 | 13,898 | (779 | ) | (5.6 | ) | ||||||||
DAMI | (2,882 | ) | — | (2,882 | ) | nmf | ||||||||
Manufacturing | 868 | 1,282 | (414 | ) | (32.3 | ) | ||||||||
Other2 | (6,156 | ) | (11,479 | ) | 5,323 | 46.4 | ||||||||
Earnings Before Income Taxes for Reportable Segments | 67,196 | 72,643 | (5,447 | ) | (7.5 | ) | ||||||||
Elimination of Intersegment Profit | (755 | ) | (1,268 | ) | 513 | 40.5 | ||||||||
Cash to Accrual and Other Adjustments | 13,287 | 6,455 | 6,832 | 105.8 | ||||||||||
Total | $ | 79,728 | $ | 77,830 | $ | 1,898 | 2.4 | % | ||||||
nmf - Calculation is not meaningful |
• | Cash and cash equivalents increased $104.0 million to $118.9 million at March 31, 2016 from $14.9 million at December 31, 2015. For additional information, refer to the “Liquidity and Capital Resources” section below. |
• | Accounts receivable, net decreased $28.2 million to $85.2 million at March 31, 2016 from $113.4 million at December 31, 2015 primarily due to decreases in non-retail sales during the period. |
• | Income tax receivable decreased $149.1 million primarily because the Company received income tax refunds, net of payments of $119.7 million, during the three months ended March 31, 2016. The enactment of the Protecting Americans From Tax Hikes Act in December 2015 extended bonus depreciation on eligible inventory held during 2015. Throughout 2015, the Company made payments based on the previously enacted law, resulting in an overpayment when the current act was signed and the Company applied for a refund at that time. |
• | Accounts payable and accrued expenses decreased $55.9 million due primarily to decreases in lease merchandise purchases during the three months ended March 31, 2016 compared to the three months ended December 31, 2015. |
• | Debt decreased $88.7 million due primarily to the net repayment of $89.0 million in revolving credit borrowings, term loans and capital lease obligations. Refer to “Liquidity and Capital Resources” below for further details regarding the Company's financing arrangements. |
• | cash flows from operations; |
• | private debt offerings; |
• | bank debt; |
• | trade credit with vendors; |
• | proceeds from the sale of lease return merchandise; and |
• | stock offerings. |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Period | Total Number of Shares Purchased | Average Price Paid per Share | 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 1 | ||||
January 1, 2016 through January 31, 2016 | — | — | — | 10,496,421 | ||||
February 1, 2016 through February 29, 2016 | — | — | — | 10,496,421 | ||||
March 1, 2016 through March 31, 2016 | — | — | — | 10,496,421 | ||||
Total | — | — |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
ITEM 6. | EXHIBITS |
EXHIBIT NO. | DESCRIPTION OF EXHIBIT | |
10.1* | Eleventh amendment to the Loan and Security Agreement by and among Dent-A-Med, Inc., HC Recovery, Inc. and Wells Fargo, N.A, dated as of May 5, 2016. | |
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 March 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015, (ii) Condensed Consolidated Statements of Earnings for the three months ended March 31, 2016 and 2015, (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2016 and 2015, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015, and (v) the Notes to Condensed Consolidated Financial Statements. | |
*Filed herewith. |
AARON’S, INC. | |||
(Registrant) | |||
Date: | May 5, 2016 | By: | /s/ Steven A. Michaels |
Steven A. Michaels | |||
Chief Financial Officer, | |||
President Strategic Operations | |||
Date: | May 5, 2016 | By: | /s/ Robert P. Sinclair, Jr. |
Robert P. Sinclair, Jr. | |||
Vice President, | |||
Corporate Controller |
BORROWERS: | DENT-A-MED INC. By: /s/ Clifton C. Scogin_____________ Name: Clifton C. Scogin_______________ Title: Executive Vice President__________ |
HC RECOVERY, INC. By: /s/ Clifton C. Scogin______________ Name: Clifton C. Scogin______________ __ Title: Vice President __________________ | |
AGENT AND LENDER: | WELLS FARGO BANK, N.A. By: /s/ Casey P. Johnson_____________ Name: Casey P. Johnson________________ Title: Senior Vice President_____________ |
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: | May 5, 2016 | /s/ John W. Robinson III |
John W. Robinson III | ||
Chief Executive Officer | ||
I, Steven A. Michaels, 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: | May 5, 2016 | /s/ Steven A. Michaels |
Steven A. Michaels | ||
Chief Financial Officer, | ||
President Strategic Operations |
Date: | May 5, 2016 | /s/ John W. Robinson III | |
John W. Robinson III | |||
Chief Executive Officer | |||
Date: | May 5, 2016 | /s/ Steven A. Michaels | |
Steven A. Michaels | |||
Chief Financial Officer, | |||
President Strategic Operations |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
May. 02, 2016 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
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 (in shares) | 72,750,329 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 30,028 | $ 34,861 |
Lease Merchandise, Accumulated depreciation | 720,007 | 738,657 |
Loans Receivable, allowances | 6,779 | 2,971 |
Property, Plant and Equipment at Cost, accumulated depreciation and amortization | 228,941 | 222,752 |
Other Intangibles, accumulated amortization | $ 54,932 | $ 48,021 |
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 | 18,002,753 | 18,151,560 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||
Net Earnings | $ 49,687 | $ 49,243 |
Other Comprehensive Income: | ||
Foreign Currency Translation Adjustment | 593 | 3 |
Total Other Comprehensive Income | 593 | 3 |
Comprehensive Income | $ 50,280 | $ 49,246 |
Basis and Summary of Significant Accounting Policies |
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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 leader in the sales and lease ownership and specialty retailing of furniture, consumer electronics, computers, and home appliances and accessories throughout the United States and Canada. The Company's 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), DAMI and Woodhaven Furniture Industries, which manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in Company-operated and franchised stores. Progressive is a leading virtual lease-to-own company that provides lease-purchase solutions 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. DAMI, which was acquired by Progressive on October 15, 2015, partners with merchants to provide a variety of revolving credit products originated through a federally insured bank to customers that may not qualify for traditional prime lending (called "second-look" financing programs). The following table presents store count by ownership type for the Company's store-based operations:
On April 5, 2016, the Company entered into an agreement to sell the 82 Company-operated HomeSmart stores. Refer to Note 9 for more information. The following table presents active doors for Progressive:
1 An active door is a retail store location at which at least one virtual lease-to-own transaction has been completed during the trailing three month period. 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 the 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, 2015 (the “2015 Annual Report”). The results of operations for the three months ended March 31, 2016 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. 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 operates 70 retail stores as of March 31, 2016. 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 since 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 is $22.1 million at March 31, 2016. Accounting Policies and Estimates See Note 1 to the consolidated financial statements in the 2015 Annual Report. 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 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 months ended March 31, 2016 and 2015:
Approximately 849,000 and 468,000 share-based awards were excluded from the computation for earnings per share assuming dilution during the three months ended March 31, 2016 and 2015, respectively, because the awards would have been anti-dilutive for the periods presented. Investments At March 31, 2016 and December 31, 2015, investments classified as held-to-maturity securities consisted of British pound-denominated notes issued by Perfect Home. The Perfect Home notes, which totaled £15.4 million ($22.1 million) and £15.1 million ($22.2 million) at March 31, 2016 and December 31, 2015, respectively, are classified as held-to-maturity securities because 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 and mature on June 30, 2016. The increase in the carrying amount of the notes during the three months ended March 31, 2016 relates to accretion of the original discount on the notes, which had a face value of £10.0 million. The Company does not intend to sell its securities and it is not more likely than not that the Company will be required to sell the investments before recovery of its amortized cost basis. 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 March 31, 2016. 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 real estate leasing activities, in-transit credit card transactions and vendor consideration) and franchisee obligations. Accounts receivable, net of allowances, consist of the following:
The following table shows the components of the accounts receivable provision for the three months ended March 31:
Refer to Note 1 to the consolidated financial statements in the 2015 Annual Report for information on the Company's accounting policy for the accounts receivable provision. 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 March 31, 2016 and December 31, 2015, the allowance for lease merchandise write-offs was $34.6 million and $33.4 million, respectively. Lease merchandise adjustments totaled $33.9 million and $29.3 million for the three months ended March 31, 2016 and 2015, respectively, and are included in operating expenses in the accompanying condensed consolidated statements of earnings. Loans Receivable, Net Loans receivable, net represents the principal balances of credit card charges at DAMI's participating merchants that remain outstanding to cardholders, plus unpaid interest and fees due from cardholders, net of an allowance for uncollectible amounts and unamortized fees (which include merchant fees, net of capitalized origination costs, promotional fees and deferred annual card fees). The Company acquired outstanding credit card loans in the October 15, 2015 DAMI acquisition (the "Acquired Loans"). Loans acquired in a business acquisition are recorded at their fair value at the acquisition date. The projected net cash flows from expected payments of principal, interest, fees and servicing costs and anticipated charge-offs are included in the determination of fair value; therefore, an allowance for loan losses and an amount for unamortized fees are not recognized for the Acquired Loans. The difference, or discount, between the expected cash flows to be received and the fair value of the Acquired Loans is accreted to revenue based on the effective interest method. At each period end, the Company evaluates the appropriateness of the accretable discount on the Acquired Loans based on actual and revised projected future cash receipts. Assets Held for Sale Assets held for sale are classified within prepaid expenses and other assets in the condensed consolidated balance sheets. On April 5, 2016, the Company entered into an agreement to sell substantially all of the assets and certain liabilities of the HomeSmart segment ("the HomeSmart Disposal Group"). Refer to Note 9 for more information. As a result of the expected sale, the Company classified the HomeSmart Disposal Group as held for sale as of March 31, 2016 and recognized a loss of $4.6 million in the three month period then ended related to the write-down of the disposal group to its fair value, less estimated costs to sell. The loss is reflected within other operating income, net in the condensed consolidated statements of earnings. The sale of the HomeSmart Disposal Group does not represent a strategic shift that will have a major effect on the Company’s operations and financial results and therefore the HomeSmart segment is not classified as discontinued operations. Certain properties, consisting of parcels of land and commercial buildings, met the held for sale classification criteria as of March 31, 2016 and December 31, 2015. On January 29, 2016, the Company sold its Corporate headquarters building for cash of $13.6 million, resulting in a gain of $11.1 million. The gain was recorded to other operating income, net in the condensed consolidated statements of earnings. After adjustment to fair value, the carrying amount of the properties held for sale as of March 31, 2016 and December 31, 2015 is $4.9 million and $7.0 million, respectively. Accumulated Other Comprehensive Income (Loss) Changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2016 are as follows:
There were no reclassifications out of accumulated other comprehensive income (loss) for the three months ended March 31, 2016. 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. The fair value for the loans receivable and the revolving credit borrowings also approximate their carrying amounts. Recent Accounting Pronouncements Adopted Debt Issuance Costs. In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 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 has adopted this ASU retrospectively in this quarterly report and as a result debt issuance costs of $3.7 million at December 31, 2015, previously recognized as an asset in prepaid expenses and other assets, are now classified as a direct deduction from debt in the condensed consolidated balance sheet as of that date. Measurement-Period Adjustments. In September 2015, the FASB issued No. ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 eliminates the requirement that an acquirer in a business combination account for a measurement-period adjustment retrospectively. Instead, acquirers must recognize measurement-period adjustments during the period in which they determine the adjustment amounts. The adjustment amounts must include the effect on earnings of any amounts the acquirer would have recorded in previous periods if the accounting had been completed at the acquisition date. ASU 2015-16 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. ASU 2015-16 is applied prospectively to adjustments to provisional amounts that occur after the effective date. That is, ASU 2015-16 applies to open measurement periods, regardless of the acquisition date. The Company has adopted this standard in this quarterly report and applied it to the measurement period adjustments related to the DAMI acquisition. See Note 2 for more information. Pending adoption Revenue Recognition. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 replaces substantially all existing revenue recognition guidance with a single, comprehensive revenue recognition model that requires a company to recognize revenue at the amount to which it expects to be entitled in exchange for transferring goods or services to a customer. 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. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09, and, as a result of a subsequent amendment, it will be effective in annual reporting periods, and interim periods within that period, beginning after December 15, 2017. In March and April 2016, the FASB issued additional updates to the revenue recognition guidance in ASU 2014-09 related to principal versus agent assessments, identifying performance obligations, and the accounting for licenses. The Company has not yet determined the potential effects of adopting ASU 2014-09 and any related updates on its consolidated financial statements. The Company plans to complete its initial assessment of how it will be affected by this standard and any related updates in the second half of 2016. Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases, which would require lessees to recognize assets and liabilities for most leases and would change certain aspects of today’s lessor accounting, among other things. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. Companies must use a modified retrospective approach to adopt ASU 2016-02. The Company has not yet determined the potential effects of adopting ASU 2016-02 on its consolidated financial statements. Share-Based Payments. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. The objective of the update is to simplify the accounting for employee share-based awards by, among other things, requiring companies to recognize the income tax effects of awards in earnings when they vest or are settled, providing companies with an option to recognize forfeitures in earnings as they occur, and clarifying certain guidance on classification of awards as either equity or liabilities and classification of tax payment activity on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, with early adoption permitted. The Company has not yet determined the potential effects of adopting ASU 2016-09 on its consolidated financial statements. |
Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | ACQUISITIONS During the three months ended March 31, 2016, the Company did not make any cash payments related to the acquisitions of businesses or contracts. During the three months ended March 31, 2015, net cash payments related to the acquisitions of businesses, including contracts, were $3.6 million. The effect of these acquisitions on the condensed consolidated financial statements for the three months ended March 31, 2016 and 2015 was not significant. DAMI Acquisition On October 15, 2015, the Company acquired a 100% ownership interest in DAMI for a total purchase price of $54.9 million, inclusive of cash acquired of $4.2 million.The following table summarizes the preliminary estimated fair value of the assets acquired and liabilities assumed as of the acquisition date, as well as adjustments made during the three months ended March 31, 2016 (referred to as the "measurement period adjustments"). The measurement period adjustments did not have a significant effect on the condensed consolidated financial statements.
1 As previously reported in the notes to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. 2 The measurement period adjustments primarily related to the resolution of certain income tax-related matters. 3 Contractually required amounts due at the acquisition date were $94.2 million. The preliminary acquisition accounting presented above is subject to further refinement. The Company is still finalizing certain working capital adjustments with the sellers and gathering information on certain contingencies that existed at the acquisition date. Estimates for affected items have been included in the acquisition accounting and are expected to be finalized prior to the one year anniversary date of the acquisition. |
Fair Value Measurement |
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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:
The Company maintains the Aaron’s, Inc. Deferred Compensation Plan, which is an unfunded, nonqualified deferred compensation plan for a select group of management, highly compensated employees and non-employee directors. 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:
As discussed in Note 1, the HomeSmart Disposal Group is classified as held for sale as of March 31, 2016 and certain real estate properties that consist of land and commercial buildings are classified as held for sale as of March 31, 2016 and December 31, 2015. Assets and disposal groups classified as held for sale are adjusted to fair value less estimated costs to sell, and the adjustment is recorded in other operating income, net in the condensed consolidated statements of earnings. The Company estimated the fair value of the HomeSmart Disposal Group as of March 31, 2016 based on the contractual sales price. The highest and best use of the real estate properties 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. The Company estimated the fair values of real estate properties using the market values for similar properties. 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:
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Loans Receivable |
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Loans Receivable | LOANS RECEIVABLE The following is a summary of the Company’s loans receivable, net:
The following table summarizes the aging of the Company’s finance receivables portfolio, including delinquency percentage rates. A cardholder account is measured as past due when a current account’s minimum payment due has been outstanding for 30 days or longer. The aging is based on the contractual amounts outstanding for each loan as of period end, and does not reflect the fair value of the Acquired Loans.
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Indebtedness |
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Debt Disclosure [Abstract] | |
Indebtedness | INDEBTEDNESS See Note 7 to the consolidated financial statements in the 2015 Annual Report and Note 9 in these condensed consolidated financial statements. |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES 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 March 31, 2016, the maximum amount that the Company would be obligated to repay in the event franchisees defaulted was $74.2 million. The Company has recourse rights to franchisee assets securing the debt obligations, which consist primarily of lease merchandise and fixed assets. Since the inception of the franchise loan program in 1994, the Company has had no significant associated losses. The Company believes the likelihood of any significant amounts being funded in connection with these commitments to be remote. 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 approximately $760,000 as of March 31, 2016. 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 (other than the province of Quebec) 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 the Company is currently a party are described below. The Company believes it has meritorious defenses to all of the claims described below, and intends 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 the Company will ultimately be successful in these proceedings, or in others to which it is currently a party. Substantial losses from these proceedings or the costs of defending them could have a material adverse impact upon the Company's 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 March 31, 2016, the Company had accrued $5.2 million for pending legal and regulatory matters for which it believes losses are probable, which is the Company's best estimate of its exposure to loss. The Company estimates that the aggregate range of reasonably possible loss in excess of accrued liabilities for such probable loss contingencies is between $0 and $3.3 million. At March 31, 2016, 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 $546,000 and $2.6 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. On October 4, 2013, the Company also 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. On August 14, 2015, the Company filed a motion for partial summary judgment seeking judicial dismissal of a portion of the claims in the case. The motion filed October 4, 2013 to allow counterclaims was denied by the magistrate judge on June 30, 2014, and that decision was confirmed by the District Court on November 30, 2015. On December 23, 2015, the Company filed a motion requesting permission for an interlocutory appeal of the denial of the motion to add counterclaims to the United States Third Circuit Court of Appeals, which also remains pending. On February 23, 2016, the Court granted in part and denied in part the Company’s motion for partial summary judgment filed August 14, 2015, dismissing plaintiff’s claims that the pro-rate violated the New Jersey Consumer Fraud Act, but denying summary judgment on the claim that Aaron’s Service Plus violated the same act. On March 7, 2016, the Company moved for limited reconsideration of that ruling. On March 24, 2016, plaintiff filed a motion for approval of issuance of class notice. The Company has filed a motion requesting a stay on issuance of class notice pending the ruling on the request for limited reconsideration of the partial summary judgment ruling and the request for interlocutory review of the denial of the motion to add counterclaims filed on December 23, 2015. That motion remains pending. 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 asserted 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 United States 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 United States Third Circuit Court of Appeals. On April 10, 2015, the 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, which was denied on July 11, 2015. 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 15, 2015. In Michael Peterson v. Aaron’s, Inc. and Aspen Way Enterprises, Inc., filed on June 19, 2014, in the United States District Court for the Northern District of Georgia (Case No. 1:14-cv-01919-TWT), 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 plaintiffs' 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. On June 4, 2015, the Court granted the Company’s motion to dismiss all claims except a claim for aiding and abetting invasion of privacy. Plaintiffs then filed a second amended complaint alleging only the invasion of privacy claims that survived the June 4, 2015 court order, and adding a claim for unjust enrichment. The Company filed a motion to dismiss the second amended complaint, and on September 16, 2015, the Court granted the Company’s motion to dismiss plaintiffs’ unjust enrichment claim. The only remaining claim against the Company is a claim for aiding and abetting invasion of privacy. Plaintiffs filed their motion for class certification on March 18, 2016. The Company responded in opposition to that motion, which remains pending. 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. The final payment as scheduled under the consent order was made on January 6, 2016. Other Matters In Foster v. Aaron’s, Inc., filed on August 21, 2015, in the United States District Court in Phoenix, Arizona (No. CV-15-1637-PHX-SRB), the plaintiff in this putative class action alleges that the Company violated the Telephone Consumer Protection Act ("TCPA") by placing automated calls to customer references, or otherwise violated the TCPA in the manner in which the Company contacts customer references. The Company's initial responsive pleading was filed on October 7, 2015. A Scheduling Order was entered on January 26, 2016. Other Contingencies The Company is a party to various claims and legal 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. Unfunded Lending Commitments The Company, through its DAMI business, has unfunded lending commitments totaling approximately $383.9 million and $378.7 million as of March 31, 2016 and December 31, 2015, respectively. These unfunded commitments arise in the ordinary course of business from credit card agreements with individual cardholders that give them the ability to borrow, against unused amounts, up to the maximum credit limit assigned to their account. While these unfunded amounts represented the total available unused lines of credit, the Company does not anticipate that all cardholders will utilize their entire available line at any given point in time. Commitments to extend unsecured credit are agreements to lend to a cardholder so long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. See Note 9 to the consolidated financial statements in the 2015 Annual Report for further information. |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments | SEGMENTS As of March 31, 2016, the Company had six operating and reportable segments: Sales and Lease Ownership, Progressive, HomeSmart, DAMI, Franchise and Manufacturing. On April 5, 2016, the Company entered into an agreement to sell HomeSmart. See Note 9 for more information. The results of DAMI have been included in the Company's consolidated results and presented as a reportable segment from its October 15, 2015 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 needed. Progressive is a leading virtual lease-to-own company that provides lease-purchase solutions on a variety of products, including furniture and bedding, consumer electronics, appliances and jewelry. The HomeSmart division offers furniture, electronics, appliances and computers to customers primarily on a weekly payment basis with no credit needed. DAMI offers a variety of second-look financing programs originated through a federally insured bank to customers of participating merchants and, together with Progressive, allows the Company to provide retail partners one source for financing and leasing transactions with below prime customers. The 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 are eliminated through the elimination of intersegment revenues and intersegment profit or loss.
1 Represents interest and fees on loans receivable, and excludes the effect of interest expense. 2 HomeSmart earnings before income taxes includes an estimated loss on the sale of HomeSmart of $4.6 million during the three months ended March 31, 2016 incurred upon classification of the HomeSmart Disposal Group as held for sale. 3 Earnings before income taxes for the Other category includes a gain of $11.1 million on the sale of the Company's corporate office building during the the three months ended March 31, 2016. Revenues in the Other category are primarily revenues attributable to leasing space to unrelated third parties in the corporate headquarters building and several minor unrelated activities. The pre-tax losses or earnings in the Other category generally are the result of the activity mentioned above, net of the portion of corporate overhead not allocated to the reportable segments for management purposes.
The Company determines earnings (loss) before income taxes for all reportable segments in accordance with U.S. GAAP with the following adjustments:
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Related Party Transactions |
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Mar. 31, 2016 | |
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 7 and 14 to the consolidated financial statements in the 2015 Annual Report. |
Subsequent Events |
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Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS HomeSmart On April 5, 2016, the Company entered into an agreement to sell the 82 Company-operated HomeSmart stores. The transaction is expected to close in May, subject to customary closing conditions. During the current quarter, the Company recognized a loss of $4.6 million related to the write-down of the HomeSmart Disposal Group to its fair value less estimated costs to sell. The Company expects that any additional charges associated with the sale of HomeSmart would not be significant to future results. Amendments to DAMI Credit Facility On May 5, 2016, the Company entered into the eleventh amendment to the 2011 loan and security agreement assumed in the October 2015 DAMI acquisition (the DAMI Credit Facility). Among other things, the amendment changed the EBITDA ratio DAMI is required to maintain. DAMI was in compliance with the amended financial covenants as of March 31, 2016. |
Basis and Summary of Significant Accounting Policies (Policies) |
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Description of Business | Description of Business Aaron’s, Inc. (the “Company” or “Aaron’s”) is a leader in the sales and lease ownership and specialty retailing of furniture, consumer electronics, computers, and home appliances and accessories throughout the United States and Canada. The Company's 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), DAMI and Woodhaven Furniture Industries, which manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in Company-operated and franchised stores. |
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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 the 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, 2015 (the “2015 Annual Report”). The results of operations for the three months ended March 31, 2016 are not necessarily indicative of operating results for the full year. |
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Reclassifications | Reclassifications Certain reclassifications have been made to the prior periods to conform to the current period presentation. |
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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 operates 70 retail stores as of March 31, 2016. 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 since the Company lacks the power through voting or similar rights to direct the activities that most significantly affect Perfect Home's economic performance. |
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Accounting Policies and Estimates | Accounting Policies and Estimates See Note 1 to the consolidated financial statements in the 2015 Annual Report. |
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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 and performance share units (collectively, “share-based awards”) as determined under the treasury stock method. |
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Investments | At March 31, 2016 and December 31, 2015, investments classified as held-to-maturity securities consisted of British pound-denominated notes issued by Perfect Home. The Perfect Home notes, which totaled £15.4 million ($22.1 million) and £15.1 million ($22.2 million) at March 31, 2016 and December 31, 2015, respectively, are classified as held-to-maturity securities because 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 and mature on June 30, 2016. The increase in the carrying amount of the notes during the three months ended March 31, 2016 relates to accretion of the original discount on the notes, which had a face value of £10.0 million. The Company does not intend to sell its securities and it is not more likely than not that the Company will be required to sell the investments before recovery of its amortized cost basis. 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 March 31, 2016. |
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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 real estate leasing activities, in-transit credit card transactions and vendor consideration) and franchisee obligations. Accounts receivable, net of allowances, consist of the following:
The following table shows the components of the accounts receivable provision for the three months ended March 31:
Refer to Note 1 to the consolidated financial statements in the 2015 Annual Report for information on the Company's accounting policy for the accounts receivable provision. |
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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 March 31, 2016 and December 31, 2015, the allowance for lease merchandise write-offs was $34.6 million and $33.4 million, respectively. Lease merchandise adjustments totaled $33.9 million and $29.3 million for the three months ended March 31, 2016 and 2015, respectively, and are included in operating expenses in the accompanying condensed consolidated statements of earnings. |
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Loans Receivable, Net | Loans Receivable, Net Loans receivable, net represents the principal balances of credit card charges at DAMI's participating merchants that remain outstanding to cardholders, plus unpaid interest and fees due from cardholders, net of an allowance for uncollectible amounts and unamortized fees (which include merchant fees, net of capitalized origination costs, promotional fees and deferred annual card fees). The Company acquired outstanding credit card loans in the October 15, 2015 DAMI acquisition (the "Acquired Loans"). Loans acquired in a business acquisition are recorded at their fair value at the acquisition date. The projected net cash flows from expected payments of principal, interest, fees and servicing costs and anticipated charge-offs are included in the determination of fair value; therefore, an allowance for loan losses and an amount for unamortized fees are not recognized for the Acquired Loans. The difference, or discount, between the expected cash flows to be received and the fair value of the Acquired Loans is accreted to revenue based on the effective interest method. At each period end, the Company evaluates the appropriateness of the accretable discount on the Acquired Loans based on actual and revised projected future cash receipts. |
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Assets Held for Sale | Assets Held for Sale Assets held for sale are classified within prepaid expenses and other assets in the condensed consolidated balance sheets. On April 5, 2016, the Company entered into an agreement to sell substantially all of the assets and certain liabilities of the HomeSmart segment ("the HomeSmart Disposal Group"). Refer to Note 9 for more information. As a result of the expected sale, the Company classified the HomeSmart Disposal Group as held for sale as of March 31, 2016 and recognized a loss of $4.6 million in the three month period then ended related to the write-down of the disposal group to its fair value, less estimated costs to sell. The loss is reflected within other operating income, net in the condensed consolidated statements of earnings. The sale of the HomeSmart Disposal Group does not represent a strategic shift that will have a major effect on the Company’s operations and financial results and therefore the HomeSmart segment is not classified as discontinued operations. Certain properties, consisting of parcels of land and commercial buildings, met the held for sale classification criteria as of March 31, 2016 and December 31, 2015. On January 29, 2016, the Company sold its Corporate headquarters building for cash of $13.6 million, resulting in a gain of $11.1 million. The gain was recorded to other operating income, net in the condensed consolidated statements of earnings. After adjustment to fair value, the carrying amount of the properties held for sale as of March 31, 2016 and December 31, 2015 is $4.9 million and $7.0 million, respectively. |
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Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Income (Loss) Changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2016 are as follows:
There were no reclassifications out of accumulated other comprehensive income (loss) for the three months ended March 31, 2016. |
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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. The fair value for the loans receivable and the revolving credit borrowings also approximate their carrying amounts. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements Adopted Debt Issuance Costs. In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 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 has adopted this ASU retrospectively in this quarterly report and as a result debt issuance costs of $3.7 million at December 31, 2015, previously recognized as an asset in prepaid expenses and other assets, are now classified as a direct deduction from debt in the condensed consolidated balance sheet as of that date. Measurement-Period Adjustments. In September 2015, the FASB issued No. ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 eliminates the requirement that an acquirer in a business combination account for a measurement-period adjustment retrospectively. Instead, acquirers must recognize measurement-period adjustments during the period in which they determine the adjustment amounts. The adjustment amounts must include the effect on earnings of any amounts the acquirer would have recorded in previous periods if the accounting had been completed at the acquisition date. ASU 2015-16 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. ASU 2015-16 is applied prospectively to adjustments to provisional amounts that occur after the effective date. That is, ASU 2015-16 applies to open measurement periods, regardless of the acquisition date. The Company has adopted this standard in this quarterly report and applied it to the measurement period adjustments related to the DAMI acquisition. See Note 2 for more information. Pending adoption Revenue Recognition. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 replaces substantially all existing revenue recognition guidance with a single, comprehensive revenue recognition model that requires a company to recognize revenue at the amount to which it expects to be entitled in exchange for transferring goods or services to a customer. 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. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09, and, as a result of a subsequent amendment, it will be effective in annual reporting periods, and interim periods within that period, beginning after December 15, 2017. In March and April 2016, the FASB issued additional updates to the revenue recognition guidance in ASU 2014-09 related to principal versus agent assessments, identifying performance obligations, and the accounting for licenses. The Company has not yet determined the potential effects of adopting ASU 2014-09 and any related updates on its consolidated financial statements. The Company plans to complete its initial assessment of how it will be affected by this standard and any related updates in the second half of 2016. Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases, which would require lessees to recognize assets and liabilities for most leases and would change certain aspects of today’s lessor accounting, among other things. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. Companies must use a modified retrospective approach to adopt ASU 2016-02. The Company has not yet determined the potential effects of adopting ASU 2016-02 on its consolidated financial statements. Share-Based Payments. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. The objective of the update is to simplify the accounting for employee share-based awards by, among other things, requiring companies to recognize the income tax effects of awards in earnings when they vest or are settled, providing companies with an option to recognize forfeitures in earnings as they occur, and clarifying certain guidance on classification of awards as either equity or liabilities and classification of tax payment activity on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, with early adoption permitted. The Company has not yet determined the potential effects of adopting ASU 2016-09 on its consolidated financial statements. |
Basis and Summary of Significant Accounting Policies (Tables) |
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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:
On April 5, 2016, the Company entered into an agreement to sell the 82 Company-operated HomeSmart stores. Refer to Note 9 for more information. The following table presents active doors for Progressive:
1 An active door is a retail store location at which at least one virtual lease-to-own transaction has been completed during the trailing three month period. |
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Calculation of Dilutive Stock Awards | The following table shows the calculation of dilutive share-based awards for the three months ended March 31, 2016 and 2015:
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Accounts Receivable Net of Allowances | Accounts receivable, net of allowances, consist of the following:
The following is a summary of the Company’s loans receivable, net:
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Components of the Accounts Receivable Provision | The following table shows the components of the accounts receivable provision for the three months ended March 31:
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Changes in Accumulated Other Comprehensive Income (Loss) by Component | Changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2016 are as follows:
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Acquisitions (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | he following table summarizes the preliminary estimated fair value of the assets acquired and liabilities assumed as of the acquisition date, as well as adjustments made during the three months ended March 31, 2016 (referred to as the "measurement period adjustments"). The measurement period adjustments did not have a significant effect on the condensed consolidated financial statements.
1 As previously reported in the notes to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. 2 The measurement period adjustments primarily related to the resolution of certain income tax-related matters. 3 Contractually required amounts due at the acquisition date were $94.2 million. |
Fair Value Measurement (Tables) |
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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:
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Assets Measured at Fair Value on Nonrecurring Basis | The following table summarizes non-financial assets measured at fair value on a nonrecurring basis:
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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:
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Loans Receivable (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the Components of Loans Receivable, Net | Accounts receivable, net of allowances, consist of the following:
The following is a summary of the Company’s loans receivable, net:
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Aging of the Loans Receivable Balance |
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Segments (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information on Segments and Reconciliation to Earnings Before Income Taxes from Continuing Operations |
1 Represents interest and fees on loans receivable, and excludes the effect of interest expense. 2 HomeSmart earnings before income taxes includes an estimated loss on the sale of HomeSmart of $4.6 million during the three months ended March 31, 2016 incurred upon classification of the HomeSmart Disposal Group as held for sale. 3 Earnings before income taxes for the Other category includes a gain of $11.1 million on the sale of the Company's corporate office building during the the three months ended March 31, 2016. |
Basis and Summary of Significant Accounting Policies - Store Count by Ownership Type (Details) - Operating Segments |
3 Months Ended | |||
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Mar. 31, 2016
transaction
Store
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Mar. 31, 2015
transaction
Store
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Significant Accounting Policies [Line Items] | ||||
Number of retail stores | 1,305 | 1,318 | ||
Sales and Lease Ownership | ||||
Significant Accounting Policies [Line Items] | ||||
Number of retail stores | 1,223 | 1,235 | ||
HomeSmart | ||||
Significant Accounting Policies [Line Items] | ||||
Number of retail stores | 82 | 83 | ||
Franchise | ||||
Significant Accounting Policies [Line Items] | ||||
Number of retail stores | 729 | 790 | ||
Systemwide Stores | ||||
Significant Accounting Policies [Line Items] | ||||
Number of retail stores | 2,034 | 2,108 | ||
Progressive | ||||
Significant Accounting Policies [Line Items] | ||||
Number of retail stores | [1] | 13,521 | 11,861 | |
Number of virtual lease-to-own transactions completed | transaction | 1 | 1 | ||
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Basis and Summary of Significant Accounting Policies - Calculation of Dilutive Stock Awards (Detail) - shares shares in Thousands |
3 Months Ended | |
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Mar. 31, 2016 |
Mar. 31, 2015 |
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Accounting Policies [Abstract] | ||
Weighted average shares outstanding | 72,634 | 72,517 |
Dilutive effect of share-based awards (in shares) | 583 | 338 |
Weighted average shares outstanding assuming dilution | 73,217 | 72,855 |
Basis and Summary of Significant Accounting Policies - Accounts Receivable Net of Allowances (Detail) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
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Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net of allowances | $ 85,203 | $ 113,439 |
Customers | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net of allowances | 32,263 | 35,153 |
Corporate | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net of allowances | 16,046 | 26,175 |
Franchisee | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net of allowances | $ 36,894 | $ 52,111 |
Basis and Summary of Significant Accounting Policies - Components of the Accounts Receivable Provision (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Accounting Policies [Abstract] | ||
Bad debt expense | $ 27,939 | $ 24,141 |
Provision for returns and uncollected renewal payments | 6,575 | 5,790 |
Accounts receivable provision | $ 34,514 | $ 29,931 |
Basis and Summary of Significant Accounting Policies - Changes in Accumulated Other Comprehensive Income (Loss) by Component (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Accumulated Other Comprehensive Income [Roll Forward] | ||
Beginning balance | $ 1,366,618 | |
Other comprehensive income | 593 | $ 3 |
Ending balance | 1,417,922 | |
Foreign Currency | ||
Accumulated Other Comprehensive Income [Roll Forward] | ||
Beginning balance | (517) | |
Other comprehensive income | 593 | |
Ending balance | 76 | |
AOCI Attributable to Parent [Member] | ||
Accumulated Other Comprehensive Income [Roll Forward] | ||
Beginning balance | (517) | |
Ending balance | $ 76 |
Acquisitions - Narrative (Details) - USD ($) |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Mar. 31, 2016 |
Oct. 15, 2015 |
Mar. 31, 2016 |
Mar. 31, 2015 |
||||
Business Combinations [Abstract] | |||||||
Net cash payments related to acquisitions | $ 0 | $ 3,623,000 | |||||
Progressive Subsidiary | DAMI | |||||||
Business Acquisition [Line Items] | |||||||
Ownership interest acquired (percentage) | 100.00% | ||||||
Purchase Price | $ 54,900,000 | $ 54,900,000 | [1] | ||||
Cash acquired | 4,200,000 | ||||||
Loans receivable, gross | $ 94,200,000 | ||||||
|
Fair Value Measurement - Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Level 1 | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Deferred Compensation Liability | $ 0 | $ 0 |
Level 2 | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Deferred Compensation Liability | (11,587) | (11,576) |
Level 3 | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Deferred Compensation Liability | $ 0 | $ 0 |
Fair Value Measurement - Assets Measured At Fair Value on Nonrecurring Basis (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
|||
---|---|---|---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Assets held for sale | $ 4,900 | $ 7,000 | |||
Level 1 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Assets held for sale | 0 | 0 | |||
Level 2 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Assets held for sale | 39,059 | [1] | 6,976 | ||
Level 2 | Disposal Group, Held-for-sale, Not Discontinued Operations | HomeSmart | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Liabilities associated with disposal group | 1,100 | ||||
Level 3 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Assets held for sale | $ 0 | $ 0 | |||
|
Fair Value Measurement - Fair Value of Assets (Liabilities) Not Measured at Fair Value In Consolidated Balance Sheets (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
|||||
---|---|---|---|---|---|---|---|
Level 1 | Debt Securities | |||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||
Fair Value | [1] | $ 0 | $ 0 | ||||
Level 1 | Long-term Debt | |||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||
Long term debt, fair value | [2] | 0 | 0 | ||||
Level 2 | Debt Securities | |||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||
Fair Value | [1] | 0 | 0 | ||||
Level 2 | Long-term Debt | |||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||
Long term debt, fair value | [2] | (394,375) | (395,618) | ||||
Level 3 | Debt Securities | |||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||
Fair Value | [1] | 22,108 | 22,226 | ||||
Level 3 | Long-term Debt | |||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||
Long term debt, fair value | [2] | $ 0 | $ 0 | ||||
|
Fair Value Measurement - Fair Value of Assets (Liabilities) Not Measured at Fair Value In Consolidated Balance Sheet - Additional Information (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Long-term Debt | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long term debt, carrying value | $ 375.0 | $ 375.0 |
Loans Receivable - Components of Loans Receivable, Net (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans Receivable, Gross | $ 89,977 | $ 88,766 |
Allowance for Loan Losses | (2,589) | (937) |
Unamortized Fees | (4,190) | (2,034) |
Loans Receivable, Net | 83,198 | 85,795 |
Credit Card Loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans Receivable, Gross | 30,456 | 13,900 |
Acquired Loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans Receivable, Gross | $ 59,521 | $ 74,866 |
Loans Receivable - Aging of the Loans Receivable Balance (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past due loans receivable (percentage) | 12.10% | 15.30% |
Current loans receivable (percentage) | 87.90% | 84.70% |
30-59 days past due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past due loans receivable (percentage) | 5.90% | 7.90% |
60-89 days past due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past due loans receivable (percentage) | 2.50% | 3.30% |
90 or more days past due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past due loans receivable (percentage) | 3.70% | 4.10% |
Balance of loans receivable 90 or more days past due and still accruing interest and fees | $ 0 | $ 0 |
Commitments and Contingencies (Details) |
3 Months Ended | ||||
---|---|---|---|---|---|
Feb. 27, 2013
USD ($)
|
Mar. 31, 2016
CAD
|
Mar. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
Oct. 26, 2010
$ / violation
|
|
Commitments and Contingencies Disclosure [Line Items] | |||||
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 | $ 74,200,000 | ||||
Fair value of franchise related borrowings | 760,000 | ||||
Loan facility to franchisees, maximum commitment amount | 175,000,000.0 | ||||
Loss contingency accrual | 5,200,000 | ||||
Minimum range of possible loss | 546,000 | ||||
Maximum range of possible loss | 2,600,000 | ||||
Unused credit card lines | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Remaining credit available | 383,900,000 | $ 378,700,000 | |||
Minimum | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Range of possible loss not accrued | 0 | ||||
Maximum | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Range of possible loss not accrued | $ 3,300,000 | ||||
Amendment | Franchise Loan Facility | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Loan facility maximum Canadian sub facility commitment amount | CAD | CAD 50,000,000 | ||||
Margaret Korrow | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Statutory penalty damages (in dollars per violation) | $ / violation | 100 | ||||
Lomi Price | Maximum | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Damages sought, value | $ 250,000 |
Segments - Narrative (Details) |
3 Months Ended | |
---|---|---|
Oct. 15, 2015
source
|
Mar. 31, 2016
segments
|
|
Segment Reporting [Abstract] | ||
Number of operating segments | segments | 6 | |
DAMI | Progressive Subsidiary | ||
Business Acquisition [Line Items] | ||
Sources of financial and leasing transactions acquired | source | 1 |
Segments - Information on Segments and Reconciliation to Earnings Before Income Taxes from Continuing Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | $ 854,427 | $ 821,814 | ||||||||||
Earnings (Loss) Before Income Taxes | 79,728 | 77,830 | ||||||||||
Assets | 2,548,767 | $ 2,655,171 | ||||||||||
Operating Segments | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 872,802 | 850,929 | ||||||||||
Earnings (Loss) Before Income Taxes | 67,196 | 72,643 | ||||||||||
Operating Segments | Sales and Lease Ownership | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 502,192 | 536,160 | ||||||||||
Earnings (Loss) Before Income Taxes | 43,562 | 52,575 | ||||||||||
Assets | 1,249,551 | 1,261,040 | ||||||||||
Operating Segments | Progressive | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 306,665 | 251,619 | ||||||||||
Earnings (Loss) Before Income Taxes | 21,914 | 15,830 | ||||||||||
Assets | 878,204 | 878,457 | ||||||||||
Operating Segments | HomeSmart | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 17,680 | 16,972 | ||||||||||
Earnings (Loss) Before Income Taxes | [1] | (3,229) | 537 | |||||||||
Assets | 38,621 | 44,429 | ||||||||||
Operating Segments | DAMI | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | [2] | 4,763 | 0 | |||||||||
Earnings (Loss) Before Income Taxes | (2,882) | 0 | ||||||||||
Assets | 93,701 | 97,486 | ||||||||||
Operating Segments | Franchise | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 16,295 | 17,004 | ||||||||||
Earnings (Loss) Before Income Taxes | 13,119 | 13,898 | ||||||||||
Assets | 39,161 | 53,693 | ||||||||||
Operating Segments | Manufacturing | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 24,923 | 28,806 | ||||||||||
Earnings (Loss) Before Income Taxes | 868 | 1,282 | ||||||||||
Assets | [3] | 31,538 | 28,986 | |||||||||
Operating Segments | Other Segments | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 284 | 368 | ||||||||||
Earnings (Loss) Before Income Taxes | [4] | (6,156) | (11,479) | |||||||||
Assets | 217,991 | $ 291,080 | ||||||||||
Intersegment Eliminations | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | (23,802) | (28,289) | ||||||||||
Earnings (Loss) Before Income Taxes | (755) | (1,268) | ||||||||||
Segment Reconciling Items | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 5,427 | (826) | ||||||||||
Earnings (Loss) Before Income Taxes | $ 13,287 | $ 6,455 | ||||||||||
|
Segments - Information on Segments and Reconciliation to Earnings Before Income Taxes from Continuing Operations- Additional Information (Details) - Operating Segments - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
HomeSmart | ||
Segment Reporting Information [Line Items] | ||
Charge related to write down of disposal group | $ 4.6 | |
Manufacturing | ||
Segment Reporting Information [Line Items] | ||
Inventory (principally raw materials and work-in-process) | 22.1 | $ 19.4 |
Building | Other Segments | ||
Segment Reporting Information [Line Items] | ||
Gain on sale of corporate office building | $ 11.1 |
Subsequent Events (Details) - HomeSmart - Disposal Group, Held-for-sale, Not Discontinued Operations $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016
USD ($)
|
Apr. 05, 2016
Store
|
|
Subsequent Event [Line Items] | ||
Charge related to write down of disposal group | $ | $ 4.6 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Number of stores agreed to sell | Store | 82 |
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