SEGMENTS

As of June 30, 2018, the Company has three operating and reportable segments: Progressive Leasing, Aaron's Business and DAMI.

Progressive Leasing is a leading virtual lease-to-own company that provides lease-purchase solutions on a variety of products, including furniture and bedding, consumer electronics, appliances and jewelry.

The Aaron's Business offers furniture, consumer electronics, home appliances and accessories to consumers primarily with a month-to-month, lease-to-own agreement with no credit needed through the Company's Aaron's-branded stores in the United States and Canada and e-commerce website. This operating segment also supports franchisees of its Aaron's stores. In addition, the Aaron's Business segment also includes the operations of Woodhaven Furniture Industries, which manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in Company-operated and franchised stores.

DAMI offers a variety of second-look financing programs originated through two third-party federally insured banks to customers of participating merchants and, together with Progressive Leasing, allows the Company to provide retail partners with below-prime customers one source for financing and leasing transactions.

Disaggregated Revenue

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



	Three Months Ended June 30, 2018
(In Thousands)	Progressive Leasing		Aaron's Business		DAMI		Total
Lease Revenues and Fees¹	$	483,666	$	362,272	$	—	$	845,938
Retail Sales²	—		6,592		—		6,592
Non-Retail Sales²	—		53,661		—		53,661
Franchise Royalties and Fees²	—		12,125		—		12,125
Interest and Fees on Loans Receivable³	—		—		9,208		9,208
Other	—		335		—		335
Total	$	483,666	$	434,985	$	9,208	$	927,859

¹Substantially all lease revenues and fees are within the scope of ASC 840, Leases. The Company had $4.4 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers.

²Revenue within the scope of ASC 606, Revenue from Contracts with Customers. Of the Franchise Royalties and Fees, $9.1 million is related to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. The remaining revenue is primarily related to fees collected for pre-opening services, which are being deferred and recognized as revenue over the agreement term, and advertising fees charged to franchisees. Retail and non-retail sales are recognized at the point of sale.

³Revenue within the scope of ASC 310, Credit Card Interest & Fees.

The following table presents revenue by source and by segment for the three months ended June 30, 2017:



	Three Months Ended June 30, 2017
(In Thousands)	Progressive Leasing		Aaron's Business		DAMI		Total
Lease Revenues and Fees¹	$	373,499	$	344,590	$	—	$	718,089
Retail Sales²	—		6,106		—		6,106
Non-Retail Sales²	—		69,602		—		69,602
Franchise Royalties and Fees²	—		12,824		—		12,824
Interest and Fees on Loans Receivable³	—		—		8,532		8,532
Other	—		491		—		491
Total	$	373,499	$	433,613	$	8,532	$	815,644

¹Substantially all revenue is within the scope of ASC 840, Leases. The Company had $0.6 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers.

²Revenue within the scope of ASC 606, Revenue from Contracts with Customers. Of the Franchise Royalties and Fees, $11.9 million relates to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. Retail and non-retail sales are recognized at the point of sale.

³Revenue within the scope of ASC 310, Credit Card Interest & Fees.

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



	Six Months Ended June 30, 2018
(In Thousands)	Progressive Leasing		Aaron's Business		DAMI		Total
Lease Revenues and Fees¹	$	970,183	$	745,822	$	—	$	1,716,005
Retail Sales²	—		15,108		—		15,108
Non-Retail Sales²	—		106,891		—		106,891
Franchise Royalties and Fees²	—		24,987		—		24,987
Interest and Fees on Loans Receivable³	—		—		18,750		18,750
Other	—		927		—		927
Total	$	970,183	$	893,735	$	18,750	$	1,882,668

¹Substantially all lease revenues and fees are within the scope of ASC 840, Leases. The Company had $8.4 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers.

²Revenue within the scope of ASC 606, Revenue from Contracts with Customers. Of the Franchise Royalties and Fees, $19.2 million is related to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. The remaining revenue is primarily related to fees collected for pre-opening services, which are being deferred and recognized as revenue over the agreement term, and advertising fees charged to franchisees. Retail and non-retail sales are recognized at the point of sale.

³Revenue within the scope of ASC 310, Credit Card Interest & Fees.

The following table presents revenue by source and by segment for the six months ended June 30, 2017:



	Six Months Ended June 30, 2017
(In Thousands)	Progressive Leasing		Aaron's Business		DAMI		Total
Lease Revenues and Fees¹	$	739,614	$	722,097	$	—	$	1,461,711
Retail Sales²	—		14,884		—		14,884
Non-Retail Sales²	—		138,929		—		138,929
Franchise Royalties and Fees²	—		27,025		—		27,025
Interest and Fees on Loans Receivable³	—		—		16,733		16,733
Other	—		916		—		916
Total	$	739,614	$	903,851	$	16,733	$	1,660,198

¹Substantially all revenue is within the scope of ASC 840, Leases. The Company had $1.5 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers.

²Revenue within the scope of ASC 606, Revenue from Contracts with Customers. Of the Franchise Royalties and Fees, $25.1 million relates to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. Retail and non-retail sales are recognized at the point of sale.

³Revenue within the scope of ASC 310, Credit Card Interest & Fees.

Measurement of Segment Profit or Loss and Segment Assets

The Company evaluates performance and allocates resources based on revenue growth and pre-tax profit or loss from operations. Intersegment sales are completed at internally negotiated amounts. Since the intersegment profit affects inventory valuation, depreciation and cost of goods sold are adjusted when intersegment profit is eliminated in consolidation. The Company determines earnings (loss) before income taxes for all reportable segments in accordance with U.S. GAAP. Interest expense is allocated to the Progressive Leasing and DAMI segments based on a percentage of the outstanding balances of their intercompany borrowings and of the debt incurred when they were acquired. The following is a summary of earnings (loss) before income taxes by segment:



	Three Months Ended June 30,						Six Months Ended June 30,
(In Thousands)	2018			2017			2018			2017
Earnings (Loss) Before Income Taxes:
Progressive Leasing	$	44,575		$	38,240		$	79,554		$	73,998
Aaron's Business¹	7,697			21,450			40,776			70,080
DAMI	(2,292		)	(2,695		)	(3,598		)	(4,460		)
Total Earnings Before Income Taxes	$	49,980		$	56,995		$	116,732		$	139,618

¹Earnings before income taxes for the Aaron's Business during the three months ended June 30, 2018 includes a full impairment of the PerfectHome investment of $20.1 million. This charge is net of restructuring reversals of $0.9 million related to reversals of previously recorded restructuring charges partially offset by charges related to Aaron's contractual lease obligations for closed stores.

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



(In Thousands)	June 30, 2018		December 31, 2017
Assets:
Progressive Leasing	$	1,019,520	$	1,022,413
Aaron's Business¹	1,253,427		1,261,234
DAMI	97,818		108,306
Other²	248,185		300,311
Total Assets	$	2,618,950	$	2,692,264

¹Includes inventory (principally raw materials and work-in-process) that has been classified within lease merchandise in the condensed consolidated balance sheets of $15.9 million and $16.3 million as of June 30, 2018 and December 31, 2017, respectively.

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