SEGMENTS

As of September 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 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 September 30, 2018:



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

¹Substantially all lease revenues and fees are within the scope of ASC 840, Leases. The Company had $5.6 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers.

Revenue within the scope of ASC 606, Revenue from Contracts with Customers. Of the Franchise Royalties and Fees, $7.4 million is related to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. The remaining revenue is primarily related to fees collected for pre-opening services, which are being deferred and recognized as revenue over the agreement term, and advertising fees charged to franchisees. Retail sales are recognized as revenue at the point of sale. Non-retail sales are recognized as revenue upon delivery of the merchandise.

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 September 30, 2017:



	Three Months Ended September 30, 2017
(In Thousands)	Progressive Leasing		Aaron's Business		DAMI		Total
Lease Revenues and Fees¹	$	398,282	$	357,036	$	—	$	755,318
Retail Sales²	—		6,274		—		6,274
Non-Retail Sales²	—		56,443		—		56,443
Franchise Royalties and Fees²	—		11,140		—		11,140
Interest and Fees on Loans Receivable³	—		—		8,936		8,936
Other	—		772		—		772
Total	$	398,282	$	431,665	$	8,936	$	838,883

¹Substantially all revenue is within the scope of ASC 840, Leases. The Company had $2.0 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, $10.2 million relates to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. Retail sales are recognized as revenue at the point of sale. Non-retail sales are recognized as revenue upon delivery of the merchandise.

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

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



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

¹Substantially all lease revenues and fees are within the scope of ASC 840, Leases. The Company had $13.0 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers.

²Revenue within the scope of ASC 606, Revenue from Contracts with Customers. Of the Franchise Royalties and Fees, $26.6 million is related to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. The remaining revenue is primarily related to fees collected for pre-opening services, which are being deferred and recognized as revenue over the agreement term, and advertising fees charged to franchisees. Retail sales are recognized as revenue at the point of sale. Non-retail sales are recognized as revenue upon delivery of the merchandise.

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

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



	Nine Months Ended September 30, 2017
(In Thousands)	Progressive Leasing		Aaron's Business		DAMI		Total
Lease Revenues and Fees¹	$	1,137,896	$	1,079,133	$	—	$	2,217,029
Retail Sales²	—		21,158		—		21,158
Non-Retail Sales²	—		195,372		—		195,372
Franchise Royalties and Fees²	—		38,165		—		38,165
Interest and Fees on Loans Receivable³	—		—		25,669		25,669
Other	—		1,688		—		1,688
Total	$	1,137,896	$	1,335,516	$	25,669	$	2,499,081

¹Substantially all revenue is within the scope of ASC 840, Leases. The Company had $2.7 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, $35.4 million relates to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. Retail sales are recognized as revenue at the point of sale. Non-retail sales are recognized as revenue upon delivery of the merchandise.

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 September 30,						Nine Months Ended September 30,
(In Thousands)	2018			2017			2018			2017
Earnings (Loss) Before Income Taxes:
Progressive Leasing	$	40,839		$	27,734		$	120,393		$	101,732
Aaron's Business¹	15,641			15,484			56,417			85,564
DAMI	(3,065		)	(3,997		)	(6,663		)	(8,457		)
Total Earnings Before Income Taxes	$	53,415		$	39,221		$	170,147		$	178,839

¹Earnings before income taxes for the Aaron's Business during the nine months ended September 30, 2018 includes a full impairment of the PerfectHome investment of $20.1 million.

Earnings before income taxes for the Aaron's Business during the nine months ended September 30, 2017 includes restructuring charges of $14.4 million related to store contractual lease obligations, severance costs and impairment charges in connection with the Company's strategic decision to close Company-operated stores, of which $0.8 million was incurred during the three months ended September 30, 2017.

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



(In Thousands)	September 30, 2018		December 31, 2017
Assets:
Progressive Leasing	$	1,037,017	$	1,022,413
Aaron's Business¹	1,388,850		1,261,234
DAMI	96,297		108,306
Other²	176,734		300,311
Total Assets	$	2,698,898	$	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 $17.9 million and $16.3 million as of September 30, 2018 and December 31, 2017, respectively.

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