10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 ________________________________

FORM 10-Q

________________________________

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2019

OR

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

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-13941

 ________________________________

AARON’S, INC.

(Exact name of registrant as specified in its charter)

 _________________________________

Georgia	58-0687630
(State or other jurisdiction of incorporation or organization)	(I. R. S. Employer Identification No.)
400 Galleria Parkway SE, Suite 300 Atlanta, Georgia	30339-3182
(Address of principal executive offices)	(Zip Code)

(678) 402-3000

(Registrant’s telephone number, including area code)

Not Applicable

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

 ___________________________________

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

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

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

Large Accelerated Filer	ý		Accelerated Filer	o
Non-Accelerated Filer	o	(Do not check if a smaller reporting company)	Smaller Reporting Company	o
Emerging Growth Company	o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act				o

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

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

Title of Each Class	Shares Outstanding as of April 19, 2019
Common Stock, $0.50 Par Value	67,677,449

1

AARON’S, INC.

INDEX

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets – March 31, 2019 (Unaudited) and December 31, 2018	3
Condensed Consolidated Statements of Earnings (Unaudited) – Three Months Ended March 31, 2019 and 2018	4
Condensed Consolidated Statements of Comprehensive Income (Unaudited) – Three Months Ended March 31, 2019 and 2018	5
Condensed Consolidated Statements of Cash Flows (Unaudited) – Three Months Ended March 31, 2019 and 2018	6
Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3. Quantitative and Qualitative Disclosures About Market Risk	41
Item 4. Controls and Procedures	42
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	43
Item 1A. Risk Factors	43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3. Defaults Upon Senior Securities	43
Item 4. Mine Safety Disclosures	43
Item 5. Other Information	43
Item 6. Exhibits	44
Signatures	45

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AARON’S, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	March 31, 2019			December 31, 2018
	(In Thousands, Except Share Data)
ASSETS:
Cash and Cash Equivalents	$	124,154		$	15,278
Accounts Receivable (net of allowances of $56,785 in 2019 and $62,704 in 2018)	84,037			98,159
Lease Merchandise (net of accumulated depreciation and allowances of $808,056 in 2019 and $816,928 in 2018)	1,301,066			1,318,470
Loans Receivable (net of allowances and unamortized fees of $18,925 in 2019 and $19,941 in 2018)	72,564			76,153
Property, Plant and Equipment at Cost (net of accumulated depreciation of $291,750 in 2019 and $284,287 in 2018)	228,864			229,492
Operating Lease Right-of-Use Assets	370,282			—
Goodwill	734,558			733,170
Other Intangibles (net of accumulated amortization of $138,308 in 2019 and $130,116 in 2018)	216,559			228,600
Income Tax Receivable	13,401			29,148
Prepaid Expenses and Other Assets	92,481			98,222
Total Assets	$	3,237,966		$	2,826,692
LIABILITIES & SHAREHOLDERS’ EQUITY:
Accounts Payable and Accrued Expenses	$	246,779		$	293,153
Deferred Income Taxes Payable	279,224			267,500
Customer Deposits and Advance Payments	83,610			80,579
Operating Lease Liabilities	406,559			—
Debt	408,286			424,752
Total Liabilities	1,424,458			1,065,984
Commitments and Contingencies (Note 6)
SHAREHOLDERS' EQUITY:
Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at March 31, 2019 and December 31, 2018; Shares Issued: 90,752,123 at March 31, 2019 and December 31, 2018	45,376			45,376
Additional Paid-in Capital	270,727			278,922
Retained Earnings	2,061,651			2,005,344
Accumulated Other Comprehensive Loss	(663		)	(1,087		)
	2,377,091			2,328,555
Less: Treasury Shares at Cost
Common Stock: 23,074,674 Shares at March 31, 2019 and 23,567,979 at December 31, 2018	(563,583		)	(567,847		)
Total Shareholders’ Equity	1,813,508			1,760,708
Total Liabilities & Shareholders’ Equity	$	3,237,966		$	2,826,692

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

3

AARON’S, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

	Three Months Ended   March 31,
	2019			2018
	(In Thousands, Except Per Share Data)
REVENUES:
Lease Revenues and Fees	$	944,157		$	870,067
Retail Sales	12,809			8,516
Non-Retail Sales	36,981			53,230
Franchise Royalties and Fees	9,207			12,862
Interest and Fees on Loans Receivable	8,646			9,542
Other	303			592
	1,012,103			954,809
COSTS AND EXPENSES:
Depreciation of Lease Merchandise	500,820			440,008
Retail Cost of Sales	8,632			5,662
Non-Retail Cost of Sales	29,196			48,020
Operating Expenses	387,216			390,232
Restructuring Expenses, Net	13,281			906
Other Operating Income, Net	(897		)	(83		)
	938,248			884,745
OPERATING PROFIT	73,855			70,064
Interest Income	101			202
Interest Expense	(4,956		)	(4,326		)
Other Non-Operating Income, Net	1,308			812
EARNINGS BEFORE INCOME TAXES	70,308			66,752
INCOME TAXES	14,230			14,506
NET EARNINGS	$	56,078		$	52,246
EARNINGS PER SHARE
Basic	$	0.83		$	0.75
Assuming Dilution	$	0.82		$	0.73
CASH DIVIDENDS DECLARED PER SHARE:
Common Stock	$	0.0350		$	0.0300
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic	67,294			70,105
Assuming Dilution	68,773			72,018

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

4

AARON’S, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended   March 31,
(In Thousands)	2019		2018
Net Earnings	$	56,078	$	52,246
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustment	424		(477		)
Total Other Comprehensive Income (Loss)	424		(477		)
Comprehensive Income	$	56,502	$	51,769

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

5

AARON’S, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended   March 31,
	2019			2018
	(In Thousands)
OPERATING ACTIVITIES:
Net Earnings	$	56,078		$	52,246
Adjustments to Reconcile Net Earnings to Cash Provided by Operating Activities:
Depreciation of Lease Merchandise	500,820			440,008
Other Depreciation and Amortization	26,562			22,115
Accounts Receivable Provision	63,235			51,458
Provision for Credit Losses on Loans Receivable	4,255			4,492
Stock-Based Compensation	7,549			8,519
Deferred Income Taxes	10,861			23,201
Impairment of Assets	10,492			—
Amortization of Right of Use Assets	25,802			—
Other Changes, Net	883			(1,014		)
Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions:
Additions to Lease Merchandise	(580,089		)	(514,055		)
Book Value of Lease Merchandise Sold or Disposed	98,257			98,797
Accounts Receivable	(50,467		)	(33,591		)
Prepaid Expenses and Other Assets	1,550			(6,022		)
Income Tax Receivable	15,747			68,214
Operating Lease Liabilities	(27,890		)	—
Accounts Payable and Accrued Expenses	(1,854		)	(21,598		)
Customer Deposits and Advance Payments	2,947			3,806
Cash Provided by Operating Activities	164,738			196,576
INVESTING ACTIVITIES:
Investments in Loans Receivable	(14,493		)	(14,598		)
Proceeds from Loans Receivable	14,482			15,135
Proceeds from Investments	—			666
Outflows on Purchases of Property, Plant and Equipment	(23,807		)	(17,254		)
Proceeds from Property, Plant and Equipment	511			2,731
Outflows on Acquisitions of Businesses and Customer Agreements, Net of Cash Acquired	(3,470		)	(4,774		)
Proceeds from Dispositions of Businesses and Customer Agreements, Net of Cash Disposed	755			144
Cash Used in Investing Activities	(26,022		)	(17,950		)
FINANCING ACTIVITIES:
Repayments on Revolving Facility, Net	(16,000		)	—
Repayments on Debt	(575		)	(10,511		)
Dividends Paid	(2,366		)	(2,111		)
Acquisition of Treasury Stock	—			(18,407		)
Issuance of Stock Under Stock Option Plans	1,996			3,182
Shares Withheld for Tax Payments	(12,977		)	(12,343		)
Debt Issuance Costs	—			(55		)
Cash Used in Financing Activities	(29,922		)	(40,245		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	82			(8		)
Increase in Cash and Cash Equivalents	108,876			138,373
Cash and Cash Equivalents at Beginning of Period	15,278			51,037
Cash and Cash Equivalents at End of Period	$	124,154		$	189,410

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

6

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. BASIS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Aaron's, Inc. (the "Company") is a leading omnichannel provider of lease-purchase solutions. As of March 31, 2019, the Company's operating segments are Progressive Leasing, Aaron's Business and DAMI.

Progressive Leasing is a virtual lease-to-own company that provides lease-purchase solutions in 46 states and the District of Columbia. It does so by purchasing merchandise from third-party retailers desired by those retailers' customers and, in turn, leasing that merchandise to the customers through a lease-to-own transaction. Progressive Leasing consequently has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional and e-commerce retailers.

The following table presents invoice volume for Progressive Leasing:

For the Three Months Ended March 31 (Unaudited and In Thousands)	2019		2018
Progressive Leasing Invoice Volume1	$	394,727	$	345,562

¹ Invoice volume is defined as the retail price of lease merchandise acquired and then leased to customers during the period, net of returns.

The Aaron's Business segment 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 its e-commerce platform. This operating segment also supports franchisees of its Aaron's-branded stores. In addition, the Aaron's Business segment includes the operations of Woodhaven Furniture Industries ("Woodhaven"), which manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in Company-operated and franchised stores.

The Company acquired the store operations of two franchisees during the three months ended March 31, 2019. Refer to Note 2 to these condensed consolidated financial statements.

The following table presents store count by ownership type for the Aaron's Business operations:

Stores as of March 31 (Unaudited)	2019	2018
Company-operated Aaron's Branded Stores	1,230	1,182
Franchised Stores	369	537
Systemwide Stores	1,599	1,719

DAMI partners with merchants to provide a variety of revolving credit products originated through two third-party federally insured banks to customers that may not qualify for traditional prime lending (called "second-look" financing programs).

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 unidentified 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 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 for the year ended December 31, 2018 (the "2018 Annual Report") filed with the U.S. Securities and Exchange Commission on February 14, 2019. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of operating results for the full year.

7

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Principles of Consolidation

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.

Accounting Policies and Estimates

See Note 1 to the consolidated financial statements in the 2018 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 ("RSUs"), restricted stock awards ("RSAs") and performance share units ("PSUs") (collectively, "share-based awards") as determined under the treasury stock method. The following table shows the calculation of dilutive share-based awards:

	Three Months Ended   March 31,
(Shares In Thousands)	2019	2018
Weighted Average Shares Outstanding	67,294	70,105
Dilutive Effect of Share-Based Awards	1,479	1,913
Weighted Average Shares Outstanding Assuming Dilution	68,773	72,018

Approximately 443,000 and 187,000 weighted-average share-based awards were excluded from the computation of earnings per share assuming dilution during the three months ended March 31, 2019 and 2018, respectively, as the awards would have been anti-dilutive for the periods presented.

Revenue Recognition

Lease Revenues and Fees

The Company provides merchandise, consisting primarily of furniture, consumer electronics, home appliances and accessories, to its customers for lease under certain terms agreed to by the customer. The Company's Progressive Leasing segment offers virtual lease-purchase solutions, typically over 12 months, to the customers of traditional and e-commerce retailers. The Company's Aaron's-branded stores and its e-commerce platform offer leases with month-to-month terms that can be renewed up to 12, 18 or 24 months. The Company does not require deposits upon inception of customer agreements. The customer has the right to acquire ownership either through a purchase option or through payment of all required lease payments.

Progressive lease revenues are earned prior to the lease payment due date and are recorded net of related sales taxes as earned. Revenue recorded prior to the payment due date results in unbilled accounts receivable in the accompanying condensed consolidated balance sheets. Beginning January 1, 2019, Progressive lease revenues are recorded net of a provision for returns and uncollectible renewal payments.

Aaron's Business lease revenues are recognized as revenue net of related sales taxes in the month they are earned. Lease payments received prior to the month earned are recorded as deferred lease revenue, and this amount is included in customer deposits and advance payments in the accompanying condensed consolidated balance sheets. Aaron's Business lease revenues are recorded net of a provision for returns and uncollectible renewal payments.

All of the Company's customer agreements are considered operating leases. The Company maintains ownership of the lease merchandise until all payment obligations are satisfied under sales and lease ownership agreements. Initial direct costs related to Progressive Leasing's lease purchase agreements are capitalized as incurred and amortized as operating expense over the estimated lease term. The capitalized costs have been classified within prepaid expenses and other assets in the accompanying condensed consolidated balance sheets. Initial direct costs related to Aaron's Business customer agreements are expensed as incurred and have been classified as operating expenses in the Company's condensed consolidated statements of earnings. The statement of earnings effects of expensing the initial direct costs of the Aaron's Business as incurred are not materially different from amortizing initial direct costs over the lease term.

Retail and Non-Retail Sales

Revenues from the retail sale of merchandise to customers are recognized at the point of sale. Revenues for the non-retail sale of merchandise to franchisees are recognized when control transfers to the franchisee, which is upon delivery of the merchandise.

8

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Substantially all of the amounts reported as non-retail sales and non-retail cost of sales in the accompanying condensed consolidated statements of earnings relate to the sale of lease merchandise to franchisees. The Company classifies the sale of merchandise to other customers as retail sales in the condensed consolidated statements of earnings.

Franchise Royalties and Fees

The Company has no current plans to franchise additional Aaron's stores. Current franchisees pay an ongoing royalty of 6% of the weekly cash revenue collections, which is recognized as the fees become due. The Company received a non-refundable initial franchise fee from current franchisees from $15,000 to $50,000 per store depending upon market size. Franchise fees and area development fees were generated from the sale of rights to develop, own and operate sales and lease ownership stores and pre-opening services provided by Aaron's to assist in the start-up operations of the stores. The Company considers the rights to the intellectual property and the pre-opening services to be a single performance obligation, resulting in the recognition of revenue ratably over time from the store opening date throughout the remainder of the franchise agreement term. The Company believes that this period of time is most representative of the time period in which the franchisee realizes the benefits of having the right to access the Company's intellectual property.

The Company guarantees certain debt obligations of some of the franchisees and receives guarantee fees based on the outstanding debt obligations of such franchisees. Refer to Note 6 of these condensed consolidated financial statements for additional discussion of the Company's franchise-related guarantee obligation. The Company also charges fees for advertising efforts that benefit the franchisees. Such fees are recognized at the time the advertising takes place and are presented as franchise royalties and fees in the Company's condensed consolidated statements of earnings.

Initial direct costs related to the pre-opening services provided to franchisees are immaterial and are expensed as incurred. These expenses have been classified as operating expenses in the Company's condensed consolidated statements of earnings.

Interest and Fees on Loans Receivable

DAMI extends or declines credit to an applicant through its bank partners based upon the applicant's credit rating and other factors. Qualifying applicants receive a credit card to finance their initial purchase and to use in subsequent purchases at the merchant or other participating merchants for an initial 24-month period, which DAMI may renew if the cardholder remains in good standing.

DAMI acquires the loan receivable from merchants through its third-party bank partners at a discount from the face value of the loan. The discount is comprised of a merchant fee discount and a promotional fee discount, if applicable.

The merchant fee discount represents a pre-negotiated, nonrefundable discount that generally ranges from 3% to 25% of the loan face value. The discount is designed to cover the risk of loss related to the portfolio of cardholder charges and DAMI's direct origination costs. The merchant fee discount and origination costs are presented net on the condensed consolidated balance sheet in loans receivable. Cardholders generally have an initial 24-month period that the card is active. The merchant fee discount, net of the origination costs, is amortized on a net basis and is recorded as interest and fee revenue on loans receivable in the condensed consolidated statements of earnings on a straight-line basis over the initial 24-month period.

The discount from the face value of the loan on the acquisition of the loan receivable from the merchant through the third-party bank partners may also include a promotional fee discount, which generally ranges from 1% to 8%. The promotional fee discount is intended to compensate the holder of the loan receivable (i.e. DAMI) for deferred or reduced interest rates that are offered to the cardholder for a specified period on the outstanding loan balance (generally for six, 12 or 18 months). The promotional fee discount is amortized as interest and fee revenue on loans receivable in the condensed consolidated statements of earnings on a straight-line basis over the promotional interest period (i.e., over six, 12 or 18 months, depending on the promotion). The unamortized promotional fee discount is netted on the condensed consolidated balance sheet in loans receivable.

The customer is typically required to make periodic minimum payments of at least 3.5% of the outstanding loan balance, which includes outstanding interest. Fixed and variable interest rates, typically 25% to 35.99%, are compounded daily for cards that do not qualify for deferred or reduced interest promotional periods. Interest income, which is recognized based upon the amount of the loans outstanding, is recognized as interest and fees on loans receivable in the billing period in which they are assessed if collectability is reasonably assured. For credit cards that provide for deferred or reduced interest, if the balance is not paid off during the promotional period, interest is billed to the customers at standard rates and the cumulative amount owed is charged to the cardholder account in the month that the promotional period expires or defaults. The Company recognizes interest revenue during the promotional period based on its historical experience related to cardholders that fail to pay off balances during the promotional period.

9

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Annual fees are charged to cardholders at the commencement of the loan and on each subsequent anniversary date. Annual fees are deferred and recognized into revenue on a straight-line basis over a one-year period. Under the provisions of the credit card agreements, the Company also may assess fees for service calls or for missed or late payments, which are recognized as revenue in the billing period in which they are assessed if collectability is reasonably assured. Annual fees and other fees discussed are recognized as interest and fee revenue on loans receivable in the condensed consolidated statements of earnings.

Accounts Receivable

Accounts receivable consist primarily of receivables due from customers of Progressive Leasing and Company-operated stores, corporate receivables incurred during the normal course of business (primarily for real estate leasing activities and vendor consideration) and franchisee obligations.

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

(In Thousands)	March 31, 2019		December 31, 2018
Customers	$	54,517	$	60,879
Corporate	13,405		18,171
Franchisee	16,115		19,109
Accounts Receivable	$	84,037	$	98,159

The Company maintains an accounts receivable allowance, which primarily relates to its Progressive Leasing operations and the Aaron's Business operations. The Company’s policy for its Progressive Leasing segment is to record an allowance for returns and uncollectible renewal payments based on historical collection experience. During 2019, the Company adopted ASU 2016-02, Leases ("ASC 842") which resulted in the Progressive Leasing provision for returns and uncollectible renewal payments being recorded as a reduction of lease revenue and fees within the condensed consolidated statements of earnings beginning January 1, 2019. The provision for returns and uncollectible renewal payments for periods prior to 2019 are reported herein as bad debt expense within operating expenses in the condensed consolidated statement of earnings. The Progressive Leasing segment writes off lease receivables that are 120 days or more contractually past due.

For the Aaron's Business operations, contractually required lease payments are accrued when due. The Aaron's Business policy is to record a provision for returns and uncollectible contractually due renewal payments based on historical collection experience, which is recognized as a reduction of lease revenues and fees within the condensed consolidated statement of earnings. Aaron's Business write-off of lease receivables that are 60 days or more past due occur on pre-determined dates twice monthly.

DAMI's allowance for uncollectible merchant accounts receivable, which primarily relates to cardholder returns and refunds, is recorded as bad debt expense within operating expenses in the condensed consolidated statement of earnings.

The following table shows the amounts recognized for bad debt expense and provision for returns and uncollected payments:

	Three Months Ended March 31,
(In Thousands)	2019		2018
Bad Debt Expense1	$	1,125	$	46,542
Provision for Returns and Uncollectible Renewal Payments2	62,110		4,916
Accounts Receivable Provision	$	63,235	$	51,458

¹ Bad debt expense is recorded within operating expenses in the condensed consolidated financial statements.

² In accordance with the adoption of ASC 842, Progressive Leasing provision for returns and uncollectible renewal payments are recorded as a reduction to lease revenues and fees within the condensed consolidated financial statements beginning January 1, 2019. Prior to January 1, 2019, Progressive Leasing provision for returns and uncollectible renewal payments were recorded as bad debt expense within operating expenses in the condensed consolidated financial statements.

10

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Lease Merchandise

The Company's lease merchandise consists primarily of furniture, consumer electronics, home appliances, jewelry, and accessories and is recorded at the lower of cost or net realizable value. The cost of merchandise manufactured by our Woodhaven operations is recorded at cost and includes overhead from production facilities, shipping costs and warehousing costs. The Company's Progressive Leasing segment, at which substantially all merchandise is on lease, depreciates merchandise generally over 12 months. The Company's Aaron's Business segment begins depreciating merchandise at the earlier of 12 months and one day or when the item is leased. Aaron's Business depreciates merchandise to a 0% salvage value over the lease agreement period when on lease, generally 12 to 24 months, and generally 36 months when not on lease. Depreciation is accelerated upon early payout.

The following is a summary of lease merchandise, net of accumulated depreciation and allowances:

(In Thousands)	March 31, 2019		December 31, 2018
Merchandise on Lease	$	1,022,902	$	1,053,684
Merchandise Not on Lease	278,164		264,786
Lease Merchandise, net of Accumulated Depreciation and Allowances	$	1,301,066	$	1,318,470

The Company's policies require weekly lease merchandise counts at its store-based operations, which include write-offs for unsalable, damaged, or missing merchandise inventories. In addition to monthly cycle counting, full physical inventories are generally taken at the fulfillment and manufacturing facilities annually and appropriate provisions are made for missing, damaged and unsalable merchandise. In addition, the Company monitors lease merchandise levels and mix by division, store, and fulfillment center, as well as the average age of merchandise on hand. If obsolete lease merchandise cannot be returned to vendors, its carrying amount is adjusted to its net realizable value or written off.

Generally, 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 a provision for write-offs 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. The provision for write-offs is included in operating expenses in the accompanying condensed consolidated statements of earnings.

The following table shows the components of the allowance for lease merchandise write-offs:

	Three Months Ended March 31,
(In Thousands)	2019			2018
Beginning Balance	$	46,694		$	35,629
Merchandise Written off, net of Recoveries	(53,222		)	(40,511		)
Provision for Write-offs	56,995			44,470
Ending Balance	$	50,467		$	39,588

Loans Receivable, Net

Gross loans receivable represents the principal balances of credit card charges at DAMI's participating merchants that remain due from cardholders, plus unpaid interest and fees due from cardholders. The allowances and unamortized fees represents an allowance for uncollectible amounts; merchant fee discounts, net of capitalized origination costs; promotional fee discounts; and deferred annual card fees.

Loans acquired in the October 15, 2015 DAMI acquisition (the "Acquired Loans") were recorded at their estimated 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 were included in the determination of fair value; therefore, an allowance for loan losses and an amount for unamortized fees were 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 interest and fees on loans receivable 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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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Losses on loans receivable are recognized when they are incurred, which requires the Company to make its best estimate of probable losses inherent in the portfolio. The Company evaluates loans receivable collectively for impairment. The method for calculating the best estimate of probable losses takes into account the Company's historical experience, adjusted for current conditions and the Company's judgment concerning the probable effects of relevant observable data, trends and market factors. Economic conditions and loan performance trends are closely monitored to manage and evaluate exposure to credit risk. Trends in delinquency ratios are an indicator of credit risk within the loans receivable portfolio, including the migration of loans between delinquency categories over time. Charge-off rates represent another indicator of the potential for future credit losses. The risk in the loans receivable portfolio is correlated with broad economic trends, such as unemployment rates, gross domestic product growth and gas prices, which can have a material effect on credit performance. To the extent that actual results differ from estimates of uncollectible loans receivable, the Company's results of operations and liquidity could be materially affected.

The Company calculates the allowance for loan losses based on actual delinquency balances and historical average loss experience on loans receivable by aging category for the prior eight quarters. The allowance for loan losses is maintained at a level considered adequate to cover probable losses of principal, interest and fees on active loans in the loans receivable portfolio. The adequacy of the allowance is evaluated at each period end.

Delinquent loans receivable are those that are 30 days or more past due based on their contractual billing dates. The Company places loans receivable on nonaccrual status when they are greater than 90 days past due or upon notification of cardholder bankruptcy, death or fraud. The Company discontinues accruing interest and fees and amortizing merchant fee discounts and promotional fee discounts for loans receivable in nonaccrual status. Loans receivable are removed from nonaccrual status when cardholder payments resume, the loan becomes 90 days or less past due and collection of the remaining amounts outstanding is deemed probable. Payments received on nonaccrual loans are allocated according to the same payment hierarchy methodology applied to loans that are accruing interest. Loans receivable are charged off at the end of the month following the billing cycle in which the loans receivable become 120 days past due.

DAMI extends or declines credit to an applicant through its bank partners based upon the applicant's credit rating and other factors. Below is a summary of the credit quality of the Company's loan portfolio as of March 31, 2019 and December 31, 2018 by Fair Isaac and Company (FICO) score as determined at the time of loan origination:

FICO Score Category	March 31, 2019		December 31, 2018
600 or Less	4.1	%	3.7	%
Between 600 and 700	79.0	%	77.9	%
700 or Greater	16.9	%	18.4	%

Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist of the following:

(In Thousands)	March 31, 2019		December 31, 2018
Prepaid Expenses	$	27,467	$	30,763
Prepaid Insurance	24,072		27,948
Assets Held for Sale	8,974		6,589
Deferred Tax Asset	8,761		8,761
Other Assets	23,207		24,161
Prepaid Expenses and Other Assets	$	92,481	$	98,222

Assets Held for Sale

Certain properties, consisting of parcels of land and commercial buildings, met the held for sale classification criteria as of March 31, 2019 and December 31, 2018. Assets held for sale are recorded at the lower of their carrying value or fair value less estimated cost to sell and are classified within prepaid expenses and other assets in the condensed consolidated balance sheets. Depreciation is suspended on assets upon classification to held for sale.

The carrying amount of the properties held for sale as of March 31, 2019 and December 31, 2018 is $9.0 million and $6.6 million, respectively. The Company estimated the fair values of real estate properties using the market values for similar properties. These properties are considered Level 2 assets as defined below.

12

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

(In Thousands)	March 31, 2019		December 31, 2018
Accounts Payable	$	71,751	$	88,369
Accrued Insurance Costs	39,181		40,423
Accrued Salaries and Benefits	45,832		40,790
Accrued Real Estate and Sales Taxes	30,749		30,332
Deferred Rent1	—		27,270
Other Accrued Expenses and Liabilities1	59,266		65,969
Accounts Payable and Accrued Expenses	$	246,779	$	293,153

¹ Amounts as of March 31, 2019 were impacted by the January 1, 2019 adoption of ASC 842. Upon transition to ASC 842, the remaining balances of the Company's deferred rent, lease incentives, and closed store reserve were reclassified as a reduction to the operating lease right-of-use asset in the accompanying condensed consolidated balance sheet.

Debt

At March 31, 2019, the Company was in compliance with all covenants related to its outstanding debt. See Note 7 to the consolidated financial statements in the 2018 Annual Report for further information regarding the Company's indebtedness.

Stockholders' Equity

Changes in stockholders' equity for the three months ended March 31, 2019 and 2018 are as follows:

	Treasury Stock					Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
(In Thousands, Except Per Share)	Shares		Amount
Balance, December 31, 2018	(23,568	)	$	(567,847	)	$	45,376	$	278,922		$	2,005,344		$	(1,087	)	$	1,760,708
Opening Balance Sheet Adjustment - ASC 842, net of taxes	—		—			—		—			2,592			—			2,592
Cash Dividends, $0.035 per share	—		—			—		—			(2,363		)	—			(2,363		)
Stock-Based Compensation	—		—			—		7,050			—			—			7,050
Reissued Shares	493		4,264			—		(15,245		)	—			—			(10,981		)
Net Earnings	—		—			—		—			56,078			—			56,078
Foreign Currency Translation Adjustment	—		—			—		—			—			424			424
Balance, March 31, 2019	(23,075	)	$	(563,583	)	$	45,376	$	270,727		$	2,061,651		$	(663	)	$	1,813,508

	Treasury Stock					Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
(In Thousands, Except Per Share)	Shares		Amount
Balance, December 31, 2017	(20,733	)	$	(407,713	)	$	45,376	$	270,043		$	1,819,524		$	774		$	1,728,004
Opening Balance Sheet Adjustment - ASC 606, net of taxes	—		—			—		—			(1,729		)	—			(1,729		)
Cash Dividends, $0.03 per share	—		—			—		—			(2,146		)	—			(2,146		)
Stock-Based Compensation	—		—			—		7,862			—			—			7,862
Reissued Shares	545		3,441			—		(12,602		)	—			—			(9,161		)
Repurchased Shares	(391	)	(18,407		)	—		—			—			—			(18,407		)
Net Earnings	—		—			—		—			52,246			—			52,246
Foreign Currency Translation Adjustment	—		—			—		—			—			(477		)	(477		)
Balance, March 31, 2018	(20,579	)	$	(422,679	)	$	45,376	$	265,303		$	1,867,895		$	297		$	1,756,192

13

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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, 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, net of allowances, and the revolving credit borrowings also approximate their carrying amounts.

Related Party Transactions

Aaron Ventures I, LLC, which we refer to as "Aaron Ventures," was formed in December 2002 for the purpose of acquiring properties from the Company and leasing them back to the Company and is controlled by certain of the Company’s current and former executives. Aaron Ventures purchased a combined total of 21 properties from the Company in 2002 and 2004, and leased the properties back to the Company. As of March 31, 2019, the Company has two remaining capital leases and four remaining operating leases with Aaron Ventures with lease expiration dates between 2019 and 2026. The two capital leases have aggregate annual rental payments of approximately $0.1 million. The rate of interest implicit in the leases is approximately 9.7%. The land and buildings, associated depreciation expense and lease obligations are recorded in the Company's condensed consolidated financial statements. The four operating leases have aggregate annual rental payments of approximately $0.2 million.

Supplemental Disclosure of Noncash Investing Transactions

During the three months ended March 31, 2018, the Company entered into transactions to acquire and sell certain customer agreements and related lease merchandise with third parties which are accounted for as asset acquisitions and asset disposals. The fair value of the non-cash consideration exchanged in these transactions was $0.4 million.

In addition, the purchase price for the acquisition of certain franchisees made during the three months ended March 31, 2019 and 2018 included the non-cash settlement of pre-existing accounts receivable the franchisees owed the Company of $0.1 million and $0.2 million, respectively. This non-cash consideration has been excluded from the line "Outflows on Acquisitions of Businesses and Customer Agreements, Net of Cash Acquired" in the investing activities section of the condensed consolidated statements of cash flows for the respective periods.

Hurricane Impact

During the third and fourth quarters of 2017, Hurricanes Harvey and Irma impacted the Company in the form of: (i) property damages (primarily in-store and on-lease merchandise, store leasehold improvements and furniture and fixtures) and employee assistance payments; (ii) increased customer-related accounts receivable allowances and lease merchandise allowances primarily in the impacted areas; (iii) lost lease revenue due to store closures of Aaron's Business and Progressive Leasing retail partners; and (iv) lost lease revenue due to the postponing of customer payments in the impacted areas.

During the three months ended March 31, 2019, the Company received cash payments of $2.7 million from its insurers related to the partial settlements of property damage and business interruption claims resulting from Hurricanes Harvey and Irma. Settled property damage claims that were in excess of the respective insurance receivable balances as well as business interruption proceeds resulted in gains of $0.9 million during the three months ended March 31, 2019. These gains were recorded within other operating income, net in the condensed consolidated statements of earnings. As of March 31, 2019, the Company has an insurance receivable of $0.7 million, which the Company believes is probable of receipt.

14

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Recent Accounting Pronouncements

Adopted

Leases. In February 2016, the FASB issued ASU 2016-02, Leases ("ASC 842"), which requires lessees to recognize assets and liabilities for most leases and changes certain aspects of lessor accounting, among other things. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018. Companies must use a modified retrospective approach to adopt ASC 842; however, the Company adopted an optional transition method in which entities are permitted to not apply the requirements of ASC 842 in the comparative periods presented within the financial statements in the year of adoption, with recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The application of this optional transition method resulted in a cumulative-effect adjustment of $2.6 million representing an increase to the Company’s January 1, 2019 retained earnings balance, net of tax, due primarily to the recognition of deferred gains recorded under previous sale and operating leaseback transactions for which the ASC 842 transition guidance requires companies to recognize any deferred gains not resulting from off-market terms as a cumulative adjustment to retained earnings upon adoption of ASC 842.

As a lessor, a majority of the Company’s revenue generating activities are within the scope of ASC 842. The new standard did not materially impact the timing of revenue recognition. Effective January 1, 2019, ASC 842 resulted in the Company classifying the Progressive Leasing provision for returns and uncollectible renewal payments as a reduction of lease revenue and fees within the condensed consolidated statements of earnings. For periods reported herein prior to January 1, 2019 the Progressive Leasing provision for returns and uncollectible renewal payments was recorded as bad debt expense within operating expenses in the condensed consolidated statement of earnings. The Aaron’s Business provision for returns and uncollectible renewal payments has historically been and continues to be recorded as a reduction to lease revenue and fees. The Company has customer lease agreements with lease and non-lease components that fall within the scope of ASU 2014-09, Revenue from Contracts with Customers ("ASC 606"). The Company has elected to aggregate these components into a single component for all classes of underlying assets as the lease and non-lease components generally have the same timing and pattern of transfer.

The new standard also impacts the Company as a lessee by requiring substantially all of its operating leases to be recognized on the balance sheet as operating lease right-to-use assets and operating lease liabilities. See Note 5 to these condensed consolidated financial statements for further details regarding the Company’s leasing activities as a lessee. The Company elected to adopt a package of practical expedients offered by the FASB which removes the requirement to reassess whether expired or existing contracts contain leases and removes the requirement to reassess the lease classification for any existing leases prior to the adoption date of January 1, 2019. Additionally, the Company has elected the practical expedient to include both lease and non-lease components as a single component and account for it as a lease.

Cloud Computing Arrangements. In August 2018, the FASB issued ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The intent of the standard is to reduce diversity in practice in accounting for the costs of implementing cloud computing arrangements that are service contracts. Under the new standard, entities will be required to apply the accounting guidance as prescribed by ASC 350-40, Internal Use Software,in determining which implementation costs should be capitalized as assets or expensed as incurred. The internal-use software guidance requires the capitalization of certain costs incurred during the application development stage of an internal-use software project, while requiring companies to expense all costs incurred during preliminary project and post-implementation project stages. As a result, certain implementation costs which were previously expensed by the Company are now eligible for capitalization under ASU 2018-15. The standard may be applied either prospectively to all implementation costs incurred after the adoption date or retrospectively. ASU 2018-15 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The Company elected to early adopt ASU 2018-15 on a prospective basis during the three months ended March 31, 2019, and the impact to the condensed consolidated financial statements was not significant. Costs eligible for capitalization will be classified within prepaid expenses and other assets and operating expenses in the condensed consolidated balance sheets and statements of earnings, respectively.

15

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Pending Adoption

Financial Instruments - Credit Losses. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments ("CECL"). The main objective of the update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by companies at each reporting date. For trade and other receivables, held to maturity debt securities and other instruments, companies will be required to use a new forward-looking "expected losses" model that generally will result in the recognition of allowances for losses earlier than under current accounting guidance. The standard will be adopted on a modified retrospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. ASU 2016-13 is effective for the Company in the first quarter of 2020.

The Company's operating lease activities within Aaron's Business and Progressive Leasing will not be impacted by ASU 2016-13, as operating lease receivables are not in the scope of the CECL model. The Company will be impacted by ASU 2016-13 within its DAMI segment by requiring earlier recognition of estimated credit losses in the consolidated statements of earnings. DAMI acquires loan receivables from merchants through its third-party bank partners at a discount from the face value of the loan, referred to as the "merchant fee discount." The merchant fee discount represents a pre-negotiated, nonrefundable discount that generally ranges from 3% to 25% of the loan face value, which is primarily intended to cover the risk of credit loss related to the portfolio of loans originated. Although the CECL model will require the estimated credit losses to be recognized at the time of loan origination, the related merchant fee discount will continue to be amortized as interest and fee revenue on a straight-line basis over the initial 24-month period that the card is active. Therefore, on a loan-by-loan basis, the Company expects higher losses to be recognized upon loan origination for the estimated credit losses, generally followed by higher net earnings as the related merchant fee discount is amortized to interest income, and as interest income is accrued and earned on the outstanding loan. Although the CECL model will result in earlier recognition of credit losses in the statement of earnings, no changes are expected related to the loan cash flows.

The Company has evaluated the guidance in ASU 2016-13 related to purchased financial assets with credit deterioration (“PCD Method”) and currently expects that its loans receivable would not qualify for the PCD Method as, generally, a more-than-insignificant deterioration in credit quality since origination does not occur.

The Company is continuing to evaluate the various impacts of CECL, including identifying changes to processes and procedures that will be necessary to adopt ASU 2016-13, and is in the process of identifying and testing potential software solutions to support the new accounting requirements for the Company's loans receivable. The Company is also evaluating whether it will choose to measure future loans at fair value under the fair value option as an alternative to CECL. The fair value option would result in the Company measuring loans at fair value on an instrument-by-instrument basis with changes in fair value reported in net earnings. Election of the fair value option could cause volatility in our reported results, primarily in periods with large fluctuations in interest rates. The Company is also evaluating emerging guidance which would allow companies to choose a one-time election of the fair value option for loans previously recorded at amortized cost under the current incurred loss model. As a result, we are continuing to evaluate transition options and alternatives available under ASU 2016-13.

NOTE 2. ACQUISITIONS

Franchisee Acquisitions - 2018

During 2018, the Company acquired 152 Aaron's-branded franchised stores operated by franchisees for an aggregated purchase price of $189.8 million, exclusive of the settlement of pre-existing receivables and post-closing working capital settlements. The acquired operations generated revenues of $48.9 million and $1.3 million and earnings before income taxes of $3.0 million and $0.1 million during the three months ended March 31, 2019 and 2018, respectively which are included in our condensed consolidated statements of earnings. The results of the acquired operations were negatively impacted by acquisition-related transaction and transition costs and amortization expense of the various intangible assets recorded from the acquisitions. The revenues and earnings before income taxes of the acquired operations discussed above have not been adjusted for estimated non-retail sales and franchise royalties and fees and related expenses that the Company could have generated as revenue and expenses to the Company from the franchisees during the three months ended March 31, 2019 and 2018 had the transaction not been completed.

16

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Acquisition Accounting

The 2018 acquisitions are benefiting the Company's omnichannel platform through added scale, strengthening its presence in certain geographic markets, and enhancing operational control, including compliance, and enabling the Company to execute its business transformation initiatives on a broader scale. The following table presents summaries of the preliminary fair value of the assets acquired and liabilities assumed in the franchisee acquisitions as of the respective acquisition dates:

(In Thousands)	Amounts Recognized as of Acquisition Dates (as of December 31, 2018)1			Acquisition Accounting Adjustments			Amounts Recognized as of Acquisition Dates (as of March 31, 2019)
Purchase Price	$	189,826		$	—		$	189,826
Add: Settlement of Pre-existing Relationship	5,405			—			5,405
Less: Working Capital Adjustments	155			—			155
Aggregated Consideration Transferred	195,386			—			195,386
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed
Cash and Cash Equivalents	43			7			50
Lease Merchandise	59,616			—			59,616
Property, Plant and Equipment	5,568			—			5,568
Other Intangibles2	24,530			(32		)	24,498
Prepaid Expenses and Other Assets	1,168			38			1,206
Total Identifiable Assets Acquired	90,925			13			90,938
Accounts Payable and Accrued Expenses	(852		)	(58		)	(910		)
Customer Deposits and Advance Payments	(5,156		)	—			(5,156		)
Total Liabilities Assumed	(6,008		)	(58		)	(6,066		)
Goodwill3	110,469			45			110,514
Net Assets Acquired	$	84,917		$	(45	)	$	84,872

¹ As previously reported in Note 2 to the consolidated financial statements in the 2018 Annual Report.

² Identifiable intangible assets are further disaggregated in the table set forth below.

³ The total goodwill recognized in conjunction with the franchisee acquisitions, all of which is expected to be deductible for tax purposes, has been assigned to the Aaron’s Business reporting unit. The purchase price exceeded the fair value of the net assets acquired, which resulted in the recognition of goodwill, primarily due to synergies created from the expected future benefits to the Company’s omnichannel platform, implementation of the Company’s operational capabilities, expected inventory supply chain synergies between the Aaron’s Business and Progressive Leasing, and control of the Company’s brand name in new geographic markets. Goodwill also includes certain other intangible assets that do not qualify for separate recognition, such as an assembled workforce.

17

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The preliminary acquisition accounting presented above is subject to refinement. The Company is still finalizing the valuation of assumed favorable and unfavorable real estate operating leases based on comparable market terms of similar leases at the acquisition dates and obtaining additional information regarding other assets. The Company expects these items to be finalized prior to the one-year anniversary date of the acquisitions.

The estimated intangible assets attributable to the franchisee acquisitions are comprised of the following:

	Fair Value (in thousands)		Weighted Average Life (in years)
Non-compete Agreements	$	1,872	3.0
Customer Lease Contracts	7,876		1.0
Customer Relationships	10,087		3.0
Reacquired Franchise Rights	4,663		3.9
Total Acquired Intangible Assets1	$	24,498

¹ Acquired definite-lived intangible assets have a total weighted average life of 2.5 years.

The Company incurred $1.4 million of acquisition-related costs in connection with the franchisee acquisitions, substantially all of which were incurred during 2018. These costs were included in operating expenses in the condensed consolidated statements of earnings.

Other Acquisitions

In addition to the acquisitions discussed above, the Company acquired the store operations of two franchisees during the three months ended March 31, 2019.

Net cash outflows related to the acquisitions of other Aaron's franchisees, other rent-to-own store businesses, and customer contracts aggregated to$3.5 million and $4.8 million during the three months ended March 31, 2019 and 2018, respectively. The effect of these acquisitions on the condensed consolidated financial statements for the three months ended March 31, 2019 and 2018 was not significant.

NOTE 3. FAIR VALUE MEASUREMENT

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

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

(In Thousands)	March 31, 2019							December 31, 2018
	Level 1		Level 2			Level 3		Level 1		Level 2			Level 3
Deferred Compensation Liability	$	—	$	(10,790	)	$	—	$	—	$	(10,389	)	$	—

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 is recorded in accounts payable and accrued expenses in the condensed consolidated balance sheets. The liability representing benefits accrued for plan participants is valued at the quoted market prices of the participants’ investment elections, which consist of equity and debt "mirror" funds. As such, the Company has classified the deferred compensation liability as a Level 2 liability.

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

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

(In Thousands)	March 31, 2019						December 31, 2018
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets Held for Sale	$	—	$	8,974	$	—	$	—	$	6,589	$	—

Assets classified as held for sale are recorded at the lower of carrying value or fair value less estimated costs to sell, and any adjustment is recorded in other operating income, net or restructuring expenses, net (if the asset is a part of the Company's restructuring program as described in Note 8) in the condensed consolidated statements of earnings. The highest and best use of the assets held for sale is as real estate land parcels for development or real estate properties for use or lease; however, the Company has chosen not to develop or use these properties.

18

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Certain Financial Assets and Liabilities Not Measured at Fair Value

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

(In Thousands)	March 31, 2019				December 31, 2018
	Level 1	Level 2		Level 3	Level 1	Level 2		Level 3
Fixed-Rate Long-Term Debt1	—	(184,835	)	—	—	(183,765	)	—

¹ The fair value of fixed-rate long-term debt is estimated using the present value of underlying cash flows discounted at a current market yield for similar instruments. The carrying amount of fixed-rate long-term debt was $180.0 million at March 31, 2019 and December 31, 2018, respectively.

19

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 4. LOANS RECEIVABLE

The following is a summary of the Company’s loans receivable, net:

(In Thousands)	March 31, 2019			December 31, 2018
Credit Card Loans1	$	87,768		$	90,406
Acquired Loans2	3,721			5,688
Loans Receivable, Gross	91,489			96,094
Allowance for Loan Losses	(12,363		)	(12,970		)
Unamortized Fees	(6,562		)	(6,971		)
Loans Receivable, Net of Allowances and Unamortized Fees	$	72,564		$	76,153

¹ "Credit Card Loans" are loans originated after the 2015 acquisition of DAMI.

² "Acquired Loans" are credit card loans the Company purchased in the 2015 acquisition of DAMI.

Included in the table below is an aging of the loans receivable, gross balance:

(Dollar Amounts in Thousands)
Aging Category1	March 31, 2019			December 31, 2018
30-59 days past due	6.3		%	6.9		%
60-89 days past due	3.1		%	3.4		%
90 or more days past due	4.1		%	4.3		%
Past due loans receivable	13.5		%	14.6		%
Current loans receivable	86.5		%	85.4		%
Balance of Credit Card Loans on Nonaccrual Status	$	1,954		$	2,110
Balance of Loans Receivable 90 or More Days Past Due and Still Accruing Interest and Fees	$	—		$	—

¹ This aging is based on the contractual amounts outstanding for each loan as of period end, and does not reflect the fair value adjustments for the Acquired Loans.

The table below presents the components of the allowance for loan losses:

	Three Months Ended
(In Thousands)	March 31, 2019			March 31, 2018
Beginning Balance	$	12,970		$	11,454
Provision for Loan Losses	4,255			4,492
Charge-offs	(5,484		)	(5,619		)
Recoveries	622			372
Ending Balance	$	12,363		$	10,699

20

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5. LEASES

Lessor Information

Refer to Note 1 to these condensed consolidated financial statements for further information about the Company's revenue generating activities as a lessor. All of the Company's customer agreements are considered operating leases, and the Company currently does not have any sales-type or direct financing leases.

Lessee Information

As a lessee, the Company leases retail store and warehouse space for most of its Aaron's Business store-based operations, call center space and hubs for its Progressive Leasing segment, and management and information technology space for corporate functions under operating leases expiring at various times through 2033. To the extent that a leased retail store or warehouse space is vacated prior to the termination of the lease, the Company may sublease these spaces to third parties while maintaining its primary obligation as the intermediate lessor. The Company leases transportation vehicles under operating and finance leases, most of which generally expire during the next three years. The transportation leases generally include a residual value that is guaranteed to the lessor, which ensures that the vehicles will be returned to the lessor in reasonable working condition. The Company also leases various IT equipment such as printers and computers under operating leases, most of which generally expire during the next three years. For all of its leases in which the Company is a lessee, the Company has elected to include both the lease and non-lease components as a single component and account for it as a lease.

Finance lease costs are comprised of the amortization of right-of-use assets and interest on lease liabilities, which are recorded within operating expenses and interest expense, respectively, in the Company’s condensed consolidated statements of earnings. Operating lease costs are recorded on a straight-line basis within operating expenses or restructuring expenses, net (if the lease costs are related to the Company's restructuring programs as described in Note 8) in the Company’s condensed consolidated statements of earnings. The Company’s total lease expense is comprised of the following:

	Three Months Ended
(In Thousands)	March 31, 2019
Finance Lease Cost:
Amortization of Right-of-Use Assets	$	465
Interest on Lease Liabilities	114
Total Finance Lease Cost:	579
Operating Lease Cost:
Operating Lease Cost Classified within Operating Expenses1	29,213
Operating Lease Cost Classified within Restructuring Expenses, Net	804
Sublease Receipts	(732		)
Total Operating Lease Cost:	29,285
Total Lease Cost	$	29,864

¹ Includes short-term and variable lease costs, which are not significant.

21

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Additional information regarding the Company’s leasing activities as a lessee is as follows:

	Three Months Ended
(In Thousands)	March 31, 2019
Cash Paid for Amounts Included in Measurement of Lease Liabilities:
Operating Cash Flows for Finance Leases	$	113
Operating Cash Flows for Operating Leases	31,643
Financing Cash Flows for Finance Leases	574
Total Cash Paid for Amounts Included in Measurement of Lease Liabilities	32,330
Right-of-Use Assets Obtained in Exchange for New Finance Lease Liabilities	—
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities	$	6,587

Supplemental balance sheet information related to leases is as follows:

(In Thousands)	Balance Sheet Classification	March 31, 2019
Assets
Operating Lease Assets	Operating Lease Right-of-Use Assets	$	370,282
Finance Lease Assets	Property, Plant and Equipment, Net	2,578
Total Lease Assets		$	372,860
Liabilities
Operating Lease Liabilities	Operating Lease Liabilities	$	406,559
Finance Lease Liabilities	Debt	4,590
Total Lease Liabilities		$	411,149

Most of the Company’s real estate leases contain renewal options for additional periods ranging from one to 20 years or provide for options to purchase the related property at predetermined purchase prices that do not represent bargain purchase options. The Company currently does not have any real estate leases in which it considers the renewal options to be reasonably certain of exercise, as the Company's historical experience indicates that renewal options are not reasonably certain to be exercised, as well as contractual renewal rental rates that are considered to be in line with market rental rates and lack of significant economic penalties or business disruptions incurred by not exercising any renewal options.

22

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Company uses its incremental borrowing rate as the discount rate for its leases, as the implicit rate in the lease is not readily determinable. Below is a summary of the weighted-average discount rate and weighted-average remaining lease term for the Company’s finance and operating leases:

	Weighted Average Discount Rate1		Weighted Average Remaining Lease Term (in years)
Finance Leases	6.0	%	2
Operating Leases	3.6	%	5

¹ Upon adoption of ASC 842, discount rates for existing operating leases were established as of January 1, 2019.

Under the short-term lease exception provided within ASC 842, the Company does not record a lease liability or right-of-use asset for any leases that have a lease term of 12 months or less at commencement, including renewal options that the Company is reasonably certain to exercise, and do not include purchase options. Below is a summary of undiscounted finance and operating lease liabilities that have initial terms in excess of one year as of March 31, 2019. The table also includes a reconciliation of the future undiscounted cash flows to the present value of the finance and operating lease liabilities included in the condensed consolidated balance sheet.

(In Thousands)	Operating Leases		Finance Leases		Total
2019	$	89,172	$	2,407	$	91,579
2020	104,166		2,028		106,194
2021	81,568		772		82,340
2022	61,345		74		61,419
2023	40,967		—		40,967
Thereafter	75,891		—		75,891
Total Undiscounted Cash Flows	453,109		5,281		458,390
Less: Interest	46,550		691		47,241
Present Value of Lease Liabilities	$	406,559	$	4,590	$	411,149

NOTE 6. COMMITMENTS AND CONTINGENCIES

Guarantees

The Company has guaranteed certain debt obligations of some of the 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, 2019, the maximum amount that the Company would be obligated to repay in the event franchisees defaulted was $36.8 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 franchisee loan program in 1994, the Company has had no significant associated losses. The Company believes the likelihood of any significant amounts being funded by the Company in connection with these guarantees 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 $0.1 million and $0.3 million as of March 31, 2019 and December 31, 2018. The maximum facility commitment amount under the franchisee loan program was $55.0 million at March 31, 2019, including a Canadian subfacility commitment amount for loans to franchisees that operate stores in Canada (other than the province of Quebec) of CAD $25.0 million.

The Company is subject to financial covenants under the franchisee loan program that are consistent with the Revolving Credit and Term Loan Agreement, which are more fully described in Note 7 to the consolidated financial statements in the 2018 Annual Report. The Company is in compliance with all covenants at March 31, 2019 and believes it will continue to be in compliance in the future.

23

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Legal and Regulatory 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, 2019 and December 31, 2018, the Company had accrued $1.7 million and $1.4 million, respectively, for pending legal and regulatory matters for which it believes losses are probable and is the Company's best estimate of its exposure to loss. The Company records these liabilities in accounts payable and accrued expenses in the condensed consolidated balance sheets. The Company estimated that the aggregate range of reasonably possible loss in excess of accrued liabilities for such probable loss contingencies is between $0 and $1.0 million.

At March 31, 2019, 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 $2.6 million and $5.2 million. Those matters for which a reasonable estimate is not possible are not included within estimated ranges and, therefore, the estimated ranges do not represent the Company's maximum loss exposure. The Company’s estimates for legal and regulatory accruals, aggregate probable loss amounts and reasonably possible loss amounts are all subject to the uncertainties and variables described above.

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, plaintiffs allege 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." Plaintiffs filed an amended complaint, asserting claims under the ECPA, common law invasion of privacy, seeking an injunction, and naming additional independently owned and operated Company franchisees as defendants. Plaintiffs seek monetary damages as well as injunctive relief.

In March 2014, the United States District Court dismissed all claims against all franchisees other than Aspen Way Enterprises, LLC, dismissed claims for invasion of privacy, aiding and abetting, and conspiracy against all defendants, and denied plaintiffs’ motion to certify a class action, but denied the Company’s motion to dismiss the claims alleging ECPA violations. Following an appeal of the decision to deny class certification, the matter was sent back to the District Court and, on September 26, 2017, the District Court denied plaintiffs' motion for class certification. A petition with the United States Court of Appeals for permission to appeal the denial of class certification a second time was denied on December 11, 2018. The case is now proceeding for determination on an individual basis as to the named plaintiffs.

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, 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 as well as certification of a putative California class. In April 2013, the Company removed this matter to federal court. In May 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. In June 2015, the plaintiffs filed a motion to lift the stay, which was denied in July 2015.

24

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In Lomi Price v. Aaron's, Inc. and NW Freedom Corporation, filed on February 27, 2013, in the State Court of Fulton County, Georgia, 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. This case has been stayed pending resolution of the Byrd litigation.

Regulatory Inquiries

In July 2018, the Company received civil investigative demands ("CIDs") from the Federal Trade Commission (the "FTC") regarding disclosures related to financial products offered by the Company through the Aaron’s Business and Progressive Leasing and whether such disclosures violate the Federal Trade Commission Act (the “FTC Act”). Although we believe we are in compliance with the FTC Act, these inquiries could lead to an enforcement action and/or a consent order, and substantial costs, including legal fees, fines, penalties, and remediation expenses. The Company submitted a significant amount of documentation from both the Aaron’s Business and Progressive Leasing in October 2018 and continues to work with the FTC as its inquiry proceeds.

In April 2019, the Aaron’s Business, along with other rent-to-own companies, received an unrelated CID from the FTC focused on certain transactions involving the purchase and sale of customer lease agreements, and whether such transactions violated the FTC Act. Although we believe such transactions were in compliance with the FTC Act, this inquiry could lead to an enforcement action and/or a consent order, and substantial costs. The Company is fully cooperating with the FTC in responding to this inquiry.

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.

Off-Balance Sheet Risk

The Company, through its DAMI business, had unfunded lending commitments totaling $316.0 million and $316.4 million as of March 31, 2019 and December 31, 2018, 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 represent 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. The reserve for losses on unfunded loan commitments is calculated by the Company based on historical usage patterns of cardholders after the initial charge and was approximately $0.6 million and $0.5 million as of March 31, 2019 and December 31, 2018, respectively. The reserve for losses on unfunded loan commitments is included in accounts payable and accrued expenses in the condensed consolidated balance sheets.

See Note 9 to the consolidated financial statements in the 2018 Annual Report for further information.

NOTE 7. SEGMENTS

As of March 31, 2019, the Company has three operating and reportable segments: Progressive Leasing, Aaron's Business and DAMI.

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

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

25

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 March 31, 2019:

	Three Months Ended March 31, 2019
(In Thousands)	Progressive Leasing		Aaron's Business		DAMI		Total
Lease Revenues and Fees1	$	523,401	$	420,756	$	—	$	944,157
Retail Sales2	—		12,809		—		12,809
Non-Retail Sales2	—		36,981		—		36,981
Franchise Royalties and Fees2	—		9,207		—		9,207
Interest and Fees on Loans Receivable3	—		—		8,646		8,646
Other	—		303		—		303
Total	$	523,401	$	480,056	$	8,646	$	1,012,103

¹ Substantially all lease revenues and fees are within the scope of ASC 842, Leases. The Company had $7.9 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers.

²  Revenue within the scope of ASC 606, Revenue from Contracts with Customers. Of the Franchise Royalties and Fees, $7.0 million is related to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. The remaining revenue is primarily related to fees collected for pre-opening services, which are being deferred and recognized as revenue over the agreement term, and advertising fees charged to franchisees. Retail sales are recognized as revenue at the point of sale. Non-retail sales are recognized as revenue upon delivery of the merchandise.

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

The following table presents revenue by source and by segment for the three months ended March 31, 2018:

	Three Months Ended March 31, 2018
(In Thousands)	Progressive Leasing		Aaron's Business		DAMI		Total
Lease Revenues and Fees1	$	486,517	$	383,550	$	—	$	870,067
Retail Sales2	—		8,516		—		8,516
Non-Retail Sales2	—		53,230		—		53,230
Franchise Royalties and Fees2	—		12,862		—		12,862
Interest and Fees on Loans Receivable3	—		—		9,542		9,542
Other	—		592		—		592
Total	$	486,517	$	458,750	$	9,542	$	954,809

¹ Substantially all lease revenues and fees are within the scope of ASC 842, Leases. The Company had $5.0 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers.

² Revenue within the scope of ASC 606, Revenue from Contracts with Customers. Of the Franchise Royalties and Fees, $10.2 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 sales are recognized as revenue at the point of sale. Non-retail sales are recognized as revenue upon delivery of the merchandise.

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

26

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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   March 31,
(In Thousands)	2019			2018
Earnings (Loss) Before Income Taxes:
Progressive Leasing	$	55,388		$	34,979
Aaron's Business1	17,588			33,079
DAMI	(2,668		)	(1,306		)
Total Earnings Before Income Taxes	$	70,308		$	66,752

¹ Earnings before income taxes for the Aaron's Business during the three months ended March 31, 2019 includes restructuring charges of $13.3 million related to closed store right-of-use asset impairment and operating lease charges, the write-off and impairment of store property, plant and equipment and related workforce reductions, and other impairment charges in connection with the Company's strategic decision to close 84 Company-operated stores.

Earnings before income taxes for the Aaron's Business during the three months ended March 31, 2018 includes net restructuring charges of $0.9 million related to store contractual lease obligations and severance costs, partially offset by gains recognized from the sale of the associated properties of stores closed under the restructuring program.

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

(In Thousands)	March 31, 2019		December 31, 2018
Assets:
Progressive Leasing	$	1,106,668	$	1,088,227
Aaron's Business1	1,774,858		1,483,102
DAMI	89,533		95,341
Other2	266,907		160,022
Total Assets	$	3,237,966	$	2,826,692

¹ Includes inventory (principally raw materials and work-in-process) that has been classified within lease merchandise in the condensed consolidated balance sheets of $14.5 million and $15.2 million as of March 31, 2019 and December 31, 2018, respectively.

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

NOTE 8. RESTRUCTURING

2019 Restructuring Programs

During the three months ended March 31, 2019, the Company initiated a restructuring program to further align its Company-operated Aaron's store base portfolio with marketplace demand. The program resulted in the closure and consolidation of 84 underperforming Company operated stores throughout the three months of 2019. The Company also further rationalized its home office and field support staff, which resulted in a reduction in employee headcount in those areas to more closely align with current business conditions.

27

AARON'S, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Total net restructuring expenses of $12.9 million were recorded for the three months ended March 31, 2019 under the 2019 restructuring program, all of which were incurred within the Aaron's Business segment. Restructuring activity for the three months endedMarch 31, 2019 was comprised of closed store operating lease right-of-use asset impairment and operating lease charges, the write-off and impairment of store property, plant and equipment and related workforce reductions, and other impairment charges. These costs were included in restructuring expenses, net in the condensed consolidated statements of earnings. The Company does not expect to incur material additional restructuring charges for this program.

2017 and 2016 Restructuring Programs

During the years ended December 31, 2017 and 2016, the Company initiated restructuring programs to rationalize its Company-operated Aaron's store base portfolio to better align with marketplace demand. The programs resulted in the closure and consolidation of 139 underperforming Company operated stores throughout 2016, 2017, and 2018. The Company also optimized its home office staff and field support, which resulted in a reduction in employee headcount in those areas to more closely align with current business conditions.

Total net restructuring expenses of $0.4 million and $0.9 million were recorded for the three months ended March 31, 2019 and 2018 under the 2017 and 2016 restructuring programs, all of which were incurred within the Aaron's Business segment. Restructuring activity for the three months ended March 31, 2019 was comprised principally of operating lease charges for stores closed under the restructuring program. These costs were included in restructuring expenses, net in the condensed consolidated statements of earnings. The Company does not expect to incur any further material charges under the 2017 and 2016 restructuring programs. However, this estimate is subject to change based on future sublease activity and potential earlier buyouts of leases with landlords.

The following table summarizes restructuring charges for the three months ended March 31, 2019 and 2018, respectively, under the three programs:

	Three Months Ended March 31,
(In Thousands)	2019		2018
Right-of-Use Asset Impairment and Operating Lease Charges	$	9,522	$	719
Fixed Asset Impairment	1,497		—
Severance	1,136		514
Other Expenses	1,126		—
Gain on Sale of Closed Store Properties	—		(327		)
Total Restructuring Expenses	$	13,281	$	906

To date, the Company has incurred charges of $39.7 million under the 2016 and 2017 restructuring programs.

The following table summarizes the balances of the accruals for the restructuring programs, which are recorded in accounts payable and accrued expenses in the condensed consolidated balance sheets, and the activity for the three months ended March 31, 2019:

(In Thousands)	Contractual Lease Obligations			Severance
Balance at January 1, 2019	$	8,472		$	651
ASC 842 Transition Adjustment1	(8,472		)	—
Adjusted Balance at January 1, 2019	—			651
Restructuring Charges	—			1,136
Payments	—			(1,033		)
Balance at March 31, 2019	$	—		$	754

¹ Upon the adoption of ASC 842 on January 1, 2019, the Company reclassified the remaining liability for contractual lease obligations from accounts payable and accrued expenses to a reduction to operating lease right-of-use assets within its condensed consolidated balance sheets.

28

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

Special Note Regarding Forward-Looking Information: Except for historical information contained herein, the matters set forth in this Form 10-Q are forward-looking statements. These statements are based on management’s current expectations and plans, which involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "believe," "expect," "forecast," "guidance," "intend," "could," "project," "estimate," "anticipate," "should," and similar terminology. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the filing date of this Quarterly Report and which involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. These risks and uncertainties include factors such as the impact of increased regulation, changes in general economic conditions, including consumer confidence and demand for certain merchandise, increased competition, pricing pressures, the impact of legal proceedings faced by the Company, costs relating to protecting customer privacy and information security more generally and a failure to realize the expected benefits of our restructuring plans and strategic initiatives, the execution and results of our operational strategies, risks related to Progressive Leasing's "virtual" lease-to-own business, deteriorations in the business performance of our franchisees and our franchisee relationships, and the other risks and uncertainties discussed under Item 1A, "Risk Factors," in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (the "2018 Annual Report"). Except as required by law, the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances after the filing date of this Quarterly Report.

The following discussion should be read in conjunction with the condensed consolidated financial statements as of and for the three months ended March 31, 2019 and 2018, including the notes to those statements, appearing elsewhere in this report. We also suggest that management’s discussion and analysis appearing in this report be read in conjunction with the management’s discussion and analysis and consolidated financial statements included in our 2018 Annual Report.

Business Overview

Aaron’s, Inc. ("we", "our", "us" or the "Company") is a leading omnichannel provider of lease-purchase solutions. As of March 31, 2019, the Company's operating segments are Progressive Leasing, Aaron's Business and DAMI.

Progressive Leasing is a virtual lease-to-own company that provides lease-purchase solutions through approximately 20,000 retail locations in 46 states and the District of Columbia. It does so by purchasing merchandise from third-party retailers desired by those retailers’ customers and, in turn, leasing that merchandise to the customers through a cancellable lease-to-own transaction. Progressive Leasing consequently has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional and e-commerce retailers.

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 its Company-operated stores in the United States and Canada as well as through its e-commerce platform, Aarons.com. This operating segment also supports franchisees of its Aaron’s stores. In addition, the Aaron’s Business segment also includes the operations of Woodhaven, which manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in Company-operated and franchised stores.

DAMI partners with merchants to provide a variety of revolving credit products originated through two third-party federally insured banks to customers that may not qualify for traditional prime lending (called "second-look" financing programs).

29

Business Environment and Company Outlook

Like many industries, the lease-to-own industry has been transformed by the internet and virtual marketplaces. We believe that the Progressive Leasing and DAMI acquisitions have been strategically transformational in this respect by allowing the Company to diversify its presence in the market and strengthen our business, as demonstrated by Progressive Leasing's significant revenue and profit growth throughout 2018 and through the first three months of 2019. The Company is also leveraging franchisee acquisition opportunities to expand into new geographic markets, enhance operational control, and benefit more fully from our business transformation initiatives on a broader scale. We believe the traditional store based lease-to-own industry has been negatively impacted in recent periods by: (i) increased competition from a wide range of competitors, including national, regional and local operators of lease-to-own stores; virtual lease-to-own companies; traditional and e-commerce retailers; traditional and online sellers of used merchandise; and from a growing number of various types of consumer finance companies that enable our customers to shop at traditional or online retailers; (ii) the challenges faced by many traditional "brick-and-mortar" retailers, with respect to a decrease in the number of consumers visiting those stores, especially younger consumers; and (iii) commoditization of pricing in electronics. In response to these changing market conditions, we are executing a strategic plan that focuses on the following items and that we believe positions us for success over the long-term:

• Strengthen relationships of Progressive Leasing current retail partners;

• Focus on converting existing pipeline into Progressive Leasing retail partners;

• Drive operational excellence in our Aaron's Business stores;

• Grow revenue and new customers through our omnichannel platform;

• Invest and innovate to provide a superior customer experience while lowering our costs to serve; and

• Accelerate our vision of business transformation in the Aaron's Business at a larger scale.

We continue to invest in various Aaron's Business transformation initiatives including rapid customer onboarding, centralized decisioning and collections, and the introduction of our next generation store concepts to appeal to our changing target consumer market. We also continue to execute on various Aaron's Business store optimization initiatives, including strategic store consolidations. As a result of these store optimization initiatives and other cost-reduction initiatives, the Company closed and consolidated 84 Company-operated stores during the first three months of 2019 under a new restructuring program announced in January 2019.

During 2017 and 2018, the Company acquired substantially all of the assets of the store operations of 111 and 152 Aaron's-branded franchised stores, respectively. The acquisitions are benefiting the Company's omnichannel platform through added scale, strengthening its presence in certain geographic markets, enhancing operational control, including compliance, and enabling the Company to execute its business transformation initiatives on a broader scale.

Highlights

The following summarizes significant highlights from the three months ended March 31, 2019:

• The Company reported record revenues of $1.012 billion in the first quarter of 2019 compared to $954.8 million for the first quarter of 2018. Earnings before income taxes increased to $70.3 million compared to $66.8 million during the first quarter of 2018.

• Progressive Leasing reported revenues of $523.4 million in the first quarter of 2019, an increase of 7.6% over the first quarter of 2018. Calculated on a basis consistent with the January 2019 adoption of ASC 842, Leases (see the “Use of Non-GAAP Financial Information” section below), Progressive Leasing revenues increased 19.0% over the first quarter of 2018. Progressive Leasing's revenue growth is due to a 14.2%increase in total invoice volume, which was generated through an increase in invoice volume per active door. Progressive Leasing's earnings before income taxes increased to $55.4 million compared to $35.0 million during the first quarter of 2018, due mainly to its higher revenue.

• Aaron's Business revenuesincreasedto$480.1 millionfor the first quarter of 2019, compared to $458.8 million in the prior year period. Aaron's Business lease revenue and fees increased due to the acquisitions of various franchisees throughout 2017 and 2018, partially offset by declines in non-retail sales to our franchisees. Same store revenues increased0.7% in the first quarter of 2019. Earnings before income taxes decreased to $17.6 million during the first quarter of 2019 compared to $33.1 million in the prior year period primarily due to restructuring charges of $13.3 million.

• The Company generated cash from operating activities of $164.7 million for the three months ended March 31, 2019 compared to $196.6 million for the comparable period in 2018. The decrease in net cash from operating activities was impacted by net income tax refunds of $15.3 million during the three months ended March 31, 2019, compared to net income tax refunds of $75.4 million in the same period in 2018.

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Invoice Volume. We believe that invoice volume is a key performance indicator of our Progressive Leasing segment. Invoice volume is defined as the retail price of lease merchandise acquired and then leased to customers during the period, net of returns. The following table presents total invoice volume for the Progressive Leasing segment:

For the Three Months Ended March 31 (Unaudited and In Thousands)	2019		2018
Progressive Leasing Invoice Volume	$	394,727	$	345,562

The increase in invoice volume was driven by a 17.9%increase in invoice volume per active door, partially offset by a 3.1%decrease in active doors.

Active Doors. Progressive Leasing active doors are comprised of both (i) each retail store location where at least one virtual lease-to-own transaction has been completed during the trailing twelve-month period; and (ii) with respect to an e-commerce merchant, each state where at least one virtual lease-to-own transaction has been completed through that e-commerce merchant during the trailing twelve-month period. The following table presents active doors for the Progressive Leasing segment:

Active Doors at March 31 (Unaudited)	2019	2018
Progressive Leasing Active Doors	19,795	20,434

The decrease in active door count was due primarily to store consolidation in the mattress industry and our exit from a mobile provider, partially offset by additions in other verticals.

Same Store Revenues. We believe that changes in same store revenues are a key performance indicator of Aaron's Business. For the three months ended March 31, 2019, we calculated this amount by comparing revenues for the three months ended March 31, 2019 to revenues for the comparable period in 2018 for all stores open for the entire 15-month period ended March 31, 2019, excluding stores that received lease agreements from other acquired, closed or merged stores. Same store revenues increased 0.7% for the three months ended March 31, 2019.

Seasonality

Our revenue mix is moderately seasonal for both our Progressive Leasing and Aaron's Business segments. Adjusting for growth, the first quarter of each year generally has higher revenues than any other quarter. This is primarily due to realizing the full benefit of business that historically gradually increases in the fourth quarter as a result of the holiday season, as well as the receipt by our customers in the first quarter of federal and state income tax refunds. Our customers will more frequently exercise the early purchase option on their existing lease agreements or purchase merchandise off the showroom floor during the first quarter of the year. We expect these trends to continue in future periods. Due to the seasonality of our business, results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.

Key Components of Earnings Before Income Taxes

In this management’s discussion and analysis section, we review our consolidated results. For the three months ended March 31, 2019 and the comparable prior year periods, some of the key revenue, cost and expense items that affected earnings before income taxes were as follows:

Revenues. We separate our total revenues into six components: (i) lease revenues and fees; (ii) retail sales; (iii) non-retail sales; (iv) franchise royalties and fees; (v) interest and fees on loans receivable; and (vi) other. Lease revenues and fees include all revenues derived from lease agreements at retail locations serviced by Progressive Leasing and the Aaron's Business Company-operated stores and e-commerce platform. Retail sales represent sales of both new and returned lease merchandise from our Company-operated stores. Non-retail sales primarily represent new merchandise sales to our franchisees. Franchise royalties and fees represent fees from the sale of franchise rights and royalty payments from franchisees, as well as other related income from our franchised stores. Interest and fees on loans receivable primarily represents merchant fees, finance charges and annual and other fees earned on loans originated since the DAMI acquisition, as well as the accretion of the discount on loans acquired in the acquisition. Other revenues primarily relate to revenues from leasing real estate properties to unrelated third parties, as well as other miscellaneous revenues.

Depreciation of Lease Merchandise. Depreciation of lease merchandise primarily reflects the expense associated with depreciating merchandise held for lease and leased to customers by Progressive Leasing and our Company-operated Aaron's stores and through our e-commerce platform.

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

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

Operating Expenses. Operating expenses include personnel costs, occupancy costs, store maintenance, provision for lease merchandise write-offs, shipping and handling, advertising and marketing, the provision for loan losses, intangible asset amortization expense, software licensing expense and third-party consulting expense, among other expenses.

Restructuring Expenses, Net. Restructuring expenses primarily represent the cost of optimization efforts and cost reduction initiatives related to the Aaron’s Business, home office and field support functions. Restructuring expenses, net are comprised principally of closed store right-of-use asset impairment and operating lease charges, the write-off and impairment of store property, plant and equipment and related workforce reductions, and other impairment charges.

Other Operating Income, Net. Other operating income, net consists of gains or losses on sales of Company-operated stores and delivery vehicles, fair value adjustments on assets held for sale, gains or losses on other transactions involving property, plant and equipment, and gains related to property damage and business interruption insurance claim recoveries.

Interest Expense. Interest expense consists of interest incurred on fixed and variable rate debt.

Other Non-Operating Income, Net. Other non-operating income, net includes the impact of foreign currency remeasurement, as well as gains and losses resulting from changes in the cash surrender value of Company-owned life insurance related to the Company’s deferred compensation plan.

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Results of Operations – Three months ended March 31, 2019 and 2018

	Three Months Ended   March 31,						Change
(In Thousands)	2019			2018			$			%
REVENUES:
Lease Revenues and Fees	$	944,157		$	870,067		$	74,090		8.5	%
Retail Sales	12,809			8,516			4,293			50.4
Non-Retail Sales	36,981			53,230			(16,249		)	(30.5	)
Franchise Royalties and Fees	9,207			12,862			(3,655		)	(28.4	)
Interest and Fees on Loans Receivable	8,646			9,542			(896		)	(9.4	)
Other	303			592			(289		)	(48.8	)
	1,012,103			954,809			57,294			6.0
COSTS AND EXPENSES:
Depreciation of Lease Merchandise	500,820			440,008			60,812			13.8
Retail Cost of Sales	8,632			5,662			2,970			52.5
Non-Retail Cost of Sales	29,196			48,020			(18,824		)	(39.2	)
Operating Expenses	387,216			390,232			(3,016		)	(0.8	)
Restructuring Expenses, Net	13,281			906			12,375			nmf
Other Operating Income, Net	(897		)	(83		)	(814		)	nmf
	938,248			884,745			53,503			6.0
OPERATING PROFIT	73,855			70,064			3,791			5.4
Interest Income	101			202			(101		)	(50.0	)
Interest Expense	(4,956		)	(4,326		)	630			14.6
Other Non-Operating Income, Net	1,308			812			496			61.1
EARNINGS BEFORE INCOME TAXES	70,308			66,752			3,556			5.3
INCOME TAXES	14,230			14,506			(276		)	(1.9	)
NET EARNINGS	$	56,078		$	52,246		$	3,832		7.3	%

nmf—Calculation is not meaningful

Revenues

Information about our revenues by reportable segment is as follows:

	Three Months Ended   March 31,				Change
(In Thousands)	2019		2018		$			%
REVENUES:
Progressive Leasing	$	523,401	$	486,517	$	36,884		7.6	%
Aaron's Business	480,056		458,750		21,306			4.6
DAMI	8,646		9,542		(896		)	(9.4	)
Total Revenues from External Customers	$	1,012,103	$	954,809	$	57,294		6.0	%

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The following table presents revenue by source and by segment for the three months ended March 31, 2019:

	Three Months Ended March 31, 2019
(In Thousands)	Progressive Leasing1		Aaron's Business		DAMI		Total
Lease Revenues and Fees	$	523,401	$	420,756	$	—	$	944,157
Retail Sales	—		12,809		—		12,809
Non-Retail Sales	—		36,981		—		36,981
Franchise Royalties and Fees	—		9,207		—		9,207
Interest and Fees on Loans Receivable	—		—		8,646		8,646
Other	—		303		—		303
Total Revenues	$	523,401	$	480,056	$	8,646	$	1,012,103

¹ For the three months ended March 31, 2019, the Progressive Leasing provision for returns and uncollectible renewal payments was $56.1 million which was recorded as a reduction to Lease Revenues and Fees as a result of the Company's adoption of ASC 842, Leases. See Note 1 to these condensed consolidated financial statements for more information regarding the impacts of ASC 842 on the Company's financial results.

The following table presents revenue by source and by segment for the three months ended March 31, 2018:

	Three Months Ended March 31, 2018
(In Thousands)	Progressive Leasing		Aaron's Business		DAMI		Total
Lease Revenues and Fees	$	486,517	$	383,550	$	—	$	870,067
Retail Sales	—		8,516		—		8,516
Non-Retail Sales	—		53,230		—		53,230
Franchise Royalties and Fees	—		12,862		—		12,862
Interest and Fees on Loans Receivable	—		—		9,542		9,542
Other	—		592		—		592
Total Revenues	$	486,517	$	458,750	$	9,542	$	954,809
Progressive Bad Debt Expense	46,525		—		—		46,525
Total Revenues, net of Progressive Bad Debt Expense1	$	439,992	$	458,750	$	9,542	$	908,284

¹ See the “Use of Non-GAAP Financial Information” section below.

Progressive Leasing. Progressive Leasing segment revenues increased primarily due to a 14.2%increase in total invoice volume, which was driven by an increase in invoice volume per active door, partially offset by the recognition of a provision for returns and uncollectible renewal payments of $56.1 million as a reduction to lease revenues in accordance with ASC 842 beginning in 2019.

Aaron's Business. Aaron's Business segment revenues increased$21.3 million primarily due to the net addition of 55 Company-operated stores and a 0.7% increase in same store revenues during the 15-month period ended March 31, 2019, which contributed to a $37.2 millionincrease in lease revenues and fees for the three months ended March 31, 2019. This increase was offset by a $16.2 milliondecrease in non-retail sales primarily due to the net reduction of 182 franchised stores resulting from the Company's acquisition of various franchisees during the 15-month period ended March 31, 2019, and decreasing demand for product by franchisees. The acquisitions of various franchisees throughout 2017, 2018 and 2019 impacted the Aaron's Business in the form of an increase in lease revenues and fees, partially offset by lower non-retail sales and lower franchise royalties and fees during the three months ended March 31, 2019 compared to the same period in the prior year.

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Operating Expenses

Information about certain significant components of operating expenses for the first quarter of 2019 as compared to the first quarter of 2018 is as follows:

	Three Months Ended   March 31,				Change
(In Thousands)	2019		2018		$			%
Personnel Costs	$	181,750	$	170,213	$	11,537		6.8	%
Occupancy Costs	58,128		54,217		3,911			7.2
Provision for Lease Merchandise Write-Offs	56,995		44,470		12,525			28.2
Bad Debt Expense	1,125		46,542		(45,417		)	(97.6	)
Shipping and Handling	19,188		18,435		753			4.1
Advertising	13,583		10,399		3,184			30.6
Provision for Loan Losses	4,255		4,492		(237		)	(5.3	)
Intangible Amortization	9,997		7,319		2,678			36.6
Other Operating Expenses	42,195		34,145		8,050			23.6
Operating Expenses	$	387,216	$	390,232	$	(3,016	)	(0.8	)%

As a percentage of total revenues, operating expenses decreased to 38.3% in 2019 from 40.9% in the same period in 2018.

Personnel costs increased by $8.3 million in our Aaron's Business segment and $3.3 million at our Progressive Leasing segment. The increase in personnel costs is due to the Aaron's Business acquisition of 152 franchised stores during 2018, hiring to support Aaron's Business transformation initiatives and the growth of Progressive Leasing, partially offset by the closure and merger of underperforming stores and a reduction of store support center and field support staff from our Aaron's Business restructuring programs in 2018 and 2019.

Occupancy costs increased primarily due to higher store maintenance expenses and the acquisition of franchisee stores, partially offset by the closure of underperforming stores as part of our restructuring actions.

The provision for lease merchandise write-offs increased during the three months ended March 31, 2019 primarily due to Progressive Leasing's invoice volume growth. The provision for lease merchandise write-offs as a percentage of lease revenues for the Progressive Leasing segment was 7.0% in 2019 compared to 6.8% in 2018, calculated on a basis consistent with the January 2019 adoption of ASC 842, Leases. The provision for lease merchandise write-offs as a percentage of lease revenues for the Aaron's Business increased to 4.8% in 2019 from 3.8% in 2018. This increase is due to an increase in the number and type of promotional offerings, higher ticket leases, store closure activity and an increasing mix of e-commerce as a percentage of revenues during the three months ended March 31, 2019.

Bad debt expense decreased during the three months ended March 31, 2019. As discussed above, the Company's adoption of ASC 842 resulted in the Company classifying Progressive Leasing bad debt expense, which is reported within operating expenses in 2018 and prior periods, as a reduction of lease revenue and fees within the condensed consolidated statements of earnings beginning January 1, 2019. The bad debt expense for the three months ended March 31, 2019 relates to uncollectible merchant accounts receivable for cardholder refunded charges at DAMI.

Advertising expense increased during the three months ended March 31, 2019 due to an increase in various advertising initiatives in our Aaron's Business segment.

Intangible amortization expense increased primarily due to additional intangible assets recorded as a result of the acquisition of 152 franchised stores throughout 2018.

Other operating expenses increased due to higher third-party consulting costs, legal expenses and software licensing expense.

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Other Costs and Expenses

Depreciation of lease merchandise. As a percentage of total lease revenues and fees, depreciation of lease merchandise increased to 53.0% from 50.6% in the prior year period, primarily due to a shift in lease merchandise mix from the Aaron’s Business to Progressive Leasing, which is consistent with the increasing proportion of Progressive Leasing’s revenue to total lease revenue. Progressive Leasing generally experiences higher depreciation as a percentage of lease revenues because, among other factors, its merchandise has a shorter average life on lease, a higher rate of customer early buyouts, and the merchandise is generally purchased at retail prices compared to the Aaron’s Business, which procures merchandise at wholesale prices. Progressive Leasing's depreciation of lease merchandise as a percentage of Progressive Leasing's lease revenues and fees was 68.8% in 2019 compared to 70.6% in 2018, calculated on a basis consistent with the January 2019 adoption of ASC 842, Leases, due to a decrease in revenue from early buyouts, which has a lower margin, quarter over quarter. Aaron's Business depreciation of lease merchandise as a percentage of Aaron's Business lease revenues and fees decreased to 33.5% in 2019 from 33.7% in the prior year.

Retail cost of sales. Retail cost of sales as a percentage of retail sales increased to 67.4% from 66.5% primarily due to higher discounting of pre-leased merchandise during 2019 as compared to 2018.

Non-retail cost of sales. Non-retail cost of sales as a percentage of non-retail sales decreased to 78.9% from 90.2% primarily due to lower inventory purchase cost during 2019 as compared to 2018.

Restructuring Expenses, Net. The Company's restructuring actions relate to announced closures and consolidations of underperforming Company-operated Aaron's stores and workforce reductions in our store support centers and field support operations under the 2016, 2017, and 2019 restructuring programs. Restructuring activity for the three months ended March 31, 2019 was comprised of expenses of $13.3 million, which were primarily to record impairment of operating lease right-of-use assets, fixed assets, and other assets related to the stores identified for closure under the 2019 restructuring program as well as severance expenses related to workforce reductions in our store support center and field support operations. Restructuring activity for the three months ended March 31, 2018 was comprised of expenses of $0.9 million related to changes in assumptions related to Aaron's contractual lease obligations for closed stores and workforce reductions, partially offset by gains recognized on the sale of properties closed under the restructuring program.

Other Operating Income, Net

Information about the components of other operating income, net is as follows:

	Three Months Ended   March 31,						Change
(In Thousands)	2019			2018			$			%
Losses (gains) on sales of stores and customer agreements	$	4		$	(72	)	$	76		nmf
Net gains on sales of delivery vehicles	(108		)	(134		)	26			19.4
Gain on insurance recoveries	(892		)	—			(892		)	nmf
Impairment charges and net losses on asset dispositions, assets held for sale and other	99			123			(24		)	(19.5	)
Other operating income, net	$	(897	)	$	(83	)	$	(814	)	nmf

nmf—Calculation is not meaningful

The gain on insurance recoveries of $0.9 million during the three months ended March 31, 2019 relates to payments received from insurance carriers for Hurricanes Harvey and Irma claims in excess of the related property insurance receivables.

Operating Profit

Interest expense. Interest expense increased to $5.0 million in 2019 from $4.3 million in 2018 due primarily to a higher outstanding debt balance during the three months ended March 31, 2019.

Other non-operating income, net. Other non-operating income, net includes the impact of foreign currency remeasurement, as well as gains or losses resulting from changes in the cash surrender value of Company-owned life insurance related to the Company's deferred compensation plan. Foreign exchange remeasurement gains were not significant during the three months ended March 31, 2019. Included in other non-operating income, net were foreign exchange remeasurement gains of $0.6 million during the three months ended March 31, 2018. These net gains result from changes in the value of the U.S. dollar against the British pound and Canadian dollar. Gains related to the changes in the cash surrender value of Company-owned life insurance were $1.3 million and $0.2 million during the three months ended March 31, 2019 and 2018, respectively.

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Earnings Before Income Taxes

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

	Three Months Ended   March 31,						Change
(In Thousands)	2019			2018			$			%
EARNINGS (LOSS) BEFORE INCOME TAXES:
Progressive Leasing	$	55,388		$	34,979		$	20,409		58.3	%
Aaron's Business	17,588			33,079			(15,491		)	(46.8	)
DAMI	(2,668		)	(1,306		)	(1,362		)	(104.3	)
Total Earnings Before Income Taxes	$	70,308		$	66,752		$	3,556		5.3	%

The factors impacting the change in earnings before income taxes are discussed above.

Income Tax Expense

Income tax expense decreased to $14.2 million for the three months ended March 31, 2019 compared to $14.5 million in the prior year comparable period due to a decrease in the effective tax rate to 20.2% in 2019 from 21.7% in 2018.

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Overview of Financial Position

The major changes in the condensed consolidated balance sheet from December 31, 2018 to March 31, 2019 include:

• Cash and cash equivalents increased$108.9 million to $124.2 million at March 31, 2019. For additional information, refer to the "Liquidity and Capital Resources" section below.

• As a result of the adoption of ASC 842 as of January 1, 2019, the Company recorded operating lease right-of-use assets and operating lease liabilities of $370.3 million and $406.6 million, respectively, as of March 31, 2019.

• Income tax receivable decreased$15.7 million due primarily to net income tax refunds of $15.3 million received during the three months ended March 31, 2019.

Liquidity and Capital Resources

General

Our primary capital requirements consist of buying merchandise for the operations of Progressive Leasing and the Aaron’s Business. As we continue to grow, the need for additional lease merchandise is expected to remain our major capital requirement. Other capital requirements include (i) purchases of property, plant and equipment; (ii) expenditures for acquisitions, including franchisee acquisitions; (iii) expenditures related to our corporate operating activities; (iv) personnel expenditures; (v) income tax payments; (vi) funding of loans receivable for DAMI; and (vii) servicing our outstanding debt obligations. The Company has also historically paid quarterly cash dividends and periodically repurchases stock. Our capital requirements have been financed through:

• cash flows from operations;

• private debt offerings;

• bank debt; and

• stock offerings.

As of March 31, 2019, the Company had $124.2 million of cash and $389.0 million of availability under its revolving credit facility.

Cash Provided by Operating Activities

Cash provided by operating activities was $164.7 million and $196.6 million during the three months ended March 31, 2019 and 2018, respectively. The $31.8 milliondecrease in operating cash flows was primarily driven by net tax refunds of $15.3 million during the three months ended March 31, 2019 compared to net tax refunds of $75.4 million during the three months ended March 31, 2018. The Tax Act changed previous tax laws by providing for 100% expense deduction of the Company's lease merchandise inventory purchased by the Company after September 27, 2017. As a result of the provisions in the Tax Act not being enacted until December 22, 2017, the Company made more than the required estimated federal tax liability payments in 2017 and therefore qualified for and received a refund related to 2017 income tax payments during the three months ended March 31, 2018. Other changes in cash provided by operating activities are discussed above in our discussion of results for the three months ended March 31, 2019.

Cash Used in Investing Activities

Cash used in investing activities was $26.0 million and $18.0 million during the three months ended March 31, 2019 and 2018, respectively. The $8.1 millionincrease in investing cash outflows was primarily due to (i) $6.6 million of additional outflows related to the purchase of property, plant and equipment and (ii) $2.2 million lower proceeds from the sale of property, plant and equipment, partially offset by $1.3 million lower outflows as a result of the acquisition of businesses and customer agreements during the three months ended March 31, 2019 as compared to the same period in 2018.

Cash Used in Financing Activities

Cash used in financing activities was $29.9 million and $40.2 million during the three months ended March 31, 2019 and 2018, respectively. The $10.3 milliondecrease in financing cash outflows was primarily due to an $18.4 milliondecrease in the Company's repurchases of outstanding common stock in 2019 compared to 2018, partially offset by a $6.1 millionincrease in net repayments of debt as compared to the three months ended March 31, 2018.

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Share Repurchases

We purchase our stock in the market from time to time as authorized by our Board of Directors. As of March 31, 2019, we have the authority to purchase additional shares up to our remaining authorization limit of $331.3 million.

Dividends

We have a consistent history of paying dividends, having paid dividends for 32 consecutive years. At its November 2018 meeting, our board of directors increased the quarterly dividend to $0.035 per share from $0.03 per share. Aggregate dividend payments for the three months ended March 31, 2019 were $2.4 million.

Subject to sufficient operating profits, any future capital needs and other contingencies, we currently expect to continue our policy of paying quarterly cash dividends.

Debt Financing

As of March 31, 2019, $225.0 million in term loans were outstanding under the term loan and revolving credit agreement that matures on September 18, 2022. The total available credit under our revolving credit facility as of March 31, 2019 was $389.0 million. The revolving credit and term loan agreement includes an uncommitted incremental facility increase option (an "accordion facility") which, subject to certain terms and conditions, permits the Company at any time prior to the maturity date to request an increase in extensions of credit available thereunder by an aggregate additional principal amount of up to $250.0 million.

As of March 31, 2019, the Company had outstanding $180.0 million in aggregate principal amount of senior unsecured notes issued in a private placement in connection with the April 14, 2014 Progressive Leasing acquisition. The notes bear interest at the rate of 4.75% per year and mature on April 14, 2021. Quarterly payments of interest commenced July 14, 2014, and annual principal payments of $60.0 million commenced April 14, 2017.

Our revolving credit and term loan agreement contains certain financial covenants, which include requirements that the Company maintain ratios of (i) adjusted EBITDA plus lease expense to fixed charges of no less than 2.50:1.00 and (ii) total debt to adjusted EBITDA of no greater than 3.00:1.00. In each case, adjusted EBITDA refers to the Company’s consolidated net income before interest and tax expense, depreciation (other than lease merchandise depreciation), amortization expense, and other cash and non-cash charges. If we fail to comply with these covenants, we will be in default under these agreements, and all amounts could become due immediately. We are in compliance with all of these covenants at March 31, 2019 and believe that we will continue to be in compliance in the future.

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Commitments

Income Taxes

During the three months ended March 31, 2019, we received net tax refunds of $15.3 million. Within the next nine months, we anticipate we will make no cash payments for U.S. federal income taxes and estimated payments of $0.4 million for Canadian income taxes, and an estimated $4.5 million for state income taxes.

The Tax Act, which was enacted in December 2017, provides for 100% expense deduction of certain qualified depreciable assets, including lease merchandise inventory, purchased by the Company after September 27, 2017 (but would be phased down starting in 2023). Because of our sales and lease ownership model, in which the Company remains the owner of merchandise on lease, we benefit more from bonus depreciation, relatively, than traditional furniture, electronics and appliance retailers. The Company made periodic tax payments throughout 2017 based on the tax laws in effect at that time. As a result of the Tax Act, the Company applied for and received, during the three months ended March 31, 2018, a $77 million refund from the Internal Revenue Service (the "IRS") for the 2017 tax year.

We estimate the tax deferral associated with bonus depreciation from the Tax Act and the prior tax legislation is approximately $282.0 million as of December 31, 2018, of which approximately 87% is expected to reverse in 2019 and most of the remainder during 2020. These amounts exclude bonus depreciation the Company will receive on qualifying expenditures after December 31, 2018.

Franchise Loan Guarantee

We have guaranteed the borrowings of certain independent franchisees under a franchise loan agreement with several banks, under which the maximum facility commitment amount under the franchisee loan program was $55.0 million as of March 31, 2019. At March 31, 2019, the total amount that we might be obligated to repay in the event franchisees defaulted was $36.8 million. However, due to franchisee borrowing limits, we believe any losses associated with defaults would be substantially mitigated through recovery of lease merchandise and other assets. Since the inception of the franchise loan program in 1994, we have had no significant associated losses. We believe the likelihood that the Company would fund any significant amounts in connection with these commitments to be remote.

Contractual Obligations and Commitments

As part of our ongoing operations, we enter into various arrangements that obligate us to make future payments, including debt agreements, operating leases, and other purchase obligations. The future cash commitments owed under these arrangements generally fluctuate in the normal course of business as we, for example, borrow on or pay down our revolving lines of credit, make scheduled payments on other debt, leases or purchase obligations and renegotiate arrangements or enter into new arrangements. Nonetheless, as of March 31, 2019, there were no material changes outside the normal course of business in our material cash commitments and contractual obligations from those reported in our Annual Report on Form 10-K for the year ended December 31, 2018.

Unfunded Lending Commitments

The Company, through its DAMI business, has unfunded lending commitments totaling approximately$316.0 million and $316.4 million as of March 31, 2019 and December 31, 2018, respectively, that do not give rise to revenues and cash flows. 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. The reserve for losses on unfunded loan commitments, which is included in accounts payable and accrued expenses in the condensed consolidated balance sheets, is calculated by the Company based on historical customer usage of available credit and is approximately $0.6 million and $0.5 million as of March 31, 2019 and December 31, 2018, respectively.

Critical Accounting Policies

Refer to the 2018 Annual Report.

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Recent Accounting Pronouncements

Refer to Note 1 to the condensed consolidated financial statements for a discussion of recently issued accounting pronouncements, including pronouncements that were adopted in the current year.

Use of Non-GAAP Financial Information

The "Results of Operations" section above discloses non-GAAP revenues as if the lessor accounting impacts of ASC 842 were in effect for the three months ended March 31, 2018. “Total Revenues, net of Progressive Bad Debt Expense” and the related percentages for the comparable prior year period are a supplemental measure of our performance that are not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”) in place during 2018. These non-GAAP measures assume that Progressive bad debt expense is recorded as a reduction to lease revenues and fees instead of within operating expenses in 2018.

Management believes these non-GAAP measures for 2018 provide relevant and useful information for users of our financial statements, as it provides comparability with the financial results we are reporting beginning in 2019 when ASC 842 became effective and we began reporting Progressive bad debt expense as a reduction to lease revenues and fees. We believe these non-GAAP measures provide management and investors the ability to better understand the results from the primary operations of our business in 2019 compared with 2018 by classifying Progressive bad debt expense consistently between the periods.

These non-GAAP financial measures should not be used as a substitute for, or considered superior to, measures of financial performance prepared in accordance with GAAP.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures about market risk, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," of our Annual Report on Form 10-K for the year ended December 31, 2018. Our exposures to market risk have not changed materially since December 31, 2018.

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.

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

This evaluation is performed to determine if our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. No system of controls, no matter how well designed and operated, can provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that the system of controls has operated effectively in all cases. Our disclosure controls and procedures, however, are designed to provide reasonable assurance that the objectives of disclosure controls and procedures are met.

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

Changes in Internal Control Over Financial Reporting.

There were no changes in the Company’s internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, during the three months ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are party to various legal proceedings arising in the ordinary course of business. While any proceeding contains an element of uncertainty, we do not currently believe that any of the outstanding legal proceedings to which we are a party will have a material adverse impact on our business, financial position or results of operations. However, an adverse resolution of a number of these items may have a material adverse impact on our business, financial position or results of operations. For further information, see Note 6 to the condensed consolidated financial statements, which discussion is incorporated herein by reference.

ITEM 1A. RISK FACTORS

The Company does not have any updates to its risk factors disclosure from that previously reported in the 2018 Annual Report.

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

The following table presents our share repurchase activity for the three months ended March 31, 2019:

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 Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 1
January 1, 2019 through January 31, 2019	—	—	—	$	331,265,263
February 1, 2019 through February 28, 2019	—	—	—	331,265,263
March 1, 2019 through March 31, 2019	—	—	—	331,265,263
Total	—		—

¹Share repurchases are conducted under authorizations made from time to time by the Company’s Board of Directors. The most recent authorization, which replaced our previous repurchase program, was publicly announced on February 15, 2018 and authorized the repurchase of shares up to a maximum amount of $500 million. Subject to the terms of the Board's authorization and applicable law, repurchases may be made at such times and in such amounts as the Company deems appropriate. Repurchases may be discontinued at any time.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

EXHIBIT NO.	DESCRIPTION OF EXHIBIT
10.1*	Form of Severance and Change-in-Control Agreement
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, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018, (ii) Condensed Consolidated Statements of Earnings for the three months ended March 31, 2019 and 2018, (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2019 and 2018, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018, and (v) the Notes to Condensed Consolidated Financial Statements.
*Filed herewith.

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SIGNATURES

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

		AARON’S, INC.
			(Registrant)
Date:	April 25, 2019	By:	/s/ Steven A. Michaels
			Steven A. Michaels
			Chief Financial Officer,
			President Strategic Operations
			(Principal Financial Officer)
Date:	April 25, 2019	By:	/s/ Robert P. Sinclair, Jr.
			Robert P. Sinclair, Jr.
			Vice President,
			Corporate Controller
			(Principal Accounting Officer)

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EX-10.1

FORM OF SEVERANCE AND CHANGE-IN-CONTROL AGREEMENT

THIS SEVERANCE AND CHANGE-IN-CONTROL AGREEMENT (this “Agreement”), dated as of _____________________, 2019(the “Effective Date”), is made by and between Aaron’s, Inc., a corporation organized under the laws of the State of Georgia (the “Company”) and ________________ (“Executive”).

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity of Executive, notwithstanding the possibility, threat or occurrence of a termination of employment or the occurrence of a Change in Control (as defined hereinbelow) of the Company;

WHEREAS, the Board believes that it is in the best interests of the Company and its stockholders to provide Executive with an incentive to continue Executive’s employment and to motivate Executive to maximize the value of the Company for the benefit of its stockholders; and

WHEREAS, the Board further believes that it is imperative to provide Executive with certain severance benefits upon Executive’s termination of employment and with certain additional benefits upon a Change in Control to provide Executive with enhanced financial security and incentive to remain with the Company.

NOW, THEREFORE, in consideration of the promises, agreements and conditions contained in this Agreement, the Company and Executive agree as follows:

SECTION I

DEFINITIONS

For the purposes of this Agreement the following definitions shall apply:

1.1“Accrued Obligations” means the sum of (a) Executive’s Annual Salary through the Date of Termination to the extent not already paid, and (b) Executive’s business expenses that are reimbursable in accordance with the Company’s policies and for which Executive submits for reimbursement within thirty (30) calendar days following the Date of Termination, but have not been reimbursed by the Company as of the Date of Termination.

1.2“Affiliate” means any entity controlled by, controlling, or under common control with, the Company.

1.3“Annual Bonus” means Executive’s annual bonus under the Company’s or Affiliate’s annual bonus program, as in effect from time to time, in which Executive is covered, if any.

1.4 “Annual Salary” means Executive’s annual base salary, exclusive of any bonus pay, commissions or other additional compensation, in effect on the Date of Termination.

1.5“Board” means the Board of Directors of the Company.

1.6“Cause” means:

(a)the commission by Executive of an act of fraud, embezzlement, theft or proven dishonesty, or any other illegal act or practice (whether or not resulting in criminal prosecution or conviction);

(b)the willful engaging by Executive in misconduct which is deemed by the Board, in good faith, to be materially injurious to the Company or an Affiliate, monetarily or otherwise; or

(c)the willful and continued failure or habitual neglect by Executive to perform Executive’s duties with the Company or an Affiliate substantially in accordance with the operating and personnel policies and procedures of the Company or Affiliate generally applicable to all of their employees.

No act or failure to act by Executive shall be deemed to be “willful” unless done or omitted to be done by Executive not in good faith and without reasonable belief that Executive’s action or omission was in the best interest of the Company and/or an Affiliate. “Cause” under either (a), (b) or (c) shall be determined by the Board in its sole discretion.

1.7“Change in Control” means:

(a)The acquisition (other than from the Company) by any person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (but without regard to any time period specified in Rule 13d-3(d)(l)(i))), of thirty-five percent (35%) or more of the combined voting power of then outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); excluding, however, (1) any acquisition by the Company or (2) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate;

(b)A majority of the members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or

(c)Consummation by the Company of a reorganization, merger, or consolidation or sale of all or substantially all of the assets of the Company (a “Transaction”); excluding, however, a Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Company Voting Securities immediately prior to such Transaction will beneficially own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors of the corporation resulting from such Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Transaction, of the Outstanding Company Voting Securities.

Provided, however, a Change in Control shall not be deemed to occur unless the Transaction also constitutes a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, each as defined in Section 409A(a)(2)(A)(v) of the Code and the regulations promulgated thereunder.

1.8“Change in Control Protection Period” means the period commencing on a Change in Control and ending on the second anniversary thereof.

1.9“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to time.

1.10“Code” means the Internal Revenue Code of 1986, as amended from time to time.

1.11“Company” means Aaron’s, Inc., its successors and assigns, or, following a Change in Control, the surviving entity resulting from such event.

1.12 “Date of Termination” means the effective date of Executive’s termination of employment with the Company or its Affiliates.

1.13“Disability” shall be deemed the reason for the termination by the Company of Executive’s employment if Executive, due to physical or mental injury or illness, is unable to perform the essential functions of Executive’s position with or without reasonable accommodation for a period of one hundred eighty (180) days, whether or not consecutive, occurring within any period of twelve (12) consecutive months, subject to any limitation imposed by federal, state or local laws, including, without limitation, the Americans with Disabilities Act. Eligibility for disability benefits under any policy for long-term disability benefits provided to Executive by the Company, or a determination of total disability by the Social Security Administration, shall conclusively establish Executive’s Disability. Any purported termination for Disability that does not follow the notice provisions set forth in Section 1.15 shall be deemed not to be a termination for Disability.

1.14“Good Reason” means, without Executive’s express written consent, the occurrence of any of the following circumstances:

(a)A material diminution in Executive’s Annual Salary other than as a result of an across-the-board base salary reduction similarly affecting other executives of the Company;

(b)A material diminution in Executive’s authority, duties, or responsibilities;

(c)A material change in the geographic location at which Executive must perform services for the Company or its Affiliates (for this purpose, the relocation of Executive’s principal office location to a location more than fifty (50) miles from its current location will be deemed to be material); or

(d)A material breach of this Agreement by the Company;

provided that any of the events described above shall constitute Good Reason only if (i) Executive provides the Company written notice of the existence of the event or circumstances constituting Good Reason (with sufficient specificity for the Company to respond to such claim) within sixty (60) days of the initial existence of such event or circumstances, (ii) Executive cooperates in good faith with the Company’s efforts to cure such event or circumstance for a period not less than thirty (30) days following Executive’s notice to the Company (the “Cure Period”), (iii) notwithstanding such efforts, the Company fails to cure such event or circumstances prior to the end of the Cure Period, and (iv) Executive terminates employment with the Company and all Affiliates of the Company within sixty (60) days after the end of the Cure Period.

1.15“Notice of Termination” means the written notice of termination of Executive’s employment that is communicated in accordance with Article VIII of the Agreement. If the Company terminates Executive for Cause or Disability, the Notice of Termination shall specify in reasonable detail the grounds for the termination for Cause or Disability; provided that Executive’s employment shall terminate immediately upon Executive’s death and a Notice of Termination shall not be required.

1.16“Section 409A” shall mean Section 409A of the Code and any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section 409A by the U.S. Department of Treasury. 

1.17“Target Bonus” means Executive’s annual target bonus under the Company’s or Affiliate’s annual bonus program, as in effect from time to time, in which Executive is covered, if any.

SECTION II

TERM OF AGREEMENT

2.1This Agreement shall become effective on the Effective Date and shall continue in effect for a three (3) year term (the “Term”). To the extent not previously terminated, the Term shall be automatically renewed for successive one (1) year periods upon the terms and conditions set forth herein, commencing at the end of the initial Term, and on each annual anniversary thereafter, unless either party gives the other party notice at least ninety (90) calendar days prior to the end of such initial or applicable renewal Term that the Term shall not be so extended. For purposes of this Agreement, any reference to the “Term” of this Agreement shall include the original term and any renewal thereof. Notwithstanding the foregoing, upon the execution of a definitive agreement for a Change in Control or the consummation of a Change in Control, the Term shall be automatically extended so that the Term shall continue in full force and effect until the second anniversary of the consummation of the Change in Control. If the definitive agreement for the Change in Control is terminated prior to consummation, the automatic extension described in the previous sentence shall not apply. Executive’s employment with the Company is “at will” and may be terminated by the Company for any reason in its sole and absolute discretion in accordance with any applicable provision of Article III and the payment or provision of such benefits as may be required under this Agreement.

SECTION III

SEVERANCE PAYMENTS AND BENEFITS

3.1Change in Control Protection Period.

a.During the Term, if, during a Change in Control Protection Period, (1) the Company shall terminate Executive’s employment other than for Cause, Disability or death, or (2) Executive shall terminate employment for Good Reason, then the Company shall pay or provide the following amounts and benefits to Executive, in addition to the Accrued Obligations:

i.Severance Payments. On the sixtieth (60^th) day following the Date of Termination, Executive will be paid a lump sum payment in an amount equal to two (2) times the sum of (x) Executive’s Annual Salary in effect immediately prior to the Date of Termination or, if higher, immediately prior to the Change in Control, plus (y) Executive’s Target Bonus in effect immediately prior to the Date of Termination or, if higher, immediately prior to the Change in Control.

ii.Bonus for Year of Termination. On the sixtieth (60^th) day following the Date of Termination, Executive will be paid a lump sum cash payment in an amount equal to the product of (x) the average Annual Bonus earned by Executive for the two (2) calendar years immediately preceding the year in which the Date of Termination occurs, and (y) a fraction, the numerator of which is the number of days from January 1 of the year during which the Date of Termination occurs to the Date of Termination and the denominator of which is three hundred and sixty five (365).

iii.Vacation. On the sixtieth (60th) day following the Date of Termination, Executive will be paid a lump sum cash payment in an amount equal to Executive’s accrued, unused vacation time (if any), to the extent not previously paid.

iv.COBRA Payments. On the sixtieth (60^th) day following the Date of Termination, Executive will be paid a lump sum payment in an amount equal to the product of (x) Executive’s monthly premium amount for health insurance continuation coverage for Executive and Executive’s eligible dependents under COBRA (based on the monthly premium rate for such coverage in effect on the Date of Termination) and (y) twenty four (24).

v.Stock Options and Other Equity Awards. As of the Date of Termination, any and all outstanding stock options, stock appreciation rights, restricted stock units and other equity based awards granted to Executive under any Company stock plan shall be become fully vested (to the extent not already then vested) and exercisable or settled, as applicable, to the extent provided under the terms of the applicable Company stock plan and award agreements.

In the event of Executive’s death following the Date of Termination and before all payments or benefits Executive is entitled to receive under this Section 3.1 have been paid, such unpaid amounts will be paid to Executive’s estate in a lump-sum payment within thirty (30) days following Executive’s death.

b.If (i) Executive is terminated by the Company without Cause, or an event constituting Good Reason occurs, following the public announcement of a definitive agreement that, when consummated, would constitute a Change in Control, and (ii) such Change in Control is consummated, then the termination or event constituting Good Reason will be deemed

to occur within the Change in Control Protection Period, and Executive may exercise Executive’s rights under Section 3.1 following the consummation of such Change in Control.

3.2Outside of Change in Control Protection Period.

a.If, during the Term, (1) the Company shall terminate Executive’s employment other than for Cause, Disability or death, or (2) Executive shall terminate employment for Good Reason, in either case other than during a Change in Control Protection Period, then the Company shall pay or provide the following amounts and benefits to Executive, in addition to the Accrued Obligations:

i.Annual Salary and Target Bonus Continuation Payments. Commencing on the Company’s first normal payroll date which is on or immediately follows the sixtieth (60^th) day following the Date of Termination, Executive will (x) continue to receive Executive’s Annual Salary in effect immediately prior to the Date of Termination for a period of twenty four (24) months following the Date of Termination, and (y) be paid an amount equal to one-twelfth (1/12th) of the Executive’s Target Bonus in effect on the Date of Termination in each of the twenty four (24) months following the Date of Termination, payable in normal payroll periods, in the same manner as it was paid as of the Date of Termination, and no less frequently than monthly; provided, however, any payments that would otherwise be payable during the period following the Date of Termination until the payment commencement date shall be accumulated without interest and paid on such commencement date.

ii.Vacation. On the sixtieth (60th) day following the Date of Termination, Executive will be paid a lump sum cash payment in an amount equal to Executive’s accrued, unused vacation time (if any), to the extent not previously paid.

In the event of Executive’s death following the Date of Termination and before all payments or benefits Executive is entitled to receive under this Section 3.2 have been paid, such unpaid amounts will be paid to Executive’s estate in a lump-sum payment within thirty (30) days following Executive’s death.

3.3Voluntary Resignation without Good Reason. If, during the Term, Executive voluntarily resigns Executive’s employment without Good Reason, Executive will be paid the Accrued Obligations. No additional amounts or benefits shall be payable or provided under this Agreement.

3.4Termination Due to Disability or Death. If Executive’s employment with the Company is terminated due to Executive’s Disability or death, Executive (or the Executive’s estate, if applicable) will be paid the Accrued Obligations and an additional amount equal to the product of (x) Executive’s Annual Bonus for the year in which the Date of Termination occurs based on actual results, and (y) a fraction, the numerator of which is the number of days from January 1 of the year during which the Date of Termination occurs to the Date of Termination and the denominator of which is three hundred and sixty five (365). The pro rata Annual Bonus, if any, will be paid at the same time such amount would otherwise have been paid to Executive. No additional amounts or benefits shall be payable or provided under this Agreement.

3.5Release. Notwithstanding anything contained in this Agreement to the contrary, the Company shall not be obligated to provide any benefits to Executive under Section 3.1, 3.2, 3.3 or 3.4 hereof unless: (a) Executive first executes no later than forty-five (45) calendar days after the Date of Termination a general release of the Company and Affiliates and their respective employees, officers and directors in such form as is requested by the Company, (b) Executive does not revoke such general release within seven (7) days after signature, and (c) the release becomes effective and irrevocable in accordance with its terms.

3.6Exclusive Severance Benefit. Notwithstanding anything contained in this Agreement to the contrary, and except as specifically provided below, any severance payments or benefits received by Executive pursuant to this Agreement shall be in lieu of any benefits under the Executive Severance Pay Plan of Aaron’s, Inc. (as may be in effect from time to time) or any other severance or reduction-in-force plan, program, policy, agreement or other similar arrangement maintained by the Company or an Affiliate from time to time and in lieu of any severance or separation pay benefit that may be required under applicable law; provided, however, the exclusion provided in this Section 3.6 shall not include any equity award agreement, retirement or deferred compensation plan or similar plan or agreement which may provide benefits upon the termination of Executive’s employment. Executive shall not be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under this Agreement.

3.7Tax Withholding. The Company shall deduct from payments to be paid to Executive or any beneficiary all federal, state and local withholding and other taxes and charges required to be deducted under applicable law.

3.8Coordination with WARN Act. To the extent that the Company determines that Executive’s termination may be subject to the Worker Adjustment and Retraining Notification Act or any other similar federal, state or local law regarding mass employment separations (collectively, “WARN Act”), notwithstanding any other provision of this Agreement, the Company shall endeavor to comply with the WARN Act, to the extent applicable, by giving notice of the termination (“WARN Act Notice”) at least sixty (60) days in advance of the termination date. The period between the WARN Act Notice date and the termination date is hereinafter referred to as “WARN Act Notice Period.” The Company’s determination that Executive may be subject to the

WARN Act and/or any corresponding actions taken or statements made are not an admission or indication that any WARN Act or WARN Act obligations are applicable, triggered, invoked or owed and do not waive or otherwise hinder the Company’s ability to argue the WARN Act does not apply or to take other similar positions.

The Company may excuse Executive from work during all or part of the WARN Act Notice Period and provide Executive with a payment or payments intended to satisfy all or part of any potential WARN Act obligations, including those during the WARN Act Notice Period. If this occurs, any payments or benefits under this Agreement shall be reduced and offset by and may be coordinated with any payment(s) Executive receives during the WARN Act Notice Period. After any reduction and offset, the Company will provide the remaining benefits (subject to the release requirement described in Section 3.5) to Executive.

If Executive is not excused from work following the WARN Act Notice date, the regular salary or wages paid to Executive during the WARN Act Notice Period will constitute Executive’s usual compensation and not a benefit under this Agreement.

3.9No Duplication. In no event shall payments and benefits provided in accordance with this Agreement be made in respect of more than one of Section 3.1, 3.2, 3.3 or 3.4.

SECTION IV

TAX INFORMATION

4.1Section 280G Parachute Payments. Notwithstanding any provision of this Agreement to the contrary, if any payment or benefit to be paid or provided hereunder would be a “Parachute Payment,” within the meaning of Section 280G of the Code, or any successor provision thereto, but for the application of this sentence, then the payments and benefits to be paid or provided hereunder shall be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes a Parachute Payment; provided, however, that the foregoing reduction shall not be made if the total of the unreduced aggregate payments and benefits to be provided to Executive, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code, or any successor provision thereto, any tax imposed by any comparable provision of state law, and any applicable federal, state and local income taxes), exceeds by at least ten percent (10%) the total after-tax amount of such aggregate payments and benefits after application of the foregoing reduction. The determination of whether any reduction in such payments or benefits to be provided hereunder is required pursuant to the preceding sentence shall be made at the expense of the Company, if requested by Executive or the Company, by the Company’s independent accountants. The fact that Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section shall not of itself limit or otherwise affect any other rights of Executive under this Agreement. In the event that any payment or benefit intended to be provided hereunder is required to be reduced pursuant to this Section and no such payment or benefit qualifies as a “deferral of compensation” within the meaning of and subject to Section 409A (“Nonqualified Deferred Compensation”), Executive shall be entitled to designate the payments and/or benefits to be so reduced in order to give effect to this Section. The Company shall provide Executive with all information reasonably requested by Executive to permit Executive to make such designation. In the event that any payment or benefit intended to be provided hereunder is required to be reduced pursuant to this Section and any such payment or benefit constitutes Nonqualified Deferred Compensation or Executive fails to elect an order in which payments or benefits will be reduced pursuant to this Section, then the reduction shall occur in the following order: (a) reduction of cash payments described in Sections 3.1 and 3.2 (with such reduction being applied to the payments in the reverse order in which they would otherwise be made, that is, later payments shall be reduced before earlier payments); (b) cancellation of acceleration of vesting on any equity awards for which the exercise price exceeds the then fair market value of the underlying equity; and (c) cancellation of acceleration of vesting of equity awards not covered under (b) above. Within any category of payments and benefits (that is, (a), (b) or (c)), a reduction shall occur first with respect to amounts that are not Nonqualified Deferred Compensation within the meaning of Section 409A and then with respect to amounts that are. In the event that acceleration of vesting of equity awards is to be cancelled, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of such equity awards, that is, later equity awards shall be canceled before earlier equity awards.

4.2Section 409A.

a.Section 409A imposes payment restrictions on “nonqualified deferred compensation” (potentially including payments owed to Executive upon termination of employment). Failure to comply with these restrictions could result in negative tax consequences to Executive. It is the Company’s intent that this Agreement be exempt from the application of, or otherwise comply with, the requirements of Section 409A. Specifically, any taxable benefits or payments provided under this Agreement are intended to be separate payments that qualify for the “short-term deferral” exception to Section 409A to the maximum extent possible and, to the extent they do not so qualify, are intended to qualify for the separation pay exceptions to Section 409A to the maximum extent possible. To the extent that none of these exceptions applies, and to the extent that the Company determines it is necessary to comply with Section 409A (e.g., if Executive is a “specified employee” within the meaning of Section 409A), then notwithstanding any provision in this Agreement to the contrary, all amounts that would otherwise be paid or provided to Executive during the first six months following the Date of Termination shall instead be accumulated through and paid or provided (without interest) on the first business day that is more than six (6) months after Executive’s separation from service.

b.A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits subject to Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A and Executive is no longer providing services (at a level that would preclude the occurrence of a “separation from service” within the meaning of Section 409A) to the Company or its Affiliates as an employee or consultant, and for purposes of any such provision of this Agreement, references to the “Date of Termination,” a “termination,” “termination of employment” or like terms shall mean “separation from service” within the meaning of Section 409A.

c.Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company. In the event the payment period under this Agreement for any nonqualified deferred compensation commences in one calendar year and ends in a second calendar year, the payments shall not be paid (or installments commenced) until the later of the first payroll date of the second calendar year, or the date that the release described in Section 3.5 becomes effective and irrevocable, to the extent necessary to comply with Section 409A. For purposes of Section 409A, Executive’s right to receive installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.

d.Although the Company will use its best efforts to avoid the imposition of taxation, interest and penalties under Section 409A, the tax treatment of the benefits provided under this Agreement is not warranted or guaranteed. Neither the Company, its Affiliates nor their respective directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Executive (or any other individual claiming a benefit through Executive) as a result of this Agreement.

SECTION V

RESTRICTIVE COVENANTS

5.1Executive acknowledges and agrees that the restrictions set forth in this Section V are reasonable and necessary to protect the legitimate business interests of the Company, and they will not impair or infringe upon Executive’s right to work or earn a living when Executive’s employment with the Company ends for any reason, and (i) Executive (1) served the Company as a Key Employee; and/or (2) served the Company as a Professional; and/or (3) customarily and regularly solicited Customers and/or Prospective Customers for the Company; and/or (4) customarily and regularly engaged in making sales or obtaining orders or contracts for products or services to be provided or performed by others in the Company; and/or (5) (A) had a primary duty of managing a department or subdivision of the Company, (B) customarily and regularly directed the work of two or more other employees, and (C) had the authority to hire or fire other employees; and/or (ii) Executive’s position was a position of trust and responsibility with access to (1) Confidential Information, (2) Trade Secrets, (3) information concerning Employees of the Company, (4) information concerning Customers of the Company, and/or (5) information concerning Prospective Customers of the Company.

a.Trade Secrets and Confidential Information. Executive shall not: (i) use, disclose, reverse engineer, divulge, sell, exchange, furnish, give away, or transfer in any way the Trade Secrets or the Confidential Information for any purpose other than the Company’s Business, except as authorized in writing by the Company; (ii) retain any Trade Secrets or Confidential Information, including any copies existing in any form (including electronic form) that are in Executive’s possession or control, or (iii) destroy, delete, or alter the Trade Secrets or Confidential Information without the Company’s prior written consent. The obligations under this subsection shall: (i) with regard to the Trade Secrets, remain in effect as long as the information constitutes a trade secret under applicable law; and (ii) with regard to the Confidential Information, remain in effect for so long as such information constitutes Confidential Information as defined in this Agreement. The confidentiality, property, and proprietary rights protections set forth in this Agreement are in addition to, and not exclusive of, any and all other rights to which the Company is entitled under federal and state law, including, but not limited to, rights provided under copyright laws, trade secret and confidential information laws, and laws concerning fiduciary duties. Notwithstanding anything to the contrary set forth in this Agreement, pursuant to the Defend Trade Secrets Act of 2016 (18 U.S.C. § 1833(b)(1)), no individual shall be held criminally or civilly liable under federal or state law for the disclosure of a trade secret that: (1) is made (x) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (y) solely for the purpose of reporting or investigating a suspected violation of law; or (2) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

b.Non-Solicitation of Customers. During the Restricted Period, Executive shall not, directly or indirectly, solicit any Customer of the Company for the purpose of selling or providing any products or services competitive with the Business. The restrictions set forth in this subsection shall apply only to those Customers (a) with whom or which Executive dealt on behalf of the Company, (b) whose dealings with the Company were coordinated or supervised by Executive, (c) about whom Executive obtained Confidential Information in the ordinary course of business as a result of Executive’s association with the Company, or (d) who received products or services authorized by the Company, the sale or provision of which resulted in compensation, commissions, or earnings for Executive within two (2) years prior to the Date of Termination.

c.Non-Solicitation of Prospective Customers. During the Restricted Period, Executive shall not, directly or indirectly, solicit any Prospective Customer of the Company for the purpose of selling or providing any products or services competitive with the Business. The restrictions set forth in this subsection shall apply only to those Prospective Customers (i) with whom or which Executive dealt on behalf of the Company, (ii) whose dealings with the Company were coordinated or supervised by Executive, or (iii) about whom Executive obtained Confidential Information in the ordinary course of business as a result of Executive’s association with the Company.

d.Non-Recruit of Employees. During the Restricted Period, Executive shall not, directly or indirectly, solicit, recruit, or induce any Employee to (i) terminate his or her employment relationship with the Company, or (ii) work for any other person or entity engaged in the Business. For the avoidance of doubt, the foregoing restriction shall prohibit Executive from disclosing to any third party the names, background information, or qualifications of any Employee, or otherwise identifying any Employee as a potential candidate for employment. The restrictions set forth in this subsection shall apply only to Employees (a) with whom Executive had Material Interaction, or (b) Executive, directly or indirectly, supervised.

e.Non-Competition. During the Restricted Period, Executive shall not, on Executive’s own behalf or on behalf of any person or entity, engage in the Business within the Territory; provided, however, that Executive may work for a competitor within the Territory and during the Restricted Period if Executive first obtains express written permission from the Chief Executive Officer or the Board. For purposes of this subsection, the term “engage in the Business” shall include: (a) performing or participating in any activities which are the same as, or substantially similar to, activities which Executive performed or in which Executive participated, in whole or in part, for or on behalf of the Company; (b) performing activities or services about which Executive obtained Confidential Information or Trade Secrets as a result of Executive’s association with the Company; and/or (c) interfering with or negatively impacting the business relationship between the Company and a Customer, Prospective Customer, or any other third party about whom Executive obtained Confidential Information or Trade Secrets as a result of Executive’s association with the Company.

f.Definitions. For purposes of this Section V only, the capitalized terms shall be defined as follows:

i.“Business” means (x) those activities, products, and services that are the same as or similar to the activities conducted and products and services offered and/or provided by the Company within two (2) years prior to the Date of Termination, and (y) (1) renting, leasing, and/or selling new or reconditioned residential furniture, consumer electronics, computers (including hardware, software, and accessories), appliances, household goods, and home furnishings; provided, however, that for the purposes of this Agreement the Business shall not include selling new goods or merchandise by Executive or on behalf of or as an employee of any entity or individual that has no involvement in rental, leasing, rent-to-own, or similar activity related to such goods or merchandise either on its own, through a subsidiary or affiliated entity or person, or in partnership with any other entity or person; (2) designing, manufacturing, and/or reconditioning of residential furniture of a type especially suited to the leasing, rental, and sales business; and (3) providing any other activities, products, or services of the type conducted, authorized, offered, or provided by the Company as of the Date of Termination, or during the one (1) year period immediately prior to the Date of Termination.

Companies engaged in the Business include, but are not limited to, (i) the following entities and each of their parents, owners, subsidiaries, affiliates, franchisees, assigns, or successors in interest or persons with any of the listed Companies or trade names below, which Executive acknowledges and agrees directly compete with the Company: AcceptanceNow; American First Finance, Inc.; American Rental; Bi-Rite Co., d/b/a Buddy’s Home Furnishings; Bestway Rental, Inc.; Better Finance, Inc.; billfloat; Bluestem Brands, Inc.; Conn’s, Inc.; Crest Financial; Curacao Finance; Discovery Rentals; Easyhome, Inc.; Flexi Compras Corp.; FlexShopper LLC; Fortiva Financial, LLC; Genesis Financial Solutions, Inc.; Lendmark Financial Services, Inc.; Mariner Finance, LLC; Merchants Preferred Lease-Purchase Services; New Avenues, LLC; Okinus; Premier Rental-Purchase, Inc.; OneMain Financial Holdings, Inc.; Purchasing Power, LLC; Regional Management Corp.; Rent-A-Center, Inc. (including, but not limited to, Colortyme); Santander Consumer USA Inc.; SmartPay Leasing, Inc.; Springleaf Financial; TEMPOE; Tidewater Finance Company; and WhyNotLeaseIt, and/or (ii) the franchisees of the Company.

ii.“Confidential Information” means: (1) information of the Company, to the extent not considered a Trade Secret under applicable law, that: (A) relates to the business of the Company, (B) was disclosed to Executive or of which Executive became aware of as a consequence of Executive’s relationship with the Company, (D) possesses an element of value to the Company, and (D) is not generally known to the Company’s competitors, and (2) information of any third party provided to the Company which the Company is obligated to treat as confidential, including, but not limited to, information provided to the Company by its licensors, suppliers or customers. Confidential Information includes, but is not limited to: (I) methods of operation, (II) price lists, (III) financial information and projections, (IV) personnel data, (V) future business plans, (VI) the composition, description, schematic or design of products, future products or equipment of the Company or any third party, (VII) advertising or marketing plans, (VIII) information regarding independent contractors, employees, clients, licensors, suppliers, Customers, Prospective Customers or any third party, including, but not limited to, the names of Customers and Prospective Customers, Customer and Prospective Customer lists compiled by the Company, and Customer and Prospective Customer information compiled by the Company, and (IX) personal information concerning owners and members of the Company.

Confidential Information shall not include any information that: (x) is or becomes generally available to the public other than as a result of an unauthorized disclosure, (y) has been independently developed and disclosed by others without violating this Agreement or the legal rights of any party, or (z) otherwise enters the public domain through lawful means.

iii.“Customer” means any person or entity to which the Company has sold its products or services.

iv.“Employee” means any person who (i) is employed by the Company on the Date of Termination, or (ii) was employed by the Company during the last year of Executive’s employment with the Company.

v.“Key Employee” means that, by reason of the Company’s investment of time, training, money, trust, exposure to the public, or exposure to Customers, vendors, or other business relationships during the course of Executive’s employment with the Company, Executive will gain a high level of notoriety, fame, reputation, or public persona as the Company’s representative or spokesperson, or will gain a high level of influence or credibility with the Company’s Customers, vendors, or other business relationships, or will be intimately involved in the planning for or direction of the business of the Company or a defined unit of the business of the Company. Such term also means that Executive will possess selective or specialized skills, learning, or abilities or customer contacts or customer information by reason of having worked for the Company.

vi.“Material Interaction” means any interaction with an Employee which related, directly or indirectly, to the performance of Executive’s duties or the Employee’s duties for the Company.

vii.“Professional” means an employee who has a primary duty the performance of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction or requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor. Such term shall not include employees performing technician work using knowledge acquired through on-the-job and classroom training, rather than by acquiring the knowledge through prolonged academic study, such as might be performed, without limitation, by a mechanic, a manual laborer, or a ministerial employee.

viii.“Prospective Customer” means any person or entity to which the Company has solicited to purchase the Company’s products or services.

ix.“Restricted Period” means twenty-four (24) months after the Date of Termination.

x.“Territory” means within each of the following discrete, severable, geographic areas:

(A)any state or province in which Executive performed services for or on behalf of the Company during the last two (2) years of Executive’s employment with the Company (or during Executive’s employment if employed less than two (2) years); and/or if this subclause or any portion thereof is found to be unenforceable;

(B)the United States of America (including the following states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming, as well as the District of Columbia) and Canada (including the following provinces: Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Quebec, and Saskatchewan; and/or if this subclause or any portion thereof is found to be unenforceable;

(C)Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wyoming, the District of Columbia, Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Quebec, and Saskatchewan; and/or if this subclause or any portion thereof is found to be unenforceable;

(D)the state of Georgia; and/or if this subclause or any portion thereof is found to be unenforceable;

(E)the Metropolitan Statistical Area of Atlanta-Sandy Springs-Roswell, Georgia as designated by the Office of Management and Budget and used by the U.S. Census Bureau in its most recent census as of the Date of Termination; and/or if this clause of any portion thereof is found to be unenforceable;

(F)the counties of Fulton, Gwinnett, Cobb, Dekalb, Clayton, Cherokee, Henry, Forsyth, Paulding, Douglas, Coweta, Carroll, Fayette, Newton, Barton, Rockdale, Walton, Barrow, Spalding, Pickens, Haralson, Butts, Dawson, Meriwether, Lamar, Morgan, Pile, Jasper, and Heard, Georgia; and/or if this subclause or any portion thereof is found to be unenforceable;

(G)the city of Atlanta, Georgia; and/or if this subclause or any portion thereof is found to be unenforceable;

(H)a fifteen (15) air mile radius of 400 Galleria Parkway SE, Suite 300, Atlanta, Georgia 30339.

The Company and Executive acknowledge and agree that the Territory described above (i) represents a good faith estimate of the geographic areas that are applicable at the time of termination of Executive’s employment; (ii) shall be construed ultimately to cover only so much of such estimate as relates to the geographic areas actually involved within a reasonable period of time prior to Executive’s termination; and (iii) is drafted in such a way that a court may modify the definition and grant only the relief reasonably necessary to protect such legitimate business interests.

xi.“Trade Secrets” means information of the Company, and its licensors, suppliers, clients, and customers, without regard to form, including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, a list of actual customers, clients, licensors, or suppliers, or a list of potential customers, clients, licensors, or suppliers which is not commonly known by or available to the public and which information (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

5.2Injunctive Relief. If Executive breaches or threatens to breach any portion of this Agreement, Executive agrees that: (a) the Company would suffer irreparable harm; (b) it would be difficult to determine damages, and money damages alone would be an inadequate remedy for the injuries suffered by the Company; and (c) if the Company seeks injunctive relief to enforce this Agreement, Executive shall waive and shall not (i) assert any defense that the Company has an adequate remedy at law with respect to the breach, (ii) require that the Company submit proof of the economic value of any Trade Secret or Confidential Information, or (iii) require the Company to post a bond or any other security. Nothing contained in this Agreement shall limit the Company’s right to any other remedies at law or in equity.

5.3Independent Enforcement. Each of the covenants set forth in Section 5.1 above shall be construed as an agreement independent of (a) each of the other covenants set forth in Section 5.1, (b) any other agreements, or (c) any other provision in this Agreement, and the existence of any claim or cause of action by Executive against the Company, whether predicated on this Agreement or otherwise, regardless of who was at fault and regardless of any claims that either Executive or the Company may have against the other, shall not constitute a defense to the enforcement by the Company of any of the covenants set forth in Section 5.1 above. The Company shall not be barred from enforcing any of the covenants set forth in Section 5.1 above by reason of any breach of (i) any other part of this Agreement, or (ii) any other agreement with Executive.

5.4Protected Rights. Nothing contained in this Agreement limits Executive’s ability to file a charge or complaint with the Equal Employment Opportunity Commission or any other federal, state or local governmental agency or commission (collectively, “Government Agencies”), or prevents Executive from providing truthful testimony in response to a lawfully issued subpoena or court order. Further, this Agreement does not limit Executive’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company.

5.5Survival of Restrictive Covenants. Upon termination of Executive’s employment for any reason whatsoever (whether voluntary on the part of Executive, for Cause, or other reasons), the obligations of Executive pursuant to Article V shall survive and remain in effect for the periods described herein.

SECTION VI

DISPUTES

6.1Arbitration.

a.Rules; Jurisdiction. Any controversy, dispute or claim between the parties, including any controversy, dispute or claim arising out of, relating to or concerning this Agreement, the breach of this Agreement, the employment of Executive, or the termination of Executive’s employment (a “Disputed Matter”) will be resolved pursuant to this Article VI. Any such controversy, dispute or claim will be settled in Atlanta, Georgia, in accordance with the applicable rules of the American Arbitration Association (the “AAA”) then in effect; provided, however, that a breach of the obligations under Article V may be enforced by an action for injunctive relief and damages in a court of competent jurisdiction. If the rules of the AAA differ from any provisions of this Agreement, the provisions of this Agreement will control.

b.Terms of Arbitration. The arbitrator chosen in accordance with these provisions shall not have the power to alter, amend or otherwise affect the terms of these arbitration provisions or the provisions of this Agreement except as otherwise expressly provided herein.

c.Binding Effect. The arbitrator will have the authority to grant only such equitable and legal remedies that would be available in any judicial proceeding instituted to resolve a Disputed Matter, and the decision of the arbitrator within the scope of the submission will be final and conclusive upon the parties. Judgment upon any award rendered by the arbitrator may be entered in any court having subject matter jurisdiction to render such judgment. In the event any provision of this Article VI is found to be unenforceable for any reason by a court or an arbitrator, the court or arbitrator, as the case may be, shall reform this Article VI to the extent necessary to render it enforceable.

d.Time for Arbitration. Any demand for arbitration involving an alleged breach of this Agreement shall be filed within one (1) year of the date the claim became known or should have become known; provided, however, any claim involving an alleged statutory obligation may be filed with the AAA and served on the other party at any time within the period covered by the applicable statute of limitations.

e.Payment of Costs. To the extent permitted by applicable law, each party hereby agrees to pay one half the arbitrator’s fees, the costs of transcripts and all other expenses of the arbitration proceedings; provided, however, that the arbitrator shall have the authority to determine payment of costs as part of the award or to allocate costs in accordance with the AAA rules.

f.Burden of Proof; Basis of Decision. For any claim submitted to arbitration, the burden of proof shall be as it would be if the claim were litigated in a judicial proceeding except where otherwise specifically provided in this Agreement, and the decision shall be based on the application of the law of the State of Georgia (as determined from statutes, court decisions and other recognized authorities) to the facts found by the arbitrator.

SECTION VII

SUCCESSORS

7.1In addition to any obligations imposed by law upon any successor to the Company, the Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. The provisions of this Article VII shall continue to apply to each subsequent employer of Executive bound by this Agreement in the event of any merger, consolidation or transfer of all or substantially all of the business or assets of that subsequent employer.

7.2This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

SECTION VIII

NOTICES

8.1For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by (1) United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt; or (2) personal delivery to the Chief Executive Officer:

To the Company:     

Aaron’s, Inc.

400 Galleria Parkway SE, Suite 300

Atlanta, Georgia 30339

Attention: Chief Executive Officer

Copy to (which shall not constitute notice):

Aaron’s, Inc.

400 Galleria Parkway SE, Suite 300

Atlanta, Georgia 30305-2377

Attention: VP, Compensation & Benefits

To Executive: At Executive’s most recent mailing address in the records of the Company, or at Executive’s employee email address (during employment)

SECTION IX

MISCELLANEOUS

9.1Any compensation paid or payable to Executive pursuant to this Agreement which is subject to recovery under any law, government regulation, order or stock exchange listing requirement, will be subject to such deductions and clawback (recovery) as may be required to be made pursuant to law, government regulation, order, stock exchange listing requirement (or any policy of the Company adopted from time to time). Executive specifically authorizes the Company to withhold from future salary or wages any amounts that may become due under this provision. This Section 9.1 shall survive the termination of this Agreement for a period of three (3) years.

9.2This Agreement embodies the entire agreement of the Company and Executive relating to separation or severance pay and, except as specifically provided herein, no provisions of any employee manual, personnel policies, corporate directives or other agreement or document shall be deemed to modify the terms of this Agreement. Except as otherwise provided in Section 5.10, no amendment or modification of this Agreement shall be valid or binding upon Executive or the Company unless made in writing and signed by the Company and Executive. This Agreement supersedes all prior understandings and agreements addressing severance or separation pay to which Executive and the Company or an Affiliate are or were parties, including any previous change in control agreement, severance plan, offer letter provisions, or other employment agreements.

9.3No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

9.4No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. 

9.5The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

9.6The Agreement shall be construed, administered and governed in all respects under and by the applicable laws of the State of Georgia.

9.7This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

[Signature page follows. Remainder of page left intentionally blank.]

[Signature page to Severance and Change-in-Control Agreement]

IN WITNESS WHEREOF, the parties have signed this Agreement as of the date set forth above.

AARON’S, INC.

By:    ____________________________________________

Name: __________________________________________

Title: ___________________________________________

Date: ___________________________________________

EXECUTIVE

________________________________________________

Date: ___________________________________________

EX-31.1

EXHIBIT 31.1

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

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

Date:	April 25, 2019	/s/ John W. Robinson III
		John W. Robinson III
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

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

	I, 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:	April 25, 2019	/s/ Steven A. Michaels
		Steven A. Michaels
		Chief Financial Officer,
		President Strategic Operations

EX-32.1

EXHIBIT 32.1

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

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

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

The Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2019 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

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

Date:	April 25, 2019	/s/ John W. Robinson III
		John W. Robinson III
		Chief Executive Officer

EX-32.2

EXHIBIT 32.2

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

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

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

The Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2019 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

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

Date:	April 25, 2019	/s/ Steven A. Michaels
		Steven A. Michaels
		Chief Financial Officer,
		President Strategic Operations

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	Apr. 19, 2019
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
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 Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding (in shares)		67,677,449

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
ASSETS:
Cash and Cash Equivalents	$ 124,154	$ 15,278
Accounts Receivable (net of allowances of $56,785 in 2019 and $62,704 in 2018)	84,037	98,159
Lease Merchandise (net of accumulated depreciation and allowances of $808,056 in 2019 and $816,928 in 2018)	1,301,066	1,318,470
Loans Receivable (net of allowances and unamortized fees of $18,925 in 2019 and $19,941 in 2018)	72,564	76,153
Property, Plant and Equipment at Cost (net of accumulated depreciation of $291,750 in 2019 and $284,287 in 2018)	228,864	229,492
Operating Lease Right-of-Use Assets	370,282
Goodwill	734,558	733,170
Other Intangibles (net of accumulated amortization of $138,308 in 2019 and $130,116 in 2018)	216,559	228,600
Income Tax Receivable	13,401	29,148
Prepaid Expenses and Other Assets	92,481	98,222
Total Assets	3,237,966	2,826,692
LIABILITIES & SHAREHOLDERS’ EQUITY:
Accounts Payable and Accrued Expenses	246,779	293,153
Deferred Income Taxes Payable	279,224	267,500
Customer Deposits and Advance Payments	83,610	80,579
Operating Lease Liabilities	406,559
Debt	408,286	424,752
Total Liabilities	1,424,458	1,065,984
Commitments and Contingencies (Note 6)
SHAREHOLDERS' EQUITY:
Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at March 31, 2019 and December 31, 2018; Shares Issued: 90,752,123 at March 31, 2019 and December 31, 2018	45,376	45,376
Additional Paid-in Capital	270,727	278,922
Retained Earnings	2,061,651	2,005,344
Accumulated Other Comprehensive Loss	(663)	(1,087)
Stockholders' Equity before Treasury Stock, Total	2,377,091	2,328,555
Less: Treasury Shares at Cost
Common Stock: 23,074,674 Shares at March 31, 2019 and 23,567,979 at December 31, 2018	(563,583)	(567,847)
Total Shareholders’ Equity	1,813,508	1,760,708
Total Liabilities & Shareholders’ Equity	$ 3,237,966	$ 2,826,692

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Accounts receivable, allowances	$ 56,785	$ 62,704
Lease Merchandise, accumulated depreciation and allowances	808,056	816,928
Loans Receivable, allowances and unamortized fees	18,925	19,941
Property, Plant and Equipment at Cost, accumulated depreciation	291,750	284,287
Other Intangibles, accumulated amortization	$ 138,308	$ 130,116
Common Stock, Par Value (in dollars per share)	$ 0.50	$ 0.50
Common Stock, Shares Authorized (in shares)	225,000,000	225,000,000
Common Stock, Shares Issued (in shares)	90,752,123	90,752,123
Treasury Shares (in shares)	23,074,674	23,567,979

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement of Comprehensive Income [Abstract]
Net Earnings	$ 56,078	$ 52,246
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustment	424	(477)
Total Other Comprehensive Income (Loss)	424	(477)
Comprehensive Income	$ 56,502	$ 51,769

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Condensed Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
REVENUES:
Revenues	$ 1,012,103	$ 954,809
COSTS AND EXPENSES:
Depreciation of Lease Merchandise	500,820	440,008
Operating Expenses	387,216	390,232
Restructuring Expenses, Net	13,281	906
Other Operating Income, Net	(897)	(83)
Costs and Expenses, Total	938,248	884,745
OPERATING PROFIT	73,855	70,064
Interest Income	101	202
Interest Expense	(4,956)	(4,326)
Other Non-Operating Income, Net	1,308	812
EARNINGS BEFORE INCOME TAXES	70,308	66,752
INCOME TAXES	14,230	14,506
NET EARNINGS	$ 56,078	$ 52,246
EARNINGS PER SHARE
Basic (in dollars per share)	$ 0.83	$ 0.75
Assuming Dilution (in dollars per share)	0.82	0.73
CASH DIVIDENDS DECLARED PER SHARE:
Common Stock (in dollars per share)	$ 0.035	$ 0.0300
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic (in shares)	67,294	70,105
Assuming Dilution (in shares)	68,773	72,018
Lease Revenues and Fees
REVENUES:
Revenues	$ 944,157	$ 870,067
Retail Sales
REVENUES:
Revenues	12,809	8,516
COSTS AND EXPENSES:
Cost of Sales	8,632	5,662
Non-Retail Sales
REVENUES:
Revenues	36,981	53,230
COSTS AND EXPENSES:
Cost of Sales	29,196	48,020
Franchise Royalties and Fees
REVENUES:
Revenues	9,207	12,862
Interest and Fees on Loans Receivable
REVENUES:
Revenues	8,646	9,542
Other
REVENUES:
Revenues	$ 303	$ 592

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
OPERATING ACTIVITIES:
Net Earnings	$ 56,078	$ 52,246
Adjustments to Reconcile Net Earnings to Cash Provided by Operating Activities:
Depreciation of Lease Merchandise	500,820	440,008
Other Depreciation and Amortization	26,562	22,115
Accounts Receivable Provision	63,235	51,458
Provision for Credit Losses on Loans Receivable	4,255	4,492
Stock-Based Compensation	7,549	8,519
Deferred Income Taxes	10,861	23,201
Impairment of Assets	10,492	0
Amortization of Right of Use Assets	25,802
Other Changes, Net	883	(1,014)
Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions:
Additions to Lease Merchandise	(580,089)	(514,055)
Book Value of Lease Merchandise Sold or Disposed	98,257	98,797
Accounts Receivable	(50,467)	(33,591)
Prepaid Expenses and Other Assets	1,550	(6,022)
Income Tax Receivable	15,747	68,214
Operating Lease Liabilities	(27,890)
Accounts Payable and Accrued Expenses	(1,854)	(21,598)
Customer Deposits and Advance Payments	2,947	3,806
Cash Provided by Operating Activities	164,738	196,576
INVESTING ACTIVITIES:
Investments in Loans Receivable	(14,493)	(14,598)
Proceeds from Loans Receivable	14,482	15,135
Proceeds from Investments	0	666
Outflows on Purchases of Property, Plant and Equipment	(23,807)	(17,254)
Proceeds from Property, Plant and Equipment	511	2,731
Outflows on Acquisitions of Businesses and Customer Agreements, Net of Cash Acquired	(3,470)	(4,774)
Proceeds from Dispositions of Businesses and Customer Agreements, Net of Cash Disposed	755	144
Cash Used in Investing Activities	(26,022)	(17,950)
FINANCING ACTIVITIES:
Repayments on Revolving Facility, Net	(16,000)	0
Repayments on Debt	(575)	(10,511)
Dividends Paid	(2,366)	(2,111)
Acquisition of Treasury Stock	0	(18,407)
Issuance of Stock Under Stock Option Plans	1,996	3,182
Shares Withheld for Tax Payments	(12,977)	(12,343)
Debt Issuance Costs	0	(55)
Cash Used in Financing Activities	(29,922)	(40,245)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	82	(8)
Increase in Cash and Cash Equivalents	108,876	138,373
Cash and Cash Equivalents at Beginning of Period	15,278	51,037
Cash and Cash Equivalents at End of Period	$ 124,154	$ 189,410

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Basis and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

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") is a leading omnichannel provider of lease-purchase solutions. As of March 31, 2019, the Company's operating segments are Progressive Leasing, Aaron's Business and DAMI.

Progressive Leasing is a virtual lease-to-own company that provides lease-purchase solutions in 46 states and the District of Columbia. It does so by purchasing merchandise from third-party retailers desired by those retailers' customers and, in turn, leasing that merchandise to the customers through a lease-to-own transaction. Progressive Leasing consequently has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional and e-commerce retailers.

The following table presents invoice volume for Progressive Leasing:

For the Three Months Ended March 31 (Unaudited and In Thousands)	2019		2018
Progressive Leasing Invoice Volume1	$	394,727	$	345,562

¹ Invoice volume is defined as the retail price of lease merchandise acquired and then leased to customers during the period, net of returns.

The Aaron's Business segment 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 its e-commerce platform. This operating segment also supports franchisees of its Aaron's-branded stores. In addition, the Aaron's Business segment includes the operations of Woodhaven Furniture Industries ("Woodhaven"), which manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in Company-operated and franchised stores.

The Company acquired the store operations of two franchisees during the three months ended March 31, 2019. Refer to Note 2 to these condensed consolidated financial statements.

The following table presents store count by ownership type for the Aaron's Business operations:

Stores as of March 31 (Unaudited)	2019	2018
Company-operated Aaron's Branded Stores	1,230	1,182
Franchised Stores	369	537
Systemwide Stores	1,599	1,719

DAMI partners with merchants to provide a variety of revolving credit products originated through two third-party federally insured banks to customers that may not qualify for traditional prime lending (called "second-look" financing programs).

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 unidentified 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 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 for the year ended December 31, 2018 (the "2018 Annual Report") filed with the U.S. Securities and Exchange Commission on February 14, 2019. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of operating results for the full year.

Principles of Consolidation

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.

Accounting Policies and Estimates

See Note 1 to the consolidated financial statements in the 2018 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 ("RSUs"), restricted stock awards ("RSAs") and performance share units ("PSUs") (collectively, "share-based awards") as determined under the treasury stock method. The following table shows the calculation of dilutive share-based awards:

	Three Months Ended   March 31,
(Shares In Thousands)	2019	2018
Weighted Average Shares Outstanding	67,294	70,105
Dilutive Effect of Share-Based Awards	1,479	1,913
Weighted Average Shares Outstanding Assuming Dilution	68,773	72,018

Approximately 443,000 and 187,000 weighted-average share-based awards were excluded from the computation of earnings per share assuming dilution during the three months ended March 31, 2019 and 2018, respectively, as the awards would have been anti-dilutive for the periods presented.

Revenue Recognition

Lease Revenues and Fees

The Company provides merchandise, consisting primarily of furniture, consumer electronics, home appliances and accessories, to its customers for lease under certain terms agreed to by the customer. The Company's Progressive Leasing segment offers virtual lease-purchase solutions, typically over 12 months, to the customers of traditional and e-commerce retailers. The Company's Aaron's-branded stores and its e-commerce platform offer leases with month-to-month terms that can be renewed up to 12, 18 or 24 months. The Company does not require deposits upon inception of customer agreements. The customer has the right to acquire ownership either through a purchase option or through payment of all required lease payments.

Progressive lease revenues are earned prior to the lease payment due date and are recorded net of related sales taxes as earned. Revenue recorded prior to the payment due date results in unbilled accounts receivable in the accompanying condensed consolidated balance sheets. Beginning January 1, 2019, Progressive lease revenues are recorded net of a provision for returns and uncollectible renewal payments.

Aaron's Business lease revenues are recognized as revenue net of related sales taxes in the month they are earned. Lease payments received prior to the month earned are recorded as deferred lease revenue, and this amount is included in customer deposits and advance payments in the accompanying condensed consolidated balance sheets. Aaron's Business lease revenues are recorded net of a provision for returns and uncollectible renewal payments.

All of the Company's customer agreements are considered operating leases. The Company maintains ownership of the lease merchandise until all payment obligations are satisfied under sales and lease ownership agreements. Initial direct costs related to Progressive Leasing's lease purchase agreements are capitalized as incurred and amortized as operating expense over the estimated lease term. The capitalized costs have been classified within prepaid expenses and other assets in the accompanying condensed consolidated balance sheets. Initial direct costs related to Aaron's Business customer agreements are expensed as incurred and have been classified as operating expenses in the Company's condensed consolidated statements of earnings. The statement of earnings effects of expensing the initial direct costs of the Aaron's Business as incurred are not materially different from amortizing initial direct costs over the lease term.

Retail and Non-Retail Sales

Revenues from the retail sale of merchandise to customers are recognized at the point of sale. Revenues for the non-retail sale of merchandise to franchisees are recognized when control transfers to the franchisee, which is upon delivery of the merchandise.

Substantially all of the amounts reported as non-retail sales and non-retail cost of sales in the accompanying condensed consolidated statements of earnings relate to the sale of lease merchandise to franchisees. The Company classifies the sale of merchandise to other customers as retail sales in the condensed consolidated statements of earnings.

Franchise Royalties and Fees

The Company has no current plans to franchise additional Aaron's stores. Current franchisees pay an ongoing royalty of 6% of the weekly cash revenue collections, which is recognized as the fees become due. The Company received a non-refundable initial franchise fee from current franchisees from $15,000 to $50,000 per store depending upon market size. Franchise fees and area development fees were generated from the sale of rights to develop, own and operate sales and lease ownership stores and pre-opening services provided by Aaron's to assist in the start-up operations of the stores. The Company considers the rights to the intellectual property and the pre-opening services to be a single performance obligation, resulting in the recognition of revenue ratably over time from the store opening date throughout the remainder of the franchise agreement term. The Company believes that this period of time is most representative of the time period in which the franchisee realizes the benefits of having the right to access the Company's intellectual property.

The Company guarantees certain debt obligations of some of the franchisees and receives guarantee fees based on the outstanding debt obligations of such franchisees. Refer to Note 6 of these condensed consolidated financial statements for additional discussion of the Company's franchise-related guarantee obligation. The Company also charges fees for advertising efforts that benefit the franchisees. Such fees are recognized at the time the advertising takes place and are presented as franchise royalties and fees in the Company's condensed consolidated statements of earnings.

Initial direct costs related to the pre-opening services provided to franchisees are immaterial and are expensed as incurred. These expenses have been classified as operating expenses in the Company's condensed consolidated statements of earnings.

Interest and Fees on Loans Receivable

DAMI extends or declines credit to an applicant through its bank partners based upon the applicant's credit rating and other factors. Qualifying applicants receive a credit card to finance their initial purchase and to use in subsequent purchases at the merchant or other participating merchants for an initial 24-month period, which DAMI may renew if the cardholder remains in good standing.

DAMI acquires the loan receivable from merchants through its third-party bank partners at a discount from the face value of the loan. The discount is comprised of a merchant fee discount and a promotional fee discount, if applicable.

The merchant fee discount represents a pre-negotiated, nonrefundable discount that generally ranges from 3% to 25% of the loan face value. The discount is designed to cover the risk of loss related to the portfolio of cardholder charges and DAMI's direct origination costs. The merchant fee discount and origination costs are presented net on the condensed consolidated balance sheet in loans receivable. Cardholders generally have an initial 24-month period that the card is active. The merchant fee discount, net of the origination costs, is amortized on a net basis and is recorded as interest and fee revenue on loans receivable in the condensed consolidated statements of earnings on a straight-line basis over the initial 24-month period.

The discount from the face value of the loan on the acquisition of the loan receivable from the merchant through the third-party bank partners may also include a promotional fee discount, which generally ranges from 1% to 8%. The promotional fee discount is intended to compensate the holder of the loan receivable (i.e. DAMI) for deferred or reduced interest rates that are offered to the cardholder for a specified period on the outstanding loan balance (generally for six, 12 or 18 months). The promotional fee discount is amortized as interest and fee revenue on loans receivable in the condensed consolidated statements of earnings on a straight-line basis over the promotional interest period (i.e., over six, 12 or 18 months, depending on the promotion). The unamortized promotional fee discount is netted on the condensed consolidated balance sheet in loans receivable.

The customer is typically required to make periodic minimum payments of at least 3.5% of the outstanding loan balance, which includes outstanding interest. Fixed and variable interest rates, typically 25% to 35.99%, are compounded daily for cards that do not qualify for deferred or reduced interest promotional periods. Interest income, which is recognized based upon the amount of the loans outstanding, is recognized as interest and fees on loans receivable in the billing period in which they are assessed if collectability is reasonably assured. For credit cards that provide for deferred or reduced interest, if the balance is not paid off during the promotional period, interest is billed to the customers at standard rates and the cumulative amount owed is charged to the cardholder account in the month that the promotional period expires or defaults. The Company recognizes interest revenue during the promotional period based on its historical experience related to cardholders that fail to pay off balances during the promotional period.

Annual fees are charged to cardholders at the commencement of the loan and on each subsequent anniversary date. Annual fees are deferred and recognized into revenue on a straight-line basis over a one-year period. Under the provisions of the credit card agreements, the Company also may assess fees for service calls or for missed or late payments, which are recognized as revenue in the billing period in which they are assessed if collectability is reasonably assured. Annual fees and other fees discussed are recognized as interest and fee revenue on loans receivable in the condensed consolidated statements of earnings.

Accounts Receivable

Accounts receivable consist primarily of receivables due from customers of Progressive Leasing and Company-operated stores, corporate receivables incurred during the normal course of business (primarily for real estate leasing activities and vendor consideration) and franchisee obligations.

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

(In Thousands)	March 31, 2019		December 31, 2018
Customers	$	54,517	$	60,879
Corporate	13,405		18,171
Franchisee	16,115		19,109
Accounts Receivable	$	84,037	$	98,159

The Company maintains an accounts receivable allowance, which primarily relates to its Progressive Leasing operations and the Aaron's Business operations. The Company’s policy for its Progressive Leasing segment is to record an allowance for returns and uncollectible renewal payments based on historical collection experience. During 2019, the Company adopted ASU 2016-02, Leases ("ASC 842") which resulted in the Progressive Leasing provision for returns and uncollectible renewal payments being recorded as a reduction of lease revenue and fees within the condensed consolidated statements of earnings beginning January 1, 2019. The provision for returns and uncollectible renewal payments for periods prior to 2019 are reported herein as bad debt expense within operating expenses in the condensed consolidated statement of earnings. The Progressive Leasing segment writes off lease receivables that are 120 days or more contractually past due.

For the Aaron's Business operations, contractually required lease payments are accrued when due. The Aaron's Business policy is to record a provision for returns and uncollectible contractually due renewal payments based on historical collection experience, which is recognized as a reduction of lease revenues and fees within the condensed consolidated statement of earnings. Aaron's Business write-off of lease receivables that are 60 days or more past due occur on pre-determined dates twice monthly.

DAMI's allowance for uncollectible merchant accounts receivable, which primarily relates to cardholder returns and refunds, is recorded as bad debt expense within operating expenses in the condensed consolidated statement of earnings.

The following table shows the amounts recognized for bad debt expense and provision for returns and uncollected payments:

	Three Months Ended March 31,
(In Thousands)	2019		2018
Bad Debt Expense1	$	1,125	$	46,542
Provision for Returns and Uncollectible Renewal Payments2	62,110		4,916
Accounts Receivable Provision	$	63,235	$	51,458

¹ Bad debt expense is recorded within operating expenses in the condensed consolidated financial statements.

² In accordance with the adoption of ASC 842, Progressive Leasing provision for returns and uncollectible renewal payments are recorded as a reduction to lease revenues and fees within the condensed consolidated financial statements beginning January 1, 2019. Prior to January 1, 2019, Progressive Leasing provision for returns and uncollectible renewal payments were recorded as bad debt expense within operating expenses in the condensed consolidated financial statements.

Lease Merchandise

The Company's lease merchandise consists primarily of furniture, consumer electronics, home appliances, jewelry, and accessories and is recorded at the lower of cost or net realizable value. The cost of merchandise manufactured by our Woodhaven operations is recorded at cost and includes overhead from production facilities, shipping costs and warehousing costs. The Company's Progressive Leasing segment, at which substantially all merchandise is on lease, depreciates merchandise generally over 12 months. The Company's Aaron's Business segment begins depreciating merchandise at the earlier of 12 months and one day or when the item is leased. Aaron's Business depreciates merchandise to a 0% salvage value over the lease agreement period when on lease, generally 12 to 24 months, and generally 36 months when not on lease. Depreciation is accelerated upon early payout.

The following is a summary of lease merchandise, net of accumulated depreciation and allowances:

(In Thousands)	March 31, 2019		December 31, 2018
Merchandise on Lease	$	1,022,902	$	1,053,684
Merchandise Not on Lease	278,164		264,786
Lease Merchandise, net of Accumulated Depreciation and Allowances	$	1,301,066	$	1,318,470

The Company's policies require weekly lease merchandise counts at its store-based operations, which include write-offs for unsalable, damaged, or missing merchandise inventories. In addition to monthly cycle counting, full physical inventories are generally taken at the fulfillment and manufacturing facilities annually and appropriate provisions are made for missing, damaged and unsalable merchandise. In addition, the Company monitors lease merchandise levels and mix by division, store, and fulfillment center, as well as the average age of merchandise on hand. If obsolete lease merchandise cannot be returned to vendors, its carrying amount is adjusted to its net realizable value or written off.

Generally, 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 a provision for write-offs 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. The provision for write-offs is included in operating expenses in the accompanying condensed consolidated statements of earnings.

The following table shows the components of the allowance for lease merchandise write-offs:

	Three Months Ended March 31,
(In Thousands)	2019			2018
Beginning Balance	$	46,694		$	35,629
Merchandise Written off, net of Recoveries	(53,222		)	(40,511		)
Provision for Write-offs	56,995			44,470
Ending Balance	$	50,467		$	39,588

Loans Receivable, Net

Gross loans receivable represents the principal balances of credit card charges at DAMI's participating merchants that remain due from cardholders, plus unpaid interest and fees due from cardholders. The allowances and unamortized fees represents an allowance for uncollectible amounts; merchant fee discounts, net of capitalized origination costs; promotional fee discounts; and deferred annual card fees.

Loans acquired in the October 15, 2015 DAMI acquisition (the "Acquired Loans") were recorded at their estimated 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 were included in the determination of fair value; therefore, an allowance for loan losses and an amount for unamortized fees were 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 interest and fees on loans receivable 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.

Losses on loans receivable are recognized when they are incurred, which requires the Company to make its best estimate of probable losses inherent in the portfolio. The Company evaluates loans receivable collectively for impairment. The method for calculating the best estimate of probable losses takes into account the Company's historical experience, adjusted for current conditions and the Company's judgment concerning the probable effects of relevant observable data, trends and market factors. Economic conditions and loan performance trends are closely monitored to manage and evaluate exposure to credit risk. Trends in delinquency ratios are an indicator of credit risk within the loans receivable portfolio, including the migration of loans between delinquency categories over time. Charge-off rates represent another indicator of the potential for future credit losses. The risk in the loans receivable portfolio is correlated with broad economic trends, such as unemployment rates, gross domestic product growth and gas prices, which can have a material effect on credit performance. To the extent that actual results differ from estimates of uncollectible loans receivable, the Company's results of operations and liquidity could be materially affected.

The Company calculates the allowance for loan losses based on actual delinquency balances and historical average loss experience on loans receivable by aging category for the prior eight quarters. The allowance for loan losses is maintained at a level considered adequate to cover probable losses of principal, interest and fees on active loans in the loans receivable portfolio. The adequacy of the allowance is evaluated at each period end.

Delinquent loans receivable are those that are 30 days or more past due based on their contractual billing dates. The Company places loans receivable on nonaccrual status when they are greater than 90 days past due or upon notification of cardholder bankruptcy, death or fraud. The Company discontinues accruing interest and fees and amortizing merchant fee discounts and promotional fee discounts for loans receivable in nonaccrual status. Loans receivable are removed from nonaccrual status when cardholder payments resume, the loan becomes 90 days or less past due and collection of the remaining amounts outstanding is deemed probable. Payments received on nonaccrual loans are allocated according to the same payment hierarchy methodology applied to loans that are accruing interest. Loans receivable are charged off at the end of the month following the billing cycle in which the loans receivable become 120 days past due.

DAMI extends or declines credit to an applicant through its bank partners based upon the applicant's credit rating and other factors. Below is a summary of the credit quality of the Company's loan portfolio as of March 31, 2019 and December 31, 2018 by Fair Isaac and Company (FICO) score as determined at the time of loan origination:

FICO Score Category	March 31, 2019		December 31, 2018
600 or Less	4.1	%	3.7	%
Between 600 and 700	79.0	%	77.9	%
700 or Greater	16.9	%	18.4	%

Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist of the following:

(In Thousands)	March 31, 2019		December 31, 2018
Prepaid Expenses	$	27,467	$	30,763
Prepaid Insurance	24,072		27,948
Assets Held for Sale	8,974		6,589
Deferred Tax Asset	8,761		8,761
Other Assets	23,207		24,161
Prepaid Expenses and Other Assets	$	92,481	$	98,222

Assets Held for Sale

Certain properties, consisting of parcels of land and commercial buildings, met the held for sale classification criteria as of March 31, 2019 and December 31, 2018. Assets held for sale are recorded at the lower of their carrying value or fair value less estimated cost to sell and are classified within prepaid expenses and other assets in the condensed consolidated balance sheets. Depreciation is suspended on assets upon classification to held for sale.

The carrying amount of the properties held for sale as of March 31, 2019 and December 31, 2018 is $9.0 million and $6.6 million, respectively. The Company estimated the fair values of real estate properties using the market values for similar properties. These properties are considered Level 2 assets as defined below.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

(In Thousands)	March 31, 2019		December 31, 2018
Accounts Payable	$	71,751	$	88,369
Accrued Insurance Costs	39,181		40,423
Accrued Salaries and Benefits	45,832		40,790
Accrued Real Estate and Sales Taxes	30,749		30,332
Deferred Rent1	—		27,270
Other Accrued Expenses and Liabilities1	59,266		65,969
Accounts Payable and Accrued Expenses	$	246,779	$	293,153

¹ Amounts as of March 31, 2019 were impacted by the January 1, 2019 adoption of ASC 842. Upon transition to ASC 842, the remaining balances of the Company's deferred rent, lease incentives, and closed store reserve were reclassified as a reduction to the operating lease right-of-use asset in the accompanying condensed consolidated balance sheet.

Debt

At March 31, 2019, the Company was in compliance with all covenants related to its outstanding debt. See Note 7 to the consolidated financial statements in the 2018 Annual Report for further information regarding the Company's indebtedness.

Stockholders' Equity

Changes in stockholders' equity for the three months ended March 31, 2019 and 2018 are as follows:

	Treasury Stock					Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
(In Thousands, Except Per Share)	Shares		Amount
Balance, December 31, 2018	(23,568	)	$	(567,847	)	$	45,376	$	278,922		$	2,005,344		$	(1,087	)	$	1,760,708
Opening Balance Sheet Adjustment - ASC 842, net of taxes	—		—			—		—			2,592			—			2,592
Cash Dividends, $0.035 per share	—		—			—		—			(2,363		)	—			(2,363		)
Stock-Based Compensation	—		—			—		7,050			—			—			7,050
Reissued Shares	493		4,264			—		(15,245		)	—			—			(10,981		)
Net Earnings	—		—			—		—			56,078			—			56,078
Foreign Currency Translation Adjustment	—		—			—		—			—			424			424
Balance, March 31, 2019	(23,075	)	$	(563,583	)	$	45,376	$	270,727		$	2,061,651		$	(663	)	$	1,813,508

	Treasury Stock					Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
(In Thousands, Except Per Share)	Shares		Amount
Balance, December 31, 2017	(20,733	)	$	(407,713	)	$	45,376	$	270,043		$	1,819,524		$	774		$	1,728,004
Opening Balance Sheet Adjustment - ASC 606, net of taxes	—		—			—		—			(1,729		)	—			(1,729		)
Cash Dividends, $0.03 per share	—		—			—		—			(2,146		)	—			(2,146		)
Stock-Based Compensation	—		—			—		7,862			—			—			7,862
Reissued Shares	545		3,441			—		(12,602		)	—			—			(9,161		)
Repurchased Shares	(391	)	(18,407		)	—		—			—			—			(18,407		)
Net Earnings	—		—			—		—			52,246			—			52,246
Foreign Currency Translation Adjustment	—		—			—		—			—			(477		)	(477		)
Balance, March 31, 2018	(20,579	)	$	(422,679	)	$	45,376	$	265,303		$	1,867,895		$	297		$	1,756,192

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, 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, net of allowances, and the revolving credit borrowings also approximate their carrying amounts.

Related Party Transactions

Aaron Ventures I, LLC, which we refer to as "Aaron Ventures," was formed in December 2002 for the purpose of acquiring properties from the Company and leasing them back to the Company and is controlled by certain of the Company’s current and former executives. Aaron Ventures purchased a combined total of 21 properties from the Company in 2002 and 2004, and leased the properties back to the Company. As of March 31, 2019, the Company has two remaining capital leases and four remaining operating leases with Aaron Ventures with lease expiration dates between 2019 and 2026. The two capital leases have aggregate annual rental payments of approximately $0.1 million. The rate of interest implicit in the leases is approximately 9.7%. The land and buildings, associated depreciation expense and lease obligations are recorded in the Company's condensed consolidated financial statements. The four operating leases have aggregate annual rental payments of approximately $0.2 million.

Supplemental Disclosure of Noncash Investing Transactions

During the three months ended March 31, 2018, the Company entered into transactions to acquire and sell certain customer agreements and related lease merchandise with third parties which are accounted for as asset acquisitions and asset disposals. The fair value of the non-cash consideration exchanged in these transactions was $0.4 million.

In addition, the purchase price for the acquisition of certain franchisees made during the three months ended March 31, 2019 and 2018 included the non-cash settlement of pre-existing accounts receivable the franchisees owed the Company of $0.1 million and $0.2 million, respectively. This non-cash consideration has been excluded from the line "Outflows on Acquisitions of Businesses and Customer Agreements, Net of Cash Acquired" in the investing activities section of the condensed consolidated statements of cash flows for the respective periods.

Hurricane Impact

During the third and fourth quarters of 2017, Hurricanes Harvey and Irma impacted the Company in the form of: (i) property damages (primarily in-store and on-lease merchandise, store leasehold improvements and furniture and fixtures) and employee assistance payments; (ii) increased customer-related accounts receivable allowances and lease merchandise allowances primarily in the impacted areas; (iii) lost lease revenue due to store closures of Aaron's Business and Progressive Leasing retail partners; and (iv) lost lease revenue due to the postponing of customer payments in the impacted areas.

During the three months ended March 31, 2019, the Company received cash payments of $2.7 million from its insurers related to the partial settlements of property damage and business interruption claims resulting from Hurricanes Harvey and Irma. Settled property damage claims that were in excess of the respective insurance receivable balances as well as business interruption proceeds resulted in gains of $0.9 million during the three months ended March 31, 2019. These gains were recorded within other operating income, net in the condensed consolidated statements of earnings. As of March 31, 2019, the Company has an insurance receivable of $0.7 million, which the Company believes is probable of receipt.

Recent Accounting Pronouncements

Adopted

Leases. In February 2016, the FASB issued ASU 2016-02, Leases ("ASC 842"), which requires lessees to recognize assets and liabilities for most leases and changes certain aspects of lessor accounting, among other things. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018. Companies must use a modified retrospective approach to adopt ASC 842; however, the Company adopted an optional transition method in which entities are permitted to not apply the requirements of ASC 842 in the comparative periods presented within the financial statements in the year of adoption, with recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The application of this optional transition method resulted in a cumulative-effect adjustment of $2.6 million representing an increase to the Company’s January 1, 2019 retained earnings balance, net of tax, due primarily to the recognition of deferred gains recorded under previous sale and operating leaseback transactions for which the ASC 842 transition guidance requires companies to recognize any deferred gains not resulting from off-market terms as a cumulative adjustment to retained earnings upon adoption of ASC 842.

As a lessor, a majority of the Company’s revenue generating activities are within the scope of ASC 842. The new standard did not materially impact the timing of revenue recognition. Effective January 1, 2019, ASC 842 resulted in the Company classifying the Progressive Leasing provision for returns and uncollectible renewal payments as a reduction of lease revenue and fees within the condensed consolidated statements of earnings. For periods reported herein prior to January 1, 2019 the Progressive Leasing provision for returns and uncollectible renewal payments was recorded as bad debt expense within operating expenses in the condensed consolidated statement of earnings. The Aaron’s Business provision for returns and uncollectible renewal payments has historically been and continues to be recorded as a reduction to lease revenue and fees. The Company has customer lease agreements with lease and non-lease components that fall within the scope of ASU 2014-09, Revenue from Contracts with Customers ("ASC 606"). The Company has elected to aggregate these components into a single component for all classes of underlying assets as the lease and non-lease components generally have the same timing and pattern of transfer.

The new standard also impacts the Company as a lessee by requiring substantially all of its operating leases to be recognized on the balance sheet as operating lease right-to-use assets and operating lease liabilities. See Note 5 to these condensed consolidated financial statements for further details regarding the Company’s leasing activities as a lessee. The Company elected to adopt a package of practical expedients offered by the FASB which removes the requirement to reassess whether expired or existing contracts contain leases and removes the requirement to reassess the lease classification for any existing leases prior to the adoption date of January 1, 2019. Additionally, the Company has elected the practical expedient to include both lease and non-lease components as a single component and account for it as a lease.

Cloud Computing Arrangements. In August 2018, the FASB issued ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The intent of the standard is to reduce diversity in practice in accounting for the costs of implementing cloud computing arrangements that are service contracts. Under the new standard, entities will be required to apply the accounting guidance as prescribed by ASC 350-40, Internal Use Software,in determining which implementation costs should be capitalized as assets or expensed as incurred. The internal-use software guidance requires the capitalization of certain costs incurred during the application development stage of an internal-use software project, while requiring companies to expense all costs incurred during preliminary project and post-implementation project stages. As a result, certain implementation costs which were previously expensed by the Company are now eligible for capitalization under ASU 2018-15. The standard may be applied either prospectively to all implementation costs incurred after the adoption date or retrospectively. ASU 2018-15 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The Company elected to early adopt ASU 2018-15 on a prospective basis during the three months ended March 31, 2019, and the impact to the condensed consolidated financial statements was not significant. Costs eligible for capitalization will be classified within prepaid expenses and other assets and operating expenses in the condensed consolidated balance sheets and statements of earnings, respectively.

Pending Adoption

Financial Instruments - Credit Losses. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments ("CECL"). The main objective of the update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by companies at each reporting date. For trade and other receivables, held to maturity debt securities and other instruments, companies will be required to use a new forward-looking "expected losses" model that generally will result in the recognition of allowances for losses earlier than under current accounting guidance. The standard will be adopted on a modified retrospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. ASU 2016-13 is effective for the Company in the first quarter of 2020.

The Company's operating lease activities within Aaron's Business and Progressive Leasing will not be impacted by ASU 2016-13, as operating lease receivables are not in the scope of the CECL model. The Company will be impacted by ASU 2016-13 within its DAMI segment by requiring earlier recognition of estimated credit losses in the consolidated statements of earnings. DAMI acquires loan receivables from merchants through its third-party bank partners at a discount from the face value of the loan, referred to as the "merchant fee discount." The merchant fee discount represents a pre-negotiated, nonrefundable discount that generally ranges from 3% to 25% of the loan face value, which is primarily intended to cover the risk of credit loss related to the portfolio of loans originated. Although the CECL model will require the estimated credit losses to be recognized at the time of loan origination, the related merchant fee discount will continue to be amortized as interest and fee revenue on a straight-line basis over the initial 24-month period that the card is active. Therefore, on a loan-by-loan basis, the Company expects higher losses to be recognized upon loan origination for the estimated credit losses, generally followed by higher net earnings as the related merchant fee discount is amortized to interest income, and as interest income is accrued and earned on the outstanding loan. Although the CECL model will result in earlier recognition of credit losses in the statement of earnings, no changes are expected related to the loan cash flows.

The Company has evaluated the guidance in ASU 2016-13 related to purchased financial assets with credit deterioration (“PCD Method”) and currently expects that its loans receivable would not qualify for the PCD Method as, generally, a more-than-insignificant deterioration in credit quality since origination does not occur.

The Company is continuing to evaluate the various impacts of CECL, including identifying changes to processes and procedures that will be necessary to adopt ASU 2016-13, and is in the process of identifying and testing potential software solutions to support the new accounting requirements for the Company's loans receivable. The Company is also evaluating whether it will choose to measure future loans at fair value under the fair value option as an alternative to CECL. The fair value option would result in the Company measuring loans at fair value on an instrument-by-instrument basis with changes in fair value reported in net earnings. Election of the fair value option could cause volatility in our reported results, primarily in periods with large fluctuations in interest rates. The Company is also evaluating emerging guidance which would allow companies to choose a one-time election of the fair value option for loans previously recorded at amortized cost under the current incurred loss model. As a result, we are continuing to evaluate transition options and alternatives available under ASU 2016-13.

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Acquisitions

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Acquisitions

ACQUISITIONS

Franchisee Acquisitions - 2018

During 2018, the Company acquired 152 Aaron's-branded franchised stores operated by franchisees for an aggregated purchase price of $189.8 million, exclusive of the settlement of pre-existing receivables and post-closing working capital settlements. The acquired operations generated revenues of $48.9 million and $1.3 million and earnings before income taxes of $3.0 million and $0.1 million during the three months ended March 31, 2019 and 2018, respectively which are included in our condensed consolidated statements of earnings. The results of the acquired operations were negatively impacted by acquisition-related transaction and transition costs and amortization expense of the various intangible assets recorded from the acquisitions. The revenues and earnings before income taxes of the acquired operations discussed above have not been adjusted for estimated non-retail sales and franchise royalties and fees and related expenses that the Company could have generated as revenue and expenses to the Company from the franchisees during the three months ended March 31, 2019 and 2018 had the transaction not been completed.

Acquisition Accounting

The 2018 acquisitions are benefiting the Company's omnichannel platform through added scale, strengthening its presence in certain geographic markets, and enhancing operational control, including compliance, and enabling the Company to execute its business transformation initiatives on a broader scale. The following table presents summaries of the preliminary fair value of the assets acquired and liabilities assumed in the franchisee acquisitions as of the respective acquisition dates:

(In Thousands)	Amounts Recognized as of Acquisition Dates (as of December 31, 2018)1			Acquisition Accounting Adjustments			Amounts Recognized as of Acquisition Dates (as of March 31, 2019)
Purchase Price	$	189,826		$	—		$	189,826
Add: Settlement of Pre-existing Relationship	5,405			—			5,405
Less: Working Capital Adjustments	155			—			155
Aggregated Consideration Transferred	195,386			—			195,386
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed
Cash and Cash Equivalents	43			7			50
Lease Merchandise	59,616			—			59,616
Property, Plant and Equipment	5,568			—			5,568
Other Intangibles2	24,530			(32		)	24,498
Prepaid Expenses and Other Assets	1,168			38			1,206
Total Identifiable Assets Acquired	90,925			13			90,938
Accounts Payable and Accrued Expenses	(852		)	(58		)	(910		)
Customer Deposits and Advance Payments	(5,156		)	—			(5,156		)
Total Liabilities Assumed	(6,008		)	(58		)	(6,066		)
Goodwill3	110,469			45			110,514
Net Assets Acquired	$	84,917		$	(45	)	$	84,872

¹ As previously reported in Note 2 to the consolidated financial statements in the 2018 Annual Report.

² Identifiable intangible assets are further disaggregated in the table set forth below.

³ The total goodwill recognized in conjunction with the franchisee acquisitions, all of which is expected to be deductible for tax purposes, has been assigned to the Aaron’s Business reporting unit. The purchase price exceeded the fair value of the net assets acquired, which resulted in the recognition of goodwill, primarily due to synergies created from the expected future benefits to the Company’s omnichannel platform, implementation of the Company’s operational capabilities, expected inventory supply chain synergies between the Aaron’s Business and Progressive Leasing, and control of the Company’s brand name in new geographic markets. Goodwill also includes certain other intangible assets that do not qualify for separate recognition, such as an assembled workforce.

The preliminary acquisition accounting presented above is subject to refinement. The Company is still finalizing the valuation of assumed favorable and unfavorable real estate operating leases based on comparable market terms of similar leases at the acquisition dates and obtaining additional information regarding other assets. The Company expects these items to be finalized prior to the one-year anniversary date of the acquisitions.

The estimated intangible assets attributable to the franchisee acquisitions are comprised of the following:

	Fair Value (in thousands)		Weighted Average Life (in years)
Non-compete Agreements	$	1,872	3.0
Customer Lease Contracts	7,876		1.0
Customer Relationships	10,087		3.0
Reacquired Franchise Rights	4,663		3.9
Total Acquired Intangible Assets1	$	24,498

¹ Acquired definite-lived intangible assets have a total weighted average life of 2.5 years.

The Company incurred $1.4 million of acquisition-related costs in connection with the franchisee acquisitions, substantially all of which were incurred during 2018. These costs were included in operating expenses in the condensed consolidated statements of earnings.

Other Acquisitions

In addition to the acquisitions discussed above, the Company acquired the store operations of two franchisees during the three months ended March 31, 2019.

Net cash outflows related to the acquisitions of other Aaron's franchisees, other rent-to-own store businesses, and customer contracts aggregated to$3.5 million and $4.8 million during the three months ended March 31, 2019 and 2018, respectively. The effect of these acquisitions on the condensed consolidated financial statements for the three months ended March 31, 2019 and 2018 was not significant.

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Fair Value Measurement

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurement

FAIR VALUE MEASUREMENT

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

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

(In Thousands)	March 31, 2019							December 31, 2018
	Level 1		Level 2			Level 3		Level 1		Level 2			Level 3
Deferred Compensation Liability	$	—	$	(10,790	)	$	—	$	—	$	(10,389	)	$	—

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 is recorded in accounts payable and accrued expenses in the condensed consolidated balance sheets. The liability representing benefits accrued for plan participants is valued at the quoted market prices of the participants’ investment elections, which consist of equity and debt "mirror" funds. As such, the Company has classified the deferred compensation liability as a Level 2 liability.

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

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

(In Thousands)	March 31, 2019						December 31, 2018
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets Held for Sale	$	—	$	8,974	$	—	$	—	$	6,589	$	—

Assets classified as held for sale are recorded at the lower of carrying value or fair value less estimated costs to sell, and any adjustment is recorded in other operating income, net or restructuring expenses, net (if the asset is a part of the Company's restructuring program as described in Note 8) in the condensed consolidated statements of earnings. The highest and best use of the assets held for sale is as real estate land parcels for development or real estate properties for use or lease; however, the Company has chosen not to develop or use these properties.

Certain Financial Assets and Liabilities Not Measured at Fair Value

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

(In Thousands)	March 31, 2019				December 31, 2018
	Level 1	Level 2		Level 3	Level 1	Level 2		Level 3
Fixed-Rate Long-Term Debt1	—	(184,835	)	—	—	(183,765	)	—

¹ The fair value of fixed-rate long-term debt is estimated using the present value of underlying cash flows discounted at a current market yield for similar instruments. The carrying amount of fixed-rate long-term debt was $180.0 million at March 31, 2019 and December 31, 2018, respectively.

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Loans Receivable

3 Months Ended

Mar. 31, 2019

Receivables [Abstract]

Loans Receivable

LOANS RECEIVABLE

The following is a summary of the Company’s loans receivable, net:

(In Thousands)	March 31, 2019			December 31, 2018
Credit Card Loans1	$	87,768		$	90,406
Acquired Loans2	3,721			5,688
Loans Receivable, Gross	91,489			96,094
Allowance for Loan Losses	(12,363		)	(12,970		)
Unamortized Fees	(6,562		)	(6,971		)
Loans Receivable, Net of Allowances and Unamortized Fees	$	72,564		$	76,153

¹ "Credit Card Loans" are loans originated after the 2015 acquisition of DAMI.

² "Acquired Loans" are credit card loans the Company purchased in the 2015 acquisition of DAMI.

Included in the table below is an aging of the loans receivable, gross balance:

(Dollar Amounts in Thousands)
Aging Category1	March 31, 2019			December 31, 2018
30-59 days past due	6.3		%	6.9		%
60-89 days past due	3.1		%	3.4		%
90 or more days past due	4.1		%	4.3		%
Past due loans receivable	13.5		%	14.6		%
Current loans receivable	86.5		%	85.4		%
Balance of Credit Card Loans on Nonaccrual Status	$	1,954		$	2,110
Balance of Loans Receivable 90 or More Days Past Due and Still Accruing Interest and Fees	$	—		$	—

¹ This aging is based on the contractual amounts outstanding for each loan as of period end, and does not reflect the fair value adjustments for the Acquired Loans.

The table below presents the components of the allowance for loan losses:

	Three Months Ended
(In Thousands)	March 31, 2019			March 31, 2018
Beginning Balance	$	12,970		$	11,454
Provision for Loan Losses	4,255			4,492
Charge-offs	(5,484		)	(5,619		)
Recoveries	622			372
Ending Balance	$	12,363		$	10,699

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Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

LEASES

Lessor Information

Refer to Note 1 to these condensed consolidated financial statements for further information about the Company's revenue generating activities as a lessor. All of the Company's customer agreements are considered operating leases, and the Company currently does not have any sales-type or direct financing leases.

Lessee Information

As a lessee, the Company leases retail store and warehouse space for most of its Aaron's Business store-based operations, call center space and hubs for its Progressive Leasing segment, and management and information technology space for corporate functions under operating leases expiring at various times through 2033. To the extent that a leased retail store or warehouse space is vacated prior to the termination of the lease, the Company may sublease these spaces to third parties while maintaining its primary obligation as the intermediate lessor. The Company leases transportation vehicles under operating and finance leases, most of which generally expire during the next three years. The transportation leases generally include a residual value that is guaranteed to the lessor, which ensures that the vehicles will be returned to the lessor in reasonable working condition. The Company also leases various IT equipment such as printers and computers under operating leases, most of which generally expire during the next three years. For all of its leases in which the Company is a lessee, the Company has elected to include both the lease and non-lease components as a single component and account for it as a lease.

Finance lease costs are comprised of the amortization of right-of-use assets and interest on lease liabilities, which are recorded within operating expenses and interest expense, respectively, in the Company’s condensed consolidated statements of earnings. Operating lease costs are recorded on a straight-line basis within operating expenses or restructuring expenses, net (if the lease costs are related to the Company's restructuring programs as described in Note 8) in the Company’s condensed consolidated statements of earnings. The Company’s total lease expense is comprised of the following:

	Three Months Ended
(In Thousands)	March 31, 2019
Finance Lease Cost:
Amortization of Right-of-Use Assets	$	465
Interest on Lease Liabilities	114
Total Finance Lease Cost:	579
Operating Lease Cost:
Operating Lease Cost Classified within Operating Expenses1	29,213
Operating Lease Cost Classified within Restructuring Expenses, Net	804
Sublease Receipts	(732		)
Total Operating Lease Cost:	29,285
Total Lease Cost	$	29,864

¹ Includes short-term and variable lease costs, which are not significant.

Additional information regarding the Company’s leasing activities as a lessee is as follows:

	Three Months Ended
(In Thousands)	March 31, 2019
Cash Paid for Amounts Included in Measurement of Lease Liabilities:
Operating Cash Flows for Finance Leases	$	113
Operating Cash Flows for Operating Leases	31,643
Financing Cash Flows for Finance Leases	574
Total Cash Paid for Amounts Included in Measurement of Lease Liabilities	32,330
Right-of-Use Assets Obtained in Exchange for New Finance Lease Liabilities	—
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities	$	6,587

Supplemental balance sheet information related to leases is as follows:

(In Thousands)	Balance Sheet Classification	March 31, 2019
Assets
Operating Lease Assets	Operating Lease Right-of-Use Assets	$	370,282
Finance Lease Assets	Property, Plant and Equipment, Net	2,578
Total Lease Assets		$	372,860
Liabilities
Operating Lease Liabilities	Operating Lease Liabilities	$	406,559
Finance Lease Liabilities	Debt	4,590
Total Lease Liabilities		$	411,149

Most of the Company’s real estate leases contain renewal options for additional periods ranging from one to 20 years or provide for options to purchase the related property at predetermined purchase prices that do not represent bargain purchase options. The Company currently does not have any real estate leases in which it considers the renewal options to be reasonably certain of exercise, as the Company's historical experience indicates that renewal options are not reasonably certain to be exercised, as well as contractual renewal rental rates that are considered to be in line with market rental rates and lack of significant economic penalties or business disruptions incurred by not exercising any renewal options.

The Company uses its incremental borrowing rate as the discount rate for its leases, as the implicit rate in the lease is not readily determinable. Below is a summary of the weighted-average discount rate and weighted-average remaining lease term for the Company’s finance and operating leases:

	Weighted Average Discount Rate1		Weighted Average Remaining Lease Term (in years)
Finance Leases	6.0	%	2
Operating Leases	3.6	%	5

¹ Upon adoption of ASC 842, discount rates for existing operating leases were established as of January 1, 2019.

Under the short-term lease exception provided within ASC 842, the Company does not record a lease liability or right-of-use asset for any leases that have a lease term of 12 months or less at commencement, including renewal options that the Company is reasonably certain to exercise, and do not include purchase options. Below is a summary of undiscounted finance and operating lease liabilities that have initial terms in excess of one year as of March 31, 2019. The table also includes a reconciliation of the future undiscounted cash flows to the present value of the finance and operating lease liabilities included in the condensed consolidated balance sheet.

(In Thousands)	Operating Leases		Finance Leases		Total
2019	$	89,172	$	2,407	$	91,579
2020	104,166		2,028		106,194
2021	81,568		772		82,340
2022	61,345		74		61,419
2023	40,967		—		40,967
Thereafter	75,891		—		75,891
Total Undiscounted Cash Flows	453,109		5,281		458,390
Less: Interest	46,550		691		47,241
Present Value of Lease Liabilities	$	406,559	$	4,590	$	411,149

Leases

LEASES

Lessor Information

Refer to Note 1 to these condensed consolidated financial statements for further information about the Company's revenue generating activities as a lessor. All of the Company's customer agreements are considered operating leases, and the Company currently does not have any sales-type or direct financing leases.

Lessee Information

As a lessee, the Company leases retail store and warehouse space for most of its Aaron's Business store-based operations, call center space and hubs for its Progressive Leasing segment, and management and information technology space for corporate functions under operating leases expiring at various times through 2033. To the extent that a leased retail store or warehouse space is vacated prior to the termination of the lease, the Company may sublease these spaces to third parties while maintaining its primary obligation as the intermediate lessor. The Company leases transportation vehicles under operating and finance leases, most of which generally expire during the next three years. The transportation leases generally include a residual value that is guaranteed to the lessor, which ensures that the vehicles will be returned to the lessor in reasonable working condition. The Company also leases various IT equipment such as printers and computers under operating leases, most of which generally expire during the next three years. For all of its leases in which the Company is a lessee, the Company has elected to include both the lease and non-lease components as a single component and account for it as a lease.

Finance lease costs are comprised of the amortization of right-of-use assets and interest on lease liabilities, which are recorded within operating expenses and interest expense, respectively, in the Company’s condensed consolidated statements of earnings. Operating lease costs are recorded on a straight-line basis within operating expenses or restructuring expenses, net (if the lease costs are related to the Company's restructuring programs as described in Note 8) in the Company’s condensed consolidated statements of earnings. The Company’s total lease expense is comprised of the following:

	Three Months Ended
(In Thousands)	March 31, 2019
Finance Lease Cost:
Amortization of Right-of-Use Assets	$	465
Interest on Lease Liabilities	114
Total Finance Lease Cost:	579
Operating Lease Cost:
Operating Lease Cost Classified within Operating Expenses1	29,213
Operating Lease Cost Classified within Restructuring Expenses, Net	804
Sublease Receipts	(732		)
Total Operating Lease Cost:	29,285
Total Lease Cost	$	29,864

¹ Includes short-term and variable lease costs, which are not significant.

Additional information regarding the Company’s leasing activities as a lessee is as follows:

	Three Months Ended
(In Thousands)	March 31, 2019
Cash Paid for Amounts Included in Measurement of Lease Liabilities:
Operating Cash Flows for Finance Leases	$	113
Operating Cash Flows for Operating Leases	31,643
Financing Cash Flows for Finance Leases	574
Total Cash Paid for Amounts Included in Measurement of Lease Liabilities	32,330
Right-of-Use Assets Obtained in Exchange for New Finance Lease Liabilities	—
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities	$	6,587

Supplemental balance sheet information related to leases is as follows:

(In Thousands)	Balance Sheet Classification	March 31, 2019
Assets
Operating Lease Assets	Operating Lease Right-of-Use Assets	$	370,282
Finance Lease Assets	Property, Plant and Equipment, Net	2,578
Total Lease Assets		$	372,860
Liabilities
Operating Lease Liabilities	Operating Lease Liabilities	$	406,559
Finance Lease Liabilities	Debt	4,590
Total Lease Liabilities		$	411,149

Most of the Company’s real estate leases contain renewal options for additional periods ranging from one to 20 years or provide for options to purchase the related property at predetermined purchase prices that do not represent bargain purchase options. The Company currently does not have any real estate leases in which it considers the renewal options to be reasonably certain of exercise, as the Company's historical experience indicates that renewal options are not reasonably certain to be exercised, as well as contractual renewal rental rates that are considered to be in line with market rental rates and lack of significant economic penalties or business disruptions incurred by not exercising any renewal options.

The Company uses its incremental borrowing rate as the discount rate for its leases, as the implicit rate in the lease is not readily determinable. Below is a summary of the weighted-average discount rate and weighted-average remaining lease term for the Company’s finance and operating leases:

	Weighted Average Discount Rate1		Weighted Average Remaining Lease Term (in years)
Finance Leases	6.0	%	2
Operating Leases	3.6	%	5

¹ Upon adoption of ASC 842, discount rates for existing operating leases were established as of January 1, 2019.

Under the short-term lease exception provided within ASC 842, the Company does not record a lease liability or right-of-use asset for any leases that have a lease term of 12 months or less at commencement, including renewal options that the Company is reasonably certain to exercise, and do not include purchase options. Below is a summary of undiscounted finance and operating lease liabilities that have initial terms in excess of one year as of March 31, 2019. The table also includes a reconciliation of the future undiscounted cash flows to the present value of the finance and operating lease liabilities included in the condensed consolidated balance sheet.

(In Thousands)	Operating Leases		Finance Leases		Total
2019	$	89,172	$	2,407	$	91,579
2020	104,166		2,028		106,194
2021	81,568		772		82,340
2022	61,345		74		61,419
2023	40,967		—		40,967
Thereafter	75,891		—		75,891
Total Undiscounted Cash Flows	453,109		5,281		458,390
Less: Interest	46,550		691		47,241
Present Value of Lease Liabilities	$	406,559	$	4,590	$	411,149

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Guarantees

The Company has guaranteed certain debt obligations of some of the 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, 2019, the maximum amount that the Company would be obligated to repay in the event franchisees defaulted was $36.8 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 franchisee loan program in 1994, the Company has had no significant associated losses. The Company believes the likelihood of any significant amounts being funded by the Company in connection with these guarantees 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 $0.1 million and $0.3 million as of March 31, 2019 and December 31, 2018. The maximum facility commitment amount under the franchisee loan program was $55.0 million at March 31, 2019, including a Canadian subfacility commitment amount for loans to franchisees that operate stores in Canada (other than the province of Quebec) of CAD $25.0 million.

The Company is subject to financial covenants under the franchisee loan program that are consistent with the Revolving Credit and Term Loan Agreement, which are more fully described in Note 7 to the consolidated financial statements in the 2018 Annual Report. The Company is in compliance with all covenants at March 31, 2019 and believes it will continue to be in compliance in the future.

Legal and Regulatory 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, 2019 and December 31, 2018, the Company had accrued $1.7 million and $1.4 million, respectively, for pending legal and regulatory matters for which it believes losses are probable and is the Company's best estimate of its exposure to loss. The Company records these liabilities in accounts payable and accrued expenses in the condensed consolidated balance sheets. The Company estimated that the aggregate range of reasonably possible loss in excess of accrued liabilities for such probable loss contingencies is between $0 and $1.0 million.

At March 31, 2019, 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 $2.6 million and $5.2 million. Those matters for which a reasonable estimate is not possible are not included within estimated ranges and, therefore, the estimated ranges do not represent the Company's maximum loss exposure. The Company’s estimates for legal and regulatory accruals, aggregate probable loss amounts and reasonably possible loss amounts are all subject to the uncertainties and variables described above.

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, plaintiffs allege 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." Plaintiffs filed an amended complaint, asserting claims under the ECPA, common law invasion of privacy, seeking an injunction, and naming additional independently owned and operated Company franchisees as defendants. Plaintiffs seek monetary damages as well as injunctive relief.

In March 2014, the United States District Court dismissed all claims against all franchisees other than Aspen Way Enterprises, LLC, dismissed claims for invasion of privacy, aiding and abetting, and conspiracy against all defendants, and denied plaintiffs’ motion to certify a class action, but denied the Company’s motion to dismiss the claims alleging ECPA violations. Following an appeal of the decision to deny class certification, the matter was sent back to the District Court and, on September 26, 2017, the District Court denied plaintiffs' motion for class certification. A petition with the United States Court of Appeals for permission to appeal the denial of class certification a second time was denied on December 11, 2018. The case is now proceeding for determination on an individual basis as to the named plaintiffs.

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, 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 as well as certification of a putative California class. In April 2013, the Company removed this matter to federal court. In May 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. In June 2015, the plaintiffs filed a motion to lift the stay, which was denied in July 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, 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. This case has been stayed pending resolution of the Byrd litigation.

Regulatory Inquiries

In July 2018, the Company received civil investigative demands ("CIDs") from the Federal Trade Commission (the "FTC") regarding disclosures related to financial products offered by the Company through the Aaron’s Business and Progressive Leasing and whether such disclosures violate the Federal Trade Commission Act (the “FTC Act”). Although we believe we are in compliance with the FTC Act, these inquiries could lead to an enforcement action and/or a consent order, and substantial costs, including legal fees, fines, penalties, and remediation expenses. The Company submitted a significant amount of documentation from both the Aaron’s Business and Progressive Leasing in October 2018 and continues to work with the FTC as its inquiry proceeds.

In April 2019, the Aaron’s Business, along with other rent-to-own companies, received an unrelated CID from the FTC focused on certain transactions involving the purchase and sale of customer lease agreements, and whether such transactions violated the FTC Act. Although we believe such transactions were in compliance with the FTC Act, this inquiry could lead to an enforcement action and/or a consent order, and substantial costs. The Company is fully cooperating with the FTC in responding to this inquiry.

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.

Off-Balance Sheet Risk

The Company, through its DAMI business, had unfunded lending commitments totaling $316.0 million and $316.4 million as of March 31, 2019 and December 31, 2018, 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 represent 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. The reserve for losses on unfunded loan commitments is calculated by the Company based on historical usage patterns of cardholders after the initial charge and was approximately $0.6 million and $0.5 million as of March 31, 2019 and December 31, 2018, respectively. The reserve for losses on unfunded loan commitments is included in accounts payable and accrued expenses in the condensed consolidated balance sheets.

See Note 9 to the consolidated financial statements in the 2018 Annual Report for further information.

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Segments

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Segments

SEGMENTS

As of March 31, 2019, the Company has three operating and reportable segments: Progressive Leasing, Aaron's Business and DAMI.

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

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

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

Disaggregated Revenue

The following table presents revenue by source and by segment for the three months ended March 31, 2019:

	Three Months Ended March 31, 2019
(In Thousands)	Progressive Leasing		Aaron's Business		DAMI		Total
Lease Revenues and Fees1	$	523,401	$	420,756	$	—	$	944,157
Retail Sales2	—		12,809		—		12,809
Non-Retail Sales2	—		36,981		—		36,981
Franchise Royalties and Fees2	—		9,207		—		9,207
Interest and Fees on Loans Receivable3	—		—		8,646		8,646
Other	—		303		—		303
Total	$	523,401	$	480,056	$	8,646	$	1,012,103

¹ Substantially all lease revenues and fees are within the scope of ASC 842, Leases. The Company had $7.9 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers.

²  Revenue within the scope of ASC 606, Revenue from Contracts with Customers. Of the Franchise Royalties and Fees, $7.0 million is related to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. The remaining revenue is primarily related to fees collected for pre-opening services, which are being deferred and recognized as revenue over the agreement term, and advertising fees charged to franchisees. Retail sales are recognized as revenue at the point of sale. Non-retail sales are recognized as revenue upon delivery of the merchandise.

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

The following table presents revenue by source and by segment for the three months ended March 31, 2018:

	Three Months Ended March 31, 2018
(In Thousands)	Progressive Leasing		Aaron's Business		DAMI		Total
Lease Revenues and Fees1	$	486,517	$	383,550	$	—	$	870,067
Retail Sales2	—		8,516		—		8,516
Non-Retail Sales2	—		53,230		—		53,230
Franchise Royalties and Fees2	—		12,862		—		12,862
Interest and Fees on Loans Receivable3	—		—		9,542		9,542
Other	—		592		—		592
Total	$	486,517	$	458,750	$	9,542	$	954,809

¹ Substantially all lease revenues and fees are within the scope of ASC 842, Leases. The Company had $5.0 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers.

² Revenue within the scope of ASC 606, Revenue from Contracts with Customers. Of the Franchise Royalties and Fees, $10.2 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 sales are recognized as revenue at the point of sale. Non-retail sales are recognized as revenue upon delivery of the merchandise.

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

Measurement of Segment Profit or Loss and Segment Assets

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

	Three Months Ended   March 31,
(In Thousands)	2019			2018
Earnings (Loss) Before Income Taxes:
Progressive Leasing	$	55,388		$	34,979
Aaron's Business1	17,588			33,079
DAMI	(2,668		)	(1,306		)
Total Earnings Before Income Taxes	$	70,308		$	66,752

¹ Earnings before income taxes for the Aaron's Business during the three months ended March 31, 2019 includes restructuring charges of $13.3 million related to closed store right-of-use asset impairment and operating lease charges, the write-off and impairment of store property, plant and equipment and related workforce reductions, and other impairment charges in connection with the Company's strategic decision to close 84 Company-operated stores.

Earnings before income taxes for the Aaron's Business during the three months ended March 31, 2018 includes net restructuring charges of $0.9 million related to store contractual lease obligations and severance costs, partially offset by gains recognized from the sale of the associated properties of stores closed under the restructuring program.

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

(In Thousands)	March 31, 2019		December 31, 2018
Assets:
Progressive Leasing	$	1,106,668	$	1,088,227
Aaron's Business1	1,774,858		1,483,102
DAMI	89,533		95,341
Other2	266,907		160,022
Total Assets	$	3,237,966	$	2,826,692

¹ Includes inventory (principally raw materials and work-in-process) that has been classified within lease merchandise in the condensed consolidated balance sheets of $14.5 million and $15.2 million as of March 31, 2019 and December 31, 2018, respectively.

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

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Restructuring

3 Months Ended

Mar. 31, 2019

Restructuring and Related Activities [Abstract]

Restructuring

RESTRUCTURING

2019 Restructuring Programs

During the three months ended March 31, 2019, the Company initiated a restructuring program to further align its Company-operated Aaron's store base portfolio with marketplace demand. The program resulted in the closure and consolidation of 84 underperforming Company operated stores throughout the three months of 2019. The Company also further rationalized its home office and field support staff, which resulted in a reduction in employee headcount in those areas to more closely align with current business conditions.

Total net restructuring expenses of $12.9 million were recorded for the three months ended March 31, 2019 under the 2019 restructuring program, all of which were incurred within the Aaron's Business segment. Restructuring activity for the three months endedMarch 31, 2019 was comprised of closed store operating lease right-of-use asset impairment and operating lease charges, the write-off and impairment of store property, plant and equipment and related workforce reductions, and other impairment charges. These costs were included in restructuring expenses, net in the condensed consolidated statements of earnings. The Company does not expect to incur material additional restructuring charges for this program.

2017 and 2016 Restructuring Programs

During the years ended December 31, 2017 and 2016, the Company initiated restructuring programs to rationalize its Company-operated Aaron's store base portfolio to better align with marketplace demand. The programs resulted in the closure and consolidation of 139 underperforming Company operated stores throughout 2016, 2017, and 2018. The Company also optimized its home office staff and field support, which resulted in a reduction in employee headcount in those areas to more closely align with current business conditions.

Total net restructuring expenses of $0.4 million and $0.9 million were recorded for the three months ended March 31, 2019 and 2018 under the 2017 and 2016 restructuring programs, all of which were incurred within the Aaron's Business segment. Restructuring activity for the three months ended March 31, 2019 was comprised principally of operating lease charges for stores closed under the restructuring program. These costs were included in restructuring expenses, net in the condensed consolidated statements of earnings. The Company does not expect to incur any further material charges under the 2017 and 2016 restructuring programs. However, this estimate is subject to change based on future sublease activity and potential earlier buyouts of leases with landlords.

The following table summarizes restructuring charges for the three months ended March 31, 2019 and 2018, respectively, under the three programs:

	Three Months Ended March 31,
(In Thousands)	2019		2018
Right-of-Use Asset Impairment and Operating Lease Charges	$	9,522	$	719
Fixed Asset Impairment	1,497		—
Severance	1,136		514
Other Expenses	1,126		—
Gain on Sale of Closed Store Properties	—		(327		)
Total Restructuring Expenses	$	13,281	$	906

To date, the Company has incurred charges of $39.7 million under the 2016 and 2017 restructuring programs.

The following table summarizes the balances of the accruals for the restructuring programs, which are recorded in accounts payable and accrued expenses in the condensed consolidated balance sheets, and the activity for the three months ended March 31, 2019:

(In Thousands)	Contractual Lease Obligations			Severance
Balance at January 1, 2019	$	8,472		$	651
ASC 842 Transition Adjustment1	(8,472		)	—
Adjusted Balance at January 1, 2019	—			651
Restructuring Charges	—			1,136
Payments	—			(1,033		)
Balance at March 31, 2019	$	—		$	754

¹ Upon the adoption of ASC 842 on January 1, 2019, the Company reclassified the remaining liability for contractual lease obligations from accounts payable and accrued expenses to a reduction to operating lease right-of-use assets within its condensed consolidated balance sheets.

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Basis and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Description of Business

Description of Business

Aaron's, Inc. (the "Company") is a leading omnichannel provider of lease-purchase solutions. As of March 31, 2019, the Company's operating segments are Progressive Leasing, Aaron's Business and DAMI.

Progressive Leasing is a virtual lease-to-own company that provides lease-purchase solutions in 46 states and the District of Columbia. It does so by purchasing merchandise from third-party retailers desired by those retailers' customers and, in turn, leasing that merchandise to the customers through a lease-to-own transaction. Progressive Leasing consequently has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional and e-commerce retailers.

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 unidentified 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 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 for the year ended December 31, 2018 (the "2018 Annual Report") filed with the U.S. Securities and Exchange Commission on February 14, 2019. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of operating results for the full year.

Principles of Consolidation

Principles of Consolidation

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.

Accounting Policies and Estimates

Accounting Policies and Estimates

See Note 1 to the consolidated financial statements in the 2018 Annual Report.

Earnings Per Share

Earnings Per Share

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

Revenue Recognition

Revenue Recognition

Lease Revenues and Fees

The Company provides merchandise, consisting primarily of furniture, consumer electronics, home appliances and accessories, to its customers for lease under certain terms agreed to by the customer. The Company's Progressive Leasing segment offers virtual lease-purchase solutions, typically over 12 months, to the customers of traditional and e-commerce retailers. The Company's Aaron's-branded stores and its e-commerce platform offer leases with month-to-month terms that can be renewed up to 12, 18 or 24 months. The Company does not require deposits upon inception of customer agreements. The customer has the right to acquire ownership either through a purchase option or through payment of all required lease payments.

Progressive lease revenues are earned prior to the lease payment due date and are recorded net of related sales taxes as earned. Revenue recorded prior to the payment due date results in unbilled accounts receivable in the accompanying condensed consolidated balance sheets. Beginning January 1, 2019, Progressive lease revenues are recorded net of a provision for returns and uncollectible renewal payments.

Aaron's Business lease revenues are recognized as revenue net of related sales taxes in the month they are earned. Lease payments received prior to the month earned are recorded as deferred lease revenue, and this amount is included in customer deposits and advance payments in the accompanying condensed consolidated balance sheets. Aaron's Business lease revenues are recorded net of a provision for returns and uncollectible renewal payments.

All of the Company's customer agreements are considered operating leases. The Company maintains ownership of the lease merchandise until all payment obligations are satisfied under sales and lease ownership agreements. Initial direct costs related to Progressive Leasing's lease purchase agreements are capitalized as incurred and amortized as operating expense over the estimated lease term. The capitalized costs have been classified within prepaid expenses and other assets in the accompanying condensed consolidated balance sheets. Initial direct costs related to Aaron's Business customer agreements are expensed as incurred and have been classified as operating expenses in the Company's condensed consolidated statements of earnings. The statement of earnings effects of expensing the initial direct costs of the Aaron's Business as incurred are not materially different from amortizing initial direct costs over the lease term.

Retail and Non-Retail Sales

Revenues from the retail sale of merchandise to customers are recognized at the point of sale. Revenues for the non-retail sale of merchandise to franchisees are recognized when control transfers to the franchisee, which is upon delivery of the merchandise.

Substantially all of the amounts reported as non-retail sales and non-retail cost of sales in the accompanying condensed consolidated statements of earnings relate to the sale of lease merchandise to franchisees. The Company classifies the sale of merchandise to other customers as retail sales in the condensed consolidated statements of earnings.

Franchise Royalties and Fees

The Company has no current plans to franchise additional Aaron's stores. Current franchisees pay an ongoing royalty of 6% of the weekly cash revenue collections, which is recognized as the fees become due. The Company received a non-refundable initial franchise fee from current franchisees from $15,000 to $50,000 per store depending upon market size. Franchise fees and area development fees were generated from the sale of rights to develop, own and operate sales and lease ownership stores and pre-opening services provided by Aaron's to assist in the start-up operations of the stores. The Company considers the rights to the intellectual property and the pre-opening services to be a single performance obligation, resulting in the recognition of revenue ratably over time from the store opening date throughout the remainder of the franchise agreement term. The Company believes that this period of time is most representative of the time period in which the franchisee realizes the benefits of having the right to access the Company's intellectual property.

The Company guarantees certain debt obligations of some of the franchisees and receives guarantee fees based on the outstanding debt obligations of such franchisees. Refer to Note 6 of these condensed consolidated financial statements for additional discussion of the Company's franchise-related guarantee obligation. The Company also charges fees for advertising efforts that benefit the franchisees. Such fees are recognized at the time the advertising takes place and are presented as franchise royalties and fees in the Company's condensed consolidated statements of earnings.

Initial direct costs related to the pre-opening services provided to franchisees are immaterial and are expensed as incurred. These expenses have been classified as operating expenses in the Company's condensed consolidated statements of earnings.

Interest and Fees on Loans Receivable

Interest and Fees on Loans Receivable

DAMI extends or declines credit to an applicant through its bank partners based upon the applicant's credit rating and other factors. Qualifying applicants receive a credit card to finance their initial purchase and to use in subsequent purchases at the merchant or other participating merchants for an initial 24-month period, which DAMI may renew if the cardholder remains in good standing.

DAMI acquires the loan receivable from merchants through its third-party bank partners at a discount from the face value of the loan. The discount is comprised of a merchant fee discount and a promotional fee discount, if applicable.

The merchant fee discount represents a pre-negotiated, nonrefundable discount that generally ranges from 3% to 25% of the loan face value. The discount is designed to cover the risk of loss related to the portfolio of cardholder charges and DAMI's direct origination costs. The merchant fee discount and origination costs are presented net on the condensed consolidated balance sheet in loans receivable. Cardholders generally have an initial 24-month period that the card is active. The merchant fee discount, net of the origination costs, is amortized on a net basis and is recorded as interest and fee revenue on loans receivable in the condensed consolidated statements of earnings on a straight-line basis over the initial 24-month period.

The discount from the face value of the loan on the acquisition of the loan receivable from the merchant through the third-party bank partners may also include a promotional fee discount, which generally ranges from 1% to 8%. The promotional fee discount is intended to compensate the holder of the loan receivable (i.e. DAMI) for deferred or reduced interest rates that are offered to the cardholder for a specified period on the outstanding loan balance (generally for six, 12 or 18 months). The promotional fee discount is amortized as interest and fee revenue on loans receivable in the condensed consolidated statements of earnings on a straight-line basis over the promotional interest period (i.e., over six, 12 or 18 months, depending on the promotion). The unamortized promotional fee discount is netted on the condensed consolidated balance sheet in loans receivable.

The customer is typically required to make periodic minimum payments of at least 3.5% of the outstanding loan balance, which includes outstanding interest. Fixed and variable interest rates, typically 25% to 35.99%, are compounded daily for cards that do not qualify for deferred or reduced interest promotional periods. Interest income, which is recognized based upon the amount of the loans outstanding, is recognized as interest and fees on loans receivable in the billing period in which they are assessed if collectability is reasonably assured. For credit cards that provide for deferred or reduced interest, if the balance is not paid off during the promotional period, interest is billed to the customers at standard rates and the cumulative amount owed is charged to the cardholder account in the month that the promotional period expires or defaults. The Company recognizes interest revenue during the promotional period based on its historical experience related to cardholders that fail to pay off balances during the promotional period.

Annual fees are charged to cardholders at the commencement of the loan and on each subsequent anniversary date. Annual fees are deferred and recognized into revenue on a straight-line basis over a one-year period. Under the provisions of the credit card agreements, the Company also may assess fees for service calls or for missed or late payments, which are recognized as revenue in the billing period in which they are assessed if collectability is reasonably assured. Annual fees and other fees discussed are recognized as interest and fee revenue on loans receivable in the condensed consolidated statements of earnings.

Accounts Receivable

The Company maintains an accounts receivable allowance, which primarily relates to its Progressive Leasing operations and the Aaron's Business operations. The Company’s policy for its Progressive Leasing segment is to record an allowance for returns and uncollectible renewal payments based on historical collection experience. During 2019, the Company adopted ASU 2016-02, Leases ("ASC 842") which resulted in the Progressive Leasing provision for returns and uncollectible renewal payments being recorded as a reduction of lease revenue and fees within the condensed consolidated statements of earnings beginning January 1, 2019. The provision for returns and uncollectible renewal payments for periods prior to 2019 are reported herein as bad debt expense within operating expenses in the condensed consolidated statement of earnings. The Progressive Leasing segment writes off lease receivables that are 120 days or more contractually past due.

For the Aaron's Business operations, contractually required lease payments are accrued when due. The Aaron's Business policy is to record a provision for returns and uncollectible contractually due renewal payments based on historical collection experience, which is recognized as a reduction of lease revenues and fees within the condensed consolidated statement of earnings. Aaron's Business write-off of lease receivables that are 60 days or more past due occur on pre-determined dates twice monthly.

DAMI's allowance for uncollectible merchant accounts receivable, which primarily relates to cardholder returns and refunds, is recorded as bad debt expense within operating expenses in the condensed consolidated statement of earnings.

Accounts Receivable

Accounts receivable consist primarily of receivables due from customers of Progressive Leasing and Company-operated stores, corporate receivables incurred during the normal course of business (primarily for real estate leasing activities and vendor consideration) and franchisee obligations.

Lease Merchandise

Lease Merchandise

The Company's lease merchandise consists primarily of furniture, consumer electronics, home appliances, jewelry, and accessories and is recorded at the lower of cost or net realizable value. The cost of merchandise manufactured by our Woodhaven operations is recorded at cost and includes overhead from production facilities, shipping costs and warehousing costs. The Company's Progressive Leasing segment, at which substantially all merchandise is on lease, depreciates merchandise generally over 12 months. The Company's Aaron's Business segment begins depreciating merchandise at the earlier of 12 months and one day or when the item is leased. Aaron's Business depreciates merchandise to a 0% salvage value over the lease agreement period when on lease, generally 12 to 24 months, and generally 36 months when not on lease. Depreciation is accelerated upon early payout.

The Company's policies require weekly lease merchandise counts at its store-based operations, which include write-offs for unsalable, damaged, or missing merchandise inventories. In addition to monthly cycle counting, full physical inventories are generally taken at the fulfillment and manufacturing facilities annually and appropriate provisions are made for missing, damaged and unsalable merchandise. In addition, the Company monitors lease merchandise levels and mix by division, store, and fulfillment center, as well as the average age of merchandise on hand. If obsolete lease merchandise cannot be returned to vendors, its carrying amount is adjusted to its net realizable value or written off.

Generally, 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 a provision for write-offs 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. The provision for write-offs is included in operating expenses in the accompanying condensed consolidated statements of earnings.

Loans Receivable, Net

Loans Receivable, Net

Gross loans receivable represents the principal balances of credit card charges at DAMI's participating merchants that remain due from cardholders, plus unpaid interest and fees due from cardholders. The allowances and unamortized fees represents an allowance for uncollectible amounts; merchant fee discounts, net of capitalized origination costs; promotional fee discounts; and deferred annual card fees.

Loans acquired in the October 15, 2015 DAMI acquisition (the "Acquired Loans") were recorded at their estimated 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 were included in the determination of fair value; therefore, an allowance for loan losses and an amount for unamortized fees were 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 interest and fees on loans receivable 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.

Losses on loans receivable are recognized when they are incurred, which requires the Company to make its best estimate of probable losses inherent in the portfolio. The Company evaluates loans receivable collectively for impairment. The method for calculating the best estimate of probable losses takes into account the Company's historical experience, adjusted for current conditions and the Company's judgment concerning the probable effects of relevant observable data, trends and market factors. Economic conditions and loan performance trends are closely monitored to manage and evaluate exposure to credit risk. Trends in delinquency ratios are an indicator of credit risk within the loans receivable portfolio, including the migration of loans between delinquency categories over time. Charge-off rates represent another indicator of the potential for future credit losses. The risk in the loans receivable portfolio is correlated with broad economic trends, such as unemployment rates, gross domestic product growth and gas prices, which can have a material effect on credit performance. To the extent that actual results differ from estimates of uncollectible loans receivable, the Company's results of operations and liquidity could be materially affected.

The Company calculates the allowance for loan losses based on actual delinquency balances and historical average loss experience on loans receivable by aging category for the prior eight quarters. The allowance for loan losses is maintained at a level considered adequate to cover probable losses of principal, interest and fees on active loans in the loans receivable portfolio. The adequacy of the allowance is evaluated at each period end.

Delinquent loans receivable are those that are 30 days or more past due based on their contractual billing dates. The Company places loans receivable on nonaccrual status when they are greater than 90 days past due or upon notification of cardholder bankruptcy, death or fraud. The Company discontinues accruing interest and fees and amortizing merchant fee discounts and promotional fee discounts for loans receivable in nonaccrual status. Loans receivable are removed from nonaccrual status when cardholder payments resume, the loan becomes 90 days or less past due and collection of the remaining amounts outstanding is deemed probable. Payments received on nonaccrual loans are allocated according to the same payment hierarchy methodology applied to loans that are accruing interest. Loans receivable are charged off at the end of the month following the billing cycle in which the loans receivable become 120 days past due.

DAMI extends or declines credit to an applicant through its bank partners based upon the applicant's credit rating and other factors.

Assets Held for Sale

Assets Held for Sale

Certain properties, consisting of parcels of land and commercial buildings, met the held for sale classification criteria as of March 31, 2019 and December 31, 2018. Assets held for sale are recorded at the lower of their carrying value or fair value less estimated cost to sell and are classified within prepaid expenses and other assets in the condensed consolidated balance sheets. Depreciation is suspended on assets upon classification to held for sale.

The carrying amount of the properties held for sale as of March 31, 2019 and December 31, 2018 is $9.0 million and $6.6 million, respectively. The Company estimated the fair values of real estate properties using the market values for similar properties. These properties are considered Level 2 assets as defined below.

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, 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, net of allowances, and the revolving credit borrowings also approximate their carrying amounts.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Adopted

Leases. In February 2016, the FASB issued ASU 2016-02, Leases ("ASC 842"), which requires lessees to recognize assets and liabilities for most leases and changes certain aspects of lessor accounting, among other things. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018. Companies must use a modified retrospective approach to adopt ASC 842; however, the Company adopted an optional transition method in which entities are permitted to not apply the requirements of ASC 842 in the comparative periods presented within the financial statements in the year of adoption, with recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The application of this optional transition method resulted in a cumulative-effect adjustment of $2.6 million representing an increase to the Company’s January 1, 2019 retained earnings balance, net of tax, due primarily to the recognition of deferred gains recorded under previous sale and operating leaseback transactions for which the ASC 842 transition guidance requires companies to recognize any deferred gains not resulting from off-market terms as a cumulative adjustment to retained earnings upon adoption of ASC 842.

As a lessor, a majority of the Company’s revenue generating activities are within the scope of ASC 842. The new standard did not materially impact the timing of revenue recognition. Effective January 1, 2019, ASC 842 resulted in the Company classifying the Progressive Leasing provision for returns and uncollectible renewal payments as a reduction of lease revenue and fees within the condensed consolidated statements of earnings. For periods reported herein prior to January 1, 2019 the Progressive Leasing provision for returns and uncollectible renewal payments was recorded as bad debt expense within operating expenses in the condensed consolidated statement of earnings. The Aaron’s Business provision for returns and uncollectible renewal payments has historically been and continues to be recorded as a reduction to lease revenue and fees. The Company has customer lease agreements with lease and non-lease components that fall within the scope of ASU 2014-09, Revenue from Contracts with Customers ("ASC 606"). The Company has elected to aggregate these components into a single component for all classes of underlying assets as the lease and non-lease components generally have the same timing and pattern of transfer.

The new standard also impacts the Company as a lessee by requiring substantially all of its operating leases to be recognized on the balance sheet as operating lease right-to-use assets and operating lease liabilities. See Note 5 to these condensed consolidated financial statements for further details regarding the Company’s leasing activities as a lessee. The Company elected to adopt a package of practical expedients offered by the FASB which removes the requirement to reassess whether expired or existing contracts contain leases and removes the requirement to reassess the lease classification for any existing leases prior to the adoption date of January 1, 2019. Additionally, the Company has elected the practical expedient to include both lease and non-lease components as a single component and account for it as a lease.

Cloud Computing Arrangements. In August 2018, the FASB issued ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The intent of the standard is to reduce diversity in practice in accounting for the costs of implementing cloud computing arrangements that are service contracts. Under the new standard, entities will be required to apply the accounting guidance as prescribed by ASC 350-40, Internal Use Software,in determining which implementation costs should be capitalized as assets or expensed as incurred. The internal-use software guidance requires the capitalization of certain costs incurred during the application development stage of an internal-use software project, while requiring companies to expense all costs incurred during preliminary project and post-implementation project stages. As a result, certain implementation costs which were previously expensed by the Company are now eligible for capitalization under ASU 2018-15. The standard may be applied either prospectively to all implementation costs incurred after the adoption date or retrospectively. ASU 2018-15 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The Company elected to early adopt ASU 2018-15 on a prospective basis during the three months ended March 31, 2019, and the impact to the condensed consolidated financial statements was not significant. Costs eligible for capitalization will be classified within prepaid expenses and other assets and operating expenses in the condensed consolidated balance sheets and statements of earnings, respectively.

Pending Adoption

Financial Instruments - Credit Losses. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments ("CECL"). The main objective of the update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by companies at each reporting date. For trade and other receivables, held to maturity debt securities and other instruments, companies will be required to use a new forward-looking "expected losses" model that generally will result in the recognition of allowances for losses earlier than under current accounting guidance. The standard will be adopted on a modified retrospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. ASU 2016-13 is effective for the Company in the first quarter of 2020.

The Company's operating lease activities within Aaron's Business and Progressive Leasing will not be impacted by ASU 2016-13, as operating lease receivables are not in the scope of the CECL model. The Company will be impacted by ASU 2016-13 within its DAMI segment by requiring earlier recognition of estimated credit losses in the consolidated statements of earnings. DAMI acquires loan receivables from merchants through its third-party bank partners at a discount from the face value of the loan, referred to as the "merchant fee discount." The merchant fee discount represents a pre-negotiated, nonrefundable discount that generally ranges from 3% to 25% of the loan face value, which is primarily intended to cover the risk of credit loss related to the portfolio of loans originated. Although the CECL model will require the estimated credit losses to be recognized at the time of loan origination, the related merchant fee discount will continue to be amortized as interest and fee revenue on a straight-line basis over the initial 24-month period that the card is active. Therefore, on a loan-by-loan basis, the Company expects higher losses to be recognized upon loan origination for the estimated credit losses, generally followed by higher net earnings as the related merchant fee discount is amortized to interest income, and as interest income is accrued and earned on the outstanding loan. Although the CECL model will result in earlier recognition of credit losses in the statement of earnings, no changes are expected related to the loan cash flows.

The Company has evaluated the guidance in ASU 2016-13 related to purchased financial assets with credit deterioration (“PCD Method”) and currently expects that its loans receivable would not qualify for the PCD Method as, generally, a more-than-insignificant deterioration in credit quality since origination does not occur.

The Company is continuing to evaluate the various impacts of CECL, including identifying changes to processes and procedures that will be necessary to adopt ASU 2016-13, and is in the process of identifying and testing potential software solutions to support the new accounting requirements for the Company's loans receivable. The Company is also evaluating whether it will choose to measure future loans at fair value under the fair value option as an alternative to CECL. The fair value option would result in the Company measuring loans at fair value on an instrument-by-instrument basis with changes in fair value reported in net earnings. Election of the fair value option could cause volatility in our reported results, primarily in periods with large fluctuations in interest rates. The Company is also evaluating emerging guidance which would allow companies to choose a one-time election of the fair value option for loans previously recorded at amortized cost under the current incurred loss model. As a result, we are continuing to evaluate transition options and alternatives available under ASU 2016-13.

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Basis and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Schedule Of Company Operated Store Activity

The following table presents invoice volume for Progressive Leasing:

For the Three Months Ended March 31 (Unaudited and In Thousands)	2019		2018
Progressive Leasing Invoice Volume1	$	394,727	$	345,562

¹ Invoice volume is defined as the retail price of lease merchandise acquired and then leased to customers during the period, net of returns.

The Aaron's Business segment 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 its e-commerce platform. This operating segment also supports franchisees of its Aaron's-branded stores. In addition, the Aaron's Business segment includes the operations of Woodhaven Furniture Industries ("Woodhaven"), which manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in Company-operated and franchised stores.

The Company acquired the store operations of two franchisees during the three months ended March 31, 2019. Refer to Note 2 to these condensed consolidated financial statements.

The following table presents store count by ownership type for the Aaron's Business operations:

Stores as of March 31 (Unaudited)	2019	2018
Company-operated Aaron's Branded Stores	1,230	1,182
Franchised Stores	369	537
Systemwide Stores	1,599	1,719

Calculation of Dilutive Stock Awards

The following table shows the calculation of dilutive share-based awards:

	Three Months Ended   March 31,
(Shares In Thousands)	2019	2018
Weighted Average Shares Outstanding	67,294	70,105
Dilutive Effect of Share-Based Awards	1,479	1,913
Weighted Average Shares Outstanding Assuming Dilution	68,773	72,018

Accounts Receivable Net of Allowances

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

(In Thousands)	March 31, 2019		December 31, 2018
Customers	$	54,517	$	60,879
Corporate	13,405		18,171
Franchisee	16,115		19,109
Accounts Receivable	$	84,037	$	98,159

The following is a summary of the Company’s loans receivable, net:

(In Thousands)	March 31, 2019			December 31, 2018
Credit Card Loans1	$	87,768		$	90,406
Acquired Loans2	3,721			5,688
Loans Receivable, Gross	91,489			96,094
Allowance for Loan Losses	(12,363		)	(12,970		)
Unamortized Fees	(6,562		)	(6,971		)
Loans Receivable, Net of Allowances and Unamortized Fees	$	72,564		$	76,153

¹ "Credit Card Loans" are loans originated after the 2015 acquisition of DAMI.

² "Acquired Loans" are credit card loans the Company purchased in the 2015 acquisition of DAMI.

Components of the Accounts Receivable Provision

The following table shows the amounts recognized for bad debt expense and provision for returns and uncollected payments:

	Three Months Ended March 31,
(In Thousands)	2019		2018
Bad Debt Expense1	$	1,125	$	46,542
Provision for Returns and Uncollectible Renewal Payments2	62,110		4,916
Accounts Receivable Provision	$	63,235	$	51,458

¹ Bad debt expense is recorded within operating expenses in the condensed consolidated financial statements.

² In accordance with the adoption of ASC 842, Progressive Leasing provision for returns and uncollectible renewal payments are recorded as a reduction to lease revenues and fees within the condensed consolidated financial statements beginning January 1, 2019. Prior to January 1, 2019, Progressive Leasing provision for returns and uncollectible renewal payments were recorded as bad debt expense within operating expenses in the condensed consolidated financial statements.

Schedule of Lease Merchandise

The following is a summary of lease merchandise, net of accumulated depreciation and allowances:

(In Thousands)	March 31, 2019		December 31, 2018
Merchandise on Lease	$	1,022,902	$	1,053,684
Merchandise Not on Lease	278,164		264,786
Lease Merchandise, net of Accumulated Depreciation and Allowances	$	1,301,066	$	1,318,470

Allowance for Lease Merchandise

The following table shows the components of the allowance for lease merchandise write-offs:

	Three Months Ended March 31,
(In Thousands)	2019			2018
Beginning Balance	$	46,694		$	35,629
Merchandise Written off, net of Recoveries	(53,222		)	(40,511		)
Provision for Write-offs	56,995			44,470
Ending Balance	$	50,467		$	39,588

Loan Portfolio Credit Quality Indicators

Below is a summary of the credit quality of the Company's loan portfolio as of March 31, 2019 and December 31, 2018 by Fair Isaac and Company (FICO) score as determined at the time of loan origination:

FICO Score Category	March 31, 2019		December 31, 2018
600 or Less	4.1	%	3.7	%
Between 600 and 700	79.0	%	77.9	%
700 or Greater	16.9	%	18.4	%

Schedule of Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist of the following:

(In Thousands)	March 31, 2019		December 31, 2018
Prepaid Expenses	$	27,467	$	30,763
Prepaid Insurance	24,072		27,948
Assets Held for Sale	8,974		6,589
Deferred Tax Asset	8,761		8,761
Other Assets	23,207		24,161
Prepaid Expenses and Other Assets	$	92,481	$	98,222

Schedule of Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

(In Thousands)	March 31, 2019		December 31, 2018
Accounts Payable	$	71,751	$	88,369
Accrued Insurance Costs	39,181		40,423
Accrued Salaries and Benefits	45,832		40,790
Accrued Real Estate and Sales Taxes	30,749		30,332
Deferred Rent1	—		27,270
Other Accrued Expenses and Liabilities1	59,266		65,969
Accounts Payable and Accrued Expenses	$	246,779	$	293,153

¹ Amounts as of March 31, 2019 were impacted by the January 1, 2019 adoption of ASC 842. Upon transition to ASC 842, the remaining balances of the Company's deferred rent, lease incentives, and closed store reserve were reclassified as a reduction to the operating lease right-of-use asset in the accompanying condensed consolidated balance sheet.

Schedule of Stockholders Equity

Changes in stockholders' equity for the three months ended March 31, 2019 and 2018 are as follows:

	Treasury Stock					Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
(In Thousands, Except Per Share)	Shares		Amount
Balance, December 31, 2018	(23,568	)	$	(567,847	)	$	45,376	$	278,922		$	2,005,344		$	(1,087	)	$	1,760,708
Opening Balance Sheet Adjustment - ASC 842, net of taxes	—		—			—		—			2,592			—			2,592
Cash Dividends, $0.035 per share	—		—			—		—			(2,363		)	—			(2,363		)
Stock-Based Compensation	—		—			—		7,050			—			—			7,050
Reissued Shares	493		4,264			—		(15,245		)	—			—			(10,981		)
Net Earnings	—		—			—		—			56,078			—			56,078
Foreign Currency Translation Adjustment	—		—			—		—			—			424			424
Balance, March 31, 2019	(23,075	)	$	(563,583	)	$	45,376	$	270,727		$	2,061,651		$	(663	)	$	1,813,508

	Treasury Stock					Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
(In Thousands, Except Per Share)	Shares		Amount
Balance, December 31, 2017	(20,733	)	$	(407,713	)	$	45,376	$	270,043		$	1,819,524		$	774		$	1,728,004
Opening Balance Sheet Adjustment - ASC 606, net of taxes	—		—			—		—			(1,729		)	—			(1,729		)
Cash Dividends, $0.03 per share	—		—			—		—			(2,146		)	—			(2,146		)
Stock-Based Compensation	—		—			—		7,862			—			—			7,862
Reissued Shares	545		3,441			—		(12,602		)	—			—			(9,161		)
Repurchased Shares	(391	)	(18,407		)	—		—			—			—			(18,407		)
Net Earnings	—		—			—		—			52,246			—			52,246
Foreign Currency Translation Adjustment	—		—			—		—			—			(477		)	(477		)
Balance, March 31, 2018	(20,579	)	$	(422,679	)	$	45,376	$	265,303		$	1,867,895		$	297		$	1,756,192

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Acquisitions (Tables)

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table presents summaries of the preliminary fair value of the assets acquired and liabilities assumed in the franchisee acquisitions as of the respective acquisition dates:

(In Thousands)	Amounts Recognized as of Acquisition Dates (as of December 31, 2018)1			Acquisition Accounting Adjustments			Amounts Recognized as of Acquisition Dates (as of March 31, 2019)
Purchase Price	$	189,826		$	—		$	189,826
Add: Settlement of Pre-existing Relationship	5,405			—			5,405
Less: Working Capital Adjustments	155			—			155
Aggregated Consideration Transferred	195,386			—			195,386
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed
Cash and Cash Equivalents	43			7			50
Lease Merchandise	59,616			—			59,616
Property, Plant and Equipment	5,568			—			5,568
Other Intangibles2	24,530			(32		)	24,498
Prepaid Expenses and Other Assets	1,168			38			1,206
Total Identifiable Assets Acquired	90,925			13			90,938
Accounts Payable and Accrued Expenses	(852		)	(58		)	(910		)
Customer Deposits and Advance Payments	(5,156		)	—			(5,156		)
Total Liabilities Assumed	(6,008		)	(58		)	(6,066		)
Goodwill3	110,469			45			110,514
Net Assets Acquired	$	84,917		$	(45	)	$	84,872

¹ As previously reported in Note 2 to the consolidated financial statements in the 2018 Annual Report.

² Identifiable intangible assets are further disaggregated in the table set forth below.

³ The total goodwill recognized in conjunction with the franchisee acquisitions, all of which is expected to be deductible for tax purposes, has been assigned to the Aaron’s Business reporting unit. The purchase price exceeded the fair value of the net assets acquired, which resulted in the recognition of goodwill, primarily due to synergies created from the expected future benefits to the Company’s omnichannel platform, implementation of the Company’s operational capabilities, expected inventory supply chain synergies between the Aaron’s Business and Progressive Leasing, and control of the Company’s brand name in new geographic markets. Goodwill also includes certain other intangible assets that do not qualify for separate recognition, such as an assembled workforce.

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination

The estimated intangible assets attributable to the franchisee acquisitions are comprised of the following:

	Fair Value (in thousands)		Weighted Average Life (in years)
Non-compete Agreements	$	1,872	3.0
Customer Lease Contracts	7,876		1.0
Customer Relationships	10,087		3.0
Reacquired Franchise Rights	4,663		3.9
Total Acquired Intangible Assets1	$	24,498

¹ Acquired definite-lived intangible assets have a total weighted average life of 2.5 years.

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Fair Value Measurement (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

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

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

(In Thousands)	March 31, 2019							December 31, 2018
	Level 1		Level 2			Level 3		Level 1		Level 2			Level 3
Deferred Compensation Liability	$	—	$	(10,790	)	$	—	$	—	$	(10,389	)	$	—

Assets Measured at Fair Value on Nonrecurring Basis

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

(In Thousands)	March 31, 2019						December 31, 2018
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets Held for Sale	$	—	$	8,974	$	—	$	—	$	6,589	$	—

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

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

(In Thousands)	March 31, 2019				December 31, 2018
	Level 1	Level 2		Level 3	Level 1	Level 2		Level 3
Fixed-Rate Long-Term Debt1	—	(184,835	)	—	—	(183,765	)	—

¹ The fair value of fixed-rate long-term debt is estimated using the present value of underlying cash flows discounted at a current market yield for similar instruments. The carrying amount of fixed-rate long-term debt was $180.0 million at March 31, 2019 and December 31, 2018, respectively.

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Loans Receivable (Tables)

3 Months Ended

Mar. 31, 2019

Receivables [Abstract]

Schedule of the Components of Loans Receivable, Net

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

(In Thousands)	March 31, 2019		December 31, 2018
Customers	$	54,517	$	60,879
Corporate	13,405		18,171
Franchisee	16,115		19,109
Accounts Receivable	$	84,037	$	98,159

The following is a summary of the Company’s loans receivable, net:

(In Thousands)	March 31, 2019			December 31, 2018
Credit Card Loans1	$	87,768		$	90,406
Acquired Loans2	3,721			5,688
Loans Receivable, Gross	91,489			96,094
Allowance for Loan Losses	(12,363		)	(12,970		)
Unamortized Fees	(6,562		)	(6,971		)
Loans Receivable, Net of Allowances and Unamortized Fees	$	72,564		$	76,153

¹ "Credit Card Loans" are loans originated after the 2015 acquisition of DAMI.

² "Acquired Loans" are credit card loans the Company purchased in the 2015 acquisition of DAMI.

Aging of the Loans Receivable Balance

Included in the table below is an aging of the loans receivable, gross balance:

(Dollar Amounts in Thousands)
Aging Category1	March 31, 2019			December 31, 2018
30-59 days past due	6.3		%	6.9		%
60-89 days past due	3.1		%	3.4		%
90 or more days past due	4.1		%	4.3		%
Past due loans receivable	13.5		%	14.6		%
Current loans receivable	86.5		%	85.4		%
Balance of Credit Card Loans on Nonaccrual Status	$	1,954		$	2,110
Balance of Loans Receivable 90 or More Days Past Due and Still Accruing Interest and Fees	$	—		$	—

¹ This aging is based on the contractual amounts outstanding for each loan as of period end, and does not reflect the fair value adjustments for the Acquired Loans.

Components of the Allowance for Loan Losses

The table below presents the components of the allowance for loan losses:

	Three Months Ended
(In Thousands)	March 31, 2019			March 31, 2018
Beginning Balance	$	12,970		$	11,454
Provision for Loan Losses	4,255			4,492
Charge-offs	(5,484		)	(5,619		)
Recoveries	622			372
Ending Balance	$	12,363		$	10,699

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Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Lease, Cost

The Company’s total lease expense is comprised of the following:

	Three Months Ended
(In Thousands)	March 31, 2019
Finance Lease Cost:
Amortization of Right-of-Use Assets	$	465
Interest on Lease Liabilities	114
Total Finance Lease Cost:	579
Operating Lease Cost:
Operating Lease Cost Classified within Operating Expenses1	29,213
Operating Lease Cost Classified within Restructuring Expenses, Net	804
Sublease Receipts	(732		)
Total Operating Lease Cost:	29,285
Total Lease Cost	$	29,864

¹ Includes short-term and variable lease costs, which are not significant.

Supplemental Cash Flow Information

Additional information regarding the Company’s leasing activities as a lessee is as follows:

	Three Months Ended
(In Thousands)	March 31, 2019
Cash Paid for Amounts Included in Measurement of Lease Liabilities:
Operating Cash Flows for Finance Leases	$	113
Operating Cash Flows for Operating Leases	31,643
Financing Cash Flows for Finance Leases	574
Total Cash Paid for Amounts Included in Measurement of Lease Liabilities	32,330
Right-of-Use Assets Obtained in Exchange for New Finance Lease Liabilities	—
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities	$	6,587

Assets And Liabilities, Lessee

Supplemental balance sheet information related to leases is as follows:

(In Thousands)	Balance Sheet Classification	March 31, 2019
Assets
Operating Lease Assets	Operating Lease Right-of-Use Assets	$	370,282
Finance Lease Assets	Property, Plant and Equipment, Net	2,578
Total Lease Assets		$	372,860
Liabilities
Operating Lease Liabilities	Operating Lease Liabilities	$	406,559
Finance Lease Liabilities	Debt	4,590
Total Lease Liabilities		$	411,149

Schedule of Weighted-Average Discount Rate and Weighted-Average Remaining Lease Term

Below is a summary of the weighted-average discount rate and weighted-average remaining lease term for the Company’s finance and operating leases:

	Weighted Average Discount Rate1		Weighted Average Remaining Lease Term (in years)
Finance Leases	6.0	%	2
Operating Leases	3.6	%	5

¹ Upon adoption of ASC 842, discount rates for existing operating leases were established as of January 1, 2019.

Operating Lease, Liability, Maturity

The table also includes a reconciliation of the future undiscounted cash flows to the present value of the finance and operating lease liabilities included in the condensed consolidated balance sheet.

(In Thousands)	Operating Leases		Finance Leases		Total
2019	$	89,172	$	2,407	$	91,579
2020	104,166		2,028		106,194
2021	81,568		772		82,340
2022	61,345		74		61,419
2023	40,967		—		40,967
Thereafter	75,891		—		75,891
Total Undiscounted Cash Flows	453,109		5,281		458,390
Less: Interest	46,550		691		47,241
Present Value of Lease Liabilities	$	406,559	$	4,590	$	411,149

Finance Lease, Liability, Maturity

The table also includes a reconciliation of the future undiscounted cash flows to the present value of the finance and operating lease liabilities included in the condensed consolidated balance sheet.

(In Thousands)	Operating Leases		Finance Leases		Total
2019	$	89,172	$	2,407	$	91,579
2020	104,166		2,028		106,194
2021	81,568		772		82,340
2022	61,345		74		61,419
2023	40,967		—		40,967
Thereafter	75,891		—		75,891
Total Undiscounted Cash Flows	453,109		5,281		458,390
Less: Interest	46,550		691		47,241
Present Value of Lease Liabilities	$	406,559	$	4,590	$	411,149

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Segments (Tables)

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

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

The following table presents revenue by source and by segment for the three months ended March 31, 2019:

	Three Months Ended March 31, 2019
(In Thousands)	Progressive Leasing		Aaron's Business		DAMI		Total
Lease Revenues and Fees1	$	523,401	$	420,756	$	—	$	944,157
Retail Sales2	—		12,809		—		12,809
Non-Retail Sales2	—		36,981		—		36,981
Franchise Royalties and Fees2	—		9,207		—		9,207
Interest and Fees on Loans Receivable3	—		—		8,646		8,646
Other	—		303		—		303
Total	$	523,401	$	480,056	$	8,646	$	1,012,103

¹ Substantially all lease revenues and fees are within the scope of ASC 842, Leases. The Company had $7.9 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers.

²  Revenue within the scope of ASC 606, Revenue from Contracts with Customers. Of the Franchise Royalties and Fees, $7.0 million is related to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. The remaining revenue is primarily related to fees collected for pre-opening services, which are being deferred and recognized as revenue over the agreement term, and advertising fees charged to franchisees. Retail sales are recognized as revenue at the point of sale. Non-retail sales are recognized as revenue upon delivery of the merchandise.

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

The following table presents revenue by source and by segment for the three months ended March 31, 2018:

	Three Months Ended March 31, 2018
(In Thousands)	Progressive Leasing		Aaron's Business		DAMI		Total
Lease Revenues and Fees1	$	486,517	$	383,550	$	—	$	870,067
Retail Sales2	—		8,516		—		8,516
Non-Retail Sales2	—		53,230		—		53,230
Franchise Royalties and Fees2	—		12,862		—		12,862
Interest and Fees on Loans Receivable3	—		—		9,542		9,542
Other	—		592		—		592
Total	$	486,517	$	458,750	$	9,542	$	954,809

¹ Substantially all lease revenues and fees are within the scope of ASC 842, Leases. The Company had $5.0 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers.

² Revenue within the scope of ASC 606, Revenue from Contracts with Customers. Of the Franchise Royalties and Fees, $10.2 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 sales are recognized as revenue at the point of sale. Non-retail sales are recognized as revenue upon delivery of the merchandise.

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

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

(In Thousands)	March 31, 2019		December 31, 2018
Assets:
Progressive Leasing	$	1,106,668	$	1,088,227
Aaron's Business1	1,774,858		1,483,102
DAMI	89,533		95,341
Other2	266,907		160,022
Total Assets	$	3,237,966	$	2,826,692

¹ Includes inventory (principally raw materials and work-in-process) that has been classified within lease merchandise in the condensed consolidated balance sheets of $14.5 million and $15.2 million as of March 31, 2019 and December 31, 2018, respectively.

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

The following is a summary of earnings (loss) before income taxes by segment:

	Three Months Ended   March 31,
(In Thousands)	2019			2018
Earnings (Loss) Before Income Taxes:
Progressive Leasing	$	55,388		$	34,979
Aaron's Business1	17,588			33,079
DAMI	(2,668		)	(1,306		)
Total Earnings Before Income Taxes	$	70,308		$	66,752

¹

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Restructuring (Tables)

3 Months Ended

Mar. 31, 2019

Restructuring and Related Activities [Abstract]

Restructuring and Related Costs

The following table summarizes restructuring charges for the three months ended March 31, 2019 and 2018, respectively, under the three programs:

	Three Months Ended March 31,
(In Thousands)	2019		2018
Right-of-Use Asset Impairment and Operating Lease Charges	$	9,522	$	719
Fixed Asset Impairment	1,497		—
Severance	1,136		514
Other Expenses	1,126		—
Gain on Sale of Closed Store Properties	—		(327		)
Total Restructuring Expenses	$	13,281	$	906

Schedule of Restructuring Reserve

The following table summarizes the balances of the accruals for the restructuring programs, which are recorded in accounts payable and accrued expenses in the condensed consolidated balance sheets, and the activity for the three months ended March 31, 2019:

(In Thousands)	Contractual Lease Obligations			Severance
Balance at January 1, 2019	$	8,472		$	651
ASC 842 Transition Adjustment1	(8,472		)	—
Adjusted Balance at January 1, 2019	—			651
Restructuring Charges	—			1,136
Payments	—			(1,033		)
Balance at March 31, 2019	$	—		$	754

¹ Upon the adoption of ASC 842 on January 1, 2019, the Company reclassified the remaining liability for contractual lease obligations from accounts payable and accrued expenses to a reduction to operating lease right-of-use assets within its condensed consolidated balance sheets.

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Basis and Summary of Significant Accounting Policies - Narrative (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2019 USD ($) state	Mar. 31, 2018 USD ($)	Dec. 31, 2018	Dec. 31, 2017 franchise
Significant Accounting Policies [Line Items]
Number of businesses acquired | franchise				4
Threshold Period Past Due for Write-off of Trade Accounts Receivable			60 days
Progressive Finance Holdings, LLC
Significant Accounting Policies [Line Items]
Threshold Period Past Due for Write-off of Trade Accounts Receivable			120 days
Progressive Leasing
Significant Accounting Policies [Line Items]
Number of states in which entity operates | state	46
Progressive leasing invoice volume | $	$ 394,727	$ 345,562

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Basis and Summary of Significant Accounting Policies - Store Count by Ownership Type (Details) - Operating Segments - Store	Mar. 31, 2019	Mar. 31, 2018
Significant Accounting Policies [Line Items]
Number of retail stores	1,599	1,719
Company-operated Aaron's Branded Stores
Significant Accounting Policies [Line Items]
Number of retail stores	1,230	1,182
Franchised Stores
Significant Accounting Policies [Line Items]
Number of retail stores	369	537

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Basis and Summary of Significant Accounting Policies - Calculation of Dilutive Stock Awards (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Accounting Policies [Abstract]
Weighted Average Shares Outstanding (in shares)	67,294	70,105
Dilutive Effect of Share-Based Awards (in shares)	1,479	1,913
Weighted Average Shares Outstanding Assuming Dilution (in shares)	68,773	72,018
Anti-dilutive securities excluded from the computation of earnings per share assuming dilution (in shares)	443	187

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Basis and Summary of Significant Accounting Policies - Revenue Recognition Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenues	$ 1,012,103	$ 954,809
Deferred revenue	$ 83,610		$ 80,579
Promotional fees percent promotional interest period one	6 months
Promotional fees percent promotional interest period two	12 months
Promotional fees percent promotional interest period three	18 months
Credit Card Loans
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Privilege period	24 months
Minimum payment required percentage of outstanding loan balance	3.50%
Minimum | Credit Card Loans
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Merchant fee percent	3.00%
Promotional fees percent	1.00%
Interest rate fixed and variable	25.00%
Maximum | Credit Card Loans
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Merchant fee percent	25.00%
Promotional fees percent	8.00%
Interest rate fixed and variable	35.99%
Sales And Lease Ownership | Agreement One
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Lease agreement period	12 months
Sales And Lease Ownership | Agreement Two
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Lease agreement period	18 months
Sales And Lease Ownership | Agreement Three
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Lease agreement period	24 months
Progressive Finance Holdings, LLC | Agreement One
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Lease agreement period	12 months
Sales and Lease Ownership and HomeSmart
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Royalty payment rate	6.00%
Initial franchise fees | Sales and Lease Ownership and HomeSmart | Minimum
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenues	$ 15
Initial franchise fees | Sales and Lease Ownership and HomeSmart | Maximum
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenues	$ 50

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Basis and Summary of Significant Accounting Policies - Accounts Receivable Net of Allowances (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts Receivable	$ 84,037	$ 98,159
Customers
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts Receivable	54,517	60,879
Corporate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts Receivable	13,405	18,171
Franchisee
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts Receivable	$ 16,115	$ 19,109

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Basis and Summary of Significant Accounting Policies - Components of the Accounts Receivable Provision (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Accounting Policies [Abstract]
Bad Debt Expense	$ 1,125	$ 46,542
Provision for Returns and Uncollected Renewal Payments	62,110	4,916
Accounts Receivable Provision	$ 63,235	$ 51,458

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Basis and Summary of Significant Accounting Policies - Lease Merchandise (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Significant Accounting Policies [Line Items]
Lease merchandise salvage value percentage	0.00%
Lease agreement, lease period used as asset useful life	12 months
Lease Merchandise, net of Accumulated Depreciation and Allowances	$ 1,301,066		$ 1,318,470
Components of the allowance of leases merchandise write-offs:
Beginning Balance	46,694	$ 35,629
Merchandise Written off, net of Recoveries	(53,222)	(40,511)
Provision for Write-offs	56,995	44,470
Ending Balance	50,467	$ 39,588
Merchandise on Lease
Significant Accounting Policies [Line Items]
Lease Merchandise, net of Accumulated Depreciation and Allowances	$ 1,022,902		1,053,684
Merchandise on Lease | Minimum
Significant Accounting Policies [Line Items]
Lease merchandise useful life	12 months
Merchandise on Lease | Maximum
Significant Accounting Policies [Line Items]
Lease merchandise useful life	24 months
Merchandise Not on Lease
Significant Accounting Policies [Line Items]
Lease merchandise useful life	36 months
Lease Merchandise, net of Accumulated Depreciation and Allowances	$ 278,164		$ 264,786

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Basis and Summary of Significant Accounting Policies - Credit Quality Indicators (Details)	Mar. 31, 2019	Dec. 31, 2018
FICO Score, 600 or Less
Financing Receivable, Recorded Investment [Line Items]
Financing receivable, percentage of loan portfolio per FICO Score	4.10%	3.70%
FICO Score, Between 600 and 700
Financing Receivable, Recorded Investment [Line Items]
Financing receivable, percentage of loan portfolio per FICO Score	79.00%	77.90%
FICO Score, 700 or Greater
Financing Receivable, Recorded Investment [Line Items]
Financing receivable, percentage of loan portfolio per FICO Score	16.90%	18.40%

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Basis and Summary of Significant Accounting Policies - Components of Prepaid Expenses and Other Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Prepaid Expenses	$ 27,467	$ 30,763
Prepaid Insurance	24,072	27,948
Assets Held for Sale	8,974	6,589
Deferred Tax Asset	8,761	8,761
Other Assets	23,207	24,161
Prepaid Expenses and Other Assets	$ 92,481	$ 98,222

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Basis and Summary of Significant Accounting Policies - Assets Held for Sale (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Assets Held for Sale	$ 8,974	$ 6,589

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Basis and Summary of Significant Accounting Policies - Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Accounts Payable	$ 71,751	$ 88,369
Accrued Insurance Costs	39,181	40,423
Accrued Salaries and Benefits	45,832	40,790
Accrued Real Estate and Sales Taxes	30,749	30,332
Deferred Rent		27,270
Other Accrued Expenses and Liabilities	59,266	65,969
Accounts Payable and Accrued Expenses	$ 246,779	$ 293,153

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Basis and Summary of Significant Accounting Policies - Statements of Stockholders' Equity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Jan. 01, 2019
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	$ 1,760,708	$ 1,728,004
Dividends	(2,363)	(2,146)
Stock-Based Compensation	7,050	7,862
Reissued Shares	(10,981)	(9,161)
Repurchased Shares		(18,407)
Net Earnings	56,078	52,246
Foreign Currency Translation Adjustment	424	(477)
Ending Balance	1,813,508	1,756,192
Treasury Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	$ (567,847)	$ (407,713)
Beginning Balance (in shares)	(23,568)	(20,733)
Reissued Shares (in shares)	493	545
Reissued Shares	$ 4,264	$ 3,441
Repurchased Shares (in shares)		(391)
Repurchased Shares		$ (18,407)
Ending Balance (in shares)	(23,075)	(20,579)
Ending Balance	$ (563,583)	$ (422,679)
Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	45,376	45,376
Ending Balance	45,376	45,376
Additional Paid-in Capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	278,922	270,043
Stock-Based Compensation	7,050	7,862
Reissued Shares	(15,245)	(12,602)
Ending Balance	$ 270,727	$ 265,303
Retained Earnings
Dividends, per share (in dollars per share)	$ 0.035	$ 0.03
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	$ 2,005,344	$ 1,819,524
Dividends	(2,363)	(2,146)
Net Earnings	56,078	52,246
Ending Balance	2,061,651	1,867,895
Accumulated Other Comprehensive Income (Loss)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	(1,087)	774
Foreign Currency Translation Adjustment	424	(477)
Ending Balance	(663)	297
Accounting Standards Update 2014-09
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Opening Balance Sheet Adjustment - ASC 842, net of taxes		(1,729)
Accounting Standards Update 2014-09 | Retained Earnings
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Opening Balance Sheet Adjustment - ASC 842, net of taxes		$ (1,729)
Accounting Standards Update 2016-02
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Opening Balance Sheet Adjustment - ASC 842, net of taxes	2,592
Accounting Standards Update 2016-02 | Retained Earnings
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Opening Balance Sheet Adjustment - ASC 842, net of taxes	$ 2,592		$ 2,612

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Basis and Summary of Significant Accounting Policies - Related Party Transactions (Details) $ in Millions	3 Months Ended	12 Months Ended	36 Months Ended
	Mar. 31, 2019 USD ($) lease franchise	Dec. 31, 2018	Dec. 31, 2004 Property
Related Party Transaction [Line Items]
Threshold Period Past Due for Write-off of Trade Accounts Receivable		60 days
Additional number of businesses acquired | franchise	2
Related Party
Related Party Transaction [Line Items]
Sale leaseback, number of properties | Property			21
Number of capital leases | lease	2
Number of operating leases | lease	4
Capital leases, annual rental payments | $	$ 0.1
Interest rate in the leases	9.70%
Operating leases, annual rental payments | $	$ 0.2

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Basis and Summary of Significant Accounting Policies - Supplemental Disclosure of Noncash Investing Transactions (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Accounting Policies [Abstract]
Asset acquisition, fair value of non-cash consideration		$ 0.4
Asset acquisition, non-cash settlement of accounts receivable	$ 0.1	$ 0.2

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Basis and Summary of Significant Accounting Policies - Hurricane Impact (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Accounting Policies [Abstract]
Partial cash payment from insurer	$ 2.7
Insurance proceeds received, before tax	0.9
Insurance settlements receivable	$ 0.7

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Basis and Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - Accounting Standards Update 2016-02 - USD ($) $ in Thousands	Mar. 31, 2019	Jan. 01, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Opening Balance Sheet Adjustment - ASC 842, net of taxes	$ 2,592
Retained Earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Opening Balance Sheet Adjustment - ASC 842, net of taxes	$ 2,592	$ 2,612

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Acquisitions - Narrative (Details) $ in Thousands		3 Months Ended		12 Months Ended
	Jan. 01, 2018 USD ($)	Mar. 31, 2019 USD ($) franchise	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($) store
Business Acquisition [Line Items]
Additional number of businesses acquired | franchise		2
Payments to acquire businesses and asset acquisitions		$ (3,470)	$ (4,774)
Franchisee Acquisitions
Business Acquisition [Line Items]
Number of branded stores | store				152
Purchase price	$ 189,826	189,826		$ 189,826
Revenue of acquiree since acquisition date		48,900	1,300
Earnings or loss of acquiree since acquisition date		3,000	100
Acquisition-related costs		1,400
All Acquisitions Excluding SEI Acquisition
Business Acquisition [Line Items]
Payments to acquire businesses and asset acquisitions		$ (3,500)	$ (4,800)

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Acquisitions - Franchisee Acquisition (Details) - USD ($) $ in Thousands		3 Months Ended	12 Months Ended
	Jan. 01, 2018	Mar. 31, 2019	Dec. 31, 2018
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed
Goodwill		$ 734,558	$ 733,170
Franchisee Acquisitions
Business Acquisition [Line Items]
Purchase Price	$ 189,826	189,826	189,826
Add: Settlement of Pre-existing Relationship		5,405	5,405
Working Capital Adjustment		155	155
Consideration Transferred		195,386	195,386
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed
Cash and Cash Equivalents		50	43
Lease Merchandise		59,616	59,616
Property, Plant and Equipment		5,568	5,568
Other Intangibles		24,498	24,530
Prepaid Expenses and Other Assets		1,206	1,168
Total Identifiable Assets Acquired		90,938	90,925
Accounts Payable and Accrued Expenses		(910)	(852)
Customer Deposits and Advance Payments		(5,156)	(5,156)
Total Liabilities Assumed		(6,066)	(6,008)
Goodwill		110,514	110,469
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net		$ 84,872	84,917
Acquisition Accounting Adjustments
Cash and Cash Equivalents			7
Lease Merchandise			0
Property, Plant and Equipment			0
Other Intangibles			(32)
Prepaid Expenses and Other Assets			38
Total Identifiable Assets Acquired			13
Accounts Payable and Accrued Expenses			(58)
Customer Deposits and Advance Payments			0
Total Liabilities Assumed			58
Goodwill			45
Net Assets Acquired			$ (45)

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Acquisitions - Intangibles Acquired (Details) - Franchisee Acquisitions $ in Thousands	1 Months Ended
	Jul. 31, 2018 USD ($)
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Fair Value	$ 24,498
Weighted Average Life (in years)	2 years 6 months 6 days
Non-compete Agreements
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Fair Value	$ 1,872
Weighted Average Life (in years)	3 years
Customer Lease Contracts
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Fair Value	$ 7,876
Weighted Average Life (in years)	1 year
Customer Relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Fair Value	$ 10,087
Weighted Average Life (in years)	3 years
Reacquired Franchise Rights
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Fair Value	$ 4,663
Weighted Average Life (in years)	3 years 10 months 18 days

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Fair Value Measurement - Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair value on a recurring basis - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred Compensation Liability	$ 0	$ 0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred Compensation Liability	(10,790)	(10,389)
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred Compensation Liability	$ 0	$ 0

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Fair Value Measurement - Assets Measured At Fair Value on Nonrecurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets Held for Sale	$ 8,974	$ 6,589
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	8,974	6,589
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets Held for Sale	$ 0	$ 0

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Fair Value Measurement - Fair Value of Assets (Liabilities) Not Measured at Fair Value In Consolidated Balance Sheets (Details) - Fixed-Rate Long-Term Debt - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long term debt, fair value	$ 0	$ 0
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long term debt, fair value	(184,835)	(183,765)
Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long term debt, fair value	$ 0	$ 0

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Fair Value Measurement - Fair Value of Assets (Liabilities) Not Measured at Fair Value In Consolidated Balance Sheet - Additional Information (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Fixed-Rate Long-Term Debt
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long term debt, carrying value	$ 180.0	$ 180.0

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Loans Receivable - Components of Loans Receivable, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross	$ 91,489	$ 96,094
Allowance for Loan Losses	(12,363)	(12,970)	$ (10,699)	$ (11,454)
Unamortized Fees	(6,562)	(6,971)
Loans Receivable, Net of Allowances and Unamortized Fees	72,564	76,153
Credit Card Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross	87,768	90,406
Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross	$ 3,721	$ 5,688

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Loans Receivable - Aging of the Loans Receivable Balance (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due loans receivable	13.50%	14.60%
Current loans receivable	86.50%	85.40%
Balance of Credit Card Loans on Nonaccrual Status	$ 1,954	$ 2,110
30-59 days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due loans receivable	6.30%	6.90%
60-89 days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due loans receivable	3.10%	3.40%
90 or more days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due loans receivable	4.10%	4.30%
Balance of Loans Receivable 90 or More Days Past Due and Still Accruing Interest and Fees	$ 0	$ 0

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Loans Receivable - Components of the Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Components of the Allowance For Loan Losses:
Beginning Balance	$ 12,970	$ 11,454
Provision for Loan Losses	4,255	4,492
Charge-offs	(5,484)	(5,619)
Recoveries	622	372
Ending Balance	$ 12,363	$ 10,699

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Leases - Narrative (Details)	Mar. 31, 2019
Minimum
Lessee, Lease, Description [Line Items]
Renewal term	1 year
Maximum
Lessee, Lease, Description [Line Items]
Renewal term	20 years

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Leases - Total Lease Expense (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Finance Lease Cost:
Amortization of Right-of-Use Assets	$ 465
Interest on Lease Liabilities	114
Total Finance Lease Cost	579
Operating Lease Cost	29,285
Sublease Receipts	(732)
Total Lease Cost	29,864
Operating Lease Cost Classified within Operating Expenses
Finance Lease Cost:
Operating Lease Cost	29,213
Operating Lease Cost Classified within Restructuring Expenses, Net
Finance Lease Cost:
Operating Lease Cost	$ 804

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Leases - Leasing Activities (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Leases [Abstract]
Operating Cash Flows for Finance Leases	$ 113
Operating Cash Flows for Operating Leases	31,643
Financing Cash Flows for Finance Leases	574
Total Cash Paid for Amounts Included in Measurement of Lease Liabilities	32,330
Right-of-Use Assets Obtained in Exchange for New Finance Lease Liabilities	0
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities	$ 6,587

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Leases - Supplemental Balance Sheet Information Related to Leases (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Leases [Abstract]
Operating Lease Assets	$ 370,282
Finance Lease Assets	2,578
Total Lease Assets	372,860
Operating Lease Liabilities	406,559
Finance Lease Liabilities	4,590
Total Lease Liabilities	$ 411,149

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Leases - Summary of the Weighted-Average Discount Rate and Weighted-Average Remaining Lease Term (Details)	Mar. 31, 2019
Weighted Average Discount Rate
Finance Leases	6.00%
Operating Leases	3.60%
Weighted Average Remaining Lease Term (in years)
Finance Leases	2 years
Operating Leases	5 years

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Leases - Operating and Finance Lease Liability (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Operating Lease Liabilities, Payments Due [Abstract]
2019	$ 89,172
2020	104,166
2021	81,568
2022	61,345
2023	40,967
Thereafter	75,891
Total Undiscounted Cash Flows	453,109
Less: Interest	46,550
Finance Lease, Liability, Undiscounted Excess Amount	691
Present Value of Lease Liabilities	406,559
Finance Lease Liabilities, Payments, Due [Abstract]
2019	2,407
2020	2,028
2021	772
2022	74
2023	0
Thereafter	0
Total Undiscounted Cash Flows	5,281
Present Value of Lease Liabilities	4,590
Total
2019	91,579
2020	106,194
2021	82,340
2022	61,419
2023	40,967
Thereafter	75,891
Total Undiscounted Cash Flows	458,390
Less: Interest	47,241
Present Value of Lease Liabilities	$ 411,149

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Commitments and Contingencies (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 CAD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Other Commitments [Line Items]
Event of default, loan due In full, term	90 days
Portion that company might be obligated to repay in the event franchisees defaulted		$ 36.8
Fair value of franchisee-related borrowings		0.1	$ 0.3
Loan facility to franchisees, maximum commitment amount		55.0
Loss contingency accrual		1.7	1.4
Reserve for unfunded loan commitments		0.6	0.5
Unused credit card lines
Other Commitments [Line Items]
Remaining credit available		316.0	$ 316.4
Minimum
Other Commitments [Line Items]
Range of possible loss not accrued		0.0
Loss contingency, estimate of possible loss		2.6
Maximum
Other Commitments [Line Items]
Range of possible loss not accrued		1.0
Loss contingency, estimate of possible loss		$ 5.2
Franchise Loan Facility
Other Commitments [Line Items]
Loan facility maximum Canadian sub facility commitment amount	$ 25,000,000

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Segments - Narrative (Details)	3 Months Ended
	Mar. 31, 2019 source segments
Segment Reporting [Abstract]
Number of operating segments	3
Number of reportable segments	3
DAMI | Progressive Subsidiary
Business Acquisition [Line Items]
Sources of financial and leasing transactions acquired | source	1

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Segments Segments - Revenue by source and segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Segment Reporting Information [Line Items]
Revenues	$ 1,012,103	$ 954,809
Progressive Leasing
Segment Reporting Information [Line Items]
Revenues	523,401	486,517
Aaron's Business
Segment Reporting Information [Line Items]
Revenues	480,056	458,750
DAMI
Segment Reporting Information [Line Items]
Revenues	8,646	9,542
Lease Revenues and Fees
Segment Reporting Information [Line Items]
Revenues	944,157	870,067
Lease Revenues and Fees | Progressive Leasing
Segment Reporting Information [Line Items]
Revenues	523,401	486,517
Lease Revenues and Fees | Aaron's Business
Segment Reporting Information [Line Items]
Revenues	420,756	383,550
Lease Revenues and Fees | DAMI
Segment Reporting Information [Line Items]
Revenues	0	0
Retail Sales
Segment Reporting Information [Line Items]
Revenues	12,809	8,516
Retail Sales | Progressive Leasing
Segment Reporting Information [Line Items]
Revenues	0	0
Retail Sales | Aaron's Business
Segment Reporting Information [Line Items]
Revenues	12,809	8,516
Retail Sales | DAMI
Segment Reporting Information [Line Items]
Revenues	0	0
Non-Retail Sales
Segment Reporting Information [Line Items]
Revenues	36,981	53,230
Non-Retail Sales | Progressive Leasing
Segment Reporting Information [Line Items]
Revenues	0	0
Non-Retail Sales | Aaron's Business
Segment Reporting Information [Line Items]
Revenues	36,981	53,230
Non-Retail Sales | DAMI
Segment Reporting Information [Line Items]
Revenues	0	0
Franchise Royalties and Fees
Segment Reporting Information [Line Items]
Revenues	9,207	12,862
Franchise Royalties and Fees | Progressive Leasing
Segment Reporting Information [Line Items]
Revenues	0	0
Franchise Royalties and Fees | Aaron's Business
Segment Reporting Information [Line Items]
Revenues	9,207	12,862
Franchise Royalties and Fees | DAMI
Segment Reporting Information [Line Items]
Revenues	0	0
Interest and Fees on Loans Receivable
Segment Reporting Information [Line Items]
Revenues	8,646	9,542
Interest and Fees on Loans Receivable | Progressive Leasing
Segment Reporting Information [Line Items]
Revenues	0	0
Interest and Fees on Loans Receivable | Aaron's Business
Segment Reporting Information [Line Items]
Revenues	0	0
Interest and Fees on Loans Receivable | DAMI
Segment Reporting Information [Line Items]
Revenues	8,646	9,542
Other
Segment Reporting Information [Line Items]
Revenues	303	592
Other | Progressive Leasing
Segment Reporting Information [Line Items]
Revenues	0	0
Other | Aaron's Business
Segment Reporting Information [Line Items]
Revenues	303	592
Other | DAMI
Segment Reporting Information [Line Items]
Revenues	0	0
Leases
Segment Reporting Information [Line Items]
Revenues	7,900	5,000
Transferred over Time | Franchise Royalties and Fees
Segment Reporting Information [Line Items]
Revenues	$ 7,000	$ 10,200

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Segments - Information on Segments and Reconciliation to Earnings Before Income Taxes from Continuing Operations (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Segment Reporting Information [Line Items]
Total Earnings Before Income Taxes	$ 70,308	$ 66,752
Total Assets	3,237,966		$ 2,826,692
Progressive Leasing
Segment Reporting Information [Line Items]
Total Earnings Before Income Taxes	55,388	34,979
Total Assets	1,106,668		1,088,227
Aaron's Business
Segment Reporting Information [Line Items]
Total Earnings Before Income Taxes	17,588	33,079
Total Assets	1,774,858		1,483,102
DAMI
Segment Reporting Information [Line Items]
Total Earnings Before Income Taxes	(2,668)	$ (1,306)
Total Assets	89,533		95,341
Other
Segment Reporting Information [Line Items]
Total Assets	$ 266,907		$ 160,022

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Segments - Information on Segments and Reconciliation to Earnings Before Income Taxes from Continuing Operations- Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Segment Reporting Information [Line Items]
Impairment of Assets	$ 10,492	$ 0
Charges	13,281	906
Operating Segments | Aaron's Business
Segment Reporting Information [Line Items]
Inventory (principally raw materials and work-in-process)	14,500		$ 15,200
Restructuring Program 2016 | Operating Segments | Aaron's Business
Segment Reporting Information [Line Items]
Charges		$ 900
Maximum
Segment Reporting Information [Line Items]
Charges	$ 13,300

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Restructuring - Narrative (Details) $ in Thousands	3 Months Ended		36 Months Ended	39 Months Ended
	Mar. 31, 2019 USD ($) store	Mar. 31, 2018 USD ($)	Dec. 31, 2018 store	Mar. 31, 2019 USD ($)
Restructuring Cost and Reserve [Line Items]
Document Period End Date	Mar. 31, 2019
Restructuring and related cost, number of store closures | store	84
Total Restructuring Expenses	$ 13,281	$ 906
Restructuring Program 2019
Restructuring Cost and Reserve [Line Items]
Total Restructuring Expenses	12,900
Restructuring Program 2016 and 2017
Restructuring Cost and Reserve [Line Items]
Total Restructuring Expenses	400	900		$ 39,700
Gain on Sale of Closed Store Properties
Restructuring Cost and Reserve [Line Items]
Restructuring and related cost, number of store closures | store			139
Total Restructuring Expenses	$ 0	$ (327)

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Restructuring - Summary of Restructuring Charges (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Restructuring Cost and Reserve [Line Items]
Total Restructuring Expenses	$ 13,281	$ 906
Right-of-Use Asset Impairment and Operating Lease Charges
Restructuring Cost and Reserve [Line Items]
Total Restructuring Expenses	9,522	719
Fixed Asset Impairment
Restructuring Cost and Reserve [Line Items]
Total Restructuring Expenses	1,497	0
Severance
Restructuring Cost and Reserve [Line Items]
Total Restructuring Expenses	1,136	514
Other Expenses
Restructuring Cost and Reserve [Line Items]
Total Restructuring Expenses	1,126	0
Other Expenses
Restructuring Cost and Reserve [Line Items]
Total Restructuring Expenses	$ 0	$ (327)

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Restructuring - Summary of Accruals of Restructuring Programs (Details) - USD ($) $ in Thousands		3 Months Ended
	Jan. 01, 2019	Mar. 31, 2019	Mar. 31, 2018
Restructuring Cost and Reserve [Line Items]
Restructuring Expenses, Net		$ 13,281	$ 906
Contractual Lease Obligations
Restructuring Reserve [Roll Forward]
Balance at January 1, 2019	$ 8,472	8,472
Restructuring Charges		0
Payments		0
Balance at March 31, 2019		0
Severance
Restructuring Cost and Reserve [Line Items]
Restructuring Expenses, Net		1,136	$ 514
Restructuring Reserve [Roll Forward]
Balance at January 1, 2019	651	651
Restructuring Charges		1,136
Payments		(1,033)
Balance at March 31, 2019		754
Accounting Standards Update 2016-02 | Contractual Lease Obligations
Restructuring Reserve [Roll Forward]
Balance at January 1, 2019	0	0
Topic 842 Transition Adjustment	(8,472)
Accounting Standards Update 2016-02 | Severance
Restructuring Reserve [Roll Forward]
Balance at January 1, 2019	651	$ 651
Topic 842 Transition Adjustment	$ 0