XML 73 R13.htm IDEA: XBRL DOCUMENT v3.19.3
Segments
 9 Months Ended
Sep. 30, 2019
Segment Reporting [Abstract]  
Segments SEGMENTS
As of September 30, 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 September 30, 2019:
 
Three Months Ended September 30, 2019
(In Thousands)
Progressive Leasing
Aaron's Business
DAMI
Total
Lease Revenues and Fees1
$
528,850

$
377,926

$
—

$
906,776

Retail Sales2
—

8,854

—

8,854

Non-Retail Sales2
—

31,085

—

31,085

Franchise Royalties and Fees2
—

8,087

—

8,087

Interest and Fees on Loans Receivable3
—

—

8,687

8,687

Other
—

319

—

319

Total
$
528,850

$
426,271

$
8,687

$
963,808

1 Substantially all lease revenues and fees are within the scope of ASC 842, Leases. The Company had $7.0 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, $6.3 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 September 30, 2018:
 
Three Months Ended September 30, 2018
(In Thousands)
Progressive Leasing
Aaron's Business
DAMI
Total
Lease Revenues and Fees1
$
504,407

$
376,464

$
—

$
880,871

Retail Sales2
—

7,620

—

7,620

Non-Retail Sales2
—

44,368

—

44,368

Franchise Royalties and Fees2
—

10,153

—

10,153

Interest and Fees on Loans Receivable3
—

—

9,508

9,508

Other
—

551

—

551

Total
$
504,407

$
439,156

$
9,508

$
953,071

1 Substantially all lease revenues and fees are within the scope of ASC 840, Leases. The Company had $5.6 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers.
2 Revenue within the scope of ASC 606, Revenue from Contracts with Customers. Of the Franchise Royalties and Fees, $7.4 million is related to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. The remaining revenue is primarily related to fees collected for pre-opening services, which are being deferred and recognized as revenue over the agreement term, and advertising fees charged to franchisees. Retail sales are recognized as revenue at the point of sale. Non-retail sales are recognized as revenue upon delivery of the merchandise.
3 Revenue within the scope of ASC 310, Credit Card Interest & Fees.
The following table presents revenue by source and by segment for the nine months ended September 30, 2019:
 
Nine Months Ended September 30, 2019
(In Thousands)
Progressive Leasing
Aaron's Business
DAMI
Total
Lease Revenues and Fees1
$
1,568,584

$
1,189,914

$
—

$
2,758,498

Retail Sales2
—

30,561

—

30,561

Non-Retail Sales2
—

102,190

—

102,190

Franchise Royalties and Fees2
—

25,899

—

25,899

Interest and Fees on Loans Receivable3
—

—

25,943

25,943

Other
—

961

—

961

Total
$
1,568,584

$
1,349,525

$
25,943

$
2,944,052

1 Substantially all lease revenues and fees are within the scope of ASC 842, Leases. The Company had $20.4 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, $19.6 million is related to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. The remaining revenue is primarily related to fees collected for pre-opening services, which are being deferred and recognized as revenue over the agreement term, and advertising fees charged to franchisees. Retail sales are recognized as revenue at the point of sale. Non-retail sales are recognized as revenue upon delivery of the merchandise.
3 Revenue within the scope of ASC 310, Credit Card Interest & Fees.
The following table presents revenue by source and by segment for the nine months ended September 30, 2018:
 
Nine Months Ended September 30, 2018
(In Thousands)
Progressive Leasing
Aaron's Business
DAMI
Total
Lease Revenues and Fees1
$
1,474,590

$
1,122,286

$
—

$
2,596,876

Retail Sales2
—

22,728

—

22,728

Non-Retail Sales2
—

151,259

—

151,259

Franchise Royalties and Fees2
—

35,140

—

35,140

Interest and Fees on Loans Receivable3
—

—

28,258

28,258

Other
—

1,478

—

1,478

Total
$
1,474,590

$
1,332,891

$
28,258

$
2,835,739

1 Substantially all lease revenues and fees are within the scope of ASC 840, Leases. The Company had $13.0 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers.
2 Revenue within the scope of ASC 606, Revenue from Contracts with Customers. Of the Franchise Royalties and Fees, $26.6 million is related to franchise royalty income that is recognized as the franchisee collects cash revenue from its customers. The remaining revenue is primarily related to fees collected for pre-opening services, which are being deferred and recognized as revenue over the agreement term, and advertising fees charged to franchisees. Retail sales are recognized as revenue at the point of sale. Non-retail sales are recognized as revenue upon delivery of the merchandise.
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
September 30,
 
Nine Months Ended
September 30,
(In Thousands)
2019
 
2018
 
2019
 
2018
Earnings (Loss) Before Income Taxes:
 
 
 
 
 
 
 
Progressive Leasing
$
53,473

 
$
40,839

 
$
167,267

 
$
120,393

Aaron's Business1
932

 
15,641

 
18,658

 
56,417

DAMI
(2,740
)
 
(3,065
)
 
(7,133
)
 
(6,663
)
Total Earnings Before Income Taxes
$
51,665

 
$
53,415

 
$
178,792

 
$
170,147


1 Earnings before income taxes for the Aaron's Business during the nine months ended September 30, 2019 were impacted by (i) restructuring charges of $37.5 million related to closed store operating lease right-of-use asset impairment and operating lease charges, the impairment of vacant store properties, including the planned exit from one of our store support buildings, workforce reductions, and a loss on sale of six Canadian stores to a third party, of which $5.5 million was incurred during the three months ended September 30, 2019 and (ii) gains on insurance recoveries of $4.5 million recorded during the first and second quarters of 2019 related to payments received from and final settlements reached with insurance carriers for Hurricanes Harvey and Irma property and business interruption claims in excess of the related property insurance receivables.
Earnings before income taxes for the Aaron's Business during the nine months ended September 30, 2018 includes the full impairment of the PerfectHome investment of $20.1 million recorded during the second quarter of 2018.
The following is a summary of total assets by segment and shared corporate-related assets.
(In Thousands)
September 30, 2019
 
December 31, 2018
Assets:
 
 
 
Progressive Leasing
$
1,128,831

 
$
1,088,227

Aaron's Business1
1,693,574

 
1,483,102

DAMI
89,951

 
95,341

Other2
307,264

 
160,022

Total Assets
$
3,219,620

 
$
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 $15.8 million and $15.2 million as of September 30, 2019 and December 31, 2018, respectively.
2 Corporate-related assets that benefit multiple segments are reported as other assets.