Basis and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2019

Schedule Of Company Operated Store Activity

The following table presents invoice volume for Progressive Leasing:



For the Three Months Ended September 30 (Unaudited and In Thousands)	2019		2018
Progressive Leasing Invoice Volume¹	$	420,902	$	355,005

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



Stores as of September 30 (Unaudited)	2019	2018
Company-operated Aaron's Branded Stores	1,163	1,267
Franchised Stores	341	432
Systemwide Stores	1,504	1,699

Calculation of Dilutive Stock Awards

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



	Three Months Ended September 30,		Nine Months Ended September 30,
(Shares In Thousands)	2019	2018	2019	2018
Weighted Average Shares Outstanding	67,400	68,819	67,461	69,521
Dilutive Effect of Share-Based Awards	1,252	1,320	1,278	1,475
Weighted Average Shares Outstanding Assuming Dilution	68,652	70,139	68,739	70,996

Accounts Receivable Net of Allowances

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



(In Thousands)	September 30, 2019		December 31, 2018
Customers	$	67,359	$	60,879
Corporate	12,600		18,171
Franchisee	13,131		19,109
Accounts Receivable	$	93,090	$	98,159

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



(In Thousands)	September 30, 2019			December 31, 2018
Credit Card Loans¹	$	91,279		$	90,406
Acquired Loans²	821			5,688
Loans Receivable, Gross	92,100			96,094

Allowance for Loan Losses	(14,054		)	(12,970		)
Unamortized Fees	(5,916		)	(6,971		)
Loans Receivable, Net of Allowances and Unamortized Fees	$	72,130		$	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:



	Nine Months Ended September 30,
(In Thousands)	2019		2018
Bad Debt Expense¹	$	1,272	$	160,886
Provision for Returns and Uncollectible Renewal Payments²	227,336		27,877
Accounts Receivable Provision	$	228,608	$	188,763

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)	September 30, 2019		December 31, 2018
Merchandise on Lease	$	1,034,855	$	1,053,684
Merchandise Not on Lease	247,017		264,786
Lease Merchandise, net of Accumulated Depreciation and Allowances	$	1,281,872	$	1,318,470

Allowance for Lease Merchandise

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



	Nine Months Ended September 30,
(In Thousands)	2019			2018
Beginning Balance	$	46,694		$	35,629
Merchandise Written off, net of Recoveries	(168,770		)	(130,946		)
Provision for Write-offs	186,922			146,091
Ending Balance	$	64,846		$	50,774

Loan Portfolio Credit Quality Indicators

Below is a summary of the credit quality of the Company's loan portfolio as of September 30, 2019 and December 31, 2018 by Fair Isaac and Company (FICO) score as determined at the time of loan origination:



FICO Score Category	September 30, 2019		December 31, 2018
600 or Less	5.6	%	3.7	%
Between 600 and 700	79.9	%	77.9	%
700 or Greater	14.5	%	18.4	%

Schedule of Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist of the following:



(In Thousands)	September 30, 2019		December 31, 2018
Prepaid Expenses	$	37,658	$	30,763
Prepaid Insurance	26,535		27,948
Assets Held for Sale	10,017		6,589
Deferred Tax Asset	8,761		8,761
Other Assets	28,512		24,161
Prepaid Expenses and Other Assets	$	111,483	$	98,222

Schedule of Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:



(In Thousands)	September 30, 2019		December 31, 2018
Accounts Payable	$	72,190	$	88,369
Accrued Insurance Costs	41,872		40,423
Accrued Salaries and Benefits	49,052		40,790
Accrued Real Estate and Sales Taxes	32,337		30,332
Deferred Rent¹	—		27,270
Other Accrued Expenses and Liabilities¹	58,783		65,969
Accounts Payable and Accrued Expenses	$	254,234	$	293,153

Amounts as of September 30, 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 nine months ended September 30, 2019 and 2018 are as follows:



	Treasury Stock					Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
(In Thousands, Except Per Share)	Shares		Amount			Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
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
Cash Dividends, $0.035 per share	—		—			—		—			(2,386		)	—			(2,386		)
Stock-Based Compensation	—		—			—		6,522			—			—			6,522
Reissued Shares	113		2,776			—		284			—			—			3,060
Repurchased Shares	(243	)	(14,414		)	—		—			—			—			(14,414		)
Net Earnings	—		—			—		—			42,650			—			42,650
Foreign Currency Translation Adjustment	—		—			—		—			—			618			618
Balance, June 30, 2019	(23,205	)	(575,221		)	45,376		277,533			2,101,915			(45		)	1,849,558
Cash Dividends, $0.035 per share	—		—			—		—			(2,363		)	—			(2,363		)
Stock-Based Compensation	—		—			—		5,911			—			—			5,911
Reissued Shares	2		49			—		10			—			—			59
Repurchased Shares	(399	)	(25,008		)	—		—			—			—			(25,008		)
Net Earnings	—		—			—		—			39,801			—			39,801
Foreign Currency Translation Adjustment	—		—			—		—			—			(303		)	(303		)
Balance, September 30, 2019	(23,602	)	$	(600,180	)	$	45,376	$	283,454		$	2,139,353		$	(348	)	$	1,867,655



	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			Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
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
Cash Dividends, $0.03 per share	—		—			—		—			(2,087		)	—			(2,087		)
Stock-Based Compensation	—		—			—		6,380			—			—			6,380
Reissued Shares	220		1,795			—		(5,408		)	—			—			(3,613		)
Repurchased Shares	(1,234	)	(50,025		)	—		—			—			—			(50,025		)
Net Earnings	—		—			—		—			38,501			—			38,501
Foreign Currency Translation Adjustment	—		—			—		—			—			(535		)	(535		)
Balance, June 30, 2018	(21,593	)	(470,909		)	45,376		266,275			1,904,309			(238		)	1,744,813
Cash Dividends, $0.03 per share	—		—			—		—			(2,068		)	—			(2,068		)
Stock-Based Compensation	—		—			—		6,140			—			—			6,140
Reissued Shares	104		2,322			—		(146		)	—			—			2,176
Repurchased Shares	(676	)	(31,572		)	—		—			—			—			(31,572		)
Net Earnings	—		—			—		—			43,720			—			43,720
Foreign Currency Translation Adjustment	—		—			—		—			—			297			297
Balance, September 30, 2018	(22,165	)	$	(500,159	)	$	45,376	$	272,269		$	1,945,961		$	59		$	1,763,506