Segments

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Segments

SEGMENTS

As of March 31, 2020, the Company has three operating and reportable segments: Progressive Leasing, Aaron's Business and Vive.

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

The Aaron's Business offers furniture, home appliances, consumer electronics and accessories to consumers through a lease-to-own agreement 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 bedding and a significant portion of the upholstered furniture leased and sold in Company-operated and franchised stores.

Vive offers a variety of second-look financing programs originated through 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, 2020:

	Three Months Ended March 31, 2020
(In Thousands)	Progressive Leasing		Aaron's Business		Vive		Total
Lease Revenues and Fees1	$	658,534	$	389,379	$	—	$	1,047,913
Retail Sales2	—		9,531		—		9,531
Non-Retail Sales2	—		26,846		—		26,846
Franchise Royalties and Fees2	—		6,724		—		6,724
Interest and Fees on Loans Receivable3	—		—		9,908		9,908
Other	—		352		—		352
Total	$	658,534	$	432,832	$	9,908	$	1,101,274

¹ Substantially all lease revenues and fees are within the scope of ASC 842, Leases. The Company had $6.7 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers.

²  Substantially all retail sales, non-retail sales and franchise royalties and fees are within the scope of ASC 606, Revenue from Contracts with Customers.

³ All interest and fees on loans receivable are 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, 2019:

	Three Months Ended March 31, 2019
(In Thousands)	Progressive Leasing		Aaron's Business		Vive		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 $6.5 million of other revenue within the scope of ASC 606, Revenue from Contracts with Customers.

² Substantially all retail sales, non-retail sales and franchise royalties and fees are within the scope of ASC 606, Revenue from Contracts with Customers.

³ All interest and fees on loans receivable are 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 Vive 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)	2020			2019
(Loss) Earnings Before Income Taxes:
Progressive Leasing	$	58,987		$	55,388
Aaron's Business1	(465,357		)	17,588
Vive	(8,083		)	(2,668		)
Total (Loss) Earnings Before Income Taxes	$	(414,453	)	$	70,308

¹ Loss before income taxes for the Aaron's Business during the three months ended March 31, 2020 was impacted by (i) goodwill impairment charges of $446.9 million, (ii) $14.1 million related to an early termination fee for a sales and marketing agreement, and (iii) restructuring charges of $22.3 million related to stores the Company has closed or plans to close in conjunction with its 2020 restructuring plan, which includes operating lease right-of-use asset impairment and operating lease charges, fixed asset impairment charges, and workforce reductions.

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 under the 2019 restructuring program.

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

(In Thousands)	March 31, 2020		December 31, 2019
Assets:
Progressive Leasing	$	1,235,893	$	1,261,786
Aaron's Business1,2	1,215,979		1,740,281
Vive	71,697		85,825
Other3	629,386		209,908
Total Assets	$	3,152,955	$	3,297,800

¹ Includes inventory (principally raw materials and work-in-process) that has been classified within lease merchandise in the condensed consolidated balance sheets of $14.1 million and $14.0 million as of March 31, 2020 and December 31, 2019, respectively.

² During the three months ended March 31, 2020, the Aaron's Business segment assets were impacted by a goodwill impairment charge of $446.9 million to fully write-off its goodwill balance.

³ Corporate-related assets that benefit multiple segments are reported as other assets. During the three months ended March 31, 2020, the increase in corporate-related assets is primarily due to a temporary $300.0 million draw on the Company's revolving credit facility in March 2020, which the Company subsequently repaid on April 30, 2020, that was held as cash as of March 31, 2020.