Segment Information

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Segment Information

Segment Information.

The operating segments reported below are the segments for which separate financial information is available and for which segment results are evaluated by the chief operating decision makers. Our operating segments are organized based on factors including, but not limited to, type of business transactions, geographic location and store ownership. All operating segments offer merchandise from four basic product categories: consumer electronics, appliances, computers, furniture and accessories. Reportable segments and their respective operations are defined as follows.

Our Core U.S. segment primarily operates rent-to-own stores in the United States and Puerto Rico whose customers enter into weekly, semi-monthly or monthly rental purchase agreements, which renew automatically upon receipt of each payment. We retain the title to the merchandise during the term of the rental purchase agreement and ownership passes to the customer if the customer has continuously renewed the rental purchase agreement through the end of the term or exercises a specified early purchase option. This segment also includes the 43 stores operating in two states that utilize a retail model which generates installment credit sales through a retail sale transaction. Segment assets include cash, receivables, rental merchandise, property assets, goodwill and other intangible assets.

Our RAC Acceptance segment operates kiosks within various traditional retailers’ locations where we generally offer the rent-to-own transaction to consumers who do not qualify for financing from the traditional retailer. The transaction offered is generally similar to that of the Core U.S. segment; however, the majority of the customers in this segment enter into monthly rather than weekly agreements. Segment assets include cash, rental merchandise, property assets, goodwill and other intangible assets.

Our International segment consists of our company-owned rent-to-own stores in Mexico and Canada. The nature of this segment’s operations and assets are the same as our Core U.S. segment. At June 30, 2013, we operated 130 stores in Mexico and 18 stores in Canada.

ColorTyme is a national franchisor of rent-to-own stores that use ColorTyme’s trade names, service marks, trademarks and logos, and operate under distinctive operating procedures and standards. ColorTyme’s primary source of revenue is the sale of rental merchandise to its franchisees who, in turn, offer the merchandise to the general public for rent or purchase under a rent-to-own program. As franchisor, ColorTyme receives royalties of 2.0% to 4.0% of the franchisees’ monthly gross revenue and initial fees for new locations. Segment assets include cash, franchise fee receivables, property assets and intangible assets.

We incur costs at our corporate headquarters that benefit our Core U.S., RAC Acceptance and International operating segments. Accordingly, we allocate such costs among these segments based on segment revenue to determine segment operating profit. Likewise, certain corporate assets used to support these operating segments, including the land and building in which the corporate headquarters are located and related property assets, cash and prepaid expenses are also allocated to these operating segments based on segment revenue. Because our ColorTyme segment maintains a separate, independent corporate office, no additional corporate costs or assets are allocated to that segment.

Segment information for the three and six months ended June 30, 2013 and 2012 is as follows (in thousands):

	Three Months Ended June 30, 2013
	Core U.S.		RAC Acceptance		International			ColorTyme		Total
Revenue	$	619,687	$	117,493	$	14,095		$	9,236	$	760,511
Gross profit	449,944		68,770		10,184			1,722		530,620
Operating profit (loss)	66,029		17,612		(6,746		)	542		77,437
Depreciation of property assets	15,990		1,162		1,588			20		18,760
Amortization and write-down of intangibles	1,023		142		—			—		1,165
Capital expenditures	20,147		2,262		2,775			—		25,184

	Three Months Ended June 30, 2012
	Core U.S.		RAC Acceptance		International			ColorTyme		Total
Revenue	$	654,356	$	77,060	$	8,900		$	9,382	$	749,698
Gross profit	474,414		44,617		6,242			1,700		526,973
Operating profit (loss)	79,463		6,897		(7,811		)	478		79,027
Depreciation of property assets	15,952		856		1,506			24		18,338
Amortization and write-down of intangibles	585		896		—			—		1,481
Capital expenditures	16,692		1,047		3,153			—		20,892

	Six Months Ended June 30, 2013
	Core U.S.		RAC Acceptance		International			ColorTyme		Total
Revenue	$	1,289,253	$	244,656	$	26,430		$	19,453	$	1,579,792
Gross profit	923,009		135,877		18,889			3,523		1,081,298
Operating profit (loss)	134,665		33,529		(12,719		)	1,245		156,720
Depreciation of property assets	31,918		2,251		3,024			40		37,233
Amortization and write-down of intangibles	1,770		285		—			—		2,055
Capital expenditures	35,197		4,202		5,422			—		44,821

	Six Months Ended June 30, 2012
	Core U.S.		RAC Acceptance		International			ColorTyme		Total
Revenue	$	1,382,186	$	164,788	$	16,609		$	21,369	$	1,584,952
Gross profit	984,471		87,787		11,609			3,523		1,087,390
Operating profit (loss)	174,671		9,765		(14,571		)	1,196		171,061
Depreciation of property assets	31,708		1,684		2,891			49		36,332
Amortization and write-down of intangibles	1,023		1,793		—			—		2,816
Capital expenditures	37,033		2,391		8,896			—		48,320

Segment information – selected balance sheet data (in thousands):
	June 30, 2013
	Core U.S.		RAC Acceptance		International		ColorTyme		Total
Rental merchandise, net
On rent	$	588,427	$	244,717	$	16,144	$	—	$	849,288
Held for rent	207,105		3,434		7,724		—		218,263
Total assets	2,537,770		333,279		67,794		1,609		2,940,452

	December 31, 2012
	Core U.S.		RAC Acceptance		International		ColorTyme		Total
Rental merchandise, net
On rent	$	597,771	$	209,964	$	14,152	$	—	$	821,887
Held for rent	189,526		2,979		6,412		—		198,917
Total assets	2,508,370		292,070		65,954		2,711		2,869,105