Segment Information

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note Q — 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 45 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. During 2011 in this segment, we recorded a pre-tax impairment charge of approximately $7.3 million related to the discontinuation of the financial services business, which ceased operations in December 2010, a pre-tax litigation charge of approximately $2.8 million related to the settlement of wage and hour claims in California and a pre-tax restructuring charge of approximately $7.6 million related to the closure of eight Home Choice stores in Illinois, 24 RAC Limited locations within third-party grocery stores and 26 core rent-to-own stores following the sale of all customer accounts at those locations.

Our Acceptance Now 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. A restructuring charge of $4.9 million associated with the December 2010 acquisition of The Rental Store, Inc. was recognized in this segment during 2011.

Our International segment currently 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 December 31, 2013, we operated 151 stores in Mexico and 18 stores in Canada.

During the third quarter of 2013, ColorTyme, Inc., our franchisor of rent-to-own stores, changed its name to Rent-A-Center Franchising International, Inc., and all future franchises sold will be licensed under the Rent-A-Center name. This segment will be referred to as Franchising in the future. We offered our current franchisees the opportunity to convert their ColorTyme stores to the Rent-A-Center name. Our franchised stores use Rent-A-Center’s, ColorTyme’s or RimTyme's trade names, service marks, trademarks and logos, and operate under distinctive operating procedures and standards. Franchising’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, Franchising receives royalties of 2.0% to 6.0% of the franchisees' monthly gross revenue and initial fees for new locations. Segment assets include cash, franchise fee receivables, property assets and intangible assets.

To facilitate the conversion of ColorTyme branded stores to Rent-A-Center, we sold some of our company-owned stores to existing franchisees and purchased some of the former ColorTyme stores and are either operating them under the Rent-A-Center brand or merged them with existing stores. We believe that an unified network of both company-owned and franchised stores operating under the Rent-A-Center name creates a stronger service offering for our customers and leverages our growth efforts to reach more customers.

We incur costs at our corporate headquarters that benefit our Core U.S., Acceptance Now 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 Franchising segment maintains a separate, independent corporate office, no additional corporate costs or assets are allocated to that segment.

Segment information as of and for the years ended December 31, 2013, 2012 and 2011 is as follows (in thousands, except location count):

	Year Ended December 31, 2013
	Core U.S.		Acceptance Now		International			Franchising		Total
Revenues	$	2,507,498	$	502,043	$	58,445		$	36,197	$	3,104,183
Gross profit	1,810,160		290,741		41,887			6,658		2,149,446
Operating profit (loss)	205,928		66,625		(28,237		)	1,853		246,169
Depreciation of property assets	64,852		5,036		6,484			79		76,451
Amortization and write-down of intangibles	9,892		569		1,068			—		11,529
Capital expenditures	84,819		11,076		12,472			—		108,367
Rental merchandise, net
On rent	609,332		284,421		20,865			—		914,618
Held for rent	194,734		3,837		11,879			—		210,450
Total assets	2,561,688		375,920		79,257			1,688		3,018,553

	Year Ended December 31, 2012
	Core U.S.		Acceptance Now		International			Franchising		Total
Revenues	$	2,655,411	$	343,283	$	40,211		$	43,741	$	3,082,646
Gross profit	1,904,586		194,607		27,831			6,893		2,133,917
Operating profit (loss)	318,784		25,261		(30,700		)	2,326		315,671
Depreciation of property assets	63,793		3,631		5,848			89		73,361
Amortization and write-down of intangibles	2,103		2,819		967			—		5,889
Capital expenditures	84,680		5,275		12,498			—		102,453
Rental merchandise, net
On rent	589,181		204,640		13,576			—		807,397
Held for rent	190,703		3,007		6,412			—		200,122
Total assets	2,504,954		286,774		65,378			2,711		2,859,817

	Year Ended December 31, 2011
	Core U.S.		Acceptance Now			International			Franchising		Total
Revenues	$	2,631,416	$	193,295		$	18,490		$	38,983	$	2,882,184
Gross profit	1,918,781		114,228			13,011			6,496		2,052,516
Operating profit (loss)	318,271		(16,483		)	(13,679		)	3,220		291,329
Depreciation of property assets	60,558		2,229			2,295			132		65,214
Amortization and write-down of intangibles	1,092		3,583			—			—		4,675
Capital expenditures	108,553		5,881			18,276			—		132,710
Rental merchandise, net
On rent	610,104		136,755			7,698			—		754,557
Held for rent	178,826		1,274			7,869			—		187,969
Total assets	2,532,412		214,572			44,337			3,571		2,794,892

 Over 85% of our total revenues are comprised of rental and fee revenues from the following product groups:

	Year Ended December 31,
	2013		2012		2011
	(In thousands)
Furniture and accessories	$	913,398	$	858,245	$	785,918
Consumer electronics	664,882		696,621		670,135
Appliances	431,100		421,762		385,795
Computers	345,646		357,014		366,619
Other products and services	343,369		320,439		288,396
Total rentals and fees	$	2,698,395	$	2,654,081	$	2,496,863

Our revenues originate in the following countries:

	Year Ended December 31,
	2013		2012		2011
	(In thousands)
United States	$	3,045,738	$	3,042,435	$	2,863,694
Mexico	47,169		22,603		4,303
Canada	11,276		17,608		14,187
Total revenues	$	3,104,183	$	3,082,646	$	2,882,184