Segment Information

6 Months Ended

Jun. 30, 2014

Segment Information [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. On January 1, 2014, the Company realigned its reporting structure to include its 18 Canadian stores in the Core U.S. segment, which were previously reported in the International segment. These stores now report into the Core U.S. segment, and the chief operating decision makers no longer analyze their operating results as a part of the International segment. The accompanying prior-year disclosures have been revised to reflect this change, and we now refer to the segment formerly reported as "International" as "Mexico" since only that country's results are reported therein. 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, Canada 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.

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 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 Mexico segment consists of our company-owned rent-to-own stores in Mexico, and the nature of this segment’s operations and assets are the same as our Core U.S. segment.

The stores in our Franchising segment 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, receivables and property assets.

We incur costs at our corporate headquarters that benefit our Core U.S., Acceptance Now and Mexico 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 has maintained a separate, independent corporate office, no additional corporate costs or assets have been allocated to that segment. Our Franchising segment uses trade names owned by entities that are reported in the Core U.S. segment, and pays a royalty for the use of these trade names. These royalties have been eliminated in consolidation.

Segment information for the three and six months ended June 30, 2014 and 2013 is as follows (in thousands):

	Three Months Ended June 30, 2014
	Core U.S.		Acceptance Now		Mexico			Franchising		Total
Revenue	$	592,040	$	155,797	$	17,695		$	7,685	$	773,217
Gross profit	431,920		89,876		12,753			1,948		536,497
Operating profit (loss)	28,161		18,399		(6,818		)	417		40,159
Depreciation of property assets	17,884		1,426		1,788			51		21,149
Amortization and write-down of intangibles	1,903		142		—			—		2,045
Capital expenditures	13,685		3,073		1,584			—		18,342

	Three Months Ended June 30, 2013
	Core U.S.		Acceptance Now		Mexico			Franchising		Total
Revenue	$	622,469	$	117,493	$	11,313		$	9,236	$	760,511
Gross profit	451,920		68,770		8,208			1,722		530,620
Operating profit (loss)	65,656		17,394		(6,362		)	542		77,230
Depreciation of property assets	16,203		1,162		1,375			20		18,760
Amortization and write-down of intangibles	1,023		142		—			—		1,165
Capital expenditures	20,191		2,262		2,731			—		25,184

	Six Months Ended June 30, 2014
	Core U.S.		Acceptance Now		Mexico			Franchising		Total
Revenue	$	1,226,803	$	330,004	$	33,568		$	16,588	$	1,606,963
Gross profit	888,509		182,783		24,231			3,851		1,099,374
Operating profit (loss)	72,018		39,976		(13,095		)	1,023		99,922
Depreciation of property assets	33,921		2,850		3,431			86		40,288
Amortization and write-down of intangibles	2,508		284		—			—		2,792
Capital expenditures	31,721		5,857		3,872			—		41,450

	Six Months Ended June 30, 2013
	Core U.S.		Acceptance Now		Mexico			Franchising		Total
Revenue	$	1,294,877	$	244,656	$	20,806		$	19,453	$	1,579,792
Gross profit	926,992		135,877		14,906			3,523		1,081,298
Operating profit (loss)	132,734		33,044		(11,009		)	1,245		156,014
Depreciation of property assets	32,377		2,251		2,565			40		37,233
Amortization and write-down of intangibles	1,770		285		—			—		2,055
Capital expenditures	35,243		4,202		5,376			—		44,821

Segment information – selected balance sheet data (in thousands):
	June 30, 2014
	Core U.S.		Acceptance Now		Mexico		Franchising		Total
Rental merchandise, net
On rent	$	538,222	$	296,133	$	21,466	$	—	$	855,821
Held for rent	227,118		8,139		12,118		—		247,375
Total assets	2,545,380		396,158		74,361		1,861		3,017,760

	December 31, 2013
	Core U.S.		Acceptance Now		Mexico		Franchising		Total
Rental merchandise, net
On rent	$	612,517	$	284,421	$	17,680	$	—	$	914,618
Held for rent	195,654		3,837		10,959		—		210,450
Total assets	2,569,057		375,920		71,888		1,688		3,018,553