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Segment Information
9 Months Ended
Sep. 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 remaining 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 nine months ended September 30, 2014 and 2013 is as follows (in thousands): 
 
Three Months Ended September 30, 2014
 
Core U.S.
 
Acceptance Now
 
Mexico
 
Franchising
 
Total
Revenue
$
581,600

 
$
160,388

 
$
19,152

 
$
8,385

 
$
769,525

Gross profit
430,816

 
92,911

 
13,574

 
2,138

 
539,439

Operating profit (loss)
27,297

 
21,242

 
(4,884
)
 
1,168

 
44,823

Depreciation of property assets
15,208

 
1,506

 
1,773

 
49

 
18,536

Amortization and write-down of intangibles
1,240

 
142

 

 

 
1,382

Capital expenditures
16,177

 
3,336

 
770

 

 
20,283

 
Three Months Ended September 30, 2013
 
Core U.S.
 
Acceptance Now
 
Mexico
 
Franchising
 
Total
Revenue
$
611,091

 
$
123,798

 
$
12,210

 
$
7,681

 
$
754,780

Gross profit
444,898

 
74,083

 
8,812

 
1,539

 
529,332

Operating profit (loss)
44,073

 
18,789

 
(7,488
)
 
399

 
55,773

Depreciation of property assets
16,610

 
1,323

 
1,468

 
20

 
19,421

Amortization and write-down of intangibles
497

 
142

 

 

 
639

Capital expenditures
22,399

 
2,819

 
3,722

 

 
28,940

 
Nine Months Ended September 30, 2014
 
Core U.S.
 
Acceptance Now
 
Mexico
 
Franchising
 
Total
Revenue
$
1,808,403

 
$
490,392

 
$
52,720

 
$
24,973

 
$
2,376,488

Gross profit
1,319,325

 
275,694

 
37,805

 
5,989

 
1,638,813

Operating profit (loss)
99,315

 
61,218

 
(17,979
)
 
2,191

 
144,745

Depreciation of property assets
49,129

 
4,356

 
5,204

 
135

 
58,824

Amortization and write-down of intangibles
3,748

 
426

 

 

 
4,174

Capital expenditures
47,898

 
9,193

 
4,642

 

 
61,733

 
Nine Months Ended September 30, 2013
 
Core U.S.
 
Acceptance Now
 
Mexico
 
Franchising
 
Total
Revenue
$
1,905,968

 
$
368,454

 
$
33,016

 
$
27,134

 
$
2,334,572

Gross profit
1,371,890

 
209,960

 
23,718

 
5,062

 
1,610,630

Operating profit (loss)
176,807

 
51,833

 
(18,497
)
 
1,644

 
211,787

Depreciation of property assets
48,987

 
3,574

 
4,033

 
60

 
56,654

Amortization and write-down of intangibles
2,267

 
427

 

 

 
2,694

Capital expenditures
57,642

 
7,021

 
9,098

 

 
73,761

Segment information – selected balance sheet data (in thousands):
 
 
 
 
 
 
 
September 30, 2014
 
Core U.S.
 
Acceptance Now
 
Mexico
 
Franchising
 
Total
Rental merchandise, net
 
 
 
 
 
 
 
 
 
On rent
$
532,743

 
$
313,533

 
$
20,908

 
$

 
$
867,184

Held for rent
253,017

 
5,779

 
7,778

 

 
266,574

Total assets
2,576,022

 
410,296

 
70,350

 
2,523

 
3,059,191

 
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