Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2018

These financial statements include the accounts of Rent-A-Center, Inc. and its direct and indirect subsidiaries. All intercompany accounts and transactions have been eliminated.

Newly Adopted Accounting Pronouncements [Policy Text Block]

Newly Adopted Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which clarifies existing accounting literature relating to how and when a company recognizes revenue. We adopted ASU 2014-09 and all related amendments beginning January 1, 2018, using the modified retrospective adoption method. We recognized the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

Under Topic 606, initial franchise fees charged to franchisees for new stores are recognized over the term of the franchise agreement, rather than when they are paid by the franchisee, upon the opening of a new location. Furthermore, franchise advertising fees are presented on a gross basis, as revenue, in the consolidated statement of operations, rather than net of operating expenses in the consolidated statement of operations. Impacts resulting from adoption were not material to the consolidated statement of operations. See descriptions of the revenues in Note 2.

The cumulative effect of the changes made to our condensed consolidated balance sheets for the adoption of Topic 606 were as follows:



	January 1, 2018		Adjustments due to Topic 606			December 31, 2017
(In thousands)	Unaudited
LIABILITIES
Accrued liabilities	$	299,683	$	(1,665	)	$	298,018
Deferred tax liability	86,727		354			87,081
Total liabilities	1,149,649		(1,311		)	1,148,338
STOCKHOLDERS’ EQUITY
Retained earnings	$	797,432	$	1,311		$	798,743
Total stockholders' equity	271,132		1,311			272,443

In accordance with Topic 606, the disclosure of the impact of adoption on our condensed consolidated statements of operations and condensed consolidated balance sheets for the periods ended September 30, 2018 is as follows:



Condensed Consolidated Statements of Operations	Three Months Ended September 30, 2018				Nine Months Ended September 30, 2018
	As Reported	Adjustments due to Topic 606		Balances without Adoption of Topic 606	As Reported	Adjustments due to Topic 606		Balances without Adoption of Topic 606
(In thousands)	Unaudited				Unaudited
Royalty income and fees	3,265	(1,129	)	2,136	10,428	(2,171	)	8,257
Total revenues	644,942	(1,129	)	643,813	1,998,715	(2,171	)	1,996,544
Gross profit	407,740	(1,129	)	406,611	1,268,604	(2,171	)	1,266,433
Other store expenses	149,326	(1,068	)	148,258	492,129	(3,047	)	489,082
Total operating expenses	382,108	(1,068	)	381,040	1,226,091	(3,047	)	1,223,044
Operating profit	25,632	(61	)	25,571	42,513	876		43,389
Earnings before income taxes	15,481	(61	)	15,420	10,607	876		11,483
Income tax expense	2,563	(10	)	2,553	3,779	53		3,832
Net earnings	12,918	(51	)	12,867	6,828	823		7,651



Condensed Consolidated Balance Sheets	September 30, 2018
	As Reported		Adjustments due to Topic 606			Balances without Adoption of Topic 606
(In thousands)	Unaudited
LIABILITIES
Accrued liabilities	$	311,277	$	(2,541	)	$	308,736
Deferred tax liability	119,288		407			119,695
Total liabilities	1,068,347		(2,134		)	1,066,213
STOCKHOLDERS’ EQUITY
Retained earnings	$	804,260	$	2,134		$	806,394
Total stockholders' equity	283,746		2,134			285,880

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides guidance on the treatment of cash receipts and cash payments for certain types of cash transactions, to eliminate diversity in practice in the presentation of the cash flow statement. Rent-A-Center adopted ASU 2016-15 beginning January 1, 2018, on a retrospective basis. The adoption of ASU 2016-15 had no impact to the financial statements as of September 30, 2018.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which introduces amendments that are intended to make the guidance in ASC 805 on the definition of a business more consistent and cost-efficient. The amendments narrow the definition of a business and provide a framework that gives entities a basis for making reasonable judgments about whether a transaction involves an asset or a business. Rent-A-Center adopted ASU 2017-01 beginning January 1, 2018, using the prospective approach. The adoption of ASU 2017-01 had an immaterial impact to the financial statements as of September 30, 2018.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the new guidance, modification accounting is required if the fair value, vesting conditions or classification (equity or liability) of the new award are different from the original award immediately before the original award is modified. Rent-A-Center adopted ASU 2017-09 beginning January 1, 2018, on a prospective basis. The adoption of ASU 2017-09 had no impact to the financial statements as of September 30, 2018.