Other (Gains) and Charges

6 Months Ended

Jun. 30, 2019

Restructuring Costs and Asset Impairment Charges [Abstract]

Cost Savings Initiatives. During 2018, we began execution of multiple cost savings initiatives, including reductions in overhead and supply chain, resulting in pre-tax charges during the first half of 2019 consisting of $5.0 million in lease impairment charges, $2.8 million in severance and other payroll-related costs, $1.6 million in other miscellaneous shutdown costs, and $0.4 million in disposal of fixed assets. Costs incurred during the first six months of 2018 related to these initiatives included pre-tax charges of $6.8 million in contract termination fees, $6.2 million in severance and other payroll-related costs, $1.9 million in legal and advisory fees, $1.0 million in other miscellaneous shutdown costs, $0.9 million in lease obligation costs, $0.4 million related to the write-down of capitalized software, and $0.1 million in disposal of fixed assets.

Store Consolidation Plan. During the first half of 2019, we closed 66 Core U.S. stores, resulting in pre-tax charges of $2.3 million in lease impairment charges, $0.9 million in other miscellaneous shutdown costs, $0.7 million in disposal of fixed assets, and $0.3 million in severance and other payroll-related costs. During the first six months of 2018, we closed 109 Core U.S. stores and 8 locations in Mexico, resulting in pre-tax charges of $8.7 million, consisting of $7.0 million in lease obligation costs, $1.0 million in disposal of fixed assets, $0.5 million in other miscellaneous shutdown costs, and $0.2 million in severance and other payroll-related costs.

Vintage Settlement. On April 22, 2019, we agreed to settle (the "Vintage Settlement") all litigation with Vintage Rodeo Parent, LLC, Vintage Rodeo Acquisition, Inc., Vintage Capital Management, LLC (collectively, "Vintage Capital") and B. Riley Financial, Inc. ("B. Riley") relating to our termination of the Agreement and Plan of Merger (the "Merger Agreement") among Vintage Rodeo Parent, LLC, Vintage Rodeo Acquisition, Inc. and Rent-A-Center, Inc. In the Vintage Settlement, we received a payment of $92.5 million in cash in May 2019, of which we retained net pre-tax proceeds of approximately $80 million following payment of all remaining costs, fees and expenses relating to the termination (the "Vintage Settlement Proceeds"). The Vintage Settlement was recorded as a pre-tax gain upon receipt.

Write-down of Capitalized Software. During the first six months of 2018 we discontinued certain IT software projects and as a result incurred pre-tax charges of $1.9 million, related to the write-down of capitalized assets.

Activity with respect to other charges for the six months ended June 30, 2019 is summarized in the below table:



(in thousands)	Accrued Charges at December 31, 2018		Charges & Adjustments			Payments & Adjustments			Accrued Charges at June 30, 2019
Cash charges:
Labor reduction costs	$	7,623	$	3,145		$	(8,525	)	$	2,243
Lease obligation costs⁽¹⁾	4,882		—			(4,882		)	—
Other miscellaneous	—		2,565			(2,565		)	—
Total cash charges	$	12,505	5,710			$	(15,972	)	$	2,243
Non-cash charges:
Asset impairments⁽²⁾			8,283
Other⁽³⁾			(58,160		)
Total other (gains) and charges			$	(44,167	)

⁽¹⁾ Upon adoption of ASU 2016-02, previously accrued lease obligation costs related to discontinued operations were eliminated and are now reflected as an adjustment to our operating lease right-of-use assets in our condensed consolidated balance sheet.

⁽²⁾ Includes impairments of operating lease right-of-use assets and other property assets related to the closure of RTO stores and our product service centers in the first half of 2019.

⁽³⁾ Other primarily includes the Vintage Settlement Proceeds, offset by the Blair class action settlement (refer to Note 11 for additional details), incremental legal and professional fees related to the termination of the Merger Agreement, and state tax audit assessments.