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Segment Information
12 Months Ended
Dec. 31, 2011
Segment Reporting [Abstract]  
Segment Information

Note R — Segment Information

 

Through September 30, 2011, we reported the results of our operations under one segment as only one of our operating segments met the quantitative thresholds of a reportable segment under Topic 280, Segment Reporting. Because of the aggressive growth strategies in our RAC Acceptance and international operations, our chief operating decision makers now analyze the results of these operations on an individual basis, and we believe that future period operating results in those segments may meet the quantitative thresholds for a reportable segment as early as 2012. Therefore, segment information for the year ended December 31, 2011, will be presented in accordance with Topic 280.

 

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 including 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 39 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. Reported amounts also include our financial services business, which ceased operations in December 2010, and our prepaid telecommunications and energy business, which was divested in November 2009. Impairment charges related to the discontinuation of our financial services business and restructuring charges (with the exception of the $4.9 million restructuring charge associated with the December 2010 acquisition of The Rental Store, Inc.) are recorded in the Core U.S. segment.

 

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

 

Our International segment consists of our company-owned store locations in Canada and Mexico, which is expanding its rent-to-own operations. The nature of this segment's operations and assets are the same as our Core U.S. segment.

 

ColorTyme is a national franchisor of rent-to-own stores that use ColorTyme's trade names, service marks, trademarks and logos, and operate under distinctive operating procedures and standards. ColorTyme'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, ColorTyme receives royalties of 2.0% to 4.0% of the franchisees' monthly gross revenue and initial fees for new locations. Segment assets include cash, franchise fee receivables, property assets and intangible assets.

 

We incur costs at our corporate headquarters that benefit our Core U.S., RAC Acceptance 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 allocated to these operating segments also based on segment revenue. Because our ColorTyme 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, 2011, 2010 and 2009 is as follows (in thousands, except location count):

 

   Year Ended December 31, 2011
                          
   Core U.S.  RAC Acceptance  International  ColorTyme  Total
                          
                    
Revenue $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  317,473    (13,985)    (13,551)    3,220    293,157 
Depreciation  60,558    2,229    2,295    132    65,214 
Amortization  1,092    3,583    0    0    4,675 
Capital expenditures  108,553    5,881    18,276    0    132,710 
Rental merchandise, net                        
 On rent  619,189    139,340    7,896    0    766,425 
 Held for rent  177,625    1,274    7,869    0    186,768 
Total assets  2,536,115    217,157    44,535    3,571    2,801,378 
                          
                          
   Year Ended December 31, 2010
                          
   Core U.S.  RAC Acceptance  International  ColorTyme  Total
                          
                    
Revenue $2,667,943 (1)  $18,203   $10,054   $35,432   $2,731,632 
Gross profit  1,970,280 (1)   12,074    7,128    6,190    1,995,672 
Operating profit  311,501 (1)   (5,372)    (5,226)    2,866    303,769 
Depreciation  61,879    395    989    147    63,410 
Amortization  3,254    0    0    0    3,254 
Capital expenditures  90,866    1,450    691    0    93,007 
Rental merchandise, net                        
 On rent  606,121    44,293    4,834    0    655,248 
 Held for rent  177,621    2,809    1,176    0    181,606 
Total assets  2,554,980    114,382    15,179    3,790    2,688,331 
                          
                          
   Year Ended December 31, 2009
                          
   Core U.S.  RAC Acceptance  International  ColorTyme  Total
                          
                    
Revenue $2,709,786 (2)  $3,213   $6,117   $32,840   $2,751,956 
Gross profit  1,974,930 (2)   2,615    4,433    6,020    1,987,998 
Operating profit  299,053 (2)   (1,902)    (3,365)    2,538    296,324 
Depreciation  65,105    66    512    105    65,788 
Amortization  2,843    0    0    0    2,843 
Capital expenditures  65,757    239    2,845    0    68,841 
Rental merchandise, net                        
 On rent  585,233    1,399    2,434    0    589,066 
 Held for rent  159,286    125    1,521    0    160,932 
Total assets  2,428,944    1,984    10,209    2,860    2,443,997 
                          
                          
   Location Count at December 31,
                          
   Core U.S.  RAC Acceptance  International  ColorTyme  Total
                          
                    
2011  2,994    750    80    216    4,040 
2010  2,985    384    23    209    3,601 
2009  2,989    82    18    210    3,299 

                
(1)                
 Includes revenue, gross profit and operating profit of $56.2 million, $56.2 million and $(12.8) million, respectively, related to our financial
 services business.
                 
(2)                
 Includes revenue, gross profit and operating profit of $51.5 million, $51.5 million and $5.2 million, respectively, related to our financial
 services business and $50.5 million, $17.3 million and $0.5 million, respectively, related to our prepaid telecommunications and energy
 business.