(Mark One)
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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2017
or
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission File No. 001-38047
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Delaware
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45-0491516
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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Title of Each Class
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Name of Exchange on Which Registered
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Common Stock, par value $0.01 per share
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The Nasdaq Global Select Market, Inc.
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Securities registered pursuant to Section 12(g) of the Act:
None
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Aggregate market value of the 42,856,015 shares
of Common Stock held by non-affiliates
of the registrant at the closing sales
price as reported on The Nasdaq Global Select Market, Inc. on June 30, 2017
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$
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502,272,496
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Number of shares of Common Stock outstanding as of the close of business on February 21, 2018:
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53,413,636
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Page
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Item 1.
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Business
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures about Market Risk
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Item 8.
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Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accountant Fees and Services
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Item 15.
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Exhibits and Financial Statement Schedules
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SIGNATURES
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•
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the general strength of the economy and other economic conditions affecting consumer preferences and spending;
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•
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factors affecting the disposable income available to our current and potential customers;
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•
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changes in the unemployment rate;
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•
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uncertainties concerning the outcome, impact, effects and results of the exploration of our strategic and financial alternatives;
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•
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difficulties encountered in improving the financial and operational performance of our business segments;
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•
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our ability to realize any benefits from our initiatives regarding cost-savings and other EBITDA enhancements, efficiencies and working capital improvements;
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•
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our chief executive officer transitions, including our ability to effectively operate and execute our strategies during the transition period;
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•
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our ability to execute our franchise strategy;
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•
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failure to manage our store labor and other store expenses;
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•
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our ability to develop and successfully execute strategic initiatives;
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•
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disruptions caused by the operation of our store information management system;
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•
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our transition to more-readily scalable "cloud-based" solutions;
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•
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our ability to develop and successfully implement digital or E-commerce capabilities, including mobile applications;
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•
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disruptions in our supply chain;
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•
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limitations of, or disruptions in, our distribution network;
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•
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rapid inflation or deflation in the prices of our products;
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•
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our ability to execute and the effectiveness of a store consolidation, including our ability to retain the revenue from customer accounts merged into another store location as a result of a store consolidation;
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•
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our available cash flow;
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•
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our ability to refinance our senior credit facility on favorable terms, if at all;
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•
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our ability to identify and successfully market products and services that appeal to our customer demographic;
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•
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consumer preferences and perceptions of our brands;
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•
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our ability to control costs and increase profitability;
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•
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our ability to retain the revenue associated with acquired customer accounts and enhance the performance of acquired stores;
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•
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our ability to enter into new and collect on our rental or lease purchase agreements;
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•
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the passage of legislation adversely affecting the Rent-to-Own industry;
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•
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our compliance with applicable statutes or regulations governing our transactions;
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•
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changes in interest rates;
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•
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adverse changes in the economic conditions of the industries, countries or markets that we serve;
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•
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information technology and data security costs;
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•
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the impact of any breaches in data security or other disturbances to our information technology and other networks and our ability to protect the integrity and security of individually identifiable data of our customers and employees;
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•
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changes in our stock price, the number of shares of common stock that we may or may not repurchase, and our dividend policy and any changes thereto, if any;
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•
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changes in estimates relating to self-insurance liabilities and income tax and litigation reserves;
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•
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changes in our effective tax rate;
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•
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fluctuations in foreign currency exchange rates;
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•
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our ability to maintain an effective system of internal controls;
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•
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the resolution of our litigation; and
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•
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the other risks detailed from time to time in our reports furnished or filed with the Securities and Exchange Commission.
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•
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The Company is targeting significant cost savings opportunities across the business in the areas of overhead, supply chain and other store expenses.
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•
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The updated value proposition in the Core is intended to improve traffic trends with a balanced approach of competitively pricing elastic categories while capturing more margin in inelastic categories.
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•
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Within Acceptance NOW, the value proposition will center around improved return on investment through a shorter payback period and higher ownership levels.
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•
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Refranchising brick and mortar locations will enable the Company to maintain and grow its presence while using proceeds to pay down debt.
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•
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our ability to meet market expectations with respect to the growth and profitability of each of our operating segments;
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•
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quarterly variations in our results of operations, which may be impacted by, among other things, changes in same store sales or when and how many locations we acquire or open;
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•
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quarterly variations in our competitors’ results of operations;
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•
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changes in earnings estimates or buy/sell recommendations by financial analysts; and
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•
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the stock price performance of comparable companies.
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2017
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High
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Low
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Cash Dividends
Declared
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Fourth Quarter
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$12.20
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$9.05
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$—
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Third Quarter
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$13.89
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$10.66
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$—
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Second Quarter
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$13.33
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$8.52
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$0.08
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First Quarter
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$11.98
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$7.76
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$0.08
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2016
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High
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Low
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Cash Dividends
Declared
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Fourth Quarter
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$13.16
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$8.00
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$0.08
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Third Quarter
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$13.73
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$10.20
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$0.08
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Second Quarter
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$15.94
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$11.21
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$0.08
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First Quarter
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$16.37
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$9.76
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$0.08
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Year Ended December 31,
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(In thousands, except per share data)
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2017
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2016
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2015
(6)
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2014
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2013
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Consolidated Statements of Operations
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Revenues
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Store
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Rentals and fees
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$
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2,267,741
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$
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2,500,053
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$
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2,781,315
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$
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2,745,828
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(11)
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$
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2,695,895
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Merchandise sales
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331,402
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351,198
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377,240
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290,048
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278,753
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Installment sales
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71,651
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74,509
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76,238
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75,889
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71,475
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|||||
Other
|
9,620
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12,706
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19,158
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19,949
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18,133
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Franchise
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Merchandise sales
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13,157
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16,358
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|
15,577
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|
19,236
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|
|
24,556
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|||||
Royalty income and fees
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8,969
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8,428
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8,892
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6,846
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|
|
5,206
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|||||
Total revenues
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2,702,540
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|
2,963,252
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|
3,278,420
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3,157,796
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|
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3,094,018
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|||||
Cost of revenues
|
|
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||||||||||
Store
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|
|
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Cost of rentals and fees
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625,358
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664,845
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728,706
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704,595
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|
676,674
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|||||
Cost of merchandise sold
|
322,628
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|
323,727
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|
356,696
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|
|
231,520
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|
216,206
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|||||
Cost of installment sales
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23,622
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|
|
24,285
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|
|
25,677
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|
|
26,084
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|
|
24,541
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|||||
Other charges and (credits)
|
—
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|
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—
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34,698
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|
(7)
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(6,836
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)
|
(12)
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—
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Franchise cost of merchandise sold
|
12,390
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|
|
15,346
|
|
|
14,534
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|
|
18,070
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|
|
23,104
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|||||
Total cost of revenues
|
983,998
|
|
|
1,028,203
|
|
|
1,160,311
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|
|
973,433
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|
|
940,525
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Gross profit
|
1,718,542
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|
|
1,935,049
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|
|
2,118,109
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|
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2,184,363
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|
|
2,153,493
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|||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Store expenses
|
|
|
|
|
|
|
|
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||||||||||
Labor
|
732,466
|
|
|
789,049
|
|
|
854,610
|
|
|
888,929
|
|
|
881,671
|
|
|||||
Other store expenses
|
744,187
|
|
|
791,614
|
|
|
833,914
|
|
|
842,254
|
|
|
789,212
|
|
|||||
General and administrative expenses
|
171,090
|
|
|
168,907
|
|
|
166,102
|
|
|
162,316
|
|
|
147,621
|
|
|||||
Depreciation, amortization and write-down of intangibles
|
74,639
|
|
|
80,456
|
|
|
80,720
|
|
|
83,168
|
|
|
86,912
|
|
|||||
Goodwill impairment charge
|
—
|
|
|
151,320
|
|
(4)
|
1,170,000
|
|
(8)
|
—
|
|
|
1,068
|
|
|||||
Other charges
|
59,219
|
|
(1)
|
20,299
|
|
(5)
|
20,651
|
|
(9)
|
14,234
|
|
(13)
|
—
|
|
|||||
Total operating expenses
|
1,781,601
|
|
|
2,001,645
|
|
|
3,125,997
|
|
|
1,990,901
|
|
|
1,906,484
|
|
|||||
Operating (loss) profit
|
(63,059
|
)
|
|
(66,596
|
)
|
|
(1,007,888
|
)
|
|
193,462
|
|
|
247,009
|
|
|||||
Write-off of debt issuance costs
|
1,936
|
|
(2)
|
—
|
|
|
—
|
|
|
4,213
|
|
(14)
|
—
|
|
|||||
Interest expense, net
|
45,205
|
|
|
46,678
|
|
|
48,692
|
|
|
46,896
|
|
|
38,813
|
|
|||||
(Loss) earnings before income taxes
|
(110,200
|
)
|
|
(113,274
|
)
|
|
(1,056,580
|
)
|
|
142,353
|
|
|
208,196
|
|
|||||
Income tax (benefit) expense
|
(116,853
|
)
|
(3)
|
(8,079
|
)
|
|
(103,060
|
)
|
(10)
|
45,931
|
|
|
79,439
|
|
|||||
Net earnings (loss)
|
$
|
6,653
|
|
|
$
|
(105,195
|
)
|
|
$
|
(953,520
|
)
|
|
$
|
96,422
|
|
|
$
|
128,757
|
|
Basic earnings (loss) per common share
|
$
|
0.12
|
|
|
$
|
(1.98
|
)
|
|
$
|
(17.97
|
)
|
|
$
|
1.82
|
|
|
$
|
2.35
|
|
Diluted earnings (loss) per common share
|
$
|
0.12
|
|
|
$
|
(1.98
|
)
|
|
$
|
(17.97
|
)
|
|
$
|
1.81
|
|
|
$
|
2.33
|
|
Cash dividends declared per common share
|
$
|
0.16
|
|
|
$
|
0.32
|
|
|
$
|
0.96
|
|
|
$
|
0.93
|
|
|
$
|
0.86
|
|
|
December 31,
|
||||||||||||||||||
(Dollar amounts in thousands)
|
2017
|
|
2016
|
|
2015
(6)
|
|
2014
|
|
2013
|
||||||||||
Consolidated Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental merchandise, net
|
$
|
868,991
|
|
|
$
|
1,001,954
|
|
|
$
|
1,136,472
|
|
|
$
|
1,237,856
|
|
|
$
|
1,124,198
|
|
Intangible assets, net
|
57,496
|
|
|
60,560
|
|
|
213,899
|
|
|
1,377,992
|
|
|
1,373,518
|
|
|||||
Total assets
|
1,420,781
|
|
|
1,602,741
|
|
|
1,974,468
|
|
|
3,271,197
|
|
|
3,018,175
|
|
|||||
Total debt
|
672,887
|
|
|
724,230
|
|
|
955,833
|
|
|
1,042,813
|
|
|
916,275
|
|
|||||
Total liabilities
|
1,148,338
|
|
|
1,337,808
|
|
|
1,590,878
|
|
|
1,881,802
|
|
|
1,682,306
|
|
|||||
Total stockholders' equity
|
272,443
|
|
|
264,933
|
|
|
383,590
|
|
|
1,389,395
|
|
|
1,335,869
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Data (Unaudited)
|
|
|
|
|
|
|
|
|
|
||||||||||
Core U.S. and Mexico stores open at end of period
|
2,512
|
|
|
2,593
|
|
|
2,815
|
|
|
3,001
|
|
|
3,161
|
|
|||||
Acceptance Now Staffed locations open at end of period
|
1,106
|
|
|
1,431
|
|
|
1,444
|
|
|
1,406
|
|
|
1,325
|
|
|||||
Acceptance Now Direct locations open at end of period
|
125
|
|
|
478
|
|
|
532
|
|
|
—
|
|
|
—
|
|
|||||
Same store revenue (decrease) growth
(12)
|
(5.4
|
)%
|
|
(6.2
|
)%
|
|
5.7
|
%
|
|
1.2
|
%
|
|
(2.0
|
)%
|
|||||
Franchise stores open at end of period
|
225
|
|
|
229
|
|
|
227
|
|
|
187
|
|
|
179
|
|
(1)
|
Includes
$24.0 million related to the closure of Acceptance Now locations, $18.2 million for capitalized software write-downs, $6.5 million for incremental legal and advisory fees, $5.4 million for hurricane damages, $3.4 million for reductions at the field support center, $1.1 million for previous store closure plans, and $0.6 million in legal settlements.
|
(2)
|
Includes the effects of a $1.9 million financing expense related to the write-off of unamortized financing costs.
|
(3)
|
Includes a
$77.5 million
gain resulting from the Tax Cuts and Jobs Act.
|
(4)
|
Includes a $151.3 million goodwill impairment charge in the Core U.S. segment.
|
(5)
|
Includes $22.5 million primarily related to the closure of Core U.S. stores, Acceptance Now locations, and Mexico stores, partially offset by a $2.2 million legal settlement.
|
(6)
|
Includes revisions for immaterial correction of deferred tax error associated with our goodwill impairment reported in the fourth quarter of 2015 as discussed in
Note B
to the consolidated financial statements.
|
(7)
|
Includes a $34.7 million write-down of smartphones.
|
(8)
|
Includes a $1,170.0 million goodwill impairment charge in the Core U.S. segment.
|
(9)
|
Includes a $7.5 million loss on the sale of Core U.S. and Canada stores, a $7.2 million charge related to the closure of Core U.S. and Mexico stores, $2.8 million of charges for start-up and warehouse closure expenses related to our sourcing and distribution initiative, a $2.0 million corporate reduction charge and $1.1 million of losses for other store sales and closures. .
|
(10)
|
Includes $6.0 million of discrete adjustments to income tax reserves.
|
(11)
|
Includes a $0.6 million reduction of revenue due to consumer refunds as a result of an operating system programming error.
|
(12)
|
Includes a $6.8 million credit due to the settlement of a lawsuit against the manufacturers of LCD screen displays.
|
(13)
|
Includes store closure charges of $5.1 million, asset impairment charges of $4.6 million, corporate reduction charges of $2.8 million, and a $1.8 million loss on the sale of stores in the Core U.S. segment.
|
(14)
|
Includes the effects of a $4.2 million financing expense related to the payment of debt origination costs and the write-off of unamortized financing costs.
|
|
Year Ended December 31,
|
|
2017-2016 Change
|
|
2016-2015 Change
|
||||||||||||||||||||
(Dollar amounts in thousands)
|
2017
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Store
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Rentals and fees
|
$
|
2,267,741
|
|
|
$
|
2,500,053
|
|
|
$
|
2,781,315
|
|
|
$
|
(232,312
|
)
|
|
(9.3
|
)%
|
|
$
|
(281,262
|
)
|
|
(10.1
|
)%
|
Merchandise sales
|
331,402
|
|
|
351,198
|
|
|
377,240
|
|
|
(19,796
|
)
|
|
(5.6
|
)%
|
|
(26,042
|
)
|
|
(6.9
|
)%
|
|||||
Installment sales
|
71,651
|
|
|
74,509
|
|
|
76,238
|
|
|
(2,858
|
)
|
|
(3.8
|
)%
|
|
(1,729
|
)
|
|
(2.3
|
)%
|
|||||
Other
|
9,620
|
|
|
12,706
|
|
|
19,158
|
|
|
(3,086
|
)
|
|
(24.3
|
)%
|
|
(6,452
|
)
|
|
(33.7
|
)%
|
|||||
Total store revenues
|
2,680,414
|
|
|
2,938,466
|
|
|
3,253,951
|
|
|
(258,052
|
)
|
|
(8.8
|
)%
|
|
(315,485
|
)
|
|
(9.7
|
)%
|
|||||
Franchise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Merchandise sales
|
13,157
|
|
|
16,358
|
|
|
15,577
|
|
|
(3,201
|
)
|
|
(19.6
|
)%
|
|
781
|
|
|
5.0
|
%
|
|||||
Royalty income and fees
|
8,969
|
|
|
8,428
|
|
|
8,892
|
|
|
541
|
|
|
6.4
|
%
|
|
(464
|
)
|
|
(5.2
|
)%
|
|||||
Total revenues
|
2,702,540
|
|
|
2,963,252
|
|
|
3,278,420
|
|
|
(260,712
|
)
|
|
(8.8
|
)%
|
|
(315,168
|
)
|
|
(9.6
|
)%
|
|||||
Cost of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Store
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of rentals and fees
|
625,358
|
|
|
664,845
|
|
|
728,706
|
|
|
(39,487
|
)
|
|
(5.9
|
)%
|
|
(63,861
|
)
|
|
(8.8
|
)%
|
|||||
Cost of merchandise sold
|
322,628
|
|
|
323,727
|
|
|
356,696
|
|
|
(1,099
|
)
|
|
(0.3
|
)%
|
|
(32,969
|
)
|
|
(9.2
|
)%
|
|||||
Cost of installment sales
|
23,622
|
|
|
24,285
|
|
|
25,677
|
|
|
(663
|
)
|
|
(2.7
|
)%
|
|
(1,392
|
)
|
|
(5.4
|
)%
|
|||||
Total cost of store revenues
|
971,608
|
|
|
1,012,857
|
|
|
1,111,079
|
|
|
(41,249
|
)
|
|
(4.1
|
)%
|
|
(98,222
|
)
|
|
(8.8
|
)%
|
|||||
Other charges
|
—
|
|
|
—
|
|
|
34,698
|
|
|
—
|
|
|
—
|
%
|
|
(34,698
|
)
|
|
(100.0
|
)%
|
|||||
Franchise cost of merchandise sold
|
12,390
|
|
|
15,346
|
|
|
14,534
|
|
|
(2,956
|
)
|
|
(19.3
|
)%
|
|
812
|
|
|
5.6
|
%
|
|||||
Total cost of revenues
|
983,998
|
|
|
1,028,203
|
|
|
1,160,311
|
|
|
(44,205
|
)
|
|
(4.3
|
)%
|
|
(132,108
|
)
|
|
(11.4
|
)%
|
|||||
Gross profit
|
1,718,542
|
|
|
1,935,049
|
|
|
2,118,109
|
|
|
(216,507
|
)
|
|
(11.2
|
)%
|
|
(183,060
|
)
|
|
(8.6
|
)%
|
|||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Store expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Labor
|
732,466
|
|
|
789,049
|
|
|
854,610
|
|
|
(56,583
|
)
|
|
(7.2
|
)%
|
|
(65,561
|
)
|
|
(7.7
|
)%
|
|||||
Other store expenses
|
744,187
|
|
|
791,614
|
|
|
833,914
|
|
|
(47,427
|
)
|
|
(6.0
|
)%
|
|
(42,300
|
)
|
|
(5.1
|
)%
|
|||||
General and administrative
|
171,090
|
|
|
168,907
|
|
|
166,102
|
|
|
2,183
|
|
|
1.3
|
%
|
|
2,805
|
|
|
1.7
|
%
|
|||||
Depreciation, amortization and write-down of intangibles
|
74,639
|
|
|
80,456
|
|
|
80,720
|
|
|
(5,817
|
)
|
|
(7.2
|
)%
|
|
(264
|
)
|
|
(0.3
|
)%
|
|||||
Goodwill impairment charge
|
—
|
|
|
151,320
|
|
|
1,170,000
|
|
|
(151,320
|
)
|
|
(100.0
|
)%
|
|
(1,018,680
|
)
|
|
(87.1
|
)
|
|||||
Other charges
|
59,219
|
|
|
20,299
|
|
|
20,651
|
|
|
38,920
|
|
|
191.7
|
%
|
|
(352
|
)
|
|
(1.7
|
)%
|
|||||
Total operating expenses
|
1,781,601
|
|
|
2,001,645
|
|
|
3,125,997
|
|
|
(220,044
|
)
|
|
(11.0
|
)%
|
|
(1,124,352
|
)
|
|
(36.0
|
)%
|
|||||
Operating loss
|
(63,059
|
)
|
|
(66,596
|
)
|
|
(1,007,888
|
)
|
|
3,537
|
|
|
5.3
|
%
|
|
941,292
|
|
|
93.4
|
%
|
|||||
Write-off of debt issuance costs
|
1,936
|
|
|
—
|
|
|
—
|
|
|
1,936
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||||
Interest, net
|
45,205
|
|
|
46,678
|
|
|
48,692
|
|
|
(1,473
|
)
|
|
(3.2
|
)%
|
|
(2,014
|
)
|
|
(4.1
|
)%
|
|||||
Loss before income taxes
|
(110,200
|
)
|
|
(113,274
|
)
|
|
(1,056,580
|
)
|
|
3,074
|
|
|
2.7
|
%
|
|
943,306
|
|
|
89.3
|
%
|
|||||
Income tax benefit
|
(116,853
|
)
|
|
(8,079
|
)
|
|
(103,060
|
)
|
|
(108,774
|
)
|
|
(1,346.4
|
)%
|
|
94,981
|
|
|
92.2
|
%
|
|||||
Net earnings (loss)
|
$
|
6,653
|
|
|
$
|
(105,195
|
)
|
|
$
|
(953,520
|
)
|
|
$
|
111,848
|
|
|
106.3
|
%
|
|
$
|
848,325
|
|
|
89.0
|
%
|
|
Year Ended December 31,
|
|
2017-2016 Change
|
|
2016-2015 Change
|
||||||||||||||||||||
(Dollar amounts in thousands)
|
2017
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Revenues
|
$
|
1,835,422
|
|
|
$
|
2,069,725
|
|
|
$
|
2,371,823
|
|
|
$
|
(234,303
|
)
|
|
(11.3
|
)%
|
|
$
|
(302,098
|
)
|
|
(12.7
|
)%
|
Gross profit
|
1,276,212
|
|
|
1,467,679
|
|
|
1,644,840
|
|
|
(191,467
|
)
|
|
(13.0
|
)%
|
|
(177,161
|
)
|
|
(10.8
|
)%
|
|||||
Operating profit (loss)
|
86,196
|
|
|
(1,020
|
)
|
|
(959,447
|
)
|
|
87,216
|
|
|
(8,550.6
|
)%
|
|
958,427
|
|
|
(99.9
|
)%
|
|||||
Change in same store revenue
|
|
|
|
|
|
|
|
|
|
(8.0
|
)%
|
|
|
|
|
(9.0
|
)%
|
||||||||
Stores in same store revenue calculation
|
|
|
|
|
|
|
|
|
2,118
|
|
|
|
|
2,053
|
|
|
Year Ended December 31,
|
|
2017-2016 Change
|
|
2016-2015 Change
|
||||||||||||||||||||
(Dollar amounts in thousands)
|
2017
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Revenues
|
$
|
797,987
|
|
|
$
|
817,814
|
|
|
$
|
818,325
|
|
|
$
|
(19,827
|
)
|
|
(2.4
|
)%
|
|
$
|
(511
|
)
|
|
(0.1
|
)%
|
Gross profit
|
400,002
|
|
|
422,381
|
|
|
420,980
|
|
|
(22,379
|
)
|
|
(5.3
|
)%
|
|
1,401
|
|
|
0.3
|
%
|
|||||
Operating profit
|
48,618
|
|
|
105,925
|
|
|
123,971
|
|
|
(57,307
|
)
|
|
(54.1
|
)%
|
|
(18,046
|
)
|
|
(14.6
|
)%
|
|||||
Change in same store revenue
|
|
|
|
|
|
|
|
|
|
5.2
|
%
|
|
|
|
(0.4
|
)%
|
|||||||||
Stores in same store revenue calculation
|
|
|
|
|
|
|
|
|
1,140
|
|
|
|
|
1,297
|
|
|
Year Ended December 31,
|
|
2017-2016 Change
|
|
2016-2015 Change
|
||||||||||||||||||||
(Dollar amounts in thousands)
|
2017
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Revenues
|
$
|
47,005
|
|
|
$
|
50,927
|
|
|
$
|
63,803
|
|
|
$
|
(3,922
|
)
|
|
(7.7
|
)%
|
|
$
|
(12,876
|
)
|
|
(20.2
|
)%
|
Gross profit
|
32,592
|
|
|
35,549
|
|
|
42,354
|
|
|
(2,957
|
)
|
|
(8.3
|
)%
|
|
(6,805
|
)
|
|
(16.1
|
)%
|
|||||
Operating loss
|
(260
|
)
|
|
(2,449
|
)
|
|
(14,149
|
)
|
|
2,189
|
|
|
(89.4
|
)%
|
|
11,700
|
|
|
(82.7
|
)%
|
|||||
Change in same store revenue
|
|
|
|
|
|
|
|
|
|
(5.1
|
)%
|
|
|
|
6.6
|
%
|
|||||||||
Stores in same store revenue calculation
|
|
|
|
|
|
|
|
|
118
|
|
|
|
|
119
|
|
|
Year Ended December 31,
|
|
2017-2016 Change
|
|
2016-2015 Change
|
||||||||||||||||||||
(Dollar amounts in thousands)
|
2017
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Revenues
|
$
|
22,126
|
|
|
$
|
24,786
|
|
|
$
|
24,469
|
|
|
$
|
(2,660
|
)
|
|
(10.7
|
)%
|
|
$
|
317
|
|
|
1.3
|
%
|
Gross profit
|
9,736
|
|
|
9,440
|
|
|
9,935
|
|
|
296
|
|
|
3.1
|
%
|
|
(495
|
)
|
|
(5.0
|
)%
|
|||||
Operating profit
|
5,081
|
|
|
5,650
|
|
|
5,793
|
|
|
(569
|
)
|
|
(10.1
|
)%
|
|
(143
|
)
|
|
(2.5
|
)%
|
(In thousands, except per share data)
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
||||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
741,986
|
|
|
$
|
677,635
|
|
|
$
|
643,965
|
|
|
$
|
638,954
|
|
Gross profit
|
462,663
|
|
|
432,533
|
|
|
412,465
|
|
|
410,881
|
|
||||
Operating profit (loss)
|
1,152
|
|
|
(873
|
)
|
|
(8,445
|
)
|
|
(54,893
|
)
|
||||
Net (loss) earnings
|
(6,679
|
)
|
|
(8,893
|
)
|
|
(12,599
|
)
|
|
34,824
|
|
||||
Basic (loss) earnings per common share
|
$
|
(0.13
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
0.65
|
|
Diluted (loss) earnings per common share
|
$
|
(0.13
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
0.65
|
|
Cash dividends declared per common share
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(In thousands, except per share data)
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
||||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
835,652
|
|
|
$
|
749,619
|
|
|
$
|
693,877
|
|
|
$
|
684,104
|
|
Gross profit
|
534,944
|
|
|
500,158
|
|
|
457,226
|
|
|
442,721
|
|
||||
Operating profit (loss)
|
48,430
|
|
|
27,550
|
|
|
16,700
|
|
|
(159,276
|
)
|
||||
Net earnings (loss)
|
25,061
|
|
|
9,946
|
|
|
6,181
|
|
|
(146,383
|
)
|
||||
Basic earnings (loss) per common share
|
$
|
0.47
|
|
|
$
|
0.19
|
|
|
$
|
0.12
|
|
|
$
|
(2.76
|
)
|
Diluted earnings (loss) per common share
|
$
|
0.47
|
|
|
$
|
0.19
|
|
|
$
|
0.12
|
|
|
$
|
(2.76
|
)
|
Cash dividends declared per common share
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
(As a percentage of revenues)
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
||||
Revenues
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Gross profit
|
62.4
|
%
|
|
63.8
|
%
|
|
64.1
|
%
|
|
64.3
|
%
|
Operating profit (loss)
|
0.2
|
%
|
|
(0.1
|
)%
|
|
(1.3
|
)%
|
|
(8.6
|
)%
|
Net (loss) earnings
|
(0.9
|
)%
|
|
(1.3
|
)%
|
|
(2.0
|
)%
|
|
5.5
|
%
|
(As a percentage of revenues)
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
||||
Revenues
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Gross profit
|
64.0
|
%
|
|
66.7
|
%
|
|
65.9
|
%
|
|
64.7
|
%
|
Operating profit (loss)
|
5.8
|
%
|
|
3.7
|
%
|
|
2.4
|
%
|
|
(23.3
|
)%
|
Net earnings (loss)
|
3.0
|
%
|
|
1.3
|
%
|
|
0.9
|
%
|
|
(21.4
|
)%
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Customer stolen merchandise
|
$
|
161,912
|
|
|
$
|
169,021
|
|
|
$
|
154,781
|
|
Other merchandise losses
(1)
|
47,596
|
|
|
49,731
|
|
|
52,003
|
|
|||
Total merchandise losses
|
$
|
209,508
|
|
|
$
|
218,752
|
|
|
$
|
206,784
|
|
(1)
|
Other merchandise losses include unrepairable and missing merchandise, and loss/damage waiver claims.
|
|
Year Ended December 31, 2017
|
||||||||||||||||||||||
|
Core U.S.
|
|
Acceptance Now Staffed
|
|
Acceptance Now Direct
|
|
Mexico
|
|
Franchising
|
|
Total
|
||||||||||||
Locations at beginning of period
|
2,463
|
|
|
1,431
|
|
|
478
|
|
|
130
|
|
|
229
|
|
|
4,731
|
|
||||||
New location openings
|
—
|
|
|
222
|
|
|
24
|
|
|
1
|
|
|
1
|
|
|
248
|
|
||||||
Acquired locations remaining open
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
||||||
Conversions
|
—
|
|
|
(63
|
)
|
|
63
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Closed locations
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Merged with existing locations
|
(51
|
)
|
|
(483
|
)
|
|
(439
|
)
|
|
—
|
|
|
—
|
|
|
(973
|
)
|
||||||
Sold or closed with no surviving location
|
(31
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
(9
|
)
|
|
(42
|
)
|
||||||
Locations at end of period
|
2,381
|
|
|
1,106
|
|
|
125
|
|
|
131
|
|
|
225
|
|
|
3,968
|
|
||||||
Acquired locations closed and accounts merged with existing locations
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||
Total approximate purchase price
(in millions)
|
$
|
2.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.5
|
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||||
|
Core U.S.
|
|
Acceptance Now Staffed
|
|
Acceptance Now Direct
|
|
Mexico
|
|
Franchising
|
|
Total
|
||||||||||||
Locations at beginning of period
|
2,672
|
|
|
1,444
|
|
|
532
|
|
|
143
|
|
|
227
|
|
|
5,018
|
|
||||||
New location openings
|
—
|
|
|
171
|
|
|
67
|
|
|
1
|
|
|
2
|
|
|
241
|
|
||||||
Acquired locations remaining open
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
||||||
Conversions
|
—
|
|
|
1
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||||
Closed locations
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Merged with existing locations
|
(185
|
)
|
|
(185
|
)
|
|
—
|
|
|
(4
|
)
|
|
(1
|
)
|
|
(375
|
)
|
||||||
Sold or closed with no surviving location
|
(24
|
)
|
|
—
|
|
|
(119
|
)
|
|
(10
|
)
|
|
(4
|
)
|
|
(157
|
)
|
||||||
Locations at end of period
|
2,463
|
|
|
1,431
|
|
|
478
|
|
|
130
|
|
|
229
|
|
|
4,731
|
|
||||||
Acquired locations closed and accounts merged with existing locations
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Total approximate purchase price (
in millions
)
|
$
|
2.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.3
|
|
|
Year Ended December 31, 2015
|
||||||||||||||||||||||
|
Core U.S.
|
|
Acceptance Now Staffed
|
Acceptance Now Direct
|
|
Mexico
|
|
Franchising
|
|
Total
|
|||||||||||||
Locations at beginning of period
|
2,824
|
|
|
1,406
|
|
|
—
|
|
|
177
|
|
|
187
|
|
|
4,594
|
|
||||||
New location openings
|
—
|
|
|
161
|
|
|
505
|
|
|
—
|
|
|
11
|
|
|
677
|
|
||||||
Acquired locations remaining open
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||||
Conversions
|
(40
|
)
|
|
(29
|
)
|
|
29
|
|
|
—
|
|
|
40
|
|
|
|
|||||||
Closed locations
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Merged with existing locations
|
(83
|
)
|
|
(94
|
)
|
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
(211
|
)
|
||||||
Sold or closed with no surviving location
|
(34
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(11
|
)
|
|
(47
|
)
|
||||||
Locations at end of period
|
2,672
|
|
|
1,444
|
|
|
532
|
|
|
143
|
|
|
227
|
|
|
5,018
|
|
||||||
Acquired locations closed and accounts merged with existing locations
|
34
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
||||||
Total approximate purchase price
(in millions)
|
$
|
25.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25.5
|
|
|
Payments Due by Period
|
||||||||||||||||||
(In thousands)
|
Total
|
|
2018
|
|
2019-2020
|
|
2021-2022
|
|
Thereafter
|
||||||||||
Senior Term Debt
(1)
|
$
|
48,563
|
|
|
$
|
2,250
|
|
|
$
|
4,500
|
|
|
$
|
41,813
|
|
|
$
|
—
|
|
Revolving Credit Facility
(2)
|
85,000
|
|
|
—
|
|
|
85,000
|
|
|
—
|
|
|
—
|
|
|||||
INTRUST Line of Credit
|
5,735
|
|
|
5,735
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
6.625% Senior Notes
(3)
|
350,922
|
|
|
19,394
|
|
|
331,528
|
|
|
—
|
|
|
—
|
|
|||||
4.75% Senior Notes
(4)
|
291,563
|
|
|
11,875
|
|
|
23,750
|
|
|
255,938
|
|
|
—
|
|
|||||
Operating Leases
|
466,239
|
|
|
158,347
|
|
|
220,205
|
|
|
83,958
|
|
|
3,729
|
|
|||||
Total contractual cash obligations
(5)
|
$
|
1,248,022
|
|
|
$
|
197,601
|
|
|
$
|
664,983
|
|
|
$
|
381,709
|
|
|
$
|
3,729
|
|
(1)
|
Does not include interest payments. Our senior term debt bears interest at varying rates equal to the Eurodollar rate (not less than 0.75%) plus 3.00% or the prime rate plus 2.00% at our election. The Eurodollar rate on our senior term debt at
December 31, 2017
was 1.57%.
|
(2)
|
Does not include interest payments. Our Revolving Facility bears interest at varying rates equal to the Eurodollar rate plus 1.50% to 3.00% or the prime rate plus 0.50% to 2.00% at our election. The weighted average Eurodollar rate on our Revolving Facility at
December 31, 2017
was 1.48%.
|
(3)
|
Includes interest payments of $9.7 million on each May 15 and November 15 of each year.
|
(4)
|
Includes interest payments of $5.9 million on each May 1 and November 1 of each year.
|
(5)
|
As of
December 31, 2017
, we have recorded $37.3 million in uncertain tax positions. Because of the uncertainty of the amounts to be ultimately paid as well as the timing of such payments, uncertain tax positions are not reflected in the contractual obligations table.
|
|
Page
|
Rent-A-Center, Inc. and Subsidiaries
|
|
|
|
Consolidated
Statements of Operations
|
|
Consolidated
Statements of Comprehensive Income (Loss)
|
|
Consolidated
Balance Sheets
|
|
Consolidated
Statements of Stockholders’ Equity
|
|
Consolidated
Statements of Cash Flows
|
|
/s/ KPMG LLP
|
|
We have served as the Company's auditor since 2013.
|
|
Dallas, Texas
|
February 28, 2018
|
/s/ KPMG LLP
|
|
Dallas, Texas
|
February 28, 2018
|
|
Year Ended December 31,
|
||||||||||
(In thousands, except per share data)
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
|
|
|
||||||||
Store
|
|
|
|
|
|
||||||
Rentals and fees
|
$
|
2,267,741
|
|
|
$
|
2,500,053
|
|
|
$
|
2,781,315
|
|
Merchandise sales
|
331,402
|
|
|
351,198
|
|
|
377,240
|
|
|||
Installment sales
|
71,651
|
|
|
74,509
|
|
|
76,238
|
|
|||
Other
|
9,620
|
|
|
12,706
|
|
|
19,158
|
|
|||
Total store revenues
|
2,680,414
|
|
|
2,938,466
|
|
|
3,253,951
|
|
|||
Franchise
|
|
|
|
|
|
||||||
Merchandise sales
|
13,157
|
|
|
16,358
|
|
|
15,577
|
|
|||
Royalty income and fees
|
8,969
|
|
|
8,428
|
|
|
8,892
|
|
|||
Total revenues
|
2,702,540
|
|
|
2,963,252
|
|
|
3,278,420
|
|
|||
Cost of revenues
|
|
|
|
|
|
||||||
Store
|
|
|
|
|
|
||||||
Cost of rentals and fees
|
625,358
|
|
|
664,845
|
|
|
728,706
|
|
|||
Cost of merchandise sold
|
322,628
|
|
|
323,727
|
|
|
356,696
|
|
|||
Cost of installment sales
|
23,622
|
|
|
24,285
|
|
|
25,677
|
|
|||
Total cost of store revenues
|
971,608
|
|
|
1,012,857
|
|
|
1,111,079
|
|
|||
Other charges
|
—
|
|
|
—
|
|
|
34,698
|
|
|||
Franchise cost of merchandise sold
|
12,390
|
|
|
15,346
|
|
|
14,534
|
|
|||
Total cost of revenues
|
983,998
|
|
|
1,028,203
|
|
|
1,160,311
|
|
|||
Gross profit
|
1,718,542
|
|
|
1,935,049
|
|
|
2,118,109
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Store expenses
|
|
|
|
|
|
||||||
Labor
|
732,466
|
|
|
789,049
|
|
|
854,610
|
|
|||
Other store expenses
|
744,187
|
|
|
791,614
|
|
|
833,914
|
|
|||
General and administrative expenses
|
171,090
|
|
|
168,907
|
|
|
166,102
|
|
|||
Depreciation, amortization and write-down of intangibles
|
74,639
|
|
|
80,456
|
|
|
80,720
|
|
|||
Goodwill impairment charge
|
—
|
|
|
151,320
|
|
|
1,170,000
|
|
|||
Other charges
|
59,219
|
|
|
20,299
|
|
|
20,651
|
|
|||
Total operating expenses
|
1,781,601
|
|
|
2,001,645
|
|
|
3,125,997
|
|
|||
Operating loss
|
(63,059
|
)
|
|
(66,596
|
)
|
|
(1,007,888
|
)
|
|||
Write-off of debt issuance costs
|
1,936
|
|
|
—
|
|
|
—
|
|
|||
Interest expense
|
45,996
|
|
|
47,181
|
|
|
49,326
|
|
|||
Interest income
|
(791
|
)
|
|
(503
|
)
|
|
(634
|
)
|
|||
Loss before income taxes
|
(110,200
|
)
|
|
(113,274
|
)
|
|
(1,056,580
|
)
|
|||
Income tax benefit
|
(116,853
|
)
|
|
(8,079
|
)
|
|
(103,060
|
)
|
|||
Net earnings (loss)
|
$
|
6,653
|
|
|
$
|
(105,195
|
)
|
|
$
|
(953,520
|
)
|
Basic earnings (loss) per common share
|
$
|
0.12
|
|
|
$
|
(1.98
|
)
|
|
$
|
(17.97
|
)
|
Diluted earnings (loss) per common share
|
$
|
0.12
|
|
|
$
|
(1.98
|
)
|
|
$
|
(17.97
|
)
|
Cash dividends declared per common share
|
$
|
0.16
|
|
|
$
|
0.32
|
|
|
$
|
0.96
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Net earnings (loss)
|
$
|
6,653
|
|
|
$
|
(105,195
|
)
|
|
$
|
(953,520
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustments, net of tax of $2,822, ($2,794), and ($3,445) for 2017, 2016 and 2015, respectively
|
5,241
|
|
|
(5,188
|
)
|
|
(6,399
|
)
|
|||
Total other comprehensive income (loss)
|
5,241
|
|
|
(5,188
|
)
|
|
(6,399
|
)
|
|||
Comprehensive income (loss)
|
$
|
11,894
|
|
|
$
|
(110,383
|
)
|
|
$
|
(959,919
|
)
|
|
December 31,
|
||||||
(In thousands, except share and par value data)
|
2017
|
|
2016
|
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
72,968
|
|
|
$
|
95,396
|
|
Receivables, net of allowance for doubtful accounts of $4,167 and $3,593 in 2017 and 2016, respectively
|
69,823
|
|
|
69,785
|
|
||
Prepaid expenses and other assets
|
64,577
|
|
|
54,989
|
|
||
Rental merchandise, net
|
|
|
|
||||
On rent
|
701,803
|
|
|
795,118
|
|
||
Held for rent
|
167,188
|
|
|
206,836
|
|
||
Merchandise held for installment sale
|
4,025
|
|
|
3,629
|
|
||
Property assets, net of accumulated depreciation of $525,673 and $522,101 in 2017 and 2016, respectively
|
282,901
|
|
|
316,428
|
|
||
Goodwill
|
56,614
|
|
|
55,308
|
|
||
Other intangible assets, net
|
882
|
|
|
5,252
|
|
||
Total assets
|
$
|
1,420,781
|
|
|
$
|
1,602,741
|
|
LIABILITIES
|
|
|
|
||||
Accounts payable — trade
|
$
|
90,352
|
|
|
$
|
108,238
|
|
Accrued liabilities
|
298,018
|
|
|
332,196
|
|
||
Deferred income taxes
|
87,081
|
|
|
173,144
|
|
||
Senior debt, net
|
134,125
|
|
|
186,747
|
|
||
Senior notes, net
|
538,762
|
|
|
537,483
|
|
||
Total liabilities
|
1,148,338
|
|
|
1,337,808
|
|
||
STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Common stock, $.01 par value; 250,000,000 shares authorized; 109,681,559 and 109,519,369 shares issued in 2017 and 2016, respectively
|
1,097
|
|
|
1,095
|
|
||
Additional paid-in capital
|
831,271
|
|
|
827,107
|
|
||
Retained earnings
|
798,743
|
|
|
800,640
|
|
||
Treasury stock at cost, 56,369,752 shares in 2017 and 2016
|
(1,347,677
|
)
|
|
(1,347,677
|
)
|
||
Accumulated other comprehensive loss
|
(10,991
|
)
|
|
(16,232
|
)
|
||
Total stockholders' equity
|
272,443
|
|
|
264,933
|
|
||
Total liabilities and stockholders' equity
|
$
|
1,420,781
|
|
|
$
|
1,602,741
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Treasury
Stock
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total
|
|||||||||||||||
(In thousands)
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
Balance at January 1, 2015
|
109,353
|
|
|
$
|
1,094
|
|
|
$
|
813,178
|
|
|
$
|
1,927,445
|
|
|
$
|
(1,347,677
|
)
|
|
$
|
(4,645
|
)
|
|
$
|
1,389,395
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(953,520
|
)
|
|
—
|
|
|
—
|
|
|
(953,520
|
)
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,399
|
)
|
|
(6,399
|
)
|
||||||
Exercise of stock options
|
66
|
|
|
—
|
|
|
1,485
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,485
|
|
||||||
Vesting of restricted share units
|
23
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Tax effect of stock awards vested and options exercised
|
—
|
|
|
—
|
|
|
(5,865
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,865
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
9,541
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,541
|
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(51,047
|
)
|
|
—
|
|
|
—
|
|
|
(51,047
|
)
|
||||||
Balance at December 31, 2015
|
109,442
|
|
|
1,094
|
|
|
818,339
|
|
|
922,878
|
|
|
(1,347,677
|
)
|
|
(11,044
|
)
|
|
383,590
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(105,195
|
)
|
|
—
|
|
|
—
|
|
|
(105,195
|
)
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,188
|
)
|
|
(5,188
|
)
|
||||||
Vesting of restricted share units
|
77
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Tax effect of stock awards vested and options exercised
|
—
|
|
|
—
|
|
|
(440
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(440
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
9,209
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,209
|
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,043
|
)
|
|
—
|
|
|
—
|
|
|
(17,043
|
)
|
||||||
Balance at December 31, 2016
|
109,519
|
|
|
1,095
|
|
|
827,107
|
|
|
800,640
|
|
|
(1,347,677
|
)
|
|
(16,232
|
)
|
|
264,933
|
|
||||||
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
6,653
|
|
|
—
|
|
|
—
|
|
|
6,653
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,241
|
|
|
5,241
|
|
||||||
Exercise of stock options
|
27
|
|
|
—
|
|
|
270
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
270
|
|
||||||
Vesting of restricted share units
|
136
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
3,896
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,896
|
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,550
|
)
|
|
—
|
|
|
—
|
|
|
(8,550
|
)
|
||||||
Balance at December 31, 2017
|
109,682
|
|
|
$
|
1,097
|
|
|
$
|
831,271
|
|
|
$
|
798,743
|
|
|
$
|
(1,347,677
|
)
|
|
$
|
(10,991
|
)
|
|
$
|
272,443
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net earnings (loss)
|
$
|
6,653
|
|
|
$
|
(105,195
|
)
|
|
$
|
(953,520
|
)
|
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities
|
|
|
|
|
|
||||||
Depreciation of rental merchandise
|
618,390
|
|
|
657,090
|
|
|
718,100
|
|
|||
Bad debt expense
|
15,702
|
|
|
15,449
|
|
|
15,260
|
|
|||
Stock-based compensation expense
|
3,896
|
|
|
9,209
|
|
|
9,541
|
|
|||
Depreciation of property assets
|
73,685
|
|
|
77,361
|
|
|
76,429
|
|
|||
Loss on sale or disposal of property assets
|
15,795
|
|
|
3,718
|
|
|
11,897
|
|
|||
Goodwill impairment charge
|
—
|
|
|
151,320
|
|
|
1,170,000
|
|
|||
Amortization of impairment of intangibles
|
4,908
|
|
|
2,176
|
|
|
3,333
|
|
|||
Amortization of financing fees
|
4,667
|
|
|
2,217
|
|
|
3,126
|
|
|||
Write-off of debt financing fees
|
1,936
|
|
|
—
|
|
|
—
|
|
|||
Deferred income taxes
|
(86,063
|
)
|
|
(32,994
|
)
|
|
(144,818
|
)
|
|||
Excess tax benefit related to stock awards
|
—
|
|
|
—
|
|
|
(86
|
)
|
|||
Changes in operating assets and liabilities, net of effects of acquisitions
|
|
|
|
|
|
||||||
Rental merchandise
|
(487,130
|
)
|
|
(523,697
|
)
|
|
(622,149
|
)
|
|||
Receivables
|
(15,741
|
)
|
|
(15,914
|
)
|
|
(19,088
|
)
|
|||
Prepaid expenses and other assets
|
(9,622
|
)
|
|
104,379
|
|
|
31,636
|
|
|||
Accounts payable — trade
|
(17,886
|
)
|
|
11,883
|
|
|
(45,523
|
)
|
|||
Accrued liabilities
|
(18,657
|
)
|
|
(2,929
|
)
|
|
(23,144
|
)
|
|||
Net cash provided by operating activities
|
110,533
|
|
|
354,073
|
|
|
230,994
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Purchase of property assets
|
(65,460
|
)
|
|
(61,143
|
)
|
|
(80,870
|
)
|
|||
Proceeds from sale of stores
|
4,638
|
|
|
5,262
|
|
|
15,964
|
|
|||
Acquisitions of businesses
|
(2,525
|
)
|
|
(3,098
|
)
|
|
(25,170
|
)
|
|||
Net cash used in investing activities
|
(63,347
|
)
|
|
(58,979
|
)
|
|
(90,076
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Exercise of stock options
|
270
|
|
|
—
|
|
|
1,485
|
|
|||
Shares withheld for payment of employee tax withholdings
|
(225
|
)
|
|
(338
|
)
|
|
(506
|
)
|
|||
Excess tax benefit related to stock awards
|
—
|
|
|
—
|
|
|
86
|
|
|||
Debt issuance costs
|
(5,258
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from debt
|
347,635
|
|
|
52,245
|
|
|
531,180
|
|
|||
Repayments of debt
|
(400,151
|
)
|
|
(286,065
|
)
|
|
(605,620
|
)
|
|||
Dividends paid
|
(12,811
|
)
|
|
(25,554
|
)
|
|
(51,011
|
)
|
|||
Net cash used in financing activities
|
(70,540
|
)
|
|
(259,712
|
)
|
|
(124,386
|
)
|
|||
Effect of exchange rate changes on cash
|
926
|
|
|
(349
|
)
|
|
(2,295
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
(22,428
|
)
|
|
35,033
|
|
|
14,237
|
|
|||
Cash and cash equivalents at beginning of year
|
95,396
|
|
|
60,363
|
|
|
46,126
|
|
|||
Cash and cash equivalents at end of year
|
$
|
72,968
|
|
|
$
|
95,396
|
|
|
$
|
60,363
|
|
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest
|
$
|
41,339
|
|
|
$
|
44,469
|
|
|
$
|
49,386
|
|
Income taxes (excludes $7,321, $84,884 and $116,337 of income taxes refunded in 2017, 2016 and 2015, respectively)
|
$
|
1,983
|
|
|
$
|
18,536
|
|
|
$
|
128,083
|
|
|
December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Installment sales receivable
|
$
|
55,516
|
|
|
$
|
55,834
|
|
Trade and notes receivables
|
18,474
|
|
|
14,067
|
|
||
Other receivables
|
—
|
|
|
3,477
|
|
||
Total receivables
|
73,990
|
|
|
73,378
|
|
||
Less allowance for doubtful accounts
|
(4,167
|
)
|
|
(3,593
|
)
|
||
Total receivables, net of allowance for doubtful accounts
|
$
|
69,823
|
|
|
$
|
69,785
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Beginning allowance for doubtful accounts
|
$
|
3,593
|
|
|
$
|
3,614
|
|
|
$
|
4,023
|
|
Bad debt expense
|
15,702
|
|
|
15,449
|
|
|
15,260
|
|
|||
Accounts written off
|
(15,791
|
)
|
|
(16,095
|
)
|
|
(16,317
|
)
|
|||
Recoveries
|
663
|
|
|
625
|
|
|
648
|
|
|||
Ending allowance for doubtful accounts
|
$
|
4,167
|
|
|
$
|
3,593
|
|
|
$
|
3,614
|
|
|
December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
On rent
|
|
|
|
||||
Cost
|
$
|
1,176,240
|
|
|
$
|
1,338,670
|
|
Less accumulated depreciation
|
(474,437
|
)
|
|
(543,552
|
)
|
||
Net book value, on rent
|
$
|
701,803
|
|
|
$
|
795,118
|
|
Held for rent
|
|
|
|
||||
Cost
|
$
|
198,471
|
|
|
$
|
255,857
|
|
Less accumulated depreciation
|
(31,283
|
)
|
|
(49,021
|
)
|
||
Net book value, held for rent
|
$
|
167,188
|
|
|
$
|
206,836
|
|
|
December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Furniture and equipment
|
$
|
511,527
|
|
|
$
|
522,036
|
|
Transportation equipment
|
10,585
|
|
|
11,854
|
|
||
Building and leasehold improvements
|
269,522
|
|
|
274,118
|
|
||
Land and land improvements
|
6,747
|
|
|
6,747
|
|
||
Construction in progress
|
10,193
|
|
|
23,774
|
|
||
Total property assets
|
808,574
|
|
|
838,529
|
|
||
Less accumulated depreciation
|
(525,673
|
)
|
|
(522,101
|
)
|
||
Total property assets, net of accumulated depreciation
|
$
|
282,901
|
|
|
$
|
316,428
|
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
(Dollar amounts in thousands)
|
Avg.
Life
(years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Customer relationships
|
2
|
|
$
|
79,670
|
|
|
$
|
79,274
|
|
|
$
|
79,106
|
|
|
$
|
78,707
|
|
Vendor relationships
|
11
|
|
860
|
|
|
860
|
|
|
7,538
|
|
|
3,408
|
|
||||
Non-compete agreements
|
3
|
|
6,748
|
|
|
6,262
|
|
|
6,746
|
|
|
6,023
|
|
||||
Total other intangible assets
|
|
|
$
|
87,278
|
|
|
$
|
86,396
|
|
|
$
|
93,390
|
|
|
$
|
88,138
|
|
Year Ended December 31, 2017
(1)
|
$
|
4,908
|
|
Year Ended December 31, 2016
|
$
|
2,176
|
|
Year Ended December 31, 2015
|
$
|
3,333
|
|
(In thousands)
|
Estimated
Amortization Expense
|
||
2018
|
$
|
552
|
|
2019
|
310
|
|
|
2020
|
20
|
|
|
Thereafter
|
—
|
|
|
Total amortization expense
|
$
|
882
|
|
|
Year Ended December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Beginning goodwill balance
|
$
|
55,308
|
|
|
$
|
206,122
|
|
Additions from acquisitions
|
1,217
|
|
|
1,442
|
|
||
Goodwill impairments and write-offs related to stores sold or closed
|
—
|
|
|
(152,239
|
)
|
||
Post purchase price allocation adjustments
|
89
|
|
|
(17
|
)
|
||
Ending goodwill balance
|
$
|
56,614
|
|
|
$
|
55,308
|
|
|
Year Ended December 31,
|
||||||||||
(Dollar amounts in thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Number of stores acquired remaining open
|
—
|
|
|
—
|
|
|
5
|
|
|||
Number of stores acquired that were merged with existing stores
|
8
|
|
|
3
|
|
|
34
|
|
|||
Number of transactions
|
4
|
|
|
3
|
|
|
24
|
|
|||
Total purchase price
|
$
|
2,547
|
|
|
$
|
2,302
|
|
|
$
|
25,488
|
|
Amounts allocated to:
|
|
|
|
|
|
||||||
Goodwill
|
$
|
1,217
|
|
|
$
|
1,442
|
|
|
$
|
12,942
|
|
Non-compete agreements
|
—
|
|
|
—
|
|
|
1,166
|
|
|||
Customer relationships
|
550
|
|
|
181
|
|
|
2,625
|
|
|||
Rental merchandise
|
780
|
|
|
679
|
|
|
8,755
|
|
|
December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Accrued insurance costs
|
$
|
124,760
|
|
|
$
|
125,172
|
|
Deferred revenue
|
51,742
|
|
|
58,255
|
|
||
Accrued compensation
|
37,783
|
|
|
40,551
|
|
||
Taxes other than income
|
27,415
|
|
|
22,556
|
|
||
Deferred compensation
|
11,323
|
|
|
11,394
|
|
||
Accrued interest payable
|
5,707
|
|
|
5,808
|
|
||
Deferred rent
|
3,937
|
|
|
5,199
|
|
||
Accrued dividends
|
—
|
|
|
4,262
|
|
||
Accrued other
|
35,351
|
|
|
58,999
|
|
||
Total Accrued liabilities
|
$
|
298,018
|
|
|
$
|
332,196
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Domestic
|
$
|
(109,615
|
)
|
|
$
|
(110,347
|
)
|
|
$
|
(1,041,243
|
)
|
Foreign
|
(585
|
)
|
|
(2,927
|
)
|
|
(15,337
|
)
|
|||
Loss before income taxes
|
$
|
(110,200
|
)
|
|
$
|
(113,274
|
)
|
|
$
|
(1,056,580
|
)
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Tax at statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Tax Cuts and Jobs Act of 2017
|
70.3
|
%
|
|
—
|
%
|
|
—
|
%
|
Goodwill impairment
|
—
|
%
|
|
(29.3
|
)%
|
|
(27.0
|
)%
|
State income taxes
|
(1.8
|
)%
|
|
3.3
|
%
|
|
2.8
|
%
|
Effect of foreign operations, net of foreign tax credits
|
3.5
|
%
|
|
(0.2
|
)%
|
|
—
|
%
|
Effect of current and prior year credits
|
1.7
|
%
|
|
2.9
|
%
|
|
0.5
|
%
|
Adjustments to deferred taxes
|
1.6
|
%
|
|
0.6
|
%
|
|
—
|
%
|
Valuation allowance
|
(1.6
|
)%
|
|
(6.6
|
)%
|
|
(1.0
|
)%
|
Other, net
|
(2.7
|
)%
|
|
1.4
|
%
|
|
(0.5
|
)%
|
Effective income tax rate
|
106.0
|
%
|
|
7.1
|
%
|
|
9.8
|
%
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Current (benefit) expense
|
|
|
|
|
|
||||||
Federal
|
$
|
(34,445
|
)
|
|
$
|
23,752
|
|
|
$
|
29,668
|
|
State
|
1,216
|
|
|
779
|
|
|
(6,432
|
)
|
|||
Foreign
|
(1,417
|
)
|
|
(582
|
)
|
|
2,575
|
|
|||
Total current
|
(34,646
|
)
|
|
23,949
|
|
|
25,811
|
|
|||
Deferred (benefit) expense
|
|
|
|
|
|
||||||
Federal
|
(89,820
|
)
|
|
(27,307
|
)
|
|
(100,139
|
)
|
|||
State
|
9,266
|
|
|
(6,586
|
)
|
|
(28,143
|
)
|
|||
Foreign
|
(1,653
|
)
|
|
1,865
|
|
|
(589
|
)
|
|||
Total deferred
|
(82,207
|
)
|
|
(32,028
|
)
|
|
(128,871
|
)
|
|||
Total income tax benefit
|
$
|
(116,853
|
)
|
|
$
|
(8,079
|
)
|
|
$
|
(103,060
|
)
|
|
December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Deferred tax assets
|
|
|
|
||||
State net operating loss carryforwards
|
$
|
22,154
|
|
|
$
|
17,538
|
|
Foreign net operating loss carryforwards
|
16,760
|
|
|
17,234
|
|
||
Accrued liabilities
|
49,619
|
|
|
70,733
|
|
||
Intangible assets
|
26,029
|
|
|
43,662
|
|
||
Other assets including credits
|
11,967
|
|
|
7,497
|
|
||
Foreign tax credit carryforwards
|
6,601
|
|
|
13,576
|
|
||
Total deferred tax assets
|
133,130
|
|
|
170,240
|
|
||
Valuation allowance
|
(40,074
|
)
|
|
(35,410
|
)
|
||
Deferred tax assets, net
|
93,056
|
|
|
134,830
|
|
||
Deferred tax liabilities
|
|
|
|
||||
Rental merchandise
|
(139,425
|
)
|
|
(234,211
|
)
|
||
Property assets
|
(40,712
|
)
|
|
(73,763
|
)
|
||
Total deferred tax liabilities
|
(180,137
|
)
|
|
(307,974
|
)
|
||
Net deferred taxes
|
$
|
(87,081
|
)
|
|
$
|
(173,144
|
)
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Beginning unrecognized tax benefit balance
|
$
|
33,723
|
|
|
$
|
27,164
|
|
|
$
|
13,376
|
|
(Reductions) additions based on tax positions related to current year
|
(2,280
|
)
|
|
773
|
|
|
1,508
|
|
|||
Additions for tax positions of prior years
|
6,688
|
|
|
8,396
|
|
|
20,684
|
|
|||
Reductions for tax positions of prior years
|
(368
|
)
|
|
(2,246
|
)
|
|
(8,354
|
)
|
|||
Settlements
|
(444
|
)
|
|
(364
|
)
|
|
(50
|
)
|
|||
Ending unrecognized tax benefit balance
|
$
|
37,319
|
|
|
$
|
33,723
|
|
|
$
|
27,164
|
|
•
|
The Tax Act reduced the corporate tax rate to 21 percent, effective January 1, 2018. For our net federal deferred tax liabilities ("DTL"), we have recorded a provisional decrease of
$76.5 million
, with a corresponding net adjustment to deferred income tax benefit of
$76.5 million
for the year ended December 31, 2017. This adjustment is based on a reasonable estimate of the impact of the reduction in the corporate tax rate on our DTL's as of December 22, 2017. While we are able to make a reasonable estimate of the impact of the reduction in the corporate tax rate, our DTL's may be affected by other analyses related to the Tax Act, including our calculation of deemed repatriation of deferred foreign income, our calculation of the 100% bonus depreciation for assets placed in service in 2017 impacted by the Tax Act, and the state tax effect of adjustments made to federal temporary differences.
|
•
|
A provision in the Tax Act allows for 100% bonus depreciation on certain assets acquired and placed in service after September 27, 2017. This immediate expensing will continue for assets acquired before December 31, 2022, at which point it will begin phasing out. While we have not yet completed all of the computations necessary or completed an inventory of our 2017 expenditures that qualify for immediate expensing, we have recorded a federal provisional benefit of
$9.7 million
based on our current intent to fully expense all qualifying expenditures. This resulted in a decrease of approximately
$24.2 million
to our current income tax payable and a corresponding increase in our DTLs of approximately
$14.5 million
(after considering the effects of the reduction in income tax rates). This provisional estimate is including the rate change provision above.
|
•
|
The Deemed Repatriation Transition Tax (Transition Tax) is a tax on previously untaxed accumulated and current earnings and profits (E&P) of certain of our foreign subsidiaries. To assess the amount of the Transition Tax, we must determine, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. We are able to make a reasonable estimate of the Transition Tax and currently estimate an obligation of
$0.7 million
. However, we are continuing to review additional information regarding our accumulated E&P and non-U.S. income taxes paid to more precisely compute the amount of the Transition Tax, if any. In addition, based on current state tax law, we estimate the state impact of the Transition Tax to be insignificant. This estimate will be revised based on a calculation of our final Transition Tax as well as any updated guidance on state treatment of the deemed repatriation.
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
(In thousands)
|
Facility
Maturity
|
|
Maximum
Facility
|
|
Amount
Outstanding
|
|
Amount
Available
|
|
Maximum
Facility
|
|
Amount
Outstanding
|
|
Amount
Available
|
||||||||||||
Senior Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Term Loan
|
March 19, 2021
|
|
$
|
225,000
|
|
|
$
|
48,563
|
|
|
$
|
—
|
|
|
$
|
225,000
|
|
|
$
|
191,813
|
|
|
$
|
—
|
|
Revolving Facility
|
March 19, 2019
|
|
350,000
|
|
|
85,000
|
|
|
109,700
|
|
|
675,000
|
|
|
—
|
|
|
584,304
|
|
||||||
Total
|
|
|
575,000
|
|
|
133,563
|
|
|
109,700
|
|
|
900,000
|
|
|
191,813
|
|
|
584,304
|
|
||||||
Other indebtedness:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Line of credit
|
August 20, 2018
|
|
12,500
|
|
|
5,735
|
|
|
6,765
|
|
|
20,000
|
|
|
—
|
|
|
20,000
|
|
||||||
Total
|
|
|
$
|
587,500
|
|
|
139,298
|
|
|
$
|
116,465
|
|
|
$
|
920,000
|
|
|
191,813
|
|
|
$
|
604,304
|
|
||
Unamortized debt issuance costs
|
|
|
|
|
|
(5,173
|
)
|
|
|
|
|
|
(5,066
|
)
|
|
|
|||||||||
Total senior debt, net
|
|
|
|
|
$
|
134,125
|
|
|
|
|
|
|
$
|
186,747
|
|
|
|
•
|
incur additional debt;
|
•
|
repurchase capital stock, repurchase 6.625% notes and 4.75% notes and/or pay cash dividends when the Consolidated Total Leverage Ratio is greater than 3.75:1 (subject to an exception for cash dividends in an amount not to exceed
$15 million
annually);
|
•
|
incur liens or other encumbrances;
|
•
|
merge, consolidate or sell substantially all property or business;
|
•
|
sell, lease or otherwise transfer assets (other than in the ordinary course of business);
|
•
|
make investments or acquisitions (unless they meet financial tests and other requirements); or
|
•
|
enter into an unrelated line of business.
|
•
|
the maximum Consolidated Total Leverage Ratio was removed;
|
•
|
the maximum Consolidated Senior Secured Leverage Ratio was removed;
|
•
|
the minimum Consolidated Fixed Charge Coverage Ratio was reduced from 1.50:1 to 1.10:1 and the definitions of Consolidated Fixed Charges and Consolidated Fixed Charge Coverage Ratio were modified. In addition, the sole consequence of a breach of this covenant shall be that a Minimum Availability Period shall result, which impacts the borrowing capacity under the Loans;
|
•
|
any guarantee obligations of Foreign Subsidiaries may not exceed an aggregate of $10 million outstanding at any time;
|
•
|
indebtedness, including Capital Lease Obligations, mortgage financings and purchase money obligations that are secured by Liens permitted under the Credit Agreement, may not exceed an aggregate outstanding amount of $10 million, unless such Indebtedness was outstanding on the effective date of the Fourth Amendment; and
|
•
|
removed certain Permitted Investments, and modified Permitted Acquisitions, which is now tied to certain performance criteria, including the Borrowing Base.
|
|
Required Ratio
|
|
Actual Ratio
|
||
Consolidated Fixed Charge Coverage Ratio
|
No less than
|
|
1.10:1
|
|
0.11:1
|
(in thousands)
|
Term Loan
|
|
Revolving Facility
|
|
INTRUST Line of Credit
|
|
Total
|
||||||||
2018
|
$
|
2,250
|
|
|
$
|
—
|
|
|
$
|
5,735
|
|
|
$
|
7,985
|
|
2019
|
2,250
|
|
|
85,000
|
|
|
—
|
|
|
87,250
|
|
||||
2020
|
2,250
|
|
|
—
|
|
|
—
|
|
|
2,250
|
|
||||
2021
|
41,813
|
|
|
—
|
|
|
—
|
|
|
41,813
|
|
||||
2022
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Thereafter
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total senior debt
|
$
|
48,563
|
|
|
$
|
85,000
|
|
|
$
|
5,735
|
|
|
$
|
139,298
|
|
•
|
incur additional debt;
|
•
|
sell assets or our subsidiaries;
|
•
|
grant liens to third parties;
|
•
|
pay cash dividends or repurchase stock when total leverage is greater than
2.50:1
(subject to an exception for cash dividends in an amount not to exceed
$20 million
annually); and
|
•
|
engage in a merger or sell substantially all of our assets.
|
(In thousands)
|
Operating Leases
|
||
2018
|
$
|
158,347
|
|
2019
|
125,843
|
|
|
2020
|
94,362
|
|
|
2021
|
57,630
|
|
|
2022
|
26,328
|
|
|
Thereafter
|
3,729
|
|
|
Total future minimum rental payments
|
$
|
466,239
|
|
(In thousands)
|
Accrued Charges at December 31, 2015
|
|
Charges & Adjustments
|
|
Payments
|
|
Accrued Charges at December 31, 2016
|
|
Charges & Adjustments
|
|
Payments
|
|
Accrued Charges at December 31, 2017
|
||||||||||||||
Cash charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Labor reduction costs
|
$
|
3,340
|
|
|
$
|
1,380
|
|
|
$
|
(3,327
|
)
|
|
$
|
1,393
|
|
|
$
|
3,765
|
|
|
$
|
(3,484
|
)
|
|
$
|
1,674
|
|
Lease obligation costs
|
1,229
|
|
|
15,198
|
|
|
(9,799
|
)
|
|
6,628
|
|
|
457
|
|
|
(4,980
|
)
|
|
2,105
|
|
|||||||
Other miscellaneous
|
—
|
|
|
1,455
|
|
|
(1,455
|
)
|
|
—
|
|
|
723
|
|
|
(723
|
)
|
|
—
|
|
|||||||
Total cash charges
|
$
|
4,569
|
|
|
18,033
|
|
|
$
|
(14,581
|
)
|
|
$
|
8,021
|
|
|
4,945
|
|
|
$
|
(9,187
|
)
|
|
$
|
3,779
|
|
||
Non-cash charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Rental merchandise losses
|
|
|
287
|
|
|
|
|
|
|
18,417
|
|
|
|
|
|
||||||||||||
Loss on sale of fixed assets
|
|
|
3,491
|
|
|
|
|
|
|
1,032
|
|
|
|
|
|
||||||||||||
Other, net
|
|
|
673
|
|
|
|
|
|
|
—
|
|
|
|
|
|
||||||||||||
Impairment of intangible asset
|
|
|
—
|
|
|
|
|
|
|
3,896
|
|
|
|
|
|
||||||||||||
Impairment of capitalized software costs
|
|
|
—
|
|
|
|
|
|
|
18,205
|
|
|
|
|
|
||||||||||||
Other
(1)
|
|
|
(2,185
|
)
|
|
|
|
|
|
12,724
|
|
|
|
|
|
||||||||||||
Total other charges
|
|
|
$
|
20,299
|
|
|
|
|
|
|
$
|
59,219
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Stock options
|
$
|
2,023
|
|
|
$
|
2,954
|
|
|
$
|
4,030
|
|
Restricted share units
|
1,873
|
|
|
6,255
|
|
|
5,511
|
|
|||
Total stock-based compensation expense
|
3,896
|
|
|
9,209
|
|
|
9,541
|
|
|||
Tax benefit recognized in the statements of earnings
|
1,442
|
|
|
658
|
|
|
1,715
|
|
|||
Stock-based compensation expense, net of tax
|
$
|
2,454
|
|
|
$
|
8,551
|
|
|
$
|
7,826
|
|
|
Equity Awards
Outstanding
|
|
Weighted Average
Exercise Price
|
|
Weighted Average
Remaining Contractual Life
|
|
Aggregate Intrinsic
Value
(In thousands)
|
|||||
Balance outstanding at January 1, 2017
|
3,072,181
|
|
|
$
|
25.07
|
|
|
|
|
|
||
Granted
|
935,532
|
|
|
9.46
|
|
|
|
|
|
|||
Exercised
|
(38,830
|
)
|
|
17.01
|
|
|
|
|
|
|||
Forfeited
|
(695,697
|
)
|
|
17.93
|
|
|
|
|
|
|||
Expired
|
(319,492
|
)
|
|
30.37
|
|
|
|
|
|
|||
Balance outstanding at December 31, 2017
|
2,953,694
|
|
|
$
|
21.34
|
|
|
6.15
|
|
$
|
344
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable at December 31, 2017
|
1,645,305
|
|
|
$
|
27.23
|
|
|
4.26
|
|
$
|
344
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Weighted average grant date fair value
|
$
|
2.92
|
|
|
$
|
3.06
|
|
|
$
|
6.34
|
|
Weighted average risk free interest rate
|
1.78
|
%
|
|
1.31
|
%
|
|
1.42
|
%
|
|||
Weighted average expected dividend yield
|
3.03
|
%
|
|
3.16
|
%
|
|
3.32
|
%
|
|||
Weighted average expected volatility
|
45.44
|
%
|
|
39.64
|
%
|
|
33.28
|
%
|
|||
Weighted average expected life (in years)
|
4.50
|
|
|
4.63
|
|
|
5.05
|
|
|
Restricted Awards
Outstanding
|
|
Weighted Average
Grant Date Fair Value
|
|||
Balance outstanding at January 1, 2017
|
1,362,131
|
|
|
$
|
15.31
|
|
Granted
|
955,683
|
|
|
9.00
|
|
|
Vested
|
(176,707
|
)
|
|
19.39
|
|
|
Forfeited
|
(796,696
|
)
|
|
14.34
|
|
|
Balance outstanding at December 31, 2017
|
1,344,411
|
|
|
$
|
10.87
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
(In thousands)
|
Carrying Value
|
|
Fair Value
|
|
Difference
|
|
Carrying Value
|
|
Fair Value
|
|
Difference
|
||||||||||||
6.625% senior notes
|
$
|
292,740
|
|
|
$
|
278,835
|
|
|
$
|
(13,905
|
)
|
|
$
|
292,740
|
|
|
$
|
266,393
|
|
|
$
|
(26,347
|
)
|
4.75% senior notes
|
250,000
|
|
|
237,500
|
|
|
(12,500
|
)
|
|
250,000
|
|
|
206,250
|
|
|
(43,750
|
)
|
||||||
Total senior notes
|
$
|
542,740
|
|
|
$
|
516,335
|
|
|
$
|
(26,405
|
)
|
|
$
|
542,740
|
|
|
$
|
472,643
|
|
|
$
|
(70,097
|
)
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
|
|
|
|
|
||||||
Core U.S.
|
$
|
1,835,422
|
|
|
$
|
2,069,725
|
|
|
$
|
2,371,823
|
|
Acceptance Now
|
797,987
|
|
|
817,814
|
|
|
818,325
|
|
|||
Mexico
|
47,005
|
|
|
50,927
|
|
|
63,803
|
|
|||
Franchising
|
22,126
|
|
|
24,786
|
|
|
24,469
|
|
|||
Total revenues
|
$
|
2,702,540
|
|
|
$
|
2,963,252
|
|
|
$
|
3,278,420
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Gross profit
|
|
|
|
|
|
||||||
Core U.S.
|
$
|
1,276,212
|
|
|
$
|
1,467,679
|
|
|
$
|
1,644,840
|
|
Acceptance Now
|
400,002
|
|
|
422,381
|
|
|
420,980
|
|
|||
Mexico
|
32,592
|
|
|
35,549
|
|
|
42,354
|
|
|||
Franchising
|
9,736
|
|
|
9,440
|
|
|
9,935
|
|
|||
Total gross profit
|
$
|
1,718,542
|
|
|
$
|
1,935,049
|
|
|
$
|
2,118,109
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Operating profit (loss)
|
|
|
|
|
|
||||||
Core U.S.
|
$
|
86,196
|
|
|
$
|
(1,020
|
)
|
|
$
|
(959,447
|
)
|
Acceptance Now
|
48,618
|
|
|
105,925
|
|
|
123,971
|
|
|||
Mexico
|
(260
|
)
|
|
(2,449
|
)
|
|
(14,149
|
)
|
|||
Franchising
|
5,081
|
|
|
5,650
|
|
|
5,793
|
|
|||
Total segments
|
139,635
|
|
|
108,106
|
|
|
(843,832
|
)
|
|||
Corporate
|
(202,694
|
)
|
|
(174,702
|
)
|
|
(164,056
|
)
|
|||
Total operating loss
|
$
|
(63,059
|
)
|
|
$
|
(66,596
|
)
|
|
$
|
(1,007,888
|
)
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Depreciation, amortization and write-down of intangibles
|
|
|
|
|
|
||||||
Core U.S.
(1)
|
$
|
31,070
|
|
|
$
|
39,734
|
|
|
$
|
49,137
|
|
Acceptance Now
(2)
|
2,498
|
|
|
3,309
|
|
|
3,334
|
|
|||
Mexico
|
1,973
|
|
|
3,179
|
|
|
5,160
|
|
|||
Franchising
|
177
|
|
|
177
|
|
|
185
|
|
|||
Total segments
|
35,718
|
|
|
46,399
|
|
|
57,816
|
|
|||
Corporate
|
38,921
|
|
|
34,057
|
|
|
22,904
|
|
|||
Total depreciation, amortization and write-down of intangibles
|
$
|
74,639
|
|
|
$
|
80,456
|
|
|
$
|
80,720
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Capital expenditures
|
|
|
|
|
|
||||||
Core U.S.
|
$
|
26,506
|
|
|
$
|
20,802
|
|
|
$
|
21,739
|
|
Acceptance Now
|
2,723
|
|
|
2,330
|
|
|
2,473
|
|
|||
Mexico
|
124
|
|
|
283
|
|
|
204
|
|
|||
Total segments
|
29,353
|
|
|
23,415
|
|
|
24,416
|
|
|||
Corporate
|
36,107
|
|
|
37,728
|
|
|
56,454
|
|
|||
Total capital expenditures
|
$
|
65,460
|
|
|
$
|
61,143
|
|
|
$
|
80,870
|
|
|
December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
On rent rental merchandise, net
|
|
|
|
|
|
||||||
Core U.S.
|
$
|
408,993
|
|
|
$
|
426,845
|
|
|
$
|
540,004
|
|
Acceptance Now
|
278,443
|
|
|
354,486
|
|
|
350,046
|
|
|||
Mexico
|
14,367
|
|
|
13,787
|
|
|
17,575
|
|
|||
Total on rent rental merchandise, net
|
$
|
701,803
|
|
|
$
|
795,118
|
|
|
$
|
907,625
|
|
|
December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Held for rent rental merchandise, net
|
|
|
|
|
|
||||||
Core U.S.
|
$
|
156,039
|
|
|
$
|
192,718
|
|
|
$
|
215,327
|
|
Acceptance Now
|
4,940
|
|
|
7,489
|
|
|
5,000
|
|
|||
Mexico
|
6,209
|
|
|
6,629
|
|
|
8,520
|
|
|||
Total held for rent rental merchandise, net
|
$
|
167,188
|
|
|
$
|
206,836
|
|
|
$
|
228,847
|
|
|
December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Assets by segment
|
|
|
|
|
Revised
|
||||||
Core U.S.
|
$
|
776,296
|
|
|
$
|
860,717
|
|
|
$
|
1,240,593
|
|
Acceptance Now
|
350,970
|
|
|
432,383
|
|
|
426,827
|
|
|||
Mexico
|
33,529
|
|
|
31,415
|
|
|
38,898
|
|
|||
Franchising
|
3,802
|
|
|
2,197
|
|
|
2,723
|
|
|||
Total segments
|
1,164,597
|
|
|
1,326,712
|
|
|
1,709,041
|
|
|||
Corporate
|
256,184
|
|
|
276,029
|
|
|
265,427
|
|
|||
Total assets
|
$
|
1,420,781
|
|
|
$
|
1,602,741
|
|
|
$
|
1,974,468
|
|
|
December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Assets by country
|
|
|
|
|
Revised
|
||||||
United States
|
$
|
1,383,004
|
|
|
$
|
1,567,933
|
|
|
$
|
1,930,676
|
|
Mexico
|
33,529
|
|
|
31,415
|
|
|
38,898
|
|
|||
Canada
|
4,248
|
|
|
3,393
|
|
|
4,894
|
|
|||
Total assets
|
$
|
1,420,781
|
|
|
$
|
1,602,741
|
|
|
$
|
1,974,468
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Rentals and fees by inventory category
|
|
|
|
|
|
||||||
Furniture and accessories
|
$
|
921,159
|
|
|
$
|
927,537
|
|
|
$
|
955,576
|
|
Consumer electronics
|
459,942
|
|
|
553,976
|
|
|
626,668
|
|
|||
Appliances
|
351,893
|
|
|
391,539
|
|
|
415,278
|
|
|||
Computers
|
124,158
|
|
|
148,889
|
|
|
207,906
|
|
|||
Smartphones
|
57,927
|
|
|
93,449
|
|
|
163,667
|
|
|||
Other products and services
|
352,662
|
|
|
384,663
|
|
|
412,220
|
|
|||
Total rentals and fees
|
$
|
2,267,741
|
|
|
$
|
2,500,053
|
|
|
$
|
2,781,315
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue by country
|
|
|
|
|
|
||||||
United States
|
$
|
2,654,819
|
|
|
$
|
2,911,613
|
|
|
$
|
3,209,736
|
|
Mexico
|
47,005
|
|
|
50,927
|
|
|
63,803
|
|
|||
Canada
|
716
|
|
|
712
|
|
|
4,881
|
|
|||
Total revenues
|
$
|
2,702,540
|
|
|
$
|
2,963,252
|
|
|
$
|
3,278,420
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands, except per share data)
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net earnings (loss)
|
$
|
6,653
|
|
|
$
|
(105,195
|
)
|
|
$
|
(953,520
|
)
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average shares outstanding
|
53,282
|
|
|
53,121
|
|
|
53,050
|
|
|||
Effect of dilutive stock awards
(1)
|
562
|
|
|
—
|
|
|
—
|
|
|||
Weighted-average dilutive shares
|
53,844
|
|
|
53,121
|
|
|
53,050
|
|
|||
|
|
|
|
|
|
||||||
Basic earnings (loss) per share
|
$
|
0.12
|
|
|
$
|
(1.98
|
)
|
|
$
|
(17.97
|
)
|
Diluted earnings (loss) per share
|
$
|
0.12
|
|
|
$
|
(1.98
|
)
|
|
$
|
(17.97
|
)
|
Anti-dilutive securities excluded from diluted earnings (loss) per common share:
|
|
|
|
|
|
||||||
Anti-dilutive restricted share units
|
—
|
|
|
482
|
|
|
257
|
|
|||
Anti-dilutive performance share units
|
329
|
|
|
880
|
|
|
611
|
|
|||
Anti-dilutive stock options
|
2,554
|
|
|
3,072
|
|
|
2,586
|
|
(1)
|
There was no dilutive effect to the loss per common share for the years ended December 31, 2016 and
2015
due to the net loss incurred for both periods.
|
(In thousands, except per share data)
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
||||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
741,986
|
|
|
$
|
677,635
|
|
|
$
|
643,965
|
|
|
$
|
638,954
|
|
Gross profit
|
462,663
|
|
|
432,533
|
|
|
412,465
|
|
|
410,881
|
|
||||
Operating profit (loss)
|
1,152
|
|
|
(873
|
)
|
|
(8,445
|
)
|
|
(54,893
|
)
|
||||
Net (loss) earnings
|
(6,679
|
)
|
|
(8,893
|
)
|
|
(12,599
|
)
|
|
34,824
|
|
||||
Basic (loss) earnings per common share
|
$
|
(0.13
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
0.65
|
|
Diluted (loss) earnings per common share
|
$
|
(0.13
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
0.65
|
|
Cash dividends declared per common share
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(In thousands, except per share data)
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
||||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
835,652
|
|
|
$
|
749,619
|
|
|
$
|
693,877
|
|
|
$
|
684,104
|
|
Gross profit
|
534,944
|
|
|
500,158
|
|
|
457,226
|
|
|
442,721
|
|
||||
Operating profit (loss)
|
48,430
|
|
|
27,550
|
|
|
16,700
|
|
|
(159,276
|
)
|
||||
Net earnings (loss)
|
25,061
|
|
|
9,946
|
|
|
6,181
|
|
|
(146,383
|
)
|
||||
Basic earnings (loss) per common share
|
$
|
0.47
|
|
|
$
|
0.19
|
|
|
$
|
0.12
|
|
|
$
|
(2.76
|
)
|
Diluted earnings (loss) per common share
|
$
|
0.47
|
|
|
$
|
0.19
|
|
|
$
|
0.12
|
|
|
$
|
(2.76
|
)
|
Cash dividends declared per common share
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
*
|
The information required by Items 10, 11, 12, 13 and 14 is or will be set forth in the definitive proxy statement relating to the 2018 Annual Meeting of Stockholders of Rent-A-Center, Inc., which is to be filed with the SEC pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. This definitive proxy statement relates to a meeting of stockholders involving the election of directors and the portions therefrom required to be set forth in this Form 10-K by Items 10, 11, 12, 13 and 14 are incorporated herein by reference pursuant to General Instruction G(3) to Form 10-K.
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Exhibit No.
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Description
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3.1
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3.2
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3.3
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3.4
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4.1
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4.2
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4.3
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4.4
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10.1†
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10.2
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10.3†
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10.4†
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10.5†*
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10.6†
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10.7†
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10.8†
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10.9†
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10.10†
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10.11†
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10.12†
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10.13†
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10.14†
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10.15†
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10.16†
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10.17†
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10.18†
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10.19†
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10.20†
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10.21†
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10.22
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10.23†
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10.24
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10.25
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10.26
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10.27
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10.28
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10.29
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10.30†
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10.31†
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10.32†
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10.33
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10.34
†
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10.35
†
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10.36
†
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10.37
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10.38
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10.39
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18.1
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21.1
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23.1*
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31.1*
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31.2*
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32.1*
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32.2*
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101.INS*
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XBRL Instance Document
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101.SCH*
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XBRL Taxonomy Extension Schema Document
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101.CAL*
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF*
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB*
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE*
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XBRL Taxonomy Extension Presentation Linkbase Document
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†
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Management contract or compensatory plan or arrangement.
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*
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Filed herewith.
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**
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The XBRL-related information in Exhibit No. 101 to this Annual Report on Form 10-K is filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.
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RENT-A-CENTER, INC.
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By:
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/s/ M
ITCHELL
E
.
F
ADEL
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Mitchell E. Fadel
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Chief Executive Officer
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Signature
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Title
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Date
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/s/ M
ITCHELL
E
.
F
ADEL
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Chief Executive Officer and Director
(Principal Executive Officer)
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February 28, 2018
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Mitchell E. Fadel
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/s/ M
AUREEN
B. S
HORT
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Interim Chief Financial Officer (Principal Financial and Accounting Officer)
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February 28, 2018
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Maureen B. Short
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/s/ J
EFFREY
J
.
B
ROWN
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Director
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February 28, 2018
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Jeffrey J. Brown
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/s/ M
ICHAEL
J. G
ADE
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Director
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February 28, 2018
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Michael J. Gade
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/s/ R
ISHI
G
ARG
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Director
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February 28, 2018
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Rishi Garg
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/s/
C
HRISTOPHER
B
.
H
ETRICK
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Director
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February 28, 2018
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Christopher B. Hetrick
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/s/ J. V. L
ENTELL
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Director
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February 28, 2018
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J. V. Lentell
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Each non-employee director:
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$
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50,000
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Chairman of the Board
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80,000
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Chairperson of the Audit Committee:
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16,000
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Other Audit Committee Members:
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9,000
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Chairperson of the Compensation Committee:
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12,000
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Other Compensation Committee Members:
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6,000
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Chairperson of the Nominating/Corporate Governance Committee:
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8,000
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Other Nominating/Corporate Governance Committee Members:
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6,000
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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