rcii-20210331
RENT A CENTER INC 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
or 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission File Number: 001-38047
Rent-A-Center, Inc.
(Exact name of registrant as specified in its charter)
Delaware45-0491516
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
5501 Headquarters Drive
Plano, Texas 75024
(Address, including zip code of registrant’s principal executive offices)
Registrant’s telephone number, including area code: 972-801-1100
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stock, $.01 par valueRCIIThe Nasdaq Stock Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes     No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes       No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes      No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of April 28, 2021:
ClassOutstanding
Common stock, $.01 par value66,309,348




TABLE OF CONTENTS
 
  Page No.
Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020
 


i


Item 1. Condensed Consolidated Financial Statements.
RENT-A-CENTER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 Three Months Ended March 31,
 20212020
(In thousands, except per share data)
Revenues
Store
Rentals and fees$745,534 $568,000 
Merchandise sales232,793 101,380 
Installment sales17,773 14,747 
Other918 722 
Total store revenues997,018 684,849 
Franchise
Merchandise sales33,055 12,437 
Royalty income and fees6,709 4,653 
Total revenues1,036,782 701,939 
Cost of revenues
Store
Cost of rentals and fees247,035 165,455 
Cost of merchandise sold240,106 98,757 
Cost of installment sales6,041 5,025 
Total cost of store revenues493,182 269,237 
Franchise cost of merchandise sold33,077 12,524 
Total cost of revenues526,259 281,761 
Gross profit510,523 420,178 
Operating expenses
Store expenses
Labor156,707 153,794 
Other store expenses170,133 161,718 
General and administrative expenses49,125 39,175 
Depreciation and amortization
13,393 14,913 
Other charges51,119 1,703 
Total operating expenses440,477 371,303 
Operating profit70,046 48,875 
Debt refinancing charges8,743  
Interest expense11,990 4,447 
Interest income(74)(144)
Earnings before income taxes49,387 44,572 
Income tax expense (benefit)6,835 (4,720)
Net earnings$42,552 $49,292 
Basic earnings per common share$0.76 $0.90 
Diluted earnings per common share$0.64 $0.88 
Cash dividends declared per common share$0.31 $ 
See accompanying notes to condensed consolidated financial statements.

1


RENT-A-CENTER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
 Three Months Ended March 31,
 20212020
(In thousands)
Net earnings$42,552 $49,292 
Other comprehensive loss:
Foreign currency translation adjustments, net of tax of $(227) and $(1,038) for the three months ended March 31, 2021 and 2020, respectively
(853)(3,906)
Total other comprehensive loss(853)(3,906)
Comprehensive income$41,699 $45,386 
See accompanying notes to condensed consolidated financial statements.

2


RENT-A-CENTER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
March 31, 2021December 31, 2020
(In thousands, except share and par value data)
ASSETS
Cash and cash equivalents$123,019 $159,449 
Receivables, net of allowance for doubtful accounts of $7,981 and $8,047 in 2021 and 2020, respectively
115,345 90,003 
Prepaid expenses and other assets40,839 50,006 
Rental merchandise, net
On rent1,115,913 762,886 
Held for rent135,244 146,266 
Merchandise held for installment sale5,726 5,439 
Property assets, net of accumulated depreciation of $517,765 and $505,074 in 2021 and 2020, respectively
309,860 141,641 
Operating lease right-of-use assets297,577 283,422 
Deferred tax asset37,736 33,782 
Goodwill311,991 70,217 
Other intangible assets, net513,708 7,869 
Total assets$3,006,958 $1,750,980 
LIABILITIES
Accounts payable – trade$179,933 $186,063 
Accrued liabilities381,265 320,583 
Operating lease liabilities299,892 285,354 
Deferred tax liability71,257 176,410 
Senior debt, net897,912 190,490 
Senior notes, net434,512  
Total liabilities2,264,771 1,158,900 
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value; 250,000,000 shares authorized; 124,193,049 and 112,180,517 shares issued in March 31, 2021 and December 31, 2020, respectively
1,142 1,105 
Additional paid-in capital1,015,995 886,902 
Retained earnings1,112,840 1,091,010 
Treasury stock at cost, 57,891,859 shares in March 31, 2021 and December 31, 2020
(1,375,541)(1,375,541)
Accumulated other comprehensive loss(12,249)(11,396)
Total stockholders' equity742,187 592,080 
Total liabilities and stockholders' equity$3,006,958 $1,750,980 
See accompanying notes to condensed consolidated financial statements.

3


RENT-A-CENTER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
 Common StockAdditional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Accumulated Other Comprehensive LossTotal
SharesAmount
 (In thousands)
Balance at December 31, 2020112,181 $1,105 $886,902 $1,091,010 $(1,375,541)$(11,396)$592,080 
Net earnings— — — 42,552 — — 42,552 
Other comprehensive loss— — — — — (853)(853)
Exercise of stock options330 3 8,941 — — — 8,944 
Vesting of restricted share units, net of shares withheld for employee taxes(1)
902 7 (20,910)— — — (20,903)
Stock-based compensation— — 20,148 — — — 20,148 
Dividends declared— — — (20,722)— — (20,722)
Acima acquisition10,780 27 120,914 — — — 120,941 
Balance at March 31, 2021124,193 $1,142 $1,015,995 $1,112,840 $(1,375,541)$(12,249)$742,187 
(1)Includes shares released from escrow related to the 2019 Merchant's Preferred acquisition
 Common StockAdditional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Accumulated Other Comprehensive LossTotal
SharesAmount
 (In thousands)
Balance at December 31, 2019111,166 $1,110 $869,617 $947,875 $(1,348,969)$(10,670)$458,963 
ASC 326 adoption— — — (769)— — (769)
Net earnings— — — 49,292 — — 49,292 
Other comprehensive loss— — — — — (3,906)(3,906)
Purchase of treasury stock— (14)— — (26,511)— (26,525)
Exercise of stock options69 1 1,194 — — — 1,195 
Vesting of restricted share units, net of shares withheld for employee taxes434 4 (5,274)— — — (5,270)
Stock-based compensation— — 3,043 — — — 3,043 
Balance at March 31, 2020111,669 $1,101 $868,580 $996,398 $(1,375,480)$(14,576)$476,023 
See accompanying notes to consolidated financial statements.


4


RENT-A-CENTER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 Three Months Ended March 31,
 20212020
(In thousands)
Cash flows from operating activities
Net earnings$42,552 $49,292 
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation of rental merchandise237,636 160,445 
Bad debt expense3,449 3,749 
Stock-based compensation expense20,148 3,043 
Depreciation of property assets14,459 14,597 
Loss on sale or disposal of property assets165 558 
Amortization of intangibles14,192 319 
Amortization of financing fees1,117 408 
Write-off of debt financing fees4,546  
Deferred income taxes3,852 (121)
Changes in operating assets and liabilities, net of acquired assets
Rental merchandise(222,054)(106,739)
Receivables1,674 7,270 
Prepaid expenses and other assets9,932 5,935 
Operating lease right-of-use assets and lease liabilities(171)3,704 
Accounts payable – trade(22,152)(61,265)
Accrued liabilities26,448 (33,795)
Net cash provided by operating activities135,793 47,400 
Cash flows from investing activities
Purchase of property assets(11,388)(9,151)
Proceeds from sale of property assets 187 
Acquisitions of businesses(1,267,903) 
Net cash used in investing activities(1,279,291)(8,964)
Cash flows from financing activities
Share repurchases (26,511)
Exercise of stock options8,944 1,194 
Shares withheld for payment of employee tax withholdings(20,903)(5,268)
Debt issuance costs(46,085) 
Proceeds from debt1,490,000 198,000 
Repayments of debt(307,500)(75,500)
Dividends paid(17,116)(15,912)
Net cash provided by financing activities1,107,340 76,003 
Effect of exchange rate changes on cash(272)(2,014)
Net (decrease) increase in cash and cash equivalents(36,430)112,425 
Cash and cash equivalents at beginning of period159,449 70,494 
Cash and cash equivalents at end of period$123,019 $182,919 
See accompanying notes to condensed consolidated financial statements.

5

RENT-A-CENTER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 - Basis of Presentation
The interim condensed consolidated financial statements of Rent-A-Center, Inc. included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to the SEC’s rules and regulations, although we believe the disclosures are adequate to make the information presented not misleading. We suggest these financial statements be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2020. In our opinion, the accompanying unaudited interim financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary to present fairly our results of operations and cash flows for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.
Use of Estimates
In preparing financial statements in conformity with U.S. generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent losses and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. In applying accounting principles, we must often make individual estimates and assumptions regarding expected outcomes or uncertainties. Our estimates, judgments and assumptions are continually evaluated based on available information and experience. However, uncertainties may affect certain estimates and assumptions inherent in the financial reporting process, which may impact reported amounts of assets and liabilities in future periods and cause actual results to differ from those estimates.
Principles of Consolidation and Nature of Operations
These financial statements included herein include the accounts of Rent-A-Center, Inc. and its direct and indirect subsidiaries. All intercompany accounts and transactions have been eliminated. Unless the context indicates otherwise, references to “Rent-A-Center” refer only to Rent-A-Center, Inc., the parent, and references to the “Company”, “we,” “us” and “our” refer to the consolidated business operations of Rent-A-Center and any or all of its direct and indirect subsidiaries. We report four operating segments: Rent-A-Center Business, Acima (formerly Preferred Lease), Mexico and Franchising.
Our Rent-A-Center Business segment consists of company-owned lease-to-own stores in the United States and Puerto Rico that lease household durable goods to customers on a lease-to-own basis. We also offer merchandise on an installment sales basis in certain of our stores under the names “Get It Now” and “Home Choice.” Our Rent-A-Center Business segment operates through our company-owned stores and e-commerce platform through rentacenter.com.
Our Acima segment (formerly Preferred Lease), which operates in the United States and Puerto Rico and which, includes the operations of Acima Holdings (as defined in Note 2 below) acquired in February 2021 and our Preferred Lease virtual and staffed locations, generally offers the lease-to-own transaction to consumers who do not qualify for financing from the traditional retailer. The Acima segment offers the lease-to-own transaction through our virtual offering solutions across e-commerce, digital, and mobile channels, and through staffed and unstaffed kiosks located within such retailer’s locations.
Our Mexico segment consists of our company-owned lease-to-own stores in Mexico that lease household durable goods to customers on a lease-to-own basis.
Rent-A-Center Franchising International, Inc., an indirect wholly-owned subsidiary of Rent-A-Center, is a franchisor of lease-to-own stores. Our Franchising segment’s primary source of revenue is the sale of rental merchandise to its franchisees, who in turn offer the merchandise to the general public for rent or purchase under a lease-to-own transaction. The balance of our Franchising segment’s revenue is generated primarily from royalties based on franchisees’ monthly gross revenues.
Newly Adopted Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. The standard removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. We adopted ASU 2019-12 beginning January 1, 2021 using a prospective approach. Impacts to our financial statements for the three months ended March 31, 2021 resulting from the adoption of this ASU were immaterial.

6

RENT-A-CENTER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Note 2 - Acquisitions and Divestitures
On December 20, 2020, we entered into the Merger Agreement with Radalta, LLC, a Utah limited liability company and wholly owned subsidiary of the company, Acima ("Acima Holdings"), and Aaron Allred, solely in his capacity as the representative of the former owners of Acima Holdings, providing for the merger of Radalta, LLC with and into Acima Holdings, with Acima Holdings surviving the Merger as a wholly owned subsidiary of the Company for total estimated consideration of $1.65 billion, including cash consideration of $1.3 billion and approximately 10.8 million shares with an estimated value of approximately $377 million. On February 17, 2021, we completed the acquisition of the membership interest of Acima Holdings, LLC. Acima Holdings is a leading platform offering customers virtual lease-to-own solutions at the point-of-sale via web and mobile technology.
In accordance with the Merger Agreement, we issued to the former owners of Acima Holdings an aggregate of 10,779,923 shares of our common stock (the “Aggregate Stock Consideration”) and paid to them aggregate cash consideration of $1.3 billion (the “Aggregate Cash Consideration”). In accordance with the terms of the Merger Agreement, the portion of the Aggregate Stock Consideration issued to former owners of Acima Holdings who are also employees of Acima Holdings is subject to restricted stock agreements providing vesting conditions over a 36-month period beginning upon closing of the Merger. The portion of the Aggregate Stock Consideration issued to nonemployee former owners of Acima Holdings is subject to the terms of an 18-month lockup agreement, pursuant to which one-third of the aggregate shares of our common stock received by a non-employee former owner in the Merger becomes transferable after each six month period following the closing of the Merger. We entered into a Registration Rights Agreement, dated as of February 17, 2021, pursuant to which certain former owners of Acima are entitled to registration rights in respect of the portion of the Aggregate Stock Consideration received by them in the Merger.
The aggregate purchase price was approximately $1.4 billion, including net cash consideration of approximately $1.3 billion, and 2,683,328 shares of the Aggregate Stock Consideration subject to 18-month lockup agreements valued at $51.14 per share, as of the date of closing, and adjusted by a discount for lack of marketability to account for the transfer restrictions in three tranches, each in 6-month intervals after the closing date. The Aggregate Cash Consideration for the acquisition was financed with a combination of cash on hand, borrowings under our ABL Credit Facility and proceeds from issuances under our Term Loan Facility, as defined in Note 7, in addition to proceeds from the issuance of new unsecured senior notes. See Note 7 and Note 8 for additional information.
The remaining 8,096,595 common shares included in the Aggregate Stock Consideration subject to restricted stock agreements and 36-month vesting conditions were valued at $414.1 million, as of the date of closing. These shares have been excluded from the aggregate purchase price and instead will be recognized as stock-based compensation expense subject to ASC Topic 718, “Stock-based Compensation” over the required vesting period, and recorded to Other charges in our unaudited Condensed Consolidated Statements of Operations. However, for tax purposes the value of Aggregate Stock Consideration subject to restricted stock agreements is treated as goodwill. In addition, the total value of the common shares subject to restricted stock agreements noted above, resulted in a decrease in the deferred tax liability included in the net assets acquired of approximately $103.5 million based on the fair value of the shares, as of the date of closing, multiplied by the blended federal and state statutory rate of approximately 24%, as included in the below net assets acquired table.

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RENT-A-CENTER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Assets acquired and liabilities assumed in connection with the acquisition have been recorded at their fair values. The following table provides the preliminary estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date:
(in thousands)February 17, 2021
Aggregate cash consideration$1,273,263 
Aggregate stock consideration, subject to lockup agreements120,929 
Total Purchase price$1,394,192 
ASSETS ACQUIRED
Receivables, net(1)
$30,465 
Prepaid expenses and other assets699 
Rental merchandise
On rent357,692 
Property assets171,455 
Operating lease right-of-use assets9,136 
Goodwill241,774 
Other intangible assets520,000 
Total assets acquired$1,331,221 
LIABILITIES ASSUMED
Accounts payable - trade16,023 
Accrued liabilities24,277 
Operating lease liabilities9,689 
Deferred income taxes(112,960)
Total liabilities assumed(62,971)
Total equity value$1,394,192 
(1) Includes gross contractual receivables of $65.2 million related to merchandise lease contracts, of which we have estimated $35.5 million are uncollectible.
Carrying value for assets and liabilities assumed as part of the acquisition, including receivables, prepaid expenses and other assets, rental merchandise, accounts payable and accrued liabilities were recorded as fair value, as of the date of acquisition, due to the short term nature of these balances. Operating lease right-of-use assets and liabilities were recorded as the discounted value of future obligations in accordance with ASC 842. The fair value measurements for acquired intangible assets and developed technology were primarily based on significant unobservable inputs (level 3) developed using company-specific information. Certain fair value estimates were determined based on an independent valuation of the net assets acquired, including $520 million of identifiable intangible assets with an estimated weighted average useful life of 8 years, as follows:
Asset ClassEstimated Fair Value
(in thousands)
Estimated Remaining Useful Life (in years)
Merchant relationships$380,000 10
Relationship with existing lessees60,000 1
Trade name40,000 7
Non-compete agreements40,000 3
Developed technology, included in Property assets, net, in line with our accounting policies, was also acquired with a value of $170.0 million and an estimated remaining useful life of 10 years. The fair value for these intangible and property assets were estimated using common industry valuation methods for similar asset types, based primarily on cost inputs and projected cash flows.
In addition, we recorded goodwill of $241.8 million in our Acima operating segment, which consists of the excess of the net purchase price over the fair value of the net assets acquired and assembled workforce of $10 million. Goodwill represents expected cost and revenue synergies and other benefits expected to result within our retail partner business from the acquisition of Acima Holdings. The total value of goodwill for tax purposes, including our recorded goodwill, plus the value of Aggregate Stock Consideration subject to restricted stock agreements described above, and acquisition-related expenses described below, is fully deductible and will be amortized over 15 years.

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RENT-A-CENTER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
The values above reflect our preliminary purchase price allocation and may change as we finalize our assessments of the acquired assets and liabilities during the measurement period. Acima Holdings results of operations are reflected in our unaudited Condensed Consolidated Statements of Operations from the date of acquisition.
In connection with this acquisition, we incurred approximately $22.5 million in acquisition-related expenses including expenses related to legal, professional, and banking transaction fees, which are treated as an addition to goodwill for tax purposes. In addition, we recognized a decrease in deferred tax liability included in the net assets acquired of $7.6 million related to these expenditures. These costs were included in Other charges in our unaudited Condensed Consolidated Statements of Operations .
The following unaudited pro forma combined results of operations present our financial results as if the acquisition of Acima had been completed on January 1, 2020. These unaudited pro forma results may not necessarily reflect the actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations. The unaudited pro forma information reflects the step-up depreciation and amortization adjustments for the fair value of the assets acquired, adjustments to stock compensation expense as a result of Aggregate Stock Consideration subject to restricted stock awards, the adjustments in interest expense due to the elimination of historical debt and placement of the new debt, and the related adjustments to the income tax provision. In addition, the pro forma net income has been adjusted to include transaction expenses and other non-recurring costs as of January 1, 2020. The unaudited pro forma financial information is as follows:
(in thousands)Three Months Ended March 31, 2021Three Months Ended March 31, 2020
(unaudited)(unaudited)
Pro Forma total revenues$1,231,386 $986,747 
Pro Forma net earnings(1)
56,413 (16,966)
(1)Total pro forma adjustments to net earnings for the three months ended March 31, 2021 and March 31, 2020 were decreases of $13.2 million and $106.2 million, respectively.
The amounts of revenue and earnings of Acima Holdings included in our Condensed Consolidated Statements of Operations from the acquisition date of February 17, 2021 are as follows:
(in thousands)February 17, 2021 -
March 31, 2021
February 17, 2020 -
March 31, 2020
(unaudited)(unaudited)
Total revenues$210,569 $143,439 
Net earnings(1)
19,006 21,025 
(1)Net Earnings for the period February 17, 2021 - March 31, 2021 includes amortization of intangible assets acquired upon closing of the Acima Holdings acquisition
Note 3 - Revenues
The following table disaggregates our revenue for the periods ended March 31, 2021 and 2020:
 Three Months Ended March 31, 2021
 
Rent-A-Center Business
AcimaMexicoFranchisingConsolidated
(In thousands)
Store
Rentals and fees$429,301 $302,526 $13,707 $ $745,534 
Merchandise sales77,378 154,630 785  232,793 
Installment sales17,773    17,773 
Other414 293 6 205 918 
Total store revenues524,866 457,449 14,498 205 997,018 
Franchise
Merchandise sales   33,055 33,055 
Royalty income and fees   6,709 6,709 
Total revenues$524,866 $457,449 $14,498 $39,969 $1,036,782 


9

RENT-A-CENTER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
 Three Months Ended March 31, 2020
 
Rent-A-Center Business
AcimaMexicoFranchisingConsolidated
(In thousands)
Store
Rentals and fees$393,165 $161,998 $12,837 $ $568,000 
Merchandise sales46,687 53,988 705  101,380 
Installment sales14,747    14,747 
Other366 141 4 211 722 
Total store revenues454,965 216,127 13,546 211 684,849 
Franchise
Merchandise sales   12,437 12,437 
Royalty income and fees   4,653 4,653 
Total revenues$454,965 $216,127 $13,546 $17,301 $701,939 
Lease Purchase Agreements
Rent-A-Center Business, Acima, and Mexico
Rentals and Fees. Rental merchandise is leased to customers pursuant to rental purchase agreements, which provide for weekly, semi-monthly or monthly rental terms with non-refundable rental payments. At the expiration of each rental term, customers may renew the rental agreement for the next rental term. Generally, the customer has the right to acquire title of the merchandise either through a purchase option or through payment of all required rental terms. Customers can terminate the rental agreement at the end of any rental term without penalty. Therefore, rental transactions are accounted for as operating leases.
Rental payments received at our Rent-A-Center Business, Acima (excluding virtual) and Mexico locations must be prepaid in advance of the next rental term. Under the virtual business model, revenues may be earned prior to the rental payment due date, in which case revenue is accrued prior to receipt of the rental payment, net of estimated returns and uncollectible renewal payments. Under both models, rental revenue is recognized over the rental term. See Note 4 for additional information regarding accrued rental revenue.
Cash received for rental payments, including fees, prior to the period in which it should be recognized, is deferred and recognized according to the rental term. At March 31, 2021 and December 31, 2020, we had $58.3 million and $45.8 million, respectively, in deferred revenue included in accrued liabilities related to our rental purchase agreements. Revenue related to various payment, reinstatement or late fees is recognized when paid by the customer at the point service is provided. Rental merchandise in our Rent-A-Center Business, formerly Preferred Lease, and Mexico locations is depreciated using the income forecasting method and is recognized in cost of sales over the rental term. Rental merchandise in the recently acquired Acima Holdings is depreciated over the rental term using a straight-line depreciation method.
We also offer additional product plans along with our rental agreements which provide customers with liability protection against significant damage or loss of a product, and club membership benefits, including various discount programs and product service and replacement benefits in the event merchandise is damaged or lost, and payment insurance in the event eligible customers become unemployed. Customers renew product plans in conjunction with their rental term renewals, and can cancel the plans at any time. Revenue for product plans is recognized over the term of the plan. Costs incurred related to product plans are primarily recognized in cost of sales.
Revenue from contracts with customers
Rent-A-Center Business, Acima, and Mexico
Merchandise Sales. Merchandise sales include payments received for the exercise of the early purchase option offered through our rental purchase agreements or merchandise sold through point of sale transactions. Revenue for merchandise sales is recognized when payment is received and ownership of the merchandise passes to the customer. The remaining net value of merchandise sold is recorded to cost of sales at the time of the transaction.
Installment Sales. Revenue from the sale of merchandise in our retail installment stores is recognized when the installment note is signed and control of the merchandise has passed to the customer. The cost of merchandise sold through installment agreements is recognized in cost of sales at the time of the transaction. We offer extended service plans with our installment

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RENT-A-CENTER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
agreements which are administered by third parties and provide customers with product service maintenance beyond the term of the installment agreement. Payments received for extended service plans are deferred and recognized, net of related costs, when the installment payment plan is complete and the service plan goes into effect. Customers can cancel extended service plans at any time during the installment agreement period and receive a refund for payments previously made towards the plan. At March 31, 2021 and December 31, 2020, we had $2.9 million and $3.1 million in deferred revenue included in accrued liabilities related to extended service plans.
Other. Other revenue consisted of revenue generated by other miscellaneous product plans offered to our rental and installment customers. Revenue for other product plans is recognized in accordance with the terms of the applicable plan agreement.
Franchising
Merchandise Sales. Revenue from the sale of rental merchandise is recognized upon shipment of the merchandise to the franchisee.
Royalty Income and Fees. Franchise royalties, including franchisee contributions to corporate advertising funds, represent sales-based royalties calculated as a percentage of gross rental payments and sales. Royalty revenue is accrued and recognized as rental payments and merchandise sales occur. Franchise fees are initial fees charged to franchisees for new or converted franchise stores. Franchise fee revenue is recognized on a straight-line basis over the term of the franchise agreement. At both March 31, 2021 and December 31, 2020, we had $4.7 million in deferred revenue included in accrued liabilities related to franchise fees.
Note 4 - Receivables and Allowance for Doubtful Accounts
Installment sales receivables consist primarily of receivables due from customers for the sale of merchandise in our retail installment stores. Installment sales receivable associated with the sale of merchandise at our Get It Now and Home Choice stores generally consist of the sales price of the merchandise purchased and any additional fees for services the customer has chosen, less the customer’s down payment. No interest is accrued and interest income is recognized each time a customer makes a payment, generally on a monthly basis. Interest paid on installment agreements for the three months ended March 31, 2021 and 2020 was $3.1 million and $2.8 million, respectively.
Trade and notes receivables consist of amounts due from our rental customers for renewal and uncollected rental payments; amounts owed from our franchisees for inventory purchases, earned royalties and other obligations; and other corporate related receivables. Credit is extended based on an evaluation of a franchisee’s financial condition and collateral is generally not required. Trade receivables are generally due within 30 days.
Receivables consist of the following:
(In thousands)March 31, 2021December 31, 2020
Installment sales receivables$60,798 $61,794 
Trade and notes receivables62,528 36,256 
Total receivables123,326 98,050 
Less allowance for doubtful accounts(7,981)(8,047)
Total receivables, net of allowance for doubtful accounts$115,345 $90,003 
We have established an allowance for doubtful accounts for our installment notes receivable. Our policy for determining the allowance is primarily based on historical loss experience, as well as the results of management’s review and analysis of the payment and collection of the installment notes receivable within the previous year. We believe our allowance is adequate to absorb all expected losses. Our policy is to charge off installment notes receivable that are 120 days or more past due. Charge-offs are applied as a reduction to the allowance for doubtful accounts and any recoveries of previously charged off balances are applied as an increase to the allowance for doubtful accounts.
The allowance for our Franchising trade and note receivables is determined by considering a number of factors, including the length of time receivables are past due, previous loss history, the franchisee’s current ability to pay its obligation, and the condition of the general economy and the industry as a whole. Trade receivables that are more than 90 days past due are either written-off or fully reserved in our allowance for doubtful accounts. Payments subsequently received on such receivables are credited to the allowance for doubtful accounts.
The allowance for doubtful accounts related to trade and notes receivable was $1.0 million, and the allowance for doubtful accounts related to installment sales receivable was $7.0 million at both March 31, 2021 and December 31, 2020, respectively.

11

RENT-A-CENTER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Changes in our allowance for doubtful accounts are as follows: 
(In thousands)March 31, 2021
Beginning allowance for doubtful accounts$8,047 
Bad debt expense (1)
3,449 
Accounts written off, net of recoveries(3,515)
 Ending allowance for doubtful accounts$7,981 
(1) Uncollectible installment payments, franchisee obligations, and other corporate receivables are recognized in other store operating expenses in our condensed consolidated financial statements.
Note 5 - Leases
We lease space for all of our Rent-A-Center Business and Mexico stores under operating leases expiring at various times through 2027. In addition, we lease space for certain support facilities under operating leases expiring at various times through 2032. Most of our store leases are five year leases and contain renewal options for additional periods ranging from three to five years at rental rates adjusted according to agreed formulas. We evaluate all leases to determine if it is likely that we will exercise future renewal options and in most cases we are not reasonably certain of exercise due to competing market rental rates and lack of significant penalty or business disruption incurred by not exercising the renewal options. We include month-to-month leases in operating lease right-of-use assets and operating lease liabilities in our Condensed Consolidated Balance Sheet. In certain situations involving the sale of a Rent-A-Center Business corporate store to a franchisee, we enter into a lease assignment agreement with the buyer, but we remain the primary obligor under the original lease for the remaining active term. These assignments are therefore classified as subleases and the original lease is included in our operating lease right-of-use assets and operating lease liabilities in our Condensed Consolidated Balance Sheet.
We lease vehicles for all of our Rent-A-Center Business stores under operating leases with lease terms expiring twelve months after the start date of the lease. We classify these leases as short-term and have elected the short-term lease exemption for our vehicle leases, and have therefore excluded them from our operating lease right-of-use assets within our Condensed Consolidated Balance Sheet. We also lease vehicles for all of our Mexico stores which have terms expiring at various times through 2025 with rental rates adjusted periodically for inflation. Finally, we have a minimal number of equipment leases, primarily related to temporary storage containers and certain back office technology hardware assets.
For all of the leases described above, we have elected not to separate the lease and non-lease components and instead account for these as a single component. In addition, we have elected to use available practical expedients that eliminate the requirement to reassess whether expired or existing contracts contained leases and the requirement to reassess the lease classification for any existing leases prior to our adoption of ASU 2016-02 on January 1, 2019.
Operating lease right-of-use assets and operating lease liabilities are discounted using our incremental borrowing rate, since the implicit rate is not readily determinable. We do not currently have any financing leases.
Operating lease costs are recorded on a straight-line basis within other store expenses in our Condensed Consolidated Statements of Operations.
Total operating lease costs by expense type:
Three Months Ended
(in thousands)March 31, 2021March 31, 2020
Operating lease cost included in Other store expenses(1)(2)
$34,136 $37,439 
Operating lease cost included in Other charges(2)
166 769 
Sublease receipts(3,349)(2,317)
Total operating lease charges $30,953 $35,891 
(1) Includes short-term lease costs, which are not significant.
(2) Excludes variable lease costs of $8.5 million and $8.9 million for the three months ended March 31, 2021 and 2020, respectively.

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RENT-A-CENTER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Supplemental cash flow information related to leases:
Three Months Ended
(in thousands)March 31, 2021March 31, 2020
Cash paid for amounts included in measurement of operating lease liabilities$26,572 $29,881 
Cash paid for short-term operating leases not included in operating lease liabilities4,580 6,736 
Right-of-use assets obtained in exchange for new operating lease liabilities37,923 20,619 
Weighted-average discount rate and weighted-average remaining lease term:
(in thousands)March 31, 2021December 31, 2020
Weighted-average discount rate(1)
6.5 %6.8 %
Weighted-average remaining lease term (in years)44
(1) The January 1, 2019 incremental borrowing rate was used for leases in existence at the time of adoption of ASU 2016-02.
Reconciliation of undiscounted operating lease liabilities to the present value operating lease liabilities at March 31, 2021:
(In thousands)Operating Leases
2021$84,302 
202290,915 
202364,787 
202446,838 
202531,296 
Thereafter22,304 
Total undiscounted operating lease liabilities340,442 
Less: Interest(40,550)
Total present value of operating lease liabilities$299,892 
In response to the COVID-19 pandemic and related government restrictions negatively impacting our operations, we renegotiated approximately 500 store lease agreements in the second quarter of 2020 to obtain rent relief, in order to help offset the negative financial impacts of COVID-19. Lease amendments executed as a result of our renegotiations included near term rent abatements of approximately $2.3 million and rent deferrals of approximately $2.1 million. As of March 31, 2021, remaining unpaid deferred rent associated with these lease amendments was approximately $0.4 million, the majority of which will be repaid in 2021.
Note 6 - Income Taxes
The effective tax rate was 13.8% for the three months ended March 31, 2021, compared to (10.6)% in 2020. The effective tax rate for the three months ended March 31, 2021 was impacted by the tax effect of the equity consideration included in the Aggregate Stock Consideration subject to vesting conditions, and discrete income tax items related to excess tax benefits from the vesting of our annual restricted stock award grants and stock option exercises, and the release of domestic and foreign tax valuation allowances. The effective tax rate for the three months ended March 31, 2020 was primarily impacted as a result of the tax benefit of net operating loss carrybacks at a 35% tax rate that became available as a result of the Coronavirus Aid, Relief, and Economic Security Act, enacted on March 27, 2020 (the “CARES Act”).
Note 7 - Senior Debt, net
On February 17, 2021, we entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and lenders party thereto, that provides for a seven-year $875 million senior secured term loan facility (the “Term Loan Facility”) and an Asset Based Loan Credit Facility (the “ABL Credit Facility”) that provides for a five-year asset-based revolving credit facility with commitments of $550 million and a letter of credit sublimit of $150 million. Commitments under the ABL Credit Facility may be increased, at our option and under certain conditions, by up to an additional $125 million in the aggregate.
The amount outstanding under the Term Loan Facility was $875.0 million at March 31, 2021. In addition, we had $55.0 million outstanding under our ABL Credit Facility at March 31, 2021 and borrowing capacity availability of $405.2 million.

13

RENT-A-CENTER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Proceeds from the Term Loan Credit Facility were net of original issue discount of $4.4 million upon issuance from the lenders. In addition, in connection with the closing of the Term Loan Credit Facility and the ABL Credit Facility, we incurred approximately $30.2 million in debt issuance costs, including bank financing fees and third party legal and other professional fees, of which $25.3 million was capitalized in accordance with ASC Topic 470, “Debt” and recorded as a reduction of our outstanding Senior debt, net in our Condensed Consolidated Balance Sheet. Remaining debt issuance costs incurred of $4.9 million were expensed and recorded to Other charges in our Condensed Consolidated Statement of Operations. The original issue discount and capitalized debt issuance costs will be amortized as interest expense over the terms of the respective credit agreements. As of March 31, 2021, the total balance of unamortized of debt issuance costs relating to our senior debt, including rollover debt issuance costs from our previous senior debt credit facilities of approximately $3.0 million, and original issue discount reported in the Condensed Consolidated Balance Sheet were $27.8 million and $4.3 million, respectively.
We also utilize the ABL Credit Facility for the issuance of letters of credit. As of March 31, 2021, we have issued letters of credit in the aggregate outstanding amount of $89.8 million primarily relating to workers compensation insurance claims.
Term Loan Credit Agreement
The Term Loan Facility, which matures on February 17, 2028, amortizes in equal quarterly installments at a rate of 1.00% per annum of the original principal amount thereof, with the remaining balance due at final maturity. Subject in each case to certain restrictions and conditions, we may add up to $500 million of incremental term loan facilities to the Term Loan Facility or utilize incremental capacity under the Term Loan Facility at any time by issuing or incurring incremental equivalent term debt.
Interest on borrowings under the Term Loan Facility is payable at a fluctuating rate of interest determined by reference to the eurodollar rate plus an applicable margin of 4.00%, subject to a 0.75% LIBOR floor. Borrowings under the Term Loan Facility amortize in equal quarterly installments in an amount equal to 1.000% per annum of the original aggregate principal amount thereof, with the remaining balance due at final maturity.
The Term Loan Facility is secured by a first-priority security interest in substantially all of our present and future tangible and intangible personal property, including our subsidiary guarantors, other than the ABL Priority Collateral (as defined below), and by a second-priority security interest in the ABL Priority Collateral, subject to certain exceptions. The obligations under the Term Loan Facility are guaranteed by us and our material wholly-owned domestic restricted subsidiaries that also guarantee the ABL Credit Facility.
The Term Loan Facility contains covenants that are usual and customary for similar facilities and transactions and that, among other things, restrict our ability and our restricted subsidiaries to create certain liens and enter into certain sale and lease-back transactions; create, assume, incur or guarantee certain indebtedness; consolidate or merge with, or convey, transfer or lease all or substantially all of our and our restricted subsidiaries’ assets, to another person; pay dividends or make other distributions on, or repurchase or redeem, our capital stock or certain other debt; and make other restricted payments. The Term Loan Facility also includes mandatory prepayment requirements related to asset sales (subject to reinvestment), debt incurrence (other than permitted debt) and excess cash flow, subject to certain limitations described therein. Any voluntary prepayment of the Term Loan Facility made using proceeds from a substantially concurrent incurrence of indebtedness and in connection with a repricing transaction in the first six months following the closing date of the Acquisition will be subject to a 1.00% prepayment premium, except that no such prepayment premium will be required in connection with a change of control or a transformative acquisition. These covenants are subject to a number of limitations and exceptions set forth in the documentation governing the Term Loan.
The Term Loan provides for customary events of default, including, but not limited to, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, and certain events of bankruptcy or insolvency involving us and our significant subsidiaries.
The Term Loan Facility was fully drawn at the closing of the Acima Holdings acquisition to fund a portion of the Aggregate Cash Consideration payable in the transaction, repay certain of our outstanding indebtedness and our subsidiaries, repay all outstanding indebtedness of Acima Holdings and its subsidiaries and pay certain fees and expenses incurred in connection with the transaction. A portion of such proceeds were used to repay $197.5 million outstanding under the prior term loan facility, dated as of August 5, 2019, among us, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (the “Prior Term Loan Facility”).
ABL Credit Agreement
The ABL Credit Facility will mature on February 17, 2026. We may borrow only up to the lesser of the level of the then-current borrowing base and the aggregate amount of commitments under the ABL Credit Facility. The borrowing base is tied to the amount of eligible installment sales accounts, inventory and eligible rental contracts, reduced by reserves.

14

RENT-A-CENTER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
The ABL Credit Facility bears interest at a fluctuating rate determined by reference to the eurodollar rate plus an applicable margin of 1.50% to 2.00%. The total interest rate on the ABL Credit Facility at March 31, 2021 was 2.125%. A commitment fee equal to 0.250% to 0.375% of the unused portion of the ABL Credit Facility fluctuates dependent upon average utilization for the prior month as defined by a pricing grid included in the documentation governing the ABL Credit Facility. The commitment fee at March 31, 2021 was 0.375%. We paid $0.7 million of commitment fees during the first quarter of 2021.
Loans under the ABL Credit Facility may be borrowed, repaid and re-borrowed until February 17, 2026, at which time all amounts borrowed must be repaid. The obligations under the ABL Credit Facility are guaranteed by us and certain of our wholly owned domestic restricted subsidiaries, subject to certain exceptions. The obligations under the ABL Credit Facility and such guarantees are secured on a first-priority basis by all of our and our subsidiary guarantors’ accounts, inventory, deposit accounts, securities accounts, cash and cash equivalents, rental agreements, general intangibles (other than equity interests in our subsidiaries), chattel paper, instruments, documents, letter of credit rights, commercial tort claims related to the foregoing and other related assets and all proceeds thereof related to the foregoing, subject to permitted liens and certain exceptions (such assets, collectively, the “ABL Priority Collateral”) and a second-priority basis in substantially all other present and future tangible and intangible personal property of ours and the subsidiary guarantors, subject to certain exceptions.
The ABL Facility contains covenants that are usual and customary for similar facilities and transactions and that, among other things, restrict our ability and our restricted subsidiaries to create certain liens and enter into certain sale and lease-back transactions; create, assume, incur or guarantee certain indebtedness; consolidate or merge with, or convey, transfer or lease all or substantially all of our and our restricted subsidiaries’ assets, to another person; pay dividends or make other distributions on, or repurchase or redeem, our capital stock or certain other debt; and make other restricted payments.
The ABL Facility also requires the maintenance of a consolidated fixed charge coverage ratio of 1.10 to 1.00 at the end of each fiscal quarter when either (i) certain specified events of default have occurred and are continuing or (ii) availability is less than or equal to the greater of $56.25 million and 15% of the line cap then in effect. These covenants are subject to a number of limitations and exceptions set forth in the documentation governing the ABL Facility. The fixed charge coverage ratio as of March 31, 2021 was 1.99 to 1.00.
The documentation governing the ABL Facility provides for customary events of default, including, but not limited to, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, and certain events of bankruptcy or insolvency involving us and our significant subsidiaries.
The table below shows the scheduled maturity dates of our outstanding debt at March 31, 2021 for each of the years ending December 31: 
(in thousands)Term Loan FacilityABL Credit FacilityTotal
2021$6,563 $ $6,563 
20228,750  8,750 
20238,750  8,750 
20248,750  8,750 
20258,750  8,750 
Thereafter833,437 55,000 888,437 
Total senior debt$875,000 $55,000 $930,000 

Note 8 -Senior Notes
On February 17, 2021, we issued $450 million in senior unsecured notes due February 15, 2029, at par value, bearing interest at 6.375% (the "Notes"), the proceeds of which were used to fund a portion of the Aggregate Cash Consideration upon closing of the Acima Holdings acquisition. Interest on the Notes is payable in arrears on February 15 and August 15 of each year, beginning on August 15, 2021. In connection with the issuance of the Notes, we incurred approximately $15.7 million in debt issuance costs, including bank financing fees and third party legal and other professional fees, which were capitalized in accordance with ASC Topic 470, “Debt” and recorded as a reduction of our outstanding Notes in our Condensed Consolidated Balance Sheet. Debt issuance costs will be amortized as interest expense over the term of the Notes.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
We may redeem some or all of the Notes at any time on or after February 15, 2024 for cash at the redemption prices set forth in the indenture governing the Notes, plus accrued and unpaid interest to, but not including, the redemption date. Prior to February 15, 2024, we may redeem up to 40% of the aggregate principal amount of the Notes with the proceeds of certain equity offerings at a redemption price of 106.375% plus accrued and unpaid interest to, but not including, the redemption date. In addition, we may redeem some or all of the Notes prior to February 15, 2024, at a redemption price of 100% of the principal amount of the Notes plus accrued and unpaid interest to, but not including, the redemption date, plus a “make-whole” premium. If we experience specific kinds of change of control, we will be required to offer to purchase the Notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest.
The Notes are our general unsecured senior obligations, and are effectively subordinated to all of our existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, structurally subordinated to all existing and future indebtedness and other liabilities of our non-guarantor subsidiaries, equal in right of payment to all of our and our guarantor subsidiaries’ existing and future senior indebtedness and senior in right of payment to all of our future subordinated indebtedness, if any. The Notes are jointly and severally guaranteed on a senior unsecured basis by certain of our domestic subsidiaries that have outstanding indebtedness or guarantee other specified indebtedness, including the ABL Credit Facility and the Term Loan Facility.
The indenture governing the Notes contains covenants that limit, among other things, our ability and the ability of some of our restricted subsidiaries to create liens, transfer or sell assets, incur indebtedness or issue certain preferred stock, pay dividends, redeem stock or make other distributions, make other restricted payments or investments, create restrictions on payment of dividends or other amounts to us by our restricted subsidiaries, merge or consolidate with other entities, engage in certain transactions with affiliates and designate our subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of exceptions and qualifications. The covenants limiting restricted payments, restrictions on payment of dividends or other amounts to us by our restricted subsidiaries, the ability to incur indebtedness, asset dispositions and transactions with affiliates will be suspended if and while the Notes have investment grade ratings from any two of Standard & Poor’s Ratings Services, Moody’s Investors Service, Inc. and Fitch, Inc.
The indenture governing the Notes also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, and interest on all the then outstanding Notes to be due and payable.
Note 9 - Fair Value
We follow a three-tier fair value hierarchy, which classifies the inputs used in measuring fair values, in determining the fair value of our non-financial assets and non-financial liabilities, which consist primarily of goodwill. These tiers include: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
Our financial instruments include cash and cash equivalents, receivables, payables, borrowings against our ABL Credit Facility and Term Loan Facility, and outstanding Notes. The carrying amount of cash and cash equivalents, receivables and payables approximates fair value at March 31, 2021 and December 31, 2020, because of the short maturities of these instruments. In addition, the interest rates on our Term Loan Facility and ABL Credit Facility are variable and, therefore, we believe the carrying value of outstanding borrowings approximates their fair value.
The fair value of our Notes is based on Level 1 inputs and was as follows at March 31, 2021:
March 31, 2021
(in thousands)Carrying ValueFair ValueDifference
Senior notes$450,000 $477,000 $27,000 

Note 10 - Other Charges
Acima Holdings Acquisition. As described in Note 2, on February 17, 2021, we completed the acquisition of Acima Holdings, a leading provider of virtual lease-to-own solutions. Included in the aggregate consideration issued to the former owners of Acima Holdings was 8,096,595 of common shares, valued at $414.1 million, subject to 36-month vesting conditions under restricted stock agreements, which will be recognized over the vesting term as stock compensation expense. During the three months ended March 31, 2021, we recognized approximately $15.9 million in stock compensation expense related to these restricted stock agreements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
The fair value of assets acquired as part of the transaction included $520 million in intangible assets and $170 million in developed technology. During the three months ended March 31, 2021, we recognized approximately $1.3 million in depreciation expense and approximately $14.0 million in amortization expense related to these assets.
Furthermore, during the three months ended March 31, 2021 we recognized approximately $16.4 million in transaction costs associated with the closing of the transaction, and approximately $3.2 million in post-acquisition integration costs, including $2.8 million in employee severance and $0.4 million in reorganization advisory fees.
Activity with respect to Other charges for the three months ended March 31, 2021 is summarized in the below table:
(in thousands)
 Accrued Charges at December 31, 2020
Charges & AdjustmentsPayments & Adjustments
 Accrued Charges at March 31, 2021
Cash charges:
Acima Holdings transaction costs$5,005 $16,406 $(20,893)$518 
Acima Holdings integration costs 3,244 (447)2,797 
Other cash charges(1)
344 197 (541) 
Total cash charges$5,349 19,847 $(21,881)$3,315 
Non-cash charges:
Depreciation and amortization of acquired assets(2)
15,258 
Acima Holdings employees stock agreements(3)
15,882 
Asset impairments(4)
132 
Total other charges$51,119 
(1) Represents employee severance, shutdown and holding expenses related to store closures.
(2) Represents depreciation recorded on the incremental fair value of acquired software and amortization of the fair value of intangible assets acquired in connection with the acquisition of Acima Holdings as described Note 2.
(3) Represents stock compensation expense recognized in the first quarter of 2021, related to common shares issued to Acima Holdings employees subject to vesting restrictions, as described in Note 2.
(4) Asset impairments primarily includes impairments of operating lease right-of-use assets and other property assets related to the closure of Rent-A-Center Business stores in the first three months of 2021.
Note 11 - Segment Information
The operating segments reported below are the segments for which separate financial information is available and for which segment results are evaluated by the chief operating decision makers. Our operating segments are organized based on factors including, but not limited to, type of business transactions, geographic location and store ownership. Within our operating segments, we offer merchandise for lease from certain basic product categories: furniture, including mattresses, tires, consumer electronics, appliances, tools, handbags, computers, and accessories. Smartphones are also offered in our Rent-A-Center Business stores and franchise locations.
Segment information for the three and nine months ended March 31, 2021 and 2020 is as follows: 
Three Months Ended March 31,
(in thousands)20212020
Revenues
Rent-A-Center Business
$524,866 $454,965 
Acima457,449 216,127 
Mexico14,498 13,546 
Franchising39,969 17,301 
Total revenues$1,036,782 $701,939 


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Three Months Ended March 31,
(in thousands)20212020
Gross profit
Rent-A-Center Business$359,169 $317,558 
Acima134,250 88,315 
Mexico10,212 9,528 
Franchising6,892 4,777 
Total gross profit$510,523 $420,178 

Three Months Ended March 31,
(in thousands)20212020
Operating profit
Rent-A-Center Business$121,277 $67,943 
Acima24,814 18,222 
Mexico1,954 967 
Franchising4,985 2,519 
Total segments153,030 89,651 
Corporate(82,984)(40,776)
Total operating profit$70,046 $48,875 

Three Months Ended March 31,
(in thousands)20212020
Depreciation and amortization
Rent-A-Center Business$4,577 $4,957 
Acima(1)
474 527 
Mexico120 93 
Franchising16 3 
Total segments5,187 5,580 
Corporate(2)
8,206 9,333 
Total depreciation and amortization
$13,393 $14,913 
(1)Excludes amortization of approximately $14.0 million recorded to Other charges in the Condensed Consolidated Statement of Operations, related to intangible assets acquired upon closing of the Acima Holdings acquisition
(2)Excludes depreciation of approximately $1.3 million recorded to Other charges in the Condensed Consolidated Statement of Operations, related to software acquired upon closing of the Acima Holdings acquisition

Three Months Ended March 31,
(in thousands)20212020
Capital expenditures
Rent-A-Center Business$6,257 $980 
Acima154 84 
Mexico76 37 
Total segments6,487 1,101 
Corporate4,901 8,050 
Total capital expenditures$11,388 $9,151 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

(in thousands)March 31, 2021