rcii-20220630
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 June 30, 2022
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 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 July 27, 2022:
ClassOutstanding
Common stock, $.01 par value59,198,975




TABLE OF CONTENTS
 
  Page No.
Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021
 


i


Item 1. Condensed Consolidated Financial Statements.
RENT-A-CENTER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
(in thousands, except per share data)
Revenues
Store
Rentals and fees$857,298 $916,405 $1,740,345 $1,661,939 
Merchandise sales160,769 221,229 393,649 454,022 
Installment sales18,548 18,191 35,637 35,964 
Other1,068 1,035 2,358 1,953 
Total store revenues1,037,683 1,156,860 2,171,989 2,153,878 
Franchise
Merchandise sales26,505 29,616 45,026 62,671 
Royalty income and fees7,067 7,499 13,961 14,208 
Total revenues1,071,255 1,193,975 2,230,976 2,230,757 
Cost of revenues
Store
Cost of rentals and fees319,943 320,873 658,576 567,908 
Cost of merchandise sold185,735 249,853 436,066 489,959 
Cost of installment sales6,426 6,234 12,347 12,275 
Total cost of store revenues512,104 576,960 1,106,989 1,070,142 
Franchise cost of merchandise sold26,607 29,543 45,349 62,620 
Total cost of revenues538,711 606,503 1,152,338 1,132,762 
Gross profit532,544 587,472 1,078,638 1,097,995 
Operating expenses
Store expenses
Labor163,956 159,337 330,559 316,044 
Other store expenses199,091 181,012 426,459 351,145 
General and administrative expenses44,868 54,385 101,271 103,510 
Depreciation and amortization
12,880 13,566 27,410 26,959 
Other charges53,668 72,653 123,816 123,772 
Total operating expenses474,463 480,953 1,009,515 921,430 
Operating profit58,081 106,519 69,123 176,565 
Debt refinancing charges   8,743 
Interest expense19,089 20,435 38,058 32,425 
Interest income(92)(44)(137)(118)
Earnings before income taxes39,084 86,128 31,202 135,515 
Income tax expense19,359 24,819 15,714 31,654 
Net earnings$19,725 $61,309 $15,488 $103,861 
Basic earnings per common share$0.37 $1.05 $0.29 $1.81 
Diluted earnings per common share$0.33 $0.90 $0.26 $1.55 
Cash dividends declared per common share$0.34 $0.31 $0.68 $0.62 
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 June 30,Six Months Ended June 30,
 2022202120222021
(in thousands)
Net earnings$19,725 $61,309 $15,488 $103,861 
Other comprehensive (loss) income:
Foreign currency translation adjustments, net of tax of $(26) and $238, $150 and $11 for the three and six months ended June 30, 2022 and 2021, respectively
(97)896 564 43 
Total other comprehensive (loss) income(97)896 564 43 
Comprehensive income$19,628 $62,205 $16,052 $103,904 
See accompanying notes to condensed consolidated financial statements.

2


RENT-A-CENTER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 30, 2022December 31, 2021
(in thousands, except share and par value data)
ASSETS
Cash and cash equivalents$112,175 $108,333 
Receivables, net of allowance for doubtful accounts of $9,226 and $8,479 in 2022 and 2021, respectively
122,594 126,378 
Prepaid expenses and other assets59,476 63,468 
Rental merchandise, net
On rent977,178 1,173,024 
Held for rent140,770 132,984 
Merchandise held for installment sale5,994 6,405 
Property assets, net of accumulated depreciation of $586,669 and $557,453 in 2022 and 2021, respectively
298,134 308,098 
Operating lease right-of-use assets304,376 291,338 
Deferred tax asset68,339 68,391 
Goodwill289,761 289,750 
Other intangible assets, net388,335 425,158 
Total assets$2,767,132 $2,993,327 
LIABILITIES
Accounts payable – trade$120,688 $135,666 
Accrued liabilities318,099 362,708 
Operating lease liabilities307,125 296,535 
Deferred tax liability92,401 113,943 
Senior debt, net933,019 1,135,207 
Senior notes, net436,966 435,992 
Total liabilities2,208,298 2,480,051 
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value; 250,000,000 shares authorized; 124,980,516 and 124,398,373 shares issued in June 30, 2022 and December 31, 2021, respectively
1,071 1,065 
Additional paid-in capital1,216,176 1,146,509 
Retained earnings1,118,968 1,143,647 
Treasury stock at cost, 65,790,667 shares in June 30, 2022 and December 31, 2021
(1,765,574)(1,765,574)
Accumulated other comprehensive loss(11,807)(12,371)
Total stockholders' equity558,834 513,276 
Total liabilities and stockholders' equity$2,767,132 $2,993,327 
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 (Loss) IncomeTotal
SharesAmount
(in thousands)
Balance at December 31, 2021124,398 $1,065 $1,146,509 $1,143,647 $(1,765,574)$(12,371)$513,276 
Net loss— — — (4,237)— — (4,237)
Other comprehensive income— — — — — 661 661 
Exercise of stock options22 1 476 — — — 477 
Vesting of restricted share units, net of shares withheld for employee taxes424 4 (4)— — —  
Tax effect of stock awards vested and options exercised— — (8,466)— — — (8,466)
Stock-based compensation— — 41,410 — — — 41,410 
Dividends declared— — — (20,063)— — (20,063)
Balance at March 31, 2022124,844 1,070 1,179,925 1,119,347 (1,765,574)(11,710)523,058 
Net earnings— — — 19,725 — — 19,725 
Other comprehensive loss— — — — — (97)(97)
Exercise of stock options52  783 — — — 783 
Vesting of restricted share units, net of shares withheld for employee taxes85 1 (1)— — —  
Tax effect of stock awards vested and options exercised— — (969)— — — (969)
Stock-based compensation— — 36,438 — — — 36,438 
Dividends declared— — — (20,104)— — (20,104)
Balance at June 30, 2022124,981 $1,071 $1,216,176 $1,118,968 $(1,765,574)$(11,807)$558,834 
 Common StockAdditional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Accumulated Other Comprehensive (Loss) IncomeTotal
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 
Net earnings— — — 61,309 — — 61,309 
Other comprehensive income— — — — — 896 896 
Exercise of stock options96 1 1,681 — — — 1,682 
Vesting of restricted share units, net of shares withheld for employee taxes58 1  — — — 1 
Stock-based compensation— — 39,566 — — — 39,566 
Dividends declared— — — (20,477)— — (20,477)
Balance at June 30, 2021124,347 $1,144 $1,057,242 $1,153,672 $(1,375,541)$(11,353)$825,164 
(1)Includes shares released from escrow related to the 2019 Merchant's Preferred acquisition.
See accompanying notes to condensed consolidated financial statements.

4


RENT-A-CENTER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 Six Months Ended June 30,
 20222021
(in thousands)
Cash flows from operating activities
Net earnings$15,488 $103,861 
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation of rental merchandise637,870 547,034 
Bad debt expense9,494 6,058 
Stock-based compensation expense77,848 59,714 
Depreciation of property assets34,854 31,782 
Loss on sale or disposal of property assets5,998 249 
Amortization of intangibles36,881 43,712 
Amortization of financing fees3,161 2,917 
Write-off of debt financing fees 4,546 
Deferred income taxes(21,712)21,320 
Changes in operating assets and liabilities, net of acquired assets
Rental merchandise(449,040)(555,856)
Receivables(5,711)(6,384)
Prepaid expenses and other assets3,981 4,524 
Operating lease right-of-use assets and lease liabilities(2,449)(265)
Accounts payable – trade(14,978)(28,030)
Accrued liabilities(44,564)15,336 
Net cash provided by operating activities287,121 250,518 
Cash flows from investing activities
Purchase of property assets(30,895)(25,401)
Proceeds from sale of property assets8  
Acquisitions of businesses(417)(1,273,542)
Net cash used in investing activities(31,304)(1,298,943)
Cash flows from financing activities
Exercise of stock options1,260 10,626 
Shares withheld for payment of employee tax withholdings(9,436)(20,903)
Debt issuance costs (46,085)
Proceeds from debt90,000 1,490,000 
Repayments of debt(294,375)(364,688)
Dividends paid(39,492)(35,054)
Net cash (used in) provided by financing activities(252,043)1,033,896 
Effect of exchange rate changes on cash68 152 
Net increase (decrease) in cash and cash equivalents3,842 (14,377)
Cash and cash equivalents at beginning of period108,333 159,449 
Cash and cash equivalents at end of period$112,175 $145,072 
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, 2021. 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, such as the future unknown impacts of the COVID-19 pandemic and other macroeconomic factors, including recent significant increases to the consumer price index, a condensed labor market, wage inflation, and global supply chain issues 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
The 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, which operates in the United States and Puerto Rico, which includes the operations of Acima Holdings (as defined in Note 2 below) acquired in February 2021 and our previous 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 through staffed or unstaffed kiosks located within such retailer’s locations, or other virtual location options. Virtual locations employ a virtual solution where customers, either directly or with the assistance of a representative of the third-party retailer, initiate the lease-to-own transaction online in the retailers’ locations using our virtual solutions.
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.
Note 2 - Acquisitions and Divestitures
On February 17, 2021, we completed the acquisition of Acima Holdings, LLC (“Acima Holdings”). 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 agreement and plan of merger entered into in connection with the transaction (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

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RENT-A-CENTER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
accordance with the terms of the Merger Agreement, the portion of the Aggregate Stock Consideration issued to employee former owners of Acima Holdings is subject to restricted stock agreements providing vesting conditions over a 36-month period that began upon closing of the transaction. 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 two-thirds of the aggregate shares of our common stock received by non-employee former owners in the transaction have become transferable with the remainder to become transferable on August 17, 2022. We entered into a Registration Rights Agreement at the closing of the transaction 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 transaction.
The aggregate purchase price in accordance with accounting standards under U.S. GAAP was approximately $1.4 billion, including the Aggregate Cash Consideration, and the 2,683,328 shares of the Aggregate Stock Consideration issued to non-employee former owners of Acima Holdings, valued at $51.14 per share, as of the closing date and discounted for lack of marketability on account of the transfer restrictions described above. 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 aggregate purchase price excludes the remaining 8,096,595 shares of the Aggregate Stock Consideration issued to employee former owners of Acima Holdings. Such shares were valued at $414.1 million, based on the per share price of $51.14 as of the date of closing. These shares are instead being 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.
Assets acquired and liabilities assumed in connection with the acquisition have been recorded at their fair values. The following table provides the 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)
$25,255 
Prepaid expenses and other assets700 
Rental merchandise
On rent340,575 
Property assets171,455 
Operating lease right-of-use assets9,136 
Deferred income taxes28,559 
Goodwill219,530 
Other intangible assets520,000 
Total assets acquired$1,315,210 
LIABILITIES ASSUMED
Accounts payable - trade16,023 
Accrued liabilities11,716 
Operating lease liabilities9,689 
Deferred income taxes(116,410)
Total liabilities assumed(78,982)
Total equity value$1,394,192 
(1) Includes gross contractual receivables of $61.6 million related to merchandise lease contracts, of which $34.7 million were estimated to be uncollectible.
Carrying value for assets and liabilities assumed as part of the acquisition, including receivables, prepaid expenses and other assets, 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 Topic 842, “Leases”. The fair value measurements for acquired intangible assets and

7

RENT-A-CENTER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
developed technology were primarily based on significant unobservable inputs (Level 3) developed using company-specific information. Certain fair values were determined based on an independent valuation of the net assets acquired, including $340.6 million of rental merchandise and $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 $219.5 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. 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 differs from recorded goodwill as a result of the Aggregate Stock Consideration subject to restricted stock agreements, differences in value assigned to other purchased assets, and acquisition-related expenses. Tax goodwill will be amortized over 15 years.
Acima Holdings' results of operations are reflected in our unaudited Condensed Consolidated Statements of Operations from the date of acquisition.
Subsequent to the date of acquisition, we recorded certain adjustments to the purchase price allocation within the measurement period, including an adjustment to the fair value of rental merchandise decreasing the value of the acquired assets by approximately $17.1 million. The adjustment to the fair value of rental merchandise was based on further assessment of the carrying value of the assets and corresponding evaluation of related (Level 2) market inputs. Total cumulative measurement period adjustments resulted in a decrease to goodwill of approximately $(22.2) million. The purchase price allocation for the Acima Holdings acquisition was complete as of December 31, 2021.
In connection with this acquisition, we incurred approximately $23.9 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. 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 and step-down 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:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2021202020212020
(unaudited)(unaudited)(unaudited)(unaudited)
Pro Forma total revenues$1,193,975 $982,266 $2,425,361 $1,969,013 
Pro Forma net earnings (loss)(1)
65,448 16,122 121,861 (843)
(1)Total pro forma adjustments to net earnings represented an increase of $4.1 million for the three months ended June 30, 2021, a decrease of $106.2 million for the six months ended June 30, 2021, and decreases of $71.7 million and $177.9 million for the three and six months ended June 30, 2020, respectively. Pro forma adjustments to net loss in 2020 include retro-active impacts related to purchase price allocation adjustments recorded, subsequent to the date of acquisition, within the measurement period described above.

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RENT-A-CENTER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
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 -
June 30, 2021
(unaudited)
Total revenues$615,646 
Net earnings(1)
68,986 
(1)Net earnings for the period 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 June 30, 2022 and 2021:
 Three Months Ended June 30, 2022
 
Rent-A-Center Business
Acima(1)
MexicoFranchisingConsolidated
(in thousands)
Store
Rentals and fees$436,371 $405,184 $15,743 $ $857,298 
Merchandise sales34,952 124,888 929  160,769 
Installment sales18,548    18,548 
Other314 98 29 627 1,068 
Total store revenues490,185 530,170 16,701 627 1,037,683 
Franchise
Merchandise sales   26,505 26,505 
Royalty income and fees   7,067 7,067 
Total revenues$490,185 $530,170 $16,701 $34,199 $1,071,255 
(1) Represents revenues for our Acima segment, as defined in Note 1.
 Six Months Ended June 30, 2022
 
Rent-A-Center Business
Acima(1)
MexicoFranchisingConsolidated
(in thousands)
Store
Rentals and fees$879,066 $830,655 $30,624 $ $1,740,345 
Merchandise sales93,246 298,670 1,733  393,649 
Installment sales35,637    35,637 
Other741 221 56 1,340 2,358 
Total store revenues1,008,690 1,129,546 32,413 1,340 2,171,989 
Franchise
Merchandise sales   45,026 45,026 
Royalty income and fees   13,961 13,961 
Total revenues$1,008,690 $1,129,546 $32,413 $60,327 $2,230,976 
(1) Represents revenues for our Acima segment, as defined in Note 1.


9

RENT-A-CENTER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
 Three Months Ended June 30, 2021
 
Rent-A-Center Business
Acima(1)
MexicoFranchisingConsolidated
(In thousands)
Store
Rentals and fees$438,162 $463,841 $14,402 $ $916,405 
Merchandise sales49,050 171,346 833  221,229 
Installment sales18,191    18,191 
Other431 93 20 491 1,035 
Total store revenues505,834 635,280 15,255 491 1,156,860 
Franchise
Merchandise sales   29,616 29,616 
Royalty income and fees   7,499 7,499 
Total revenues$505,834 $635,280 $15,255 $37,606 $1,193,975 
(1) Represents revenues for our Acima segment, as defined in Note 1.
 Six Months Ended June 30, 2021
 
Rent-A-Center Business
Acima(1)
MexicoFranchisingConsolidated
(In thousands)
Store
Rentals and fees$867,463 $766,367 $28,109 $ $1,661,939 
Merchandise sales126,428 325,976 1,618  454,022 
Installment sales35,964    35,964 
Other845 386 26 696 1,953 
Total store revenues1,030,700 1,092,729 29,753 696 2,153,878 
Franchise
Merchandise sales   62,671 62,671 
Royalty income and fees   14,208 14,208 
Total revenues$1,030,700 $1,092,729 $29,753 $77,575 $2,230,757 
(1) Represents revenues for our Acima segment, as defined in Note 1.
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 lease-to-own stores, certain Acima staffed locations formerly operating under the Preferred Lease brand, and Mexico stores must be prepaid in advance of the next rental term. Under the Acima Holdings 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 June 30, 2022 and December 31, 2021, we had $32.5 million and $51.7 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, former Preferred Lease locations, and Mexico stores is depreciated using the

10

RENT-A-CENTER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
income forecasting method and recognized in cost of sales over the rental term. Rental merchandise in 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 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 June 30, 2022 and December 31, 2021, we had $2.3 million and $2.6 million in deferred revenue included in accrued liabilities related to extended service plans.
Other. Other revenue consists 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 June 30, 2022 and December 31, 2021, we had $3.8 million and $4.1 million, respectively, 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 six months ended June 30, 2022 and 2021 was $6.1 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 to franchisees based on an evaluation of each franchisee’s financial condition and collateral is generally not required. Trade receivables are generally due within 30 days.

11

RENT-A-CENTER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Receivables consist of the following:
(in thousands)June 30, 2022December 31, 2021
Installment sales receivables$67,500 $66,276 
Trade and notes receivables64,320 68,581 
Total receivables131,820 134,857 
Less allowance for doubtful accounts(9,226)(8,479)
Total receivables, net of allowance for doubtful accounts$122,594 $126,378 
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 notes 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 $