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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 September 30, 2023
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
Upbound Group, 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 valueUPBDThe 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
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.  ☐
Indicate by check mark whether any of these error corrections are restatements that require a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240 10D-1(b).  ☐
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of October 24, 2023:
ClassOutstanding
Common stock, $.01 par value54,294,852




TABLE OF CONTENTS
 
  Page No.
Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022
 


i


Item 1. Condensed Consolidated Financial Statements.
UPBOUND GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
(in thousands, except per share data)
Revenues
Store
Rentals and fees$806,766 $829,459 $2,421,039 $2,569,804 
Merchandise sales127,564 147,616 415,256 541,265 
Installment sales13,444 16,718 45,191 52,355 
Other1,429 1,340 4,422 3,698 
Total store revenues949,203 995,133 2,885,908 3,167,122 
Franchise
Merchandise sales24,082 22,823 69,778 67,849 
Royalty income and fees5,813 6,001 18,636 19,962 
Total revenues979,098 1,023,957 2,974,322 3,254,933 
Cost of revenues
Store
Cost of rentals and fees296,820 310,079 885,662 968,655 
Cost of merchandise sold155,937 179,477 492,879 615,543 
Cost of installment sales5,102 6,032 16,359 18,379 
Total cost of store revenues457,859 495,588 1,394,900 1,602,577 
Franchise cost of merchandise sold24,073 22,834 69,766 68,183 
Total cost of revenues481,932 518,422 1,464,666 1,670,760 
Gross profit497,166 505,535 1,509,656 1,584,173 
Operating expenses
Store expenses
Labor152,080 156,192 460,470 486,751 
Other store expenses191,455 197,847 569,267 624,306 
General and administrative expenses53,898 40,002 150,434 141,273 
Depreciation and amortization12,624 12,798 38,102 40,208 
Other charges29,057 61,619 184,413 185,435 
Total operating expenses439,114 468,458 1,402,686 1,477,973 
Operating profit58,052 37,077 106,970 106,200 
Interest expense27,887 22,960 84,233 61,018 
Interest income(1,255)(216)(2,690)(353)
Earnings before income taxes31,420 14,333 25,427 45,535 
Income tax expense27,057 20,111 19,352 35,825 
Net earnings (loss)$4,363 $(5,778)$6,075 $9,710 
Basic earnings (loss) per common share$0.08 $(0.10)$0.11 $0.18 
Diluted earnings (loss) per common share$0.08 $(0.10)$0.11 $0.16 
Cash dividends declared per common share$0.34 $0.34 $1.02 $1.02 
See accompanying notes to condensed consolidated financial statements.

1


UPBOUND GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
(in thousands)
Net earnings (loss)$4,363 $(5,778)$6,075 $9,710 
Other comprehensive (loss) income:
Foreign currency translation adjustments, net of tax of $(725) and $(163), $1,202 and $(14) for the three and nine months ended September 30, 2023 and 2022, respectively
(2,729)(615)4,520 (51)
Total other comprehensive (loss) income(2,729)(615)4,520 (51)
Comprehensive income (loss)$1,634 $(6,393)$10,595 $9,659 
See accompanying notes to condensed consolidated financial statements.

2


UPBOUND GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
September 30, 2023December 31, 2022
(in thousands, except share and par value data)
ASSETS
Cash and cash equivalents$105,726 $144,141 
Receivables, net of allowance for doubtful accounts of $13,120 and $13,214 in 2023 and 2022, respectively
104,772 111,865 
Prepaid expenses and other assets55,671 46,070 
Rental merchandise, net
On rent968,965 989,869 
Held for rent122,493 134,959 
Merchandise held for installment sale5,537 6,988 
Property assets, net of accumulated depreciation of $627,488 and $576,675 in 2023 and 2022, respectively
277,216 295,371 
Operating lease right-of-use assets295,879 302,311 
Deferred tax asset84,164 82,886 
Goodwill289,750 289,750 
Other intangible assets, net315,902 359,409 
Total assets$2,626,075 $2,763,619 
LIABILITIES
Accounts payable – trade$132,379 $155,449 
Accrued liabilities299,597 320,624 
Operating lease liabilities299,509 305,556 
Deferred tax liability57,947 87,986 
Senior debt, net799,973 930,902 
Senior notes, net439,425 437,956 
Total liabilities2,028,830 2,238,473 
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value; 250,000,000 shares authorized; 125,354,405 and 125,028,169 shares issued in September 30, 2023 and December 31, 2022, respectively
1,108 1,080 
Additional paid-in capital1,443,667 1,298,094 
Retained earnings1,026,309 1,077,189 
Treasury stock at cost, 70,270,920 and 69,354,651 shares in September 30, 2023 and December 31, 2022
(1,867,733)(1,840,591)
Accumulated other comprehensive loss(6,106)(10,626)
Total stockholders' equity597,245 525,146 
Total liabilities and stockholders' equity$2,626,075 $2,763,619 
See accompanying notes to condensed consolidated financial statements.

3


UPBOUND GROUP, 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, 2022
125,028 $1,080 $1,298,094 $1,077,189 $(1,840,591)$(10,626)$525,146 
Net Earnings— — — 47,330 — — 47,330 
Other comprehensive income— — — — — 3,104 3,104 
Exercise of stock options55 1 683 — — — 684 
Vesting of restricted share units, net of shares withheld for employee taxes204 31 (31)— — —  
Tax effect of stock awards vested and options exercised— — (2,535)— — — (2,535)
Stock-based compensation— — 115,681 — — — 115,681 
Dividends declared— — — (19,068)— — (19,068)
Balance at March 31, 2023125,287 $1,112 $1,411,892 $1,105,451 $(1,840,591)$(7,522)$670,342 
Net Loss— — — (45,618)— — (45,618)
Other comprehensive income— — — — — 4,145 4,145 
Exercise of stock options19 — 371 — — — 371 
Vesting of restricted share units, net of shares withheld for employee taxes2 1 (1)— — —  
Stock-based compensation— — 15,425 — — — 15,425 
Dividends declared— — — (19,072)— — (19,072)
Balance at June 30, 2023125,308 $1,113 $1,427,687 $1,040,761 $(1,840,591)$(3,377)$625,593 
Net Earnings— — — 4,363 — — 4,363 
Other comprehensive loss— — — — — (2,729)(2,729)
Purchase of treasury stock— (9)— — (27,142)— (27,151)
Exercise of stock options27 — 463 — — — 463 
Vesting of restricted share units, net of shares withheld for employee taxes19 4 (4)— — —  
Tax effect of stock awards vested and options exercised— — (97)— — — (97)
Stock-based compensation— — 15,618 — — — 15,618 
Dividends declared— — — (18,815)— — (18,815)
Balance at September 30, 2023
125,354 $1,108 $1,443,667 $1,026,309 $(1,867,733)$(6,106)$597,245 

4


UPBOUND GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - (Continued)
(Unaudited)
 Common StockAdditional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Accumulated Other Comprehensive (Loss) IncomeTotal
SharesAmount
(in thousands)
Balance at December 31, 2021
124,398 $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 
Net loss— — — (5,778)— — (5,778)
Other comprehensive loss— — — — — (615)(615)
Purchase of treasury stock— (13)— — (29,784)— (29,797)
Exercise of stock options33 — 461 — — — 461 
Vesting of restricted share units, net of shares withheld for employee taxes5 45 (45)— — —  
Tax effect of stock awards vested and options exercised— — (42)— — — (42)
Stock-based compensation— — 44,773 — — — 44,773 
Dividends declared— — — (19,673)— — (19,673)
Balance at September 30, 2022
125,019 $1,103 $1,261,323 $1,093,517 $(1,795,358)$(12,422)$548,163 
See accompanying notes to condensed consolidated financial statements.

5


UPBOUND GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 Nine Months Ended September 30,
 20232022
(in thousands)
Cash flows from operating activities
Net earnings$6,075 $9,710 
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation of rental merchandise859,001 937,728 
Bad debt expense17,533 18,100 
Stock-based compensation expense146,724 122,621 
Depreciation of property assets53,894 51,384 
Loss on sale or disposal of property assets413 5,979 
Amortization of intangibles43,518 51,382 
Amortization of financing fees4,770 4,798 
Deferred income taxes(32,488)(21,025)
Changes in operating assets and liabilities, net of acquired assets
Rental merchandise(824,151)(704,191)
Receivables(10,441)(4,951)
Prepaid expenses and other assets(9,600)(7,808)
Operating lease right-of-use assets and lease liabilities385 (2,047)
Accounts payable – trade(23,070)4,085 
Accrued liabilities(12,621)(53,682)
Net cash provided by operating activities219,942 412,083 
Cash flows from investing activities
Purchase of property assets(36,167)(49,436)
Proceeds from sale of property assets15 35 
Acquisitions of businesses(39)(775)
Net cash used in investing activities(36,191)(50,176)
Cash flows from financing activities
Share repurchases(24,049)(29,797)
Exercise of stock options1,518 1,720 
Shares withheld for payment of employee tax withholdings(2,632)(9,477)
Proceeds from debt 90,000 
Repayments of debt(134,229)(296,563)
Dividends paid(64,366)(60,410)
Net cash used in financing activities(223,758)(304,527)
Effect of exchange rate changes on cash1,592 (86)
Net (decrease) increase in cash and cash equivalents(38,415)57,294 
Cash and cash equivalents at beginning of period144,141 108,333 
Cash and cash equivalents at end of period$105,726 $165,627 
See accompanying notes to condensed consolidated financial statements.

6

UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 - Basis of Presentation
The interim condensed consolidated financial statements of Upbound Group, 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, 2022. 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, including those related to recent macroeconomic trends or other factors, 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 Upbound Group, Inc. and its direct and indirect subsidiaries. All intercompany accounts and transactions have been eliminated. Unless the context indicates otherwise, references to “Upbound Group, Inc.” refer only to Upbound Group, Inc., the parent, and references to the “Company”, “we,” “us” and “our” refer to the consolidated business operations of Upbound Group and any or all of its direct and indirect subsidiaries. We report four operating segments: Rent-A-Center, Acima, Mexico, and Franchising.
Our Rent-A-Center 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 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, and includes the operations of Acima Holdings and certain locations previously operating under our Preferred Lease brand, 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 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 Upbound Group, Inc., 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.

7

UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Note 2- Revenues
The following tables disaggregate our revenue for the periods ended September 30, 2023 and 2022:
 Three Months Ended September 30, 2023
 
Rent-A-Center
AcimaMexicoFranchisingConsolidated
(in thousands)
Store
Rentals and fees$413,051 $375,202 $18,513 $ $806,766 
Merchandise sales26,819 99,857 888  127,564 
Installment sales13,444    13,444 
Other318 157 241 713 1,429 
Total store revenues453,632 475,216 19,642 713 949,203 
Franchise
Merchandise sales   24,082 24,082 
Royalty income and fees   5,813 5,813 
Total revenues$453,632 $475,216 $19,642 $30,608 $979,098 
 Nine Months Ended September 30, 2023
 
Rent-A-Center
AcimaMexicoFranchisingConsolidated
(in thousands)
Store
Rentals and fees$1,260,745 $1,107,943 $52,351 $ $2,421,039 
Merchandise sales97,905 314,741 2,610  415,256 
Installment sales45,191    45,191 
Other990 737 565 2,130 4,422 
Total store revenues1,404,831 1,423,421 55,526 2,130 2,885,908 
Franchise
Merchandise sales   69,778 69,778 
Royalty income and fees   18,636 18,636 
Total revenues$1,404,831 $1,423,421 $55,526 $90,544 $2,974,322 
 Three Months Ended September 30, 2022
 
Rent-A-Center
AcimaMexicoFranchisingConsolidated
(In thousands)
Store
Rentals and fees$426,805 $387,488 $15,166 $ $829,459 
Merchandise sales30,009 116,795 812  147,616 
Installment sales16,718    16,718 
Other223 165 63 889 1,340 
Total store revenues473,755 504,448 16,041 889 995,133 
Franchise
Merchandise sales   22,823 22,823 
Royalty income and fees   6,001 6,001 
Total revenues$473,755 $504,448 $16,041 $29,713 $1,023,957 

8

UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
 Nine Months Ended September 30, 2022
 
Rent-A-Center
AcimaMexicoFranchisingConsolidated
(In thousands)
Store
Rentals and fees$1,305,871 $1,218,143 $45,790 $ $2,569,804 
Merchandise sales123,255 415,465 2,545  541,265 
Installment sales52,355    52,355 
Other964 386 119 2,229 3,698 
Total store revenues1,482,445 1,633,994 48,454 2,229 3,167,122 
Franchise
Merchandise sales   67,849 67,849 
Royalty income and fees   19,962 19,962 
Total revenues$1,482,445 $1,633,994 $48,454 $90,040 $3,254,933 
Lease Purchase Agreements
Rent-A-Center, Acima, and Mexico
Rentals and Fees. Rental merchandise is leased to customers pursuant to lease-to-own agreements, which provide for weekly, bi-weekly, semi-monthly or monthly terms with non-refundable lease payments. At the expiration of each lease term, customers may renew the lease-to-own agreement for the next lease term. Generally, the customer has the right to acquire title of the merchandise either through a purchase option or through payment of all required lease terms. Customers can terminate the lease-to-own agreement and return the product at the end of any lease term without penalty. Therefore, lease-to-own agreements are accounted for as operating leases.
Lease payments received at our Rent-A-Center stores, certain Acima staffed locations formerly operating under the Preferred Lease brand, and Mexico stores must be prepaid in advance of the next lease term. Under the Acima Holdings business model, revenues may be earned prior to the lease payment due date, in which case revenue is accrued prior to receipt of the lease payment, net of estimated returns and uncollectible renewal payments. Under both models, rental revenue is recognized over the lease term. See Note 3 for additional information regarding accrued lease 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 lease term. At September 30, 2023 and December 31, 2022, we had $56.6 million and $54.9 million, respectively, in deferred revenue included in accrued liabilities related to our lease-to-own 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 stores, certain Acima staffed locations formerly operating under the Preferred Lease brand, and Mexico stores is depreciated using the income forecasting method and recognized in cost of rentals and fees in our Condensed Consolidated Statement of Operations over the lease term. Lease merchandise under Acima Holdings is depreciated over the lease term using a straight-line depreciation method. Under the income forecasting method, the consumption of lease merchandise occurs during periods of rental and depreciation directly coincides with the receipt of rental revenue over the lease-to-own contract period. Depreciation under the straight-line method is recognized each period over the term of the lease-to-own contract irrespective of receipt of revenue payments from the customer.
We also offer additional product plans along with our lease-to-own 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, Acima, and Mexico
Merchandise Sales. Merchandise sales include payments received for the exercise of the early purchase options offered through our lease-to-own agreements or merchandise sold through point-of-sale transactions. Revenue for merchandise sales is

9

UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
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 September 30, 2023 and December 31, 2022, we had $1.2 million and $2.0 million, respectively, 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 September 30, 2023 and December 31, 2022, we had $3.1 million and $3.4 million, respectively, in deferred revenue included in accrued liabilities related to franchise fees.
Note 3 - 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 receivables 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 each of the nine months ended September 30, 2023 and 2022 was $8.7 million and $9.2 million, respectively.
Trade and notes receivables consist of amounts due from our lease-to-own customers for lease renewal payments and past due uncollected lease payments, adjusted for the probability of collection based on our assessment of historical collection rates and length of time the receivable is past due; 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.
Receivables consist of the following:
(in thousands)September 30, 2023December 31, 2022
Installment sales receivables$62,236 $69,550 
Trade and notes receivables(1)
55,656 55,529 
Total receivables117,892 125,079 
Less allowance for doubtful accounts(2)
(13,120)(13,214)
Total receivables, net of allowance for doubtful accounts$104,772 $111,865 
(1) Trade and notes receivables includes accrued revenue, adjusted for the probability of collection, related to our lease-to-own agreements of $29.9 million and $28.7 million at September 30, 2023 and December 31, 2022, respectively.
(2) Lease receivables are accrued on a net basis, adjusted for the probability of collection based on our assessment of historical collection rates, as described above. Therefore, we do not maintain a separate allowance for doubtful accounts related to our lease receivables.
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-

10

UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
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 Franchising trade and notes receivables was $1.1 million and $1.2 million at September 30, 2023 and December 31, 2022, respectively, and the allowance for doubtful accounts related to installment sales receivables was $12.0 million at both September 30, 2023 and December 31, 2022.
Changes in our allowance for doubtful accounts are as follows:
(in thousands)September 30, 2023
Beginning allowance for doubtful accounts$13,214 
Bad debt expense(1)
17,533 
Accounts written off, net of recoveries(17,627)
 Ending allowance for doubtful accounts$13,120 
(1) Uncollectible installment payments, franchisee obligations, and other corporate receivables are recognized in other store operating expenses in our condensed consolidated financial statements.
Note 4 - Leases
We lease space for all of our Rent-A-Center and Mexico stores under operating leases expiring at various times through 2034. 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 years to five years at rental rates adjusted according to agreed upon 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.
In certain situations involving the sale of a Rent-A-Center 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 Sheets.
We lease vehicles for all of our Rent-A-Center 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 Sheets. We also lease vehicles for all of our Mexico stores which have terms expiring at various times through 2026 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.
In our calculation of operating lease right-of-use assets and operating lease liabilities we have elected not to separate the lease and non-lease components. Furthermore, 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.

11

UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Total operating lease costs by expense type:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Operating lease cost included in Other store expenses(1)(2)
$31,143 $31,100 $93,208 $93,365 
Operating lease cost included in Other charges
 264  299 
Sublease receipts(734)(1,642)(3,012)(5,700)
Total operating lease charges $30,409 $29,722 $90,196 $87,964 
(1) Includes short-term lease costs, which are not significant.
(2) Excludes variable lease costs of $9.9 million and $29.0 million for the three and nine months ended September 30, 2023, respectively, compared to $9.4 million and $27.2 million for the three and nine months ended September 30, 2022, respectively.
Supplemental cash flow information related to leases:
Nine Months Ended September 30,
(in thousands)20232022
Cash paid for amounts included in measurement of operating lease liabilities$79,871 $77,780 
Cash paid for short-term operating leases not included in operating lease liabilities13,240 14,170 
Right-of-use assets obtained in exchange for new operating lease liabilities50,786 81,937 
Weighted-average discount rate and weighted-average remaining lease term:
September 30, 2023December 31, 2022
Weighted-average discount rate(1)
7.6 %7.0 %
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 September 30, 2023:
(in thousands)Operating Leases
2023$29,524 
2024103,277 
202585,151 
202659,870 
202738,556 
Thereafter33,499 
Total undiscounted operating lease liabilities349,877 
Less: Interest(50,368)
Total present value of operating lease liabilities$299,509 
Note 5 - Income Taxes
The effective tax rate was 76.1% for the nine months ended September 30, 2023, compared to 78.7% for the corresponding period in 2022. The effective tax rates for the nine months ended September 30, 2023 and 2022 were impacted by the difference between recorded goodwill and goodwill recognized for tax purposes, primarily related to stock consideration issued to employee former owners of Acima Holdings subject to restricted stock agreements. Please reference Note 9 for additional information regarding the recognition of these restricted stock units in our condensed consolidated financial statements. For tax purposes, restricted stock units subject to restricted stock agreements issued to the former owners of Acima Holdings were recorded as goodwill and will be amortized over a period of 15 years.
Note 6 - Senior Debt
On February 17, 2021, we entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and lenders party thereto, providing 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”) providing for a five-year asset-based revolving credit facility

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
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.
Proceeds from the Term Loan 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 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 Sheets.
On September 21, 2021 we entered into a First Amendment to the Term Loan Facility, effective as of September 21, 2021. The amendment effected a repricing of the applicable margin under the Term Loan Facility by reducing the LIBOR floor by 25 basis points from 0.75% to 0.50%, and the applicable margin, with respect to any initial term loans, by 75 basis points from 4.00% to 3.25%.
In connection with the execution of the First Amendment, and in accordance with ASC Topic 470, “Debt”, we recorded approximately $5.4 million in write-offs of unamortized debt issuance costs and original issue discount previously capitalized upon the issuance of the Term Loan Facility on February 17, 2021.
On August 10, 2022, we entered into a First Amendment to the ABL Credit Facility, effective as of August 10, 2022. The amendment effected the replacement of LIBOR with Term Secured Overnight Financing Rate (“Term SOFR”) as the benchmark rate of interest thereunder.
On June 15, 2023, we entered into a Second Amendment to the Term Loan Facility, effective as of June 15, 2023. The amendment effected the replacement of LIBOR with Term SOFR as the benchmark rate of interest and also resulted in a repricing of the applicable margin by 26 basis points from 3.25% to 3.51% effective July 31, 2023.
In connection with the First Amendment to the ABL Credit Facility and the Second Amendment to the Term Loan Facility described above, we have elected optional expedients available under ASC Topic 848, “Reference Rate Reform” which classify contract amendments for the transition of LIBOR as events that do not require accounting reassessments as a contract modification.
As of September 30, 2023, the total remaining balance of unamortized debt issuance costs and original issue discount related to our senior debt reported in the Condensed Consolidated Balance Sheets were approximately $13.4 million and $2.1 million, respectively. Remaining unamortized debt issuance costs and original issue discount will be amortized to interest expense over the remaining term of the Term Loan Facility.
The amount outstanding under the Term Loan Facility was $815.5 million at September 30, 2023. We had no outstanding borrowings under our ABL Credit Facility at September 30, 2023 and borrowing capacity of $485.6 million, net of issued letters of credit of approximately $64.4 million, primarily relating to 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 Term SOFR rate plus an applicable margin of 3.51%, subject to a 0.50% Term SOFR floor. The total interest rate on the Term Loan Facility was 8.881% at September 30, 2023. 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,

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
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. These covenants are subject to a number of limitations and exceptions set forth in the governing documents of the Term Loan.
In the event our Consolidated Secured Leverage Ratio (as such term is defined in the Term Loan Facility credit agreement) exceeds 1:1, we are required to prepay the loans under the Term Loan Facility by a percentage of annual excess cash flow, as more fully described in the Term Loan Facility credit agreement. We made mandatory excess cash flow prepayments of approximately $42.6 million, including $0.6 million in accrued interest, in March 2023, relating to results for the year ended December 31, 2022.
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.
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 certain reserves.
The ABL Credit Facility bears interest at a fluctuating rate determined by reference to Term SOFR plus an applicable margin of 1.50% to 2.00%. The total interest rate on the ABL Credit Facility at September 30, 2023 was 7.52%. 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 governing documents of the ABL Credit Facility. The commitment fee at September 30, 2023 was 0.375%. We paid $0.8 million of commitment fees during the third quarter of 2023.
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 Credit 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 Credit Facility also requires the maintenance of a consolidated fixed charge coverage ratio of at least 1.10 to 1.00 at the end of each fiscal quarter only in the event 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 governing documents of the ABL Credit Facility. The fixed charge coverage ratio as of September 30, 2023 was 1.19 to 1.00.
The governing documents of the ABL Credit 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. As of September 30, 2023, we were in compliance with all requirements and conditions set forth in our ABL Credit Facility governing documents.

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UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
The table below shows the scheduled maturity dates of our outstanding senior debt at September 30, 2023 for each of the years ending December 31:
(in thousands)
Term Loan Facility(1)
2023$ 
2024 
2025 
2026 
2027 
Thereafter815,458 
Total senior debt$815,458 
(1) Annual installment requirements were reduced by the amount of the excess cash flow payment described above, in accordance with the terms of the credit agreement governing the Term Loan Facility.
Note 7 - 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. 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 Sheets. Debt issuance costs are amortized as interest expense over the term of the Notes. As of September 30, 2023, the total remaining balance of unamortized debt issuance costs related to our senior notes reported in the Condensed Consolidated Balance Sheets was approximately $10.6 million.
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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Note 8 - 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 September 30, 2023 and December 31, 2022, 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 September 30, 2023:
September 30, 2023
(in thousands)Carrying ValueFair ValueDifference
Senior notes$450,000 $401,040 $(48,960)
Note 9 - Other Charges
Acima Holdings Acquisition. 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 were 8,096,595 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, in accordance with ASC Topic 718, “Stock-based Compensation”. During the nine months ended September 30, 2023 and 2022, we recognized approximately $128.1 million and $111.5 million in stock compensation expense, respectively, related to these restricted stock agreements. See Note 11 for additional information.
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 nine months ended September 30, 2023 and 2022, we recognized approximately $42.8 million and $50.6 million in amortization expense, respectively, related to acquired intangible assets. We also recognized approximately $11.9 million in incremental depreciation expense related to acquired technology assets in both the nine months ended September 30, 2023 and 2022.
During the nine months ended September 30, 2022, we recognized approximately $0.2 million in transaction costs associated with the closing of the transaction.
Internally Developed Software Depreciation. During the third quarter of 2023, we completed initial development and began pilot testing a new internally developed point-of-sale system for our Rent-A-Center lease-to-own stores. We expect to fully deploy the new system across our lease-to-own store network during the first half of 2024, at which time our existing point-of-sale software will be retired. Therefore, in the third quarter of 2023, we accelerated the remaining useful lives of our existing point-of-sale software assets to align with the current deployment timeline of our new point-of-sale system, which resulted in the recognition of additional depreciation expense of $4.6 million for the three months ended September 30, 2023. Subsequent to September 30, 2023 we expect to recognize additional depreciation expense of $10.8 million over the remaining life of these assets.









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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Activity with respect to Other charges for the nine months ended September 30, 2023 is summarized in the below table:
(in thousands)
 Accrued Charges at December 31, 2022
Charges & AdjustmentsPayments & Adjustments
 Accrued Charges at September 30, 2023
Cash charges:
Labor reduction costs(1)
$2,202 $ $(2,202)$ 
Total cash charges$2,202  $(2,202)$ 
Non-cash charges:
Acima Holdings restricted stock agreements(2)
128,128 
Depreciation and amortization of acquired assets(3)
54,701 
Accelerated software depreciation4,609 
Other(4)
(3,025)
Total other charges$184,413 
(1) Represents charges incurred and payments related to employee severance.
(2) Represents stock compensation expense related to common stock issued to Acima Holdings employees under restricted stock agreements as part of the acquisition proceeds subject to vesting restrictions, as described in Note 11.
(3) Represents amortization of the total fair value of acquired intangible assets and incremental depreciation related to the fair value increase over net book value of acquired software assets in connection with the acquisition of Acima Holdings in 2021.
(4) Primarily represents interest income on tax refunds for prior years received in 2023.
Note 10 - 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, smartphones, and accessories.
Segment information as of and for the three and nine months ended September 30, 2023 and 2022 is as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Revenues
Rent-A-Center
$453,632 $473,755 $1,404,831 $1,482,445 
Acima475,216 504,448 1,423,421 1,633,994 
Mexico19,642 16,041 55,526 48,454 
Franchising30,608 29,713 90,544 90,040 
Total revenues$979,098 $1,023,957 $2,974,322 $3,254,933 
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Gross profit
Rent-A-Center$317,233 $334,892 $975,210 $1,046,332 
Acima159,427 152,434 474,258 481,742 
Mexico13,971 11,330 39,410 34,242 
Franchising6,535 6,879 20,778 21,857 
Total gross profit$497,166 $505,535 $1,509,656 $1,584,173 

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UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Operating profit
Rent-A-Center$63,762 $71,999 $211,637 $271,283 
Acima58,124 48,885 175,103 94,318 
Mexico1,124 996 3,417 5,011 
Franchising3,541 5,077 13,280 15,170 
Total segments126,551 126,957 403,437 385,782 
Corporate(1)
(68,499)(89,880)(296,467)(279,582)
Total operating profit$58,052 $37,077 $106,970 $106,200 
(1) Includes stock compensation expense of $9.4 million and $128.1 million recognized for the three and nine months ended September 30, 2023 and $42.1 million and $111.5 million recognized for the three and nine months ended September 30, 2022, related to common stock issued to Acima Holdings employees under restricted stock agreements as part of the acquisition consideration subject to vesting restrictions as described in Note 11.

Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Depreciation and amortization
Rent-A-Center$4,421 $4,629 $13,964 $15,665 
Acima(1)
420 439 1,263 1,496 
Mexico345 182 880 494 
Franchising36 35 110 110 
Total segments5,222 5,285 16,217 17,765 
Corporate(2)
7,402 7,513 21,885 22,443 
Total depreciation and amortization
$12,624 $12,798 $38,102 $40,208 
(1) Excludes amortization expense of approximately $14.3 million and $42.8 million for the three and nine months ended September 30, 2023, compared to $14.2 million and $50.6 million for the three and nine months ended September 30, 2022, recorded to Other charges in the Condensed Consolidated Statement of Operations, related to intangible assets acquired upon closing of the Acima Holdings acquisition. See Note 9 for additional information.
(2) Excludes depreciation expense of approximately $8.6 million and $16.5 million for both the three and nine months ended September 30, 2023, compared to $3.9 million and $11.9 million for the three and nine months ended September 30, 2022, recorded to Other charges in the Condensed Consolidated Statement of Operations, related to software acquired upon closing of the Acima Holdings acquisition and accelerated software depreciation. See Note 9 for additional information.
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Capital expenditures
Rent-A-Center$6,822 $10,714 $12,587 $30,917 
Acima121 16 203