Rent-A-Center, Inc. Reports Fourth Quarter and Year End 2016 Results

PLANO, Texas - February 13, 2017 - (BUSINESS WIRE) - Rent-A-Center, Inc. (the "Company") (NASDAQ/NGS: RCII) today announced results for the quarter and year ended December 31, 2016.

Notable Items for the Quarter

GAAP Basis

  • For the fourth quarter of 2016, loss before income taxes was $170.9 million, compared to $1,132.8 million for the fourth quarter of 2015. In the fourth quarter of 2015, a $1,170.0 million goodwill impairment charge was taken in the Core U.S. segment
  • The Company’s annual goodwill impairment testing performed for the fourth quarter of 2016 resulted in the recognition of an impairment of $151.3 million, thus writing off all the remaining goodwill in the Core U.S. segment. The impairment is a non-cash charge and does not affect liquidity, debt covenants or the Company’s ability to declare and pay dividends. We are in the process of finalizing the income tax effect of this impairment charge and certain deferred tax items, and expect to include this information in our Annual Report on Form 10-K for the year ended December 31, 2016. As a result, we are unable to report net loss or diluted loss per share for the fourth quarter of 2016 on a GAAP basis at this time

Excluding Special Items (see non-GAAP reconciliation below)

  • For the fourth quarter of 2016, loss before income taxes was $21.5 million, compared to earnings before income taxes of $41.5 million for the fourth quarter of 2015
  • Diluted loss per share was $0.23 compared to earnings of $0.54 for the fourth quarter of 2015. For the full year 2016, diluted earnings per share was $0.77 compared to $2.03 in the prior year
  • Consolidated total revenues decreased 13.8 percent to $684.1 million and same store sales decreased 9.6 percent
  • Core U.S. revenue decreased by 17.6 percent and same store sales decreased by 14.2 percent
  • Acceptance Now revenue decreased by 1.7 percent and same store sales increased by 1.0 percent
  • The Company's EBITDA as a percent of total revenues was 1.5 percent, down 780 basis points to prior year and operating loss as a percent of total revenues was 1.4 percent, down 820 basis points
  • For the full year 2016, the Company generated $353.7 million of cash from operations, capital expenditures totaled $61.1 million, and the Company ended the year with $95.4 million of cash and cash equivalents
  • The Company reduced its outstanding debt balance by $233.8 million in 2016 compared to prior year and total debt was $734.6 million as of December 31, 2016
  • The Consolidated Leverage Ratio was at 3.58x and the Fixed Charge Coverage Ratio was at 1.50x as of December 31, 2016

“As previously announced, the fourth quarter proved to be much more challenging than expected due to recovery challenges from the POS system outages in the previous quarter, heavy promotional activity, and historically high delinquencies,” stated Mark E. Speese, Interim Chief Executive Officer of Rent-A-Center, Inc.

“Today, we are intensely focused on turning the Core business around by improving our product mix, delivering a better value proposition for customers, stabilizing our workforce and improving our account management. Within the Acceptance Now business, we recently signed pilot agreements for the first time with two new national retailers representing a significant scale opportunity. We are leveraging technology investments and new capabilities to enable or accelerate our business strategies and to better serve and engage customers. We remain committed to taking all necessary actions to execute our turnaround and are moving forward with urgency to drive improved results and shareholder value, including an execution of a cost rationalization plan to achieve approximately 6% reduction in the field support center workforce,” Mr. Speese concluded.

Goodwill Write-Down

Testing of goodwill for impairment at the reporting unit level is performed annually, and this testing resulted in the recognition of an impairment of goodwill in the Core U.S. business. Substantially all of this goodwill was created as a result of the acquisition growth strategy pursued from 1993 until 2006.

Same Store Sales (Unaudited)

               
Table 1       2016     2015
Period      

Core
U.S.

   

Acceptance
Now

    Mexico     Total    

Core
U.S.

   

Acceptance
Now

    Mexico     Total
Three months ended December 31       (14.2 )%     1.0 %     (1.8 )%     (9.6 )%     (2.2 )%     13.7 %     4.4 %     1.7 %
Year ended December 31       (9.0 )%     (0.4 )%     6.6 %     (6.2 )%     0.1 %     25.8 %     9.6 %     5.7 %
                                                   

Note: Same store sales generally represents revenue earned in stores that were operated by us for 13 months or more and are reported on a constant currency basis.

Quarterly Operating Performance

Explanations of performance are excluding special items and compared to the prior year unless otherwise noted.

CORE U.S. fourth quarter revenues of $472.9 million decreased 17.6 percent primarily due to lower same store sales and the continued rationalization of our Core U.S. store base. Gross profit as a percent of total revenue was impacted by heavy promotional activity. Labor expenses decreased $17.3 million, however, as a percent of store revenue, increased due to sales deleverage. Other store expenses were positively impacted by lower store count, however, as a percent of store revenue, increased primarily due to sales deleverage and higher skip/stolen losses which increased by 110 basis points.

ACCEPTANCE NOW fourth quarter revenues of $193.5 million decreased 1.7 percent while same store sales increased as lower store count was partially offset by higher purchase volume per store. Gross profit as a percent of total revenue declined versus the prior year primarily due to lower gross profit margin on merchandise sales. Labor, as a percent of store revenue was flat versus the prior year. Other store expenses, as a percent of store revenue, were negatively impacted by higher skip/stolen losses which increased by 200 basis points.

MEXICO fourth quarter revenues decreased 23.9 percent driven by currency fluctuations, store closures and lower same store sales that were lower by 1.8 percent. Gross profit as a percent of total revenue improved 520 basis points driven by revenue mix and higher merchandise sales gross margin due to pricing initiatives.

FRANCHISING fourth quarter revenues decreased 23.2 percent and operating profit decreased by $0.4 million driven by fees associated with a new franchisee in 2015.

Other

General and administrative expenses increased in the fourth quarter of 2016 by $8.9 million, primarily due to timing differences related to compensation costs, including severance, and costs related to preparing for the Acceptance Now national accounts pilots. For the full year of 2016, general and administrative expenses increased $2.8 million.

The Company remains focused on reducing costs and has executed on a cost rationalization plan that will reduce the field support center workforce by approximately 6%.

Non-GAAP Reconciliation

To supplement the Company's financial results presented on a GAAP basis, Rent-A-Center uses the non-GAAP measures ("special items”) indicated in Table 2 below. As stated above, because we are unable to report net loss or diluted loss per share on a GAAP basis at this time, we have included a reconciliation of loss before income taxes. Special items include charges in 2016 for goodwill impairment in the Core U.S. segment, restructuring charges in 2016 for the closure of certain Core U.S. and Mexico stores, and Acceptance Now locations. Gains or charges related to sales of stores and store closures will generally recur with the occurrence of these events in the future. The presentation of these financial measures is not in accordance with, or an alternative for, accounting principles generally accepted in the United States and should be read in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP. Rent-A-Center management believes that excluding special items from the GAAP financial results provides investors a clearer perspective of the Company's ongoing operating performance and a more relevant comparison to prior period results.

Reconciliation of loss before income taxes to (loss) earnings before income taxes excluding special items:

               
Table 2      

Three Months Ended
December 31

   

Twelve Months Ended
December 31

(In thousands, except per share data)       2016     2015     2016     2015
Loss before income taxes       $ (170,876 )     $ (1,132,758 )     $ (113,274 )     $ (1,056,580 )
Special items:                          
Other charges                                 34,698  
Goodwill impairment charge         151,320         1,170,000         151,320         1,170,000  
Other (gains) and charges(1)         (1,941 )       4,211         20,299         20,651  

(Loss) earnings before income taxes, excluding special items

     

$

(21,497 )    

$

41,453      

$

58,345      

$

168,769  
                           

(1) Other (gains) and charges primarily includes restructuring charges related to the closure of Core U.S. and Mexico stores, and Acceptance Now locations in 2016, and corporate restructuring charges and losses incurred on the sale of Core U.S. and Canada stores in 2015. Restructuring charges are primarily comprised of lease obligation costs, employee severance, asset disposals, and miscellaneous costs incurred as a result of the closures. The three months and twelve months ended December 31, 2016 is partially offset by a pre-tax gain related to a litigation claims settlement

2017 Guidance

The Company is not providing annual guidance as it relates to revenue or diluted earnings per share for 2017. In an effort to enhance transparency regarding the Company’s results and turnaround efforts, the Company will shift to a monthly report of key operating metrics. The Company believes these changes will provide the investment community meaningful insight into the progress the Company is making on its turnaround.

The Company will provide the metrics outlined below for our two main operating segments.

Core U.S.

  • Same Store Sales - year over year revenue performance on comparable stores
  • Delinquencies - percent of customer agreements greater than 7 days past due vs. prior year
  • Monthly rate - average monthly rate of agreements originated in the period vs. prior year
  • Turnover - annualized year to date store co-worker turnover vs. prior year

Acceptance NOW

  • Same Store Sales - year over year revenue performance on comparable stores
  • Delinquencies - percent of customer agreements, in staffed locations, greater than 32 days past due vs. prior year

Webcast Information

Rent-A-Center, Inc. will host a conference call to discuss the fourth quarter results, guidance and other operational matters on Tuesday morning, February 14, 2017, at 8:30 a.m. ET. For a live webcast of the call, visit http://investor.rentacenter.com. Certain financial and other statistical information that will be discussed during the conference call will also be provided on the same website.

About Rent-A-Center, Inc.

A rent-to-own industry leader, Plano, Texas-based, Rent-A-Center, Inc., is focused on improving the quality of life for its customers by providing them the opportunity to obtain ownership of high-quality, durable products such as consumer electronics, appliances, computers, furniture and accessories, under flexible rental purchase agreements with no long-term obligation. The Company owns and operates approximately 2,600 stores in the United States, Mexico, Canada and Puerto Rico, and approximately 1,900 Acceptance Now kiosk locations in the United States and Puerto Rico. Rent-A-Center Franchising International, Inc., a wholly owned subsidiary of the Company, is a national franchiser of approximately 230 rent-to-own stores operating under the trade names of "Rent-A-Center", "ColorTyme", and "RimTyme". For additional information about the Company, please visit our website at www.rentacenter.com.

Forward-Looking Statements

This press release and the guidance above contain forward-looking statements that involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "could," "estimate," "should," "anticipate," or "believe," or the negative thereof or variations thereon or similar terminology. The Company believes that the expectations reflected in such forward-looking statements are accurate. However, there can be no assurance that such expectations will occur. The Company's actual future performance could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to: the general strength of the economy and other economic conditions affecting consumer preferences and spending; factors affecting the disposable income available to the Company's current and potential customers; changes in the unemployment rate; difficulties encountered in improving the financial and operational performance of the Company's business segments; our chief executive officer and chief financial officer transitions, including our ability to effectively operate and execute our strategies during the interim period and difficulties or delays in identifying and attracting a permanent chief executive officer and chief financial officer, each with the required level of experience and expertise; failure to manage the Company's store labor (including overtime pay) and other store expenses; the Company’s ability to develop and successfully execute strategic initiatives; disruptions caused by the implementation and operation of the Company's new store information management system, including capacity-related outages; the Company’s ability to successfully market smartphones and related services to its customers; the Company's ability to develop and successfully implement virtual or e-commerce capabilities; failure to achieve the anticipated profitability enhancements from the changes to the 90 day option pricing program and the development of dedicated commercial sales capabilities; disruptions in the Company's supply chain; limitations of, or disruptions in, the Company's distribution network; rapid inflation or deflation in the prices of the Company's products; the Company's ability to execute and the effectiveness of a store consolidation, including the Company's ability to retain the revenue from customer accounts merged into another store location as a result of a store consolidation; the Company's available cash flow; the Company's ability to identify and successfully market products and services that appeal to its customer demographic; consumer preferences and perceptions of the Company's brand; uncertainties regarding the ability to open new locations; the Company's ability to acquire additional stores or customer accounts on favorable terms; the Company's ability to control costs and increase profitability; the Company's ability to retain the revenue associated with acquired customer accounts and enhance the performance of acquired stores; the Company's ability to enter into new and collect on its rental or lease purchase agreements; the passage of legislation adversely affecting the rent-to-own industry; the Company's compliance with applicable statutes or regulations governing its transactions; changes in interest rates; adverse changes in the economic conditions of the industries, countries or markets that the Company serves; information technology and data security costs; the impact of any breaches in data security or other disturbances to the Company's information technology and other networks and the Company's ability to protect the integrity and security of individually identifiable data of its customers and employees; changes in the Company's stock price, the number of shares of common stock that it may or may not repurchase, and future dividends, if any; changes in estimates relating to self-insurance liabilities and income tax and litigation reserves; changes in the Company's effective tax rate; fluctuations in foreign currency exchange rates; the Company's ability to maintain an effective system of internal controls; the resolution of the Company's litigation; and the other risks detailed from time to time in the Company's SEC reports, including but not limited to, its Annual Report on Form 10-K for the year ended December 31, 2015, and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2016, June 30, 2016, and September 30, 2016. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Rent-A-Center, Inc. and Subsidiaries

 

STATEMENT OF EARNINGS HIGHLIGHTS - UNAUDITED

         
Table 3       Three Months Ended December 31,
        2016     2016     2015     2015
        Before     After     Before     After
        Special Items     Special Items     Special Items     Special Items
        (Non-GAAP     (GAAP     (Non-GAAP     (GAAP
(In thousands, except per share data)       Earnings)     Earnings)     Earnings)     Earnings)
Total revenues       $ 684,104       $ 684,104       $ 793,833       $ 793,833  
Operating (loss) profit        

(9,897

)(1)

      (159,276 )      

53,459(2)

      (1,120,752 )
(Loss) earnings before income taxes         (21,497 )(1)       (170,876 )      

41,453(2)

      (1,132,758 )
Adjusted EBITDA       $ 9,961       $ 9,961       $ 74,039       $ 74,039  
Reconciliation to adjusted EBITDA:                          
(Loss) earnings before income taxes       $ (21,497 )(1)     $ (170,876 )      

41,453(2)

    $ (1,132,758 )
Add back (subtract):                          
Goodwill impairment charge                 151,320                 1,170,000  
Other (gains) and charges                 (1,941 )               4,211  
Interest expense, net         11,600         11,600         12,006         12,006  
Depreciation, amortization and write-down of intangibles         19,858         19,858         20,580         20,580  
Adjusted EBITDA       $ 9,961       $ 9,961       $ 74,039       $ 74,039  
                           

(1) Excludes the effects of a $151.3 million pre-tax goodwill impairment charge in the Core U.S. segment, a $0.3 million pre-tax restructuring charge and a $2.2 million pre-tax gain related to a litigation claims settlement. These charges reduced loss before income taxes for the three months ended December 31, 2016, by approximately $149.4 million.

(2) Excludes the effects of a $1,170.0 million pre-tax goodwill impairment charge in the Core U.S. segment, a $2.2 million pre-tax loss on the sale of Core U.S. stores and a $2.0 million pre-tax restructuring charge. These charges reduced loss before income taxes for the three months ended December 31, 2015, by approximately $1,174.2 million.

         
Table 4       Twelve Months Ended December 31,
        2016     2016     2015     2015
        Before     After     Before     After
        Special Items     Special Items     Special Items     Special Items
        (Non-GAAP     (GAAP     (Non-GAAP     (GAAP
(In thousands, except per share data)       Earnings)     Earnings)     Earnings)     Earnings)
Total revenues       $ 2,963,252       $ 2,963,252       $ 3,278,420       $ 3,278,420  
Operating profit (loss)        

105,023 (1)

      (66,596 )      

217,461 (2)

      (1,007,888 )
Earnings (loss) before income taxes        

58,345 (1)

      (113,274 )      

168,769 (2)

      (1,056,580 )
Adjusted EBITDA       $ 185,479       $ 185,479       $ 298,181       $ 298,181  
Reconciliation to adjusted EBITDA:                          
Earnings (loss) before income taxes       $

58,345 (1)

    $ (113,274 )     $

168,769 (2)

    $ (1,056,580 )
Add back:                          
Other charges                                 34,698  
Goodwill impairment charge                 151,320                 1,170,000  
Other charges                 20,299                 20,651  
Interest expense, net         46,678         46,678         48,692         48,692  
Depreciation, amortization and write-down of intangibles         80,456         80,456         80,720         80,720  
Adjusted EBITDA       $ 185,479       $ 185,479       $ 298,181       $ 298,181  
                           

(1) Excludes the effects of a $151.3 million pre-tax goodwill impairment charge, $22.5 million of pre-tax restructuring charges primarily related to the closure of Core U.S. and Mexico stores, and Acceptance Now locations, partially offset by a $2.2 million pre-tax gain related to a litigation claims settlement. These charges reduced loss before income tax for the twelve months ended December 31, 2016, by approximately $171.6 million.

(2) Excludes the effects of a $1,170.0 million pre-tax goodwill impairment charge in the Core U.S. segment, a $34.7 million pre-tax write-down of smartphones, a $7.5 million pre-tax loss on the sale of Core U.S. and Canada stores, a $7.2 million pre-tax charge related to the closure of Core U.S. and Mexico stores, $2.8 million of pre-tax charges for start-up and warehouse closure expenses related to our sourcing and distribution initiative, a $2.0 million pre-tax restructuring charge and $1.1 million of losses for other store sales and closures. These charges reduced loss before income taxes for the twelve months ended December 31, 2015, by approximately $1,225.3 million.

 

SELECTED BALANCE SHEET HIGHLIGHTS - UNAUDITED

         
Table 5       December 31,
        2016     2015
(In thousands)             Revised
Cash and cash equivalents       $ 95,396       $ 60,363  
Receivables, net         69,785         69,320  
Rental merchandise, net              
On rent         795,118         907,625  
Held for rent         206,836         228,847  
Goodwill         55,308         206,122  
               
Senior debt, net       $

186,747 (1)

    $

419,648 (1)

Senior notes, net        

537,483 (1)

     

536,185 (1)

               

(1) In accordance with a newly adopted accounting standard, debt balances are now presented net of unamortized debt issuance costs and the 2015 amounts have been revised to conform to the current period presentation. Unamortized debt issuance costs related to Senior Debt were $5.1 million and $6.0 million at December 31, 2016 and 2015, respectively. Unamortized debt issuance costs related to Senior Notes were $5.3 million and $6.6 million at December 31, 2016 and 2015, respectively. These unamortized debt issuance costs were previously presented in Prepaid Expenses and Other Assets.

 
Rent-A-Center, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS BEFORE INCOME TAXES - UNAUDITED

               
Table 6       Three Months Ended December 31,     Year Ended December 31,
(In thousands, except per share data)       2016     2015     2016     2015
Revenues                    
Store                          
Rentals and fees       $ 584,869       $ 682,397       $ 2,500,053       $ 2,781,315  
Merchandise sales         69,495         76,742         351,198         377,240  
Installment sales         20,791         22,038         74,509         76,238  
Other         2,705         4,527         12,706         19,158  
Total store revenues         677,860         785,704         2,938,466         3,253,951  
Franchise                          
Merchandise sales         4,275         5,555         16,358         15,577  
Royalty income and fees         1,969         2,574         8,428         8,892  
Total revenues         684,104         793,833         2,963,252         3,278,420  
Cost of revenues                          
Store                          
Cost of rentals and fees         160,011         180,088         664,845         728,706  
Cost of merchandise sold         70,254         74,568         323,727         356,696  
Cost of installment sales         7,045         7,552         24,285         25,677  
Total cost of store revenues         237,310         262,208         1,012,857         1,111,079  
Other charges                                

34,698 (6)

Franchise cost of merchandise sold         4,073         5,250         15,346         14,534  
Total cost of revenues         241,383         267,458         1,028,203         1,160,311  
Gross profit         442,721         526,375         1,935,049         2,118,109  
Operating expenses                          
Store expenses                          
Labor         193,381         211,198         789,049         854,610  
Other store expenses         191,855         202,499         791,614         833,914  
General and administrative expenses         47,524         38,639         168,907         166,102  
Depreciation, amortization and write-down of intangibles         19,858         20,580         80,456         80,720  
Goodwill impairment charge        

151,320 (1)

     

1,170,000 (3)

     

151,320 (1)

     

1,170,000 (3)

Other (gains) and charges         (1,941

)(2)

     

4,211 (4)

     

20,299 (5)

     

20,651 (7)

Total operating expenses         601,997         1,647,127         2,001,645         3,125,997  
Operating loss         (159,276 )         (1,120,752 )       (66,596 )       (1,007,888 )
Interest expense         11,757         12,115         47,181         49,326  
Interest income         (157 )         (109 )       (503 )       (634 )
Loss before income taxes      

$

(170,876 )      

$

(1,132,758 )    

$

(113,274 )    

$

(1,056,580 )
                           

(1) Includes a $151.3 million goodwill impairment charge in the Core U.S. segment.

(2) Includes a $0.3 million restructuring charge offset by a $2.2 million litigation claims settlement.

(3) Includes a $1,170.0 million goodwill impairment charge in the Core U.S. segment.

(4) Includes a $2.2 million loss on the sale of Core U.S. stores and a $2.0 million restructuring charge.

(5) Includes a $22.5 million restructuring charge offset by a $2.2 million litigation claims settlement.

(6) Includes a $34.7 million write-down of smartphones.

(7)Includes a $7.5 million loss on the sale of Core U.S. and Canada stores, a $7.2 million charge related to the closure of Core U.S. and Mexico stores, $2.8 million of charges for start-up and warehouse closure expenses related to our sourcing and distribution initiative, a $2.0 million restructuring charge and $1.1 million of losses for other store sales and closures.

 
Rent-A-Center, Inc. and Subsidiaries
 
SEGMENT INFORMATION HIGHLIGHTS - UNAUDITED
               
               
Table 7       Three Months Ended December 31,     Year Ended December 31,
        2016     2015     2016     2015
Revenues                          
Core U.S.       $ 472,943     $ 573,768     $ 2,069,725     $ 2,371,823  
Acceptance Now         193,504       196,932       817,814       818,325  
Mexico         11,413       15,004       50,927       63,803  
Franchising         6,244       8,129       24,786       24,469  
Total revenues       $ 684,104     $ 793,833     $ 2,963,252     $ 3,278,420  
                                     
                                     
Table 8       Three Months Ended December 31,     Year Ended December 31,
        2016     2015     2016     2015
Gross profit                          
Core U.S.       $ 329,590     $ 407,876     $ 1,467,679    

$

1,644,840 (1)

Acceptance Now         102,889       105,787       422,381       420,980  
Mexico         8,071       9,833       35,549       42,354  
Franchising         2,171       2,879       9,440       9,935  
Total gross profit       $ 442,721     $ 526,375     $ 1,935,049     $ 2,118,109  
                           

(1) Includes a $34.7 million write-down of smartphones.

               
Table 9       Three Months Ended December 31,     Year Ended December 31,
        2016     2015     2016     2015
Operating (loss) profit                          
Core U.S.       $ (128,029 )(1)     $ (1,109,418 )(2)     $ (1,020 )(4)     $ (959,447 )(6)
Acceptance Now         19,417         28,842         105,925         123,971  
Mexico         (646 )       (1,157 )       (2,449 )(5)       (14,149 )(7)
Franchising         1,382         1,789         5,650         5,793  

Total segments

        (107,876 )       (1,079,944 )       108,106         (843,832 )
Corporate         (51,400 )       (40,808 )(3)       (174,702 )       (164,056 )(3)
Total operating loss       $ (159,276 )     $ (1,120,752 )     $ (66,596 )     $ (1,007,888 )
                           

(1) Includes a $151.3 million goodwill impairment charge and $0.3 million of restructuring charges primarily related to the closure of Core U.S stores and Acceptance Now locations, offset by a $2.2 million pre-tax gain related to a litigation claims settlement.

(2) Includes a $1,170.0 million goodwill impairment charge and a $2.2 million loss on the sale of Core U.S. stores.

(3) Includes a $2.0 million restructuring charge.

(4) Includes a $151.3 million goodwill impairment charge and a $20.2 million restructuring charge, offset by a $2.2 million pre-tax gain related to a litigation claims settlement.

(5) Includes $2.3 million of restructuring charges related to the closure of Mexico stores.

(6) Includes a $1,170.0 million goodwill impairment charge, a $7.5 million loss on the sale of Core U.S. and Canada stores, a $4.2 million charge related to the closure of Core U.S. stores, $2.8 million of charges for start-up and warehouse closure expenses related to our sourcing and distribution initiative and $1.1 million of losses for other store sales and closures.

(7) Includes a $3.0 million charge related to the closure of stores.

               
Table 10       Three Months Ended December 31,     Year Ended December 31,
        2016     2015     2016     2015
Depreciation, amortization and write-down of intangibles                          
Core U.S.       $

8,784 (1)

    $

11,560 (1)

    $

39,734(1)

    $

49,137(1)

Acceptance Now         829         946         3,309         3,334  
Mexico         630         1,109         3,179         5,160  
Franchising         44         45         177         185  
Total segments         10,287         13,660         46,399         57,816  
Corporate         9,571         6,920         34,057         22,904  
Total depreciation, amortization and write-down of intangibles       $ 19,858       $ 20,580       $ 80,456       $ 80,720  
                           

(1) We recorded goodwill impairment charges of $151.3 million and $1,170.0 million in the Core U.S. segment during the fourth quarters of 2016 and 2015, respectively, not included in the table above.

               
Table 11       Three Months Ended December 31,     Year Ended December 31,
        2016     2015     2016     2015
Capital expenditures                          
Core U.S.       $ 9,710     $ 9,342     $ 20,802     $ 21,739
Acceptance Now         873       724       2,330       2,473
Mexico         24       70       283       204
Total segments         10,607       10,136       23,415       24,416
Corporate         3,697       9,609       37,728       56,454
Total capital expenditures       $ 14,304     $ 19,745     $ 61,143     $ 80,870
                           

 

               
Table 12       On Rent at December 31,     Held for Rent at December 31,
        2016     2015     2016     2015
Rental merchandise, net                          
Core U.S.       $ 426,845     $ 540,004     $ 192,718     $ 215,327
Acceptance Now         354,486       350,046       7,489       5,000
Mexico         13,787       17,575       6,629       8,520
Total rental merchandise, net       $ 795,118     $ 907,625     $ 206,836     $ 228,847
                           

 

         
Table 13       December 31,
        2016     2015
Assets             Revised
Core U.S.       $ 872,551     $ 1,240,593
Acceptance Now         432,383       426,827
Mexico         31,415       38,898
Franchising         2,197       2,723

Total segments

     

$

1,338,546    

$

1,709,041
               

 

 
Rent-A-Center, Inc. and Subsidiaries
 
LOCATION ACTIVITY - UNAUDITED
         
Table 14       Three Months Ended December 31, 2016
        Core U.S.    

Acceptance Now
Staffed

   

Acceptance Now
Direct

    Mexico     Franchising     Total
Locations at beginning of period       2,469       1,373       495       130       231       4,698  
New location openings             70       17                   87  
Acquired locations remaining open                                      
Conversions             2       (2 )                  
Closed locations                                      
Merged with existing locations       (2 )     (14 )                       (16 )
Sold or closed with no surviving location       (4 )           (32 )           (2 )     (38 )
Locations at end of period       2,463       1,431       478       130       229       4,731  
Acquired locations closed and accounts merged with existing locations                                      
                                       
Table 15       Three Months Ended December 31, 2015
        Core U.S.    

Acceptance Now
Staffed

   

Acceptance Now
Direct

    Mexico     Franchising     Total
Locations at beginning of period       2,697       1,468       223       143       207       4,738  
New location openings             30       286             3       319  
Acquired locations remaining open                                      
Conversions       (18 )     (25 )     25             18        
Closed locations                                      
Merged with existing locations       (2 )     (29 )                       (31 )
Sold or closed with no surviving location       (5 )           (2 )           (1 )     (8 )
Locations at end of period       2,672       1,444       532       143       227       5,018  
Acquired locations closed and accounts merged with existing locations       6                               6  
                                       
Table 16       Year Ended December 31, 2016
        Core U.S.    

Acceptance Now
Staffed

   

Acceptance Now
Direct

    Mexico     Franchising     Total
Locations at beginning of period       2,672       1,444       532       143       227       5,018  
New location openings             171       67       1       2       241  
Acquired locations remaining open                               5       5  
Conversions             1       (2 )                 (1 )
Closed locations                                      
Merged with existing locations       (185 )     (185 )           (4 )     (1 )     (375 )
Sold or closed with no surviving location       (24 )           (119 )     (10 )     (4 )     (157 )
Locations at end of period       2,463       1,431       478       130       229       4,731  
Acquired locations closed and accounts merged with existing locations       3                               3  
                                       

 

         
Table 17       Year Ended December 31, 2015
        Core U.S.    

Acceptance Now
Staffed

   

Acceptance Now
Direct

    Mexico     Franchising     Total
Locations at beginning of period       2,824       1,406             177       187       4,594  
New location openings             161       505             11       677  
Acquired locations remaining open       5                               5  
Conversions       (40 )     (29 )     29             40        
Closed locations                                      
Merged with existing locations       (83 )     (94 )           (34 )           (211 )
Sold or closed with no surviving location       (34 )           (2 )           (11 )     (47 )
Locations at end of period       2,672       1,444       532       143       227       5,018  
Acquired locations closed and accounts merged with existing locations       34                               34  

Contact:

Maureen Short
Rent-A-Center, Inc.
972-801-1899
Interim Chief Financial Officer
maureen.short@rentacenter.com

SOURCE Rent-A-Center, Inc.

###

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