RENT-A-CENTER, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Reconciliation of undiscounted operating lease liabilities to the present value operating lease liabilities at ~~June 30, 2019:~~March 31, 2020:


(In thousands)	Operating Leases
2020	$	87,829
2021	91,163
2022	62,095
2023	35,677
2024	19,927
Thereafter	23,539
Total undiscounted operating lease liabilities	320,230
Less: Interest	(42,478)
Total present value of operating lease liabilities	$	277,752

(In thousands) Operating Leases
2019 $ 61,288
2020 104,264
2021 72,264
2022 43,637
2023 19,536
Thereafter 5,893
Total undiscounted operating lease liabilities 306,882
Less: Interest (35,247 )
Total present value of operating lease liabilities $ 271,635

In ~~accordance with ASC 840, future minimum rental payments~~response to the COVID-19 pandemic and related government restrictions negatively impacting our operations, subsequent to March 31, 2020, we began renegotiating certain store lease agreements to obtain rent relief in the near term, in order to help offset the negative financial impacts of COVID-19. As of May 11, 2020, we have renegotiated approximately 440 lease agreements, receiving near term rent abatements of approximately $2.3 million and rent deferrals of approximately $1.8 million. On April 10, 2020, the Financial Accounting Standards Board ("FASB") staff issued a question-and-answer document providing guidance for lease concessions provided to lessees in response to the effects of COVID-19. Such guidance allows lessees to make an election not to evaluate whether a lease concession provided by a lessor should be accounted for as a lease modification in the event the concession does not result in a substantial increase in the rights of the lessor or the obligations of the lessee. We intend to elect this practical expedient in our accounting for any lease concessions provided for our store lease agreements.

Note 6 - Income Taxes

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act”), which includes modifications to the limitation on business interest expense deductions and net operating ~~leases with remaining lease terms~~loss provisions. The effective tax rate was (10.6)% for the three months ended March 31, 2020, compared to 17.1% in ~~excess~~2019, primarily as a result of ~~one year,~~the tax benefit of net operating loss carrybacks at ~~December 31, 2018:~~a 35% tax rate that became available as a result of the CARES Act.

(In thousands) Operating Leases
2019 $ 145,345
2020 116,785
2021 80,362
2022 47,417
2023 16,460
Thereafter 2,280
Total future minimum rental payments 408,649

Note 57 - Senior Debt,

Until August 5, 2019, we were party to a Credit Agreement with BBVA Compass Bank, HSBC, and SunTrust Bank, as syndication agents, JPMorgan Chase Bank, N.A., as administrative agent (the "Agent"), and the several lenders from time to time parties thereto, dated March 19, 2014, as amended on February 1, 2016, September 30, 2016, March 31, 2017, June 6, 2017, and December 12, 2018 (the “Fifth Amendment”) and as so amended, (the "Prior Credit Agreement"), which provided prior to its termination a senior credit facility consisting of a $200 million revolving credit facility (the "Prior Revolving Facility").

There were no outstanding borrowings under the Prior Revolving Facility at June 30, 2019 or December 31, 2018. Total unamortized debt issuance costs reported in the Condensed Consolidated Balance Sheet at June 30, 2019 and December 31, 2018 were $1.4 million and $2.6 million, respectively. The Prior Revolving Facility was scheduled to mature on ~~December 31, 2019~~. We also utilized the Prior Revolving Facility for the issuance of letters of credit. As of June 30, 2019, issued letters of credit under the Prior Revolving Facility amounted to $92 million in the aggregate.

Borrowings under the Prior Revolving Facility bore interest at varying rates equal to either the Eurodollar rate plus 1.50% to 3.00%, or the prime rate plus 0.50% to 2.00% (ABR), at our election. The margins on the Eurodollar loans and on the ABR loans for borrowings under the Prior Revolving Facility were 1.75% and 0.75%, respectively, at June 30, 2019. A commitment fee equal to 0.30% to 0.50% of the unused portion of the Prior Revolving Facility was payable quarterly and fluctuated dependent upon increases or decreases in our Consolidated Total Leverage Ratio as of the end of the previous quarter as defined by a pricing grid included in the Prior Credit Agreement. The commitment fee for the second quarter of 2019 was $0.6 million, equal to 0.40% of the unused portion of the Prior Revolving Facility based on our Total Leverage Ratio as of December 31, 2018.

In connection with entering into the Fifth Amendment to the Prior Credit Agreement, we recorded a write-down of previously unamortized debt issuance costs of approximately $0.5 million in the fourth quarter of 2018. In addition, we paid arrangement and amendment fees to the Agent and the lenders that provided their consent to the Fifth Amendment of approximately $2.1 million, which were capitalized in the fourth quarter of 2018 and will be amortized to interest expense over the remaining term of the Prior Credit Agreement. net

On August 5, 2019, ~~(the "Closing Date")~~ we entered into a new a Term Loan Credit Agreement (the “Term Loan Credit Agreement”) providing for a seven-year $200 million senior secured term loan facility and an Asset Based Loan Credit Agreement (the “ABL Credit Agreement”) providing a five-year asset-based revolving credit facility (the “ABL Credit Facility”) with commitments of $300 million, the proceeds of which were used for the redemption of all of our outstanding senior notes.

The amount outstanding under the Term Loan Credit Agreement was $199.0 million at March 31, 2020. The amounts outstanding and available under our ABL Credit Agreement at March 31, 2020 were $163.0 million and $48.2 million, respectively.

Proceeds from the Term Loan Credit Agreement were net of original issue discount of $2.0 million upon issuance from the lenders. In addition, in connection with the closing of the Term Loan Credit Agreement and the ABL Credit Agreement, we incurred approximately $6.3 million in debt issuance costs. The original issue discount and debt issuance costs will be amortized over the remaining terms of the respective credit agreements. As of March 31, 2020, the total unamortized balance of debt issuance costs relating to our senior debt and original issue discount reported in the Condensed Consolidated Balance Sheet were $6.4 million and $1.8 million, respectively.

We also utilize the ABL Credit Facility for the issuance of letters of credit. As of March 31, 2020, we have issued letters of credit in the aggregate outstanding amount of $88.8 million.

In March 2020, as a precautionary measure in response to negative impacts to our operations stemming from the COVID-19 pandemic, we drew down approximately $118.0 million against our ABL Credit Facility to enhance our financial flexibility and increase our available cash on hand. The proceeds are available to be used for working capital, general corporate and other purposes, as needed.

1113

RENT-A-CENTER, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

$300 million, the proceeds of which were used, in part, to prepay in full and terminate commitments under the Prior Credit Agreement (the "Refinancing"). In connection with the Refinancing, we irrevocably deposited $551,019,061.81, the redemption price for all of our outstanding senior notes, and the indentures under which the senior notes were issued were satisfied and discharged. The senior notes will be redeemed on August 15, 2019, at a price equal to 100% of their principal amount plus accrued but unpaid interest.

Term Loan Credit Agreement

The Term Loan Credit Agreement, which matures on August 5, 2026, 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. Interest on the Term Loan Credit Agreement will accrue at the Eurodollar rate plus an applicable margin equal to 4.50%. The margin on the Term Loan Credit Agreement was 5.44% at March 31, 2020.

The Term Loan Credit Agreement permits the Company to prepay the term loans, in whole or in part, without penalty on or after the six-month anniversary of the Closing Date. It also permits the Company to incur incremental term loans in an aggregate amount equal to $150 million plus the amount of voluntary prepayments of the term loans and an unlimited amount subject to a pro forma consolidated senior secured leverage ratio of not greater than 2.00 to 1.00, subject to certain other conditions.

The obligations under the Term Loan Credit Agreement are guaranteed by certain of our subsidiaries. The Term Loan Credit Agreement and the guarantees are secured on a first-priority basis by substantially all of the tangible and intangible assets of the ~~company~~Company and the guarantors, other than collateral subject to a first-priority lien under the ABL Credit Agreement, consisting of, among other things, accounts receivable, inventory and bank accounts (and funds on deposit therein), in which the Term Loan Credit Agreement and the guarantees have a second-priority security interest, in each case, subject to certain exceptions.

The Term Loan Credit Agreement contains covenants that are usual and customary for facilities and transactions of this type and that, among other things, restrict the ability of the ~~company~~Company and its restricted subsidiaries to:

•create certain liens and enter into certain sale and lease-back ~~transactions;~~transactions, excluding the sale and lease-back of the Company headquarters;

•create, assume, incur or guarantee certain indebtedness;

~~pay dividends or make other distributions on, or repurchase or redeem, the company’s capital stock or certain other debt;~~

~~make other restricted payments; and~~

•consolidate or merge with, or convey, transfer or lease all or substantially all of the ~~company’s~~Company’s and its restricted subsidiaries’ assets, to another ~~person.~~person

•pay dividends or make other distributions on, or repurchase or redeem, the Company’s capital stock or certain other debt; and

•make other restricted payments.

These covenants are subject to a number of ~~other~~ limitations and exceptions set forth in the Term Loan Credit Agreement. We are currently permitted to pay dividends and repurchase the Company's common stock without limitation.

The Term Loan Credit Agreement 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 the Company and its significant subsidiaries.

ABL Credit Agreement

The ABL Credit Facility will mature on August 5, 2024. The Borrowers (as defined in the ABL Credit Agreement) may borrow only up to the lesser of the level of the then-current ~~borrowing base~~Borrowing Base and the committed maximum borrowing capacity of $300 million. The Borrowing Base is tied to the Eligible Installment Sales Accounts, Inventory and Eligible Rental Contracts, reduced by Reserves, as defined in the ABL Credit Agreement. We provide to the Agent information necessary to calculate the Borrowing Base within 30 days of the end of each calendar month, unless liquidity is less than 15% of the maximum borrowing capacity of the ABL Credit Agreement or $45 million, in which case we must provide weekly information.

Interest is payable on the ABL Credit Facility at a fluctuating rate of interest determined by reference to the Eurodollar rate plus an applicable margin of 1.50% to 2.00%. The margin on the ABL Credit Facility was 2.50% at March 31, 2020. 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 ABL Credit Agreement. The commitment fee at March 31, 2020 was 0.375%. We paid $0.6 million of commitment fees during the first quarter of 2020.

Letters of credit are limited to the lesser of (x) $150 million, subject to certain limitations, and (y) the aggregate unused availability then in effect.

Subject to certain conditions, the ABL Credit Facility may be expanded by up to $100 million in additional commitments, subject to a pro forma fixed charge coverage ratio being greater than 1.10 to 1.00.

The obligations under the ABL Credit Agreement are guaranteed by the ~~company~~Company and certain of the ~~company’s~~Company’s subsidiaries. The ABL Credit Agreement and the guarantees are secured on a first-priority basis on all our and the guarantors’ accounts receivable, inventory and bank accounts (and funds on deposit therein) and a second-priority basis on all of the tangible and

RENT-A-CENTER, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

intangible assets (second in priority to the liens securing the Term Loan Credit Agreement) of such persons, in each case, subject to certain exceptions.

The ABL Credit Agreement contains covenants that are usual and customary for facilities and transactions of this type and are substantially the same as covenants in the Term Loan Credit Agreement. The ABL Credit Facility also requires the maintenance of a Consolidated Fixed Charge Coverage Ratio (as defined in the ABL Credit Agreement) of 1.10 to 1.00 at the end of each fiscal

~~RENT-A-CENTER, INC. AND SUBSIDIARIES~~

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

~~(Unaudited)~~

quarter when either (i) certain specified events of default have occurred and are continuing or (ii) availability is less than or equal to the greater of $33.75 million and 15% of the line cap then in effect. The Fixed Charge Coverage Ratio as of March 31, 2020 was 1.50 to 1.00.

The ABL Credit Agreement provides for customary events of default that are substantially the same as events of default in the Term Loan Credit Agreement.

~~Liquidity~~

~~Our primary liquidity requirements are~~The table below shows the scheduled maturity dates of our outstanding debt at March 31, 2020 for rental merchandise purchases. Other capital requirements include expenditures for property assets and debt service. Our primary sources of liquidity have been cash provided by operations. We also utilize our ABL Credit Facility for the issuance of letters of credit, as well as to manage normal fluctuations in operational cash flow caused by the timing of cash receipts. In that regard, we may from time to time draw funds under our ABL Credit Facility for general corporate purposes. Amounts are drawn as needed due to the timing of cash flows and are generally paid down as cash is generated by our operating activities. We believe cash flow generated from operations and availability under our ABL Credit Facility, will be sufficient to fund our operations during the next 12 months.

~~Note 6 - Senior Notes~~

On November 2, 2010, we issued $300 million in senior unsecured notes due November 2020, bearing interest at 6.625%, pursuant to an indenture dated November 2, 2010, among Rent-A-Center, Inc., its subsidiary guarantors and The Bank of New York Mellon Trust Company, as trustee. A portioneach of the proceeds of this offering were used to repay approximately $200.0 million of outstanding term debt under a prior credit agreement. The remaining net proceeds were used to repurchase shares of our common stock. The principal amount of the 6.625% notes outstanding as of June 30, 2019 andyears ending December ~~31, 2018, was $292.7 million, reduced by $0.8 million and $1.2 million of unamortized issuance costs, respectively.~~31:

On May 2, 2013, we issued $250 million in senior unsecured notes due May 2021, bearing interest at 4.75%, pursuant to an indenture dated May 2, 2013, among Rent-A-Center, Inc., its subsidiary guarantors and The Bank of New York Mellon Trust Company, as trustee. A portion of the proceeds of this offering were used to repurchase shares of our common stock under a $200.0 million accelerated stock buyback program. The remaining net proceeds were used to repay outstanding revolving debt under a prior credit agreement. The principal amount of the 4.75% notes outstanding as of June 30, 2019 and December 31, 2018, was $250.0 million, reduced by $1.2 million and $1.5 million of unamortized issuance costs, respectively.

Certain of Rent-A-Center's subsidiaries fully, jointly and severally, and unconditionally guaranteed the obligations of Rent-A-Center with respect to the 6.625% notes and the 4.75% notes. The only direct or indirect subsidiaries of Rent-A-Center that were not guarantors were minor subsidiaries. There were no restrictions on the ability of any of the subsidiary guarantors to transfer funds to Rent-A-Center in the form of loans, advances or dividends, except as provided by applicable law.

On July 15, 2019, Rent-A-Center instructed the trustee under the indentures governing the 6.625% and 4.75% senior notes to issue a conditional notice of full redemption to the holders of the outstanding 6.625% and 4.75% senior notes. On August 5, 2019, in connection with the Refinancing, Rent-A-Center irrevocably deposited the redemption price for the 6.625% and 4.75% senior notes with the trustee, and the indentures were satisfied and discharged. The 6.625% and 4.75% senior notes will be redeemed on August 15, 2019, at a price equal to 100% of their principal amount plus accrued and unpaid interest to, but excluding, the redemption date. As a result, Rent-A-Center and its subsidiary guarantors have been released from their respective obligations under the 6.625% and 4.75% senior notes as of August 5, 2019.


(in thousands)	Term Loan		ABL Credit Facility		Total
2020	$	1,500	$	—	$	1,500
2021	2,000		—		2,000
2022	2,000		—		2,000
2023	2,000		—		2,000
2024	2,000		163,000		165,000
Thereafter	189,500		—		189,500
Total senior debt	$	199,000	$	163,000	$	362,000

Note 78 - 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. There were no changes in the methods and assumptions used in measuring fair value during the period.

At ~~June 30, 2019,~~March 31, 2020, our financial instruments include cash and cash equivalents, receivables, payables, and ~~senior notes.~~outstanding borrowings against our ABL Credit Facility and Term Loan Facility. The carrying amount of cash and cash equivalents, receivables and payables approximates fair value at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, 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, the carrying value of outstanding borrowings approximates their fair value.

Note 9 - Other Charges

Store Consolidations. During the first three months of 2020, we closed 14 Rent-A-Center Business stores, resulting in pre-tax charges of $0.5 million in lease impairment charges, and $0.3 million in other miscellaneous shutdown and holding costs. During the first three months of 2019, we closed 28 Rent-A-Center Business stores, resulting in pre-tax charges of $0.5 million in lease impairment, $0.5 million in other miscellaneous shutdown and holding costs, and $0.3 million in disposal of fixed assets.

Cost Savings Initiatives. During 2018, we began the execution of multiple cost savings initiatives, including reductions in overhead and supply chain. In connection with these initiatives, we recorded pre-tax charges during the three months ended March 31, 2020 consisting of $0.3 million in lease impairment charges, and $0.2 million in other miscellaneous shutdown and holding costs. Costs incurred during the first three months of 2019 related to these initiatives included pre-tax charges of $4.4 million in lease impairment charges, $3.0 million in severance and other payroll-related costs, $1.1 million in other miscellaneous shutdown costs, and $0.2 million in disposal of fixed assets.

1315

RENT-A-CENTER, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

~~The fair value of our senior notes was based on Level 1 inputs and was as follows at June 30, 2019 and December 31, 2018:~~

June 30, 2019 December 31, 2018
(in thousands) Carrying Value Fair Value Difference Carrying Value Fair Value Difference
6.625% senior notes $ 292,740
$ 292,740
$ —
$ 292,740
$ 285,509
$ (7,231 )
4.75% senior notes 250,000
248,750
(1,250 ) 250,000
239,050
(10,950 )
Total senior notes $ 542,740
$ 541,490
$ (1,250 ) $ 542,740
$ 524,559
$ (18,181 )

~~Note 8 - Other (Gains) and Charges~~

~~Cost Savings Initiatives.~~ During 2018, we began execution of multiple cost savings initiatives, including reductions in overhead and supply chain, resulting in pre-tax charges during the first half of 2019 consisting of $5.0 million in lease impairment charges, $2.8 million in severance and other payroll-related costs, $1.6 million in other miscellaneous shutdown costs, and $0.4 million in disposal of fixed assets. Costs incurred during the first six months of 2018 related to these initiatives included pre-tax charges of $6.8 million in contract termination fees, $6.2 million in severance and other payroll-related costs, $1.9 million in legal and advisory fees, $1.0 million in other miscellaneous shutdown costs, $0.9 million in lease obligation costs, $0.4 million related to the write-down of capitalized software, and $0.1 million in disposal of fixed assets.

~~Store Consolidation Plan.~~ During the first half of 2019, we closed 66 Core U.S. stores, resulting in pre-tax charges of $2.3 million in lease impairment charges, $0.9 million in other miscellaneous shutdown costs, $0.7 million in disposal of fixed assets, and $0.3 million in severance and other payroll-related costs. During the first six months of 2018, we closed 109 Core U.S. stores and 8 locations in Mexico, resulting in pre-tax charges of $8.7 million, consisting of $7.0 million in lease obligation costs, $1.0 million in disposal of fixed assets, $0.5 million in other miscellaneous shutdown costs, and $0.2 million in severance and other payroll-related costs.

~~Vintage Settlement.~~ On April 22, 2019, we agreed to settle (the "Vintage Settlement") all litigation with Vintage Rodeo Parent, LLC, Vintage Rodeo Acquisition, Inc., Vintage Capital Management, LLC (collectively, "Vintage Capital") and B. Riley Financial, Inc. ("B. Riley") relating to our termination of the Agreement and Plan of Merger (the "Merger Agreement") among Vintage Rodeo Parent, LLC, Vintage Rodeo Acquisition, Inc. and Rent-A-Center, Inc. In the Vintage Settlement, we received a payment of $92.5 million in cash in May 2019, of which we retained net pre-tax proceeds of approximately $80 million following payment of all remaining costs, fees and expenses relating to the termination (the "Vintage Settlement Proceeds"). The Vintage Settlement was recorded as a pre-tax gain upon receipt.

~~Write-down of Capitalized Software.~~ ~~During the first six months of 2018 we discontinued certain IT software projects and as a result incurred pre-tax charges of $1.9 million, related to the write-down of capitalized assets.~~

Activity with respect to other charges for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 is summarized in the below table:


(in thousands)	Accrued Charges at December 31, 2019		Charges & Adjustments		Payments & Adjustments		Accrued Charges at March 31, 2020
Cash charges:
Labor costs⁽¹⁾	$	738	$	141	$	(56)	$	823
Lease obligation costs⁽²⁾	—		173		(173)		—

Other miscellaneous	—		673		(673)		—
Total cash charges	$	738	987		$	(902)	$	823
Non-cash charges:

Asset impairments⁽³⁾			886
Other⁽⁴⁾			(170)
Total other charges			$	1,703

(in thousands) Accrued Charges at December 31, 2018 Charges & Adjustments Payments & Adjustments Accrued Charges at June 30, 2019
Cash charges:
Labor reduction costs $ 7,623
$ 3,145
$ (8,525 ) $ 2,243
Lease obligation costs⁽¹⁾
4,882
—
(4,882 ) —
Other miscellaneous —
2,565
(2,565 ) —
Total cash charges $ 12,505
5,710
$ (15,972 ) $ 2,243
Non-cash charges:
Asset impairments⁽²⁾
8,283

Other⁽³⁾
(58,160 )
Total other (gains) and charges $ (44,167 )

⁽¹⁾ ~~Upon adoption of ASU 2016-02, previously accrued~~Includes payments made to furloughed employees in Puerto Rico in response to the COVID-19 pandemic.

⁽²⁾ Includes lease ~~obligation costs~~expense related to ~~discontinued operations were eliminated~~closed stores and ~~are now reflected as an adjustment~~idled vehicles due to ~~our operating lease right-of-use assets~~jurisdictional ordinances in ~~our condensed consolidated balance sheet.~~response to the COVID-19 pandemic.

⁽²⁾⁽³⁾ ~~Includes~~Asset impairments primarily includes impairments of operating lease right-of-use assets and other property assets related to the closure of RTO stores and ~~our~~previously closed product service centers, as well as a write-down of capitalized software in the first ~~half~~three months of ~~2019.~~2020.

⁽³⁾⁽⁴⁾ Other primarily includes the ~~Vintage Settlement Proceeds, offset by the Blair class action settlement (refer to Note 11 for additional details), incremental legal and professional fees~~receipt of insurance proceeds related to ~~the termination of the Merger Agreement, and state tax audit assessments.~~Hurricane Maria in 2017.

~~RENT-A-CENTER, INC. AND SUBSIDIARIES~~

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

~~(Unaudited)~~

Note 910 - 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. All operating segments offer merchandise from ~~four~~certain basic product categories: furniture, consumer electronics, appliances, computers, ~~furniture~~ and accessories. ~~Our Core U.S.~~Smartphones are also offered in our Company owned stores and ~~Franchising segments also offer smartphones.~~franchise locations. In addition, in the Rent-A-Center Business segment, we have recently expanded into other product categories including, tools, tires, jewelry and other accessories.

Segment information for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ is as follows:


	Three Months Ended March 31,
(in thousands)	2020		2019
Revenues
Rent-A-Center Business	$	454,965	$	474,057
Preferred Lease	216,127		196,522
Mexico	13,546		13,345
Franchising	17,301		12,770
Total revenues	$	701,939	$	696,694

Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2019 2018 2019 2018
Revenues
Core U.S. $ 451,096
$ 455,720
$ 925,153
$ 937,761
Acceptance Now 176,389
179,011
372,911
375,997
Mexico 13,551
12,307
26,896
24,338
Franchising 14,889
8,692
27,659
15,677
Total revenues $ 655,925
$ 655,730
$ 1,352,619
$ 1,353,773


	Three Months Ended March 31,
(in thousands)	2020		2019
Gross profit
Rent-A-Center Business	$	317,558	$	324,640
Preferred Lease	88,315		86,328
Mexico	9,528		9,269
Franchising	4,777		4,629
Total gross profit	$	420,178	$	424,866

Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2019 2018 2019 2018
Gross profit
Core U.S. $ 313,871
$ 325,219
$ 638,511
$ 661,460
Acceptance Now 80,380
86,050
166,708
174,855
Mexico 9,411
8,549
18,680
16,871
Franchising 4,409
4,068
9,038
7,678
Total gross profit $ 408,071
$ 423,886
$ 832,937
$ 860,864
16

Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2019 2018 2019 2018
Operating profit
Core U.S. $ 64,925
$ 43,527
$ 118,236
$ 71,914
Acceptance Now 22,734
29,157
44,247
44,587
Mexico 1,474
887
2,693
1,384
Franchising 1,803
1,909
3,581
3,165
Total segments 90,936
75,480
168,757
121,050
Corporate 38,893
(48,329 ) (21,579 ) (104,169 )
Total operating profit $ 129,829
$ 27,151
$ 147,178
$ 16,881

Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2019 2018 2019 2018
Depreciation and amortization
Core U.S. $ 5,110
$ 6,440
$ 10,582
$ 13,266
Acceptance Now 313
432
661
867
Mexico 95
273
235
617
Franchising 9
44
39
88
Total segments 5,527
7,189
11,517
14,838
Corporate 9,594
10,239
19,377
20,490
Total depreciation and amortization $ 15,121
$ 17,428
$ 30,894
$ 35,328

RENT-A-CENTER, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)


	Three Months Ended March 31,
(in thousands)	2020		2019
Operating profit
Rent-A-Center Business	$	67,943	$	53,311
Preferred Lease	18,222		21,513
Mexico	967		1,219
Franchising	2,519		1,778
Total segments	89,651		77,821
Corporate	(40,776)		(60,472)
Total operating profit	$	48,875	$	17,349

Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2019 2018 2019 2018
Capital expenditures
Core U.S. $ 907
$ 4,325
$ 1,465
$ 9,215
Acceptance Now 54
35
101
80
Mexico 27
35
30
38
Total segments 988
4,395
1,596
9,333
Corporate 1,592
2,651
3,492
6,362
Total capital expenditures $ 2,580
$ 7,046
$ 5,088
$ 15,695

(in thousands) June 30, 2019 December 31, 2018
On rent rental merchandise, net
Core U.S. $ 392,904
$ 424,829
Acceptance Now 216,988
242,978
Mexico 15,973
16,001
Total on rent rental merchandise, net $ 625,865
$ 683,808

(in thousands) June 30, 2019 December 31, 2018
Held for rent rental merchandise, net
Core U.S. $ 107,778
$ 117,294
Acceptance Now 982
1,207
Mexico 4,493
5,161
Total held for rent rental merchandise, net $ 113,253
$ 123,662

(in thousands) June 30, 2019 December 31, 2018
Assets by segment
Core U.S. $ 922,482
$ 714,914
Acceptance Now 281,835
312,151
Mexico 36,605
29,321
Franchising 7,159
4,287
Total segments 1,248,081
1,060,673
Corporate 496,132
336,244
Total assets $ 1,744,213
$ 1,396,917


	Three Months Ended March 31,
(in thousands)	2020		2019
Depreciation and amortization
Rent-A-Center Business	$	4,957	$	5,472
Preferred Lease	527		348
Mexico	93		140
Franchising	3		30
Total segments	5,580		5,990
Corporate	9,333		9,783
Total depreciation and amortization	$	14,913	$	15,773


	Three Months Ended March 31,
(in thousands)	2020		2019
Capital expenditures
Rent-A-Center Business	$	980	$	558
Preferred Lease	84		47
Mexico	37		3

Total segments	1,101		608
Corporate	8,050		1,900
Total capital expenditures	$	9,151	$	2,508


(in thousands)	March 31, 2020		December 31, 2019
On rent rental merchandise, net
Rent-A-Center Business	$	400,604	$	411,482
Preferred Lease	246,672		268,845
Mexico	13,328		16,943
Total on rent rental merchandise, net	$	660,604	$	697,270


(in thousands)	March 31, 2020		December 31, 2019
Held for rent rental merchandise, net
Rent-A-Center Business	$	115,698	$	131,086
Preferred Lease	715		1,254
Mexico	4,517		6,078
Total held for rent rental merchandise, net	$	120,930	$	138,418

RENT-A-CENTER, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)


(in thousands)	March 31, 2020		December 31, 2019
Assets by segment
Rent-A-Center Business	$	898,795	$	953,151
Preferred Lease	334,440		357,859
Mexico	28,086		33,707
Franchising	9,491		11,095
Total segments	1,270,812		1,355,812
Corporate	336,247		226,986
Total assets	$	1,607,059	$	1,582,798

Note 1011 - Common Stock and Stock-Based Compensation

In March 2020, our Board of Directors implemented a stock repurchase program, which authorizes the purchase, from time to time, in the open market and privately negotiated transactions, of up to an aggregate of $75 million of Rent-A-Center common stock, superseding our prior authorization. During the three months ended March 31, 2020, the Company repurchased 1,461,177 shares of its common stock for an aggregate purchase price of $26.5 million, which includes shares with an aggregate purchase price of $16.5 million under the March 2020 authorization. NaN shares were repurchased during the three months ending March 31, 2019.

As noted in Note 7 above, in response to COVID-19, we have proactively taken measures to reduce certain cash flow uses, including temporarily suspending additional share repurchases.

We recognized ~~$2.0~~$3.0 million and ~~$1.1~~$0.7 million in ~~pre-tax~~ compensation expense related to stock options and restricted stock units during the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $2.7 million and $3.0 million during the six months ended June 30, 2019 and 2018,~~ respectively. During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, we granted approximately ~~255,000~~303,000 stock options, ~~278,000~~268,000 market-based performance restricted stock units and ~~193,000~~181,000 time-vesting restricted stock units. The stock options granted were valued using a Black-Scholes pricing model with the following assumptions: an expected volatility of ~~48.28%~~45.62% to ~~55.17%~~51.62%, a risk-free interest rate of ~~2.30%~~1.14% to ~~2.34%~~1.72%, an expected dividend yield of 4.02% to 4.68%, and an expected term of 3.50 to 5.75 years. The weighted-average exercise price of the options granted during the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 was ~~$20.87~~$7.32 and the weighted-average grant-date fair value was ~~$9.33.~~$25.74. Performance-based restricted stock units are valued using a Monte Carlo simulation. Time-vesting restricted stock units are valued using the closing price on the trading day immediately preceding the day of the grant. The weighted-average grant date fair value of the market-based performance and time-vesting restricted stock units granted during the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 was ~~$15.83~~$30.24 and ~~$11.42,~~$25.43, respectively.

~~RENT-A-CENTER, INC. AND SUBSIDIARIES~~

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

~~(Unaudited)~~

Note 1112 - Contingencies

From time to time, the Company, along with ~~our~~its subsidiaries, is party to various legal proceedings and governmental inquiries arising in the ordinary course of business. We reserve for loss contingencies that are both probable and reasonably estimable. We regularly monitor developments related to these legal proceedings and inquiries, and review the adequacy of our legal reserves on a quarterly basis. We do not expect these losses to have a material impact on our condensed consolidated financial statements if and when such losses are incurred.

We are subject to unclaimed property audits by states in the ordinary course of business. The property subject to review in the audit process include unclaimed wages, vendor payments and customer refunds. State escheat laws generally require entities to report and remit abandoned and unclaimed property to the state. Failure to timely report and remit the property can result in assessments that could include interest and penalties, in addition to the payment of the escheat liability itself. We routinely remit escheat payments to states in compliance with applicable escheat laws.

~~Blair v. Rent-A-Center, Inc.~~ California Attorney General.~~This matter is~~ The California Attorney General (“CAG”) previously issued an investigative subpoena to the Company seeking information with respect to the Company’s Acceptance Now business practices (now part of the Preferred Lease segment). The request for documents and information was sought in connection with a ~~state-wide class action complaint originally filed on~~broader investigation of the rent-to-own industry in California. Since receiving such demand, the Company has cooperated with the CAG in connection with its investigation and made several productions of requested documents. In March ~~13, 2017 in~~2020, the ~~Federal District Court for the Northern District~~CAG put forth proposed settlement terms to address alleged violations of ~~California.~~California law. The ~~complaint alleges various claims, including~~proposed settlement terms include civil penalties, disgorgement of certain revenues, additional training requirements, and recommended changes to Acceptance Now business practices. We believe that our cash sales and total rent to own prices exceed the pricing permitted under the Karnette Rental-Purchase Act. Following a court-ordered mediation on March 28, 2019, we reached an agreement in principle to settle this matter for a total of $13 million, including attorneys’ fees. The settlement is in the documentation process and is subject to approval by the court. We have denied any liability in the settlement and agreed to the settlement in order to avoid additional expensive, time-consuming litigation. We recorded the pre-tax charge for this settlement in the first quarter of 2019.

~~Vintage Rodeo Parent, LLC, Vintage Rodeo Acquisition, Inc. and Vintage Capital Management, LLC, and B. Riley Financial, Inc. v. Rent-A-Center, Inc.~~ As announced on April 22, 2019, we agreed to settle all litigation with Vintage Capital and B. Riley relating to our termination of the Merger Agreement. In the settlement, we received a payment of $92.5 million in cash in May 2019. The Vintage Settlement was recorded as a pre-tax gain upon receipt.

~~Velma Russell v. Acceptance Now.~~This purported class action arising out of calls made by Acceptance Now to customers’ reference (s) was filed on January 29, 2019 in Massachusetts state court. Specifically, plaintiffs seek to certify a class representing any references of customers (within the state of Massachusetts) during the 4 years prior to the filing date that were contacted by Acceptance Now more frequently during a 12 month period than is permitted by Massachusetts state law. The plaintiffsbusiness practices are seeking injunctive relief and statutory damages of $25 per reference which may be tripled to $75 per reference. References are not parties to our consumer arbitration agreement. We operate 12 Acceptance Now locations in Massachusetts. We intend to vigorously defend these claims; however, we cannot assure you that we will be found to have no liability in this matter.

~~Federal Trade Commission civil investigative demand.~~ In April 2019, along with other rent-to-own companies, we received a civil investigative demand from the Federal Trade Commission ("FTC") seeking information regarding certain transactions involving the purchase and sale of customer lease agreements, and whether such transactions violated the FTC Act. Although we believe such transactions were in compliance with California law and are continuing to discuss resolution of the ~~FTC Act, this~~ inquiry ~~could lead to an enforcement action and/or a consent order, and substantial costs. The Company is in the process of responding to this inquiry from the FTC.~~

RENT-A-CENTER, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

with the CAG. At this point, while we cannot predict the ultimate outcome, we do not believe any such outcome will have a material impact on the Company.

Note 1213 - Earnings ~~(Loss)~~ Per Common Share

Summarized basic and diluted earnings per common share were calculated as follows:


	Three Months Ended March 31,
(in thousands, except per share data)	2020		2019
Numerator:
Net earnings	$	49,292	$	7,323
Denominator:
Weighted-average shares outstanding	54,774		53,930
Effect of dilutive stock awards	1,378		1,566
Weighted-average dilutive shares	56,152		55,496

Basic earnings per common share	$	0.90	$	0.14
Diluted earnings per common share	$	0.88	$	0.13
Anti-dilutive securities excluded from diluted loss per common share:
Anti-dilutive restricted share units	148		—
Anti-dilutive performance share units	519		—
Anti-dilutive stock options	1,357		1,019

Three Months Ended June 30, Six Months Ended June 30,
(in thousands, except per share data) 2019 2018 2019 2018
Numerator:
Net earnings (loss) $ 94,455
$ 13,753
$ 101,778
$ (6,090 )
Denominator:
Weighted-average shares outstanding 54,153
53,450
54,042
53,428
Effect of dilutive stock awards⁽¹⁾
1,553
845
1,559
—
Weighted-average dilutive shares 55,706
54,295
55,601
53,428

Basic earnings (loss) per common share $ 1.74
$ 0.26
$ 1.88
$ (0.11 )
Diluted earnings (loss) per common share $ 1.70
$ 0.25
$ 1.83
$ (0.11 )
Anti-dilutive securities excluded from diluted loss per common share:
Anti-dilutive restricted share units —
—
—
797
Anti-dilutive performance share units 263
222
263
1,172
Anti-dilutive stock options 1,107
2,411
1,123
2,801


⁽¹⁾ 19	~~There was no dilutive effect to the loss per common share for the six months ended June 30, 2018 due to the net loss incurred for respective period.~~

RENT-A-CENTER, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “seeks” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could,” “may,” “aims,” “intends,” or ~~“projects.”~~“projects” and includes statements regarding the potential effects of the COVID-19 pandemic on the Company's business, operations, financial performance and prospects. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. These forward-looking statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Our actual future results and trends may differ materially depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Given these risks and uncertainties, you should not rely on forward-looking statements as a prediction of actual results. Any or all of the forward-looking statements contained in this Quarterly Report on Form 10-Q and any other public statement made by us, including by our management, may turn out to be incorrect. We are including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise. Factors that could cause or contribute to these differences include, but are not limited to:

•the impact of the COVID-19 pandemic and related federal, state, and local government restrictions, including adverse changes in such restrictions further limiting our ability to operate or prolonging their duration, and the potential for a recession resulting from such matters;

•the general strength of the economy and other economic conditions affecting consumer preferences and spending;

•factors affecting the disposable income available to our current and potential customers;

•changes in the unemployment rate;

•capital market conditions, including availability of funding sources for us;

•changes in our credit ratings;

•difficulties encountered in improving the financial and operational performance of our business ~~segments, including our ability to execute our franchise strategy;~~segments;

•risks associated with pricing changes and strategies being deployed in our businesses;

•our ability to continue to realize benefits from our initiatives regarding cost-savings and other EBITDA enhancements, efficiencies and working capital improvements;

•our ability to continue to effectively ~~operate and~~ execute our strategic initiatives;

•failure to manage our store labor and other store expenses;

•disruptions caused by the operation of our store information management ~~system;~~systems;

•risks related to our virtual lease-to-own business, including our ability to ~~satisfy all conditions required~~continue to develop and successfully ~~complete~~implement the acquisition of substantially all the assets and assumptions of certain liabilities of C/C Financial Corp., a Delaware Corporation d/b/a Merchants Preferred ("Merchants Preferred" and the acquisition thereof, the "Merchants Preferred Acquisition");necessary technologies;

•our ability to ~~realize~~achieve the ~~strategic~~ benefits expected from our recently announced integrated retail preferred offering, Preferred Lease, including our ability to integrate our historic, retail partner business (Acceptance Now) and the Merchants Preferred ~~Acquisition, including achieving expected synergies and operating efficiencies from~~business under the ~~acquisition;~~Preferred Lease offering;

~~our ability to successfully integrate Merchants Preferred's operations which may be more difficult, time-consuming or costly than expected;~~

~~operating costs, loss of retail partners and business disruption arising from the Merchants Preferred Aquisition;~~

~~the ability to retain certain key employees at Merchants Preferred;~~

~~risks related to Merchants Preferred's virtual rent-to-own business;~~

•our transition to more-readily scalable "cloud-based" solutions;

•our ability to develop and successfully implement digital or E-commerce capabilities, including mobile applications;

•disruptions in our supply chain;

•limitations of, or disruptions in, our distribution network;

•rapid inflation or deflation in the prices of our products;

•our ability to execute and the effectiveness of a store consolidation, including our ability to retain the revenue from customer accounts merged into another store location as a result of a store consolidation;

•our available cash flow and our ability to generate sufficient cash flow to ~~pay~~continue paying dividends;

~~RENT-A-CENTER, INC. AND SUBSIDIARIES~~

•our ability to identify and successfully market products and services that appeal to our customer demographic;

•consumer preferences and perceptions of our ~~brand;~~brands;

RENT-A-CENTER, INC. AND SUBSIDIARIES

•our ability to retain the revenue associated with acquired customer accounts and enhance the performance of acquired stores;

•our ability to enter into new and collect on our rental or lease purchase agreements;

•changes in the ~~passage~~enforcement of ~~legislation~~existing laws and regulations and the enactment of new laws and regulations adversely affecting ~~the Rent-to-Own industry;~~our business;

•our compliance with applicable statutes or regulations governing our ~~transactions;~~businesses;

•changes in interest rates;

•changes in tariff policies;

•adverse changes in the economic conditions of the industries, countries or markets that we serve;

•information technology and data security costs;

•the impact of any breaches in data security or other disturbances to our information technology and other networks and our ability to protect the integrity and security of individually identifiable data of our customers and employees;

•changes in estimates relating to self-insurance liabilities and income tax and litigation reserves;

•changes in our effective tax rate;

•fluctuations in foreign currency exchange rates;

•our ability to maintain an effective system of internal controls;

•litigation or administrative proceedings to which we are or may be a party to from time to time; and

•the other risks detailed from time to time in our reports furnished or filed with the Securities and Exchange Commission.

Additional important factors that could cause our actual results to differ materially from our expectations are discussed under the section “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, and elsewhere in this Quarterly Report on Form 10-Q. You should not unduly rely on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.

Our Business

We are ~~one of the largest rent-to-own operators in North America,~~a lease-to-own industry leader focused on improving the ~~quality~~lives of ~~life for~~ our customers by providing them the opportunity to obtain ownership of the high-quality ~~durable~~ products they need and want such as furniture and accessories, appliances, consumer electronics, ~~appliances,~~including computers, ~~(including tablets),~~tablets, and smartphones, and ~~furniture (including accessories),~~a variety of other products, under flexible ~~rental~~lease purchase agreements with no long-term obligation. We were incorporated in the State of Delaware in ~~1986.~~1986, and our common stock is traded on the Nasdaq Global Select Market under the ticker symbol "RCII."

Our Strategy

Our strategy ~~has three~~is focused on growing our business model through emphasis on the following key ~~pillars including optimizing~~initiatives:

•continuing positive trends in our ~~cost structure, enhancing our value proposition, and franchising.~~

~~Optimizing our cost structure~~Rent-A-Center Business segment driven by continuing to capitalize on recent initiatives targeting overhead, supply chain, and other store expenses; in addition to identifying future opportunities to efficiently manage cost within the business.

~~Enhance our value proposition through targeted pricing strategies across~~accelerating e-commerce momentum, expanding product categories, ~~aimed at~~and improving ~~traffic trends~~the customer experience;

•generating favorable EBITDA margin and ~~increasing ownership.~~strong free cash flow to fund strategic priorities and return capital to shareholders; and

~~Focus~~•executing on ~~franchising~~large market opportunities using a virtual platform via our Preferred Lease offering and e-commerce.

As we pursue our strategy, we may take advantage of merger and acquisition opportunities from time to time that advance our key initiatives, and engage in ~~underperforming markets and stabilizing our brick and mortar footprint.~~discussions regarding these opportunities, which could include mergers, consolidations or acquisitions or dispositions or other transactions, although there can be no assurance that any such activities will be consummated.

Recent Developments

~~Merger Termination.~~COVID-19 Pandemic. ~~On December 18, 2018, we terminated the Merger Agreement with Vintage Capital. On December 21, 2018, Vintage Capital and its affiliates filed a lawsuit~~Beginning in the ~~Delaware Court~~latter half of ~~Chancery against Rent-A-Center, asserting that~~March 2020, the ~~Merger Agreement remained in effect, and that Vintage Capital did not owe Rent-A-Center the $126.5 million reverse breakup fee associated with our termination~~worldwide spread of the ~~Merger Agreement. On February 11~~^threspiratory disease caused by a novel coronavirus (“COVID-19”) caused significant disruptions to the U.S. and 12^th ~~of this year, a trial was held in the Delaware Court of Chancery in connection with the lawsuit brought by Vintage Capital (and joined by B Riley) against Rent-A-Center.~~world economies. On March ~~14, 2019,~~11, 2020, the ~~Delaware Court~~World Health Organization declared the COVID-19 outbreak a worldwide pandemic. On March 13, 2020, President Trump declared a national state of ~~Chancery ruled that Rent-A-Center validly terminated~~emergency for the ~~Merger Agreement. As announced on April 22, 2019, we agreed~~United States. All 50 states and certain other US territories have reported cases of COVID-19, and, in response to ~~settle all litigation with Vintage Capital and B. Riley relating~~the issuance of U.S. federal guidelines to ~~our termination~~contain the spread of the Merger Agreement. In the Vintage Settlement, we received a payment of $92.5 million in cash in late May 2019, of which we retained net pre-tax proceeds of approximately $80 million following payment of all remaining costs, fees and expenses relating to the merger termination.COVID-19 virus, U.S. state

RENT-A-CENTER, INC. AND SUBSIDIARIES

~~Dividends.~~ ~~On June 27, 2019, we announced~~and local jurisdictions have implemented various containment or mitigation measures, including shelter-in-place orders and the temporary closure of non-essential businesses. Economists expect that ~~our Board~~the impact of Directors approved initiation of a quarterly cash dividend of $0.25 per share on our common stock subject to completion of the refinancing of the Company’s existing revolving credit facility and outstanding senior notes, which occurred on August 5, 2019. Although the amount and timing of any dividends are subject to the discretion of our Board of Directors, the first quarterly dividend is expected to be declared in September 2019 and paid in October 2019.

~~Merchants Preferred Acquisition.~~ On July 15, 2019, we announced that we had entered into an asset purchase agreement to acquire substantially all of the assets and assume certain liabilities of Merchants Preferred, a nationwide virtual rent-to-own provider. The Merchants Preferred Acquisition is expected to close in the third quarter. Total consideration consists of $30 million cash and shares of our common stock with a value equal to $15 million (but in no event fewer than 701,918 shares of our common stock). At closing, the sellers must transfer a minimum of $2 million in cash on hand. The acquisition is valued at approximately $47.5 million, basedCOVID-19 on the ~~closing stock price of the date on which the asset purchase agreement was entered into. We do not expect the impact to 2019 earnings from the acquisition to~~U.S. economy will be ~~material.~~

~~Refinancing Update~~. On August 5, 2019, we terminated our Prior Revolving Facility and entered into a new $300 million asset based revolving credit facility and a $200 million senior secured term loan facility. In connection with the Refinancing, Rent-A-Center irrevocably deposited $551,019,061.81, the redemption pricesignificant for the ~~6.625%~~remainder of 2020 and ~~4.75% senior notes~~potentially beyond.

See "Trends and Uncertainties - COVID-19 Pandemic" below and Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q for additional discussion of operational impacts to our business and additional risks associated with the trustee, and the indentures were satisfied and discharged. The 6.625% and 4.75% senior notes will be redeemed on August 15, 2019, at a price equal to 100% of their principal amount plus accrued and unpaid interest to, but excluding, the redemption date. As a result, Rent-A-Center and its subsidiary guarantors have been released from their respective obligations under the 6.625% and 4.75% senior notes as of August 5, 2019.COVID-19.

Results of Operations

The following discussion focuses on our results of operations and issues related to our liquidity and capital resources. You should read this discussion in conjunction with the condensed consolidated financial statements and notes thereto for the three months ended March 31, 2020 included ~~elsewhere~~ in Part I, Item I of this Quarterly Report on Form 10-Q.

Trends and Uncertainties

COVID-19 Pandemic

As a result of COVID-19 and related jurisdictional ordinances implemented in the United States beginning in the latter half of March 2020 to contain the spread of COVID-19 or mitigate its effects, a significant number of Preferred Lease retail partner locations were temporarily closed, resulting in the initial closure of approximately 65% of our staffed Preferred Lease locations, which operated within those stores. While the majority of our Rent-A-Center Business stores have remained open, due to government orders in certain jurisdictions, beginning in mid-March 2020, we temporarily shut down all operations at a small number of stores, and approximately 24% of our stores were partially closed. As of the date hereof, approximately 29% of Preferred Lease locations remained temporarily closed and 17% of our Rent-A-Center Business locations remain partially closed. Our partially closed locations have closed showrooms and cannot currently conduct business with walk-in customers; however, they continue to execute new rental-purchase agreements through e-commerce web orders and have transitioned to a contactless curbside service model or to a ship-from-store model, to the extent permitted by local orders. In addition, in response to the negative impacts to our business resulting from COVID-19, we have proactively taken certain measures to reduce operating expenses and cash flow uses, including implementing executive pay reductions, temporarily furloughing certain employees at our store locations and corporate headquarters, reducing store hours in certain locations, renegotiating real estate leases, reducing inventory purchases and capital expenditures, and suspending share repurchases.

Virtual Business Model

On August 13, 2019, we completed the acquisition of substantially all of the assets of C/C Financial Corp. dba Merchants Preferred ("Merchants Preferred"), a nationwide provider of virtual lease-to-own services, accelerating our growth in the virtual lease-to-own industry. In January 2020, we announced plans for our new integrated retail partner offering under Preferred Lease, which combines our staffed and virtual lease-to-own business models to meet the needs and expectations of both our customers and retail partners. While we believe the acquisition of the Merchants Preferred virtual business model and rollout of our Preferred Lease integrated offering positions us for significant revenue and earnings growth, we are exposed to potential operating margin degradation due to the higher cost of merchandise in our retail partner business and potential for higher merchandise losses.

Cost Savings Initiatives

In 2018, we initiated and executed multiple cost savings initiatives, resulting in reductions in overhead and supply chain costs. While these initiatives have led to significant decreases in operating expenses and corresponding improvement in operating profit on a year-over-year basis in our 2018 and 2019 results of operations, we do not expect to continue to realize cost reduction benefits in future periods at the same annualized rate as past periods.

Overview

The following briefly summarizes certain of our financial information for the three months ended March 31, 2020 as compared to the three months ended March 31, 2019.

RENT-A-CENTER, INC. AND SUBSIDIARIES

During the first ~~half~~three months of ~~2019,~~2020, consolidated revenues ~~decreased~~increased approximately ~~$1.2~~$5.2 million, primarily driven by ~~refranchising~~increases in same store sales and ~~closures~~the addition of ~~certain Core U.S. stores,~~the Merchants Preferred virtual solution, partially offset by ~~increased same store sales.~~refranchising of approximately 60 Rent-A-Center Business corporate stores during the preceding 12 months. Operating profit ~~however,~~ increased approximately ~~$130.3~~$31.5 million for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, primarily due to ~~receipt of the Vintage Settlement Proceeds and reduction~~a decrease in ~~operating expenses related to costs savings initiatives and store closures.~~other charges.

Revenues in our ~~Core U.S.~~Rent-A-Center Business segment decreased approximately ~~$12.6~~$19.1 million for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, driven primarily ~~due to~~by the refranchising ~~efforts~~of approximately 60 Rent-A-Center Business corporate stores as described above and rationalization of ~~the Core U.S.~~our store base, partially offset by an increase in same store sales. Gross profit as a percentage of revenue increased 1.3%. Operating profit increased $14.6 million for the three months ended March 31, 2020, primarily driven by decreased ~~1.5%~~operating expenses.

The Preferred Lease segment revenues increased approximately $19.6 million for the three months ended March 31, 2020, primarily due to ~~our strategy to enhance our value proposition. Operating profit increased $46.3 million for~~ the ~~six months ended June 30, 2019, primarily due to decreases in store labor and other store expenses driven by lower store count and cost savings initiatives.~~

~~The Acceptance Now segment revenues decreased approximately $3.1 million for~~addition of the ~~six months ended June 30, 2019, primarily due to store closures and partially offset by an increase in same store sales.~~Merchants Preferred virtual solution. Gross profit as a percent of revenue decreased ~~1.8%~~3.0% and operating profit decreased approximately $3.3 million for the three months ended March 31, 2020 primarily due to ~~our strategy to enhance our value proposition.~~a higher mix of virtual locations, resulting in higher merchandise costs and higher merchandise losses.

The Mexico segment revenues increased by ~~10.5%~~1.5% for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, driving an increase in ~~operating~~gross profit of ~~94.6%~~2.8%, or ~~$1.3~~$0.3 million.

Revenues for the Franchising segment increased ~~$12.0~~$4.5 million for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, primarily due to ~~an increase in franchise locations~~higher store count resulting from the refranchising of approximately 60 Rent-A-Center Business corporate stores as ~~a result of~~described above and higher inventory purchases by our ~~refranchising initiative.~~franchisees.

Cash flow from operations was ~~$185.4~~$47.4 million for the ~~six~~three months ended ~~June 30, 2019, ending the period with $353.1~~March 31, 2020. As of March 31, 2020, we held $182.9 million of cash and cash equivalents and no outstanding ~~borrowings under our Prior Revolving Facility.~~

indebtedness of $362 million.

2123

RENT-A-CENTER, INC. AND SUBSIDIARIES

The following table is a reference for the discussion that follows.


	Three Months Ended
	March 31,						Change
(dollar amounts in thousands)	2020		2019		$		%
Revenues
Store
Rentals and fees	$	568,000	$	563,354	$	4,646	0.8	%
Merchandise sales	101,380		104,470		(3,090)		(3.0)	%
Installment sales	14,747		15,436		(689)		(4.5)	%
Other	722		664		58		8.7	%
Total store revenue	684,849		683,924		925		0.1	%
Franchise
Merchandise sales	12,437		8,456		3,981		47.1	%
Royalty income and fees	4,653		4,314		339		7.9	%
Total revenues	701,939		696,694		5,245		0.8	%
Cost of revenues
Store
Cost of rentals and fees	165,455		155,372		10,083		6.5	%
Cost of merchandise sold	98,757		103,391		(4,634)		(4.5)	%
Cost of installment sales	5,025		4,924		101		2.1	%
Total cost of store revenues	269,237		263,687		5,550		2.1	%

Franchise cost of merchandise sold	12,524		8,141		4,383		53.8	%
Total cost of revenues	281,761		271,828		9,933		3.7	%
Gross profit	420,178		424,866		(4,688)		(1.1)	%
Operating expenses
Store expenses
Labor	153,794		161,656		(7,862)		(4.9)	%
Other store expenses	161,718		163,794		(2,076)		(1.3)	%
General and administrative expenses	39,175		32,924		6,251		19.0	%
Depreciation and amortization	14,913		15,773		(860)		(5.5)	%
Other charges	1,703		33,370		(31,667)		(94.9)	%
Total operating expenses	371,303		407,517		(36,214)		(8.9)	%
Operating profit	48,875		17,349		31,526		181.7	%

Interest, net	4,303		8,515		(4,212)		(49.5)	%
Earnings before income taxes	44,572		8,834		35,738		404.6	%
Income tax expense	(4,720)		1,511		(6,231)		(412.4)	%
Net earnings	$	49,292	$	7,323	$	41,969	573.1	%

Three Months Ended Six Months Ended
June 30, Change June 30, Change
(dollar amounts in thousands) 2019 2018 $ % 2019 2018 $ %
Revenues
Store
Rentals and fees $ 551,680
$ 562,403
$ (10,723 ) (1.9 )% $ 1,115,034
$ 1,127,117
$ (12,083 ) (1.1 )%
Merchandise sales 70,842
64,990
5,852
9.0 % 175,312
172,346
2,966
1.7 %
Installment sales 17,270
17,374
(104 ) (0.6 )% 32,706
33,778
(1,072 ) (3.2 )%
Other 1,244
2,271
(1,027 ) (45.2 )% 1,908
4,855
(2,947 ) (60.7 )%
Total store revenue 641,036
647,038
(6,002 ) (0.9 )% 1,324,960
1,338,096
(13,136 ) (1.0 )%
Franchise
Merchandise sales 10,673
4,880
5,793
118.7 % 19,129
8,514
10,615
124.7 %
Royalty income and fees 4,216
3,812
404
10.6 % 8,530
7,163
1,367
19.1 %
Total revenues 655,925
655,730
195
— % 1,352,619
1,353,773
(1,154 ) (0.1 )%
Cost of revenues
Store
Cost of rentals and fees 155,658
156,041
(383 ) (0.2 )% 311,030
312,136
(1,106 ) (0.4 )%
Cost of merchandise sold 76,034
65,562
10,472
16.0 % 179,425
161,915
17,510
10.8 %
Cost of installment sales 5,682
5,617
65
1.2 % 10,606
10,859
(253 ) (2.3 )%
Total cost of store revenues 237,374
227,220
10,154
4.5 % 501,061
484,910
16,151
3.3 %
Franchise cost of merchandise sold 10,480
4,624
5,856
126.6 % 18,621
7,999
10,622
132.8 %
Total cost of revenues 247,854
231,844
16,010
6.9 % 519,682
492,909
26,773
5.4 %
Gross profit 408,071
423,886
(15,815 ) (3.7 )% 832,937
860,864
(27,927 ) (3.2 )%
Operating expenses
Store expenses
Labor 152,899
164,172
(11,273 ) (6.9 )% 314,555
345,246
(30,691 ) (8.9 )%
Other store expenses 149,225
156,854
(7,629 ) (4.9 )% 313,019
342,803
(29,784 ) (8.7 )%
General and administrative expenses 38,534
41,792
(3,258 ) (7.8 )% 71,458
86,662
(15,204 ) (17.5 )%
Depreciation and amortization 15,121
17,428
(2,307 ) (13.2 )% 30,894
35,328
(4,434 ) (12.6 )%
Other (gains) and charges (77,537 ) 16,489
(94,026 ) (570.2 )% (44,167 ) 33,944
(78,111 ) (230.1 )%
Total operating expenses 278,242
396,735
(118,493 ) (29.9 )% 685,759
843,983
(158,224 ) (18.7 )%
Operating profit 129,829
27,151
102,678
378.2 % 147,178
16,881
130,297
771.9 %
Interest, net 8,095
10,604
(2,509 ) (23.7 )% 16,610
21,755
(5,145 ) (23.6 )%
Earnings (loss) before income taxes 121,734
16,547
105,187
635.7 % 130,568
(4,874 ) 135,442
2,778.9 %
Income tax expense 27,279
2,794
24,485
876.3 % 28,790
1,216
27,574
2,267.6 %
Net earnings (loss) $ 94,455
$ 13,753
$ 80,702
586.8 % $ 101,778
$ (6,090 ) $ 107,868
1,771.2 %

Three Months Ended ~~June 30, 2019,~~March 31, 2020, compared to Three Months Ended ~~June 30, 2018~~March 31, 2019

Store Revenue. Total store revenue ~~decreased~~increased by ~~$6.0~~$0.9 million, or ~~0.9%~~0.1%, to ~~$641.0~~$684.8 million for the three months ended ~~June 30, 2019,~~March 31, 2020, from ~~$647.0~~$683.9 million for the three months ended ~~June 30, 2018.~~March 31, 2019. This increase was primarily due to ~~decreases~~an increase of approximately ~~$4.6 million and $2.6~~$19.6 million in ~~the Core U.S. and Acceptance Now segments, respectively, as discussed further~~revenues in the Preferred Lease segment, ~~performance section below.~~

~~Same store~~partially offset by a decrease of $19.1 million in revenue is reported on a constant currency basis and generally represents revenue earned in 2,450 locations that were operated by us for 13 months or more, excluding any store that receives a certain level of customer accounts from another store.

~~RENT-A-CENTER, INC. AND SUBSIDIARIES~~

~~Receiving stores will be eligible for inclusion in the same store sales base in the twenty-fourth full month following the customer account transfers. In addition, due to the severity~~ of the 2017 hurricane impacts, we instituted a change to the same store sales store selection criteria to exclude stores in those geographically impacted regions for 18 months. Same store revenues increased by $26.4 million, or 5.8%, to $479.5 million for the three months ended June 30, 2019, as compared to $453.1 million in 2018. The increase in same store revenues was primarily attributable to an increase in the Core U.S.Rent-A-Center Business segment, as discussed further in the ~~segment performance~~ section "Segment Performance" below.

Cost of Rentals and Fees. Cost of rentals and fees consists primarily of depreciation of rental merchandise. Cost of rentals and fees for the three months ended ~~June 30, 2019, decreased~~March 31, 2020, increased by ~~$0.3~~$10.1 million, or ~~0.2%~~6.5%, to ~~$155.7~~$165.5 million as compared to ~~$156.0~~$155.4 million in ~~2018.~~2019. This ~~decrease~~increase in cost of rentals and fees was primarily attributable to ~~a decrease~~an increase of ~~$4.1~~$14.0 million in the ~~Core U.S~~Preferred Lease segment, partially offset by ~~an increase~~a decrease of ~~$3.3~~$3.9 million in ~~Acceptance Now~~the Rent-A-Center Business segment. Cost of rentals

RENT-A-CENTER, INC. AND SUBSIDIARIES

and fees expressed as a percentage of rentals and fees revenue was ~~28.2%~~29.1% for the three months ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~27.7%~~27.6% in ~~2018.~~2019.

Cost of Merchandise Sold. Cost of merchandise sold ~~increased~~decreased by ~~$10.4~~$4.6 million, or ~~16.0%~~4.5%, to ~~$76.0~~$98.8 million for the three months ended ~~June 30, 2019,~~March 31, 2020, from ~~$65.6~~$103.4 million in ~~2018,~~2019, primarily attributable to a decrease of $8.2 million in the Rent-A-Center Business segment, partially offset by an increase of ~~$10.8~~$3.7 million in the ~~Core U.S.~~Preferred Lease segment, as discussed further in the ~~segment performance~~ section "Segment Performance" below. The gross margin percent of merchandise sales ~~decreased~~increased to ~~(7.3)%~~2.6% for the three months ended ~~June 30, 2019,~~March 31, 2020, from ~~(0.9)%~~1.0% in ~~2018.~~2019.

Gross Profit. Gross profit decreased by ~~$15.8~~$4.7 million, or ~~3.7%~~1.1%, to ~~$408.1~~$420.2 million for the three months ended ~~June 30, 2019,~~March 31, 2020, from ~~$423.9~~$424.9 million in ~~2018,~~2019, due primarily to decreases of ~~$11.3 million and $5.7~~$7.1 million in the ~~Core U.S. and Acceptance Now segments, respectively,~~Rent-A-Center Business segment, partially offset by an increase of $2.0 million in the Preferred Lease segment, as discussed further in the ~~segment performance~~ section "Segment Performance" below. Gross profit as a percentage of total revenue decreased to ~~62.2%~~59.9% for the three months ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~64.6%~~61.0% in ~~2018.~~2019.

Store Labor. Store labor decreased by ~~$11.3~~$7.9 million, or ~~6.9%~~4.9%, to ~~$152.9~~$153.8 million, for the three months ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~$164.2~~$161.7 million in ~~2018,~~2019, primarily due to a decrease of ~~$12.2~~$6.4 million in the ~~Core U.S.~~Rent-A-Center Business segment as a result of a lower ~~Core U.S.~~ store base and ~~costs~~cost savings ~~initiatives.~~initiatives, in addition to employee furloughs related to COVID-19. Store labor expressed as a percentage of total store revenue was ~~23.9%~~22.5% for the three months ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~25.4%~~23.6% in ~~2018.~~2019.

Other Store Expenses. Other store expenses decreased by ~~$7.7~~$2.1 million, or ~~4.9%~~1.3%, to ~~$149.2~~$161.7 million for the three months ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~$156.9~~$163.8 million in ~~2018,~~2019, primarily due to a decrease of ~~$11.6~~$8.0 million in the ~~Core U.S.~~Rent-A-Center Business segment, partially offset by an increase of ~~$2.8~~$6.6 million in the ~~Acceptance Now~~Preferred Lease segment. ~~Other store expenses expressed as a percentage of total store revenue were 23.3% for the three months ended June 30, 2019, compared to 24.2% in 2018.~~

~~General and Administrative Expenses.~~ General and administrative expenses decreased by $3.3 million, or 7.8%, to $38.5 million for the three months ended June 30, 2019, as compared to $41.8 million in 2018, primarily due to cost savings initiatives. General and administrative expenses expressed as a percentage of total revenue were 5.9% for the three months ended June 30, 2019, compared to 6.4% in 2018.

~~Other (Gains) and Charges.~~ Other (gains) and charges decreased by $94.0 million, to $(77.5) million for the three months ended June 30, 2019, as compared to $16.5 million in 2018, primarily due to the Vintage Settlement Proceeds and insurance proceeds related to the 2017 hurricanes, partially offset by associated merger termination legal and professional fees, store closures, state tax audit assessments, and cost savings initiatives.

~~Operating Profit.~~ Operating results increased by $102.6 million, to $129.8 million for the three months ended June 30, 2019, as compared to $27.2 million in 2018, primarily due to the Vintage Settlement Proceeds described above and reduction in operating expenses related to costs savings initiatives and store closures. Operating results expressed as a percentage of total revenue were 19.8% for the three months ended June 30, 2019, compared to 4.1% in 2018. Excluding other (gains) & charges, operating profit was $52.3 million, or 8.0% of revenue for the three months ended June 30, 2019, compared to $43.6 million, or 6.7% of revenue for the comparable period of 2018.

~~Income Tax Expense.~~ Income tax expense for the three months ended June 30, 2019 was $27.3 million, as compared to $2.8 million in 2018. The effective tax rate was 22.4% for the three months ended June 30, 2019, compared to 16.9% in 2018.

~~Six Months Ended June 30, 2019, compared to Six Months Ended June 30, 2018~~

~~Store Revenue.~~ Total store revenue decreased by $13.1 million, or 1.0%, to $1,325.0 million for the six months ended June 30, 2019, from $1,338.1 million for the three months ended June 30, 2018. This was primarily due to decreases of approximately $12.6 million and $3.1 million in the Core U.S. and Acceptance Now segments, respectively, as discussed further in the segment performance section below.

Same store revenue is reported on a constant currency basis and generally represents revenue earned in 2,627 locations that were operated by us for 13 months or more, excluding any store that receives a certain level of customer accounts from another store (acquisition or merger). Receiving stores will be eligible for inclusion in the same store sales base in the twenty-fourth full month following the customer account transfers. In addition, due to the severity of the 2017 hurricane impacts, we instituted a change to

~~RENT-A-CENTER, INC. AND SUBSIDIARIES~~

the same store sales store selection criteria to exclude stores in those geographically impacted regions for 18 months. Same store revenues increased by $55.0 million, or 6.3%, to $929.1 million for the six months ended June 30, 2019, as compared to $874.1 million in 2018. The increase in same store revenues was primarily attributable to an increase in the Core U.S. segment, as discussed further in the segment performance section below.

~~Cost of Rentals and Fees.~~ Cost of rentals and fees consists primarily of depreciation of rental merchandise. Cost of rentals and fees for the six months ended June 30, 2019, decreased by $1.1 million, or 0.4%, to $311.0 million as compared to $312.1 million in 2018. This decrease in cost of rentals and fees was primarily attributable to a decrease of $8.4 million in the Core U.S. segment, partially offset by an increase of $6.5 million in the Acceptance Now segment. Cost of rentals and fees expressed as a percentage of rentals and fees revenue increased to 27.9% for the six months ended June 30, 2019 as compared to 27.7% in 2018.

~~Cost of Merchandise Sold.~~ Cost of merchandise sold increased by $17.5 million, or 10.8%, to $179.4 million for the six months ended June 30, 2019, from $161.9 million in 2018, primarily attributable to an increase of $19.0 million in the Core U.S. segment, as discussed further in the segment performance section below. The gross margin percent of merchandise sales decreased to (2.3)% for the six months ended June 30, 2019, from 6.1% in 2018.

~~Gross Profit.~~ Gross profit decreased by $28.0 million, or 3.2%, to $832.9 million for the six months ended June 30, 2019, from $860.9 million in 2018, due primarily to decreases of $22.9 million and $8.1 million in the Core U.S. and Acceptance Now segments, respectively, as discussed further in the segment performance section below. Gross profit as a percentage of total revenue decreased to 61.6% for the six months ended June 30, 2019, as compared to 63.6% in 2018.

~~Store Labor.~~ Store labor decreased by $30.6 million, or 8.9%, to $314.6 million, for the six months ended June 30, 2019, as compared to $345.2 million in 2018, primarily attributable to decreases of $29.2 million and $1.7 million in the Core U.S. and Acceptance Now segments, respectively, as a result of a lower Core U.S. store base and the closure of our Acceptance Now collection centers. Store labor expressed as a percentage of total store revenue was 23.7% for the six months ended June 30, 2019, as compared to 25.8% in 2018.

~~Other Store Expenses.~~ Other store expenses decreased by $29.8 million, or 8.7%, to $313.0 million for the six months ended June 30, 2019, as compared to $342.8 million in 2018, primarily attributable to a decrease of $32.1 million in the Core U.S. segment, as a result of a lower Core U.S. store base. Other store expenses expressed as a percentage of total store revenue were 23.6% for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~25.6%~~23.9% in ~~2018.~~2019.

General and Administrative Expenses. General and administrative expenses ~~decreased~~increased by ~~$15.2~~$6.3 million, or ~~17.5%~~19.0%, to ~~$71.5~~$39.2 million for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~$86.7~~$32.9 million in ~~2018,~~2019, primarily due to ~~cost savings initiatives.~~Merchants Preferred virtual solution, rent expense related to the sale-leaseback of our corporate headquarters, timing of our annual stock award grants, partially offset by one-time prior year advertising credits recognized for the three months ended March 31, 2019. General and administrative expenses expressed as a percentage of total revenue were ~~5.3%~~5.6% for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~6.4%~~4.7% in ~~2018.~~2019.

Other ~~(Gains) and~~ Charges. Other ~~(gains) and~~ charges decreased by ~~$78.1~~$31.7 million, to ~~$(44.2)~~$1.7 million for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~$33.9~~$33.4 million in ~~2018.~~2019. Other ~~gains~~charges for the ~~six~~three months ended ~~June 30,~~March 31, 2020 primarily related to lease impairments and other costs associated with store and other facility closures, and financial impacts related to the COVID-19 pandemic, including temporary store closures and furloughs. Other charges for the three months ended March 31, 2019 primarily related to the ~~Vintage Settlement Proceeds, and insurance proceeds related to the 2017 hurricanes, partially offset by the Blair class~~reserve of approximately $13.0 million for settlement of a legal action ~~settlement costs, associated merger termination~~that was subsequently paid in November 2019, incremental legal and professional fees ~~store closures, state tax audit assessments,~~related to the Company's termination of the merger agreement with Vintage Rodeo Parent, LLC and Vintage Rodeo Acquisition, Inc. in December 2018, cost savings ~~initiatives.~~initiatives and Rent-A-Center Business store closures.

Operating Profit. Operating ~~profit~~results increased by ~~$130.3~~$31.6 million, to ~~$147.2~~$48.9 million for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~$16.9~~$17.3 million in ~~2018,~~2019, primarily due to ~~the Vintage Settlement~~a decrease in other charges described ~~above and reduction in operating expenses related to costs savings initiatives and store closures.~~above. Operating ~~profit~~results expressed as a percentage of total revenue ~~was 10.9%~~were 7.0% for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~1.2%~~2.5% in 2018. Excluding other (gains) & charges, operating profit was $103.0 million, or 7.6% of revenue for the six months ended June 30, 2019, compared to $50.8 million, or 3.8% of revenue for the comparable period of 2018.2019.

Income Tax. Income tax (benefit) expense for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 was ~~$28.8~~$(4.7) million, as compared to ~~$1.2~~$1.5 million in ~~2018.~~2019. Income tax benefit for the three months ended March 31, 2020 was primarily related to the tax benefit of net operating loss carrybacks at a 35% tax rate as a result of changes from the Coronavirus Aid, Relief, and Economic Security Act, enacted on March 27, 2020 (the "CARES Act") in addition to benefits associated with vesting of stock compensation in the first quarter of 2020. The effective tax rate was ~~22.0%~~(10.6)% for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~24.9%~~17.1% in ~~2018.~~2019.

RENT-A-CENTER, INC. AND SUBSIDIARIES

Segment Performance

~~Core U.S.~~Rent-A-Center Business segment


	Three Months Ended									Six Months Ended										Three Months Ended
	June 30,				Change					June 30,				Change						March 31,						Change
(dollar amounts in thousands)	2019		2018		$			%		2019		2018		$			%		(dollar amounts in thousands)	2020		2019		$		%
Revenues	$	451,096	$	455,720	$	(4,624	)	(1.0	)%	$	925,153	$	937,761	$	(12,608	)	(1.3	)%	Revenues	$	454,965	$	474,057	$	(19,092)	(4.0)	%
Gross profit	313,871		325,219		(11,348		)	(3.5	)%	638,511		661,460		(22,949		)	(3.5	)%	Gross profit	317,558		324,640		(7,082)		(2.2)	%
Operating profit	64,925		43,527		21,398			49.2	%	118,236		71,914		46,322			64.4	%	Operating profit	67,943		53,311		14,632		27.4	%
Change in same store revenue								5.6	%								5.7	%	Change in same store revenue							1.7	%
Stores in same store revenue calculation								1,647									1,754
Stores in same store revenue calculation⁽¹⁾																			Stores in same store revenue calculation⁽¹⁾							1,536

⁽¹⁾ 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 as a percentage of total revenue earned in stores of the segment during the indicated period. The Company excludes from the same store sales base any store that receives a certain level of customer accounts from closed stores or acquisitions. The receiving store will be eligible for inclusion in the same store sales base in the 24^th full month following account transfer. Due to the COVID-19 pandemic, locations in Puerto Rico were excluded starting in March 2020 and will remain excluded for 18 months.

Revenues. The decrease in revenue for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 was driven primarily by a decrease in rentals and fees revenue of ~~$10.3~~$14.4 million and ~~$15.4~~merchandise sales of $3.9 million, ~~respectively,~~ as compared to ~~2018.~~2019. The decrease is primarily due to our refranchising efforts and the rationalization of our ~~Core U.S.~~Rent-A-Center Business store base, partially offset by ~~increases~~an increase in same store sales.

Gross Profit. Gross profit decreased for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~2018,~~2019, primarily due to the decreases in revenue described above, ~~in addition to increases in cost of merchandise sold of $10.8 million and $19.0 million, respectively, related to our strategy to enhance our value proposition changes,~~ partially offset by decreases in ~~cost~~costs of rentals and ~~fees.~~fees and cost of merchandise sold. Gross profit as a percentage of segment revenues ~~decreased to 69.6% and 69.0%~~was 69.8% for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~71.4% and 70.5%~~68.5% for the respective ~~periods~~period in ~~2018.~~2019.

Operating Profit. Operating profit as a percentage of segment revenues was ~~14.4% and 12.8%~~14.9% for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~9.6% and 7.7% for the respective periods~~11.2% in ~~2018,~~2019, primarily due to decreases in store labor and other store expenses of ~~$23.8 million and $61.2 million, respectively.~~$14.4 million. Declines in store labor and other store expenses were driven primarily by lower store count, ~~and cost savings initiatives,~~ partially offset by higher merchandise losses. Charge-offs in our ~~Core U.S. rent-to-own~~Rent-A-Center Business lease-to-own stores due to customer stolen merchandise, expressed as a percentage of ~~Core U.S. rent-to-own~~Rent-A-Center Business lease-to-own revenues, were approximately ~~3.2% and 3.4%~~3.9% for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~3.1%~~3.7% for the respective ~~periods~~period in ~~2018.~~2019. Charge-offs in our ~~Core U.S. rent-to-own~~Rent-A-Center Business lease-to-own stores due to other merchandise losses, expressed as a percentage of ~~Core U.S. rent-to-own~~Rent-A-Center Business lease-to-own revenues, were approximately ~~1.1% and~~ 1.2% for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~1.8% and 1.6%~~1.3% for the respective ~~periods~~period in ~~2018.~~2019. Other merchandise losses include unrepairable and missing merchandise, and loss/damage waiver claims.

~~Acceptance Now~~Preferred Lease segment


	Three Months Ended									Six Months Ended										Three Months Ended
	June 30,				Change					June 30,				Change						March 31,						Change
(dollar amounts in thousands)	2019		2018		$			%		2019		2018		$			%		(dollar amounts in thousands)	2020		2019		$		%
Revenues	$	176,389	$	179,011	$	(2,622	)	(1.5	)%	$	372,911	$	375,997	$	(3,086	)	(0.8	)%	Revenues	$	216,127	$	196,522	$	19,605	10.0	%
Gross profit	80,380		86,050		(5,670		)	(6.6	)%	166,708		174,855		(8,147		)	(4.7	)%	Gross profit	88,315		86,328		1,987		2.3	%
Operating profit	22,734		29,157		(6,423		)	(22.0	)%	44,247		44,587		(340		)	(0.8	)%	Operating profit	18,222		21,513		(3,291)		(15.3)	%
Change in same store revenue								6.0	%								7.7	%
Stores in same store revenue calculation								695									765

Revenues. ~~Revenues~~The increase in revenue for the three ~~and six~~ months ended ~~June 30, 2019 decreased~~March 31, 2020 compared to ~~2018, driven~~2019, was primarily ~~by store closures, offset by an increase~~due to the addition of the Merchants Preferred virtual solution as a result of the Merchants Preferred acquisition in ~~same store sales.~~August 2019.

Gross Profit. Gross profit ~~decreased~~increased for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~2018,~~2019, primarily due to ~~our strategy to enhance our value proposition.~~the increase in revenue described above. Gross profit as a percentage of segment revenues decreased to ~~45.6% and 44.7%~~40.9% for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~48.1% and 46.5%~~43.9% for the respective ~~periods~~period in ~~2018.~~2019.

Operating Profit. Operating profit decreased by ~~22.0% and 0.8%~~15.3% for the three ~~and six~~ months ended ~~June 30, 2019, respectively,~~March 31, 2020, as compared to ~~2018.~~2019. The ~~decreases~~decrease in operating profit for the three ~~and six~~ months ended ~~June 30, 2019 were~~March 31, 2020 was primarily due to ~~increases~~an increase in ~~labor and~~other store expenses. Operating profit as a percentage of segment revenues decreased to 8.4% for the three months ended March 31, 2020, compared to 10.9% for the respective period in 2019. The increase in other store expenses was due to a higher mix of virtual locations, resulting in higher merchandise losses, and ~~increased merchandise losses.~~investments to support expected revenue growth. Charge-offs in our ~~Acceptance Now~~Preferred Lease locations due to customer stolen merchandise, expressed as a percentage of revenues, were approximately ~~9.6% and 9.8%~~12.2% for the three ~~and six~~months ended March 31, 2020, compared to 10.0% for the respective period in 2019. Charge-offs in our

RENT-A-CENTER, INC. AND SUBSIDIARIES

~~months ended June 30, 2019, compared to 7.7% and 8.2% in 2018. Charge-offs in our Acceptance Now~~Preferred Lease locations due to other merchandise losses, expressed as a percentage of revenues, were approximately ~~0.2% and 0.3%~~0.4% for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~1.0% and 0.8%~~0.3% in ~~2018.~~2019.

Mexico segment


	Three Months Ended
	March 31,						Change
(dollar amounts in thousands)	2020		2019		$		%
Revenues	$	13,546	$	13,345	$	201	1.5	%
Gross profit	9,528		9,269		259		2.8	%
Operating profit	967		1,219		(252)		(20.7)	%
Change in same store revenue							7.1	%
Stores in same store revenue calculation⁽¹⁾							108

Three Months Ended Six Months Ended
June 30, Change June 30, Change
(dollar amounts in thousands) 2019 2018 $ % 2019 2018 $ %
Revenues $ 13,551
$ 12,307
$ 1,244
10.1 % $ 26,896
$ 24,338
$ 2,558
10.5 %
Gross profit 9,411
8,549
862
10.1 % 18,680
16,871
1,809
10.7 %
Operating profit 1,474
887
587
66.2 % 2,693
1,384
1,309
94.6 %
Change in same store revenue 10.2 % 11.6 %
Stores in same store revenue calculation 108
108
¹⁾ 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 as a percentage of total revenue earned in stores of the segment during the indicated period. The Company excludes from the same store sales base any store that receives a certain level of customer accounts from closed stores or acquisitions. The receiving store will be eligible for inclusion in the same store sales base in the 24^th full month following account transfer.

Revenues. Revenues for the three months ended ~~June 30, 2019~~March 31, 2020 were ~~positively~~negatively impacted by exchange rate fluctuations of approximately ~~$0.2~~$0.5 million ~~while revenues for the six months ended June 30, 2019 were minimally impacted by exchange rate fluctuations,~~ as compared to the same ~~periods~~period in ~~2018.~~2019. On a constant currency basis, revenues for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased approximately ~~$1.0~~$0.7 million ~~and $2.6 million, respectively.~~as compared to the same period in 2019.

Gross Profit. Gross profit for the three months ended ~~June 30, 2019~~March 31, 2020 was ~~positively~~negatively impacted by exchange rate fluctuations of approximately ~~$0.1~~$0.4 million ~~while gross profit for the six months ended June 30, 2019 was minimally impacted by exchange rate fluctuations,~~ as compared to the same ~~periods~~period in ~~2018.~~2019. On a constant currency basis, gross profit ~~increased by approximately $0.8 million~~ for the three months ended ~~June 30, 2019 and $1.8~~March 31, 2020 increased by approximately $0.7 million ~~for the six months ended June 30, 2019,~~as compared to the same period in ~~2018.~~2019. Gross profit as a percentage of segment revenues was ~~69.4% and~~70.3% for the three months ended March 31, 2020, compared to 69.5% for the ~~three and six months ended June 30, 2019, compared to 69.5% and 69.3% for the~~ respective ~~periods~~period in ~~2018.~~2019.

Operating Profit. Operating profit for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 was minimally impacted by exchange rate fluctuations compared to ~~2018.~~2019. Operating profit as a percentage of segment revenues ~~increased~~decreased to ~~10.9% and 10.0%~~7.1% for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, from ~~7.2% and 5.7%~~9.1% for the respective period in ~~2018, driven primarily by cost savings initiatives.~~2019.

Franchising segment


	Three Months Ended									Six Months Ended									Three Months Ended
	June 30,				Change					June 30,				Change					March 31,						Change
(dollar amounts in thousands)	2019		2018		$			%		2019		2018		$		%		(dollar amounts in thousands)	2020		2019		$		%
Revenues	$	14,889	$	8,692	$	6,197		71.3	%	$	27,659	$	15,677	$	11,982	76.4	%	Revenues	$	17,301	$	12,770	$	4,531	35.5	%
Gross profit	4,409		4,068		341			8.4	%	9,038		7,678		1,360		17.7	%	Gross profit	4,777		4,629		148		3.2	%
Operating profit	1,803		1,909		(106		)	(5.6	)%	3,581		3,165		416		13.1	%	Operating profit	2,519		1,778		741		41.7	%

Revenues. Revenues increased for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 compared to the respective period in ~~2018,~~2019, primarily due to an increase in franchise locations as a result of refranchising approximately 60 Rent-A-Center Business corporate stores during the preceding 12 months and higher inventory purchases by our ~~refranchising initiative resulting in higher merchandise sales.~~franchisees.

Gross Profit. Gross profit as a percentage of segment revenues decreased to ~~29.6% and 32.7%~~27.6% for the three ~~and six~~ months ended ~~June 30, 2019, respectively,~~March 31, 2020, from ~~46.8% and 49.0%~~36.2% for the respective ~~periods~~period in ~~2018,~~2019, primarily due to changes in our revenue mix of franchise royalties &and fees and rental merchandise sales, related to the increase in franchise locations described above.

Operating Profit. Operating profit as a percentage of segment revenues ~~decreased~~increased for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 to ~~12.1% and 12.9%~~14.6%, compared to ~~22.0% and 20.2%~~13.9% for the respective ~~periods~~period in ~~2018,~~2019, primarily due to ~~the decline~~a decrease in ~~gross profit described above.~~other store operating expenses.

Liquidity and Capital Resources

Overview. For the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, we generated ~~$185.4~~$47.4 million in operating cash ~~flow, including approximately $80 million of net proceeds from the Vintage Settlement. We had proceeds from the sale of property assets of $13.8 million, and used cash~~flow. Cash uses in the ~~amount~~first quarter of ~~$5.1~~2020 included $26.5 million for share repurchases, $15.9 million for dividends, and $9.2 million for capital ~~expenditures, ending~~expenditures. We ended the ~~six-month period~~first quarter of 2020 with ~~$353.1~~$182.9 million of cash and cash ~~equivalents.~~equivalents and outstanding indebtedness of $362.0 million.

~~RENT-A-CENTER, INC. AND SUBSIDIARIES~~

Analysis of Cash Flow. Cash provided by operating activities ~~increased $42.5~~decreased $28.4 million to ~~$185.4~~$47.4 million for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, from ~~$142.9~~$75.8 million in ~~2018.~~2019. This decrease was primarily attributable to ~~receipt of the Vintage Settlement Proceeds, partially offset by~~ an increase in rental merchandise purchases during the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to the same period in ~~2018.~~2019 and other net changes in operating assets and liabilities.

RENT-A-CENTER, INC. AND SUBSIDIARIES

Cash (used in) provided by investing activities ~~increased approximately $11.2 million to $9.5~~was $(9.0) million for the ~~six~~three months ended ~~June 30, 2019, from $(1.7)~~March 31, 2020, compared to $6.0 million in ~~2018,~~2019, a change of $(15.0) million, primarily due ~~primarily~~ to ~~a decrease~~an increase in capital expenditures and lower proceeds from ~~store sales.~~the sale of property assets.

Cash provided by financing activities ~~was $2.4~~increased $75.6 million to $76.0 million for the ~~six~~three months ended ~~June 30, 2019, compared to $(97.5)~~March 31, 2020, from $0.4 million in ~~2018, a change of $99.9 million,~~2019, primarily driven by proceeds from debt of $198.0 million, partially offset by $75.0 million in debt repayments, ~~of $98.2~~$26.5 million in share repurchases, and $15.9 million in dividends paid for the ~~first half of 2018.~~three months ended March 31, 2020.

Liquidity Requirements. Our primary liquidity requirements are for rental merchandise ~~purchases.~~purchases and other operating expenses. Other capital requirements include expenditures for property assets, including rental expense, debt service, and ~~debt service. Our~~dividends. Historically, our primary ~~sources~~source of liquidity ~~have~~has been cash provided by operations. ~~In addition, on August 5, 2019, we terminated our Prior Revolving Facility and entered into a new $300 million ABL Credit Facility and a $200 million senior secured term loan facility.~~ Should we require additional funding sources, we ~~have access to~~maintain a five-year asset-based revolving credit facility (the "ABL Credit Facility") with commitments of $300 million, provided for under the Asset Based Loan Agreement, entered into on August 5, 2019 (the "ABL Credit Agreement"). We utilize our ABL Credit ~~Facility, which we expect to use, as we did the Prior Revolving~~ Facility for the issuance of letters of credit, as well as to manage normal fluctuations in operational cash flow caused by the timing of cash receipts. In ~~that regard,~~March 2020, as a precautionary measure in response to negative impacts to our operations stemming from the COVID-19 pandemic, we ~~may from time to time draw funds under the~~drew down approximately $118.0 million against our ABL Credit Facility to enhance our financial flexibility and increase our available cash on hand. The proceeds are available to be used for working capital, general corporate ~~purposes. Amounts are drawn~~and other purposes, as ~~needed due to the timing of cash flows and are generally paid down as cash is generated by~~needed.

Although we anticipate our ~~operating activities. We believe~~ cash flow generated from operations will be negatively impacted by the economic effects of COVID-19 and related government restrictions on our operations, we have undertaken certain measures to reduce operating expenses and cash flow uses, including implementing executive pay reductions, temporarily furloughing employees at our store locations and corporate headquarters, reducing store hours in certain locations, renegotiating certain real estate leases, reducing inventory purchases and capital expenditures, and temporarily suspending additional share repurchases.

In addition, we believe the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act”), which includes modifications to the limitation on business interest expense and net operating loss provisions, deferral of employer payroll taxes to future periods, and other related tax credits, will allow us to lower expenses and maintain capital, in order to help mitigate the negative impacts to revenue and cash flow related to COVID-19. We expect to claim approximately $30 million in federal tax refunds, including $12 million in connection with the CARES Act related to net operating loss carrybacks at a 35% tax rate. In addition, we expect to defer approximately $19 million in employer payroll taxes to future periods.

Taking into consideration our efforts to minimize expenses and benefits from the CARES Act, and based on current assumptions and expectations, we believe the cash flow generated from operations and other sources of liquidity including availability under our ABL Credit Facility will be sufficient to fund our operations ~~during~~over the next 12 months.

At May 4, 2020, we had approximately $259.3 million in cash on hand and $48.2 million available under our ABL Credit Agreement at March 31, 2020. In addition, in May 2020, the Rent-A-Center Board of Directors declared a cash dividend of $0.29 per share for the second quarter of 2020, which will be paid on June 1, 2020 to stockholders of record at the close of business on May 18, 2020.

Deferred Taxes. Certain federal tax legislation enacted during the period 2009 to 2017 permitted bonus first-year depreciation deductions ranging from 50% to 100% of the adjusted basis of qualified property placed in service during such years. The depreciation benefits associated with these tax acts are now reversing. The Protecting Americans from Tax Hikes Act of 2015 ("PATH") extended the 50% bonus depreciation to 2015 and through September 26, 2017, when it was updated by the Tax Act. The Tax Act allows 100% bonus depreciation for certain property placed in service between September 27, 2017 and December 31, 2022, at which point it will begin to phase out. The bonus depreciation provided by the Tax Act resulted in an estimated benefit of ~~$174~~$194 million for us in ~~2018.~~2019. We estimate the remaining tax deferral associated with bonus depreciation from ~~the Tax Act is~~this act was approximately ~~$207~~$239 million at December 31, ~~2018,~~2019, of which approximately 78%, or ~~$161~~$189 million, will reverse in ~~2019,~~2020, and the majority of the remainder will reverse between ~~2020~~2021 and ~~2021.~~2022.

Merchandise Losses. Merchandise losses consist of the following:


	Three Months Ended March 31,
(in thousands)	2020		2019
Customer stolen merchandise	$	46,910	$	39,746
Other merchandise losses ⁽¹⁾	6,091		6,837
Total merchandise losses	$	53,001	$	46,583

⁽¹⁾Other merchandise losses include unrepairable and missing merchandise, and loss/damage waiver claims.

Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2019 2018 2019 2018
Customer stolen merchandise $ 33,443
$ 29,738
$ 73,189
$ 64,610
Other merchandise losses ⁽¹⁾
5,467
9,675
12,304
17,854
Total merchandise losses $ 38,910
$ 39,413
$ 85,493
$ 82,464


⁽¹⁾ RENT-A-CENTER, INC. AND SUBSIDIARIES	~~Other merchandise losses include unrepairable and missing merchandise, and loss/damage waiver claims.~~

Capital Expenditures. We make capital expenditures in order to maintain our existing operations, ~~as well as for~~acquire new capital assets in new and acquired stores and ~~investments~~invest in information technology. We spent ~~$5.1~~$9.2 million and ~~$15.7~~$2.5 million on capital expenditures during the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

Acquisitions and New Location Openings. During the first ~~six~~three months of ~~2019,~~2020, we ~~acquired two~~did not acquire any new locations ~~and~~or customer ~~accounts for an aggregate purchase price of approximately $0.1 million in one transaction.~~accounts.

~~RENT-A-CENTER, INC. AND SUBSIDIARIES~~

The table below summarizes the store location activity for the ~~six-month~~three-month period ended ~~June 30, 2019.~~March 31, 2020 for our Rent-A-Center Business, Mexico and Franchising operating segments.


	Rent-A-Center Business	Mexico	Franchising	Total
Locations at beginning of period	1,973	123	372	2,468
New location openings	—	—	—	—

Conversions	—	—	—	—
Closed locations
Merged with existing locations	(14)	—	—	(14)
Sold or closed with no surviving location	(1)	—	(2)	(3)
Locations at end of period	1,958	123	370	2,451

Core U.S. Acceptance Now Staffed Acceptance Now Virtual Mexico Franchising Total
Locations at beginning of period 2,158
1,106
96
122
281
3,763
New location openings —
81
8
—
—
89
Conversions and refranchising (57 ) (37 ) 37
—
57
—
Closed locations
Merged with existing locations (63 ) (119 ) (29 ) —
—
(211 )
Sold or closed with no surviving location (3 ) —
—
—
(4 ) (7 )
Locations at end of period 2,035
1,031
112
122
334
3,634
Acquired locations closed and accounts merged with existing locations 2
—
—
—
—
2
Total approximate purchase price of acquired stores (in millions)
$ 0.1
$ —
$ —
$ —
$ —
$ 0.1

Senior Debt. As discussed in Note 57 to the condensed consolidated financial statements included in Part I, Item I of this Quarterly Report on Form 10-Q, in August 5, 2019, we completed the ~~Refinancing~~refinancing of our ~~Prior Revolving Facility~~prior revolving facility and, ~~irrevocably deposited the amount necessary to redeem~~effective August 5, 2019, redeemed in full our unsecured senior notes using cash on hand and proceeds from our new $300 million ~~revolving credit facility~~ABL Credit Facility and $200 million from a new term loan ~~facility.~~under our ABL Credit Agreement. We may use, subject to certain limitations and borrowing availability, $150 million ~~of the new revolving credit facility~~under our ABL Credit Agreement for the issuance of letters of credit, of which ~~$92~~$88.8 million had been so utilized as of May 4, 2020. The ABL Credit Agreement has a scheduled maturity date of August 5, ~~2019.~~2024.

Store Leases. We lease space for all of our ~~Core U.S.~~Rent-A-Center Business and Mexico stores under operating leases expiring at various times through ~~2024.~~2026. 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~~five-year leases and contain renewal options for additional periods ranging from three to five years at rental rates adjusted according to ~~agreed-upon~~agreed formulas.

Contractual Cash Commitments. The table below summarizes debt, lease and other minimum cash obligations outstanding as of ~~June 30, 2019:~~March 31, 2020:


	Payments Due by Period
(in thousands)	Total		2020		2021-2022		2023-2024		Thereafter
Term Loan⁽¹⁾	$	199,000	$	1,500	$	4,000	$	4,000	$	189,500
ABL Credit Agreement⁽²⁾	163,000		—		—		163,000		—
Operating Leases⁽³⁾	320,230		87,829		153,258		55,604		23,539
Total⁽⁴⁾	$	682,230	$	89,329	$	157,258	$	222,604	$	213,039

Payments Due by Period
(in thousands) Total 2019 2020-2021 2022-2023 Thereafter
6.625% Senior Notes⁽¹⁾
$ 321,831
$ 9,697
$ 312,134
$ —
$ —
4.75% Senior Notes⁽²⁾
273,750
5,937
267,813
—
—
Operating Leases 306,882
61,288
176,528
63,173
5,893
Total⁽³⁾⁽⁴⁾
$ 902,463
$ 76,922
$ 756,475
$ 63,173
$ 5,893
⁽¹⁾Does not include interest payments. Our Term Loan bears interest at varying rates equal to the Eurodollar rate plus 4.50%. The Eurodollar rate on our Term Loan at March 31, 2020, was 5.44%.

⁽²⁾Does not include interest payments. Our ABL Credit Agreement bears interest at varying rates equal to the Eurodollar rate plus 1.50% to 2.00%. The weighted average Eurodollar rate on our ABL Credit Agreement at March 31, 2020, was 2.50%.

⁽³⁾Does not reflect rent abatements of approximately $2.3 million received in connection with renegotiated lease agreements subsequent to March 31, 2020 in response to store operation impacts stemming from COVID-19.

⁽⁴⁾As of March 31, 2020, we have recorded $23.4 million in uncertain tax positions. Because of the uncertainty of the amounts to be ultimately paid as well as the timing of such payments, uncertain tax positions are not reflected in the contractual obligations table.

⁽¹⁾

~~Includes interest payments of $9.7 million on each May 15 and November 15 of each year.~~


⁽²⁾	~~Includes interest payments of $5.9 million on each May 1 and November 1 of each year.~~


⁽³⁾	As of June 30, 2019, we have recorded $35.6 million in uncertain tax positions. Because of the uncertainty of the amounts to be ultimately paid as well as the timing of such payments, uncertain tax positions are not reflected in the contractual obligations table.

⁽⁴⁾

Seasonality. Our revenue mix is moderately seasonal, with the first quarter of each fiscal year generally providing higher merchandise sales than any other quarter during a fiscal year. Generally, our customers will more frequently exercise the early purchase option on their existing rental purchase agreements or purchase pre-leased merchandise off the showroom floor during the first quarter of each fiscal year, primarily due to the receipt of federal income tax refunds. Furthermore, we tend to experience slower growth in the number of rental purchase agreements in the third quarter of each fiscal year when compared to other quarters throughout the year. We expect these trends to continue in the future.

RENT-A-CENTER, INC. AND SUBSIDIARIES

New Accounting Pronouncements

In ~~June 2016,~~December 2019, the FASB issued ASU ~~2016-13,~~2019-12, ~~Financial Instruments—Credit Losses~~Income Taxes (Topic ~~326)~~740): ~~Measurement of Credit Losses on Financial Instruments,~~Simplifying the Accounting for Income Taxes, which ~~requires immediate recognition of estimated current expected credit losses, rather than recognition when incurred.~~is intended to simplify various aspects related to accounting for income taxes. The standard removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The adoption of ASU ~~2016-13~~2019-12 will be required for us beginning January 1, ~~2020, with early adoption permitted. Adoption is required using a modified retrospective approach with a cumulative-effect adjustment to retained earnings in the year of adoption.~~2021. We ~~are currently in the process of determining the impact the adoption of~~do not believe this ASU will have ~~on our installment notes receivables. We do not expect to early adopt this ASU.~~

~~RENT-A-CENTER, INC. AND SUBSIDIARIES~~

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~, which simplifies the subsequent measurement of goodwill by eliminating the hypothetical purchase price allocation and instead using the difference between the carrying amount and the fair value of the reporting unit. The adoption of ASU 2017-04 will be required for us on a ~~prospective basis beginning January 1, 2020, with early adoption permitted. We are currently determining what~~material impact ~~the adoption of this ASU will have~~ on our financial statements upon adoption.

~~In August 2018, the FASB issued ASU 2018-13,~~ ~~Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement,~~ which removes, modifies, and adds certain disclosure requirements in ASC 820, to improve the effectiveness of the fair value measurement disclosures. The adoption of ASU 2018-13 will be required for us beginning January 1, 2020, with early adoption permitted. We are currently in the process of determining the impact the adoption of this ASU will have on our financial statements. We do not anticipate early adopting this ASU.

~~In August 2018, the FASB issued ASU 2018-15,~~ ~~Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40); Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement,~~ which requires implementation costs incurred by customers in cloud computing arrangements (CCAs) to be deferred and recognized over the term of the arrangement, if those costs would be capitalized by the customer in a software licensing agreement under the internal-use software guidance in ASC 350-40. The adoption of ASU 2018-15 will be required for us beginning January 1, 2020, with early adoption permitted. We are currently in the process of determining our adoption date and what impact the adoption of this ASU will have on our financial statements.

From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that we adopt as of the specified effective date. Unless otherwise discussed, we believe the impact of any other recently issued standards that are not yet effective are either not applicable to us at this time or will not have a material impact on our consolidated financial statements upon adoption.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Sensitivity

As of ~~June 30, 2019,~~March 31, 2020, we had ~~$292.7~~$199.0 million ~~in senior notes~~ outstanding under our term loan credit agreement and $163.0 million outstanding under our ABL Credit Agreement, each at ~~a fixed~~ interest rates indexed to the Eurodollar rate ~~of 6.625%, and $250.0 million in senior notes outstanding at a fixed interest rate of 4.75%. The~~or the prime rate. Carrying value approximates fair value of the 6.625% senior notes, based on the closing price at June 30, 2019, was $292.7 million. The fair value of the 4.75% senior notes, based on the closing price at June 30, 2019, was $248.8 million. The outstanding senior notes will be redeemed on August 15, 2019, at a price equal to 100% of their principal amount plus accrued and unpaid interest to, but excluding, the redemption date. As a result, Rent-A-Center and its subsidiary guarantors have been released from their respective obligations under the 6.625% and 4.75% senior notes as of August 5, 2019.for this indebtedness.

Market Risk

Market risk is the potential change in an instrument’s value caused by fluctuations in interest rates. Our primary market risk exposure is fluctuations in interest rates. Monitoring and managing this risk is a continual process carried out by our senior management. We manage our market risk based on an ongoing assessment of trends in interest rates and economic developments, giving consideration to possible effects on both total return and reported earnings. As a result of such assessment, we may enter into swap contracts or other interest rate protection agreements from time to time to mitigate this risk.

Interest Rate Risk

~~Interest~~We have outstanding debt with variable interest rates ~~on borrowings under our Credit Agreement are variable,~~ indexed to prime or Eurodollar rates that ~~expose~~exposes us to the risk of increased interest costs if interest rates rise. As of ~~June 30, 2019,~~March 31, 2020, we have not entered into any interest rate swap agreements. Based on our overall interest rate exposure at ~~August 5, 2019,~~March 31, 2020, a hypothetical 1.0% increase or decrease in market interest rates would have the effect of causing a ~~$2.8~~$3.7 million additional annualized pre-tax charge or credit to our consolidated statement of operations.

Foreign Currency Translation

We are exposed to market risk from foreign exchange rate fluctuations of the Mexican peso to the U.S. dollar as the financial position and operating results of our stores in Mexico are translated into U.S. dollars for consolidation. Resulting translation adjustments are recorded as a separate component of stockholders’ equity.

~~RENT-A-CENTER, INC. AND SUBSIDIARIES~~

Item 4. Controls and Procedures.

Disclosure controls and procedures. In accordance with Rule 13a-15(b) under the Securities Exchange Act of 1934, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our management, including our Chief Executive Officer and our Chief Financial Officer, concluded that, as of ~~June 30, 2019,~~March 31, 2020, our disclosure controls and procedures (as defined in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934) were effective.

Changes in internal controls over financial reporting. For the quarter ended ~~June 30, 2019,~~March 31, 2020, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that, in the aggregate, have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~RENT-A-CENTER, INC. AND SUBSIDIARIES~~

PART II – Other Information

Item 1. Legal Proceedings

RENT-A-CENTER, INC. AND SUBSIDIARIES

Lease segment). The request for documents and information was sought in connection with a ~~state-wide class action complaint originally filed on~~broader investigation of the rent-to-own industry in California. Since receiving such demand, the Company has cooperated with the CAG in connection with its investigation and made several productions of requested documents. In March ~~13, 2017 in~~2020, the ~~Federal District Court for the Northern District~~CAG put forth proposed settlement terms to address alleged violations of ~~California.~~California law. The ~~complaint alleges various claims, including~~proposed settlement terms include civil penalties, disgorgement of certain revenues, additional training requirements, and recommended changes to Acceptance Now business practices. We believe that our cash sales and total rent to own prices exceed the pricing permitted under the Karnette Rental-Purchase Act. Following a court-ordered mediation on March 28, 2019, we reached an agreement in principle to settle this matter for a total of $13 million, including attorneys’ fees. The settlement is in the documentation process and is subject to approval by the court. We have denied any liability in the settlement and agreed to the settlement in order to avoid additional expensive, time-consuming litigation. We recorded the impact of this settlement in the first quarter of 2019.

~~Vintage Rodeo Parent, LLC, Vintage Rodeo Acquisition, Inc. and Vintage Capital Management, LLC, and B. Riley Financial, Inc. v. Rent-A-Center, Inc.~~ As announced on April 22, 2019, we agreed to settle all litigation with Vintage Capital and B. Riley relating to our termination of the Merger Agreement. In the Vintage Settlement, we received a payment of $92.5 million in cash in May 2019. The Vintage Settlement was recorded as a pre-tax gain upon receipt.

~~Velma Russell v. Acceptance Now.~~This purported class action arising out of calls made by Acceptance Now to customers’ reference (s) was filed on January 29, 2019 in Massachusetts state court. Specifically, plaintiffs seek to certify a class representing any references of customers (within the state of Massachusetts) during the 4 years prior to the filing date that were contacted by Acceptance Now more frequently during a 12 month period than is permitted by Massachusetts state law. The plaintiffsbusiness practices are ~~seeking injunctive relief and statutory damages of $25 per reference which may be tripled to $75 per reference. References are not parties to our consumer arbitration agreement.~~

~~We operate 12 Acceptance Now locations in Massachusetts. We intend to vigorously defend these claims; however, we cannot assure you that we will be found to have no liability in this matter.~~

~~Federal Trade Commission civil investigative demand.~~ In April 2019, along with other rent to own companies, we received a civil investigative demand from the Federal Trade Commission ("FTC") seeking information regarding certain transactions involving the purchase and sale of customer lease agreements, and whether such transactions violated the FTC Act. Although we believe such transactions were in compliance with California law and are continuing to discuss resolution of the ~~FTC Act,~~inquiry with the CAG. At this ~~inquiry could lead to an enforcement action and/or~~point, while we cannot predict the ultimate outcome, we do not believe any such outcome will have a ~~consent order, and substantial costs. The Company is in~~material impact on the ~~process of responding to this inquiry from the FTC.~~Company.

Item 1A. Risk Factors

~~There~~Except for the risk factor set forth below, there have been no material changes to the risk factors disclosed in Item 1A of Part 1, "Risk ~~Factors," in~~Factors" of our Annual Report on Form 10-K for the year ended December 31, ~~2018, except~~2019.

The recent novel coronavirus (COVID-19) global pandemic has had and is expected to continue to have an adverse effect on our business, financial condition and results of operations.

In March 2020, the World Health Organization declared COVID-19 a global pandemic, and governmental authorities around the world have implemented measures to reduce the spread of COVID-19. These measures have adversely affected workforces, customers, consumer sentiment, economies, and financial markets and, along with decreased consumer spending, have led to an economic downturn in many markets. Numerous state and local jurisdictions have imposed shelter-in-place orders, quarantines, executive orders and other similar types of restrictions for their residents to control the spread of COVID-19 or mitigate its effects. Such orders or restrictions have resulted in temporary operational shutdowns for non-essential businesses; imposed limitations on hours of operations and the number of people allowed in stores or warehouses; implemented requirements on sanitation and social distancing practices; enacted certain work stoppages, slowdowns or delays; and imposed certain travel restrictions and cancellations of large scale events. These restrictions have resulted in negative impacts to the U.S. economy and our operations.

As a result of COVID-19 and related jurisdictional ordinances implemented in the United States beginning in the latter half of March 2020 to contain the spread of COVID-19 or mitigate its effects, a significant number of Preferred Lease retail partner locations were temporarily closed, resulting in the initial closure of approximately 65% of our staffed Preferred Lease locations, which operated within those stores. While the majority of our Rent-A-Center Business stores have remained open, due to government orders in certain jurisdictions, beginning in mid-March 2020, we temporarily shut down all operations at a small number of stores, and approximately 24% of our stores were partially closed. As of the date hereof, approximately 29% of Preferred Lease locations remained temporarily closed and 17% of our Rent-A-Center Business locations remain partially closed. Our partially closed locations have closed showrooms and cannot currently conduct business with walk-in customers; however, they continue to execute new rental-purchase agreements through e-commerce web orders and have transitioned to a contactless curbside service model or to a ship-from-store model, to the extent permitted by local orders. As a result of these store closures and operational restrictions, we require a smaller workforce to execute the critical activities of our business during this time, and have therefore furloughed some of our store employees. In addition, in response to the negative impacts to our business resulting from COVID-19, we have proactively taken certain measures to reduce operating expenses and cash flow uses, including implementing executive pay reductions, temporarily furloughing certain employees at our store locations, and corporate headquarters, reducing store hours in certain locations, renegotiating real estate leases, reducing inventory purchases and capital expenditures, and suspending share repurchases.

While a significant number of our store locations have remained fully operational during this time, and we are beginning to re-open closed locations in both our Preferred Lease and Rent-A-Center Business when and to the extent allowed by applicable jurisdictional ordinances, there are no assurances that we ~~completed~~will be able to keep those stores open as governmental responses to the ~~Refinancing.~~pandemic progress. As a result, we are unable to accurately predict the impact that COVID-19 will have on our operations going forward, due to the uncertain duration of the pandemic, future governmental restrictions that might be imposed in response to the pandemic, and related uncertainties dictated by the length of time that these business disruptions continue. In addition, we expect to be impacted by the deterioration in worldwide economic conditions, which could have a sustained impact on discretionary consumer spending. Furthermore, deteriorating global economic conditions have created a challenging environment in capital markets and created uncertainty regarding the availability of credit. The combination of reduced consumer spending and volatile credit markets could adversely impact our liquidity. As noted above, we have suspended share repurchases to preserve capital and liquidity in order to support our customers, clients and employees. While it is premature to accurately predict the full impact of these developments, we expect our business, financial results and condition in 2020 to be adversely impacted by the various effects caused by this pandemic.

RENT-A-CENTER, INC. AND SUBSIDIARIES

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~None.~~The following table presents information with respect to purchases of common stock the Company made during the three months ended March 31, 2020:


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total number of shares purchased as part of publicly announced plans or programs	Maximum dollar value that may yet be purchased under the program (in millions)
February 1, 2020 - February 29, 2020	397,790	$	25.14	397,790	NM
March 1, 2020 - March 31, 2020	1,063,387	$	15.52	1,063,387	$	58.5

In March 2020, our Board of Directors implemented a stock repurchase program, which authorizes the purchase, from time to time, in the open market and privately negotiated transactions, of up to an aggregate of $75 million of Rent-A-Center common stock, superseding our prior authorization. In response to the negative impacts to our business resulting from COVID-19, we have proactively taken measures to reduce certain cash flow uses, including temporarily suspending additional share repurchases.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

On August 5, 2019 (the “Closing Date”), we entered into (i) a Term Loan Credit Agreement (the “Term Loan Credit Agreement”) providing for a seven-year $200 million senior secured term loan facility, among the Company, the several lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent, and (ii) an ABL Credit Agreement (the “ABL Credit Agreement” and, together with the Term Loan Credit Agreement, the “Credit Agreements”) providing a five-year asset-based revolving credit facility (the “ABL Credit Facility”) with commitments of $300 million, among the Company, the several lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent.None.

On the Closing Date, the Company borrowed the full $200 million of initial term loans available under the Term Loan Credit Agreement and drew $80 million under its ABL Credit Agreement. The proceeds of the borrowings on the Closing Date were used (i) to prepay in full and terminate commitments under the Company’s existing Credit Agreement, dated as of March 19, 2014 (as amended prior to the date of the refinancing), among the Company, the several lenders from time to time party thereto and JPMorgan Chase Bank, N.A., (ii) to satisfy and discharge the Company’s (x) 6.625% Senior Notes due 2020 (the “6.625% Notes”), issued

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RENT-A-CENTER, INC. AND SUBSIDIARIES

under the Company’s Indenture, dated as of November 2, 2010, among the Company, the guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee, and (y) 4.75% Senior Notes due 2021 (the “4.75% Notes” and, together with the 6.625% Notes, the “Notes”), issued under the Company’s Indenture, dated as of May 2, 2013, among the Company, the guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee, and (iii) for general corporate purposes. On August 15, 2019, all issued and outstanding Notes will be redeemed pursuant to the terms thereof.

~~Term Loan Credit Agreement~~

The Term Loan Credit Agreement will mature on August 5, 2026. The Term Loan Credit Agreement will amortize 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. Interest on the Term Loan Credit Agreement will accrue at the Eurodollar rate plus an applicable margin equal to 4.50%.

The obligations under the Term Loan Credit Agreement are guaranteed certain of the Company’s subsidiaries. The Term Loan Credit Agreement and the guarantees are secured on a first-priority basis by substantially all of the tangible and intangible assets of the Company and the guarantors, other than collateral subject to a first-priority lien under the ABL Credit Agreement, consisting of, among other things, accounts receivable, inventory and bank accounts (and funds on deposit therein), in which the Term Loan Credit Agreement and the guarantees have a second-priority security interest, in each case, subject to certain exceptions.

~~create certain liens and enter into certain sale and lease-back transactions;~~

~~create, assume, incur or guarantee certain indebtedness;~~

~~pay dividends or make other distributions on, or repurchase or redeem, the Company’s capital stock or certain other debt;~~

~~make other restricted payments; and~~

~~consolidate or merge with, or convey, transfer or lease all or substantially all of the Company’s and its restricted subsidiaries’ assets, to another person.~~

~~These covenants are subject to a number of other limitations and exceptions set forth in the Term Loan Credit Agreement.~~

~~ABL Credit Agreement~~

The ABL Credit Facility will mature on August 5, 2024. The Borrowers may borrow only up to the lesser of the level of the then-current borrowing base and the committed maximum borrowing capacity of $300 million. Interest is payable on the ABL Credit Facility at a fluctuating rate of interest determined by reference to the Eurodollar rate plus an applicable margin of 1.50% to 2.00%. 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 ABL Credit Agreement.

~~Letters of credit are limited to the lesser of (x) $150 million, subject to certain limitations, and (y) the aggregate unused availability then in effect.~~

The obligations under the ABL Credit Agreement are guaranteed by the Company and certain of the Company’s subsidiaries. The ABL Credit Agreement and the guarantees are secured on a first-priority basis on all accounts receivable, inventory and bank accounts (and funds on deposit therein) of the Company and the guarantors and a second-priority basis on all of the tangible and intangible assets (second in priority to the liens securing the Term Loan Credit Agreement) of such persons, in each case, subject to certain exceptions.

~~RENT-A-CENTER, INC. AND SUBSIDIARIES~~

~~The ABL Credit Agreement provides for customary events of default that are substantially the same as events of default in the Term Loan Credit Agreement.~~

~~RENT-A-CENTER, INC. AND SUBSIDIARIES~~

Item 6. Exhibits.


Exhibit No.		Description

~~Exhibit No.~~		~~Description~~

~~2.1~~3.1	Agreement and Plan of Merger, dated as of June 17, 2018, by and among Rent-A-Center, Inc., Vintage Rodeo Parent, LLC and Vintage Rodeo Acquisition, Inc. (Incorporated herein by reference to Exhibit 2.1 to the registrant's Current Report on Form 8-K dated as of June 17, 2018.)

~~2.2~~	Asset Purchase Agreement (the “Asset Purchase Agreement”), dated July 12, 2019, among Rent-A-Center, Inc., Braveheart Acquisition, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company, C/C Financial Corp., a Delaware corporation d/b/a Merchants Preferred , MPLPS II Holdings, LLC, a Delaware limited liability company, MPLPS II, LLC, a Delaware limited liability company, MP Lease-Purchase Services, Inc., a Delaware corporation, and Synterra Capital Management LLC (Incorporated herein by reference to Exhibit 2.1 to the registrant's Current Report on Form 8-K dated as of July 15, 2019.)

~~3.1~~	Certificate of Incorporation of Rent-A-Center, Inc., as amended ~~(Incorporated~~(i ncorporated herein by reference to Exhibit 3.1 to the registrant's Current Report on Form 8-K dated as of December 31, ~~2002.~~2002 )

3.2		Certificate of Amendment to the Certificate of Incorporation of Rent-A-Center, Inc., dated May 19, 2004 ~~(Incorporated~~(in corporated herein by reference to Exhibit 3.2 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2004.~~2004 )

3.3		Amended and Restated Bylaws of Rent-A-Center, Inc. ~~(Incorporated~~(i ncorporated herein by reference to Exhibit 3.1 to the registrant's Current Report on Form 8-K dated as of September 28, ~~2011.~~2011 )

3.4		Certificate of Designations of Series D Preferred Stock of Rent-A-Center, Inc. ~~(Incorporated~~(i ncorporated herein by reference to Exhibit 3.1 to the registrant's Current Report on Form 8-K dated as of March 29, ~~2017.~~2017 )

4.1		Form of Certificate evidencing Common Stock ~~(Incorporated~~(i ncorporated herein by reference to Exhibit 4.1 to the registrant's Current Report on Form 10-Q ~~dated as of~~for the quarter ended March 31, ~~2017.~~2017 )

4.2		Indenture, dated as of November 2, 2010, by and among Rent-A-Center, Inc., as Issuer, the Guarantors named therein, as Guarantors, and The Bank of New York Mellon Trust Company, N.A., as Trustee ~~(Incorporated~~(i ncorporated herein by reference to Exhibit 4.1 to the registrant's Current Report on Form 8-K dated as of November 2, ~~2010.~~2010 )

~~4.3~~	Indenture, dated as of May 2, 2013, by and among Rent-A-Center, Inc., as Issuer, the Guarantors named therein, as Guarantors, and The Bank of New York Mellon Trust Company, N.A., as Trustee (Incorporated herein by reference to Exhibit 4.1 to the registrant's Current Report on Form 8-K dated as of May 2, 2013.)

~~4.4~~	Rights Agreement, dated as of March 28, 2017, between Rent-A-Center, Inc. and American Stock Transfer & Trust Company, LLC, as Rights Agent (Incorporated herein by reference to Exhibit 4.1 to the registrant's Current Report on Form 8-K dated as of March 25, 2017.)

~~10.1†~~	Amended and Restated Rent-A-Center, Inc. Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003.)

~~10.2~~	Guarantee and Collateral Agreement, dated March 19, 2014, by and among Rent-A-Center, Inc., its subsidiaries named as guarantors therein and JPMorgan Chase Bank, N.A. as Administrative Agent (Incorporated herein by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K dated March 19, 2014.)

~~10.3†~~	Form of Stock Option Agreement issuable to Directors pursuant to the Amended and Restated Rent-A-Center, Inc. Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.20 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2004.)

~~10.4†~~	Form of Stock Option Agreement issuable to management pursuant to the Amended and Restated Rent-A-Center, Inc. Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.21 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2004.)

~~10.5†~~	~~Summary of Director Compensation (Incorporated herein by reference to Exhibit 10.5 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2017.)~~

~~10.6†~~	Form of Stock Compensation Agreement issuable to management pursuant to the Amended and Restated Rent-A-Center, Inc. Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.15 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2005.)

~~RENT-A-CENTER, INC. AND SUBSIDIARIES~~



~~10.7†~~10.1		~~Form~~Agreement Containing Consent Order, dated February 21, 2020, by and between the Bureau of ~~Long-Term Incentive Cash Award issuable to management pursuant to the Amended~~Competition and ~~Restated~~ Rent-A-Center, Inc. ~~Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.16 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2005.)~~

~~10.8†~~	Form of Loyalty and Confidentiality Agreement entered into with management (Incorporated herein by reference to Exhibit 10.14 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2016.)

~~10.9†~~	~~Rent-A-Center, Inc. 2006 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.17 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.)~~

~~10.10†~~	Form of Stock Option Agreement issuable to management pursuant to the Rent-A-Center, Inc. 2006 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.18 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.)

~~10.11†~~	Form of Stock Compensation Agreement issuable to management pursuant to the Rent-A-Center, Inc. 2006 Equity Incentive Plan (Incorporated herein by reference to Exhibit 10.19 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2006.)

~~10.12†~~	Form of Long-Term Incentive Cash Award issuable to management pursuant to the Rent-A-Center, Inc. 2006 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.20 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2006.)

~~10.13†~~	Rent-A-Center, Inc. 2006 Equity Incentive Plan and Amendment (Incorporated herein by reference to Exhibit 4.5 to the registrant's Registration Statement on Form S-8 filed with the SEC on January 4, 2007.)

~~10.14†~~	Form of Stock Option Agreement issuable to management pursuant to the Rent-A-Center, Inc. 2006 Equity Incentive Plan (Incorporated herein by reference to Exhibit 10.22 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2006.)

~~10.15†~~	Form of Stock Compensation Agreement issuable to management pursuant to the Rent-A-Center, Inc. 2006 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.23 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2006.)

~~10.16†~~	Form of Stock Option Agreement issuable to Directors pursuant to the Rent-A-Center, Inc. 2006 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.24 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2006.)

~~10.17†~~	Form of Deferred Stock Unit Award Agreement issuable to Directors pursuant to the Rent-A-Center, Inc. 2006 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.23 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2010.)

~~10.18†~~	Form of Executive Transition Agreement entered into with management (Incorporated herein by reference to Exhibit 10.24 to the registrant's Annual Report on Form 10-K for the year ended August 31, 2016.)

~~10.19†~~	~~Rent-A-Center, Inc. 2016 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.36 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.)~~

~~10.20†~~	~~Rent-A-Center, Inc. Non-Qualified Deferred Compensation Plan (Incorporated herein by reference to Exhibit 10.28 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.)~~

~~10.21†~~	~~Rent-A-Center, Inc. 401-K Plan (Incorporated herein by reference to Exhibit 10.30 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2008.)~~

~~10.22~~	Credit Agreement, dated as of March 19, 2014, among Rent-A-Center, Inc., the several lenders from time to time parties thereto, Bank of America, N.A., BBVA Compass Bank, Wells Fargo Bank, N.A. and Suntrust Bank, as syndication agents, and JPMorgan Chase Bank, N.A., as administrative agent (Incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated as of March 19, 2014.)

~~10.23†~~	Rent-A-Center East, Inc. Retirement Savings Plan for Puerto Rico Employees (Incorporated herein by reference to Exhibit 99.1 to the registrant's Registration Statement on Form S-8 filed January 28, 2011.)

~~10.24~~	First Amendment to Franchisee Financing Agreement between ColorTyme Finance, Inc. and Citibank, N.A., dated as of July 25, 2012 (Incorporated herein by reference to Exhibit 10.32 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.)

~~10.25~~	~~Master Confirmation Agreement, dated as of May 2, 2013, between Rent-A-Center, Inc. and Goldman Sachs & Co. (Incorporated~~(incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated ~~as of May 2, 2013.)~~February 21, 2020)

~~RENT-A-CENTER, INC. AND SUBSIDIARIES~~




~~10.26~~31.1*	Second Amendment to Franchisee Financing Agreement between ColorTyme Finance, Inc. and Citibank, N.A., dated as of August 30, 2013 (Incorporated herein by reference to Exhibit 10.34 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.)

~~10.27~~	Third Amendment to Franchisee Financing Agreement between ColorTyme Finance, Inc. and Citibank, N.A., dated as of May 1, 2014 (Incorporated herein by reference to Exhibit 10.33 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.)

~~10.28~~	Waiver and Fourth Amendment to Franchisee Financing Agreement between ColorTyme Finance, Inc. and Citibank, N.A., dated as of September 1, 2014 (Incorporated herein by reference to Exhibit 10.34 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.)

~~10.29~~	First Amendment to the Credit Agreement, dated February 1, 2016, between the Company, JPMorgan Chase Bank, N.A., as administrative agent, the other agents party thereto and the lenders party thereto (Incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated as of February 1, 2016.)

~~10.30†~~	Form of Stock Option Agreement issuable to management pursuant to the Rent-A-Center, Inc. 2016 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.37 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.)

~~10.31†~~	Form of Stock Compensation Agreement (RSU) issuable to management pursuant to the Rent-A-Center, Inc. 2016 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.38 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.)

~~10.32†~~	Form of Stock Compensation Agreement (PSU) issuable to management pursuant to the Rent-A-Center, Inc. 2016 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.39 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.)

~~10.33~~	Second Amendment to the Credit Agreement, dated effective as of September 30, 2016, between the Company, JPMorgan Chase Bank, N.A., as administrative agent, the other agents party thereto and the lenders party thereto (Incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated as of October 4, 2016.)

~~10.34~~†	Separation Agreement and Release of Claims, dated as of January 9, 2017, between Robert D. Davis and Rent-A-Center, Inc. (Incorporated herein by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K dated as of January 9, 2017.)

~~10.35~~	Third Amendment and Waiver to the Credit Agreement, dated effective as of May 1, 2017, between the Company, JPMorgan Chase Bank, N.A., as administrative agent, the other agents party thereto and the lenders party thereto (Incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated as of May 1, 2017.)

~~10.36~~	Fourth Amendment to the Credit Agreement (including Amended and Restated Guarantee and Collateral Agreement), dated as of June 6, 2017, between the Company, JPMorgan Chase Bank, N.A., as administrative agent, the other agents party thereto and the lenders party thereto (Incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated as of June 6, 2017.)

~~10.37~~	Cooperation Agreement, dated February 5, 2018, by and among Rent-A-Center, Inc., Engaged Capital Flagship Master Fund, LP, Engaged Capital Co-Invest V, LP, Engaged Capital Co-Invest V-A, LP, Engaged Capital Holdings, LLC and Glenn W. Welling (Incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated as of February 5, 2018.)

~~10.38~~†	CEO Employment Agreement, dated December 30, 2017, between Mitchell E. Fadel and Rent-A-Center, Inc. (Incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated as of April 3, 2018.)

~~10.39~~	Letter Agreement, dated May 25, 2018, by and among Rent-A-Center, Inc., Engaged Capital Flagship Master Fund, LP, Engaged Capital Co-Invest V, LP, Engaged Capital Co-Invest V-A, LP, Engaged Capital Flagship Fund, LP, Engaged Capital Flagship Fund, Ltd., Engaged Capital, LLC, Engaged Capital Holdings, LLC and Glenn W. Welling (Incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated as of May 25, 2018.)

~~10.40~~	Fifth Amendment to the Credit Agreement, dated as of December 12, 2018, between the Company, JPMorgan Chase Bank, N.A., as administrative agent, the other agents party thereto and the lenders party thereto (Incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K on December 12, 2018.)

~~RENT-A-CENTER, INC. AND SUBSIDIARIES~~



~~10.41~~	Amended and Restated Employment Agreement, entered into as of April 16, 2019, between Rent-A-Center, Inc. and Mitchell E. Fadel (Incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K on April 16, 2019.)

10.42*⁽¹⁾	~~Term Loan Credit Agreement, dated as of August 5, 2019, between Rent-A-Center, Inc., the several lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent~~

10.43*⁽¹⁾	~~ABL Credit Agreement, dated as of August 5, 2019, between Rent-A-Center, Inc., the several lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent~~

10.44*⁽¹⁾	Term Loan Guarantee and Collateral Agreement, dated as of August 5, 2019, between Rent-A-Center, Inc., its subsidiaries named as guarantors therein and JPMorgan Chase Bank, N.A., as administrative agent

10.45*⁽¹⁾	~~ABL Guarantee and Collateral Agreement, dated as of August 5, 2019, between Rent-A-Center, Inc., its subsidiaries named as guarantors therein and JPMorgan Chase Bank, N.A., as administrative agent~~

~~18.1~~	Preferability letter regarding change in accounting principle (Incorporated herein by reference to Exhibit 18.1 to the registrant's Quarterly Report on the Form 10-Q for the quarter ended September 30, 2014).

~~21.1~~	~~Subsidiaries of Rent-A-Center, Inc. (Incorporated herein by reference to Exhibit 21.1 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2016.)~~

31.1*	Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 implementing Section 302 of the Sarbanes-Oxley Act of 2002 by Mitchell E. Fadel

31.2*		Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 implementing Section 302 of the Sarbanes-Oxley Act of 2002 by Maureen B. Short

32.1*		Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Mitchell E. Fadel

32.2*		Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Maureen B. Short

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†104*		~~Management contract or compensatory plan or arrangement.~~
*	~~Filed herewith.~~
₍₁₎	Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish copies of such omitted materials supplementally upon request byCover page Interactive Data File (embedded within the ~~SEC.~~inline XBRL document contained in Exhibit 101)


*			Filed herewith.

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RENT-A-CENTER, INC. AND SUBSIDIARIES

~~SIGNATURES~~SIGNATURE

Pursuant to the requirements ~~of Section 13 or 15(d)~~ of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		RENT-A-CENTER, INC.
		~~RENT-A-CENTER, INC.~~

By:	/S/ MAUREEN B. SHORT
			Maureen B. Short
			EVP, Chief Financial Officer

Date: ~~August 8, 2019~~May 11, 2020

3834



Delaware						45-0491516
(State or other jurisdiction of						(I.R.S. Employer
incorporation or organization)						Identification No.)



~~Title of each class~~	~~Trading Symbol~~	~~Name of each exchange on which registered~~
~~Common Stock, $.01 Par Value~~	~~RCII~~	~~New York Stock Exchange~~


Class						Outstanding
Common stock, $.01 par value per share						53,780,909



~~Class~~		~~Outstanding~~Page No.
~~Common stock, $.01 par value per share~~ PART I.	FINANCIAL INFORMATION	~~54,270,026~~


	Three Months Ended March 31,
	2020		2019
(In thousands)
Net earnings	$	49,292	$	7,323
Other comprehensive (loss) income:
Foreign currency translation adjustments, net of tax of $(1,038) and $138 for the three months ended 2020 and 2019, respectively	(3,906)		521
Total other comprehensive (loss) income	(3,906)		521
Comprehensive income	$	45,386	$	7,844



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




		~~Page No.~~
~~PART I.~~Item 1.	~~FINANCIAL INFORMATION~~

~~Item 1.~~	Condensed Consolidated Financial Statements

			Condensed Consolidated Statements of Operations for the three-month ~~and six-month~~ periods ended ~~June 30, 2019~~March 31 , 20 20 and ~~2018~~2019	1

			Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the three-month ~~and six-month~~ periods ended ~~June 30, 2019~~March 31 , 20 20 and ~~2018~~2019	2

			Condensed Consolidated Balance Sheets as of ~~June 30, 2019~~March 31 , 20 20 and December 31, ~~2018~~2019	3

			Condensed Consolidated Statement of ~~Stockholder's~~Stockholder s ' Equity for the ~~six-month~~three -month periods ending ~~June 30, 2019~~March 31 , 20 20 and ~~2018~~2019	4

			Condensed Consolidated Statements of Cash Flows for the ~~six-month~~three -month periods ended ~~June 30, 2019~~March 3 1 , 20 20 and ~~2018~~2019	56

			Notes to Condensed Consolidated Financial Statements	67



Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations	1920

Item 3.			Quantitative and Qualitative Disclosures About Market Risk	2930

Item 4.			Controls and Procedures	30

PART II.			OTHER INFORMATION



Item 1.			Legal Proceedings	3130

Item 1A.			Risk Factors	31

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	3132

Item 3.			Defaults Upon Senior Securities	3132

Item 4.			Mine Safety Disclosures	3132

Item 5.			Other Information	3132

Item 6.			Exhibits	3433

SIGNATURES


	Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
	2019			2018			2019			2018				2020		2019
(In thousands, except per share data)													(In thousands, except per share data)
Revenues													Revenues
Store													Store
Rentals and fees	$	551,680		$	562,403		$	1,115,034		$	1,127,117		Rentals and fees	$	568,000	$	563,354
Merchandise sales	70,842			64,990			175,312			172,346			Merchandise sales	101,380		104,470
Installment sales	17,270			17,374			32,706			33,778			Installment sales	14,747		15,436
Other	1,244			2,271			1,908			4,855			Other	722		664
Total store revenues	641,036			647,038			1,324,960			1,338,096			Total store revenues	684,849		683,924
Franchise													Franchise
Merchandise sales	10,673			4,880			19,129			8,514			Merchandise sales	12,437		8,456
Royalty income and fees	4,216			3,812			8,530			7,163			Royalty income and fees	4,653		4,314
Total revenues	655,925			655,730			1,352,619			1,353,773			Total revenues	701,939		696,694
Cost of revenues													Cost of revenues
Store													Store
Cost of rentals and fees	155,658			156,041			311,030			312,136			Cost of rentals and fees	165,455		155,372
Cost of merchandise sold	76,034			65,562			179,425			161,915			Cost of merchandise sold	98,757		103,391
Cost of installment sales	5,682			5,617			10,606			10,859			Cost of installment sales	5,025		4,924
Total cost of store revenues	237,374			227,220			501,061			484,910			Total cost of store revenues	269,237		263,687

Franchise cost of merchandise sold	10,480			4,624			18,621			7,999			Franchise cost of merchandise sold	12,524		8,141
Total cost of revenues	247,854			231,844			519,682			492,909			Total cost of revenues	281,761		271,828
Gross profit	408,071			423,886			832,937			860,864			Gross profit	420,178		424,866
Operating expenses													Operating expenses
Store expenses													Store expenses
Labor	152,899			164,172			314,555			345,246			Labor	153,794		161,656
Other store expenses	149,225			156,854			313,019			342,803			Other store expenses	161,718		163,794
General and administrative expenses	38,534			41,792			71,458			86,662			General and administrative expenses	39,175		32,924
Depreciation and amortization	15,121			17,428			30,894			35,328			Depreciation and amortization	14,913		15,773
Other (gains) and charges	(77,537		)	16,489			(44,167		)	33,944
Other charges													Other charges	1,703		33,370

Total operating expenses	278,242			396,735			685,759			843,983			Total operating expenses	371,303		407,517
Operating profit	129,829			27,151			147,178			16,881			Operating profit	48,875		17,349

Interest expense	10,092			10,806			19,481			22,166			Interest expense	4,447		9,389
Interest income	(1,997		)	(202		)	(2,871		)	(411		)	Interest income	(144)		(874)
Earnings (loss) before income taxes	121,734			16,547			130,568			(4,874		)
Income tax expense	27,279			2,794			28,790			1,216
Net earnings (loss)	$	94,455		$	13,753		$	101,778		$	(6,090	)
Basic earnings (loss) per common share	$	1.74		$	0.26		$	1.88		$	(0.11	)
Diluted earnings (loss) per common share	$	1.70		$	0.25		$	1.83		$	(0.11	)
Earnings before income taxes													Earnings before income taxes	44,572		8,834
Income tax (benefit) expense													Income tax (benefit) expense	(4,720)		1,511
Net earnings													Net earnings	$	49,292	$	7,323
Basic earnings per common share													Basic earnings per common share	$	0.90	$	0.14
Diluted earnings per common share													Diluted earnings per common share	$	0.88	$	0.13


	June 30, 2019			December 31, 2018				March 31, 2020		December 31, 2019
(In thousands, except share and par value data)	Unaudited						(In thousands, except share and par value data)	Unaudited
ASSETS							ASSETS
Cash and cash equivalents	$	353,139		$	155,391		Cash and cash equivalents	$	182,919	$	70,494
Receivables, net of allowance for doubtful accounts of $4,349 and $4,883 in 2019 and 2018, respectively	65,666			69,645
Receivables, net of allowance for doubtful accounts of $7,066 and $5,601 in 2020 and 2019, respectively							Receivables, net of allowance for doubtful accounts of $7,066 and $5,601 in 2020 and 2019, respectively	73,103		84,123
Prepaid expenses and other assets	36,251			51,352			Prepaid expenses and other assets	40,108		46,043
Rental merchandise, net							Rental merchandise, net
On rent	625,865			683,808			On rent	660,604		697,270
Held for rent	113,253			123,662			Held for rent	120,930		138,418
Merchandise held for installment sale	3,874			3,834			Merchandise held for installment sale	5,192		4,878
Property assets, net of accumulated depreciation of $554,092 and $551,750 in 2019 and 2018, respectively	197,750			226,323
Property assets, net of accumulated depreciation of $526,307 and $522,826 in 2020 and 2019, respectively							Property assets, net of accumulated depreciation of $526,307 and $522,826 in 2020 and 2019, respectively	160,082		166,138
Operating lease right-of-use assets	265,767			—			Operating lease right-of-use assets	270,573		281,566
Deferred tax asset	25,568			25,558			Deferred tax asset	14,889		14,889
Goodwill	56,815			56,845			Goodwill	70,217		70,217
Other intangible assets, net	265			499			Other intangible assets, net	8,442		8,762
Total assets	$	1,744,213		$	1,396,917		Total assets	$	1,607,059	$	1,582,798
LIABILITIES							LIABILITIES
Accounts payable – trade	$	95,656		$	113,838		Accounts payable – trade	$	106,855	$	168,120
Accrued liabilities	314,415			337,459			Accrued liabilities	229,177		275,777
Operating lease liabilities	271,635			—			Operating lease liabilities	277,752		285,041
Deferred tax liability	129,941			119,061			Deferred tax liability	163,431		163,984
Senior notes, net	540,676			540,042
Senior debt, net							Senior debt, net	353,821		230,913

Total liabilities	1,352,323			1,110,400			Total liabilities	1,131,036		1,123,835
STOCKHOLDERS’ EQUITY							STOCKHOLDERS’ EQUITY
Common stock, $.01 par value; 250,000,000 shares authorized; 110,562,098 and 109,909,504 shares issued in 2019 and 2018, respectively	1,105			1,099
Common stock, $0.01 par value; 250,000,000 shares authorized; 111,669,318 and 111,166,229 shares issued in 2020 and 2019, respectively							Common stock, $0.01 par value; 250,000,000 shares authorized; 111,669,318 and 111,166,229 shares issued in 2020 and 2019, respectively	1,101		1,110
Additional paid-in capital	843,697			838,436			Additional paid-in capital	868,580		869,617
Retained earnings	905,726			805,924			Retained earnings	996,398		947,875
Treasury stock at cost, 56,369,752 shares in 2019 and 2018	(1,347,677		)	(1,347,677		)
Treasury stock at cost, 57,889,659 and 56,428,482 shares in 2020 and 2019, respectively							Treasury stock at cost, 57,889,659 and 56,428,482 shares in 2020 and 2019, respectively	(1,375,480)		(1,348,969)
Accumulated other comprehensive loss	(10,961		)	(11,265		)	Accumulated other comprehensive loss	(14,576)		(10,670)
Total stockholders' equity	391,890			286,517			Total stockholders' equity	476,023		458,963
Total liabilities and stockholders' equity	$	1,744,213		$	1,396,917		Total liabilities and stockholders' equity	$	1,607,059	$	1,582,798


	Common Stock					Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount
(In thousands)
Balance at December 31, 2019	111,166	$	1,110	$	869,617	$	947,875	$	(1,348,969)	$	(10,670)	$	458,963
Adoption of ASU 2016-13	—	—		—		(769)		—		—		(769)
Net earnings	—	—		—		49,292		—		—		49,292
Other comprehensive loss	—	—		—		—		—		(3,906)		(3,906)
Purchase of treasury stock	—	(14)		—		—		(26,511)		—		(26,525)
Exercise of stock options	69	1		1,194		—		—		—		1,195
Vesting of restricted share units	434	4		(4)		—		—		—		—
Tax effect of stock awards vested and options exercised	—	—		(5,270)		—		—		—		(5,270)
Stock-based compensation	—	—		3,043		—		—		—		3,043
Balance at March 31, 2020	111,669	$	1,101	$	868,580	$	996,398	$	(1,375,480)	$	(14,576)	$	476,023


(in thousands)	August 13, 2019
Receivables	$	1,813
Prepaid expenses and other assets	154
Rental merchandise	17,904
Software	4,300
Right of use operating leases	404
Other intangible assets	8,900
Goodwill	13,403
Lease liabilities	(487)
Net identifiable assets acquired	$	46,391


	Three Months Ended June 30, 2019											Three Months Ended March 31, 2020
	Core U.S.		Acceptance Now		Mexico		Franchising		Consolidated			Rent-A-Center Business		Preferred Lease		Mexico		Franchising		Consolidated
(In thousands)											(In thousands)
Store											Store
Rentals and fees	$	399,799	$	139,104	$	12,777	$	—	$	551,680	Rentals and fees	$	393,165	$	161,998	$	12,837	$	—	$	568,000
Merchandise sales	32,935		37,140		767		—		70,842		Merchandise sales	46,687		53,988		705		—		101,380
Installment sales	17,270		—		—		—		17,270		Installment sales	14,747		—		—		—		14,747
Other	1,092		145		7		—		1,244		Other	366		141		4		211		722
Total store revenues	451,096		176,389		13,551		—		641,036		Total store revenues	454,965		216,127		13,546		211		684,849
Franchise											Franchise
Merchandise sales	—		—		—		10,673		10,673		Merchandise sales	—		—		—		12,437		12,437
Royalty income and fees	—		—		—		4,216		4,216		Royalty income and fees	—		—		—		4,653		4,653
Total revenues	$	451,096	$	176,389	$	13,551	$	14,889	$	655,925	Total revenues	$	454,965	$	216,127	$	13,546	$	17,301	$	701,939



	Six Months Ended June 30, 2019
	Core U.S.		Acceptance Now		Mexico		Franchising		Consolidated
(In thousands)
Store
Rentals and fees	$	807,379	$	282,297	$	25,358	$	—	$	1,115,034
Merchandise sales	83,493		90,296		1,523		—		175,312
Installment sales	32,706		—		—		—		32,706
Other	1,575		318		15		—		1,908
Total store revenues	925,153		372,911		26,896		—		1,324,960
Franchise
Merchandise sales	—		—		—		19,129		19,129
Royalty income and fees	—		—		—		8,530		8,530
Total revenues	$	925,153	$	372,911	$	26,896	$	27,659	$	1,352,619



	Three Months Ended June 30, 2018
	Core U.S.		Acceptance Now		Mexico		Franchising		Consolidated
(In thousands)
Store
Rentals and fees	$	410,108	$	140,799	$	11,496	$	—	$	562,403
Merchandise sales	26,109		38,077		804		—		64,990
Installment sales	17,374		—		—		—		17,374
Other	2,129		135		7		—		2,271
Total store revenues	455,720		179,011		12,307		—		647,038
Franchise
Merchandise sales	—		—		—		4,880		4,880
Royalty income and fees	—		—		—		3,812		3,812
Total revenues	$	455,720	$	179,011	$	12,307	$	8,692	$	655,730



~~(in thousands)~~	~~June 30, 2019~~
~~Weighted-average discount rate~~⁽¹⁾	~~8.0~~	%
~~Weighted-average remaining lease term (in years)~~	3



	Six Months Ended June 30, 2018
	Core U.S.		Acceptance Now		Mexico		Franchising		Consolidated
(In thousands)
Store
Rentals and fees	$	822,750	$	281,623	$	22,744	$	—	$	1,127,117
Merchandise sales	76,693		94,083		1,570		—		172,346
Installment sales	33,778		—		—		—		33,778
Other	4,540		291		24		—		4,855
Total store revenues	937,761		375,997		24,338		—		1,338,096
Franchise
Merchandise sales	—		—		—		8,514		8,514
Royalty income and fees	—		—		—		7,163		7,163
Total revenues	$	937,761	$	375,997	$	24,338	$	15,677	$	1,353,773


	Three Months Ended March 31, 2019
	Rent-A-Center Business		Preferred Lease		Mexico		Franchising		Consolidated
(In thousands)
Store
Rentals and fees	$	407,580	$	143,193	$	12,581	$	—	$	563,354
Merchandise sales	50,558		53,156		756		—		104,470
Installment sales	15,436		—		—		—		15,436
Other	483		173		8		—		664
Total store revenues	474,057		196,522		13,345		—		683,924
Franchise
Merchandise sales	—		—		—		8,456		8,456
Royalty income and fees	—		—		—		4,314		4,314
Total revenues	$	474,057	$	196,522	$	13,345	$	12,770	$	696,694


(In thousands)	March 31, 2020
Beginning allowance for doubtful accounts	$	5,601
Bad debt expense ⁽¹⁾	3,749

Accounts written off	(2,441)
Recoveries	157
Ending allowance for doubtful accounts	$	7,066



(in thousands)	Accrued Charges at December 31, 2018		Charges & Adjustments			Payments & Adjustments			Accrued Charges at June 30, 2019
Cash charges:
Labor reduction costs	$	7,623	$	3,145		$	(8,525	)	$	2,243
Lease obligation costs⁽¹⁾	4,882		—			(4,882		)	—
Other miscellaneous	—		2,565			(2,565		)	—
Total cash charges	$	12,505	5,710			$	(15,972	)	$	2,243
Non-cash charges:
Asset impairments⁽²⁾			8,283
Other⁽³⁾			(58,160		)
Total other (gains) and charges			$	(44,167	)



	Core U.S.			Acceptance Now Staffed			Acceptance Now Virtual			Mexico		Franchising			Total
Locations at beginning of period	2,158			1,106			96			122		281			3,763
New location openings	—			81			8			—		—			89
Conversions and refranchising	(57		)	(37		)	37			—		57			—
Closed locations
Merged with existing locations	(63		)	(119		)	(29		)	—		—			(211		)
Sold or closed with no surviving location	(3		)	—			—			—		(4		)	(7		)
Locations at end of period	2,035			1,031			112			122		334			3,634
Acquired locations closed and accounts merged with existing locations	2			—			—			—		—			2
Total approximate purchase price of acquired stores (in millions)	$	0.1		$	—		$	—		$	—	$	—		$	0.1