Special Note Regarding Forward-Looking Information: Except for historical
information contained herein, the matters set forth in this Form 10-Q are
forward-looking statements. These statements are based on management's current
expectations and plans, which involve risks and uncertainties. Such
forward-looking statements generally can be identified by the use of
forward-looking terminology such as "anticipate," "believe," "could,"
"estimate," "expect," "intend," "plan," "project," "would," "should," and
similar expressions. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the filing date of this
Quarterly Report and which involve risks and uncertainties that may cause actual
results to differ materially from those set forth in these statements. These
risks and uncertainties include factors such as (i) the impact of the COVID-19
pandemic and related measures taken by governmental or regulatory authorities to
combat the pandemic, including the impact of the pandemic and such measures on:
(a) demand for the lease-to-own products offered by our Progressive Leasing and
Aaron's Business segments, (b) Progressive Leasing's retail partners, (c) our
customers, including their ability and willingness to satisfy their obligations
under their lease agreements, (d) our suppliers' ability to provide us with the
merchandise we need to obtain from them, (e) our associates, (f) our labor
needs, including our ability to adequately staff our operations, (g) our
financial and operational performance and (h) our liquidity; (ii) changes in the
enforcement of existing laws and regulations and the adoption of new laws and
regulations that may unfavorably impact our businesses; (iii) the effects of our
announcement of Progressive Leasing's settlement and court-approved consent
order with the FTC on our reputation and business; (iv) our strategic plan,
including the Aaron's Business real estate repositioning and consolidation
components of that plan, failing to deliver the benefits and outcomes we expect,
with respect to improving our Aaron's Business in particular; (v) increased
competition from traditional and virtual lease-to-own competitors, as well as
from traditional and on-line retailers and other competitors; (vi) financial
challenges faced by our franchisees, which we believe may be exacerbated by the
COVID-19 pandemic and related governmental or regulatory measures to combat the
pandemic; and (vii) other risks and uncertainties discussed under Item 1A, "Risk
Factors," in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2019 (the "2019 Annual Report") and under Item 1A, "Risk Factors"
of Part II of this Form 10-Q below. Except as required by law, the Company
undertakes no obligation to update these forward-looking statements to reflect
subsequent events or circumstances after the filing date of this Quarterly
Report.
The following discussion should be read in conjunction with the condensed
consolidated financial statements as of and for the three months ended March 31,
2020 and 2019, including the notes to those statements, appearing elsewhere in
this report. We also suggest that management's discussion and analysis appearing
in this report be read in conjunction with the management's discussion and
analysis and consolidated financial statements included in our 2019 Annual
Report.
Business Overview
Aaron's, Inc. ("we", "our", "us" or the "Company") is a leading omnichannel
provider of lease-purchase solutions. As of March 31, 2020, the Company's
operating and reportable segments are Progressive Leasing, Aaron's Business and
Vive.
Progressive Leasing is a virtual lease-to-own company that provides
lease-purchase solutions through approximately 22,000 retail locations in 46
states and the District of Columbia. It does so by purchasing merchandise from
third-party retailers desired by those retailers' customers and, in turn,
leasing that merchandise to the customers through a cancellable lease-to-own
transaction. Progressive Leasing consequently has no stores of its own, but
rather offers lease-purchase solutions to the customers of traditional and
e-commerce retailers.
Aaron's Business offers furniture, home appliances, consumer electronics and
accessories to consumers with a lease-to-own agreement through its
Company-operated stores in the United States, Canada and Puerto Rico, as well as
through its e-commerce platform, Aarons.com. This operating segment also
supports franchisees of its Aaron's stores. In addition, the Aaron's Business
segment includes the operations of Woodhaven, which manufactures and supplies
the majority of the bedding and a significant portion of the upholstered
furniture leased and sold in Company-operated and franchised stores.
Vive partners with merchants to provide a variety of revolving credit products
originated through third-party federally insured banks to customers that may not
qualify for traditional prime lending (called "second-look" financing programs).

                                       26
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Recent Developments
On March 11, 2020, the World Health Organization declared the outbreak of
COVID-19 a pandemic. In response, local, state and federal governmental
authorities have since issued various forms of stay-at-home orders. Those orders
resulted in store closures or reduced hours and scope of operations for many of
Progressive Leasing's retail partners. In addition, demand for those retail
partners' merchandise was unfavorably impacted by their customers voluntarily
electing to stay-at-home, even for those retail partners whose stores were able
to remain open due to being classified as essential businesses. These
developments have had a significant unfavorable impact on Progressive Leasing's
generation of new lease agreements, invoice volumes and revenues. As disclosed
in the Current Report on Form 8-K that we filed with the SEC on March 23, 2020,
although our Aaron's Business was classified as a provider of essential products
in most jurisdictions, and thus, its store showrooms generally were not required
to close, the Aaron's Business closed it showrooms and shifted to e-commerce and
curbside service only for all of its Company-operated Aaron's stores in order to
protect the health and safety of its customers and associates, except where such
curbside service was prohibited by governmental authorities. Since that time, we
have reopened the majority of our Aaron's Business store showrooms and expect to
reopen the remainder of them during the second quarter of 2020, but there can be
no assurance that those showrooms will not be closed in future months if, for
example, there is a "second wave" or other increase in the number of COVID-19
cases in the areas where our stores are located and we voluntarily close our
showrooms to protect the health and safety of our customers and associates, or
if governmental authorities issue orders requiring such closures due to
COVID-19. We anticipate that the COVID-19 pandemic will continue to adversely
impact our operations, financial condition, liquidity and cash flow, the extent
of which will depend on the length and severity of the outbreak and related
business disruptions, including, for example, whether there is a "second wave"
outbreak of COVID-19 cases later in the year. The following summarizes
significant developments and operational measures taken by the Company in
response to the COVID-19 pandemic:
•      Our primary concern continues to be the health and safety of our

associates and customers. Beginning in mid-March, we transitioned nearly


       all management, Progressive Leasing and store support associates to
       working remotely from home.

• Progressive continues to support its retail partners and has adapted to


       the needs of those who remain open for business via e-commerce and
       curbside lease transactions, including expanding purchasing options.
       Progressive is also assisting in local community volunteer efforts in
       Draper, Utah.

• We understand many of our customers may be experiencing significant

family, health, and/or financial challenges. We are working with our

customers to provide various forms of payment deferment options and/or

other alternative payment schedules to customers in need.

• Our commitment to the health and safety of our associates and customers is

further evident by our decision to temporarily close the Aaron's Business

store showrooms and shift to e-commerce and curbside services only (i.e.,

customers are not to enter the store showrooms, but may pick up

merchandise and make payments outside of the store), which was not a

government-mandated action in most jurisdictions as our store operations

have been classified as essential operations and are therefore permitted

to remain open for business. Further, we are taking significant steps to

reduce the risk of exposure, while continuing to provide our customers

with the essential products they need such as refrigerators, freezers,


       mattresses and computers. We are adapting our operations to protect our
       associates and customers, while still serving our customers who need our

products now more than ever. Until further notice, our store associates


       are not permitted to enter customers' homes for product deliveries or
       product returns, but rather, must deliver the products to the front door
       of the customers' homes.


•      As we begin a phased re-opening of our store showrooms over the next

several months, we are committing to doing so in a manner that complies

with local, state and federal guidelines and that ensures the safety of

our associates and customers. Our store associates will wear masks,

continue to practice social distancing practices and will adhere to strict

cleaning guidelines. Protective sneeze guards will be installed at all

store locations, and the configuration of the showrooms will be modified


       in order to regulate customer traffic.


•      In conjunction with the operational adjustments made at our

Company-operated stores, we have accelerated the rollout of Rapid Customer

Onboarding, which is a decisioning tool designed to improve our customers'

experience by streamlining and standardizing the decisioning process,

shortening transaction times, and establishing appropriate transaction


       sizes and lease payment amounts, given the customer's profile. As of April
       30, 2020, Rapid Customer Onboarding is being utilized in all Aaron's
       Business Company-operated stores in the United States.

• Our franchisees are facing similar adverse impacts to their businesses;

therefore, the Company has, among other things, offered relief through a


       royalty fee abatement until May 16, 2020 and has made various
       modifications to payment terms on outstanding accounts receivable from
       franchisees and to its franchise loan facility.



                                       27

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• We recognize that during these unprecedented times, it is more important

than ever to continue to give back to the communities we serve. Our

Woodhaven manufacturing facility in Coolidge, Georgia quickly converted

operations to produce personal protection equipment, including masks and

gowns, which have been donated to medical and assisted living facilities

across the United States. In addition, we have demonstrated our commitment

to our communities in other ways, including manufacturing and supplying

mattresses to homeless shelters and donating laptop computers to support

remote learning for the children of economically challenged families.

• We continue to monitor the Company's liquidity as the COVID-19 situation

evolves. In response to anticipated adverse impacts of COVID-19, the

Company temporarily borrowed $300.0 million from its revolving credit

facility in March 2020 to bolster the Company's cash position, which we

subsequently repaid on April 30, 2020. As of March 31, 2020, the Company

had $551.0 million of cash and $186.2 million of additional availability

under its revolving credit facility. In addition, the Company has taken

the following actions to further preserve and protect its cash position:


       (i) our executive officers and members of our Board of Directors have
       taken significant pay cuts; (ii) our Progressive Leasing and Aaron's
       Business segments furloughed approximately 2,500 associates; (iii) our
       Aaron's Business significantly reduced the amount of inventory it

purchased and manufactured; (iv) reduced discretionary spending across the

organization; and (v) we are currently negotiating rent concessions with

the landlords of Company-operated Aaron's Business stores. As of April 30,


       2020, the Company had $136.5 million of cash and $486.2 million of
       additional availability under its revolving credit facility.

• Due to the uncertainties resulting from the COVID-19 pandemic, the Company

withdrew its full year 2020 outlook on March 23, 2020.




The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act")
In response to the global impacts of COVID-19 on U.S. companies and citizens,
the government enacted the CARES Act on March 27, 2020. We believe a significant
portion of our Progressive Leasing, Aaron's Business and Vive customers have
received stimulus payments and/or federally supplemented unemployment payments,
pursuant to the CARES Act, which have enabled them to continue making the
payments they owe us under their lease-to-own or credit card agreements, despite
the economically challenging times resulting from the COVID-19 pandemic.
However, we cannot be certain whether those customers will be in a position to
continue making payments to us once those CARES Act benefits have been fully
utilized by the customers. It is possible that many of our customers will
experience unemployment or other economic challenges arising from the COVID-19
pandemic well past their full utilization, and/or the expiration, of those CARES
Act stimulus and unemployment benefits, and any related state benefits, which
could result in a reduction in the portion of our customers who continue making
payments owed to us under their lease-to-own or credit card agreements.
The CARES Act also included several tax relief options for companies, which
resulted in the following provisions available to the Company:
•      The Company has elected to carryback its 2018 net operating losses of
       $242.2 million to 2013, thus generating an anticipated refund of
       $84.4 million and an income tax benefit of $34.2 million as of March 31,
       2020. The tax benefit is the result of the federal income tax rate
       differential between the current statutory rate of 21% and the 35% rate
       applicable to 2013.


•      The Company will defer all payroll taxes permissible in the Act, which

generally applies to Social Security taxes, with 50% of the tax payable on

December 31, 2021 and the remaining 50% of the tax payable on December 31,


       2022.


•      Certain Aaron's Business, Woodhaven and Progressive furlough wages and

benefits may be eligible for an employee retention credit of up to 50% of

wages paid to eligible associates.




Separate from the CARES Act, the IRS extended the due dates for estimated tax
payments for the first and second quarters of 2020 to July 15, 2020.
Additionally, many states are offering similar deferrals.
The extent to which the COVID-19 pandemic, governmental and regulatory measures
related to the pandemic, and our precautionary measures in response thereto may
impact our business will depend on future developments, which are highly
uncertain and cannot be predicted at this time.

                                       28
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Business Environment
In addition to the recent developments from the COVID-19 pandemic discussed
above, the Company remains committed to executing a strategic plan that focuses
on the following items that we believe positions us for success over the
long-term:
• Champion compliance;


• Strengthen relationships of Progressive Leasing current retail partners

and merchant partners;

• Focus on converting existing pipeline into Progressive Leasing retail

partners;

• Enhance our virtual offering at Progressive Leasing;

• Drive omnichannel demand generation at the Aaron's Business;




•      Evaluate potential opportunities to reposition and reinvest in our real
       estate at the Aaron's Business; and

• Manage the Aaron's Business stores with operational excellence.




We believe Aarons.com represents an opportunity to provide our customers with
expanded product selections and shopping convenience in the lease-to-own
industry, especially during the COVID-19 pandemic. We are focused on engaging
customers in ways that are safe and convenient for them by providing them a
seamless, direct-to-door platform through which to shop in store or online
across our product offerings.
Finally, we continue to evaluate various Aaron's Business store optimization and
real estate initiatives, which may include geographically repositioning and
consolidating a significant number of our store locations into larger buildings
and/or different geographic locations that we believe will be more advantageous.
As a result of store optimization initiatives and other cost-reduction
initiatives, the Company initiated a new restructuring program in 2020 to
further optimize and reposition its Company-operated Aaron's store base
portfolio, which resulted in the closure and consolidation of 40 underperforming
Company-operated stores during the first three months of 2020 with the
expectation to close approximately 65 additional stores over the next twelve
months. The Company also further rationalized its store support center and field
support staff, which resulted in a reduction in associate headcount in those
areas to more closely align with current business conditions. The Company closed
and consolidated a total of 294 underperforming Company-operated stores
throughout 2016, 2017, 2018 and 2019 under similar restructuring initiatives.
The Company continually evaluates its Company-operated Aaron's Business store
portfolio to determine if it will further reposition and consolidate its store
base to better align with marketplace demand. Additional restructuring charges
may result from our strategy to reposition and reinvest in our next generation
store concepts to appeal to our target customer market in better, more
profitable locations.
Highlights
The following summarizes significant financial highlights from the three months
ended March 31, 2020:
•      The Company reported revenues of $1.1 billion in the first quarter of 2020

compared to $1.0 billion for the first quarter of 2019. Losses before

income taxes were $414.5 million compared to earnings before income taxes

of $70.3 million during the first quarter of 2019. As discussed below,

losses before income taxes during the first quarter of 2020 were primarily

due to Aaron's Business goodwill impairment charges of $446.9 million.

Progressive Leasing reported revenues of $658.5 million in the first

quarter of 2020, an increase of 25.8% over the first quarter of 2019.

Progressive Leasing's revenue growth is due to a 13.4% increase in total

invoice volume, which was driven by a 10.2% increase in the number of

active doors and a 2.9% increase in invoice volume per active door.

Progressive Leasing's earnings before income taxes increased to $59.0


       million compared to $55.4 million during the first quarter of 2019, due
       mainly to its higher revenue, partially offset by $16.1 million of
       incremental provisions for uncollectible renewal payments and lease
       merchandise write-offs recognized due to potential adverse impacts in

customer payment behavior driven by the direct or indirect impacts of the

COVID-19 pandemic.

• Aaron's Business revenues decreased to $432.8 million for the first

quarter of 2020, compared to $480.1 million in the prior year period. The

decrease is primarily due to the net reduction of 183 Company-operated

stores during the 15-month period ended March 31, 2020 and a 4.6% decrease

in same store revenues in the first quarter of 2020.

• Aaron's Business losses before income taxes were $465.4 million during the

first quarter of 2020 compared to earnings before income taxes of $17.6

million in the prior year period. Losses before income taxes for the

Aaron's Business during the first quarter of 2020 includes a goodwill

impairment charge of $446.9 million, $14.1 million related to an early

termination fee for a sales and marketing agreement, and restructuring

charges of $22.3 million related to the Company's closure and

consolidation of stores in 2020 and changes in estimates of future

sublease activity of vacant closed store properties. Aaron's Business also

recognized $5.7 million of incremental allowances for lease merchandise

write-offs, franchisee accounts receivable, and reserves on the franchise


       loan guarantees due to the potential adverse impacts of the COVID-19
       pandemic.



                                       29

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• The Company recorded a net income tax benefit of $134.4 million during the

first quarter of 2020 as compared to income tax expense of $14.2 million

in the prior year comparable period. The net income tax benefit recognized

in 2020 was primarily the result of losses before income taxes of $414.5


       million as well as a $34.2 million net tax benefit generated by a net
       operating loss carryback that the Company will be taking pursuant to the
       provisions of the CARES Act, as further discussed above.

• The Company generated cash from operating activities of $227.8 million for

the three months ended March 31, 2020 compared to $164.7 million for the

comparable period in 2019. The increase in net cash from operating

activities was primarily driven by the continued growth of Progressive


       Leasing as well as lower lease merchandise purchases by the Aaron's
       Business, partially offset by net income tax refunds of $0.4 million
       during the first quarter of 2020 compared to net income tax refunds of
       $15.3 million in the same period in 2019.


Invoice Volume. We believe that invoice volume is a key performance indicator of
our Progressive Leasing segment. Invoice volume is defined as the retail price
of lease merchandise acquired and then leased to customers during the period,
net of returns. The following table presents total invoice volume for the
Progressive Leasing segment:
For the Three Months Ended March 31 (Unaudited and In
Thousands)                                                   2020           

2019


Progressive Leasing Invoice Volume                      $    447,817     $  

394,727




The increase in invoice volume was driven by a 10.2% increase in active doors
and a 2.9% increase in invoice volume per active door.
Active Doors. Progressive Leasing active doors are comprised of both (i) each
retail store location where at least one virtual lease-to-own transaction has
been completed during the trailing three-month period; and (ii) with respect to
an e-commerce merchant, each state where at least one virtual lease-to-own
transaction has been completed through that e-commerce merchant during the
trailing three-month period. The following table presents active doors for the
Progressive Leasing segment:
Active Doors at March 31 (Unaudited)  2020      2019
Progressive Leasing Active Doors     21,816    19,795


Same Store Revenues. We believe that changes in same store revenues are a key
performance indicator of the Aaron's Business. For the three months ended March
31, 2020, we calculated this amount by comparing revenues for the three months
ended March 31, 2020 to revenues for the comparable period in 2019 for all
stores open for the entire 15-month period ended March 31, 2020, excluding
stores that received lease agreements from other acquired, closed or merged
stores. Same store revenues decreased 4.6% for the three months ended March 31,
2020.
Seasonality
Our revenue mix is moderately seasonal for both our Progressive Leasing and
Aaron's Business segments. Adjusting for growth, the first quarter of each year
generally has higher revenues than any other quarter. This is primarily due to
realizing the full benefit of business that historically gradually increases in
the fourth quarter as a result of the holiday season, as well as the receipt by
our customers in the first quarter of federal and state income tax refunds. Our
customers will more frequently exercise the early purchase option on their
existing lease agreements or purchase merchandise off the showroom floor during
the first quarter of the year. We expect these trends to continue in future
periods. Due to the seasonality of our business, results for any quarter are not
necessarily indicative of the results that may be achieved for a full fiscal
year.

                                       30
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Key Components of Earnings Before Income Taxes
In this management's discussion and analysis section, we review our condensed
consolidated results. For the three months ended March 31, 2020 and the
comparable prior year period, some of the key revenue, cost and expense items
that affected earnings before income taxes were as follows:
Revenues. We separate our total revenues into six components: (i) lease revenues
and fees; (ii) retail sales; (iii) non-retail sales; (iv) franchise royalties
and fees; (v) interest and fees on loans receivable; and (vi) other. Lease
revenues and fees primarily include all revenues derived from lease agreements
at retail locations serviced by Progressive Leasing and the Aaron's Business
Company-operated stores and e-commerce platform. Lease revenues and fees are
recorded net of a provision for uncollectible accounts receivable renewal
payments. Retail sales represent sales of both new and returned lease
merchandise from our Company-operated stores. Non-retail sales primarily
represent new merchandise sales to our franchisees. Franchise royalties and fees
represent fees from the sale of franchise rights and royalty payments from
franchisees, as well as other related income from our franchised stores.
Interest and fees on loans receivable primarily represents merchant fees,
finance charges and annual and other fees earned on loans originated by Vive.
Other revenues primarily relate to revenues from leasing Company-owned real
estate properties to unrelated third parties, as well as other miscellaneous
revenues.
Depreciation of Lease Merchandise. Depreciation of lease merchandise primarily
reflects the expense associated with depreciating merchandise held for lease and
leased to customers by Progressive Leasing and our Company-operated Aaron's
stores and through our e-commerce platform.
Retail Cost of Sales. Retail cost of sales represents the depreciated cost of
merchandise sold through our Company-operated stores.
Non-Retail Cost of Sales. Non-retail cost of sales primarily represents the cost
of merchandise sold to our franchisees.
Operating Expenses. Operating expenses include personnel costs, occupancy costs,
store maintenance, provision for lease merchandise write-offs, shipping and
handling, advertising and marketing, the provision for loan losses in our Vive
segment, franchisee bad debt expense and provision for franchise loan
guarantees, depreciation of property, plant and equipment, intangible asset
amortization expense and professional services expense, among other expenses.
Restructuring Expenses, Net. Restructuring expenses, net primarily represent the
cost of optimization efforts and cost reduction initiatives related to the
Aaron's Business store support center and field support functions. Restructuring
expenses, net are comprised principally of closed store operating lease
right-of-use asset impairment and operating lease charges, fixed asset
impairment charges and workforce reductions.
Impairment of Goodwill. Impairment of goodwill is the full write-off of the
goodwill balance at the Aaron's Business reporting unit. Refer to Note 1 of
these condensed consolidated financial statements for further discussion of the
interim goodwill impairment assessment and resulting impairment charge.
Other Operating Expense (Income). Other operating expense (income) consists of
gains or losses on sales of Company-operated stores and delivery vehicles, fair
value adjustments on assets held for sale, gains or losses on other transactions
involving property, plant and equipment, and gains related to property damage
and business interruption insurance claim recoveries.
Interest Expense. Interest expense consists of interest incurred on the
Company's fixed and variable rate debt.
Other Non-Operating (Expense) Income, Net. Other non-operating (expense) income,
net includes the impact of foreign currency remeasurement, as well as gains and
losses resulting from changes in the cash surrender value of Company-owned life
insurance related to the Company's deferred compensation plan.

                                       31
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Results of Operations - Three months ended March 31, 2020 and 2019


                                               Three Months Ended
                                                    March 31,                       Change
(In Thousands)                                2020            2019             $              %
REVENUES:
Lease Revenues and Fees                   $ 1,047,913     $   944,157     $  103,756          11.0  %
Retail Sales                                    9,531          12,809         (3,278 )       (25.6 )
Non-Retail Sales                               26,846          36,981        (10,135 )       (27.4 )
Franchise Royalties and Fees                    6,724           9,207         (2,483 )       (27.0 )
Interest and Fees on Loans Receivable           9,908           8,646          1,262          14.6
Other                                             352             303             49          16.2
                                            1,101,274       1,012,103         89,171           8.8
COSTS AND EXPENSES:
Depreciation of Lease Merchandise             597,407         500,820         96,587          19.3
Retail Cost of Sales                            6,862           8,632         (1,770 )       (20.5 )
Non-Retail Cost of Sales                       23,581          29,196         (5,615 )       (19.2 )
Operating Expenses                            412,970         387,216         25,754           6.7
Restructuring Expenses, Net                    22,286          13,281          9,005          67.8
Impairment of Goodwill                        446,893               -        446,893            nmf
Other Operating Expense (Income)                  170            (897 )        1,067            nmf
                                            1,510,169         938,248        571,921          61.0
OPERATING (LOSS) PROFIT                      (408,895 )        73,855       (482,750 )          nmf
Interest Income                                   192             101             91          90.1
Interest Expense                               (3,799 )        (4,956 )       (1,157 )       (23.3 )
Other Non-Operating (Expense) Income, Net      (1,951 )         1,308         (3,259 )          nmf
(LOSS) EARNINGS BEFORE INCOME TAXES          (414,453 )        70,308       (484,761 )          nmf
INCOME TAX (BENEFIT) EXPENSE                 (134,448 )        14,230       (148,678 )          nmf
NET (LOSS) EARNINGS                       $  (280,005 )   $    56,078     $ (336,083 )          nmf


nmf-Calculation is not meaningful
Revenues
Information about our revenues by reportable segment is as follows:
                                           Three Months Ended
                                                March 31,                   Change
(In Thousands)                             2020           2019            $           %
REVENUES:
Progressive Leasing                    $   658,534    $   523,401    $ 135,133     25.8  %
Aaron's Business                           432,832        480,056      (47,224 )   (9.8 )
Vive                                         9,908          8,646       

1,262 14.6 Total Revenues from External Customers $ 1,101,274 $ 1,012,103 $ 89,171 8.8 %





                                       32
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The following table presents revenue by source and by segment for the three
months ended March 31, 2020:
                                                           Three Months Ended March 31, 2020
                                                                       Aaron's
(In Thousands)                                 Progressive Leasing     Business      Vive         Total
Lease Revenues and Fees                      $             658,534   $ 

389,379   $       -   $ 1,047,913
Retail Sales                                                     -        9,531           -         9,531
Non-Retail Sales                                                 -       26,846           -        26,846
Franchise Royalties and Fees                                     -        6,724           -         6,724
Interest and Fees on Loans Receivable                            -            -       9,908         9,908
Other                                                            -          352           -           352
Total Revenues                               $             658,534   $  

432,832 $ 9,908 $ 1,101,274




The following table presents revenue by source and by segment for the three
months ended March 31, 2019:
                                                           Three Months Ended March 31, 2019
                                                                       Aaron's
(In Thousands)                                 Progressive Leasing     Business      Vive         Total
Lease Revenues and Fees                      $             523,401   $  420,756   $       -   $   944,157
Retail Sales                                                     -       12,809           -        12,809
Non-Retail Sales                                                 -       36,981           -        36,981
Franchise Royalties and Fees                                     -        9,207           -         9,207
Interest and Fees on Loans Receivable                            -            -       8,646         8,646
Other                                                            -          303           -           303
Total Revenues                               $             523,401   $  

480,056 $ 8,646 $ 1,012,103

Progressive Leasing. Progressive Leasing segment revenues increased primarily
due to an increase in total invoice volume, which was driven by a 10.2% increase
in active doors and a 2.9% increase in invoice volume per active door, partially
offset by an additional provision for uncollectible renewal payments, which was
recorded as a reduction to lease revenues and fees, of $4.4 million due to
potential adverse customer payment behavior driven by the direct or indirect
impacts of the COVID-19 pandemic. The Progressive Leasing segment has
experienced declining invoice volumes since the COVID-19 pandemic began in March
as a result of many of our retail partners being fully or partly closed
temporarily or operating with reduced hours. We expect a reduction in the number
of new lease originations from customers through our retail partners.
Additionally, a continuation or worsening of current economic conditions may
lead to lower consumer confidence which could result in a change in customer
behavior, such as our customers not continuing their current lease agreements or
not entering into new lease agreements with us. We believe these factors will
have an unfavorable impact on the revenues and earnings of Progressive Leasing
in future periods, including during 2020, and also may have an unfavorable
impact on the Company's liquidity, as discussed below in the "Liquidity and
Capital Resources" section.
Aaron's Business. Aaron's Business segment revenues decreased during the three
months ended March 31, 2020 due to a $31.4 million decrease in lease revenues
and fees and a $10.1 million decrease in non-retail sales. Lease revenues and
fees decreased during the three months ended March 31, 2020 primarily due to the
net reduction of 183 Company-operated stores during the 15-month period ended
March 31, 2020 and a 4.6% decrease in same store revenues. The decrease in
non-retail sales is primarily due to the net reduction of 59 franchised stores
during the 15-month period ended March 31, 2020 and lower product purchases by
franchisees. The Company launched certain sales and marketing initiatives
towards the end of 2019, which led to an increase in new customer agreements
into the portfolio but also resulted in a redeployment of store labor towards
sales activities. This redeployment of store labor resulted in lower collections
activity at the end of 2019 which had an unfavorable impact on the size of the
Aaron's Business lease portfolio, resulting in decreases in lease revenues and
same store revenues in the first quarter of 2020 compared to the prior year
period.

                                       33
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In response to the risk presented by the COVID-19 pandemic, in March 2020, the
Company voluntarily closed the showrooms for all of its Company-operated Aaron's
Business stores, and moved to an e-commerce and curbside only service model, to
protect the health and safety of the Aaron's Business' customers and associates,
while continuing to provide our customers with the essential products they need
such as refrigerators, freezers, mattresses and computers. That closure of all
Company-operated store showrooms negatively impacted the volume of new in-store
lease agreements, partially offset by increases in e-commerce agreements, in
late March and into April 2020. Aaron's Business e-commerce revenues were
approximately 11% and 9% of Aaron's Business total lease revenues and fees
during the three months ended March 31, 2020 and 2019, respectively. We expect a
reduction in the number of new in-store lease agreements generated by the
Aaron's Business as a result of the voluntary closure of its showrooms.
Additionally, a continuation or worsening of current economic conditions may
lead to lower consumer confidence which could result in a change in customer
behavior, such as our customers not continuing their current lease agreements or
not entering into new lease agreements with us. Further, our temporary
suspension of the franchise royalty fee along with the potential decline in
agreement volumes and revenues generated by our franchisees will negatively
impact our revenues from franchise royalties and fees.
We believe these factors will have an unfavorable impact on the revenues and
earnings of the Aaron's Business in future periods, including during 2020, and
also may have an unfavorable impact on the Company's liquidity, as discussed
below in the "Liquidity and Capital Resources" section.
Operating Expenses
Information about certain significant components of operating expenses for the
first quarter of 2020 as compared to the first quarter of 2019 is as follows:
                                             Three Months Ended
                                                 March 31,                       Change
(In Thousands)                              2020            2019            $              %
Personnel Costs                         $   168,390     $  181,750     $  (13,360 )       (7.4 )%
Occupancy Costs                              57,493         58,128           (635 )       (1.1 )
Provision for Lease Merchandise
Write-Offs                                   79,675         56,995         22,680         39.8
Bad Debt Expense and Provision for
Franchise Loan Guarantees                     3,036          2,767            269          9.7
Shipping and Handling                        16,525         19,188         (2,663 )      (13.9 )
Advertising                                  12,702         13,583           (881 )       (6.5 )
Provision for Loan Losses                    12,722          4,255          8,467        199.0
Intangible Amortization                       7,407          9,997         (2,590 )      (25.9 )
Professional Services                        22,197          6,695         15,502        231.5
Other Operating Expenses                     32,823         33,858         (1,035 )       (3.1 )
Operating Expenses                      $   412,970     $  387,216     $   25,754          6.7  %


nmf-Calculation is not meaningful
As a percentage of total revenues, operating expenses decreased to 37.5% for the
first quarter of 2020 from 38.3% in the same period in 2019.
Personnel costs decreased primarily due to a $16.5 million decrease at our
Aaron's Business driven by the reduction of store support center and field
support staff from our restructuring programs in 2019 and 2020. This was
partially offset by a $4.0 million increase at our Progressive Leasing segment
due to hiring to support the growth of Progressive. Beginning in late March
2020, the Aaron's Business and Progressive instituted significant pay cuts for
executive officers and furloughed or terminated associates to better align the
organization with current operations resulting from the closure of our Aaron's
Business showrooms and declining lease originations caused by the COVID-19
pandemic, and thus, we expect its personnel costs in the second quarter to
reflect those actions.
The provision for lease merchandise write-offs as a percentage of lease revenues
for the Progressive Leasing segment was 8.5% in 2020 compared to 7.0% in 2019.
This increase was primarily driven by an incremental provision of $11.7 million
recognized due to potential adverse impacts of the COVID-19 pandemic. The
provision for lease merchandise write-offs as a percentage of lease revenues for
the Aaron's Business increased to 6.2% in 2020 from 4.8% in 2019. This increase
is primarily driven by an incremental provision of $2.7 million recognized due
to potential adverse impacts of the COVID-19 pandemic, an increase in the number
and type of promotional offerings, higher ticket leases and an increasing mix of
e-commerce as a percentage of revenues, which typically results in higher
charge-off rates than in-store lease agreements, during the three months ended
March 31, 2020.

                                       34
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Bad debt expense and provision for franchise loan guarantees increased as a
result of additional allowances and reserves of $3.0 million recognized due to
the potential financial health deterioration of certain franchisees as a result
of the COVID-19 pandemic.
The provision for loan losses increased primarily due to an incremental
allowance of $7.0 million for the forecasted adverse macroeconomic conditions
stemming primarily from the COVID-19 pandemic, including higher unemployment
rates and market volatility, which were used in estimating our allowance for
loan losses as of March 31, 2020. The Company adopted CECL during the first
quarter of 2020, which requires entities to consider forecasted macroeconomic
conditions in determining their allowance for loan losses.
Professional services increased primarily due to an Aaron's Business early
termination fee of $14.1 million for a sales and marketing agreement.
Other Costs and Expenses
Depreciation of lease merchandise. As a percentage of total lease revenues and
fees, depreciation of lease merchandise increased to 57.0% from 53.0% in the
prior year period, primarily due to a shift in lease merchandise mix from the
Aaron's Business to Progressive Leasing, which is consistent with the increasing
proportion of Progressive Leasing's revenue to total lease revenue. Progressive
Leasing generally experiences higher depreciation as a percentage of lease
revenues because, among other factors, its merchandise has a shorter average
life on lease, a higher rate of customer early buyouts, and the merchandise is
generally purchased at retail prices compared to the Aaron's Business, which
procures merchandise at wholesale prices. Progressive Leasing's depreciation of
lease merchandise as a percentage of Progressive Leasing's lease revenues and
fees was 70.4% in 2020 compared to 68.8% in 2019, due to an increase in early
buyouts, which have a lower margin, quarter over quarter. Aaron's Business
depreciation of lease merchandise as a percentage of Aaron's Business lease
revenues and fees increased to 34.3% in 2020 from 33.5% in the prior year due to
higher depreciation on merchandise not on lease during 2020 as compared to 2019
and the impact of COVID-19 driving lower cash collections during the second half
of March 2020.
Retail cost of sales. Retail cost of sales as a percentage of retail sales
increased to 72.0% from 67.4% primarily due to higher sales price discounting of
pre-leased merchandise and higher inventory purchase cost during 2020 as
compared to 2019.
Non-retail cost of sales. Non-retail cost of sales as a percentage of non-retail
sales increased to 87.8% from 78.9% primarily due to higher inventory purchase
cost during 2020 as compared to 2019.
Restructuring expenses, net. Restructuring activity for the three months ended
March 31, 2020 was comprised of expenses of $22.3 million, which were primarily
operating lease right-of-use asset impairment and operating lease charges, fixed
asset impairment charges and workforce reductions for Aaron's Business stores
identified for future closure during the first quarter of 2020.
Impairment of goodwill. During the three months ended March 31, 2020, the
Company recorded a loss of $446.9 million within the Aaron's Business segment to
fully write-off its goodwill balance. Refer to Note 1 of these condensed
consolidated financial statements for further discussion of the interim goodwill
impairment assessment and resulting impairment charge.
Other operating expense (income). Other operating expense (income) consists of
gains or losses on sales of Company-operated stores and delivery vehicles, fair
value adjustments on assets held for sale, gains or losses on other transactions
involving property, plant and equipment, and gains related to property damage
and business interruption insurance claim recoveries. Other operating expense
was not significant during the three months ended March 31, 2020. Other
operating income during the three months ended March 31, 2019 included a $0.9
million gain on insurance recoveries related to payments received from insurance
carriers for Hurricanes Harvey and Irma claims in excess of the related property
insurance receivables.
Operating (Loss) Profit
Interest expense. Interest expense decreased to $3.8 million in 2020 from $5.0
million in 2019 due primarily to a lower outstanding average debt balance in the
period and lower average interest rate on our revolving credit and term loan
facility during the three months ended March 31, 2020, partially offset by
interest expense incurred related to the temporary $300.0 million draw on our
revolving credit facility in March 2020, which we subsequently repaid on
April 30, 2020.
Other non-operating (expense) income, net. Other non-operating (expense) income,
net includes the impact of foreign currency remeasurement, as well as gains or
losses resulting from changes in the cash surrender value of Company-owned life
insurance related to the Company's deferred compensation plan. Foreign exchange
remeasurement losses and gains resulting from net changes in the value of the
U.S. dollar against the Canadian dollar were not significant during the three
months ended March 31, 2020 or 2019. The changes in the cash surrender value of
Company-owned life insurance resulted in net losses of $1.9 million during the
three months ended March 31, 2020 and net gains of $1.3 million during the three
months ended March 31, 2019.

                                       35
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(Loss) Earnings Before Income Taxes
Information about our (loss) earnings before income taxes by reportable segment
is as follows:
                                              Three Months Ended
                                                   March 31,                      Change
(In Thousands)                                2020           2019            $              %
(LOSS) EARNINGS BEFORE INCOME TAXES:
Progressive Leasing                       $   58,987     $   55,388     $    3,599           6.5  %
Aaron's Business                            (465,357 )       17,588       (482,945 )           nmf
Vive                                          (8,083 )       (2,668 )      

(5,415 ) (203.0 ) Total (Loss) Earnings Before Income Taxes $ (414,453 ) $ 70,308 $ (484,761 )

           nmf


nmf-Calculation is not meaningful
The factors impacting the change in (loss) earnings before income taxes are
discussed above.
Income Tax (Benefit) Expense
The Company recorded a net income tax benefit of $134.4 million for the three
months ended March 31, 2020 as compared to income tax expense of $14.2 million
in the prior year comparable period. The net income tax benefit recognized in
2020 was primarily the result of losses before income taxes of $414.5 million as
well as a discrete income tax benefit generated by the provisions of the CARES
Act. The CARES Act, among other things, (i) waived the 80% taxable income
limitation on the use of net operating losses which was previously set forth
under the Tax Cuts and Jobs Act of 2017 and (ii) provided that net operating
losses arising in a taxable year beginning after December 31, 2017 and before
January 1, 2021 may be treated as a carryback to each of the five preceding
taxable years. These CARES Act provisions resulted in a $34.2 million net tax
benefit driven by the rate differential on the carryback of the Company's 2018
net operating loss previously recorded at 21% to the 2013 tax year, where the
benefit is recognized at 35%.

                                       36
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Overview of Financial Position
The major changes in the condensed consolidated balance sheet from December 31,
2019 to March 31, 2020 include:
•      Cash and cash equivalents increased $493.3 million to $551.0 million at
       March 31, 2020. For additional information, refer to the "Liquidity and
       Capital Resources" section below.


•      Lease merchandise decreased $155.8 million due to lower inventory
       purchases at the Aaron's Business as a result of store closures and
       related initiatives in 2020 and reduction in inventory balances at

Progressive Leasing due to timing of early buyouts, which are seasonally

higher in the first quarter.

• Operating lease right-of-use assets decreased $29.7 million primarily due

to impairment charges recorded in connection with restructuring actions at


       the Aaron's Business.


•      Goodwill decreased to $288.8 million at March 31, 2020 due to an

impairment charge of $446.9 million to recognize a full impairment of the

goodwill within the Aaron's Business reporting unit. For additional

information, refer to Note 1 to these condensed consolidated financial


       statements.


•      Income tax receivable increased $44.1 million due primarily to the
       anticipated refund of $84.4 million generated by provisions of the CARES
       Act as described above, partially offset by current tax expense, which
       results in a future tax payment obligation recognized during the three
       months ended March 31, 2020.

• Debt increased $305.0 million due to a temporary $300.0 million draw on


       the Company's revolving credit facility in March 2020, which was
       subsequently repaid on April 30, 2020, and additional borrowings of $5.6
       million under the term loan in January 2020.



                                       37

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Liquidity and Capital Resources
Actions Taken in Response to the COVID-19 Pandemic and its Impact on Our Future
Cash Position
Due to the adverse impact the COVID-19 pandemic has had on the U.S. economy and
on the operations and financial performance of our business segments, including
a significant decline in the number of new lease agreements generated by our
Progressive Leasing and Aaron's Business segments during March, April and early
May 2020, and given the uncertainty regarding the duration and extent of the
unfavorable impacts the pandemic may have on the economy, including the capital
markets, and on our customers and the operations and financial performance of
our business segments, the Company has been especially focused on preserving and
protecting its liquidity position. It has taken several steps to increase,
preserve and protect its cash position, for example, including: (i) temporarily
borrowing $300 million from its revolving credit facility during March 2020,
which we subsequently repaid on April 30, 2020; (ii) instituting significant pay
cuts for our executive officers and members of our Board of Directors; (iii)
furloughing approximately 2,500 associates; (iv) significantly reducing the
amount of inventory the Aaron's Business purchased and manufactured; (v) reduced
discretionary spending across the organization; and (vi) negotiating rent
concessions with the landlords of Company-operated Aaron's Business stores.
Offsetting these steps to increase and preserve liquidity were cash outflows for
(i) the $175 million cash payment on April 27, 2020 to settle the Progressive
Leasing FTC matter, and (ii) the scheduled $60 million principal payment on our
outstanding unsecured senior notes.
Despite taking the steps discussed above, we believe the Company may experience
a temporary decrease in its liquidity position in future periods due primarily
to the combination of: (i) a reduction in revenue attributable to the decrease
in the number of new customer lease agreements generated by the Progressive
Leasing and Aaron's Business segments during March, April and early May 2020, as
a result of the COVID-19 pandemic, including our decision to close all of our
Aaron's Business showrooms to protect the health and safety of our customers and
associates, as well as changes in customer behaviors driven by a continuation or
worsening of current economic conditions; (ii) an increase in cash outflows,
before there has been a meaningful increase in cash inflows derived from newly
generated customer leases, as the Aaron's Business brings back a portion of its
furloughed associates to staff its showrooms and other operations that have
reopened, and begins to purchase and manufacture inventory again, and
Progressive Leasing brings back a portion of its furloughed associates in
anticipation of an increase in its requirements for revenues, customer service
and other associates; (iii) if invoice volumes were to increase for Progressive
Leasing, the cash outflows for the purchase of inventory from the third-party
retailers will be required at the time of lease origination, while the
associated cash inflows from customer lease payments is estimated to be received
over time; (iv) the temporary suspension of the franchisee royalty fee
obligation; and (v) the various forms of payment deferment options we are
providing our customers that are experiencing hardships. The Company intends to
continue to closely monitor its liquidity position and capital requirements as
the impacts of the COVID-19 pandemic on the economy and the Company's businesses
and financial position continue to unfold in the coming periods.
General
Our ongoing primary capital requirements consist of buying merchandise for the
operations of Progressive Leasing and the Aaron's Business. As Progressive
Leasing continues to grow, the need for additional lease merchandise is expected
to remain our major capital requirement. Other capital requirements include (i)
purchases of property, plant and equipment, including leasehold improvements for
our next generation store concepts; (ii) expenditures for acquisitions,
including franchisee acquisitions; (iii) expenditures related to our corporate
operating activities; (iv) personnel expenditures; (v) income tax payments; (vi)
funding of loans receivable for Vive; and (vii) servicing our outstanding debt
obligations. The Company has also historically paid quarterly cash dividends and
periodically repurchases stock. Our capital requirements have been financed
through:
• cash flows from operations;


• private debt offerings;


• bank debt; and


• stock offerings.


As of March 31, 2020, the Company had $551.0 million of cash and $186.2 million
of availability under its revolving credit facility. As discussed in Note 4 to
the condensed consolidated financial statements, the Company has accrued $175.0
million related to Progressive Leasing's settlement of the FTC matter. Following
the FTC's approval of that settlement on April 17, 2020, and the approval of the
consent order related thereto by the United States District Court for the
Northern District of Georgia on April 22, 2020, the Company made that payment to
the FTC on April 27, 2020 with cash on hand.

                                       38
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In April 2020, the Company made its regularly scheduled principal payments of
$60 million plus accrued interest on its outstanding senior unsecured notes and
repaid in full the $300.0 million outstanding balance on its revolving credit
facility. As of April 30, 2020, the Company had $136.5 million of cash and
$486.2 million of availability under its revolving credit facility.
Cash Provided by Operating Activities
Cash provided by operating activities was $227.8 million and $164.7 million
during the three months ended March 31, 2020 and 2019, respectively. The $63.0
million increase in operating cash flows was primarily driven by the continued
growth of Progressive Leasing as well as lower lease merchandise purchases at
the Aaron's Business, partially offset by net income tax refunds of $0.4 million
during the first quarter of 2020 compared to net income tax refunds of $15.3
million in the same period in 2019. Other changes in cash provided by operating
activities are discussed above in our discussion of results for the three months
ended March 31, 2020.
Cash Used in Investing Activities
Cash used in investing activities was $30.6 million and $26.0 million during the
three months ended March 31, 2020 and 2019, respectively. The $4.6 million
increase in investing cash outflows was primarily due to $7.0 million higher net
cash outflows for investments in Vive loans receivable, partially offset by $2.6
million lower outflows for the acquisition of businesses and customer agreements
in 2020 as compared to 2019.
Cash Provided by (Used in) Financing Activities
Cash provided by financing activities was $296.2 million during the three months
ended March 31, 2020 compared to cash used in financing activities of $29.9
million during the three months ended March 31, 2019. The $326.1 million
fluctuation in financing cash outflows was primarily due to net borrowings of
debt of $305.2 million during 2020 compared to net repayments of $16.6 million
during 2019.
Share Repurchases
We purchase our stock in the market from time to time as authorized by our Board
of Directors. As of March 31, 2020, we have the authority to purchase
additional shares up to our remaining authorization limit of $262.0 million.
Dividends
We have paid quarterly cash dividends for 33 consecutive years. At its November
2019 meeting, our board of directors increased the quarterly dividend to $0.04
per share from $0.035 per share, representing the Company's 17th consecutive
annual increase. Aggregate dividend payments for the three months ended
March 31, 2020 were $2.7 million. We expect to continue paying this quarterly
cash dividend.
Debt Financing
As of March 31, 2020, $225.0 million in term loans and $300.0 million in
borrowings were outstanding under the revolving credit and term loan agreement
that matures on January 21, 2025. The Company subsequently repaid the $300.0
million outstanding on the revolving credit facility on April 30, 2020. The
total available credit under our revolving credit facility as of March 31, 2020
was $186.2 million. The revolving credit and term loan agreement includes an
uncommitted incremental facility increase option (an "accordion facility")
which, subject to certain terms and conditions, permits the Company at any time
prior to the maturity date to request an increase in extensions of credit
available thereunder by an aggregate additional principal amount of up to $250.0
million.
As of March 31, 2020, the Company had outstanding $120.0 million in aggregate
principal amount of senior unsecured notes issued in a private placement. The
notes bear interest at the rate of 4.75% per year and mature on April 14, 2021.
Quarterly payments of interest commenced July 14, 2014, and annual principal
payments of $60.0 million commenced April 14, 2017. In April 2020, the Company
made its regularly scheduled principal payments of $60 million plus accrued
interest on its outstanding senior unsecured notes.

                                       39
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Our revolving credit and term loan agreement contains certain financial
covenants, which include requirements that the Company maintain ratios of (i)
adjusted EBITDA plus lease expense to fixed charges of no less than 2.50:1.00
and (ii) total debt to adjusted EBITDA of no greater than 3.00:1.00. In each
case, adjusted EBITDA refers to the Company's consolidated net income before
interest and tax expense, depreciation (other than lease merchandise
depreciation), amortization expense, and other cash and non-cash charges. If we
fail to comply with these covenants, we will be in default under these
agreements, and all amounts could become due immediately. We are in compliance
with all of these covenants at March 31, 2020 and believe that we will continue
to be in compliance in the future. However, given the uncertainties associated
with the COVID-19 pandemic's impact on our operations and financial performance
in future periods, there can be no assurances that we will not be required to
seek amendments or modifications to one or more of the covenants in our debt
agreements and/or waivers of potential or actual defaults of those covenants.
Commitments
Income Taxes
During the three months ended March 31, 2020, we received net tax refunds of
$0.4 million. Within the next nine months, we anticipate we will make
$76.0 million in estimated tax payments for U.S. federal income taxes and $7.0
million for state income taxes. In response to the global impacts of COVID-19 on
U.S. companies and citizens, the government enacted the CARES Act on March 27,
2020. The CARES Act included several tax relief options for companies, including
a five-year net operating loss carryback. The Company has elected to carryback
its 2018 net operating losses of $242.2 million to 2013, thus generating an
anticipated federal income tax refund of $84.4 million. Furthermore, the Company
estimates it will receive $3.0 million in federal income tax refunds during the
year ended December 31, 2021. Refer to "CARES Act Considerations" for further
discussion of tax relief options under the CARES Act.
The Tax Act, which was enacted in December 2017, provides for 100% expense
deduction of certain qualified depreciable assets, including lease merchandise
inventory, purchased by the Company after September 27, 2017 (but would be
phased down starting in 2023). Because of our sales and lease ownership model,
in which the Company remains the owner of merchandise on lease, we benefit more
from bonus depreciation, relatively, than traditional furniture, electronics and
appliance retailers.
We estimate the deferred tax liability associated with bonus depreciation from
the Tax Act and the prior tax legislation is approximately $321.0 million as of
December 31, 2019, of which approximately 88% is expected to reverse as a
deferred income tax benefit in 2020 and most of the remainder during 2021. These
amounts exclude bonus depreciation the Company will receive on qualifying
expenditures after December 31, 2019.
Franchise Loan Guarantee
We have guaranteed the borrowings of certain independent franchisees under a
franchise loan agreement with several banks, under which the maximum facility
commitment amount under the franchisee loan program was $25.0 million as of
March 31, 2020. At March 31, 2020, the total amount that we might be obligated
to repay in the event franchisees defaulted was $19.6 million. However, due to
franchisee borrowing limits, we believe any losses associated with defaults
would be substantially mitigated through recovery of lease merchandise and other
assets. Since the inception of the franchise loan program in 1994, the Company's
losses associated with the program have been immaterial. However, due to the
uncertainty related to the impact of the COVID-19 pandemic and possible related
governmental measures to control the pandemic, there can be no assurance that
the Company will not incur future losses on outstanding franchisee borrowings
under the franchise loan facility in the event of defaults or impending defaults
by franchisees. The Company records a liability related to estimated future
losses from repaying the franchisees' outstanding debt obligations upon any
possible future events of default, which is included in accounts payable and
accrued expenses in the condensed consolidated balance sheets. That liability
was $2.4 million and $0.4 million as of March 31, 2020 and December 31, 2019,
respectively.
Contractual Obligations and Commitments
As part of our ongoing operations, we enter into various arrangements that
obligate us to make future payments, including debt agreements, operating
leases, and other purchase obligations. The future cash commitments owed under
these arrangements generally fluctuate in the normal course of business as we,
for example, borrow on or pay down our revolving lines of credit, make scheduled
payments on other debt, leases or purchase obligations and renegotiate
arrangements or enter into new arrangements. Other than the $300.0 million
temporary draw on the Company's revolving credit facility, which was repaid by
the Company on April 30, 2020, and the $175.0 million payment to the FTC for
settlement of the Progressive Leasing FTC matters as described within the
"Liquidity and Capital Resources" section above, there were no material changes
outside the normal course of business in our material cash commitments and
contractual obligations from those reported in our Annual Report on Form 10-K
for the year ended December 31, 2019.

                                       40

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Unfunded Lending Commitments
The Company, through its Vive business, has unconditionally cancellable unfunded
lending commitments totaling approximately $224.0 million and $225.0 million as
of March 31, 2020 and December 31, 2019, respectively, that do not give rise to
revenues and cash flows. These unfunded commitments arise in the ordinary course
of business from credit card agreements with individual cardholders that give
them the ability to borrow, against unused amounts, up to the maximum credit
limit assigned to their account. While these unfunded amounts represent the
total available unused lines of credit, the Company does not anticipate that all
cardholders will utilize their entire available line at any given point in time.
Commitments to extend unsecured credit are agreements to lend to a cardholder so
long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses.
Since many of the commitments are expected to expire without being drawn upon,
the total commitment amounts do not necessarily represent future cash
requirements.
Critical Accounting Policies
Refer to the 2019 Annual Report. Accounting policies herein have also been
updated as applicable to describe the impacts of the COVID-19 pandemic.
Recent Accounting Pronouncements
Refer to Note 1 to the condensed consolidated financial statements for a
discussion of recently issued accounting pronouncements, including
pronouncements that were adopted in the current year.

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