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Management's Discussion of Results of Operations (Excerpts)

For purposes of readability, Zenith attempts to strip out all tables in excerpts from the Management Discussion. That information is contained elsewhere in our articles. The idea of this summary is simply to review how well we believe Management does its reporting. Also, this highlights what Management believes is important.

In our Decision Matrix at the end of each article, a company with 0 to 2 gets a "-1", and 3 to 5 gets a "+1."

On a scale of 0 to 5, 5 being best, Zenith rates this company's Management's Discussion as a 5.


Business Overview

Aaron’s, Inc. ("we", "our", "us" or the "Company") is a leading omnichannel 
provider of lease-purchase solutions. As of June 30, 2017, the Company's 
operating segments are Aaron's Business, Progressive Leasing, and DAMI. The 
Aaron's Business offers furniture, consumer electronics, home appliances and 
accessories to consumers primarily on a month-to-month, lease-to-own basis with 
no credit needed through the Company's Aaron's stores in the United States and 
Canada. This operating segment also awards franchises and supports franchisees 
of its Aaron's stores. In addition, the Aaron's Business segment also includes 
the operations of Woodhaven Furniture Industries, which manufactures and 
supplies the majority of the upholstered furniture and bedding leased and sold 
in Company-operated and franchised stores. Progressive Leasing is a virtual 
lease-to-own company that provides lease-purchase solutions through 
approximately 24,000 retail locations in 46 states. It does so by purchasing 
merchandise from third-party retailers desired by those retailers’ customers 
and, in turn, leasing that merchandise to the customers on a lease-to-own 
basis. Progressive Leasing consequently has no stores of its own, but rather 
offers lease-purchase solutions to the customers of traditional retailers. 
DAMI, which was acquired by Progressive Leasing on October 15, 2015, partners 
with merchants to provide a variety of revolving credit products originated 
through two third-party federally insured banks to customers that may not 
qualify for traditional prime lending (called "second-look" financing 
programs). Business Environment and Company Outlook Like many industries, the 
lease-to-own industry has been transformed by the internet and virtual 
marketplace. We believe the Progressive Leasing and DAMI acquisitions have been 
strategically transformational for the Company in this respect and will 
continue to strengthen our business, as demonstrated by Progressive Leasing’s 
significant revenue and profit growth thus far in 2017. We also believe the 
traditional lease-to-own industry has been negatively impacted in recent 
periods by: (i) the continuing economic challenges facing many traditional 
lease-to-own customers; (ii) increased competition from a wide range of 
competitors, including national, regional and local operators of lease-to-own 
stores; virtual lease-to-own companies; traditional and e-commerce retailers; 
and, indirectly, from various types of consumer finance companies that enable 
our customers to shop at traditional or online retailers; and (iii) the 
challenges faced by many traditional "brick-and-mortar" retailers, with respect 
to a decrease in the number of consumers visiting those stores, especially 
younger consumers. In response to these changing market conditions, we are 
executing a strategic plan that focuses on the following items and that we 
believe positions us for success over the long-term: • Improve Aaron's store 
profitability; • Accelerate our omnichannel platform; • Strengthen 
relationships of Progressive Leasing and DAMI's current retail partners; • 
Focus on converting existing pipeline into Progressive Leasing retail partners; 
and • Champion compliance. As part of executing this strategy, we sold the 82 
Company-operated HomeSmart stores on May 13, 2016, which we believe is enabling 
us to sharpen our focus on activities that have the highest potential for 
return. We also took steps to further address the expense structure of our 
Aaron's Business by completing a thorough review of our remaining store base in 
order to identify opportunities for rationalization. As a result of this 
evaluation and other cost-reduction initiatives, the Company closed 56 
underperforming Company-operated stores during 2016 and closed 63 stores in the 
first six months of 2017, and anticipates closing an additional six stores 
during the remainder of 2017. The Company also optimized its home office and 
field support staff in 2016 and 2017, which resulted in a reduction in employee 
headcount in those areas, to more closely align with current business 
conditions. Highlights The following summarizes significant highlights from the 
three and six months ended June 30, 2017: • The Company reported revenue of 
$815.6 million for the three months ended June 30, 2017 compared to $789.4 
million for the comparable period in 2016. Net earnings before income taxes 
decreased to $57.0 million compared to $61.1 million during the second quarter 
of 2016, due in part to $13.4 million of restructuring expenses incurred during 
the current period related to the store closures described above.

• The Company generated cash from operating activities of $115.6 million for 
the six months ended June 30, 2017 compared to $325.5 million for the 
comparable period in 2016. The decline in net cash from operating activities 
was impacted by net income tax payments of $65.8 million in 2017 compared to 
net income tax refunds of $115.3 million in 2016.

• The Company returned excess capital of $38.2 million to our shareholders 
through the repurchase of 1.2 million shares and the payment of our quarterly 
dividends, which we have paid for 30 consecutive years.

• Progressive Leasing achieved record quarterly revenues of $373.5 million for 
the three months ended June 30, 2017, an increase of 25.1% over the three 
months ended June 30, 2016. Progressive Leasing's revenue growth is due to a 
37.5% increase in active doors, which contributed to a 31.6% increase in total 
invoice volume. Progressive Leasing increased its earnings before income taxes 
to $38.2 million compared to $29.1 million during the second quarter of 2016, 
due mainly to its revenue growth.

• Aaron's Business revenues decreased to $433.6 million for the three months 
ended June 30, 2017, a 10.7% decrease from the comparable period in 2016. The 
decline is due primarily to an 8.1% decrease in same store sales and the net 
reduction of 212 Company-operated stores during the 15-month period ended June 
30, 2017, including the sale of 82 HomeSmart stores in May 2016. Earnings 
before income taxes decreased to $21.5 million during the second quarter 
compared to $34.3 million in the prior year comparable period due primarily to 
$13.3 million of restructuring expenses incurred within the Aaron's Business 
segment during the current period related to the store closures described 
above.

Same Store Revenues. We believe that changes in same store revenues are a key 
performance indicator of Aaron's Business. For the three months ended June 30, 
2017, we calculated this amount by comparing revenues for the three months 
ended June 30, 2017 to revenues for the comparable period in 2016 for all 
stores open for the entire 15-month period ended June 30, 2017, excluding 
stores that received lease agreements from other acquired, closed or merged 
stores. For the six months ended June 30, 2017, we calculated this amount by 
comparing revenues for the six months ended June 30, 2017 to revenues for the 
comparable period in 2016 for all stores open for the entire 24-month period 
ended June 30, 2017, excluding stores that received lease agreements from other 
acquired, closed or merged stores. Same store revenues declined 8.1% and 8.6% 
for the three and six months ended June 30, 2017, respectively.

Active Doors. We believe that active doors are a key performance indicator of 
our Progressive Leasing segment. Active doors represent retail store locations 
at which at least one virtual lease-to-own transaction has been completed 
during the trailing three month period.

Invoice Volume. We also 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 leased by Progressive Leasing 
during the period, net of returns.

Seasonality Our revenue mix is moderately seasonal for both the Aaron's 
Business and Progressive Leasing. 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. 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.

Key Components of Earnings Before Income Taxes In this management’s discussion 
and analysis section, we review our consolidated results. For the three and six 
months ended June 30, 2017 and the comparable prior year periods, 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 include all revenues derived from lease agreements at 
Company-operated stores and retail locations serviced by Progressive Leasing. 
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 since the DAMI acquisition, as 
well as the accretion of the discount on loans acquired in the acquisition. 
Other revenues primarily relate to revenues from leasing 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 our Company-operated stores and Progressive Leasing. 
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, provision for lease merchandise write-offs, bad debt expense, shipping 
and handling, advertising and the provision for loan losses, among other 
expenses. Restructuring Expenses. Restructuring expenses primarily represent 
the cost of optimization efforts and cost reduction initiatives related to the 
Aaron's Business, home office and field support functions. Restructuring 
charges were comprised principally of closed store contractual lease 
obligations, impairment of store property, plant and equipment and workforce 
reductions.

Other Operating (Income) Expense, Net. Other operating (income) expense, net, 
consists of gains or losses on sales of Company-operated stores and delivery 
vehicles, fair value adjustments on assets held for sale and gains or losses on 
other transactions involving property, plant and equipment.

Results of Operations – Three months ended June 30, 2017 and 2016

Aaron's Business. Aaron's Business segment revenues decreased primarily due to 
a $45.5 million decrease in lease revenues and fees and a $3.0 million decrease 
in non-retail sales. Lease revenues and fees decreased due to an 8.1% decrease 
in same store revenues and the net reduction of 212 Company-operated stores 
during the 15-month period ended June 30, 2017, including the sale of 82 
HomeSmart stores in May 2016. The decrease in non-retail sales was mainly due 
to decreasing demand for product by franchisees as a result of the net 
reduction of 49 franchised stores during the 15-month period ended June 30, 
2017. Progressive Leasing. Progressive Leasing segment revenues increased 
primarily due to a 37.5% growth in active doors, which contributed to an 
increase in total invoice volume.

DAMI. DAMI segment revenues increased due to higher interest and fee revenue 
recognized as a result of the growth of DAMI's post-acquisition loan portfolio 
subsequent to the October 15, 2015 DAMI acquisition. The balance of loans 
originated since the acquisition were approximately $77.3 million as of June 
30, 2017 compared to $44.8 million as of June 30, 2016.

Operating Expenses Operating expenses remained consistent during the three 
months ended June 30, 2017 from the comparable period in 2016. As a percentage 
of total revenues, operating expenses decreased to 40.5% in the three months 
ended June 30, 2017 from 41.9% in the same period in 2016. Personnel costs and 
occupancy costs decreased primarily due to the net reduction of 212 
Company-operated stores during the 15-month period ended June 30, 2017. 
Personnel costs also decreased due to a reduction of home office and field 
support staff from our Aaron's Business restructuring program, partially offset 
by increases in hiring to support the growth of Progressive Leasing. The 
provision for lease merchandise write-offs increased during the three months 
ended June 30, 2017. Progressive Leasing's provision for lease merchandise 
write-offs as a percentage of Progressive Leasing's lease revenues increased to 
5.5% in 2017 from 4.5% in 2016 due to a reduction in the allowance for lease 
merchandise write-offs during the three months ended June 30, 2016 as lease 
portfolio performance had improved compared to historical periods. The 
provision for lease merchandise write-offs as a percentage of lease revenues 
for the Aaron's Business decreased to 3.6% in 2017 from 3.7% in 2016. Bad debt 
expense increased by $7.8 million during the three months ended June 30, 2017 
compared to the same period in 2016 due to the increase in invoice volume from 
Progressive Leasing as discussed above. Progressive Leasing's bad debt expense 
as a percentage of Progressive Leasing's revenues increased to 9.7% in 2017 
compared to 9.5% in 2016. The provision for loan losses increased during 2017 
due to the growth of DAMI's post-acquisition loan portfolio subsequent to the 
October 15, 2015 acquisition of DAMI.

Other Costs and Expenses Depreciation of lease merchandise. As a percentage of 
total lease revenues and fees, depreciation of lease merchandise increased to 
48.1% from 46.8% in the prior year period, primarily due to a shift in product 
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 early buyouts, and the 
merchandise is generally purchased at retail prices compared to the Aaron's 
Business, which procures merchandise at wholesale prices. Retail cost of sales. 
Retail cost of sales as a percentage of retail sales increased to 64.5% from 
60.2% primarily due to lower inventory purchase cost during the prior year. 
Non-retail cost of sales. Non-retail cost of sales as a percentage of 
non-retail sales increased to 88.8% from 88.1% primarily due to lower inventory 
purchase cost during the prior year. Restructuring Expenses. In connection with 
the announced closure and consolidation of underperforming Company-operated 
Aaron's stores and workforce reductions in the home office and field support 
operations, net charges of $13.4 million were incurred during the three months 
ended June 30, 2017. The charges are comprised of $11.8 million related to 
Aaron's store contractual lease obligations for closed stores, $1.1 million 
related to workforce reductions, and $0.5 million primarily related to the 
write-down to fair value, less estimated selling costs, of land and buildings 
from stores closed under the restructuring program.

Other Operating (Income) Expense, Net

During the three months ended June 30, 2016, the impairment charges and net 
losses on asset dispositions and assets held for sale were primarily due to the 
write down to fair value of certain assets related to the HomeSmart division. 
Operating Profit Interest income. Interest income decreased to $0.4 million in 
2017 from $0.5 million in 2016 due primarily to lower Perfect Home interest 
income, partially offset by higher cash equivalent balances. Interest expense. 
Interest expense decreased to $5.6 million in 2017 from $5.9 million in 2016 
due primarily to a lower outstanding debt balance during the three months ended 
June 30, 2017. Other non-operating income (expense), net. Other non-operating 
income (expense), net includes the impact of foreign currency remeasurement, as 
well as gains resulting from changes in the cash surrender value of 
Company-owned life insurance related to the Company's deferred compensation 
plan. Included in other non-operating income (expense), net were foreign 
exchange remeasurement gains of $0.8 million and losses of $1.7 million during 
the three months ended June 30, 2017 and 2016, respectively. These net gains 
and losses result from changes in the value of the U.S. dollar against the 
British pound and Canadian dollar. Gains related to the changes in the cash 
surrender value of Company-owned life insurance were $0.3 million during the 
three months ended June 30, 2017 and were immaterial during the three months 
ended June 30, 2016.

Earnings Before Income Taxes

Income Tax Expense Income tax expense decreased to $20.7 million for the three 
months ended June 30, 2017 due to lower pre-tax income and a decrease in the 
effective tax rate to 36.2% in 2017 from 37.0% in 2016. During 2017, the 
recognition of excess tax benefits as a reduction of tax expense upon adoption 
of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, and an 
increase in credits related to research and development resulted in a decrease 
in the effective tax rate.

Results of Operations – Six months ended June 30, 2017 and 2016

Aaron's Business. Aaron's Business segment revenues decreased primarily due to 
a $103.0 million decrease in lease revenues and fees and a $13.0 million 
decrease in non-retail sales. Lease revenues and fees decreased primarily due 
to an 8.6% decrease in same store revenues and the net reduction of 201 
Company-operated stores during the 24-month period ended June 30, 2017, 
including the sale of 82 HomeSmart stores in May 2016. The decrease in 
non-retail sales was mainly due to decreasing demand for product by franchisees 
as a result of the net reduction of 106 franchised stores during the 24-month 
period ended June 30, 2017. Progressive Leasing. Progressive Leasing segment 
revenues increased primarily due to increases in invoice volume at existing 
active doors as well as an increase in active doors during the six months ended 
June 30, 2017 as compared to the six months ended June 30, 2016.

DAMI. DAMI segment revenues increased due to higher interest and fee revenue 
recognized as a result of the growth of DAMI's post-acquisition loan portfolio 
subsequent to the October 15, 2015 DAMI acquisition. The balance of loans 
originated since the acquisition were approximately $77.3 million as of June 
30, 2017 compared to $44.8 million as of June 30, 2016.

Operating Expenses Operating expenses decreased during the six months ended 
June 30, 2017 from the comparable period in 2016. As a percentage of total 
revenues, operating expenses decreased to 39.7% in the six months ended June 
30, 2017 from 41.3% in the same period in 2016. Personnel costs and occupancy 
costs decreased primarily due to the net reduction of 201 Company-operated 
stores during the 24-month period ended June 30, 2017. Personnel costs also 
decreased due to a reduction of home office and field support staff from our 
Aaron's Business restructuring program, partially offset by increases in hiring 
to support the growth of Progressive Leasing. The provision for lease 
merchandise write-offs increased during the six months ended June 30, 2017. 
However, Progressive Leasing's provision for lease merchandise write-offs as a 
percentage of Progressive Leasing's lease revenues decreased to 5.1% in 2017 
from 5.4% in 2016 due to continued operational improvements and enhancements to 
the lease decisioning process. The provision for lease merchandise write-offs 
as a percentage of lease revenues for the Aaron's Business remained consistent 
at 3.6% in both periods. Bad debt expense increased by $11.8 million during the 
six months ended June 30, 2017 from the comparable period in 2016 primarily due 
to the increase in invoice volume from Progressive Leasing as discussed above, 
partially offset by continued operational improvements and enhancements to the 
lease decisioning process. Progressive Leasing's bad debt expense as a 
percentage of Progressive Leasing's revenues decreased to 9.2% in 2017 compared 
to 9.3% in 2016. The provision for loan losses increased during 2017 due to the 
growth of DAMI's post-acquisition loan portfolio subsequent to the October 15, 
2015 acquisition of DAMI.

Other Costs and Expenses Depreciation of lease merchandise. As a percentage of 
total lease revenues and fees, depreciation of lease merchandise increased to 
48.4% from 46.9% in the prior year period, primarily due to a shift in product 
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 early buyouts, and the 
merchandise is generally purchased at retail prices compared to the Aaron's 
Business, which procures merchandise at wholesale prices. Retail cost of sales. 
Retail cost of sales as a percentage of retail sales remained consistent at 
approximately 63% for both periods. Non-retail cost of sales. Non-retail cost 
of sales as a percentage of non-retail sales remained consistent at 
approximately 89% for both periods.

Restructuring Expenses. In connection with the announced closure and 
consolidation of underperforming Company-operated stores and workforce 
reductions in our home office and field support operations, charges of $13.8 
million were incurred during the six months ended June 30, 2017. The charges 
are comprised of $11.3 million related to Aaron's store contractual lease 
obligations for closed stores, $1.6 million related to workforce reductions, 
and $0.9 million primarily related to the write-down to fair value, less 
estimated selling costs, of land and buildings from stores closed under the 
restructuring program.

During the six months ended June 30, 2016, impairment charges and net gains on 
asset dispositions and assets held for sale included a loss of $4.2 million 
related to the sale of HomeSmart, a $1.2 million charge primarily related to 
the write-down to fair value of certain assets related to the HomeSmart 
division that were not included in the May 2016 disposition and a gain of $11.1 
million related to the sale of the Company's corporate headquarters building in 
January 2016. Operating Profit Interest income. Interest income increased to 
$1.4 million during the six months ended June 30, 2017 from $0.9 million for 
the comparable period in 2016 due to an increase in cash equivalent balances, 
partially offset by lower Perfect Home interest income. Interest expense. 
Interest expense decreased to $11.4 million for the six months ended June 30, 
2017 from $12.2 million in 2016 due primarily to a lower outstanding debt 
balance during the six months ended June 30, 2017. Other non-operating income 
(expense), net. Other non-operating income (expense), net includes the impact 
of foreign currency remeasurement, as well as gains resulting from changes in 
the cash surrender value of Company-owned life insurance related to the 
Company's deferred compensation plan. Included in other non-operating income 
(expense), net were foreign exchange remeasurement gains of $1.2 million and 
losses of $2.1 million during the six months ended June 30, 2017 and 2016, 
respectively. These net gains and losses result from changes in the value of 
the U.S. dollar against the British pound and Canadian dollar. Gains related to 
the changes in the cash surrender value of Company-owned life insurance were 
$0.9 million during the six months ended June 30, 2017 and were immaterial 
during the six months ended June 30, 2016.

Earnings Before Income Taxes

Income Tax Expense Income tax expense decreased to $50.0 million for the six 
months ended June 30, 2017 compared to $52.7 million for the same period in 
2016 due to a decrease in the effective tax rate to 35.8% in 2017 from 37.4% in 
2016. During 2016, the Company recorded valuation allowances for certain tax 
credits. During 2017, the recognition of excess tax benefits as a reduction of 
tax expense upon adoption of ASU 2016-09, Improvements to Employee Share-Based 
Payment Accounting, and a decrease in statutory state tax rates resulted in a 
decrease in the effective tax rate.

Overview of Financial Position The major changes in the condensed consolidated 
balance sheet from December 31, 2016 to June 30, 2017 include: • Cash and cash 
equivalents decreased $48.2 million to $260.3 million at June 30, 2017.

• Debt decreased $96.7 million due primarily to the net repayment of $96.0 
million in revolving credit borrowings and term loans.

Liquidity and Capital Resources General Our primary capital requirements 
consist of buying merchandise for the operations of the Aaron's Business and 
Progressive Leasing. As we continue 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; (ii) 
expenditures for acquisitions; (iii) expenditures related to our corporate 
operating activities; (iv) personnel expenditures; (v) income tax payments; 
(vi) funding of loan receivables for DAMI; 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;

• trade credit with vendors;

• proceeds from the sale of lease return merchandise; and

• stock offerings.

As of June 30, 2017, the Company had $260.3 million of cash and $225.0 million 
of availability under its revolving credit facility. Franchisee Acquisition On 
July 27, 2017, the Company acquired substantially all of the assets of the 
store operations of SEI/Aaron’s, Inc., its largest franchisee, for 
approximately $140.0 million, subject to working capital and other adjustments. 
The transaction was financed with cash on hand. Cash Provided by Operating 
Activities Cash provided by operating activities was $115.6 million and $325.5 
million during the six months ended June 30, 2017 and 2016, respectively. The 
$209.9 million period-over-period decrease in operating cash flows was 
primarily due to net tax payments of $65.8 million made during the six months 
ended June 30, 2017 compared to net tax refunds of $115.3 million received 
during the six months ended June 30, 2016. The Protecting Americans from Tax 
Hikes Act ("the 2015 Act"), which was signed into law on December 18, 2015, 
extended 50% bonus depreciation and reauthorized work opportunity tax credits 
through the end of 2019. This act allowed us to qualify for and receive a 
refund related to 2015 income tax payments and to limit federal tax payments 
during the six months ended June 30, 2016. Separately, we increased purchases 
of merchandise for Progressive Leasing in the six months ended June 30, 2017 
relative to the same period in 2016 due to continuing invoice volume growth. 
Cash (Used in) Provided by Investing Activities Cash used in investing 
activities was $25.6 million during the six months ended June 30, 2017 and cash 
provided by investing activities was $20.9 million during the six months ended 
June 30, 2016. The change in investing cash flows was primarily due to cash 
received of $35.0 million related to the sale of the HomeSmart division in May 
2016 and cash received of $13.6 million related to the sale of the Company's 
corporate headquarters building in January 2016. Cash Used in Financing 
Activities Cash used in financing activities was $138.2 million and $119.1 
million during the six months ended June 30, 2017 and 2016, respectively. The 
$19.2 million increase in cash used in financing activities was primarily due 
to $34.3 million in Company repurchases of the Company's common stock offset by 
a $16.5 million decrease in net repayments of debt during the six months ended 
June 30, 2017.

30

Share Repurchases We purchase our stock in the market from time to time as 
authorized by our Board of Directors. During the six months ended June 30, 
2017, the Company purchased 1,208,466 shares for $34.3 million. As of June 30, 
2017, we have the authority to purchase 7,915,255 additional shares.

Dividends We have a consistent history of paying dividends, having paid 
dividends for 30 consecutive years. At its November 2016 meeting, our board of 
directors increased the quarterly dividend by 10.0%, raising it to $0.0275 per 
share from $0.025 per share. Aggregate dividend payments for the six months 
ended June 30, 2017 were $3.9 million. On August 4, 2017, the Board of 
Directors approved a quarterly dividend of $0.0275 per share. Subject to 
sufficient operating profits, any future capital needs and other contingencies, 
we currently expect to continue our policy of paying dividends.

Debt Financing As of June 30, 2017, $84.4 million in term loans were 
outstanding under the term loan and revolving credit agreement. Our current 
revolving credit facility matures December 9, 2019 and the total available 
credit on the facility as of June 30, 2017 was $225.0 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 $200.0 million. As of June 30, 
2017, $49.0 million was outstanding under the DAMI credit facility. The DAMI 
credit facility is currently set to mature on October 15, 2017 and the total 
available credit on the facility as of June 30, 2017 was $7.0 million. In 
addition, the DAMI credit facility includes an accordion facility, which, 
subject to certain terms and conditions, permits DAMI at any time prior to the 
maturity date to request an increase in the maximum facility of up to $25.0 
million. Borrowings under the DAMI credit facility bear interest at 4.375% plus 
one-month LIBOR, provided that the applicable margin will increase by 0.25% if 
Monthly Excess Availability (as defined in the DAMI credit facility) is less 
than 20%. As of June 30, 2017, the Company had outstanding $240.0 million in 
aggregate principal amount of senior unsecured notes issued in a private 
placement in connection with the April 14, 2014 Progressive Leasing 
acquisition. 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 each commenced April 14, 2017. As of 
June 30, 2017, the Company had outstanding $25.0 million in senior unsecured 
notes originally issued in a private placement in July 2011. Effective April 
28, 2014, the notes bear interest at the rate of 3.95% per year and mature on 
April 27, 2018. Quarterly payments of interest commenced July 27, 2011, and 
annual principal payments of $25.0 million each commenced April 27, 2014. Our 
revolving credit and term loan agreement and senior unsecured notes, and our 
franchisee loan agreement discussed below, contain certain financial covenants. 
These covenants include requirements that the Company maintain ratios of (i) 
EBITDA plus lease expense to fixed charges of no less than 2.00:1.00 and (ii) 
total debt to EBITDA of no greater than 3.00:1.00. In each case, EBITDA refers 
to the Company’s consolidated earnings before interest and tax expense, 
depreciation (other than lease merchandise depreciation), amortization expense 
and other non-cash charges, and it excludes the results of DAMI. 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 June 30, 2017 and believe that we will continue to be in 
compliance in the future. The DAMI credit facility also includes financial 
covenants that, among other things, require DAMI to maintain a senior debt to 
capital base ratio of not more than 2.0 to 1.0. Furthermore, the DAMI credit 
facility restricts DAMI's ability to transfer funds by limiting intercompany 
dividends to an amount not to exceed the amount of capital the Company has 
invested in DAMI. The aggregate amount of such dividends made in a calendar 
year is limited to 75% of DAMI's net income for the immediately preceding 
calendar year. The Company is in compliance with these covenants at June 30, 
2017 and we believe that we will continue to be in compliance in the future. 
The DAMI credit facility is currently scheduled to mature on October 15, 2017.

Commitments. Income Taxes. During the six months ended June 30, 2017, we made 
net tax payments of $65.8 million. Within the next six months, we anticipate 
that we will make cash payments for federal and state income taxes of 
approximately $61.0 million. The 2015 Act signed into law on December 18, 2015 
extended 50% bonus depreciation and reauthorized work opportunity tax credits 
through the end of 2019. 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 are making increased tax payments on our earnings 
as a result of expected profitability and the reversal of the accelerated 
depreciation deductions that were taken in 2016 and prior periods. While the 
2015 Act extended bonus depreciation through 2019, not considering the effects 
of bonus depreciation on future qualifying expenditures, we estimate that at 
December 31, 2016, the remaining tax deferral associated with the act described 
above is approximately $137.5 million, of which approximately 86% is expected 
to reverse in 2017 and most of the remainder during 2018 and 2019. Leases. The 
Company leases various properties and other assets in the normal course of 
business, including certain properties under capital leases with related 
parties.

Franchise Loan Guaranty. We have guaranteed the borrowings of certain 
independent franchisees under a franchise loan agreement with several banks, 
which has a maturity date of December 7, 2017. At June 30, 2017, the portion 
that we might be obligated to repay in the event franchisees defaulted was 
$52.6 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, we have had no significant associated losses. 
We believe the likelihood that the Company would fund any significant amounts 
in connection with these commitments to be remote. 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. 
Nonetheless, as of June 30, 2017, 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, 2016.

Unfunded Lending Commitments The Company, through its DAMI business, has 
unfunded lending commitments totaling approximately $378.4 million and $366.4 
million as of June 30, 2017 and December 31, 2016, 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 represented 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. The reserve for losses 
on unfunded loan commitments, which is included in accounts payable and accrued 
expenses, is calculated by the Company based on historical customer usage of 
available credit and is approximately $0.5 million as of June 30, 2017 and 
December 31, 2016, respectively.