Aarons 2015 Annual Report Download - page 85

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The fair value of performance share units are based on the fair market value of the Company’s common stock on the date of grant. The compensation expense
associated with these awards is amortized ratably over the vesting period based on the Company’s projected assessment of the level of performance that will
be achieved and earned. In the event the Company determines it is no longer probable that the minimum performance criteria specified in the plan will be
achieved, all previously recognized compensation expense is reversed in the period such a determination is made.
The following table summarizes information about performance share unit activity based on the target share amounts during 2015:





Non-vested at January 1, 2015 111
$ 32.01
Granted 358
32.03
Vested —
—
Forfeited/unearned (124)
29.86
Non-vested at December 31, 2015 345
32.80

Description of Products and Services of Reportable Segments
As of December 31, 2015, the Company had six operating and reportable segments: Sales and Lease Ownership, Progressive, HomeSmart, DAMI, Franchise
and Manufacturing. The results of DAMI and Progressive have been included in the Company’s consolidated results and presented as reportable segments
from their October 15, 2015 and April 14, 2014 acquisition dates, respectively.
The Aaron’s Sales & Lease Ownership division offers furniture, electronics, appliances and computers to customers primarily on a monthly payment basis
with no credit needed. Progressive is a leading virtual lease-to-own company that provides lease-purchase solutions on a variety of products, including
furniture and bedding, consumer electronics, appliances and jewelry. The HomeSmart division offers furniture, electronics, appliances and computers to
customers primarily on a weekly payment basis with no credit needed. DAMI offers a variety of second-look financing programs originated through a
federally insured bank. Together with Progressive, DAMI allows the Company to provide retail partners one source for financing and leasing transactions
with below-prime customers. The Company’s Franchise operation awards franchises and supports franchisees of its sales and lease ownership concept. The
Manufacturing segment manufactures upholstered furniture and bedding predominantly for use by Company-operated and franchised stores. Therefore, the
Manufacturing segment's revenues and earnings before income taxes are primarily the result of intercompany transactions, substantially all of which are
eliminated through the elimination of intersegment revenues and intersegment profit or loss.
Measurement of Segment Profit or Loss and Segment Assets
The Company evaluates performance and allocates resources based on revenue growth and pre-tax profit or loss from operations. Intersegment sales are
completed at internally negotiated amounts. Since the intersegment profit affects inventory valuation, depreciation and cost of goods sold are adjusted when
intersegment profit is eliminated in consolidation.
Factors Used by Management to Identify the Reportable Segments
The Company’s reportable segments are based on the operations of the Company that the chief operating decision maker regularly reviews to analyze
performance and allocate resources among business units of the Company.
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