| Acquisitions |
ACQUISITIONS Franchisee Acquisitions - 2018 During 2018, the Company acquired 152 Aaron's-branded franchised stores operated by franchisees for an aggregate purchase price of $190.2 million, exclusive of the settlement of pre-existing receivables and post-closing working capital settlements. The acquired operations generated revenues of $43.9 million and $138.7 million during the three and nine months ended September 30, 2019, respectively, and $26.8 million and $32.0 million during the comparable prior year periods. The acquired operations generated earnings before income taxes of $0.4 million and $1.6 million during the three and nine months ended September 30, 2019, respectively, and losses before income taxes of $0.2 million during the respective comparable prior year periods. The revenues and earnings before income taxes described above are included in our condensed consolidated statements of earnings for the respective periods. The results of the acquired operations were negatively impacted by acquisition-related transaction and transition costs, amortization expense of the various intangible assets recorded from the acquisitions, and restructuring charges incurred under the 2019 restructuring program associated with the closure of a number of acquired stores. The revenues and earnings before income taxes of the acquired operations discussed above have not been adjusted for estimated non-retail sales and franchise royalties and fees and related expenses that the Company could have generated as revenue and expenses to the Company from the franchisees during the three and nine months ended September 30, 2019 and 2018 had the transaction not been completed. Acquisition Accounting The 2018 acquisitions are benefiting the Company's omnichannel platform through added scale, strengthening its presence in certain geographic markets, and enhancing operational control, including compliance, and enabling the Company to execute its business transformation initiatives on a broader scale. The following table presents summaries of the preliminary and final fair value of the assets acquired and liabilities assumed in the franchisee acquisitions as of the respective acquisition dates: | | | | | | | | | | | (In Thousands) | Amounts Recognized as of Acquisition Dates (as of June 30, 2019)1 | Acquisition Accounting Adjustments2 | Final Amounts Recognized as of Acquisition Dates | Purchase Price | $ | 190,167 |
| $ | — |
| $ | 190,167 |
| Add: Settlement of Pre-existing Relationship | 5,405 |
| — |
| 5,405 |
| Less: Working Capital Adjustments | 155 |
| — |
| 155 |
| Aggregate Consideration Transferred | 195,727 |
| — |
| 195,727 |
| Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed | | | | Cash and Cash Equivalents | 50 |
| — |
| 50 |
| Lease Merchandise | 59,616 |
| — |
| 59,616 |
| Property, Plant and Equipment | 5,568 |
| — |
| 5,568 |
| Operating Lease Right-of-Use Assets3 | — |
| 4,338 |
| 4,338 |
| Other Intangibles4 | 24,498 |
| (1,176 | ) | 23,322 |
| Prepaid Expenses and Other Assets | 1,206 |
| 35 |
| 1,241 |
| Total Identifiable Assets Acquired | 90,938 |
| 3,197 |
| 94,135 |
| Accounts Payable and Accrued Expenses | (977 | ) | — |
| (977 | ) | Customer Deposits and Advance Payments | (5,156 | ) | — |
| (5,156 | ) | Total Liabilities Assumed | (6,133 | ) | — |
| (6,133 | ) | Goodwill5 | 110,922 |
| (3,197 | ) | 107,725 |
| Net Assets Acquired | $ | 84,805 |
| $ | 3,197 |
| $ | 88,002 |
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1 As previously reported in Note 2 to the condensed consolidated financial statements as of June 30, 2019. 2 During the third quarter, the Company finalized its valuation of assumed favorable and unfavorable real estate operating leases based on comparable market terms of similar leases at the acquisition dates, which also impacted the valuation of the Company's customer lease contract and customer relationship intangible assets. The adjustment also resulted in the recognition of immaterial adjustments to operating expenses within the condensed consolidated statements of earnings, as well as restructuring expenses (reversals), net during the three months ended September 30, 2019 to recognize expense that would have been recognized in prior periods had the favorable lease asset been recorded as of the acquisition date. 3 As of the respective acquisition dates, the Company had not yet adopted ASC 842. As such, there were no operating lease right-of-use assets or operating lease liabilities recognized within the condensed consolidated financial statements at the time of acquisition. The Company recognized operating lease right-of-use assets and operating lease liabilities for the acquired stores as part of the transition to ASC 842 on January 1, 2019. As discussed above, the Company finalized its valuation of assumed favorable and unfavorable real estate operating leases, which was recorded within operating lease right-of-use assets in our condensed consolidated balance sheet. 4 Identifiable intangible assets are further disaggregated in the table set forth below. 5 The total goodwill recognized in conjunction with the franchisee acquisitions, all of which is expected to be deductible for tax purposes, has been assigned to the Aaron’s Business reporting unit. The purchase price exceeded the fair value of the net assets acquired, which resulted in the recognition of goodwill, primarily due to synergies created from the expected future benefits to the Company’s omnichannel platform, implementation of the Company’s operational capabilities, expected inventory supply chain synergies between the Aaron’s Business and Progressive Leasing, and control of the Company’s brand name in new geographic markets. Goodwill also includes certain other intangible assets that do not qualify for separate recognition, such as an assembled workforce. The intangible assets attributable to the franchisee acquisitions are comprised of the following: | | | | | | | | Fair Value (In Thousands) | | Weighted Average Life (In Years) | Non-compete Agreements | $ | 1,872 |
| | 3.0 | | 7,457 |
| | 1.0 | Customer Relationships | 9,330 |
| | 3.0 | Reacquired Franchise Rights | 4,663 |
| | 3.9 | Total Acquired Intangible Assets1 | $ | 23,322 |
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1 Acquired definite-lived intangible assets have a total weighted average life of 2.5 years. The Company incurred $1.6 million of acquisition-related costs in connection with the franchisee acquisitions, substantially all of which were incurred during 2018. These costs were included in operating expenses in the condensed consolidated statements of earnings. Other Acquisitions Net cash outflows related to the acquisitions of other Aaron's franchisees, other rent-to-own store businesses, and customer contracts aggregated to $12.9 million and $14.1 million during the nine months ended September 30, 2019 and 2018, respectively. The effect of these acquisitions on the condensed consolidated financial statements for the three and nine months ended September 30, 2019 and 2018 was not significant.
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