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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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GEORGIA
|
|
58-0687630
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(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
309 E. PACES FERRY ROAD, N.E.
ATLANTA, GEORGIA
|
|
30305-2377
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
|
Name of each exchange on which registered
|
Common Stock, $.50 Par Value
|
|
New York Stock Exchange
|
|
Large Accelerated Filer
|
ý
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Accelerated Filer
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¨
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|
||
Non-Accelerated Filer
|
¨
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|
Smaller Reporting Company
|
|
¨
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•
|
Opening additional Company-operated sales and lease ownership stores
- We open sales and lease ownership stores in existing and select new geographic markets. Additional stores help us to realize economies of scale in purchasing, marketing and distribution. We have added a net of
333
Company-operated sales and lease ownership stores since the beginning of
2009
.
|
•
|
Increasing our sales and lease ownership franchises
- We believe that our franchise program allows for strategic growth and increased brand exposure in new markets. In addition, the combination of Company-operated and franchised stores creates a larger store base that generally enhances the economies of scale in purchasing, distribution, manufacturing and advertising. Franchise fees and royalties represent a growing source of revenues for us. We have added a net of
277
franchised stores since the beginning of
2009
.
|
•
|
Increasing revenues and net earnings from existing sales and lease ownership stores
- We experienced same store revenue growth (revenues earned in stores open for the entirety of the measured periods) from our Company-operated sales and lease ownership stores of
.9%
in
2013
,
5.1%
in
2012
and
4.4%
in
2011
. We calculate same store revenue growth by comparing revenues from comparable periods for all stores open during the entirety of those periods, excluding stores that received lease agreements from other acquired, closed or merged stores.
|
•
|
Pursuing selective acquisitions in both new and existing sales and lease ownership markets
- When opportune, we explore acquisitions of other rent-to-own operations and select franchised stores. Since the beginning of
2009
, we have acquired the lease agreements, merchandise and assets of
220
sales and lease ownership stores. We merged
87
of these stores with existing locations and
six
stores were sold to franchisees, resulting in
127
net new stores from acquisitions. When attractive, we also seek to convert the stores of existing independent operators to Aaron's Sales & Lease Ownership franchised stores. Since the beginning of
2009
, we purchased
69
and sold
61
of our sales and lease ownership stores to franchisees.
|
•
|
Developing and expanding the HomeSmart weekly pay concept
- In
2010
, we opened our first HomeSmart store and had
81
Company-operated stores open at the end of
2013
. We expect revenues from our HomeSmart division to increase as these recently opened stores add customers and start-up losses in existing stores diminish as the stores mature. We plan to open additional HomeSmart stores in the future assuming acceptable financial returns can be achieved.
|
•
|
Exploring international expansion
- In
2011
, we purchased
11.5%
of newly issued shares of common stock of a U.K. based rent-to-own company. As part of the transaction, the Company also received notes and an option to acquire the remaining interest in the U.K. company at any time through
December 31, 2013
. We did not exercise this purchase option, but the Company is in discussions with owners of the U.K. company to extend our relationship into 2015. We may pursue additional attractive international opportunities as they present themselves.
|
Merchandise Category
|
2013
|
|
2012
|
|
2011
|
Furniture
|
36%
|
|
35%
|
|
32%
|
Electronics
|
29%
|
|
32%
|
|
36%
|
Appliances
|
22%
|
|
20%
|
|
17%
|
Computers
|
9%
|
|
10%
|
|
12%
|
Other
|
4%
|
|
3%
|
|
3%
|
•
|
Lower total cost
- our agreement terms generally provide a lower cost of ownership to the customer.
|
•
|
Wider merchandise selection
-
we generally offer a larger selection of higher-quality merchandise.
|
•
|
Larger store layout
- our stores average
9,000
square feet, nearly twice the size of conventional rent-to-own stores.
|
•
|
Fewer payments
- our typical plan offers semi-monthly or monthly payments versus the industry standard of weekly payments. Our agreements also usually provide for a shorter term for the customer to obtain ownership.
|
•
|
Flexible payment methods
-
we offer our customers the opportunity to pay by cash, check, debit card or credit card. In conventional rent-to-own stores, cash is generally the primary payment medium. Our Aaron's Sales & Lease Ownership stores currently receive approximately
61%
of their payment volume (in dollars) from customers by check, debit card or credit card. For our HomeSmart stores, that percentage is approximately
51%
.
|
•
|
the substantial outlay of financial resources required to open new stores and initially operate them, and the availability of capital sources to finance new openings and initial operation;
|
•
|
difficulties associated with hiring, training and retaining additional skilled personnel, including store managers;
|
•
|
our ability to identify suitable new store sites and to negotiate acceptable leases for these sites;
|
•
|
competition in existing and new markets;
|
•
|
consumer demand, tastes and spending patterns in new markets that differ from those in our existing markets; and
|
•
|
challenges in adapting our distribution and other operational and management systems to an expanded network of stores.
|
•
|
changes in competition;
|
•
|
general economic conditions;
|
•
|
new product introductions;
|
•
|
consumer trends;
|
•
|
changes in our merchandise mix;
|
•
|
the opening of new stores;
|
•
|
the impact of our new stores on our existing stores, including potential decreases in existing stores’ revenues as a
|
•
|
timing of promotional events; and
|
•
|
our ability to execute our business strategy effectively.
|
LOCATION
|
SEGMENT, PRIMARY USE AND HOW HELD
|
SQ. FT.
|
|
Cairo, Georgia
|
Manufacturing—Furniture Manufacturing – Owned
|
300,000
|
|
Cairo, Georgia
|
Manufacturing—Bedding and Furniture Manufacturing – Owned
|
147,000
|
|
Cairo, Georgia
|
Warehouse—Furniture Parts – Leased
|
111,000
|
|
Coolidge, Georgia
|
Manufacturing—Furniture Manufacturing – Owned
|
81,000
|
|
Coolidge, Georgia
|
Manufacturing—Furniture Manufacturing – Owned
|
48,000
|
|
Coolidge, Georgia
|
Manufacturing—Furniture Manufacturing – Owned
|
41,000
|
|
Coolidge, Georgia
|
Manufacturing—Administration and Showroom – Owned
|
10,000
|
|
Lewisberry, Pennsylvania
|
Manufacturing—Bedding Manufacturing – Leased
|
25,000
|
|
Fairburn, Georgia
|
Manufacturing—Bedding Manufacturing – Leased
|
57,000
|
|
Sugarland, Texas
|
Manufacturing—Bedding Manufacturing – Owned
|
23,000
|
|
Auburndale, Florida
|
Manufacturing—Bedding Manufacturing – Leased
|
20,000
|
|
Kansas City, Kansas
|
Manufacturing—Bedding Manufacturing – Leased
|
13,000
|
|
Phoenix, Arizona
|
Manufacturing—Bedding Manufacturing – Leased
|
20,000
|
|
Plainfield, Indiana
|
Manufacturing—Bedding Manufacturing – Leased
|
24,000
|
|
Cheswick, Pennsylvania
|
Manufacturing—Bedding Manufacturing – Leased
|
19,000
|
|
Auburndale, Florida
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
131,000
|
|
Belcamp, Maryland
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
95,000
|
|
Obetz, Ohio
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
91,000
|
|
Dallas, Texas
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
133,000
|
|
Fairburn, Georgia
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
117,000
|
|
Sugarland, Texas
|
Sales and Lease Ownership—Fulfillment Center – Owned
|
135,000
|
|
Huntersville, North Carolina
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
214,000
|
|
LaVergne, Tennessee
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
100,000
|
|
Oklahoma City, Oklahoma
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
130,000
|
|
Phoenix, Arizona
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
89,000
|
|
Magnolia, Mississippi
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
125,000
|
|
Plainfield, Indiana
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
90,000
|
|
Portland, Oregon
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
98,000
|
|
Rancho Cucamonga, California
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
92,000
|
|
Westfield, Massachusetts
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
131,000
|
|
Kansas City, Kansas
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
103,000
|
|
Cheswick, Pennsylvania
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
126,000
|
|
Auburndale, Florida
|
Sales & Lease Ownership—Service Center – Leased
|
7,000
|
|
Belcamp, Maryland
|
Sales & Lease Ownership—Service Center – Leased
|
5,000
|
|
Cheswick, Pennsylvania
|
Sales & Lease Ownership—Service Center – Leased
|
10,000
|
|
Fairburn, Georgia
|
Sales & Lease Ownership—Service Center – Leased
|
8,000
|
|
Grand Prairie, Texas
|
Sales & Lease Ownership—Service Center – Leased
|
11,000
|
|
Houston, Texas
|
Sales & Lease Ownership—Service Center – Leased
|
15,000
|
|
Huntersville, North Carolina
|
Sales & Lease Ownership—Service Center – Leased
|
10,000
|
|
Kansas City, Kansas
|
Sales & Lease Ownership—Service Center – Leased
|
8,000
|
|
Obetz, Ohio
|
Sales & Lease Ownership—Service Center – Leased
|
7,000
|
|
Oklahoma City, Oklahoma
|
Sales & Lease Ownership—Service Center – Leased
|
10,000
|
|
Phoenix, Arizona
|
Sales & Lease Ownership—Service Center – Leased
|
6,000
|
|
Plainfield, Indiana
|
Sales & Lease Ownership—Service Center – Leased
|
6,000
|
|
Rancho Cucamong, California
|
Sales & Lease Ownership—Service Center – Leased
|
4,000
|
|
Ridgeland, Mississippi
|
Sales & Lease Ownership—Service Center – Leased
|
10,000
|
|
South Madison, Tennessee
|
Sales & Lease Ownership—Service Center – Leased
|
4,000
|
|
Brooklyn, New York
|
Sales & Lease Ownership—Warehouse – Leased
|
32,000
|
|
Common Stock
|
High
|
|
Low
|
|
Cash
Dividends
Per Share
|
||||||
Year Ended December 31, 2013
|
|
|
|
|
|
||||||
First Quarter
|
$
|
30.90
|
|
|
$
|
26.80
|
|
|
$
|
.017
|
|
Second Quarter
|
29.53
|
|
|
26.92
|
|
|
.017
|
|
|||
Third Quarter
|
30.06
|
|
|
26.43
|
|
|
.017
|
|
|||
Fourth Quarter
|
30.30
|
|
|
26.20
|
|
|
.021
|
|
Common Stock
|
High
|
|
Low
|
|
Cash
Dividends
Per Share
|
||||||
Year Ended December 31, 2012
|
|
|
|
|
|
||||||
First Quarter
|
$
|
31.78
|
|
|
$
|
24.59
|
|
|
$
|
.015
|
|
Second Quarter
|
28.59
|
|
|
24.57
|
|
|
.015
|
|
|||
Third Quarter
|
31.29
|
|
|
27.37
|
|
|
.015
|
|
|||
Fourth Quarter
|
32.53
|
|
|
24.61
|
|
|
.017
|
|
Period
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans
|
|
Maximum Number of Shares That May Yet Be Purchased Under the Publicly Announced Plans
2
|
|||||
October 1 through October 31, 2013
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
15,000,000
|
|
November 1 through November 30, 2013
|
—
|
|
|
—
|
|
|
—
|
|
|
15,000,000
|
|
|
December 1 through December 31, 2013
1
|
3,502,627
|
|
|
28.55
|
|
|
3,502,627
|
|
|
11,497,373
|
|
|
Total
|
3,502,627
|
|
|
|
|
3,502,627
|
|
|
|
(Dollar Amounts in Thousands, Except Per Share Data)
|
Year Ended December 31, 2013
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|
Year Ended December 31, 2009
|
||||||||||
OPERATING RESULTS
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Lease Revenues and Fees
|
$
|
1,748,699
|
|
|
$
|
1,676,391
|
|
|
$
|
1,516,508
|
|
|
$
|
1,402,053
|
|
|
$
|
1,310,709
|
|
Retail Sales
|
40,876
|
|
|
38,455
|
|
|
38,557
|
|
|
40,556
|
|
|
43,394
|
|
|||||
Non-Retail Sales
|
371,292
|
|
|
425,915
|
|
|
388,960
|
|
|
362,273
|
|
|
327,999
|
|
|||||
Franchise Royalties and Fees
|
68,575
|
|
|
66,655
|
|
|
63,255
|
|
|
59,112
|
|
|
52,941
|
|
|||||
Other
|
5,189
|
|
|
5,411
|
|
|
5,298
|
|
|
4,799
|
|
|
3,914
|
|
|||||
|
2,234,631
|
|
|
2,212,827
|
|
|
2,012,578
|
|
|
1,868,793
|
|
|
1,738,957
|
|
|||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Retail Cost of Sales
|
24,318
|
|
|
21,608
|
|
|
22,619
|
|
|
22,893
|
|
|
25,575
|
|
|||||
Non-Retail Cost of Sales
|
337,581
|
|
|
387,362
|
|
|
351,887
|
|
|
329,187
|
|
|
297,923
|
|
|||||
Operating Expenses
|
1,022,684
|
|
|
952,617
|
|
|
866,600
|
|
|
822,637
|
|
|
766,728
|
|
|||||
Legal and Regulatory Expense/(Income)
|
28,400
|
|
|
(35,500
|
)
|
|
36,500
|
|
|
—
|
|
|
—
|
|
|||||
Retirement and Vacation Charges
|
4,917
|
|
|
10,394
|
|
|
3,532
|
|
|
—
|
|
|
—
|
|
|||||
Depreciation of Lease Merchandise
|
628,089
|
|
|
601,552
|
|
|
547,839
|
|
|
501,467
|
|
|
472,100
|
|
|||||
Other Operating Expense (Income), Net
|
1,584
|
|
|
(2,235
|
)
|
|
(3,550
|
)
|
|
(147
|
)
|
|
(3,257
|
)
|
|||||
|
2,047,573
|
|
|
1,935,798
|
|
|
1,825,427
|
|
|
1,676,037
|
|
|
1,559,069
|
|
|||||
Operating Profit
|
187,058
|
|
|
277,029
|
|
|
187,151
|
|
|
192,756
|
|
|
179,888
|
|
|||||
Interest Income
|
2,998
|
|
|
3,541
|
|
|
1,718
|
|
|
509
|
|
|
134
|
|
|||||
Interest Expense
|
(5,613
|
)
|
|
(6,392
|
)
|
|
(4,709
|
)
|
|
(3,096
|
)
|
|
(4,299
|
)
|
|||||
Other Non-Operating Income (Expense), Net
|
517
|
|
|
2,677
|
|
|
(783
|
)
|
|
617
|
|
|
716
|
|
|||||
Earnings Before Income Taxes
|
184,960
|
|
|
276,855
|
|
|
183,377
|
|
|
190,786
|
|
|
176,439
|
|
|||||
Income Taxes
|
64,294
|
|
|
103,812
|
|
|
69,610
|
|
|
72,410
|
|
|
63,561
|
|
|||||
Net Earnings From Continuing Operations
|
120,666
|
|
|
173,043
|
|
|
113,767
|
|
|
118,376
|
|
|
112,878
|
|
|||||
Loss From Discontinued Operations, Net of Tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(277
|
)
|
|||||
Net Earnings
|
$
|
120,666
|
|
|
$
|
173,043
|
|
|
$
|
113,767
|
|
|
$
|
118,376
|
|
|
$
|
112,601
|
|
Earnings Per Share From Continuing Operations
|
$
|
1.59
|
|
|
$
|
2.28
|
|
|
$
|
1.46
|
|
|
$
|
1.46
|
|
|
$
|
1.39
|
|
Earnings Per Share From Continuing Operations Assuming Dilution
|
1.58
|
|
|
2.25
|
|
|
1.43
|
|
|
1.44
|
|
|
1.38
|
|
|||||
Loss Per Share From Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Loss Per Share From Discontinued Operations Assuming Dilution
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(.01
|
)
|
|||||
Dividends Per Share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common Stock
|
.072
|
|
|
.062
|
|
|
.054
|
|
|
.049
|
|
|
.046
|
|
|||||
Former Class A Common Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
.049
|
|
|
.046
|
|
|||||
FINANCIAL POSITION
|
|
|
|
|
|
|
|
|
|
||||||||||
(Dollar Amounts in Thousands)
|
|
|
|
|
|
|
|
|
|
||||||||||
Lease Merchandise, Net
|
$
|
869,725
|
|
|
$
|
964,067
|
|
|
$
|
862,276
|
|
|
$
|
814,484
|
|
|
$
|
682,402
|
|
Property, Plant and Equipment, Net
|
231,293
|
|
|
230,598
|
|
|
226,619
|
|
|
204,912
|
|
|
215,183
|
|
|||||
Total Assets
|
1,827,176
|
|
|
1,812,929
|
|
|
1,731,899
|
|
|
1,500,853
|
|
|
1,320,860
|
|
|||||
Debt
|
142,704
|
|
|
141,528
|
|
|
153,789
|
|
|
41,790
|
|
|
55,044
|
|
|||||
Shareholders’ Equity
|
1,139,963
|
|
|
1,136,126
|
|
|
976,554
|
|
|
979,417
|
|
|
887,260
|
|
|||||
AT YEAR END
|
|
|
|
|
|
|
|
|
|
||||||||||
Stores Open:
|
|
|
|
|
|
|
|
|
|
||||||||||
Company-operated
|
1,370
|
|
|
1,324
|
|
|
1,232
|
|
|
1,150
|
|
|
1,097
|
|
|||||
Franchised
|
781
|
|
|
749
|
|
|
713
|
|
|
664
|
|
|
597
|
|
|||||
Lease Agreements in Effect
|
1,751,000
|
|
|
1,662,000
|
|
|
1,508,000
|
|
|
1,325,000
|
|
|
1,171,000
|
|
|||||
Number of Associates
|
12,600
|
|
|
11,900
|
|
|
11,200
|
|
|
10,400
|
|
|
10,000
|
|
|
2013
|
|
2012
|
|
2011
|
|||
Franchised stores
|
|
|
|
|
|
|||
Franchised stores open at January 1,
|
749
|
|
|
713
|
|
|
664
|
|
Opened
|
45
|
|
|
56
|
|
|
55
|
|
Purchased from the Company
|
2
|
|
|
3
|
|
|
9
|
|
Purchased by the Company
|
(10
|
)
|
|
(21
|
)
|
|
(7
|
)
|
Closed, sold or merged
|
(5
|
)
|
|
(2
|
)
|
|
(8
|
)
|
Franchised stores open at December 31,
|
781
|
|
|
749
|
|
|
713
|
|
Company-operated Sales & Lease Ownership stores
|
|
|
|
|
|
|||
Company-operated Sales & Lease Ownership stores open at January 1,
|
1,227
|
|
|
1,144
|
|
|
1,135
|
|
Opened
|
33
|
|
|
73
|
|
|
51
|
|
Added through acquisition
|
10
|
|
|
21
|
|
|
8
|
|
Closed, sold or merged
|
(8
|
)
|
|
(11
|
)
|
|
(50
|
)
|
Company-operated Sales & Lease Ownership stores open at December 31,
|
1,262
|
|
|
1,227
|
|
|
1,144
|
|
Company-operated HomeSmart stores
|
|
|
|
|
|
|||
Company-operated HomeSmart stores open at January 1,
|
78
|
|
|
71
|
|
|
3
|
|
Opened
|
3
|
|
|
7
|
|
|
24
|
|
Added through acquisition
|
—
|
|
|
1
|
|
|
44
|
|
Closed, sold or merged
|
—
|
|
|
(1
|
)
|
|
—
|
|
Company-operated HomeSmart stores open at December 31,
|
81
|
|
|
78
|
|
|
71
|
|
Company-operated RIMCO stores
1
|
|
|
|
|
|
|||
Company-operated RIMCO stores open at January 1,
|
19
|
|
|
16
|
|
|
11
|
|
Opened
|
8
|
|
|
3
|
|
|
6
|
|
Closed, sold or merged
|
—
|
|
|
—
|
|
|
(1
|
)
|
Company-operated RIMCO stores open at December 31,
|
27
|
|
|
19
|
|
|
16
|
|
|
|
|
Change
|
||||||||||||||||||||||
|
Year Ended December 31,
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||||||||||||
(In Thousands)
|
2013
|
|
2012
|
|
2011
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Lease Revenues
and Fees
|
$
|
1,748,699
|
|
|
$
|
1,676,391
|
|
|
$
|
1,516,508
|
|
|
$
|
72,308
|
|
|
4.3
|
%
|
|
$
|
159,883
|
|
|
10.5
|
%
|
Retail Sales
|
40,876
|
|
|
38,455
|
|
|
38,557
|
|
|
2,421
|
|
|
6.3
|
|
|
(102
|
)
|
|
(.3
|
)
|
|||||
Non-Retail Sales
|
371,292
|
|
|
425,915
|
|
|
388,960
|
|
|
(54,623
|
)
|
|
(12.8
|
)
|
|
36,955
|
|
|
9.5
|
|
|||||
Franchise Royalties and Fees
|
68,575
|
|
|
66,655
|
|
|
63,255
|
|
|
1,920
|
|
|
2.9
|
|
|
3,400
|
|
|
5.4
|
|
|||||
Other
|
5,189
|
|
|
5,411
|
|
|
5,298
|
|
|
(222
|
)
|
|
(4.1
|
)
|
|
113
|
|
|
2.1
|
|
|||||
|
2,234,631
|
|
|
2,212,827
|
|
|
2,012,578
|
|
|
21,804
|
|
|
1.0
|
|
|
200,249
|
|
|
9.9
|
|
|||||
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Retail Cost of Sales
|
24,318
|
|
|
21,608
|
|
|
22,619
|
|
|
2,710
|
|
|
12.5
|
|
|
(1,011
|
)
|
|
(4.5
|
)
|
|||||
Non-Retail Cost of Sales
|
337,581
|
|
|
387,362
|
|
|
351,887
|
|
|
(49,781
|
)
|
|
(12.9
|
)
|
|
35,475
|
|
|
10.1
|
|
|||||
Operating Expenses
|
1,022,684
|
|
|
952,617
|
|
|
866,600
|
|
|
70,067
|
|
|
7.4
|
|
|
86,017
|
|
|
9.9
|
|
|||||
Legal and Regulatory Expense/(Income)
|
28,400
|
|
|
(35,500
|
)
|
|
36,500
|
|
|
63,900
|
|
|
nmf
|
|
(72,000
|
)
|
|
nmf
|
|||||||
Retirement and Vacation Charges
|
4,917
|
|
|
10,394
|
|
|
3,532
|
|
|
(5,477
|
)
|
|
(52.7
|
)
|
|
6,862
|
|
|
194.3
|
|
|||||
Depreciation of Lease Merchandise
|
628,089
|
|
|
601,552
|
|
|
547,839
|
|
|
26,537
|
|
|
4.4
|
|
|
53,713
|
|
|
9.8
|
|
|||||
Other Operating Expense (Income), Net
|
1,584
|
|
|
(2,235
|
)
|
|
(3,550
|
)
|
|
3,819
|
|
|
170.9
|
|
|
1,315
|
|
|
37.0
|
|
|||||
|
2,047,573
|
|
|
1,935,798
|
|
|
1,825,427
|
|
|
111,775
|
|
|
5.8
|
|
|
110,371
|
|
|
6.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
OPERATING PROFIT
|
187,058
|
|
|
277,029
|
|
|
187,151
|
|
|
(89,971
|
)
|
|
(32.5
|
)
|
|
89,878
|
|
|
48.0
|
|
|||||
Interest Income
|
2,998
|
|
|
3,541
|
|
|
1,718
|
|
|
(543
|
)
|
|
(15.3
|
)
|
|
1,823
|
|
|
106.1
|
|
|||||
Interest Expense
|
(5,613
|
)
|
|
(6,392
|
)
|
|
(4,709
|
)
|
|
(779
|
)
|
|
(12.2
|
)
|
|
1,683
|
|
|
35.7
|
|
|||||
Other Non-Operating Income (Expense), Net
|
517
|
|
|
2,677
|
|
|
(783
|
)
|
|
(2,160
|
)
|
|
(80.7
|
)
|
|
3,460
|
|
|
441.9
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
EARNINGS BEFORE INCOME TAXES
|
184,960
|
|
|
276,855
|
|
|
183,377
|
|
|
(91,895
|
)
|
|
(33.2
|
)
|
|
93,478
|
|
|
51.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
INCOME TAXES
|
64,294
|
|
|
103,812
|
|
|
69,610
|
|
|
(39,518
|
)
|
|
(38.1
|
)
|
|
34,202
|
|
|
49.1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
NET EARNINGS
|
$
|
120,666
|
|
|
$
|
173,043
|
|
|
$
|
113,767
|
|
|
$
|
(52,377
|
)
|
|
(30.3
|
)%
|
|
$
|
59,276
|
|
|
52.1
|
%
|
|
|
|
Change
|
||||||||||||||||||||||
|
Year Ended December 31,
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||||||||||||
(In Thousands)
|
2013
|
|
2012
|
|
2011
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales and Lease Ownership
1
|
$
|
2,076,269
|
|
|
$
|
2,068,124
|
|
|
$
|
1,920,372
|
|
|
$
|
8,145
|
|
|
.4
|
%
|
|
$
|
147,752
|
|
|
7.7
|
%
|
HomeSmart
1
|
62,840
|
|
|
55,226
|
|
|
15,624
|
|
|
7,614
|
|
|
13.8
|
|
|
39,602
|
|
|
253.5
|
|
|||||
RIMCO
1
|
20,596
|
|
|
16,674
|
|
|
11,317
|
|
|
3,922
|
|
|
23.5
|
|
|
5,357
|
|
|
47.3
|
|
|||||
Franchise
2
|
68,575
|
|
|
66,655
|
|
|
63,255
|
|
|
1,920
|
|
|
2.9
|
|
|
3,400
|
|
|
5.4
|
|
|||||
Manufacturing
|
106,523
|
|
|
95,693
|
|
|
89,430
|
|
|
10,830
|
|
|
11.3
|
|
|
6,263
|
|
|
7.0
|
|
|||||
Other
|
1,562
|
|
|
3,014
|
|
|
5,539
|
|
|
(1,452
|
)
|
|
(48.2
|
)
|
|
(2,525
|
)
|
|
(45.6
|
)
|
|||||
Revenues of Reportable Segments
|
2,336,365
|
|
|
2,305,386
|
|
|
2,105,537
|
|
|
30,979
|
|
|
1.3
|
|
|
199,849
|
|
|
9.5
|
|
|||||
Elimination of Intersegment Revenues
|
(103,834
|
)
|
|
(95,150
|
)
|
|
(89,430
|
)
|
|
(8,684
|
)
|
|
(9.1
|
)
|
|
(5,720
|
)
|
|
(6.4
|
)
|
|||||
Cash to Accrual Adjustments
|
2,100
|
|
|
2,591
|
|
|
(3,529
|
)
|
|
(491
|
)
|
|
(19.0
|
)
|
|
6,120
|
|
|
173.4
|
|
|||||
Total Revenues from External Customers
|
$
|
2,234,631
|
|
|
$
|
2,212,827
|
|
|
$
|
2,012,578
|
|
|
$
|
21,804
|
|
|
1.0
|
%
|
|
$
|
200,249
|
|
|
9.9
|
%
|
1
Segment revenue consists of lease revenues and fees, retail sales and non-retail sales.
|
|||||||||||||||||||||||||
2
Segment revenue consists of franchise royalties and fees.
|
|
Year Ended December 31,
|
||||||||||
(In Thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Gains on sales of stores and delivery vehicles
|
$
|
(2,728
|
)
|
|
$
|
(3,545
|
)
|
|
$
|
(4,720
|
)
|
Impairment charges and losses on asset dispositions
|
4,312
|
|
|
1,310
|
|
|
1,170
|
|
|||
Other Operating Expense (Income), Net
|
$
|
1,584
|
|
|
$
|
(2,235
|
)
|
|
$
|
(3,550
|
)
|
|
|
|
Change
|
||||||||||||||||||||||
|
Year Ended December 31,
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||||||||||||
(In Thousands)
|
2013
|
|
2012
|
|
2011
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
EARNINGS BEFORE INCOME TAXES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales and Lease Ownership
|
$
|
183,965
|
|
|
$
|
244,014
|
|
|
$
|
144,232
|
|
|
$
|
(60,049
|
)
|
|
(24.6
|
)%
|
|
$
|
99,782
|
|
|
69.2
|
%
|
HomeSmart
|
(3,428
|
)
|
|
(6,962
|
)
|
|
(7,283
|
)
|
|
3,534
|
|
|
50.8
|
|
|
321
|
|
|
4.4
|
|
|||||
RIMCO
|
(414
|
)
|
|
573
|
|
|
153
|
|
|
(987
|
)
|
|
(172.3
|
)
|
|
420
|
|
|
274.5
|
|
|||||
Franchise
|
54,171
|
|
|
52,672
|
|
|
49,577
|
|
|
1,499
|
|
|
2.8
|
|
|
3,095
|
|
|
6.2
|
|
|||||
Manufacturing
|
107
|
|
|
382
|
|
|
2,960
|
|
|
(275
|
)
|
|
(72.0
|
)
|
|
(2,578
|
)
|
|
(87.1
|
)
|
|||||
Other
|
(55,700
|
)
|
|
(12,910
|
)
|
|
119
|
|
|
(42,790
|
)
|
|
nmf
|
|
(13,029
|
)
|
|
nmf
|
|||||||
Earnings Before Income Taxes for Reportable Segments
|
178,701
|
|
|
277,769
|
|
|
189,758
|
|
|
(99,068
|
)
|
|
(35.7
|
)
|
|
88,011
|
|
|
46.4
|
|
|||||
Elimination of Intersegment Profit
|
(94
|
)
|
|
(393
|
)
|
|
(2,960
|
)
|
|
299
|
|
|
76.1
|
|
|
2,567
|
|
|
86.7
|
|
|||||
Cash to Accrual and Other Adjustments
|
6,353
|
|
|
(521
|
)
|
|
(3,421
|
)
|
|
6,874
|
|
|
nmf
|
|
2,900
|
|
|
nmf
|
|||||||
Total
|
$
|
184,960
|
|
|
$
|
276,855
|
|
|
$
|
183,377
|
|
|
$
|
(91,895
|
)
|
|
(33.2
|
)%
|
|
$
|
93,478
|
|
|
51.0
|
%
|
(In Thousands)
|
Total
|
|
Period Less
Than 1 Year
|
|
Period 1-3
Years
|
|
Period 3-5
Years
|
|
Period Over
5 Years
|
||||||||||
Debt, Excluding Capital Leases
|
$
|
128,250
|
|
|
$
|
25,000
|
|
|
$
|
53,250
|
|
|
$
|
50,000
|
|
|
$
|
—
|
|
Capital Leases
|
14,454
|
|
|
2,529
|
|
|
5,505
|
|
|
4,014
|
|
|
2,406
|
|
|||||
Interest Obligations
|
22,591
|
|
|
5,632
|
|
|
10,341
|
|
|
6,588
|
|
|
30
|
|
|||||
Operating Leases
|
528,567
|
|
|
113,067
|
|
|
171,532
|
|
|
100,385
|
|
|
143,583
|
|
|||||
Purchase Obligations
|
35,448
|
|
|
19,197
|
|
|
16,251
|
|
|
—
|
|
|
—
|
|
|||||
Retirement Obligations
|
9,306
|
|
|
4,215
|
|
|
3,837
|
|
|
1,206
|
|
|
48
|
|
|||||
Total Contractual Cash Obligations
|
$
|
738,616
|
|
|
$
|
169,640
|
|
|
$
|
260,716
|
|
|
$
|
162,193
|
|
|
$
|
146,067
|
|
(In Thousands)
|
Total
Amounts
Committed
|
|
Period Less
Than 1 Year
|
|
Period 1-3
Years
|
|
Period 3-5
Years
|
|
Period Over
5 Years
|
||||||||||
Guaranteed Borrowings of Franchisees
|
$
|
105,030
|
|
|
$
|
104,357
|
|
|
$
|
673
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
December 31,
2013 |
|
December 31,
2012 |
||||
|
(In Thousands, Except Share Data)
|
||||||
ASSETS:
|
|
|
|
||||
Cash and Cash Equivalents
|
$
|
231,091
|
|
|
$
|
129,534
|
|
Investments
|
112,391
|
|
|
85,861
|
|
||
Accounts Receivable (net of allowances of $7,172 in 2013 and $6,001 in 2012)
|
68,684
|
|
|
74,157
|
|
||
Lease Merchandise (net of accumulated depreciation of $594,436 in 2013 and $575,527 in 2012)
|
869,725
|
|
|
964,067
|
|
||
Property, Plant and Equipment, Net
|
231,293
|
|
|
230,598
|
|
||
Goodwill
|
239,181
|
|
|
234,195
|
|
||
Other Intangibles, Net
|
3,535
|
|
|
6,026
|
|
||
Prepaid Expenses and Other Assets
|
55,436
|
|
|
77,387
|
|
||
Assets Held for Sale
|
15,840
|
|
|
11,104
|
|
||
Total Assets
|
$
|
1,827,176
|
|
|
$
|
1,812,929
|
|
LIABILITIES & SHAREHOLDERS’ EQUITY:
|
|
|
|
||||
Accounts Payable and Accrued Expenses
|
$
|
243,910
|
|
|
$
|
225,532
|
|
Accrued Regulatory Expense
|
28,400
|
|
|
—
|
|
||
Deferred Income Taxes Payable
|
226,958
|
|
|
263,721
|
|
||
Customer Deposits and Advance Payments
|
45,241
|
|
|
46,022
|
|
||
Credit Facilities
|
142,704
|
|
|
141,528
|
|
||
Total Liabilities
|
687,213
|
|
|
676,803
|
|
||
Commitments and Contingencies (Note 8)
|
—
|
|
|
—
|
|
||
Shareholders’ Equity:
|
|
|
|
||||
Common Stock: Par Value $.50 Per Share; Authorized: 225,000,000; Shares Issued: 90,752,123 at December 31, 2013 and December 31, 2012, respectively
|
45,376
|
|
|
45,376
|
|
||
Additional Paid-in Capital
|
198,182
|
|
|
220,362
|
|
||
Retained Earnings
|
1,202,219
|
|
|
1,087,032
|
|
||
Accumulated Other Comprehensive Loss
|
(64
|
)
|
|
(69
|
)
|
||
|
1,445,713
|
|
|
1,352,701
|
|
||
Less: Treasury Shares at Cost
|
|
|
|
||||
Common Stock: 17,795,293 Shares at December 31, 2013 and 15,031,741 Shares at December 31, 2012
|
(305,750
|
)
|
|
(216,575
|
)
|
||
Total Shareholders’ Equity
|
1,139,963
|
|
|
1,136,126
|
|
||
Total Liabilities & Shareholders’ Equity
|
$
|
1,827,176
|
|
|
$
|
1,812,929
|
|
|
Year Ended December 31, 2013
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
||||||
|
(In Thousands, Except Per Share Data)
|
||||||||||
REVENUES:
|
|
|
|
|
|
||||||
Lease Revenues and Fees
|
$
|
1,748,699
|
|
|
$
|
1,676,391
|
|
|
$
|
1,516,508
|
|
Retail Sales
|
40,876
|
|
|
38,455
|
|
|
38,557
|
|
|||
Non-Retail Sales
|
371,292
|
|
|
425,915
|
|
|
388,960
|
|
|||
Franchise Royalties and Fees
|
68,575
|
|
|
66,655
|
|
|
63,255
|
|
|||
Other
|
5,189
|
|
|
5,411
|
|
|
5,298
|
|
|||
|
2,234,631
|
|
|
2,212,827
|
|
|
2,012,578
|
|
|||
COSTS AND EXPENSES:
|
|
|
|
|
|
||||||
Retail Cost of Sales
|
24,318
|
|
|
21,608
|
|
|
22,619
|
|
|||
Non-Retail Cost of Sales
|
337,581
|
|
|
387,362
|
|
|
351,887
|
|
|||
Operating Expenses
|
1,022,684
|
|
|
952,617
|
|
|
866,600
|
|
|||
Legal and Regulatory Expense/(Income)
|
28,400
|
|
|
(35,500
|
)
|
|
36,500
|
|
|||
Retirement and Vacation Charges
|
4,917
|
|
|
10,394
|
|
|
3,532
|
|
|||
Depreciation of Lease Merchandise
|
628,089
|
|
|
601,552
|
|
|
547,839
|
|
|||
Other Operating Expense (Income), Net
|
1,584
|
|
|
(2,235
|
)
|
|
(3,550
|
)
|
|||
|
2,047,573
|
|
|
1,935,798
|
|
|
1,825,427
|
|
|||
OPERATING PROFIT
|
187,058
|
|
|
277,029
|
|
|
187,151
|
|
|||
Interest Income
|
2,998
|
|
|
3,541
|
|
|
1,718
|
|
|||
Interest Expense
|
(5,613
|
)
|
|
(6,392
|
)
|
|
(4,709
|
)
|
|||
Other Non-Operating Income (Expense), Net
|
517
|
|
|
2,677
|
|
|
(783
|
)
|
|||
EARNINGS BEFORE INCOME TAXES
|
184,960
|
|
|
276,855
|
|
|
183,377
|
|
|||
INCOME TAXES
|
64,294
|
|
|
103,812
|
|
|
69,610
|
|
|||
NET EARNINGS
|
$
|
120,666
|
|
|
$
|
173,043
|
|
|
$
|
113,767
|
|
EARNINGS PER SHARE
|
$
|
1.59
|
|
|
$
|
2.28
|
|
|
$
|
1.46
|
|
EARNINGS PER SHARE ASSUMING DILUTION
|
$
|
1.58
|
|
|
$
|
2.25
|
|
|
$
|
1.43
|
|
|
Year End December 31,
|
||||||||||
(In Thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Net Earnings
|
$
|
120,666
|
|
|
$
|
173,043
|
|
|
$
|
113,767
|
|
Other Comprehensive Income (Loss):
|
|
|
|
|
|
||||||
Foreign Currency Translation:
|
|
|
|
|
|
||||||
Foreign Currency Translation Adjustment
|
5
|
|
|
(343
|
)
|
|
(648
|
)
|
|||
Less: Reclassification Adjustments for Net Gains Included in Net Earnings
|
—
|
|
|
373
|
|
|
—
|
|
|||
Net Change
|
5
|
|
|
30
|
|
|
(648
|
)
|
|||
Available-for-Sale Investments:
|
|
|
|
|
|
||||||
Change in Net Unrealized Losses on Available-for-Sale Investments
|
—
|
|
|
—
|
|
|
88
|
|
|||
Less: Reclassification Adjustment for Net Losses Included in Net Earnings
|
—
|
|
|
—
|
|
|
(88
|
)
|
|||
Net Change
|
—
|
|
|
—
|
|
|
—
|
|
|||
Cash Flow Hedges:
|
|
|
|
|
|
||||||
Change in Net Unrealized Gains on Derivatives Designated as Cash Flow Hedges
|
—
|
|
|
—
|
|
|
(12
|
)
|
|||
Less: Reclassification Adjustment for Net Gains Included in Net Earnings
|
—
|
|
|
—
|
|
|
12
|
|
|||
Net Change
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total Other Comprehensive Income (Loss)
|
5
|
|
|
30
|
|
|
(648
|
)
|
|||
Comprehensive Income
|
$
|
120,671
|
|
|
$
|
173,073
|
|
|
$
|
113,119
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive (Loss)Income
|
|||||||||||||||||||||
|
Treasury Stock
|
|
Common Stock
|
|
Additional
Paid-in Capital
|
|
Retained Earnings
|
|
Foreign
Currency Translation |
|
Available-for-Sale Investments
|
|
Cash Flow Hedges
|
|||||||||||||||||
(In Thousands, Except Per Share)
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance, January 1, 2011
|
(10,665
|
)
|
|
$
|
(77,641
|
)
|
|
$
|
45,376
|
|
|
$
|
201,752
|
|
|
$
|
809,084
|
|
|
$
|
922
|
|
|
$
|
(88
|
)
|
|
$
|
12
|
|
Dividends, $.054 per share
|
|
|
|
|
|
|
|
|
(4,152
|
)
|
|
|
|
|
|
|
||||||||||||||
Stock-Based Compensation
|
|
|
|
|
|
|
8,385
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Reissued Shares
|
737
|
|
|
7,493
|
|
|
|
|
2,174
|
|
|
|
|
|
|
|
|
|
||||||||||||
Repurchased Shares
|
(5,184
|
)
|
|
(129,958
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Earnings
|
|
|
|
|
|
|
|
|
113,767
|
|
|
|
|
|
|
|
||||||||||||||
Foreign Currency Translation Adjustment
|
|
|
|
|
|
|
|
|
|
|
(648
|
)
|
|
|
|
|
||||||||||||||
Change in Net Unrealized Losses on Available-for-Sale Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
88
|
|
|
|
||||||||||||||
Change in Net Unrealized Gains on Derivatives Designated as Cash Flow Hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12
|
)
|
||||||||||||||
Balance, December 31, 2011
|
(15,112
|
)
|
|
(200,106
|
)
|
|
45,376
|
|
|
212,311
|
|
|
918,699
|
|
|
274
|
|
|
—
|
|
|
—
|
|
|||||||
Dividends, $.062 per share
|
|
|
|
|
|
|
|
|
(4,710
|
)
|
|
|
|
|
|
|
||||||||||||||
Stock-Based Compensation
|
|
|
|
|
|
|
6,374
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Reissued Shares
|
1,317
|
|
|
17,662
|
|
|
|
|
1,677
|
|
|
|
|
|
|
|
|
|
||||||||||||
Repurchased Shares
|
(1,237
|
)
|
|
(34,131
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net Earnings
|
|
|
|
|
|
|
|
|
173,043
|
|
|
|
|
|
|
|
||||||||||||||
Foreign Currency Translation Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
(343
|
)
|
|
|
|
|
|||||||||||||
Balance, December 31, 2012
|
(15,032
|
)
|
|
(216,575
|
)
|
|
45,376
|
|
|
220,362
|
|
|
1,087,032
|
|
|
(69
|
)
|
|
—
|
|
|
—
|
|
|||||||
Dividends, $.072 per share
|
|
|
|
|
|
|
|
|
(5,479
|
)
|
|
|
|
|
|
|
||||||||||||||
Stock-Based Compensation
|
|
|
|
|
|
|
2,250
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Reissued Shares
|
739
|
|
|
10,825
|
|
|
|
|
570
|
|
|
|
|
|
|
|
|
|
||||||||||||
Repurchased Shares
|
(3,502
|
)
|
|
(100,000
|
)
|
|
|
|
(25,000
|
)
|
|
|
|
|
|
|
|
|
||||||||||||
Net Earnings
|
|
|
|
|
|
|
|
|
120,666
|
|
|
|
|
|
|
|
||||||||||||||
Foreign Currency Translation Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|||||||||||||
Balance, December 31, 2013
|
(17,795
|
)
|
|
$
|
(305,750
|
)
|
|
$
|
45,376
|
|
|
$
|
198,182
|
|
|
$
|
1,202,219
|
|
|
$
|
(64
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Year Ended December 31, 2013
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
||||||
|
(In Thousands)
|
||||||||||
OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net Earnings
|
$
|
120,666
|
|
|
$
|
173,043
|
|
|
$
|
113,767
|
|
Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities:
|
|
|
|
|
|
||||||
Depreciation of Lease Merchandise
|
628,089
|
|
|
601,552
|
|
|
547,839
|
|
|||
Other Depreciation and Amortization
|
57,016
|
|
|
56,783
|
|
|
52,832
|
|
|||
Bad Debt Expense
|
35,894
|
|
|
31,842
|
|
|
25,402
|
|
|||
Stock-Based Compensation
|
2,342
|
|
|
6,454
|
|
|
8,385
|
|
|||
Loss (Gain) on Sale of Property, Plant, and Equipment and Assets Held for Sale
|
613
|
|
|
(397
|
)
|
|
1,172
|
|
|||
Gain on Asset Dispositions
|
(705
|
)
|
|
(265
|
)
|
|
(3,045
|
)
|
|||
Deferred Income Taxes
|
(36,763
|
)
|
|
(23,241
|
)
|
|
59,449
|
|
|||
Excess Tax Benefits From Stock-Based Compensation
|
(1,381
|
)
|
|
(5,967
|
)
|
|
(1,264
|
)
|
|||
Other Changes, Net
|
5,469
|
|
|
7,830
|
|
|
(1,693
|
)
|
|||
Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions:
|
|
|
|
|
|
||||||
Additions to Lease Merchandise
|
(964,072
|
)
|
|
(1,162,703
|
)
|
|
(1,024,602
|
)
|
|||
Book Value of Lease Merchandise Sold or Disposed
|
425,673
|
|
|
469,897
|
|
|
433,433
|
|
|||
Accounts Receivable
|
(30,419
|
)
|
|
(18,528
|
)
|
|
(43,211
|
)
|
|||
Prepaid Expenses and Other Assets
|
(1,349
|
)
|
|
(9,263
|
)
|
|
(4,317
|
)
|
|||
Income Tax Receivable
|
22,688
|
|
|
(22,379
|
)
|
|
79,762
|
|
|||
Accounts Payable and Accrued Expenses
|
16,893
|
|
|
(4,635
|
)
|
|
18,885
|
|
|||
Accrued Litigation Expense
|
28,400
|
|
|
(41,720
|
)
|
|
40,043
|
|
|||
Customer Deposits and Advance Payments
|
(617
|
)
|
|
1,451
|
|
|
4,358
|
|
|||
Cash Provided by Operating Activities
|
308,437
|
|
|
59,754
|
|
|
307,195
|
|
|||
INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Purchase of Investments
|
(74,845
|
)
|
|
(91,000
|
)
|
|
(100,513
|
)
|
|||
Proceeds from Maturities and Calls of Investments
|
47,930
|
|
|
102,118
|
|
|
1,063
|
|
|||
Additions to Property, Plant and Equipment
|
(58,145
|
)
|
|
(65,073
|
)
|
|
(78,211
|
)
|
|||
Acquisitions of Businesses and Contracts
|
(10,898
|
)
|
|
(30,799
|
)
|
|
(32,176
|
)
|
|||
Proceeds from Dispositions of Businesses and Contracts
|
2,163
|
|
|
1,999
|
|
|
7,282
|
|
|||
Proceeds from Sale of Property, Plant, and Equipment
|
6,841
|
|
|
6,790
|
|
|
11,481
|
|
|||
Cash Used by Investing Activities
|
(86,954
|
)
|
|
(75,965
|
)
|
|
(191,074
|
)
|
|||
FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Proceeds from Credit Facilities
|
2,598
|
|
|
16,258
|
|
|
129,150
|
|
|||
Repayments on Credit Facilities
|
(4,954
|
)
|
|
(28,519
|
)
|
|
(17,151
|
)
|
|||
Acquisition of Treasury Stock
|
(125,000
|
)
|
|
(34,131
|
)
|
|
(127,193
|
)
|
|||
Dividends Paid
|
(3,875
|
)
|
|
(5,843
|
)
|
|
(4,073
|
)
|
|||
Excess Tax Benefits From Stock-Based Compensation
|
1,381
|
|
|
5,967
|
|
|
1,264
|
|
|||
Issuance of Stock Under Stock Option Plans
|
9,924
|
|
|
15,756
|
|
|
6,117
|
|
|||
Cash Used by Financing Activities
|
(119,926
|
)
|
|
(30,512
|
)
|
|
(11,886
|
)
|
|||
Increase (Decrease) in Cash and Cash Equivalents
|
101,557
|
|
|
(46,723
|
)
|
|
104,235
|
|
|||
Cash and Cash Equivalents at Beginning of Year
|
129,534
|
|
|
176,257
|
|
|
72,022
|
|
|||
Cash and Cash Equivalents at End of Year
|
$
|
231,091
|
|
|
$
|
129,534
|
|
|
$
|
176,257
|
|
Cash Paid During the Year:
|
|
|
|
|
|
||||||
Interest
|
$
|
5,614
|
|
|
$
|
6,498
|
|
|
$
|
3,983
|
|
Income Taxes
|
54,027
|
|
|
145,370
|
|
|
10,991
|
|
Stores at December 31 (Unaudited)
|
2013
|
|
2012
|
|
2011
|
|||
Company-operated stores
|
|
|
|
|
|
|||
Sales and Lease Ownership
|
1,262
|
|
|
1,227
|
|
|
1,144
|
|
HomeSmart
|
81
|
|
|
78
|
|
|
71
|
|
RIMCO
|
27
|
|
|
19
|
|
|
16
|
|
Aaron’s Office Furniture
|
—
|
|
|
—
|
|
|
1
|
|
Total Company-operated stores
|
1,370
|
|
|
1,324
|
|
|
1,232
|
|
Franchised stores
1
|
781
|
|
|
749
|
|
|
713
|
|
Systemwide stores
|
2,151
|
|
|
2,073
|
|
|
1,945
|
|
(In Thousands)
|
2013
|
|
2012
|
||||
Customers
|
$
|
8,275
|
|
|
$
|
7,840
|
|
Corporate
|
16,730
|
|
|
17,215
|
|
||
Franchisee
|
43,679
|
|
|
49,102
|
|
||
|
$
|
68,684
|
|
|
$
|
74,157
|
|
(In Thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Beginning Balance
|
$
|
6,001
|
|
|
$
|
4,768
|
|
|
$
|
4,544
|
|
Accounts written off
|
(34,723
|
)
|
|
(30,609
|
)
|
|
(25,178
|
)
|
|||
Bad debt expense
|
35,894
|
|
|
31,842
|
|
|
25,402
|
|
|||
Ending Balance
|
$
|
7,172
|
|
|
$
|
6,001
|
|
|
$
|
4,768
|
|
(In Thousands)
|
2013
|
|
2012
|
||||
Sales and Lease Ownership
|
$
|
224,523
|
|
|
$
|
219,547
|
|
HomeSmart
|
14,658
|
|
|
14,648
|
|
||
Total
|
$
|
239,181
|
|
|
$
|
234,195
|
|
(In Thousands, except for store data)
|
2013
|
|
2012
|
|
2011
|
||||||
Number of stores acquired, net
|
10
|
|
|
22
|
|
|
52
|
|
|||
Aggregate purchase price (primarily cash consideration)
|
$
|
10,898
|
|
|
$
|
31,617
|
|
|
$
|
41,425
|
|
Purchase price allocation:
|
|
|
|
|
|
||||||
Lease Merchandise
|
4,016
|
|
|
11,936
|
|
|
13,385
|
|
|||
Property, Plant and Equipment
|
467
|
|
|
739
|
|
|
500
|
|
|||
Other Current Assets and Current Liabilities
|
(228
|
)
|
|
38
|
|
|
34
|
|
|||
Identifiable Intangible Assets
1
:
|
|
|
|
|
|
||||||
Customer Relationships
|
557
|
|
|
1,725
|
|
|
2,675
|
|
|||
Non-Compete Agreements
|
405
|
|
|
1,201
|
|
|
1,688
|
|
|||
Acquired Franchise Development Rights
|
252
|
|
|
764
|
|
|
255
|
|
|||
Goodwill
2
|
5,429
|
|
|
15,214
|
|
|
22,888
|
|
(In Thousands)
|
Sales and Lease
Ownership
|
|
HomeSmart
|
|
Total
|
||||||
Balance at January 1, 2012
|
$
|
205,509
|
|
|
$
|
13,833
|
|
|
$
|
219,342
|
|
Additions
|
14,399
|
|
|
815
|
|
|
15,214
|
|
|||
Disposals
|
(361
|
)
|
|
—
|
|
|
(361
|
)
|
|||
Balance at December 31, 2012
|
219,547
|
|
|
14,648
|
|
|
234,195
|
|
|||
Additions
|
5,429
|
|
|
—
|
|
|
5,429
|
|
|||
Disposals
|
(499
|
)
|
|
—
|
|
|
(499
|
)
|
|||
Purchase Price Adjustments
|
46
|
|
|
10
|
|
|
56
|
|
|||
Balance at December 31, 2013
|
$
|
224,523
|
|
|
$
|
14,658
|
|
|
$
|
239,181
|
|
|
2013
|
|
2012
|
||||||||||||||||||||
(In Thousands)
|
Gross
|
|
Accumulated
Amortization |
|
Net
|
|
Gross
|
|
Accumulated
Amortization |
|
Net
|
||||||||||||
Customer Relationships
|
$
|
2,282
|
|
|
$
|
(1,463
|
)
|
|
$
|
819
|
|
|
$
|
4,377
|
|
|
$
|
(2,170
|
)
|
|
$
|
2,207
|
|
Non-Compete Agreements
|
3,265
|
|
|
(2,001
|
)
|
|
1,264
|
|
|
3,408
|
|
|
(1,471
|
)
|
|
1,937
|
|
||||||
Acquired Franchise Development Rights
|
3,529
|
|
|
(2,077
|
)
|
|
1,452
|
|
|
4,566
|
|
|
(2,684
|
)
|
|
1,882
|
|
||||||
Total
|
$
|
9,076
|
|
|
$
|
(5,541
|
)
|
|
$
|
3,535
|
|
|
$
|
12,351
|
|
|
$
|
(6,325
|
)
|
|
$
|
6,026
|
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||||||||||||||||
(In Thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Deferred Compensation Liability
|
$
|
—
|
|
|
$
|
(12,557
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(9,518
|
)
|
|
$
|
—
|
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||||||||||||||||
(In Thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Assets Held for Sale
|
$
|
—
|
|
|
$
|
15,840
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,104
|
|
|
$
|
—
|
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||||||||||||||||
(In Thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Corporate Bonds
1
|
$
|
—
|
|
|
$
|
91,785
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
67,470
|
|
|
$
|
—
|
|
Perfect Home Notes
2
|
—
|
|
|
—
|
|
|
20,661
|
|
|
—
|
|
|
—
|
|
|
18,449
|
|
||||||
Fixed-Rate Long Term Debt
3
|
—
|
|
|
(130,687
|
)
|
|
—
|
|
|
—
|
|
|
(127,261
|
)
|
|
—
|
|
|
|
|
Gross Unrealized
|
|
|
||||||||||
(In Thousands)
|
Amortized Cost
|
|
Gains
|
|
Losses
|
|
Fair Value
|
||||||||
2013
|
|
|
|
|
|
|
|
||||||||
Corporate Bonds
|
$
|
91,730
|
|
|
$
|
98
|
|
|
$
|
(43
|
)
|
|
$
|
91,785
|
|
Perfect Home Notes
|
20,661
|
|
|
—
|
|
|
—
|
|
|
20,661
|
|
||||
Total
|
$
|
112,391
|
|
|
$
|
98
|
|
|
$
|
(43
|
)
|
|
$
|
112,446
|
|
2012
|
|
|
|
|
|
|
|
||||||||
Corporate Bonds
|
$
|
67,412
|
|
|
$
|
99
|
|
|
$
|
(41
|
)
|
|
$
|
67,470
|
|
Perfect Home Notes
|
18,449
|
|
|
—
|
|
|
—
|
|
|
18,449
|
|
||||
Total
|
$
|
85,861
|
|
|
$
|
99
|
|
|
$
|
(41
|
)
|
|
$
|
85,919
|
|
(In Thousands)
|
Amortized Cost
|
|
Fair Value
|
||||
Due in one year or less
|
$
|
55,250
|
|
|
$
|
55,284
|
|
Due in years one through two
|
57,141
|
|
|
57,162
|
|
||
Total
|
$
|
112,391
|
|
|
$
|
112,446
|
|
(In Thousands)
|
2013
|
|
2012
|
||||
Land
|
$
|
26,021
|
|
|
$
|
25,285
|
|
Buildings and Improvements
|
84,520
|
|
|
81,773
|
|
||
Leasehold Improvements and Signs
|
120,702
|
|
|
120,883
|
|
||
Fixtures and Equipment
1
|
172,483
|
|
|
152,436
|
|
||
Assets Under Capital Leases:
|
|
|
|
||||
with Related Parties
|
10,574
|
|
|
8,158
|
|
||
with Unrelated Parties
|
10,550
|
|
|
10,564
|
|
||
Construction in Progress
|
4,347
|
|
|
5,414
|
|
||
|
429,197
|
|
|
404,513
|
|
||
Less: Accumulated Depreciation and Amortization
|
(197,904
|
)
|
|
(173,915
|
)
|
||
|
$
|
231,293
|
|
|
$
|
230,598
|
|
1
|
Includes internal-use software development costs of
$36.3 million
and
$22.6 million
as of
December 31, 2013
and
2012
, respectively. Accumulated amortization of internal-use software development costs amounted to
$9.5 million
and
$6.6 million
as of
December 31, 2013
and
2012
, respectively.
|
(In Thousands)
|
2013
|
|
2012
|
||
Senior Unsecured Notes
|
$125,000
|
|
$125,000
|
||
Capital Lease Obligation:
|
|
|
|
||
with Related Parties
|
7,412
|
|
|
6,122
|
|
with Unrelated Parties
|
7,042
|
|
|
7,156
|
|
Other Debt
|
3,250
|
|
|
3,250
|
|
|
$142,704
|
|
$141,528
|
(In Thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Current Income Tax Expense:
|
|
|
|
|
|
||||||
Federal
|
$
|
91,664
|
|
|
$
|
116,234
|
|
|
$
|
—
|
|
State
|
9,393
|
|
|
10,819
|
|
|
9,797
|
|
|||
|
101,057
|
|
|
127,053
|
|
|
9,797
|
|
|||
Deferred Income Tax Expense (Benefit):
|
|
|
|
|
|
||||||
Federal
|
(35,941
|
)
|
|
(23,035
|
)
|
|
62,015
|
|
|||
State
|
(822
|
)
|
|
(206
|
)
|
|
(2,202
|
)
|
|||
|
(36,763
|
)
|
|
(23,241
|
)
|
|
59,813
|
|
|||
|
$
|
64,294
|
|
|
$
|
103,812
|
|
|
$
|
69,610
|
|
(In Thousands)
|
2013
|
|
2012
|
||||
Deferred Tax Liabilities:
|
|
|
|
||||
Lease Merchandise and Property, Plant and Equipment
|
$
|
249,192
|
|
|
$
|
279,926
|
|
Goodwill & Other Intangibles
|
34,512
|
|
|
30,754
|
|
||
Other, Net
|
2,782
|
|
|
3,260
|
|
||
Total Deferred Tax Liabilities
|
286,486
|
|
|
313,940
|
|
||
Deferred Tax Assets:
|
|
|
|
||||
Accrued Liabilities
|
36,778
|
|
|
25,365
|
|
||
Advance Payments
|
15,400
|
|
|
15,834
|
|
||
Other, Net
|
8,032
|
|
|
9,677
|
|
||
Total Deferred Tax Assets
|
60,210
|
|
|
50,876
|
|
||
Less Valuation Allowance
|
(682
|
)
|
|
(657
|
)
|
||
Net Deferred Tax Liabilities
|
$
|
226,958
|
|
|
$
|
263,721
|
|
|
2013
|
|
2012
|
|
2011
|
|||
Statutory Rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Increases in United States Federal Taxes
|
|
|
|
|
|
|||
Resulting From:
|
|
|
|
|
|
|||
State Income Taxes, Net of Federal Income Tax Benefit
|
3.1
|
|
|
2.5
|
|
|
2.7
|
|
Federal Tax Credits
|
(1.7
|
)
|
|
(.1
|
)
|
|
(.3
|
)
|
Other, Net
|
(1.6
|
)
|
|
.1
|
|
|
.6
|
|
Effective Tax Rate
|
34.8
|
%
|
|
37.5
|
%
|
|
38.0
|
%
|
(In Thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Balance at January 1,
|
$
|
1,258
|
|
|
$
|
1,412
|
|
|
$
|
1,315
|
|
Additions based on tax positions related to the current year
|
454
|
|
|
178
|
|
|
178
|
|
|||
Additions for tax positions of prior years
|
423
|
|
|
83
|
|
|
22
|
|
|||
Prior year reductions
|
(5
|
)
|
|
(315
|
)
|
|
(13
|
)
|
|||
Statute expirations
|
(85
|
)
|
|
(83
|
)
|
|
(90
|
)
|
|||
Settlements
|
(85
|
)
|
|
(17
|
)
|
|
—
|
|
|||
Balance at December 31,
|
$
|
1,960
|
|
|
$
|
1,258
|
|
|
$
|
1,412
|
|
|
Options Outstanding
|
|
|
||||||||||||
|
|
|
Weighted Average
|
|
|
|
Options Exercisable
|
||||||||
Range of Exercise
Prices
|
Number Outstanding
December 31, 2013
|
|
Remaining Contractual
Life (in years)
|
|
Weighted Average
Exercise Price
|
|
Number Exercisable
December 31, 2013
|
|
Weighted Average
Exercise Price
|
||||||
$10.01-15.00
|
471,250
|
|
|
4.13
|
|
$
|
14.15
|
|
|
471,250
|
|
|
$
|
14.15
|
|
15.01-19.92
|
215,250
|
|
|
6.11
|
|
19.90
|
|
|
57,750
|
|
|
19.83
|
|
||
$10.01-19.92
|
686,500
|
|
|
4.75
|
|
15.95
|
|
|
529,000
|
|
|
14.77
|
|
|
Options
(In Thousands)
|
|
Weighted Average
Exercise Price
|
|
Weighted Average
Remaining
Contractual Term
|
|
Aggregate
Intrinsic Value
(in Thousands)
|
|
Weighted
Average Fair
Value
|
|||||||
Outstanding at January 1, 2013
|
1,513
|
|
|
$
|
14.81
|
|
|
|
|
|
|
|
||||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|||||
Exercised
|
(728
|
)
|
|
13.71
|
|
|
|
|
|
|
|
|||||
Forfeited/expired
|
(98
|
)
|
|
15.29
|
|
|
|
|
|
|
|
|||||
Outstanding at December 31, 2013
|
687
|
|
|
15.95
|
|
|
4.75
|
|
$
|
9,233
|
|
|
$
|
7.02
|
|
|
Expected to Vest at December 31, 2013
|
132
|
|
|
19.92
|
|
|
6.15
|
|
1,253
|
|
|
10.67
|
|
|||
Exercisable at December 31, 2013
|
529
|
|
|
14.77
|
|
|
4.33
|
|
7,740
|
|
|
5.94
|
|
|
Restricted Stock
(In Thousands)
|
|
Weighted Average
Fair Value
|
|||
Non-vested at January 1, 2013
|
696
|
|
|
$
|
23.28
|
|
Granted
|
307
|
|
|
29.23
|
|
|
Vested
|
(6
|
)
|
|
28.22
|
|
|
Forfeited
|
(315
|
)
|
|
23.60
|
|
|
Non-vested at December 31, 2013
|
682
|
|
|
25.77
|
|
(In Thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Revenues From External Customers:
|
|
|
|
|
|
||||||
Sales and Lease Ownership
|
$
|
2,076,269
|
|
|
$
|
2,068,124
|
|
|
$
|
1,920,372
|
|
HomeSmart
|
62,840
|
|
|
55,226
|
|
|
15,624
|
|
|||
RIMCO
|
20,596
|
|
|
16,674
|
|
|
11,317
|
|
|||
Franchise
|
68,575
|
|
|
66,655
|
|
|
63,255
|
|
|||
Manufacturing
|
106,523
|
|
|
95,693
|
|
|
89,430
|
|
|||
Other
|
1,562
|
|
|
3,014
|
|
|
5,539
|
|
|||
Revenues of Reportable Segments
|
2,336,365
|
|
|
2,305,386
|
|
|
2,105,537
|
|
|||
Elimination of Intersegment Revenues
|
(103,834
|
)
|
|
(95,150
|
)
|
|
(89,430
|
)
|
|||
Cash to Accrual Adjustments
|
2,100
|
|
|
2,591
|
|
|
(3,529
|
)
|
|||
Total Revenues from External Customers
|
$
|
2,234,631
|
|
|
$
|
2,212,827
|
|
|
$
|
2,012,578
|
|
|
|
|
|
|
|
||||||
Earnings (Loss) Before Income Taxes:
|
|
|
|
|
|
||||||
Sales and Lease Ownership
|
$
|
183,965
|
|
|
$
|
244,014
|
|
|
$
|
144,232
|
|
(In Thousands, Except Per Share Data)
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Year Ended December 31, 2013
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
593,010
|
|
|
$
|
550,545
|
|
|
$
|
537,224
|
|
|
$
|
553,852
|
|
Gross Profit *
|
302,439
|
|
|
282,276
|
|
|
265,056
|
|
|
263,080
|
|
||||
Earnings Before Income Taxes
|
81,042
|
|
|
40,387
|
|
|
29,420
|
|
|
34,111
|
|
||||
Net Earnings
|
51,000
|
|
|
25,854
|
|
|
21,138
|
|
|
22,674
|
|
||||
Earnings Per Share
|
.67
|
|
|
.34
|
|
|
.28
|
|
|
.30
|
|
||||
Earnings Per Share Assuming Dilution
|
.67
|
|
|
.34
|
|
|
.28
|
|
|
.30
|
|
||||
Year Ended December 31, 2012
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
583,299
|
|
|
$
|
537,279
|
|
|
$
|
526,883
|
|
|
$
|
565,366
|
|
Gross Profit *
|
284,083
|
|
|
266,913
|
|
|
259,957
|
|
|
264,396
|
|
||||
Earnings Before Income Taxes
|
115,029
|
|
|
58,590
|
|
|
46,044
|
|
|
57,192
|
|
||||
Net Earnings
|
71,226
|
|
|
36,244
|
|
|
28,941
|
|
|
36,632
|
|
||||
Earnings Per Share
|
.94
|
|
|
.48
|
|
|
.38
|
|
|
.48
|
|
||||
Earnings Per Share Assuming Dilution
|
.92
|
|
|
.47
|
|
|
.38
|
|
|
.48
|
|
|
Consolidated Balance Sheets—December 31, 2013 and 2012
|
Consolidated Statements of Earnings—Years ended December 31, 2013, 2012 and 2011
|
Consolidated Statement of Comprehensive Income—Years ended December 31, 2013, 2012 and 2011
|
Consolidated Statements of Shareholders’ Equity—Years ended December 31, 2013, 2012 and 2011
|
Consolidated Statements of Cash Flows—Years ended December 31, 2013, 2012 and 2011
|
Notes to Consolidated Financial Statements
|
Report of Independent Registered Public Accounting Firm
|
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
|
EXHIBIT
NO.
|
DESCRIPTION OF EXHIBIT
|
3(i)
|
Amended and Restated Articles of Incorporation of Aaron’s, Inc.
|
3(ii)
|
Amended and Restated By-laws of Aaron’s, Inc. (incorporated by reference to Exhibit 3(i) of the Registrant's Current Report on Form 8-K filed with the SEC on February 21, 2014).
|
4
|
Specimen of Form of Stock Certificate Representing Shares of Common Stock of the Registrant, par value $0.50 per share (incorporated by reference to Exhibit 4.1 of the Registrant’s Registration Statement on Form 8-A/A filed with the SEC on December 10, 2010).
|
10.1
|
Loan Agreement between Fort Bend County Industrial Development Corporation and Aaron Rents, Inc. relating to the Industrial Development Revenue Bonds (Aaron Rents, Inc. Project), Series 2000 dated October 1, 2000 (incorporated by reference to Exhibit 10(m) of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2000 filed with the SEC on March 30, 2001).
|
10.2
|
Letter of Credit and Reimbursement Agreement between the Registrant and First Union National Bank dated as of October 1, 2000 (incorporated by reference to Exhibit 10(n) of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2000 filed with the SEC on March 30, 2001).
|
10.3
|
First Omnibus Amendment dated as of August 21, 2002, but effective as of October 31, 2001 to the Amended and Restated Master Agreement and Amended and Restated Lease Agreement dated as of October 31, 2001, as amended, among Aaron Rents, Inc. as lessee, SunTrust Banks, Inc. as lessor, Wachovia Bank, National Association, as lender, and SunTrust Bank as lease participant and agent (incorporated by reference to Exhibit 10(kk) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005 filed with the SEC on November 8, 2005).
|
10.4
|
First Amendment dated as of July 27, 2005 to Amended and Restated Master Agreement and Amended and Restated Lease Agreement dated as of October 31, 2001, as amended, among Aaron Rents, Inc. as lessee, SunTrust Banks, Inc. as lessor, Wachovia Bank, National Association, as lender, and SunTrust Bank as lease participant and agent (incorporated by reference to Exhibit 10(jj) of the Registrant’s Current Report on Form 8-K filed with the SEC on August 2, 2005).
|
10.5
|
Note Purchase Agreement by and among Aaron’s, Inc. and certain other obligors and the purchasers dated as of July 5, 2011 and Form of Senior Note (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on July 8, 2011).
|
10.6
|
Amendment No. 1 to Note Purchase Agreement by and among Aaron’s, Inc. and certain other obligors and the purchasers, dated as of December 19, 2012 (incorporated by reference to Exhibit 10 of the Registrant’s Current Report on Form 8-K filed with the SEC on December 26, 2012).
|
10.7
|
Amendment No. 2 to Note Purchase Agreement by and among Aaron’s, Inc. and certain other obligors and the purchasers, dated as of October 8, 2013 (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on October 15, 2013).
|
10.8
|
Revolving Credit Agreement, dated as of May 23, 2008, among Aaron Rents, Inc., as borrower, the lenders from time to time party thereto, and SunTrust Bank, as administrative agent (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 30, 2008).
|
10.9
|
First Amendment made and entered into on March 31, 2011 to the Revolving Credit Agreement, dated as of May 23, 2008, by and among Aaron’s, Inc., each of the other lending institutions party thereto as participants, and SunTrust Bank as administrative agent for the lenders (incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 filed with the SEC on May 4, 2011).
|
10.10
|
Second Amendment to Revolving Credit Agreement, by and among Aaron’s, Inc., as borrower, SunTrust Bank, as administrative agent, and each of the other financial institutions party thereto as lenders, dated as of May 18, 2011 (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, filed with the SEC on May 24, 2011).
|
10.11
|
Third Amendment made and entered into as of July 1, 2011 to Revolving Credit Agreement dated as of May 23, 2008 by and among Aaron’s, Inc., the several banks and other financial institutions from time to time party thereto and SunTrust Bank as administrative agent (incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on July 8, 2011).
|
10.12
|
Fourth Amendment to Revolving Credit Agreement, by and among Aaron’s, Inc., as borrower, SunTrust Bank, as administrative agent, and each of the lending institutions party thereto as lenders, dated as of December 13, 2012 (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on December 19, 2012).
|
10.13
|
Fifth Amendment to Revolving Credit Agreement, by and among Aaron’s, Inc., as borrower, SunTrust Bank, as administrative agent, and each of the lending institutions party thereto as lenders, dated as of October 8, 2013 (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on October 15, 2013).
|
10.14
|
Second Amended and Restated Loan Facility Agreement and Guaranty, by and among Aaron's, Inc., SunTrust Bank, as servicer, and the other financial institutions party thereto as participants, dated as of June 18, 2010 (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, filed with the SEC on June 24, 2010).
|
10.15
|
First Amendment made and entered into as of March 31, 2011 to the Second Amended and Restated Loan Facility Agreement and Guaranty, dated as of June 18, 2010, by and among Aarons, Inc. as sponsor, each of the other lending institutions party thereto as participants, and SunTrust Bank as servicer (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed with the SEC on May 4, 2011).
|
10.16
|
Second Amendment to Second Amended and Restated Loan Facility Agreement and Guaranty, by and among Aaron’s, Inc., as sponsor, SunTrust Bank, as servicer, and each of the other financial institutions party thereto as participants, dated as of May 18, 2011 (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 24, 2011).
|
10.17
|
Third Amendment made and entered into as of July 1, 2011 to Second Amended and Restated Loan Facility Agreement and Guaranty dated as of June 18, 2010 by and among Aaron’s, Inc. as sponsor, SunTrust Bank and each of the other lending institutions party thereto as participants, and SunTrust Bank as servicer (incorporated by reference to Exhibit 10.4 of the Registrant’s Current Report on From 8-K filed with July 8, 2011).
|
10.18
|
Fourth Amendment made and entered into as of May 16, 2012 to Second Amended and Restated Loan Facility Agreement and Guarantee dated as of June 18, 2010 by and among Aaron’s, Inc. as sponsor, SunTrust Bank and each of the other lending institutions party thereto as participants, and SunTrust Bank as servicer (incorporated by reference to Exhibit 10.41 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on February 22, 2013).
|
10.19
|
Fifth Amendment to Second Amended and Restated Loan Facility Agreement and Guaranty, by and among Aaron’s, Inc., as sponsor, SunTrust Bank, as servicer, and each of the other financial institutions party thereto as participants, dated as of December 13, 2012 (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on December 19, 2012).
|
10.20
|
Sixth Amendment to Second Amended and Restated Loan Facility Agreement and Guaranty, by and among Aaron’s, Inc., as sponsor, SunTrust Bank, as servicer, and each of the other financial institutions party thereto as participants, dated as of October 8, 2013 (incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on October 15, 2013).
|
10.21
|
Seventh Amendment to Second Amended and Restated Loan Facility Agreement and Guaranty, by and among Aaron's, Inc. as sponsor, SunTrust Bank, as servicer, and each of the other financial institutions party thereto as participants, dated as of December 12, 2013 (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed with the SEC on December 18, 2013).
|
10.22
|
Aaron’s, Inc. Employees Retirement Plan and Trust, as amended and restated (incorporated by reference to Exhibit 99.3 of the Registrant’s Registration Statement on Form S-8 (333-171113) filed with the SEC on December 10, 2010).
|
10.23
|
Amendment No. 1 to the Aaron's Inc. Employees Retirement Plan and Trust, as amended and restated, dated as of December 1, 2011 (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 filed with the SEC on August 2, 2013).
|
10.24
|
Amendment No. 2 to the Aaron's Inc. Employees Retirement Plan and Trust, as amended and restated, dated as of December 29, 2011 (incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 filed with the SEC on August 2, 2013).
|
10.25
|
Amendment No. 3 to the Aaron's Inc. Employees Retirement Plan and Trust, as amended and restated, dated as of December 31, 2012 (incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 filed with the SEC on August 2, 2013).
|
10.26
|
Amended and Restated Aaron Rents, Inc. 2001 Stock Option and Incentive Award Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 10, 2009).
|
10.27
|
Form of Restricted Stock Unit Award Agreement for awards made prior to February 2014 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on From 10-Q for the quarter ended March 31, 2012 filed with the SEC on May 8, 2012).
|
10.28
|
Form of Option Award Agreement for awards made prior to February 2014.
|
10.29
|
Form of Restricted Stock Unit Award for awards made in or after February 2014.
|
10.30
|
Form of Option Award Agreement for awards made in or after February 2014.
|
10.31
|
Form of Performance Share Award Agreement for awards made in or after February 2014.
|
10.32
|
Aaron’s Management Performance Plan (Summary of terms for Home Office Vice Presidents) (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 5, 2011).
|
10.33
|
Aaron’s, Inc. 2001 Stock Option and Incentive Award Plan Master Restricted Stock Unit Agreement (Aaron’s Management Performance Plan) (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on August 5, 2011).
|
10.34
|
Aaron’s, Inc. Deferred Compensation Plan Master Plan Document, Effective July 1, 2009 (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on June 12, 2009).
|
10.35
|
Employment Agreement, dated as of April 18, 2012, by and between Aaron's, Inc. and Ronald W. Allen (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on April 24, 2012).
|
10.36
|
Employment Agreement, dated as of April 18, 2012, by and between Aaron's, Inc. and Gilbert L. Danielson (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on April 24, 2012).
|
10.37
|
Executive Severance Pay Plan of Aaron's, Inc. (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed with the SEC on January 31, 2014).
|
10.38
|
Separation Agreement, dated as of May 1, 2013, by and between Aaron's, Inc. and William K. Butler (incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 filed with the SEC on August 2, 2013).
|
10.39
|
Retirement Agreement between Aaron’s, Inc. and R. Charles Loudermilk, Sr., dated August 24, 2012 (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on August 30, 2012).
|
10.40
|
Fixed Dollar Discounted Accelerated Share Repurchase Agreement, dated December 3, 2013, by and between Aaron’s, Inc. and Wells Fargo Securities, LLC.
|
21
|
Subsidiaries of the Registrant.
|
23
|
Consent of Ernst & Young LLP.
|
31.1
|
Certification of the Chief Executive Officer of Aaron’s, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of the Chief Financial Officer of Aaron’s, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification of the Chief Executive Officer of Aaron’s, Inc. furnished herewith pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification of the Chief Financial Officer of Aaron’s, Inc. furnished herewith pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101
|
The following financial information from Aaron’s, Inc. Annual Report on Form 10-K for the year ended December 31, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2013 and December 31, 2012, (ii) Consolidated Statements of Earnings for the Years ended December 31, 2013, 2012 and 2011, (iii) Consolidated Statements of Comprehensive Income for the Years ended December 31, 31, 2013, 2012 and 2011, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011, (v) Consolidated Statements of Shareholder’s Equity for the Years ended December 31, 2013, 2012 and 2011 and (v) the Notes to Consolidated Financial Statements.
|
|
|
|
AARON’S, INC.
|
||
|
|
|
By:
|
|
/s/ GILBERT L. DANIELSON
|
|
|
Gilbert L. Danielson
|
|
|
Executive Vice President, Chief Financial Officer
|
|
|
|
|
|
SIGNATURE
|
|
|
|
TITLE
|
/s/ RONALD W. ALLEN
Ronald W. Allen
|
|
|
|
Chairman of the Board of Directors, President and Chief Executive Officer and Director (Principal Executive Officer)
|
/s/ GILBERT L. DANIELSON
Gilbert L. Danielson
|
|
|
|
Executive Vice President, Chief Financial Officer and Director (Principal Financial Officer)
|
/s/ ROBERT P. SINCLAIR, JR.
Robert P. Sinclair, Jr.
|
|
|
|
Vice President, Corporate Controller (Principal Accounting Officer)
|
/s/ DAVID L. BUCK
David L. Buck
|
|
|
|
Chief Operating Officer
|
/s/ LEO BENATAR
Leo Benatar
|
|
|
|
Director
|
/s/ KATHY T. BETTY
Kathy T. Betty
|
|
|
|
Director
|
/s/ CYNTHIA N. DAY
Cynthia N. Day
|
|
|
|
Director
|
/s/ HUBERT L. HARRIS, JR.
Hubert L. Harris, Jr.
|
|
|
|
Director
|
/s/ DAVID L. KOLB
David L. Kolb
|
|
|
|
Director
|
/s/ RAY M. ROBINSON
Ray M. Robinson
|
|
|
|
Director
|
|
|
|
|
|
|
AARON’S, INC.
|
|
||
|
By:
|
/s/ Gilbert L. Danielson
|
|
|
|
|
Name:
|
Gilbert L. Danielson
|
|
|
|
Title:
|
Executive Vice President and
Chief Financial Officer
|
|
|
|
|
|
|
|
|
AARON’S, INC.
|
|
||
|
By:
|
/s/ Gilbert L. Danielson
|
|
|
|
|
Name:
|
Gilbert L. Danielson
|
|
|
|
Title:
|
Executive Vice President and
Chief Financial Officer
|
|
|
|
|
|
|
|
|
AARON’S, INC.
|
|
||
|
By:
|
/s/ Gilbert L. Danielson
|
|
|
|
|
Name:
|
Gilbert L. Danielson
|
|
|
|
Title:
|
Executive Vice President and
Chief Financial Officer
|
|
|
Date
|
Number of Shares
|
|
|
|
|
|
|
Attention:
|
Gilbert L. Danielson
|
Phone:
|
(404) 231-0011
|
Fax:
|
(404) 240-6520
|
From:
|
WELLS FARGO SECURITIES, LLC,
solely as agent of Wells Fargo Bank, National Association (in its capacity as agent, the “ Agent ”) |
Trade Date:
|
December 3, 2013
|
|
|
Seller:
|
Wells Fargo
|
|
|
Buyer:
|
Counterparty
|
|
|
Shares:
|
The common stock of Counterparty (the “
Issuer
”), par value USD $0.50 per share (New York Stock Exchange ticker symbol: “AAN”)
|
|
|
Variable Obligation:
|
Applicable
|
|
|
VWAP Price:
|
For any Averaging Date, the 10b-18 volume-weighted average price per Share at which the Shares trade for the regular trading session (including any extensions thereof) of the Exchange on such Averaging Date (without regard to pre-open or after hours trading outside of such regular trading session), as reported by Bloomberg at 4:15 p.m. New York City time (or 15 minutes following the end of any extension of the regular trading session) on such Averaging Date, on Bloomberg Page “
AAN
<Equity> AQR_SEC” (or any successor thereto). If such price is not reported on such Averaging Date for any reason or is, in the Calculation Agent’s good faith and commercially reasonable discretion, erroneous, such VWAP Price shall be determined by the Calculation Agent in good faith and in a commercially reasonable manner.
|
|
|
Exchange:
|
New York Stock Exchange
|
|
|
Related Exchange(s):
|
All Exchanges
|
|
|
Prepayment:
|
Applicable
|
|
|
Prepayment Date:
|
One Currency Business Day after the Trade Date.
|
|
|
Prepayment Amount:
|
As specified in Appendix A.
|
|
|
Initial Shares:
|
As specified in Appendix A.
|
|
|
Initial Share Delivery Date:
|
The Prepayment Date. On the Initial Share Delivery Date, Seller shall deliver a number of Shares equal to the Initial Shares to Buyer in accordance with Section 9.4 of the Equity Definitions, with the Initial Share Delivery Date deemed to be a “Settlement Date” for purposes of such Section 9.4.
|
|
|
|
|
Valuation Date:
|
As specified in Appendix A.
|
|
|
Averaging:
|
Applicable
|
|
|
Averaging Dates:
|
As specified in Appendix A.
|
|
|
Averaging Period:
|
All Averaging Dates.
|
|
|
Settlement Price:
|
For the
Valuation Date, the arithmetic average of the VWAP Price on each Averaging Date for such Valuation Date
minus
Price Adjustment.
|
|
|
Price Adjustment:
|
As specified in Appendix A.
|
|
|
Valuation Disruption:
|
The definition of “Market Disruption Event” in Section 6.3(a) of the Equity Definitions is hereby amended by replacing the words “at any time during the one-hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be” with “at any time on any Scheduled Trading Day during the Averaging Period” in the third line thereof.
Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof.
Notwithstanding anything to the contrary in the Equity Definitions, if any Averaging Date in the Averaging Period is a Disrupted Day, the Calculation Agent shall have the option in its commercially reasonable discretion either (i) to elect to extend the Averaging Period by a number of Scheduled Trading Days equal to the number of Disrupted Days during the Averaging Period and/or (ii) to determine that such Averaging Date is a Disrupted Day only in part, in which case the Calculation Agent shall (x) determine the VWAP Price for such Disrupted Day based on Rule 10b-18 eligible transactions in the Shares on such Disrupted Day taking into account the nature and duration of such Market Disruption Event and (y) determine the Settlement Price based on an appropriately weighted average instead of the arithmetic average described under “Settlement Price” below, with such adjustments based on, among other factors, the duration of any Market Disruption Event and the volume, historical trading patterns and price of the Shares and/or (iii) upon prior written notice to the Buyer, to suspend the Averaging Period, as appropriate, until the circumstances giving rise to such suspension have ceased. Any day on which the Exchange is scheduled to close prior to its normal closing time shall be considered a Disrupted Day in whole. With respect to any determination as described in clause (ii)(y) above, the Calculation Agent shall provide written notice to Buyer setting forth reasonable detail to support the Calculation Agent’s determination of the Settlement Price, it being understood the Calculation Agent shall not be obligated to disclose any proprietary models used by it for such determination or calculation.
|
|
|
Additional Market Disruption Events:
|
If Seller determines, based upon the advice of counsel and in its good faith and commercially reasonable discretion, on any Scheduled Trading Day during any Averaging Period that a Hedging Disruption (as defined in Section 12.9(a)(v) of the Equity Definitions) has occurred, in each case, Seller shall notify Buyer and a Market Disruption Event shall be deemed to have occurred. In the event of a Hedging Disruption, Section 12.9(b)(iii) of the Equity Definitions shall not apply.
If on any Averaging Date (i) the trading volume or liquidity of trading in the Shares is materially reduced from levels prevailing on the Trade Date, (ii) the Calculation Agent determines in its commercially reasonable discretion that such reduction has had a materially adverse effect on Seller’s ability to effect a commercially reasonable hedge of its obligations under this Transaction and (iii) the Calculation Agent determines in its commercially reasonable discretion that as a result it would be appropriate to treat such Averaging Date as a Disrupted Day, then Seller shall notify Buyer and a Market Disruption Event shall be deemed to have occurred.
|
|
|
Settlement Currency:
|
USD
|
|
|
Settlement Method:
|
Physical Settlement;
provided
that Seller shall not make the representations set forth in Section 9.11 of the Equity Definitions specifically connected to restrictions imposed by applicable securities laws.
On the Settlement Date, Seller shall deliver to Buyer a number of Shares equal to (a) (i) the Prepayment Amount
divided by
(ii) the Settlement Price as determined on each Valuation Date,
minus
(b) the Initial Shares (such number of Shares, the “Settlement Amount”), rounded to the nearest whole number of Shares; provided, however, that if the Settlement Amount is less than zero, then Buyer shall deliver to Seller a number of Shares equal to the absolute value of the Settlement Amount (such number of Shares, the “Payment Shares”). The delivery of Shares by Buyer must be done in adherence to Section 12 of this Confirmation.
Notwithstanding the proviso above, if the Settlement Amount is less than zero, Buyer may cash settle its obligation to deliver the Payment Shares by delivering to Seller a notice by no later than the Valuation Date electing to cash settle its obligation to deliver the Payment Shares. Any such cash settlement shall be effected in accordance with “Cash Settlement of Payment Shares” below.
|
Excess Dividend Amount:
|
For the avoidance of doubt, all references to the Excess Dividend Amount shall be deleted from Section 9.2(a)(iii) of the Equity Definitions.
|
Settlement Date:
|
The date that follows the Valuation Date by one Settlement Cycle.
|
|
|
Cash Settlement of Payment Shares:
|
If Buyer elects to cash settle its obligation to deliver Payment Shares, then on the Valuation Date a balance (the “Settlement Balance”) shall be created with an initial balance equal to the Payment Shares. On the Settlement Date, Buyer shall deliver to Seller a U.S. dollar amount equal to the Payment Shares multiplied by a price per Share as reasonably determined by the Calculation Agent (such cash amount, the “Initial Cash Settlement Amount”). On the Exchange Business Day immediately following the delivery of the Initial Cash Settlement Amount, Seller shall begin purchasing Shares in a commercially reasonable manner over a period of time to unwind a commercially reasonable hedge position (all such Shares purchased, “Cash Settlement Shares”). At the end of each Exchange Business Day on which Seller purchases Cash Settlement Shares, Seller shall reduce (i) the Settlement Balance by the number of Cash Settlement Shares purchased on such Exchange Business Day and (ii) the Initial Cash Settlement Amount by the aggregate purchase price (including commissions) of the Cash Settlement Shares on such Exchange Business Day. If, on any Exchange Business Day, the Initial Cash Settlement Amount is reduced to or below zero but the Settlement Balance is above zero, the Buyer shall (i) deliver to Seller or as directed by Seller on the next Exchange Business Day after such Exchange Business Day an additional U.S. dollar amount (an “Additional Cash Settlement Amount”) equal to the Settlement Balance as of such Exchange Business Day multiplied by a price per Share as reasonably determined by the Calculation Agent
in a commercially reasonable manner. This provision shall be applied successively until the Settlement Balance is reduced to zero. On the Exchange Business Day that the Settlement Balance is reduced to zero, Seller shall return to Buyer any unused portion of the Initial Cash Settlement Amount or the Additional Cash Settlement Amount, as the case may be. For the avoidance of doubt, any purchases of Cash Settlement Shares contemplated by this paragraph shall be made over a period of time commensurate with unwinding commercially reasonable Hedge Positions in accordance with the timing, price and volume restrictions contained in subparagraphs (2), (3), and (4) of paragraph (b) of SEC Rule 10b-18.
|
Potential Adjustment Event:
|
Notwithstanding anything to the contrary in Section 11.2(e) of the Equity Definitions, an Extraordinary Dividend shall not constitute a Potential Adjustment Event.
|
Method of Adjustment:
|
Calculation Agent Adjustment;
provided
that if (i) a Hedging Disruption or liquidity event with respect to the Shares occurs which results in a Market Disruption Event or Disrupted Day as described in Section 2 of this Confirmation or (ii) Seller suspends trading in the Shares for all or any portion of a Scheduled Trading Day within the Averaging Period pursuant to Section 7 of this Confirmation, such event or suspension shall be treated as a Potential Adjustment Event subject to Calculation Agent Adjustment. In the case of any suspension in trading of the Shares as a result of the provisions set forth in Section 7 of this Confirmation, the Calculation Agent shall make such adjustments prior to the period of suspension to preserve the economics of the transaction. Otherwise, and in all cases of a suspension as contemplated under “Market Disruption Event” above, the Calculation Agent shall make such adjustments promptly following the period of suspension.
|
|
|
Extraordinary Dividend:
|
For any fiscal quarter, any dividend or distribution on the Shares with an ex-dividend date occurring during such fiscal quarter (other than any dividend or distribution of the type described in Section 11.2(e)(i) or Section 11.2(e)(ii)(A) or (B) of the Equity Definitions) (a “
Dividend
”) that is either (i) a non-regularly scheduled Dividend or a regularly scheduled Dividend for which the ex-dividend date occurs prior to the Expected Ex-Dividend Date for such calendar quarter or (ii) the amount or value of which (as determined by the Calculation Agent) does not equal the Ordinary Dividend Amount. For the avoidance of doubt, the Calculation Agent shall not make any adjustment for an Ordinary Dividend Amount.
|
|
|
Ordinary Dividend Amount:
|
For any calendar quarter, USD $0.021
|
|
|
Expected Ex-Dividend Dates:
|
As specified in Appendix A
|
|
|
Extraordinary Events:
|
Upon (x) the occurrence or effective designation of an Early Termination Date in respect of the Transaction or (y) the occurrence of an Extraordinary Event that results in the cancellation or termination of the Transaction pursuant to Section 12.2, 12.3, 12.6 or 12.9 of the Equity Definitions (any such event as described in clause (x) or (y) above, an “
Early Termination Event
”) (except, in the case of clause (y), an Extraordinary Event that is a Nationalization, Insolvency, a Merger Event or a Tender Offer, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash), if one party would owe any amount to the other party pursuant to Section 6(d)(ii) of the Agreement or any Cancellation Amount pursuant to Section 12.2, 12.3, 12.6, 12.7, 12.8 or 12.9 of the Equity Definitions (any such amount, a “
Payment Amount
”), then on the date on which any Payment Amount is due, in lieu of any payment or delivery of such Payment Amount, Counterparty may elect, by prior written notice to Wells Fargo as provided in the succeeding paragraph, that the party owing such amount shall deliver to the other party a number of Shares (or, in the case of a Merger Event, Tender Offer, Nationalization or Insolvency, a number of units, each comprising the number or amount of the securities or property that a hypothetical holder of one Share would receive in such Extraordinary Event (each such unit, an “
Alternative Termination Delivery Unit
” and, the securities or property comprising such unit, “
Alternative Termination Property
”)) with a value equal to the Payment Amount, as determined in good faith and a commercially reasonable manner by the Calculation Agent (and the parties agree that, in making such determination of value, the Calculation Agent may take into account a number of factors, including the market price of the Shares or Alternative Termination Property as of the Early Termination Date or the date as of which the Cancellation Amount is determined and, if such delivery is made by Wells Fargo, the prices at which Wells Fargo purchases Shares or Alternative Termination Property to fulfil its delivery obligations, to the extent doing so provides a commercially reasonable result) over a number of Scheduled Trading Days selected by Calculation Agent in good faith and in its commercially reasonable discretion based on the number of Scheduled Trading Days that would be appropriate to unwind a commercially reasonable hedge position;
provided
that in determining the composition of any Alternative Termination Delivery Unit, if the relevant Extraordinary Event involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash;
provided further
that the Calculation Agent shall provide written notice to Buyer setting forth reasonable detail to support the Calculation Agent’s determination of the value of any Shares or Alternative Termination Delivery Units determined as described above, it being understood the Calculation Agent shall not be obligated to disclose any proprietary models used by it for such determination or calculation.
If Counterparty elects for Wells Fargo to settle any Payment Amount owed by Wells Fargo to it in Shares or Alternative Termination Property, then on the date such Payment Amount is due, a settlement balance (the “
Settlement Balance
”) shall be established with an initial balance equal to the Payment Amount. On such date, Wells Fargo shall commence purchasing Shares or Alternative Termination Property over a commercially reasonable period for delivery to Counterparty and in a commercially reasonable manner to unwind a commercially reasonable hedge position. At the end of each Scheduled Trading Day on which Wells Fargo purchases Shares or Alternative Termination Property pursuant to this paragraph, Wells Fargo shall reduce the Settlement Balance by the amount paid by Wells Fargo to purchase the Shares or Alternative Termination Property purchased on such Scheduled Trading Day. Wells Fargo shall deliver any Shares or Alternative Termination Property purchased on a Scheduled Trading Day to Counterparty on the third Clearance Business Day following the relevant Scheduled Trading Day. Wells Fargo shall continue purchasing Shares or Alternative Termination Property over a commercially reasonable period until the Settlement Balance has been reduced to zero.
If Counterparty elects to settle any Payment Amount owed to Wells Fargo in Shares or Alternative Termination Property it must do so in adherence to Section 12 of this Confirmation and in a manner such that the value received by Wells Fargo (net of all commercially reasonable fees, expenses or discounts to compensate Wells Fargo for any discount from the public market price of the Shares incurred on the sale of such Shares in a private placement) is not less than the Payment Amount. For the avoidance of doubt, notwithstanding anything to the contrary in the Definitions or this Confirmation, the Payment Amount will not reflect the value associated with any Dividend or Extraordinary Dividend declared or paid by Counterparty to holders of record of any Shares as of any date occurring on or after the Trade Date and prior to the date on which the Payment Amount is received.
|
|
|
Announcement Date:
|
The definition of “Announcement Date” in Section 12.1(l) of the Equity Definitions shall be amended by (i) replacing the words “a firm” with the word “any” in the second and fourth lines thereof, (ii) replacing the word “leads to the” in the third and the fifth lines thereof with the words “, if completed, would lead to a”, (iii) replacing the words “voting shares” in the fifth line thereof with the word “Shares”, (iv) inserting the words “by any entity” after the word “announcement” in the second and the fourth lines thereof, (v) inserting the words “or to explore the possibility of engaging in” after the words “engage in” in the second line thereof, (vi) inserting the words “or to explore the possibility of purchasing or otherwise obtaining” after the word “obtain” in the fourth line thereto, (vii) deleting the parenthetical in the fifth line thereof and (viii) adding immediately after the words “Tender Offer” in the fifth line thereof “, and any publicly announced change or amendment to such an announcement (including the announcement of an abandonment of such intention)”. Sections 12.3(a) and 12.3(d) of the Equity Definitions shall each be amended by replacing each occurrence of the words “Tender Offer Date” with “Announcement Date.”
For purposes of this Transaction, the definition of “Merger Date” in Section 12.1(c) of the Equity Definitions shall be amended to read, “Merger Date shall mean the Announcement Date.” For purposes of this Transaction, the definition of “Tender Offer Date” in Section 12.1(e) Equity Definitions shall be amended to read, “Tender Offer Date shall mean the Announcement Date.”
|
Share-for-Share:
|
Modified Calculation Agent Adjustment
|
|
|
Share-for-Other:
|
Cancellation and Payment (Calculation Agent Determination)
|
|
|
Share-for Combined:
|
Component Adjustment
|
|
|
New Shares:
|
In the definition of “New Shares” in Section 12.1(i) of the Equity Definitions, the text in clause (i) thereof shall be deleted in its entirety and replaced with “publicly quoted, traded or listed on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors).”
|
Share-for-Share:
|
Modified Calculation Agent Adjustment or Cancellation and Payment, at the commercially reasonable election of Wells Fargo.
|
|
|
Share-for-Other:
|
Modified Calculation Agent Adjustment or Cancellation and Payment, at the commercially reasonable election of Wells Fargo.
|
|
|
Share-for-Combined:
|
Modified Calculation Agent Adjustment or Cancellation and Payment, at the commercially reasonable election of Wells Fargo.
|
Determining Party:
|
Wells Fargo
|
|
|
Composition of Combined
Consideration:
|
Not Applicable;
provided
that notwithstanding Sections 12.1(f) and 12.5(b) of the Equity Definitions, to the extent that the composition of the consideration for the relevant Shares in connection with a Merger Event or Tender Offer could be determined by a holder of the Shares, the Calculation Agent shall, in its sole discretion, determine the composition of such consideration for purposes of determining the consequences of such Merger Event or Tender Offer under the Transaction.
|
|
|
Nationalization, Insolvency or Delisting:
|
Cancellation and Payment (Calculation Agent Determination)
In addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be the Exchange.
|
Change in Law:
|
Applicable;
provided
that Section 12.9(a)(ii)(X) of the Equity Definitions is hereby amended by replacing the word “Shares” with the words “Shares or Hedge Positions”.
|
|
|
Failure to Deliver:
|
Not Applicable
|
|
|
Hedging Disruption:
Hedging Party:
Loss of Stock Borrow:
Maximum Stock Loan Rate:
Hedging Party:
Increased Cost of Stock Borrow:
Initial Stock Loan Rate:
Hedging Party:
|
Applicable
Wells Fargo
Applicable
100 basis points per annum
Wells Fargo
Applicable
50 basis points per annum
Wells Fargo
|
|
|
Determining Party for all Extraordinary Events:
|
Wells Fargo
|
Non-Reliance:
|
Applicable
|
|
|
Agreements and Acknowledgments Regarding Hedging Activities:
|
Applicable
|
|
|
Additional Acknowledgments:
|
Applicable
|
|
|
delivery instructions:
|
To be advised.
|
(a)
|
The Office of Wells Fargo for the Transaction is:
|
(b)
|
The Office of Counterparty for the Transaction is: None
|
(iv)
|
Buyer acknowledges and agrees that it does not have, and shall not attempt to exercise, any influence over how, when or whether Seller effects any purchases of Shares in connection with the Transaction.
|
(c)
|
U.S. Private Placement and Other Representations
.
|
(ii)
|
It is entering into the Transaction for its own account and not with a view to the distribution or resale of the Transaction or its rights thereunder except pursuant to a registration statement declared effective under, or an exemption from the registration requirements of, the Securities Act.
|
(iii)
|
It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing.
|
(iv)
|
It has the power to execute this Confirmation and any other documentation relating to this Confirmation to which it is a party, to deliver this Confirmation and any other documentation relating to this Confirmation that it is required by this Confirmation to deliver and to perform its obligations under this Confirmation and has taken all necessary action to authorize such execution, delivery and performance.
|
(v)
|
Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets.
|
(vi)
|
It
is an “eligible contract participant” as defined in the U.S. Commodity Exchange Act (as amended).
|
Initial Shares:
|
[]
|
|
|
Prepayment Amount:
|
USD 125,000,000
|
|
|
Valuation Date:
|
[] (or if such date is not an Exchange Business Day, the next following Exchange Business Day),
provided
that Seller shall have the right in its absolute discretion, to accelerate the Valuation Date to any date that is on or after [] (or if such date is not an Exchange Business Day, the next following Exchange Business Day) (such date, the “
Scheduled Earliest Acceleration Date
”), by giving notice prior to 8:00 pm New York City time on the Scheduled Trading Day following such date
.
|
|
|
Averaging Dates:
|
For the
Valuation Date, each Scheduled Trading Day starting on the first Scheduled Trading Day following the Trade Date and ending on, and including, such Valuation Date.
|
|
|
Price Adjustment:
|
[]
|
|
|
Expected Ex-Dividend Dates:
|
[]
|
|
|
NAME
|
|
STATE OR COUNTRY OF INCORPORATION
|
Aaron Investment Company
|
|
Delaware
|
Aaron Rents, Inc. Puerto Rico
|
|
Commonwealth of Puerto Rico
|
Aaron’s Canada, ULC
|
|
Canada
|
Aaron’s Foundation, Inc.
|
|
Georgia
|
Aaron’s Logistics, LLC
|
|
Georgia
|
Aaron’s Procurement Company, LLC
|
|
Georgia
|
Aaron’s Production Company
|
|
Georgia
|
Aaron’s Strategic Services, LLC
|
|
Georgia
|
99LTO, LLC
|
|
Georgia
|
1)
|
Registration Statement (Form S-8 No. 333-160357) dated June 30, 2009 pertaining to the Aaron’s, Inc. Deferred Compensation Plan, and
|
2)
|
Registration Statement (Form S-8 No. 333-171113) dated December 10, 2010 pertaining to the 2001 Stock Option and Incentive Award Plan, as Amended and Restated, and Aaron’s, Inc. Employees Retirement Plan and Trust, as Amended and Restated;
|
1.
|
I have reviewed this annual report on Form 10-K of Aaron’s, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
|
|
|
|
Date: February 24, 2014
|
|
/s/ Ronald W. Allen
|
|
|
Ronald W. Allen
|
|
|
Chairman, President and
Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of Aaron’s, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
|
|
|
|
Date: February 24, 2014
|
|
/s/ Gilbert L. Danielson
|
|
|
Gilbert L. Danielson
|
|
|
Executive Vice President,
|
|
|
Chief Financial Officer
|
(1)
|
The Annual Report on Form 10-K of the Company for the annual period ended
December 31, 2013
(the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
Date: February 24, 2014
|
|
/s/ Ronald W. Allen
|
|
|
Ronald W. Allen
|
|
|
Chairman, President and
Chief Executive Officer
|
(1)
|
The Annual Report on Form 10-K of the Company for the annual period ended
December 31, 2013
(the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
Date: February 24, 2014
|
|
/s/ Gilbert L. Danielson
|
|
|
Gilbert L. Danielson
|
|
|
Executive Vice President,
Chief Financial Officer
|