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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
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58-0687630
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(State or other jurisdiction of
incorporation or organization)
|
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(I.R.S. Employer
Identification No.)
|
|
|
|
309 E. PACES FERRY ROAD, N.E.
ATLANTA, GEORGIA
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|
30305-2377
|
(Address of principal executive offices)
|
|
(Zip Code)
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Title of each class
|
|
Name of each exchange on which registered
|
Common Stock, $.50 Par Value
|
|
New York Stock Exchange
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|
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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¨
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Smaller Reporting Company
|
|
¨
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|
•
|
Profitably grow our stores
– Despite year-over-year declines in same store revenues, our price increases, inventory reduction, and cost efficiency initiatives led to improvements in operating margins for our stores in 2015, and we remain committed to driving profitable growth.
|
•
|
Accelerate our omni-channel platform
– We believe Aarons.com represents an opportunity to provide a unique offering in the lease-to-own industry. We are focused on engaging customers in ways that are convenient for them by providing them a seamless, direct-to-door platform through which to shop across our product offering.
|
•
|
Promote communication, coordination and integration
– We are focused on driving executional excellence through enhanced communication, coordination and integration between our stores and support centers. We also believe we can continue to improve our store operations by facilitating the re-lease or resale of returned product from customers of Progressive and Aarons.com.
|
•
|
Champion compliance
– Aaron’s, Inc. is a large and diverse company with thousands of daily transactions that are extensively regulated and subject to the requirements of various federal, state, and local laws and regulations. We continue to believe and set expectations that long-term success requires all associates to comply with all laws and regulations governing our company’s behavior.
|
•
|
Enhanced product for retail partners
- DAMI will enhance Progressive's best-in-class point-of-sale product with an integrated solution for below-prime customers. DAMI has a centralized, scalable decisioning model with a long operating history, deployed through its established bank partner, and a sophisticated receivable management system.
|
•
|
Higher consumer credit quality
- DAMI primarily serves customers with FICO scores between 600 and 700, which make up approximately a quarter of the U.S. population. These customers generally have greater purchasing power with stronger credit profiles than Progressive's current customers.
|
•
|
Expanded customer base
- In addition to complementing Progressive's traditional offering for existing and prospective retail partners, DAMI's strong relationships in customer services offer an additional channel for longer-term growth.
|
•
|
Established product
- Approve.Me has been successfully piloted and is currently being used in over 7,200 retail doors.
|
•
|
Increased sales
- Approve.Me's streamlined approach sends customer applications through each option, from prime to second-look financing, or to Progressive's no-credit-needed lease option, quickly and seamlessly. This more efficient process typically results in more applications and higher overall approval rates.
|
•
|
Ease of use
- The time a customer spends going through the application and approval process is reduced from about an hour (for multiple applications) to just a few minutes.
|
•
|
Improved analytics
- Approve.Me gives retail partners access to a comprehensive view of credit decisioning and lease options thereby allowing partners to better analyze and improve their overall financing/leasing flow.
|
Merchandise Category
|
2015
|
|
|
2014
|
|
|
2013
|
|
Furniture
|
42
|
%
|
|
39
|
%
|
|
36
|
%
|
Electronics
|
25
|
%
|
|
26
|
%
|
|
29
|
%
|
Appliances
|
24
|
%
|
|
24
|
%
|
|
22
|
%
|
Computers
|
7
|
%
|
|
9
|
%
|
|
9
|
%
|
Other
|
2
|
%
|
|
2
|
%
|
|
4
|
%
|
•
|
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
- Aaron's Sales & Lease Ownership stores average
7,200
square feet, which is significantly larger than the average size of our largest competitor’s lease-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, ACH, debit card or credit card. Our Aaron’s Sales and Lease Ownership stores currently receive approximately
66%
of their payment volume (in dollars) from customers by check, debit card or credit card. For our HomeSmart stores, that percentage is approximately
57%
.
|
•
|
reliance on third party retailers (over whom Progressive cannot exercise the degree of control and oversight that Aaron’s and its franchisees can assert over their own respective employees) for many important business functions, from advertising through assistance with lease transaction applications;
|
•
|
revenue concentration in the customers of a relatively small number of retailers, as further discussed below;
|
•
|
lack of control over, and more product diversity within, its lease merchandise inventory relative to Aaron’s sale and lease ownership business, which can complicate matters such as merchandise repair and disposition of merchandise that is returned;
|
•
|
possibly different regulatory risks than apply to Aaron’s sales and lease ownership business, whether arising from the offer by third party retailers of Progressive’s lease-purchase solution alongside traditional cash, check or credit payment options or otherwise;
|
•
|
reliance on automatic bank account drafts for lease payments, which may become disfavored as a payment method for these transactions by regulators;
|
•
|
potential that regulators may target the virtual lease-to-own transaction and/or new regulations or legislation could be adopted (or existing laws and regulations may be interpreted) that negatively impact Progressive’s ability to offer virtual lease-to-own programs through third party retail partners; and
|
•
|
indemnification obligations to Progressive’s retail partners and their service providers for losses stemming from Progressive’s failure to perform with respect to its products and services.
|
•
|
improve same store revenues in stores that may be maturing;
|
•
|
drive recurring cost savings to recapture margin;
|
•
|
identify which markets are best suited for more disciplined store growth;
|
•
|
strengthen our franchise network; and
|
•
|
successfully manage and grow our Aarons.com e-commerce platform
|
•
|
changes in competition, particularly from the digital sector;
|
•
|
general economic conditions;
|
•
|
new product introductions;
|
•
|
consumer trends;
|
•
|
changes in our merchandise mix;
|
•
|
timing of promotional events; and
|
•
|
our ability to execute our business strategy effectively.
|
•
|
reliance on third party retailers (over whom DAMI cannot exercise the degree of control and oversight that Aaron’s core business, including franchisees, can assert over their own respective employees) for many important business functions, from advertising through assistance with finance applications;
|
•
|
reliance on a single bank partner to issue DAMI’s HELPcard® and other credit products. The bank’s regulators could at any time limit or otherwise modify the bank’s ability to continue its relationship with DAMI and any significant interruption of this relationship would result in DAMI being unable to acquire new receivables and provide other credit products. It is possible that a regulatory position or action taken with respect to DAMI’s issuing bank might result in the bank’s inability or unwillingness to originate future credit products on DAMI’s behalf or in partnership with it, which would adversely affect DAMI’s ability to grow its point-of-sale and direct-to-consumer credit products and other consumer credit offerings and underlying receivables. In addition, DAMI’s agreement with its issuing bank partner has a scheduled expiration date. If DAMI is unable to extend or execute a new agreement with its issuing bank upon the expiration of its current agreement, or if its existing agreement was terminated or otherwise disrupted, there is a risk that DAMI would not be able to enter into an agreement with an alternative bank provider on terms that DAMI would consider favorable or in a timely manner without disruption of its business; and
|
•
|
different regulatory risks than those applicable to Aaron’s and Progressive's sales and lease ownership businesses, including risks arising from state credit laws and the offering of open-end credit and the potential that regulators may target DAMI’s operating model and the interest rates it charges.
|
•
|
our ability to meet market expectations with respect to the growth and profitability of each of our operating segments;
|
•
|
quarterly variations in our results of operations, which may be impacted by, among other things, changes in same store revenues or when and how many locations we acquire or open;
|
•
|
quarterly variations in our competitors’ results of operations;
|
•
|
changes in earnings estimates or buy/sell recommendations by financial analysts;
|
•
|
state or federal legislative or regulatory proposals, initiatives, actions or changes that are, or are perceived to be, adverse to our operations;
|
•
|
the stock price performance of comparable companies; and
|
•
|
continuing unpredictable global and regional economic conditions.
|
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
|
|
Cairo, Georgia
|
Warehouse—Furniture Parts – Leased
|
40,000
|
|
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
|
|
LOCATION
|
SEGMENT, PRIMARY USE AND HOW HELD
|
SQ. FT.
|
|
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 Cucamonga, 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
|
|
Draper, Utah
|
Progressive—Corporate Management/Call Center – Leased
|
159,000
|
|
Glendale, Arizona
|
Progressive—Corporate Management/Call Center – Leased
|
52,000
|
|
Springdale, Arkansas
|
DAMI—Corporate Management/Call Center – Owned
|
29,000
|
|
Tulsa, Oklahoma
|
DAMI—Call Center – Leased
|
3,400
|
|
Common Stock
|
High
|
|
Low
|
|
Cash
Dividends
Per Share
|
||||||
Year Ended December 31, 2015
|
|
|
|
|
|
||||||
First Quarter
|
$
|
33.71
|
|
|
$
|
27.51
|
|
|
$
|
.023
|
|
Second Quarter
|
36.98
|
|
|
27.40
|
|
|
.023
|
|
|||
Third Quarter
|
40.06
|
|
|
32.36
|
|
|
.023
|
|
|||
Fourth Quarter
|
40.80
|
|
|
21.32
|
|
|
.025
|
|
Common Stock
|
High
|
|
Low
|
|
Cash
Dividends
Per Share
|
||||||
Year Ended December 31, 2014
|
|
|
|
|
|
||||||
First Quarter
|
$
|
32.64
|
|
|
$
|
26.18
|
|
|
$
|
.021
|
|
Second Quarter
|
35.82
|
|
|
27.95
|
|
|
.021
|
|
|||
Third Quarter
|
36.74
|
|
|
24.25
|
|
|
.021
|
|
|||
Fourth Quarter
|
31.33
|
|
|
23.25
|
|
|
.023
|
|
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
1
|
|||||
October 1 through October 31, 2015
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
10,496,421
|
|
November 1 through November 30, 2015
|
—
|
|
|
—
|
|
|
—
|
|
|
10,496,421
|
|
|
December 1 through December 31, 2015
|
—
|
|
|
—
|
|
|
—
|
|
|
10,496,421
|
|
|
Total
|
—
|
|
|
|
|
—
|
|
|
|
(Dollar Amounts in Thousands, Except Per Share Data)
|
Year Ended December 31, 2015
|
|
Year Ended December 31, 2014
|
|
Year Ended December 31, 2013
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
||||||||||
OPERATING RESULTS
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Lease Revenues and Fees
|
$
|
2,684,184
|
|
|
$
|
2,221,574
|
|
|
$
|
1,748,699
|
|
|
$
|
1,676,391
|
|
|
$
|
1,516,508
|
|
Retail Sales
|
32,872
|
|
|
38,360
|
|
|
40,876
|
|
|
38,455
|
|
|
38,557
|
|
|||||
Non-Retail Sales
|
390,137
|
|
|
363,355
|
|
|
371,292
|
|
|
425,915
|
|
|
388,960
|
|
|||||
Franchise Royalties and Fees
|
63,507
|
|
|
65,902
|
|
|
68,575
|
|
|
66,655
|
|
|
63,255
|
|
|||||
Interest and Fees on Loans Receivable
|
2,845
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
6,211
|
|
|
5,842
|
|
|
5,189
|
|
|
5,411
|
|
|
5,298
|
|
|||||
|
3,179,756
|
|
|
2,695,033
|
|
|
2,234,631
|
|
|
2,212,827
|
|
|
2,012,578
|
|
|||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation of Lease Merchandise
|
1,212,644
|
|
|
932,634
|
|
|
628,089
|
|
|
601,552
|
|
|
547,839
|
|
|||||
Retail Cost of Sales
|
21,040
|
|
|
24,541
|
|
|
24,318
|
|
|
21,608
|
|
|
22,619
|
|
|||||
Non-Retail Cost of Sales
|
351,777
|
|
|
330,057
|
|
|
337,581
|
|
|
387,362
|
|
|
351,887
|
|
|||||
Operating Expenses
|
1,357,030
|
|
|
1,231,801
|
|
|
1,022,684
|
|
|
952,617
|
|
|
866,600
|
|
|||||
Financial Advisory and Legal Costs
|
—
|
|
|
13,661
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restructuring Expenses
|
—
|
|
|
9,140
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Retirement and Vacation Charges
|
—
|
|
|
9,094
|
|
|
4,917
|
|
|
10,394
|
|
|
3,532
|
|
|||||
Progressive-Related Transaction Costs
|
—
|
|
|
6,638
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Legal and Regulatory (Income) Expense
|
—
|
|
|
(1,200
|
)
|
|
28,400
|
|
|
(35,500
|
)
|
|
36,500
|
|
|||||
Other Operating Expense (Income), Net
|
1,324
|
|
|
(1,176
|
)
|
|
1,584
|
|
|
(2,235
|
)
|
|
(3,550
|
)
|
|||||
|
2,943,815
|
|
|
2,555,190
|
|
|
2,047,573
|
|
|
1,935,798
|
|
|
1,825,427
|
|
|||||
Operating Profit
|
235,941
|
|
|
139,843
|
|
|
187,058
|
|
|
277,029
|
|
|
187,151
|
|
|||||
Interest Income
|
2,185
|
|
|
2,921
|
|
|
2,998
|
|
|
3,541
|
|
|
1,718
|
|
|||||
Interest Expense
|
(23,339
|
)
|
|
(19,215
|
)
|
|
(5,613
|
)
|
|
(6,392
|
)
|
|
(4,709
|
)
|
|||||
Other Non-Operating (Expense) Income, Net
|
(1,667
|
)
|
|
(1,845
|
)
|
|
517
|
|
|
2,677
|
|
|
(783
|
)
|
|||||
Earnings Before Income Taxes
|
213,120
|
|
|
121,704
|
|
|
184,960
|
|
|
276,855
|
|
|
183,377
|
|
|||||
Income Taxes
|
77,411
|
|
|
43,471
|
|
|
64,294
|
|
|
103,812
|
|
|
69,610
|
|
|||||
Net Earnings
|
$
|
135,709
|
|
|
$
|
78,233
|
|
|
$
|
120,666
|
|
|
$
|
173,043
|
|
|
$
|
113,767
|
|
Earnings Per Share
|
$
|
1.87
|
|
|
$
|
1.08
|
|
|
$
|
1.59
|
|
|
$
|
2.28
|
|
|
$
|
1.46
|
|
Earnings Per Share Assuming Dilution
|
1.86
|
|
|
1.08
|
|
|
1.58
|
|
|
2.25
|
|
|
1.43
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends Per Share
|
.094
|
|
|
.086
|
|
|
.072
|
|
|
.062
|
|
|
.054
|
|
|||||
FINANCIAL POSITION
|
|
|
|
|
|
|
|
|
|
||||||||||
(Dollar Amounts in Thousands)
|
|
|
|
|
|
|
|
|
|
||||||||||
Lease Merchandise, Net
|
$
|
1,138,938
|
|
|
$
|
1,087,032
|
|
|
$
|
869,725
|
|
|
$
|
964,067
|
|
|
$
|
862,276
|
|
Property, Plant and Equipment, Net
|
225,836
|
|
|
219,417
|
|
|
231,293
|
|
|
230,598
|
|
|
226,619
|
|
|||||
Total Assets
|
2,658,875
|
|
|
2,456,844
|
|
|
1,827,176
|
|
|
1,812,929
|
|
|
1,731,899
|
|
|||||
Debt
|
610,450
|
|
|
606,082
|
|
|
142,704
|
|
|
141,528
|
|
|
153,789
|
|
|||||
Shareholders’ Equity
|
1,366,618
|
|
|
1,223,521
|
|
|
1,139,963
|
|
|
1,136,126
|
|
|
976,554
|
|
|||||
AT YEAR END
|
|
|
|
|
|
|
|
|
|
||||||||||
Stores Open:
|
|
|
|
|
|
|
|
|
|
||||||||||
Company-operated
|
1,305
|
|
|
1,326
|
|
|
1,370
|
|
|
1,324
|
|
|
1,232
|
|
|||||
Franchised
|
734
|
|
|
782
|
|
|
781
|
|
|
749
|
|
|
713
|
|
|||||
Lease Agreements in Effect
|
1,628,000
|
|
|
1,665,000
|
|
|
1,751,000
|
|
|
1,724,000
|
|
|
1,508,000
|
|
|||||
Number of Employees
|
12,700
|
|
|
12,400
|
|
|
12,600
|
|
|
11,900
|
|
|
11,200
|
|
|||||
Progressive Active Doors
1
|
13,248
|
|
|
12,307
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2015
|
|
2014
|
|
2013
|
|||
Franchised stores
|
|
|
|
|
|
|||
Franchised stores open at January 1,
|
782
|
|
|
781
|
|
|
749
|
|
Opened
|
10
|
|
|
23
|
|
|
45
|
|
Purchased from the Company
|
16
|
|
|
6
|
|
|
2
|
|
Purchased by the Company
|
(25
|
)
|
|
(9
|
)
|
|
(10
|
)
|
Closed, sold or merged
|
(49
|
)
|
|
(19
|
)
|
|
(5
|
)
|
Franchised stores open at December 31,
|
734
|
|
|
782
|
|
|
781
|
|
Company-operated Sales & Lease Ownership stores
|
|
|
|
|
|
|||
Company-operated Sales & Lease Ownership stores open at January 1,
|
1,243
|
|
|
1,262
|
|
|
1,227
|
|
Opened
|
7
|
|
|
30
|
|
|
33
|
|
Added through acquisition
|
25
|
|
|
9
|
|
|
10
|
|
Closed, sold or merged
|
(52
|
)
|
|
(58
|
)
|
|
(8
|
)
|
Company-operated Sales & Lease Ownership stores open at December 31,
|
1,223
|
|
|
1,243
|
|
|
1,262
|
|
Company-operated HomeSmart stores
|
|
|
|
|
|
|||
Company-operated HomeSmart stores open at January 1,
|
83
|
|
|
81
|
|
|
78
|
|
Opened
|
—
|
|
|
3
|
|
|
3
|
|
Closed, sold or merged
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
Company-operated HomeSmart stores open at December 31,
|
82
|
|
|
83
|
|
|
81
|
|
Company-operated RIMCO stores
1
|
|
|
|
|
|
|||
Company-operated RIMCO stores open at January 1,
|
—
|
|
|
27
|
|
|
19
|
|
Opened
|
—
|
|
|
—
|
|
|
8
|
|
Closed, sold or merged
|
—
|
|
|
(27
|
)
|
|
—
|
|
Company-operated RIMCO stores open at December 31,
|
—
|
|
|
—
|
|
|
27
|
|
Active Doors at December 31 (Unaudited)
|
2015
|
|
2014
|
||
Progressive Active Doors
|
13,248
|
|
|
12,307
|
|
For the Year Ended December 31 (Unaudited and In Thousands)
|
2015
|
|
2014
|
||||
Progressive Invoice Volume
|
$
|
780,038
|
|
|
$
|
471,902
|
|
•
|
Profitably grow our stores
|
•
|
Accelerate our omni-channel platform
|
•
|
Promote communication, coordination and integration
|
•
|
Champion compliance
|
(In Thousands)
|
2015
|
||
Goodwill
|
$
|
539,475
|
|
Other Indefinite-Lived Intangible Assets
|
53,000
|
|
|
Definite-Lived Intangible Assets, Net
|
222,912
|
|
|
Goodwill and Other Intangibles, Net
|
$
|
815,387
|
|
(In Thousands)
|
2015
|
||
Sales and Lease Ownership
|
$
|
233,851
|
|
Progressive
|
290,605
|
|
|
HomeSmart
|
14,729
|
|
|
DAMI
|
290
|
|
|
Total
|
$
|
539,475
|
|
|
|
|
Change
|
||||||||||||||||||||||
|
Year Ended December 31,
|
|
2015 vs. 2014
|
|
2014 vs. 2013
|
||||||||||||||||||||
(In Thousands)
|
2015
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales and Lease Ownership
1
|
$
|
2,001,682
|
|
|
$
|
2,037,101
|
|
|
$
|
2,076,269
|
|
|
$
|
(35,419
|
)
|
|
(1.7
|
)%
|
|
$
|
(39,168
|
)
|
|
(1.9
|
)%
|
Progressive
2
|
1,049,681
|
|
|
519,342
|
|
|
—
|
|
|
530,339
|
|
|
102.1
|
|
|
519,342
|
|
|
nmf
|
|
|||||
HomeSmart
1
|
63,477
|
|
|
64,276
|
|
|
62,840
|
|
|
(799
|
)
|
|
(1.2
|
)
|
|
1,436
|
|
|
2.3
|
|
|||||
DAMI
3
|
2,845
|
|
|
—
|
|
|
—
|
|
|
2,845
|
|
|
nmf
|
|
|
—
|
|
|
nmf
|
|
|||||
Franchise
4
|
63,507
|
|
|
65,902
|
|
|
68,575
|
|
|
(2,395
|
)
|
|
(3.6
|
)
|
|
(2,673
|
)
|
|
(3.9
|
)
|
|||||
Manufacturing
|
106,020
|
|
|
104,058
|
|
|
106,523
|
|
|
1,962
|
|
|
1.9
|
|
|
(2,465
|
)
|
|
(2.3
|
)
|
|||||
Other
|
1,118
|
|
|
2,969
|
|
|
22,158
|
|
|
(1,851
|
)
|
|
(62.3
|
)
|
|
(19,189
|
)
|
|
(86.6
|
)
|
|||||
Revenues of Reportable Segments
|
3,288,330
|
|
|
2,793,648
|
|
|
2,336,365
|
|
|
494,682
|
|
|
17.7
|
|
|
457,283
|
|
|
19.6
|
|
|||||
Elimination of Intersegment Revenues
|
(103,890
|
)
|
|
(102,296
|
)
|
|
(103,834
|
)
|
|
(1,594
|
)
|
|
(1.6
|
)
|
|
1,538
|
|
|
1.5
|
|
|||||
Cash to Accrual Adjustments
|
(4,684
|
)
|
|
3,681
|
|
|
2,100
|
|
|
(8,365
|
)
|
|
(227.2
|
)
|
|
1,581
|
|
|
75.3
|
|
|||||
Total Revenues from External Customers
|
$
|
3,179,756
|
|
|
$
|
2,695,033
|
|
|
$
|
2,234,631
|
|
|
$
|
484,723
|
|
|
18.0
|
%
|
|
$
|
460,402
|
|
|
20.6
|
%
|
nmf—Calculation is not meaningful
|
|||||||||||||||||||||||||
1
Segment revenue consists of lease revenues and fees, retail sales and non-retail sales.
|
|||||||||||||||||||||||||
2
Segment revenue consists of lease revenues and fees.
|
|||||||||||||||||||||||||
3
Segment revenue consists of interest and fees on loans receivable, and excludes the effect of interest expense.
|
|||||||||||||||||||||||||
4
Segment revenue consists of franchise royalties and fees.
|
|
Year Ended December 31,
|
||||||||||
(In Thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Personnel costs
|
$
|
619,557
|
|
|
$
|
594,246
|
|
|
$
|
550,093
|
|
Occupancy costs
|
208,927
|
|
|
206,806
|
|
|
199,300
|
|
|||
Lease merchandise write-offs
|
136,380
|
|
|
99,942
|
|
|
57,989
|
|
|||
Bad debt expense
|
122,184
|
|
|
60,514
|
|
|
—
|
|
|||
Advertising
|
39,334
|
|
|
50,445
|
|
|
42,956
|
|
|||
Other operating expenses
|
230,648
|
|
|
219,848
|
|
|
172,346
|
|
|||
Operating Expenses
|
$
|
1,357,030
|
|
|
$
|
1,231,801
|
|
|
$
|
1,022,684
|
|
|
Year Ended December 31,
|
||||||||||
(In Thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Net gains on sales of stores
|
$
|
(2,139
|
)
|
|
$
|
(1,694
|
)
|
|
$
|
(833
|
)
|
Net gains on sales of delivery vehicles
|
(1,706
|
)
|
|
(1,099
|
)
|
|
(1,895
|
)
|
|||
Impairment charges and losses on asset dispositions and assets held for sale
|
5,169
|
|
|
1,617
|
|
|
4,312
|
|
|||
Other Operating Expense (Income), Net
|
$
|
1,324
|
|
|
$
|
(1,176
|
)
|
|
$
|
1,584
|
|
•
|
Sales and Lease Ownership earnings before income taxes included a
$3.5 million
loss related to a lease termination on a Company aircraft.
|
•
|
Progressive earnings before tax included
$3.7 million
of transaction costs related to the
October 15, 2015
DAMI acquisition.
|
•
|
Sales and Lease Ownership earnings before income taxes included
$4.8 million
of restructuring charges related to the Company's strategic decision to close
44
Company-operated stores and restructure its home office and field support.
|
•
|
Other category loss before income taxes included
$13.7 million
in financial and advisory costs related to addressing now resolved strategic matters, including proxy contests,
$4.3 million
of restructuring charges in connection with the store closures noted above,
$9.1 million
of charges associated with the retirements of both the Company's Chief Executive Officer and Chief Operating Officer,
$6.6 million
in transaction costs related to the Progressive acquisition and
$1.2 million
of regulatory income that reduced previously recognized regulatory expense upon the resolution of the regulatory investigation by the California Attorney General.
|
•
|
Other category loss before income taxes included
$28.4 million
related to an accrual for loss contingencies for the then-pending regulatory investigation by the California Attorney General and
$4.9 million
related to retirement expense and a change in vacation policies.
|
•
|
Cash and cash equivalents
increased
$11.4 million
to
$14.9 million
at
December 31, 2015
from
$3.5 million
at
December 31, 2014
. For additional information, refer to the "Liquidity and Capital Resources" section below.
|
•
|
Lease merchandise, net increased
$51.9 million
to
$1.139 billion
at
December 31, 2015
primarily due to the growth in invoice volume at Progressive.
|
•
|
Loans receivable, net of
$85.8 million
as of
December 31, 2015
, resulted from the October 15, 2015 DAMI acquisition. This amount represents the principal, interest and fees outstanding from DAMI credit cardholders, net of an allowance for loan losses and unamortized fees. Refer to Notes 1 and 6 to the consolidated financial statements for further information.
|
•
|
Income tax receivable
increased
$55.1 million
due to the enactment of the Protecting Americans From Tax Hikes Act of 2015 signed into law on December 18, 2015, which retroactively extended 50% bonus depreciation and reauthorized work opportunity tax credits for 2015. Throughout 2015, the Company made payments based on the previously enacted law, resulting in an overpayment when the current act was signed.
|
•
|
Deferred income taxes payable
increased
$38.9 million
due primarily to accelerated bonus depreciation deductions on lease merchandise on hand at December 31, 2015. Purchases of lease merchandise increased by
$310.0 million
in
2015
compared to
2014
primarily due to the inclusion of Progressive for a full year in
2015
, as well as its continued growth.
|
•
|
cash flows from operations;
|
•
|
private debt offerings;
|
•
|
bank debt;
|
•
|
trade credit with vendors;
|
•
|
proceeds from the sale of lease return merchandise; and
|
•
|
stock offerings.
|
(In Thousands)
|
Total
|
|
Period Less
Than 1 Year
|
|
Period 1-3
Years
|
|
Period 3-5
Years
|
|
Period Over
5 Years
|
||||||||||
Debt, Excluding Capital Leases
|
$
|
601,156
|
|
|
$
|
154,281
|
|
|
$
|
195,000
|
|
|
$
|
191,875
|
|
|
$
|
60,000
|
|
Capital Leases
|
9,294
|
|
|
2,897
|
|
|
3,990
|
|
|
2,070
|
|
|
337
|
|
|||||
Interest Obligations
|
64,614
|
|
|
20,210
|
|
|
29,611
|
|
|
13,486
|
|
|
1,307
|
|
|||||
Operating Leases
|
540,041
|
|
|
112,134
|
|
|
174,720
|
|
|
117,978
|
|
|
135,209
|
|
|||||
Purchase Obligations
|
22,556
|
|
|
6,672
|
|
|
11,379
|
|
|
3,937
|
|
|
568
|
|
|||||
Retirement Obligations
|
4,272
|
|
|
3,022
|
|
|
1,202
|
|
|
25
|
|
|
23
|
|
|||||
Regulatory
|
4,737
|
|
|
4,737
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total Contractual Cash Obligations
|
$
|
1,246,670
|
|
|
$
|
303,953
|
|
|
$
|
415,902
|
|
|
$
|
329,371
|
|
|
$
|
197,444
|
|
(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
|
$
|
81,024
|
|
|
$
|
81,024
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
December 31,
2015 |
|
December 31,
2014 |
||||
|
(In Thousands, Except Share Data)
|
||||||
ASSETS:
|
|
|
|
||||
Cash and Cash Equivalents
|
$
|
14,942
|
|
|
$
|
3,549
|
|
Investments
|
22,226
|
|
|
21,311
|
|
||
Accounts Receivable (net of allowances of $34,861 in 2015 and $27,401 in 2014)
|
113,439
|
|
|
107,383
|
|
||
Lease Merchandise (net of accumulated depreciation and allowances of $738,657 in 2015 and $710,266 in 2014)
|
1,138,938
|
|
|
1,087,032
|
|
||
Loans Receivable (net of allowances of $2,971 in 2015)
|
85,795
|
|
|
—
|
|
||
Property, Plant and Equipment, Net
|
225,836
|
|
|
219,417
|
|
||
Goodwill
|
539,475
|
|
|
530,670
|
|
||
Other Intangibles, Net
|
275,912
|
|
|
297,471
|
|
||
Income Tax Receivable
|
179,174
|
|
|
124,095
|
|
||
Prepaid Expenses and Other Assets
|
56,162
|
|
|
59,560
|
|
||
Assets Held for Sale
|
6,976
|
|
|
6,356
|
|
||
Total Assets
|
$
|
2,658,875
|
|
|
$
|
2,456,844
|
|
LIABILITIES & SHAREHOLDERS’ EQUITY:
|
|
|
|
||||
Accounts Payable and Accrued Expenses
|
$
|
300,356
|
|
|
$
|
270,421
|
|
Accrued Regulatory Expense
|
4,737
|
|
|
27,200
|
|
||
Deferred Income Taxes Payable
|
307,481
|
|
|
268,551
|
|
||
Customer Deposits and Advance Payments
|
69,233
|
|
|
61,069
|
|
||
Debt
|
610,450
|
|
|
606,082
|
|
||
Total Liabilities
|
1,292,257
|
|
|
1,233,323
|
|
||
Commitments and Contingencies (Note 9)
|
—
|
|
|
—
|
|
||
Shareholders’ Equity:
|
|
|
|
||||
Common Stock, Par Value $.50 Per Share: Authorized: 225,000,000 Shares at December 31, 2015 and December 31, 2014; Shares Issued: 90,752,123 at December 31, 2015 and December 31, 2014
|
45,376
|
|
|
45,376
|
|
||
Additional Paid-in Capital
|
240,112
|
|
|
227,290
|
|
||
Retained Earnings
|
1,403,120
|
|
|
1,274,233
|
|
||
Accumulated Other Comprehensive Loss
|
(517
|
)
|
|
(90
|
)
|
||
|
1,688,091
|
|
|
1,546,809
|
|
||
Less: Treasury Shares at Cost
|
|
|
|
||||
Common Stock: 18,151,560 Shares at December 31, 2015 and 18,263,589 at December 31, 2014
|
(321,473
|
)
|
|
(323,288
|
)
|
||
Total Shareholders’ Equity
|
1,366,618
|
|
|
1,223,521
|
|
||
Total Liabilities & Shareholders’ Equity
|
$
|
2,658,875
|
|
|
$
|
2,456,844
|
|
|
Year Ended December 31, 2015
|
|
Year Ended December 31, 2014
|
|
Year Ended December 31, 2013
|
||||||
|
(In Thousands, Except Per Share Data)
|
||||||||||
REVENUES:
|
|
|
|
|
|
||||||
Lease Revenues and Fees
|
$
|
2,684,184
|
|
|
$
|
2,221,574
|
|
|
$
|
1,748,699
|
|
Retail Sales
|
32,872
|
|
|
38,360
|
|
|
40,876
|
|
|||
Non-Retail Sales
|
390,137
|
|
|
363,355
|
|
|
371,292
|
|
|||
Franchise Royalties and Fees
|
63,507
|
|
|
65,902
|
|
|
68,575
|
|
|||
Interest and Fees on Loans Receivable
|
2,845
|
|
|
—
|
|
|
—
|
|
|||
Other
|
6,211
|
|
|
5,842
|
|
|
5,189
|
|
|||
|
3,179,756
|
|
|
2,695,033
|
|
|
2,234,631
|
|
|||
COSTS AND EXPENSES:
|
|
|
|
|
|
||||||
Depreciation of Lease Merchandise
|
1,212,644
|
|
|
932,634
|
|
|
628,089
|
|
|||
Retail Cost of Sales
|
21,040
|
|
|
24,541
|
|
|
24,318
|
|
|||
Non-Retail Cost of Sales
|
351,777
|
|
|
330,057
|
|
|
337,581
|
|
|||
Operating Expenses
|
1,357,030
|
|
|
1,231,801
|
|
|
1,022,684
|
|
|||
Financial Advisory and Legal Costs
|
—
|
|
|
13,661
|
|
|
—
|
|
|||
Restructuring Expenses
|
—
|
|
|
9,140
|
|
|
—
|
|
|||
Retirement and Vacation Charges
|
—
|
|
|
9,094
|
|
|
4,917
|
|
|||
Progressive-Related Transaction Costs
|
—
|
|
|
6,638
|
|
|
—
|
|
|||
Legal and Regulatory (Income) Expense
|
—
|
|
|
(1,200
|
)
|
|
28,400
|
|
|||
Other Operating Expense (Income), Net
|
1,324
|
|
|
(1,176
|
)
|
|
1,584
|
|
|||
|
2,943,815
|
|
|
2,555,190
|
|
|
2,047,573
|
|
|||
OPERATING PROFIT
|
235,941
|
|
|
139,843
|
|
|
187,058
|
|
|||
Interest Income
|
2,185
|
|
|
2,921
|
|
|
2,998
|
|
|||
Interest Expense
|
(23,339
|
)
|
|
(19,215
|
)
|
|
(5,613
|
)
|
|||
Other Non-Operating (Expense) Income, Net
|
(1,667
|
)
|
|
(1,845
|
)
|
|
517
|
|
|||
EARNINGS BEFORE INCOME TAXES
|
213,120
|
|
|
121,704
|
|
|
184,960
|
|
|||
INCOME TAXES
|
77,411
|
|
|
43,471
|
|
|
64,294
|
|
|||
NET EARNINGS
|
$
|
135,709
|
|
|
$
|
78,233
|
|
|
$
|
120,666
|
|
EARNINGS PER SHARE
|
$
|
1.87
|
|
|
$
|
1.08
|
|
|
$
|
1.59
|
|
EARNINGS PER SHARE ASSUMING DILUTION
|
$
|
1.86
|
|
|
$
|
1.08
|
|
|
$
|
1.58
|
|
|
Year End December 31,
|
||||||||||
(In Thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Net Earnings
|
$
|
135,709
|
|
|
$
|
78,233
|
|
|
$
|
120,666
|
|
Other Comprehensive (Loss) Income:
|
|
|
|
|
|
||||||
Foreign Currency Translation:
|
|
|
|
|
|
||||||
Foreign Currency Translation Adjustment
|
(427
|
)
|
|
(26
|
)
|
|
5
|
|
|||
Total Other Comprehensive (Loss) Income
|
(427
|
)
|
|
(26
|
)
|
|
5
|
|
|||
Comprehensive Income
|
$
|
135,282
|
|
|
$
|
78,207
|
|
|
$
|
120,671
|
|
|
Treasury Stock
|
|
Common Stock
|
|
Additional
Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|||||||||||||
(In Thousands, Except Per Share)
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance, January 1, 2013
|
(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
|
)
|
|||||
Dividends, $.086 per share
|
|
|
|
|
|
|
|
|
(6,219
|
)
|
|
|
||||||||||
Stock-Based Compensation
|
17
|
|
|
300
|
|
|
|
|
10,398
|
|
|
|
|
|
||||||||
Reissued Shares
|
515
|
|
|
7,162
|
|
|
|
|
(6,290
|
)
|
|
|
|
|
||||||||
Repurchased Shares
|
(1,001
|
)
|
|
(25,000
|
)
|
|
|
|
25,000
|
|
|
|
|
|
||||||||
Net Earnings
|
|
|
|
|
|
|
|
|
78,233
|
|
|
|
||||||||||
Foreign Currency Translation Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
(26
|
)
|
|||||||||
Balance, December 31, 2014
|
(18,264
|
)
|
|
(323,288
|
)
|
|
45,376
|
|
|
227,290
|
|
|
1,274,233
|
|
|
(90
|
)
|
|||||
Dividends, $.094 per share
|
|
|
|
|
|
|
|
|
(6,822
|
)
|
|
|
||||||||||
Stock-Based Compensation
|
5
|
|
|
89
|
|
|
|
|
13,605
|
|
|
|
|
|
||||||||
Reissued Shares
|
107
|
|
|
1,726
|
|
|
|
|
(783
|
)
|
|
|
|
|
||||||||
Net Earnings
|
|
|
|
|
|
|
|
|
135,709
|
|
|
|
||||||||||
Foreign Currency Translation Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
(427
|
)
|
|||||||||
Balance, December 31, 2015
|
(18,152
|
)
|
|
$
|
(321,473
|
)
|
|
$
|
45,376
|
|
|
$
|
240,112
|
|
|
$
|
1,403,120
|
|
|
$
|
(517
|
)
|
|
Year Ended December 31, 2015
|
|
Year Ended December 31, 2014
|
|
Year Ended December 31, 2013
|
||||||
|
(In Thousands)
|
||||||||||
OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net Earnings
|
$
|
135,709
|
|
|
$
|
78,233
|
|
|
$
|
120,666
|
|
Adjustments to Reconcile Net Earnings to Net Cash Provided by (Used in) Operating Activities:
|
|
|
|
|
|
||||||
Depreciation of Lease Merchandise
|
1,212,644
|
|
|
932,634
|
|
|
628,089
|
|
|||
Other Depreciation and Amortization
|
80,203
|
|
|
85,600
|
|
|
57,016
|
|
|||
Accounts Receivable Provision
|
163,111
|
|
|
99,283
|
|
|
35,894
|
|
|||
Provision for Credit Losses on Loans Receivable
|
937
|
|
|
—
|
|
|
—
|
|
|||
Fee Amortization on Loans Receivable
|
(269
|
)
|
|
—
|
|
|
—
|
|
|||
Stock-Based Compensation
|
14,163
|
|
|
10,863
|
|
|
2,342
|
|
|||
Deferred Income Taxes
|
38,970
|
|
|
(7,157
|
)
|
|
(36,763
|
)
|
|||
Other Changes, Net
|
(842
|
)
|
|
2,214
|
|
|
3,996
|
|
|||
Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions:
|
|
|
|
|
|
||||||
Additions to Lease Merchandise
|
(1,775,479
|
)
|
|
(1,465,501
|
)
|
|
(964,072
|
)
|
|||
Book Value of Lease Merchandise Sold or Disposed
|
510,657
|
|
|
456,713
|
|
|
425,673
|
|
|||
Accounts Receivable
|
(173,159
|
)
|
|
(110,269
|
)
|
|
(30,419
|
)
|
|||
Prepaid Expenses and Other Assets
|
3,964
|
|
|
(5,332
|
)
|
|
(1,349
|
)
|
|||
Income Tax Receivable
|
(54,351
|
)
|
|
(117,894
|
)
|
|
22,688
|
|
|||
Accounts Payable and Accrued Expenses
|
25,458
|
|
|
(12,788
|
)
|
|
16,893
|
|
|||
Accrued Litigation Expense
|
(22,463
|
)
|
|
(1,200
|
)
|
|
28,400
|
|
|||
Customer Deposits and Advance Payments
|
7,508
|
|
|
5,639
|
|
|
(617
|
)
|
|||
Cash Provided by (Used in) Operating Activities
|
166,761
|
|
|
(48,962
|
)
|
|
308,437
|
|
|||
INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Purchase of Investments
|
—
|
|
|
—
|
|
|
(74,845
|
)
|
|||
Loans Receivable Originated
|
(11,700
|
)
|
|
—
|
|
|
—
|
|
|||
Repayments of Loans Receivable
|
15,211
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from Maturities and Calls of Investments
|
—
|
|
|
89,993
|
|
|
47,930
|
|
|||
Additions to Property, Plant and Equipment
|
(60,557
|
)
|
|
(47,565
|
)
|
|
(58,145
|
)
|
|||
Acquisitions of Businesses and Contracts
|
(73,295
|
)
|
|
(700,509
|
)
|
|
(10,898
|
)
|
|||
Proceeds from Dispositions of Businesses and Contracts
|
13,976
|
|
|
16,525
|
|
|
2,163
|
|
|||
Proceeds from Sale of Property, Plant, and Equipment
|
7,515
|
|
|
6,032
|
|
|
6,841
|
|
|||
Cash Used in Investing Activities
|
(108,850
|
)
|
|
(635,524
|
)
|
|
(86,954
|
)
|
|||
FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Proceeds from Debt
|
290,090
|
|
|
904,956
|
|
|
2,598
|
|
|||
Repayments of Debt
|
(330,747
|
)
|
|
(441,603
|
)
|
|
(4,954
|
)
|
|||
Acquisition of Treasury Stock
|
—
|
|
|
—
|
|
|
(125,000
|
)
|
|||
Dividends Paid
|
(6,822
|
)
|
|
(7,823
|
)
|
|
(3,875
|
)
|
|||
Excess Tax Benefits From Stock-Based Compensation
|
348
|
|
|
1,392
|
|
|
1,381
|
|
|||
Issuance of Stock Under Stock Option Plans
|
1,038
|
|
|
4,388
|
|
|
9,924
|
|
|||
Other
|
(425
|
)
|
|
(4,366
|
)
|
|
—
|
|
|||
Cash (Used in) Provided by Financing Activities
|
(46,518
|
)
|
|
456,944
|
|
|
(119,926
|
)
|
|||
Increase (Decrease) in Cash and Cash Equivalents
|
11,393
|
|
|
(227,542
|
)
|
|
101,557
|
|
|||
Cash and Cash Equivalents at Beginning of Year
|
3,549
|
|
|
231,091
|
|
|
129,534
|
|
|||
Cash and Cash Equivalents at End of Year
|
$
|
14,942
|
|
|
$
|
3,549
|
|
|
$
|
231,091
|
|
Cash Paid During the Year:
|
|
|
|
|
|
||||||
Interest
|
$
|
23,405
|
|
|
$
|
16,344
|
|
|
$
|
5,614
|
|
Income Taxes
|
91,720
|
|
|
187,709
|
|
|
54,027
|
|
Stores at December 31 (Unaudited)
|
2015
|
|
2014
|
|
2013
|
|||
Company-operated stores
|
|
|
|
|
|
|||
Sales and Lease Ownership
|
1,223
|
|
|
1,243
|
|
|
1,262
|
|
HomeSmart
|
82
|
|
|
83
|
|
|
81
|
|
RIMCO
|
—
|
|
|
—
|
|
|
27
|
|
Total Company-operated stores
|
1,305
|
|
|
1,326
|
|
|
1,370
|
|
Franchised stores
1
|
734
|
|
|
782
|
|
|
781
|
|
Systemwide stores
|
2,039
|
|
|
2,108
|
|
|
2,151
|
|
Active Doors at December 31 (Unaudited)
|
2015
|
|
2014
|
||
Progressive Active Doors
1
|
13,248
|
|
|
12,307
|
|
(In Thousands)
|
2015
|
|
2014
|
||||
Customers
|
$
|
35,153
|
|
|
$
|
30,438
|
|
Corporate
|
26,175
|
|
|
32,572
|
|
||
Franchisee
|
52,111
|
|
|
44,373
|
|
||
|
$
|
113,439
|
|
|
$
|
107,383
|
|
(In Thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Beginning Balance
|
$
|
27,401
|
|
|
$
|
7,172
|
|
|
$
|
6,001
|
|
Accounts written off
|
(155,651
|
)
|
|
(79,054
|
)
|
|
(34,723
|
)
|
|||
Accounts receivable provision
|
163,111
|
|
|
99,283
|
|
|
35,894
|
|
|||
Ending Balance
|
$
|
34,861
|
|
|
$
|
27,401
|
|
|
$
|
7,172
|
|
(In Thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Bad debt expense
|
122,184
|
|
|
60,514
|
|
|
—
|
|
|||
Provision for returns and uncollected renewal payments
|
40,927
|
|
|
38,769
|
|
|
35,894
|
|
|||
Accounts receivable provision
|
$
|
163,111
|
|
|
$
|
99,283
|
|
|
$
|
35,894
|
|
(In Thousands)
|
2015
|
|
2014
|
||||
Sales and Lease Ownership
|
$
|
233,851
|
|
|
$
|
226,828
|
|
Progressive
|
290,605
|
|
|
289,184
|
|
||
HomeSmart
|
14,729
|
|
|
14,658
|
|
||
DAMI
|
290
|
|
|
—
|
|
||
Total
|
$
|
539,475
|
|
|
$
|
530,670
|
|
(In Thousands)
|
Foreign Currency
|
|
Total
|
||||
Balance at January 1, 2015
|
$
|
(90
|
)
|
|
$
|
(90
|
)
|
Other comprehensive loss
|
(427
|
)
|
|
(427
|
)
|
||
Balance at December 31, 2015
|
$
|
(517
|
)
|
|
$
|
(517
|
)
|
|
Fair Value
(in thousands)
|
|
Weighted Average Life
(in years)
|
||
Technology
|
$
|
2,550
|
|
|
5.0
|
Trade Names and Trademarks
|
500
|
|
|
10.0
|
|
Non-compete Agreements
|
350
|
|
|
5.0
|
|
Total Acquired Intangible Assets
1
|
$
|
3,400
|
|
|
|
(In Thousands)
|
Amounts Recognized as of Acquisition Date (as adjusted)
1
|
|
Measurement Period Adjustments
2
|
|
Amounts Recognized as of Acquisition Date (as adjusted)
|
||||||
Purchase Price
|
$
|
705,810
|
|
|
$
|
—
|
|
|
$
|
705,810
|
|
|
|
|
|
|
|
||||||
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed
|
|
|
|
|
|
||||||
Cash and Cash Equivalents
|
5,810
|
|
|
—
|
|
|
5,810
|
|
|||
Receivables
2, 3
|
27,581
|
|
|
(4,245
|
)
|
|
23,336
|
|
|||
Lease Merchandise
2
|
141,185
|
|
|
110
|
|
|
141,295
|
|
|||
Property, Plant and Equipment
|
4,010
|
|
|
—
|
|
|
4,010
|
|
|||
Other Intangibles
4
|
325,000
|
|
|
—
|
|
|
325,000
|
|
|||
Prepaid Expenses and Other Assets
|
893
|
|
|
—
|
|
|
893
|
|
|||
Total Identifiable Assets Acquired
|
504,479
|
|
|
(4,135
|
)
|
|
500,344
|
|
|||
Accounts Payable and Accrued Expenses
2
|
(29,104
|
)
|
|
3,049
|
|
|
(26,055
|
)
|
|||
Deferred Income Taxes Payable
2
|
(48,749
|
)
|
|
(335
|
)
|
|
(49,084
|
)
|
|||
Customer Deposits and Advance Payments
|
(10,000
|
)
|
|
—
|
|
|
(10,000
|
)
|
|||
Total Liabilities Assumed
|
(87,853
|
)
|
|
2,714
|
|
|
(85,139
|
)
|
|||
Goodwill
5
|
289,184
|
|
|
1,421
|
|
|
290,605
|
|
|||
Net Assets Acquired
|
$
|
705,810
|
|
|
$
|
—
|
|
|
$
|
705,810
|
|
|
|
Fair Value
(in thousands)
|
|
Weighted Average Life
(in years)
|
||
Internal Use Software
|
|
$
|
14,000
|
|
|
3.0
|
Technology
|
|
66,000
|
|
|
10.0
|
|
Trade Names and Trademarks
|
|
53,000
|
|
|
Indefinite
|
|
Customer Lease Contracts
|
|
11,000
|
|
|
1.0
|
|
Merchant Relationships
|
|
181,000
|
|
|
12.0
|
|
Total Acquired Intangible Assets
1
|
|
$
|
325,000
|
|
|
|
|
Twelve Months Ended
December 31, |
||||||||||||||
|
2014
|
|
2013
|
||||||||||||
(In Thousands)
|
As Reported
|
|
Pro Forma
|
|
As Reported
|
|
Pro Forma
|
||||||||
Revenues
|
$
|
2,695,033
|
|
|
$
|
2,851,631
|
|
|
$
|
2,234,631
|
|
|
$
|
2,607,977
|
|
Net Earnings
|
78,233
|
|
|
86,038
|
|
|
120,666
|
|
|
105,682
|
|
(In Thousands)
|
2015
|
|
2014
|
||||
Trade Names and Trademarks
|
$
|
53,000
|
|
|
$
|
53,000
|
|
Goodwill
|
539,475
|
|
|
530,670
|
|
||
Indefinite-lived Intangible Assets
|
$
|
592,475
|
|
|
$
|
583,670
|
|
(In Thousands)
|
Sales and Lease
Ownership |
|
Progressive
|
|
DAMI
|
|
HomeSmart
|
|
Total
|
||||||||||
Balance at January 1, 2014
|
$
|
224,523
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,658
|
|
|
$
|
239,181
|
|
Acquisitions
|
3,629
|
|
|
277,958
|
|
|
—
|
|
|
—
|
|
|
281,587
|
|
|||||
Disposals
|
(1,321
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,321
|
)
|
|||||
Acquisition Accounting Adjustments
|
(3
|
)
|
|
11,226
|
|
|
—
|
|
|
—
|
|
|
11,223
|
|
|||||
Balance at December 31, 2014
|
226,828
|
|
|
289,184
|
|
|
—
|
|
|
14,658
|
|
|
530,670
|
|
|||||
Acquisitions
|
9,529
|
|
|
—
|
|
|
290
|
|
|
229
|
|
|
10,048
|
|
|||||
Disposals
|
(2,506
|
)
|
|
—
|
|
|
—
|
|
|
(158
|
)
|
|
(2,664
|
)
|
|||||
Acquisition Accounting Adjustments
|
—
|
|
|
1,421
|
|
|
—
|
|
|
—
|
|
|
1,421
|
|
|||||
Balance at December 31, 2015
|
$
|
233,851
|
|
|
$
|
290,605
|
|
|
$
|
290
|
|
|
$
|
14,729
|
|
|
$
|
539,475
|
|
|
2015
|
|
2014
|
||||||||||||||||||||
(In Thousands)
|
Gross
|
|
Accumulated
Amortization |
|
Net
|
|
Gross
|
|
Accumulated
Amortization |
|
Net
|
||||||||||||
Internal Use Software
|
$
|
14,000
|
|
|
$
|
(7,998
|
)
|
|
$
|
6,002
|
|
|
$
|
14,000
|
|
|
$
|
(3,331
|
)
|
|
$
|
10,669
|
|
Technology
|
68,550
|
|
|
(11,419
|
)
|
|
57,131
|
|
|
66,000
|
|
|
(4,712
|
)
|
|
61,288
|
|
||||||
Customer Lease Contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
11,000
|
|
|
(11,000
|
)
|
|
—
|
|
||||||
Merchant Relationships
|
181,000
|
|
|
(25,851
|
)
|
|
155,149
|
|
|
181,000
|
|
|
(10,768
|
)
|
|
170,232
|
|
||||||
Other Intangibles
1
|
7,383
|
|
|
(2,753
|
)
|
|
4,630
|
|
|
5,721
|
|
|
(3,439
|
)
|
|
2,282
|
|
||||||
Total
|
$
|
270,933
|
|
|
$
|
(48,021
|
)
|
|
$
|
222,912
|
|
|
$
|
277,721
|
|
|
$
|
(33,250
|
)
|
|
$
|
244,471
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
(In Thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Deferred Compensation Liability
|
$
|
—
|
|
|
$
|
(11,576
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(12,677
|
)
|
|
$
|
—
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
(In Thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Assets Held for Sale
|
$
|
—
|
|
|
$
|
6,976
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,356
|
|
|
$
|
—
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
(In Thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Perfect Home Notes
1
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,226
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,311
|
|
Fixed-Rate Long Term Debt
2
|
—
|
|
|
(395,618
|
)
|
|
—
|
|
|
—
|
|
|
(429,049
|
)
|
|
—
|
|
(In Thousands)
|
2015
|
|
2014
|
||||
Land
|
$
|
24,300
|
|
|
$
|
24,861
|
|
Buildings and Improvements
|
76,982
|
|
|
83,053
|
|
||
Leasehold Improvements and Signs
|
98,435
|
|
|
107,380
|
|
||
Fixtures and Equipment
1
|
223,382
|
|
|
196,965
|
|
||
Assets Under Capital Leases:
|
|
|
|
||||
with Related Parties
|
10,573
|
|
|
10,573
|
|
||
with Unrelated Parties
|
11,063
|
|
|
10,564
|
|
||
Construction in Progress
|
3,853
|
|
|
2,086
|
|
||
|
448,588
|
|
|
435,482
|
|
||
Less: Accumulated Depreciation and Amortization
|
(222,752
|
)
|
|
(216,065
|
)
|
||
|
$
|
225,836
|
|
|
$
|
219,417
|
|
1
|
Includes internal-use software development costs of
$60.7 million
and
$50.3 million
as of
December 31, 2015
and
2014
, respectively. Accumulated amortization of internal-use software development costs amounted to
$22.2 million
and
$14.8 million
as of
December 31, 2015
and
2014
, respectively.
|
(In Thousands)
|
|
2015
|
||
Credit Card Loans
|
|
$
|
13,900
|
|
Acquired Loans
|
|
74,866
|
|
|
Loans Receivable, Gross
|
|
88,766
|
|
|
|
|
|
||
Allowance for Loan Losses
|
|
(937
|
)
|
|
Unamortized Fees
|
|
(2,034
|
)
|
|
Loans Receivable, Net
|
|
$
|
85,795
|
|
Aging category
|
|
Percentage
1
|
||
30-59 days past due
|
|
7.9
|
%
|
|
60-89 days past due
|
|
3.3
|
%
|
|
90 or more days past due
|
|
4.1
|
%
|
|
Past due loans receivable
|
|
15.3
|
%
|
|
Current loans receivable
|
|
84.7
|
%
|
|
Balance of loans receivable 90 or more days past due and still accruing interest and fees
|
|
$
|
—
|
|
(In Thousands)
|
2015
|
|
2014
|
||||
DAMI Credit Facility
|
$41,781
|
|
$
|
—
|
|
||
Revolving Facility
|
75,000
|
|
|
69,116
|
|
||
Senior Unsecured Notes, 3.95%, Due in Installments through April 2018
|
75,000
|
|
|
100,000
|
|
||
Term Loan, Due in Installments through December 2019
|
109,375
|
|
|
121,875
|
|
||
Senior Unsecured Notes, 4.75%, Due in Installments through April 2021
|
300,000
|
|
|
300,000
|
|
||
|
|
|
|
||||
Capital Lease Obligation:
|
|
|
|
||||
with Related Parties
|
4,703
|
|
|
6,157
|
|
||
with Unrelated Parties
|
4,591
|
|
|
5,684
|
|
||
Other Debt
|
—
|
|
|
3,250
|
|
||
|
$
|
610,450
|
|
|
$
|
606,082
|
|
(In Thousands)
|
|
||
2016
|
$
|
157,178
|
|
2017
|
100,134
|
|
|
2018
|
98,856
|
|
|
2019
|
133,190
|
|
|
2020
|
60,755
|
|
|
Thereafter
|
60,337
|
|
|
|
$
|
610,450
|
|
(In Thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Current Income Tax Expense:
|
|
|
|
|
|
||||||
Federal
|
$
|
32,999
|
|
|
$
|
41,946
|
|
|
$
|
91,664
|
|
State
|
5,442
|
|
|
8,682
|
|
|
9,393
|
|
|||
|
38,441
|
|
|
50,628
|
|
|
101,057
|
|
|||
Deferred Income Tax Expense (Benefit):
|
|
|
|
|
|
||||||
Federal
|
35,413
|
|
|
(3,314
|
)
|
|
(35,941
|
)
|
|||
State
|
3,557
|
|
|
(3,843
|
)
|
|
(822
|
)
|
|||
|
38,970
|
|
|
(7,157
|
)
|
|
(36,763
|
)
|
|||
|
$
|
77,411
|
|
|
$
|
43,471
|
|
|
$
|
64,294
|
|
(In Thousands)
|
2015
|
|
2014
|
||||
Deferred Tax Liabilities:
|
|
|
|
||||
Lease Merchandise and Property, Plant and Equipment
|
$
|
228,174
|
|
|
$
|
228,002
|
|
Goodwill & Other Intangibles
|
47,421
|
|
|
40,644
|
|
||
Investment in Partnership
|
88,913
|
|
|
61,342
|
|
||
Other, Net
|
2,062
|
|
|
1,866
|
|
||
Total Deferred Tax Liabilities
|
366,570
|
|
|
331,854
|
|
||
Deferred Tax Assets:
|
|
|
|
||||
Accrued Liabilities
|
29,192
|
|
|
42,024
|
|
||
Advance Payments
|
15,713
|
|
|
14,272
|
|
||
Other, Net
|
14,936
|
|
|
7,713
|
|
||
Total Deferred Tax Assets
|
59,841
|
|
|
64,009
|
|
||
Less Valuation Allowance
|
(752
|
)
|
|
(706
|
)
|
||
Net Deferred Tax Liabilities
|
$
|
307,481
|
|
|
$
|
268,551
|
|
|
2015
|
|
2014
|
|
2013
|
|||
Statutory Rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Increases (Decreases) in United States Federal Taxes
|
|
|
|
|
|
|||
Resulting From:
|
|
|
|
|
|
|||
State Income Taxes, Net of Federal Income Tax Benefit
|
2.7
|
|
|
2.6
|
|
|
3.1
|
|
Federal Tax Credits
|
(.5
|
)
|
|
(1.8
|
)
|
|
(1.7
|
)
|
Other, Net
|
(.9
|
)
|
|
(.1
|
)
|
|
(1.6
|
)
|
Effective Tax Rate
|
36.3
|
%
|
|
35.7
|
%
|
|
34.8
|
%
|
(In Thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Balance at January 1,
|
$
|
2,644
|
|
|
$
|
1,960
|
|
|
$
|
1,258
|
|
Additions Based on Tax Positions Related to the Current Year
|
331
|
|
|
311
|
|
|
454
|
|
|||
Additions for Tax Positions of Prior Years
|
1,176
|
|
|
928
|
|
|
423
|
|
|||
Prior Year Reductions
|
(1
|
)
|
|
(370
|
)
|
|
(5
|
)
|
|||
Statute Expirations
|
(589
|
)
|
|
(94
|
)
|
|
(85
|
)
|
|||
Settlements
|
—
|
|
|
(91
|
)
|
|
(85
|
)
|
|||
Balance at December 31,
|
$
|
3,561
|
|
|
$
|
2,644
|
|
|
$
|
1,960
|
|
(In Thousands)
|
Contractual Obligations Under Canceled Leases
|
Severance
|
Fixed Assets
|
Other
|
Total
|
||||||||||
Balance at January 1, 2014
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Restructuring Expenses
|
4,797
|
|
620
|
|
3,328
|
|
395
|
|
9,140
|
|
|||||
Payments
|
(1,570
|
)
|
(620
|
)
|
—
|
|
—
|
|
(2,190
|
)
|
|||||
Impairment and Assets Written Off
|
—
|
|
—
|
|
(3,328
|
)
|
(395
|
)
|
(3,723
|
)
|
|||||
Balance at December 31, 2014
|
3,227
|
|
—
|
|
—
|
|
—
|
|
3,227
|
|
|||||
Payments
|
(1,559
|
)
|
—
|
|
—
|
|
—
|
|
(1,559
|
)
|
|||||
Balance at December 31, 2015
|
$
|
1,668
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,668
|
|
•
|
the 2015 Plan does not include liberal share counting methodologies, such as allowing shares tendered or withheld for taxes to be added back to the shares available under the 2015 Plan;
|
•
|
the 2015 Plan does not permit the grant of stock options at a discounted exercise price, unless required to maintain intrinsic or economic value in certain corporate transactions (e.g., spin-offs, etc.);
|
•
|
the 2015 Plan prohibits the re-pricing of awards without shareholder approval; and
|
•
|
awards granted under the 2015 Plan will be subject to any clawback policy adopted by the Company.
|
|
2015
|
2014
|
||||
Dividend Yield
|
.3
|
%
|
.3
|
%
|
||
Expected Volatility
|
28.9
|
%
|
31.9
|
%
|
||
Risk-free Interest Rate
|
1.6
|
%
|
1.9
|
%
|
||
Expected Term (in years)
|
5.2
|
|
6.2
|
|
||
Weighted-average Fair Value of Stock Options Granted
|
$
|
8.41
|
|
$
|
9.61
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of Exercise
Prices |
Number Outstanding
December 31, 2015 |
|
Weighted Average Remaining Contractual
Life
(in Years)
|
|
Weighted Average
Exercise Price
|
|
Number Exercisable
December 31, 2015 |
|
Weighted Average
Exercise Price
|
||||||
$10.01-15.00
|
199,000
|
|
|
2.79
|
|
$
|
14.11
|
|
|
199,000
|
|
|
$
|
14.11
|
|
15.01-20.00
|
82,500
|
|
|
4.15
|
|
19.92
|
|
|
82,500
|
|
|
19.92
|
|
||
20.01-25.00
|
7,521
|
|
|
8.85
|
|
24.98
|
|
|
—
|
|
|
—
|
|
||
25.01-30.00
|
380,646
|
|
|
8.91
|
|
28.23
|
|
|
53,640
|
|
|
27.80
|
|
||
30.01-32.20
|
202,687
|
|
|
8.97
|
|
31.93
|
|
|
—
|
|
|
—
|
|
||
10.01-32.20
|
872,354
|
|
|
7.08
|
|
25.05
|
|
|
335,140
|
|
|
17.73
|
|
|
Options
(In Thousands)
|
|
Weighted Average
Exercise Price
|
|
Weighted Average
Remaining
Contractual Term
(in Years)
|
|
Aggregate
Intrinsic Value
(in Thousands)
|
|
Weighted
Average Fair
Value
|
|||||||
Outstanding at January 1, 2015
|
624
|
|
|
$
|
21.52
|
|
|
|
|
|
|
|
||||
Granted
|
338
|
|
|
30.17
|
|
|
|
|
|
|
|
|||||
Exercised
|
(61
|
)
|
|
16.95
|
|
|
|
|
|
|
|
|||||
Forfeited/expired
|
(29
|
)
|
|
28.92
|
|
|
|
|
|
|
|
|||||
Outstanding at December 31, 2015
|
872
|
|
|
25.05
|
|
|
7.08
|
|
$
|
—
|
|
|
$
|
8.31
|
|
|
Expected to Vest at December 31, 2015
|
485
|
|
|
29.56
|
|
|
8.93
|
|
—
|
|
|
8.90
|
|
|||
Exercisable at December 31, 2015
|
335
|
|
|
17.73
|
|
|
4.11
|
|
1,562
|
|
|
7.39
|
|
|
Restricted Stock
(In Thousands)
|
|
Weighted Average
Fair Value
|
|||
Non-vested at January 1, 2015
|
698
|
|
|
$
|
28.75
|
|
Granted
|
261
|
|
|
31.78
|
|
|
Vested
|
(61
|
)
|
|
27.07
|
|
|
Forfeited
|
(77
|
)
|
|
29.45
|
|
|
Non-vested at December 31, 2015
|
821
|
|
1
|
29.77
|
|
|
Performance Share Units
(In Thousands)
|
|
Weighted Average
Fair Value
|
|||
Non-vested at January 1, 2015
|
111
|
|
|
$
|
32.01
|
|
Granted
|
358
|
|
|
32.03
|
|
|
Vested
|
—
|
|
|
—
|
|
|
Forfeited/unearned
|
(124
|
)
|
|
29.86
|
|
|
Non-vested at December 31, 2015
|
345
|
|
|
32.80
|
|
(In Thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Revenues From External Customers:
|
|
|
|
|
|
||||||
Sales and Lease Ownership
|
$
|
2,001,682
|
|
|
$
|
2,037,101
|
|
|
$
|
2,076,269
|
|
Progressive
|
1,049,681
|
|
|
519,342
|
|
|
—
|
|
|||
HomeSmart
|
63,477
|
|
|
64,276
|
|
|
62,840
|
|
|||
DAMI
1
|
2,845
|
|
|
—
|
|
|
—
|
|
|||
Franchise
|
63,507
|
|
|
65,902
|
|
|
68,575
|
|
|||
Manufacturing
|
106,020
|
|
|
104,058
|
|
|
106,523
|
|
|||
Other
|
1,118
|
|
|
2,969
|
|
|
22,158
|
|
|||
Revenues of Reportable Segments
|
3,288,330
|
|
|
2,793,648
|
|
|
2,336,365
|
|
|||
Elimination of Intersegment Revenues
|
(103,890
|
)
|
|
(102,296
|
)
|
|
(103,834
|
)
|
|||
Cash to Accrual Adjustments
|
(4,684
|
)
|
|
3,681
|
|
|
2,100
|
|
|||
Total Revenues from External Customers
|
$
|
3,179,756
|
|
|
$
|
2,695,033
|
|
|
$
|
2,234,631
|
|
|
|
|
|
|
|
||||||
Earnings (Loss) Before Income Taxes:
|
|
|
|
|
|
||||||
Sales and Lease Ownership
|
$
|
166,838
|
|
|
$
|
140,854
|
|
|
$
|
183,965
|
|
Progressive
|
54,525
|
|
|
4,603
|
|
|
—
|
|
|||
HomeSmart
|
771
|
|
|
(2,643
|
)
|
|
(3,428
|
)
|
|||
DAMI
|
(1,964
|
)
|
|
—
|
|
|
—
|
|
|||
Franchise
|
48,576
|
|
|
50,504
|
|
|
54,171
|
|
|||
Manufacturing
|
2,520
|
|
|
860
|
|
|
107
|
|
|||
Other
|
(51,651
|
)
|
|
(75,905
|
)
|
|
(56,114
|
)
|
|||
Earnings Before Income Taxes for Reportable Segments
|
219,615
|
|
|
118,273
|
|
|
178,701
|
|
|||
Elimination of Intersegment Profit
|
(2,488
|
)
|
|
(813
|
)
|
|
(94
|
)
|
|||
Cash to Accrual and Other Adjustments
|
(4,007
|
)
|
|
4,244
|
|
|
6,353
|
|
|||
Total Earnings Before Income Taxes
|
$
|
213,120
|
|
|
$
|
121,704
|
|
|
$
|
184,960
|
|
|
|
|
|
|
|
||||||
Assets:
|
|
|
|
|
|
||||||
Sales and Lease Ownership
|
$
|
1,261,040
|
|
|
$
|
1,246,325
|
|
|
$
|
1,431,720
|
|
Progressive
|
878,457
|
|
|
858,159
|
|
|
—
|
|
|||
HomeSmart
|
44,429
|
|
|
47,585
|
|
|
47,970
|
|
|||
DAMI
|
97,858
|
|
|
—
|
|
|
—
|
|
|||
Franchise
|
53,693
|
|
|
46,755
|
|
|
47,788
|
|
|||
Manufacturing
2
|
28,986
|
|
|
23,050
|
|
|
24,305
|
|
|||
Other
|
294,412
|
|
|
234,970
|
|
|
275,393
|
|
|||
Total Assets
|
$
|
2,658,875
|
|
|
$
|
2,456,844
|
|
|
$
|
1,827,176
|
|
2
|
Includes inventory (principally raw materials and work-in-process) that has been classified within lease merchandise in the consolidated balance sheets of
$19.4 million
,
$13.2 million
and
$14.0 million
as of
December 31, 2015
,
2014
and
2013
, respectively.
|
(In Thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Depreciation and Amortization:
|
|
|
|
|
|
||||||
Sales and Lease Ownership
|
$
|
592,450
|
|
|
$
|
633,119
|
|
|
$
|
639,951
|
|
Progressive
|
661,646
|
|
|
346,343
|
|
|
—
|
|
|||
HomeSmart
|
20,817
|
|
|
22,407
|
|
|
23,977
|
|
|||
DAMI
|
218
|
|
|
—
|
|
|
—
|
|
|||
Franchise
|
1,429
|
|
|
1,599
|
|
|
1,781
|
|
|||
Manufacturing
|
1,482
|
|
|
1,649
|
|
|
2,081
|
|
|||
Other
|
14,805
|
|
|
13,117
|
|
|
17,315
|
|
|||
Total Depreciation and Amortization
|
$
|
1,292,847
|
|
|
$
|
1,018,234
|
|
|
$
|
685,105
|
|
|
|
|
|
|
|
||||||
Interest Expense:
|
|
|
|
|
|
||||||
Sales and Lease Ownership
|
$
|
7,751
|
|
|
$
|
7,834
|
|
|
$
|
7,070
|
|
Progressive
|
21,959
|
|
|
14,992
|
|
|
—
|
|
|||
HomeSmart
|
900
|
|
|
922
|
|
|
916
|
|
|||
DAMI
|
764
|
|
|
—
|
|
|
—
|
|
|||
Franchise
|
—
|
|
|
—
|
|
|
—
|
|
|||
Manufacturing
|
26
|
|
|
50
|
|
|
80
|
|
|||
Other
|
(8,061
|
)
|
|
(4,583
|
)
|
|
(2,453
|
)
|
|||
Total Interest Expense
|
$
|
23,339
|
|
|
$
|
19,215
|
|
|
$
|
5,613
|
|
|
|
|
|
|
|
||||||
Capital Expenditures:
|
|
|
|
|
|
||||||
Sales and Lease Ownership
|
$
|
23,082
|
|
|
$
|
24,135
|
|
|
$
|
30,831
|
|
Progressive
|
8,175
|
|
|
1,625
|
|
|
—
|
|
|||
HomeSmart
|
374
|
|
|
1,020
|
|
|
994
|
|
|||
DAMI
|
40
|
|
|
—
|
|
|
—
|
|
|||
Franchise
|
—
|
|
|
—
|
|
|
—
|
|
|||
Manufacturing
|
387
|
|
|
1,477
|
|
|
1,531
|
|
|||
Other
|
28,499
|
|
|
19,308
|
|
|
24,789
|
|
|||
Total Capital Expenditures
|
$
|
60,557
|
|
|
$
|
47,565
|
|
|
$
|
58,145
|
|
|
|
|
|
|
|
||||||
Revenues From Canadian Operations (included in totals above):
|
|
|
|
|
|
||||||
Sales and Lease Ownership
|
$
|
3,384
|
|
|
$
|
179
|
|
|
$
|
300
|
|
|
|
|
|
|
|
||||||
Assets From Canadian Operations (included in totals above):
|
|
|
|
|
|
||||||
Sales and Lease Ownership
|
$
|
8,900
|
|
|
$
|
776
|
|
|
$
|
1,021
|
|
•
|
Sales and Lease Ownership earnings before income taxes included a
$3.5 million
loss related to a lease termination on a Company aircraft.
|
•
|
Progressive earnings before income taxes included
$3.7 million
of transaction costs related to the
October 15, 2015
DAMI acquisition.
|
•
|
Sales and Lease Ownership earnings before income taxes included
$4.8 million
of restructuring charges related to the Company's strategic decision to close
44
Company-operated stores.
|
•
|
Other category loss before income taxes included
$13.7 million
in financial and advisory costs related to addressing now-resolved strategic matters, including proxy contests,
$4.3 million
of restructuring charges in connection with the store closures noted above,
$9.1 million
of charges associated with the retirements of both the Company's Chief Executive Officer and Chief Operating Officer,
$6.6 million
in transaction costs related to the Progressive acquisition and
$1.2 million
of regulatory income that reduced previously recognized regulatory expense upon the resolution of the regulatory investigation by the California Attorney General.
|
•
|
Other category loss before income taxes included
$28.4 million
related to an accrual for loss contingencies for the then-pending regulatory investigation by the California Attorney General and
$4.9 million
related to retirement expense and a change in vacation policies.
|
•
|
Revenues in the Sales and Lease Ownership and HomeSmart segments are reported on a cash basis for management reporting purposes.
|
•
|
Generally a predetermined amount of each reportable segment’s revenues is charged to the reportable segment as an allocation of corporate overhead.
|
•
|
Accruals related to store closures are not recorded on the reportable segments’ financial statements, but are maintained and controlled by corporate headquarters.
|
•
|
The capitalization and amortization of manufacturing variances are recorded on the consolidated financial statements as part of Cash to Accrual and Other Adjustments and are not allocated to the segment that holds the related lease merchandise.
|
•
|
Advertising expense in the Sales and Lease Ownership and HomeSmart segments is estimated at the beginning of each year and then allocated to the division ratably over time for management reporting purposes. For financial reporting purposes, advertising expense is recognized when the related advertising activities occur. The difference between these two methods is reflected as part of Cash to Accrual and Other Adjustments.
|
•
|
Sales and lease ownership lease merchandise write-offs are recorded using the direct write-off method for management reporting purposes and using the allowance method for financial reporting purposes. The difference between these two methods is reflected as part of Cash to Accrual and Other Adjustments.
|
•
|
Interest is allocated to the Sales and Lease Ownership and HomeSmart segments based a percentage of their revenues. Interest is allocated to the Progressive segment based on a percentage of the outstanding balances of its intercompany borrowings and of the debt incurred when it was acquired.
|
(In Thousands, Except Per Share Data)
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Year Ended December 31, 2015
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
821,814
|
|
|
$
|
769,049
|
|
|
$
|
767,694
|
|
|
$
|
821,199
|
|
Gross Profit *
|
363,478
|
|
|
346,110
|
|
|
331,628
|
|
|
344,144
|
|
||||
Earnings Before Income Taxes
|
77,830
|
|
|
64,354
|
|
|
36,556
|
|
|
34,380
|
|
||||
Net Earnings
|
49,243
|
|
|
40,546
|
|
|
24,194
|
|
|
21,726
|
|
||||
Earnings Per Share
|
.68
|
|
|
.56
|
|
|
.33
|
|
|
.30
|
|
||||
Earnings Per Share Assuming Dilution
|
.68
|
|
|
.56
|
|
|
.33
|
|
|
.30
|
|
||||
Year Ended December 31, 2014
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
585,423
|
|
|
$
|
662,490
|
|
|
$
|
698,418
|
|
|
$
|
748,702
|
|
Gross Profit *
|
292,393
|
|
|
309,385
|
|
|
313,540
|
|
|
320,797
|
|
||||
Earnings Before Income Taxes
|
60,710
|
|
|
13,562
|
|
|
13,199
|
|
|
34,233
|
|
||||
Net Earnings
|
38,339
|
|
|
8,505
|
|
|
9,295
|
|
|
22,094
|
|
||||
Earnings Per Share
|
.53
|
|
|
.12
|
|
|
.13
|
|
|
.30
|
|
||||
Earnings Per Share Assuming Dilution
|
.53
|
|
|
.12
|
|
|
.13
|
|
|
.30
|
|
•
|
The fourth quarter of 2015 included
$2.7 million
of transaction costs related to the
October 15, 2015
DAMI acquisition and a
$3.5 million
loss related to a lease termination on a Company aircraft.
|
•
|
The first quarter of 2014 included an
$872,000
charge for financial advisory and legal costs related to addressing now-resolved strategic matters, including an unsolicited acquisition offer,
two
proxy contests and certain other shareholder proposals and
$803,000
in transaction costs related to the Progressive acquisition.
|
•
|
The second quarter of 2014 included an additional
$12.4 million
charge for the financial advisory and legal costs related to now-resolved strategic matters, an additional
$5.5 million
in transaction costs in connection with the Progressive acquisition and
$2.3 million
in leasehold improvement impairment charges related to the closure of
44
Company-operated stores announced July 15, 2014.
|
•
|
The third quarter of 2014 included an additional
$385,000
charge for financial advisory and legal costs related to now-resolved strategic matters, an additional
$6.9 million
in restructuring charges related to the store closures noted above,
$9.1 million
due to the retirements of both the Company's Chief Executive Officer and Chief Operating Officer, an additional
$371,000
in transaction costs related to the acquisition of Progressive and regulatory income of
$1.2 million
that reduced previously recognized regulatory expense upon the resolution of the regulatory investigation by the California Attorney General.
|
•
|
Improvements to our quality assurance program were designed and put in place to verify that the potential financial statement effect of all program changes is thoroughly considered when our lease management software is updated;
|
•
|
Additional resources were allocated to ensure that our quality assurance procedures are adequately designed and are operating effectively; and
|
•
|
Additional review controls were put in place to enhance our existing control framework and ensure that errors of this nature are detected timely.
|
Consolidated Balance Sheets—December 31, 2015 and 2014
|
Consolidated Statements of Earnings—Years ended December 31, 2015, 2014 and 2013
|
Consolidated Statement of Comprehensive Income—Years ended December 31, 2015, 2014 and 2013
|
Consolidated Statements of Shareholders’ Equity—Years ended December 31, 2015, 2014 and 2013
|
Consolidated Statements of Cash Flows—Years ended December 31, 2015, 2014 and 2013
|
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
|
10.3
|
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).
|
10.4
|
Amendment No. 3 to Note Purchase Agreement by and among Aaron's, Inc. and certain other obligors and the purchasers, dated as of April 14, 2014 and Form of Senior Note (incorporated by reference to Exhibit 10.4 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 filed with the SEC on August 8, 2014).
|
10.5
|
Amendment No. 4 to Note Purchase Agreement by and among Aaron's, Inc. and certain other obligors and the purchasers, dated as of December 9, 2014 (incorporated by reference to Exhibit 10.7 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 2, 2015).
|
10.6
|
Amendment No. 5 to Note Purchase Agreement by and among Aaron’s Inc. and certain other obligors and the purchasers, dated as of September 21, 2015 (incorporated by reference to Exhibit 10.5 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 filed with the SEC on November 9, 2015).
|
10.7
|
Note Purchase Agreement by and among Aaron's, Inc. and certain other obligors and the purchasers dated as of April 14, 2014 with respect to $225 million in aggregate principal amount of the Company's 4.75% Series A Senior Notes due April 14, 2021 and Form of Senior Note (incorporated by reference to Exhibit 10.2 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 filed with the SEC on August 8, 2014).
|
10.8
|
Amendment No. 1 to Note Purchase Agreement by and among Aaron's, Inc. and certain other obligors and the purchasers dated as of December 9, 2014 with respect to $225 million in aggregate principal amount of the Company's 4.75% Series A Senior Notes Due April 14, 2021 and Form of Senior Note (incorporated by reference to Exhibit 10.9 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 2, 2015).
|
10.9
|
Amendment No. 2 to Note Purchase Agreement by and among Aaron’s Inc. and certain other obligors and the purchasers dated as of September 21, 2015 with respect to $225 million in aggregate principal amount of the Company’s 4.75% Series A Senior Notes due April 14, 2021 and Form of Senior Note (incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 filed with the SEC on November 9, 2015).
|
10.10
|
Note Purchase Agreement by and among Aaron's, Inc. and certain other obligors and the purchasers dated as of April 14, 2014 with respect to $75 million in aggregate principal amount of the Company's 4.75% Series B Senior Notes due April 14, 2021 and Form of Senior Note (incorporated by reference to Exhibit 10.3 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 filed with the SEC on August 8, 2014).
|
10.11
|
Amendment No. 1 to Note Purchase Agreement by and among Aaron's, Inc. and certain other obligors and purchasers dated as of December 9, 2014 with respect to $75 million in aggregate principal amount of the Company's 4.75% Series B Senior Notes due April 14, 2021 and Form of Senior Notes (incorporated by reference to Exhibit 10.11 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 2, 2015).
|
10.12
|
Amendment No. 2 to Note Purchase Agreement by and among Aaron’s Inc. and certain other obligors and purchasers dated as of September 21, 2015 with respect to $75 million in aggregate principal amount of the Company’s 4.75% Series B Senior Notes due April 14, 2021 and Form of Senior Note (incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 filed with the SEC on November 9, 2015).
|
10.13
|
Amended and Restated Revolving Credit and Term Loan Agreement, by and among Aaron's, Inc., as borrower, the several banks and other financial institutions from time to time party thereto and SunTrust Bank as administrative agent, dated as of April 14, 2014 (incorporated by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 filed with the SEC on August 8, 2014).
|
10.14
|
First Amendment to Amended and Restated Revolving Credit and Term Loan Agreement, by and among Aaron's, Inc., as borrower, the several banks and other financial institutions from time to time party thereto and SunTrust Bank as administrative agent, dated December 9, 2014 (incorporated by reference to Exhibit 10.19 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 2, 2015).
|
10.15
|
Second Amendment to Amended and Restated Revolving Credit and Term Loan Agreement by and among Aaron’s, Inc., as borrower, the several banks and other financial institutions from time to time party thereto and SunTrust Bank as administrative agent, dated September 21, 2015 (incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 filed with the SEC on November 9, 2015).
|
10.16
|
Third 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 lending institutions party thereto as participants, dated as of April 14, 2014 (incorporated by reference to Exhibit 10.5 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 filed with the SEC on August 8, 2014).
|
10.17
|
First Amendment to the Third Amended and Restated Loan Facility Agreement and Guaranty among Aaron's, Inc. as sponsor, SunTrust Bank, as servicer, and each of the other lending institutions party thereto as participants, dated December 9, 2014 (incorporated by reference to Exhibit 10.29 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 2, 2015).
|
10.18
|
Second Amendment to the Third Amended and Restated Loan Facility Agreement among Aaron’s Inc. as sponsor, SunTrust Bank, as servicer, and each of the other lending institutions party thereto as participants, dated September 21, 2015 (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 filed with the SEC on November 9, 2015).
|
10.19
|
Third Amendment to the Third Amended and Restated Loan Facility Agreement and Guaranty among Aaron's, Inc. as sponsor, SunTrust Bank, as servicer, and each of the other lending institutions party thereto as participants, dated December 4, 2015 (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed with the SEC on December 10, 2015).
|
10.20
|
Loan and Security Agreement by and among Dent-A-Med Inc., Dent-A-Med Receivables Corporation, HC Recovery, Inc. and Wells Fargo Preferred Capital, Inc., 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 October 21, 2015).
|
10.21
|
First Amendment to Loan and Security Agreement by and among Dent-A-Med Inc., Dent-A-Med Receivables Corporation, HC Recovery, Inc. and Wells Fargo Preferred Capital, Inc., dated as of August 3, 2011 (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on October 21, 2015).
|
10.22
|
Second Amendment to Loan and Security Agreement by and among Dent-A-Med Inc., Dent-A-Med Receivables Corporation, HC Recovery, Inc. and Wells Fargo Bank, N.A, dated as of July 26, 2012 (incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on October 21, 2015).
|
10.23
|
Third Amendment to Loan and Security Agreement by and among Dent-A-Med Inc., HC Recovery, Inc. and Wells Fargo Bank, N.A, dated as of June 6, 2013 (incorporated by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K filed with the SEC on October 21, 2015).
|
10.24
|
Fourth Amendment to Loan and Security Agreement by and among Dent-A-Med Inc., HC Recovery, Inc. and Wells Fargo Bank, N.A, dated as of November 7, 2013 (incorporated by reference to Exhibit 10.5 of the Registrant’s Current Report on Form 8-K filed with the SEC on October 21, 2015).
|
10.25
|
Fifth Amendment to Loan and Security Agreement by and among Dent-A-Med Inc., HC Recovery, Inc. and Wells Fargo Bank, N.A, dated as of March 31, 2014 (incorporated by reference to Exhibit 10.6 of the Registrant’s Current Report on Form 8-K filed with the SEC on October 21, 2015).
|
10.26
|
Sixth Amendment to Loan and Security Agreement by and among Dent-A-Med Inc., HC Recovery, Inc. and Wells Fargo Bank, N.A, dated as of October 24, 2014 (incorporated by reference to Exhibit 10.7 of the Registrant’s Current Report on Form 8-K filed with the SEC on October 21, 2015).
|
10.27
|
Seventh Amendment to Loan and Security Agreement by and among Dent-A-Med Inc., HC Recovery, Inc. and Wells Fargo Bank, N.A, dated as of February 3, 2015 (incorporated by reference to Exhibit 10.8 of the Registrant’s Current Report on Form 8-K filed with the SEC on October 21, 2015).
|
10.28
|
Eighth Amendment to Loan and Security Agreement by and among Dent-A-Med Inc., HC Recovery, Inc. and Wells Fargo Bank, N.A, dated as of September 21, 2015 (incorporated by reference to Exhibit 10.9 of the Registrant’s Current Report on Form 8-K filed with the SEC on October 21, 2015).
|
10.29*
|
Ninth Amendment to the Loan and Security Agreement by and among Dent-A-Med, Inc., HC Recovery, Inc. and Wells Fargo Bank, N.A, dated as of December 29, 2015.
|
10.30*
|
Tenth Amendment to the Loan and Security Agreement by and among Dent-A-Med, Inc., HC Recovery, Inc. and Wells Fargo Bank, N.A, dated as of February 23, 2016.
|
10.31
|
Agreement, dated as of May 13, 2014, by and among Aaron's, Inc., Vintage Capital Management, L.L.C., Kahn Capital Management, L.L.C., Brian R. Kahn, and Matthew E. Avril (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed with the SEC on May 14, 2014).
|
|
|
|
Management Contracts and Compensatory Plans or Arrangements
|
10.32
|
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).
|
10.33
|
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).
|
10.34
|
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).
|
10.35
|
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).
|
10.36
|
Amendment No. 4 to the Aaron's, Inc. Employees Retirement Plan and Trust, as amended and restated, dated as of April 23, 2014 (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
|
10.37
|
Amendment No. 5 to the Aaron's, Inc. Employees Retirement Plan and Trust, as amended and restated, dated as of November 12, 2014 (incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
|
10.38
|
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).
|
10.39
|
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 Form 10-Q for the quarter ended March 31, 2012 filed with the SEC on May 8, 2012).
|
10.40
|
Amendment to Form of Restricted Stock Unit Award Agreement for awards made prior to February 2014 (incorporated by reference to Exhibit 10.11 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
|
10.41
|
Form of Restricted Stock Unit Award for awards made in or after February 2014 (incorporated by reference to Exhibit 10.29 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC on February 24, 2013).
|
10.42
|
Form of Option Award Agreement for awards made prior to February 2014 (incorporated by reference to Exhibit 10.28 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC on February 24, 2013).
|
10.43
|
Form of Option Award Agreement for awards made in or after February 2014(incorporated by reference to Exhibit 10.30 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC on February 24, 2013).
|
10.44
|
Amendment to Form of Option Award Agreement for awards made in or after February 2014 (incorporated by reference to Exhibit 10.10 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
|
10.45
|
Form of Performance Share Award Agreement for awards made in or after February 2014 (incorporated by reference to Exhibit 10.31 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC on February 24, 2013).
|
10.46
|
Amendment to Form of Performance Share Award Agreement for awards made in or after February 2014 (incorporated by reference to Exhibit 10.12 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
|
10.47
|
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).
|
10.48
|
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).
|
10.49
|
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).
|
10.50
|
Aaron’s, Inc. 2015 Equity and Incentive Plan (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement filed on April 7, 2015).
|
10.51
|
Form of Employee Stock Option Award Agreement under the Aaron’s, Inc. 2015 Equity and Incentive Plan (incorporated by reference to Exhibit 99.2 of the Company’s Registration Statement on Form S-8 (333-204014) filed with the SEC on May 8, 2015).
|
10.52
|
Form of Executive Performance Share Award Agreement under the Aaron’s, Inc. 2015 Equity and Incentive Plan (incorporated by reference to Exhibit 99.3 of the Company’s Registration Statement on Form S-8 (333-204014) filed with the SEC on May 8, 2015).
|
10.53
|
Amendment to Form of Executive Performance Share Award Agreement under the Aaron's, Inc. 2015 Equity and Incentive Plan (incorporated by reference to Exhibit 10.6 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
|
10.54
|
Form of Executive Officer Restricted Stock Unit Award Agreement under the Aaron’s, Inc. 2015 Equity and Incentive Plan (incorporated by reference to Exhibit 99.4 of the Company’s Registration Statement on Form S-8 (333-204014) filed with the SEC on May 8, 2015).
|
10.55
|
Amendment to Form of Executive Officer Restricted Stock Unit Award Agreement under the Aaron's, Inc. 2015 Equity and Incentive Plan (incorporated by reference to Exhibit 10.8 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
|
|
|
|
AARON’S, INC.
|
||
|
|
|
By:
|
|
/s/ STEVEN A. MICHAELS
|
|
|
Steven A. Michaels
|
|
|
Chief Financial Officer and President of Strategic Operations
|
|
|
|
|
|
SIGNATURE
|
|
|
|
TITLE
|
/s/ JOHN W. ROBINSON, III
John W. Robinson III
|
|
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
/s/ STEVEN A. MICHAELS
Steven A. Michaels
|
|
|
|
Chief Financial Officer and President of Strategic Operations (Principal Financial Officer)
|
/s/ ROBERT P. SINCLAIR, JR.
Robert P. Sinclair, Jr.
|
|
|
|
Vice President, Corporate Controller
(Principal Accounting Officer)
|
/s/ MATTHEW E. AVRIL
Matthew E. Avril
|
|
|
|
Director
|
/s/ LEO BENATAR
Leo Benatar
|
|
|
|
Director
|
/s/ KATHY T. BETTY
Kathy T. Betty
|
|
|
|
Director
|
/s/ DOUGLAS C. CURLING
Douglas C. Curling
|
|
|
|
Director
|
/s/ CYNTHIA N. DAY
Cynthia N. Day
|
|
|
|
Director
|
/s/ CURTIS L. DOMAN
Curtis L. Doman
|
|
|
|
Director
|
/s/ HUBERT L. HARRIS, JR.
Hubert L. Harris, Jr.
|
|
|
|
Director
|
/s/ EUGENE H. LOCKHART
Eugene H. Lockhart
|
|
|
|
Director
|
/s/ RAY M. ROBINSON
Ray M. Robinson
|
|
|
|
Director
|
BORROWERS:
|
DENT-A-MED INC.
By: /s/ Clifton C. Scogin_______________
Name: Clifton C. Scogin__________________
Title: Executive Vice President____________
|
|
HC RECOVERY, INC.
By: /s/ Thomas W. Center_________________
Name: Thomas W. Center____________________
Title: President and Chief Executive Officer _____
|
AGENT AND LENDER:
|
WELLS FARGO BANK, N.A.
By: /s/ William M. Laird________________
Name: William M. Laird___________________
Title: Senior Vice President________________
|
BORROWERS:
|
DENT-A-MED INC.
By: /s/
Clifton C. Scogin_________________
Name:
Clifton C. Scogin_________________
Title:
Executive Vice President____________
|
|
HC RECOVERY, INC.
By: /s/
Thomas W. Center_________________
Name:
Thomas W. Center_________________
Title:
President and Chief Executive Officer __
|
AGENT AND LENDER:
|
WELLS FARGO BANK, N.A.
By: /s/
William M. Laird__________________
Name:
William M. Laird__________________
Title:
Senior Vice President________________
|
AARON’S, INC.
|
|
By: /s/
Gilbert L. Danielson___________
|
Title: Executive Vice President and Chief Financial Officer
|
Executive
|
Amount of Severance Pay under Section 5.2(a)
|
Ryan Woodley
|
24 months of Annual Salary
+ 24 months of Target Bonus |
Curtis Doman
Blake Wakefield
|
18 months of Annual Salary
+ 18 months of Target Bonus |
Tanner Barney
Kelee Delaney
Marvin Fertress
Brian J. Garner
Kurtis Hilton
Michael Jeffcoat
Robert M. Johns
Frank Laura
Branden Neish
Ryan Ray
Nathan C. Roe
Trevor Thatcher
|
12 months of Annual Salary
+ 12 months of Target Bonus |
NAME
|
|
STATE OR COUNTRY OF INCORPORATION
|
Aaron Investment Company
|
|
Delaware
|
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
|
Woodhaven Furniture Industries, LLC
|
|
Georgia
|
99LTO, LLC
|
|
Georgia
|
Dent-A-Med, Inc.
|
|
Oklahoma
|
HC Recovery, Inc.
|
|
Oklahoma
|
Progressive Finance Holdings, LLC
|
|
Delaware
|
Prog Leasing, LLC
|
|
Delaware
|
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 29, 2016
|
|
/s/ John W. Robinson, III
|
|
|
John W. Robinson, III
|
|
|
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
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b)
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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.
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Date: February 29, 2016
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/s/ Steven A. Michaels
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Steven A. Michaels
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Chief Financial Officer and President of Strategic Operations
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(1)
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The Annual Report on Form 10-K of the Company for the annual period ended
December 31, 2015
(the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: February 29, 2016
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/s/ John W. Robinson, III
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John W. Robinson, III
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Chief Executive Officer
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(1)
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The Annual Report on Form 10-K of the Company for the annual period ended
December 31, 2015
(the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: February 29, 2016
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/s/ Steven A. Michaels
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Steven A. Michaels
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Chief Financial Officer and President of Strategic Operations
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