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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.)
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400 Galleria Parkway SE, Suite 300
Atlanta, Georgia |
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30339-3194
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
|
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Name of each exchange on which registered
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Common Stock, $0.50 Par Value
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|
New York Stock Exchange
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Large Accelerated Filer
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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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¨
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•
|
Improve Aaron's store profitability
– We remain committed to increasing profits through improved marketing and customer acquisition strategies, improved collections and merchandise loss controls, optimization of product mix, increases in customer retention, inventory reduction, cost efficiency initiatives and closing underperforming Aaron's stores. In addition, our Aaron’s Business is investing in improving its analytical capabilities to optimize pricing, promotion, and product mix, which is expected to enhance margins and drive lease volume.
|
•
|
Accelerate our omnichannel platform
– We believe Aarons.com represents an opportunity to provide more options and shopping convenience 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.
|
•
|
Strengthen relationships of Progressive and DAMI's current retail partners
– Our Progressive and DAMI businesses have benefited from long-term, mutually beneficial relationships with our existing retailer base. Our ability to maintain these relationships and address the changing needs of these retailers is critical to the long-term growth strategy of our business.
|
•
|
Focus on converting existing pipeline into Progressive retail partners
– Our Progressive business segment is continuously focused on establishing new relationships with retailers and identifying solutions that address their business needs. We believe these new relationships are fundamental to continued revenue growth for Progressive.
|
•
|
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 behave in an ethical manner and to comply with all laws and regulations governing our company’s behavior.
|
•
|
Enhanced product for retail partners
- DAMI enhances 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 partners, 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 with merchant partners that provide customer services offer an additional channel for longer-term growth.
|
|
Year Ended December 31,
|
|||||||
Merchandise Category
|
2016
|
|
2015
|
|
2014
|
|||
Furniture
|
42
|
%
|
|
42
|
%
|
|
39
|
%
|
Electronics
|
26
|
%
|
|
25
|
%
|
|
26
|
%
|
Appliances
|
24
|
%
|
|
24
|
%
|
|
24
|
%
|
Computers
|
6
|
%
|
|
7
|
%
|
|
9
|
%
|
Other
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
|
Year Ended December 31,
|
|||||||
Retail Partner Category
|
2016
|
|
2015
|
|
2014
|
|||
Furniture
|
57
|
%
|
|
53
|
%
|
|
44
|
%
|
Mattress
|
19
|
%
|
|
20
|
%
|
|
24
|
%
|
Automobile electronics and accessories
|
12
|
%
|
|
12
|
%
|
|
13
|
%
|
Mobile
|
5
|
%
|
|
8
|
%
|
|
12
|
%
|
Jewelry
|
4
|
%
|
|
4
|
%
|
|
4
|
%
|
Other
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
|
Year Ended December 31,
|
||||
Merchant Partner Category
|
2016
|
|
2015
|
||
Medical
|
48
|
%
|
|
53
|
%
|
Retail
|
20
|
%
|
|
22
|
%
|
Furniture
|
22
|
%
|
|
14
|
%
|
Other
|
10
|
%
|
|
11
|
%
|
•
|
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 stores average
8,000
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.
|
•
|
Flexible payment methods
-
We offer our customers the opportunity to pay by cash, check, ACH, debit card or credit card. Our Aaron’s stores currently receive approximately
68%
of their payment volume (in dollars) from customers by check, debit card or credit card.
|
•
|
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, including, for example, explaining the nature of the lease-to-own transaction when asked to do so by the customer, and that the transaction is with Progressive and not with the third-party retailer;
|
•
|
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 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 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, including the risk that regulators may mistakenly treat virtual lease-to-own transactions as some other type of transaction that would face different and more burdensome and complex regulations;
|
•
|
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 adopt new regulations or legislation (or existing laws and regulations may be interpreted in a manner) that negatively impact Progressive’s ability to offer virtual lease-to-own programs through third party retail partners;
|
•
|
potential that regulators may attempt to force the application of laws and regulations on Progressive's virtual lease-to-own business in inconsistent and unpredictable ways that could increase the compliance-related costs incurred by Progressive, and negatively impact Progressive's financial and operational performance; 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.
|
•
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improve same store revenues and profitability in stores that may be maturing;
|
•
|
drive recurring cost savings to recapture margin;
|
•
|
identify and close underperforming stores, and transition the customers of those stores to other stores that remain open;
|
•
|
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;
|
•
|
economic challenges faced by our customer base;
|
•
|
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 business, including franchisees, can assert over their own respective employees) for many important business functions, from advertising through assistance with finance applications;
|
•
|
reliance on two bank partners to issue DAMI’s HELPcard® and other credit products. The banks' regulators could at any time limit or otherwise modify the banks' ability to continue their relationships with DAMI and any significant interruption of those relationships would result in DAMI being unable to use exported rates or acquire new receivables without moving to a costly and inefficient state-by-state model, and provide other credit products. It is possible that a regulatory position or action taken with respect to DAMI’s issuing banks might result in the banks' 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 agreements with its issuing bank partners have scheduled expiration dates. Although those expiration dates are several months apart, if DAMI is unable to extend or execute new agreements with both of its issuing banks upon the expiration of its current agreements, or if its existing agreements both were 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 legal and regulatory risks than those applicable to Aaron’s and Progressive's sales and lease ownership businesses, including risks arising from the Truth in Lending Act, state credit laws and the offering of open-end credit, the potential that regulators may target DAMI’s operating model and the interest rates it charges, and the risk of unfavorable court decisions relating to the exporting of interest rates and state usury laws.
|
•
|
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
|
Manufacturing—Furniture Parts Warehouse – Leased
|
111,000
|
|
Coolidge, Georgia
|
Manufacturing—Furniture Manufacturing – Owned
|
81,000
|
|
Coolidge, Georgia
|
Manufacturing—Furniture Manufacturing – Owned
|
48,000
|
|
Coolidge, Georgia
|
Manufacturing—Furniture Manufacturing – Owned
|
41,000
|
|
Coolidge, Georgia
|
Manufacturing—Administration and Showroom – Owned
|
10,000
|
|
Lewisberry, Pennsylvania
|
Manufacturing—Bedding Manufacturing – Leased
|
25,000
|
|
Fairburn, Georgia
|
Manufacturing—Bedding Manufacturing – Leased
|
57,000
|
|
Sugarland, Texas
|
Manufacturing—Bedding Manufacturing – Owned
|
23,000
|
|
Auburndale, Florida
|
Manufacturing—Bedding Manufacturing – Leased
|
20,000
|
|
Kansas City, Kansas
|
Manufacturing—Bedding Manufacturing – Leased
|
13,000
|
|
Phoenix, Arizona
|
Manufacturing—Bedding Manufacturing – Leased
|
24,000
|
|
Plainfield, Indiana
|
Manufacturing—Bedding Manufacturing – Leased
|
40,000
|
|
Cheswick, Pennsylvania
1
|
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
|
115,000
|
|
Sugarland, Texas
|
Sales and Lease Ownership—Fulfillment Center – Owned
|
135,000
|
|
Huntersville, North Carolina
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
206,000
|
|
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
|
107,000
|
|
Magnolia, Mississippi
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
125,000
|
|
Plainfield, Indiana
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
156,000
|
|
Portland, Oregon
|
Sales and Lease Ownership—Fulfillment Center – Leased
|
98,000
|
|
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 and Lease Ownership—Service Center – Leased
|
7,000
|
|
Belcamp, Maryland
|
Sales and Lease Ownership—Service Center – Leased
|
5,000
|
|
Cheswick, Pennsylvania
|
Sales and Lease Ownership—Service Center – Leased
|
10,000
|
|
Fairburn, Georgia
|
Sales and Lease Ownership—Service Center – Leased
|
10,000
|
|
Grand Prairie, Texas
|
Sales and Lease Ownership—Service Center – Leased
|
7,000
|
|
Houston, Texas
|
Sales and Lease Ownership—Service Center – Leased
|
20,000
|
|
Huntersville, North Carolina
|
Sales and Lease Ownership—Service Center – Leased
|
18,000
|
|
Kansas City, Kansas
|
Sales and Lease Ownership—Service Center – Leased
|
8,000
|
|
Obetz, Ohio
|
Sales and Lease Ownership—Service Center – Leased
|
7,000
|
|
Oklahoma City, Oklahoma
|
Sales and Lease Ownership—Service Center – Leased
|
10,000
|
|
Phoenix, Arizona
|
Sales and Lease Ownership—Service Center – Leased
|
7,000
|
|
Plainfield, Indiana
|
Sales and Lease Ownership—Service Center – Leased
|
13,000
|
|
Citrus Heights, California
|
Sales and Lease Ownership—Service Center – Leased
|
8,000
|
|
Ridgeland, Mississippi
|
Sales and Lease Ownership—Service Center – Leased
|
10,000
|
|
South Madison, Tennessee
|
Sales and Lease Ownership—Service Center – Leased
|
23,000
|
|
Queens, New York
|
Sales and Lease Ownership—Warehouse – Leased
|
32,000
|
|
Draper, Utah
|
Progressive—Corporate Management/Call Center – Leased
|
148,000
|
|
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, 2016
|
|
|
|
|
|
||||||
First Quarter
|
$
|
25.25
|
|
|
$
|
20.24
|
|
|
$
|
0.0250
|
|
Second Quarter
|
27.72
|
|
|
20.51
|
|
|
0.0250
|
|
|||
Third Quarter
|
25.90
|
|
|
21.50
|
|
|
0.0250
|
|
|||
Fourth Quarter
|
34.22
|
|
|
22.37
|
|
|
0.0275
|
|
Common Stock
|
High
|
|
Low
|
|
Cash
Dividends
Per Share
|
||||||
Year Ended December 31, 2015
|
|
|
|
|
|
||||||
First Quarter
|
$
|
33.71
|
|
|
$
|
27.51
|
|
|
$
|
0.0230
|
|
Second Quarter
|
36.98
|
|
|
27.40
|
|
|
0.0230
|
|
|||
Third Quarter
|
40.06
|
|
|
32.36
|
|
|
0.0230
|
|
|||
Fourth Quarter
|
40.80
|
|
|
21.32
|
|
|
0.0250
|
|
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, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
9,123,721
|
|
November 1 through November 30, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
9,123,721
|
|
December 1 through December 31, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
9,123,721
|
|
Total
|
—
|
|
|
|
|
—
|
|
|
|
December 31,
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
||||||||||||
Aaron's, Inc.
|
$
|
100.00
|
|
$
|
106.23
|
|
$
|
110.72
|
|
$
|
115.47
|
|
$
|
84.84
|
|
$
|
121.68
|
|
S&P Midcap 400
|
100.00
|
|
117.88
|
|
157.37
|
|
172.74
|
|
168.98
|
|
204.03
|
|
||||||
S&P 400 Retailing Index
|
100.00
|
|
112.24
|
|
136.46
|
|
145.32
|
|
124.57
|
|
130.35
|
|
|
Year Ended December 31,
|
||||||||||||||||||
(Dollar Amounts in Thousands, Except Per Share Data)
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
OPERATING RESULTS
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Lease Revenues and Fees
|
$
|
2,780,824
|
|
|
$
|
2,684,184
|
|
|
$
|
2,221,574
|
|
|
$
|
1,748,699
|
|
|
$
|
1,676,391
|
|
Retail Sales
|
29,418
|
|
|
32,872
|
|
|
38,360
|
|
|
40,876
|
|
|
38,455
|
|
|||||
Non-Retail Sales
|
309,446
|
|
|
390,137
|
|
|
363,355
|
|
|
371,292
|
|
|
425,915
|
|
|||||
Franchise Royalties and Fees
|
58,350
|
|
|
63,507
|
|
|
65,902
|
|
|
68,575
|
|
|
66,655
|
|
|||||
Interest and Fees on Loans Receivable
|
24,080
|
|
|
2,845
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
5,598
|
|
|
6,211
|
|
|
5,842
|
|
|
5,189
|
|
|
5,411
|
|
|||||
|
3,207,716
|
|
|
3,179,756
|
|
|
2,695,033
|
|
|
2,234,631
|
|
|
2,212,827
|
|
|||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation of Lease Merchandise
|
1,304,295
|
|
|
1,212,644
|
|
|
932,634
|
|
|
628,089
|
|
|
601,552
|
|
|||||
Retail Cost of Sales
|
18,580
|
|
|
21,040
|
|
|
24,541
|
|
|
24,318
|
|
|
21,608
|
|
|||||
Non-Retail Cost of Sales
|
276,608
|
|
|
351,777
|
|
|
330,057
|
|
|
337,581
|
|
|
387,362
|
|
|||||
Operating Expenses
|
1,351,785
|
|
|
1,357,030
|
|
|
1,231,801
|
|
|
1,022,684
|
|
|
952,617
|
|
|||||
Financial Advisory and Legal Costs
|
—
|
|
|
—
|
|
|
13,661
|
|
|
—
|
|
|
—
|
|
|||||
Restructuring Expenses
|
20,218
|
|
|
—
|
|
|
9,140
|
|
|
—
|
|
|
—
|
|
|||||
Retirement and Vacation Charges
|
—
|
|
|
—
|
|
|
9,094
|
|
|
4,917
|
|
|
10,394
|
|
|||||
Progressive-Related Transaction Costs
|
—
|
|
|
—
|
|
|
6,638
|
|
|
—
|
|
|
—
|
|
|||||
Legal and Regulatory (Income) Expense
|
—
|
|
|
—
|
|
|
(1,200
|
)
|
|
28,400
|
|
|
(35,500
|
)
|
|||||
Other Operating (Income) Expense, Net
|
(6,446
|
)
|
|
1,324
|
|
|
(1,176
|
)
|
|
1,584
|
|
|
(2,235
|
)
|
|||||
|
2,965,040
|
|
|
2,943,815
|
|
|
2,555,190
|
|
|
2,047,573
|
|
|
1,935,798
|
|
|||||
Operating Profit
|
242,676
|
|
|
235,941
|
|
|
139,843
|
|
|
187,058
|
|
|
277,029
|
|
|||||
Interest Income
|
2,699
|
|
|
2,185
|
|
|
2,921
|
|
|
2,998
|
|
|
3,541
|
|
|||||
Interest Expense
|
(23,390
|
)
|
|
(23,339
|
)
|
|
(19,215
|
)
|
|
(5,613
|
)
|
|
(6,392
|
)
|
|||||
Other Non-Operating (Expense) Income, Net
|
(3,563
|
)
|
|
(1,667
|
)
|
|
(1,845
|
)
|
|
517
|
|
|
2,677
|
|
|||||
Earnings Before Income Taxes
|
218,422
|
|
|
213,120
|
|
|
121,704
|
|
|
184,960
|
|
|
276,855
|
|
|||||
Income Taxes
|
79,139
|
|
|
77,411
|
|
|
43,471
|
|
|
64,294
|
|
|
103,812
|
|
|||||
Net Earnings
|
$
|
139,283
|
|
|
$
|
135,709
|
|
|
$
|
78,233
|
|
|
$
|
120,666
|
|
|
$
|
173,043
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings Per Share
|
$
|
1.93
|
|
|
$
|
1.87
|
|
|
$
|
1.08
|
|
|
$
|
1.59
|
|
|
$
|
2.28
|
|
Earnings Per Share Assuming Dilution
|
1.91
|
|
|
1.86
|
|
|
1.08
|
|
|
1.58
|
|
|
2.25
|
|
|||||
Dividends Per Share
|
0.1025
|
|
|
0.0940
|
|
|
0.0860
|
|
|
0.0720
|
|
|
0.0620
|
|
|||||
FINANCIAL POSITION
|
|
|
|
|
|
|
|
|
|
||||||||||
Lease Merchandise, Net
|
$
|
999,381
|
|
|
$
|
1,138,938
|
|
|
$
|
1,087,032
|
|
|
$
|
869,725
|
|
|
$
|
964,067
|
|
Property, Plant and Equipment, Net
|
211,271
|
|
|
225,836
|
|
|
219,417
|
|
|
231,293
|
|
|
230,598
|
|
|||||
Total Assets
|
2,615,736
|
|
|
2,698,488
|
|
|
2,456,844
|
|
|
1,827,176
|
|
|
1,812,929
|
|
|||||
Debt
|
497,829
|
|
|
606,746
|
|
|
606,082
|
|
|
142,704
|
|
|
141,528
|
|
|||||
Shareholders’ Equity
|
1,481,598
|
|
|
1,366,618
|
|
|
1,223,521
|
|
|
1,139,963
|
|
|
1,136,126
|
|
|||||
AT YEAR END (unaudited)
|
|
|
|
|
|
|
|
|
|
||||||||||
Stores Open:
|
|
|
|
|
|
|
|
|
|
||||||||||
Company-operated
|
1,165
|
|
|
1,305
|
|
|
1,326
|
|
|
1,370
|
|
|
1,324
|
|
|||||
Franchised
|
699
|
|
|
734
|
|
|
782
|
|
|
781
|
|
|
749
|
|
|||||
Lease Agreements in Effect
|
2,104,700
|
|
|
2,164,200
|
|
|
2,111,800
|
|
|
1,751,000
|
|
|
1,724,000
|
|
|||||
Progressive Active Doors
1
|
17,963
|
|
|
13,248
|
|
|
12,307
|
|
|
—
|
|
|
—
|
|
|||||
Number of Employees
|
11,500
|
|
|
12,700
|
|
|
12,400
|
|
|
12,600
|
|
|
11,900
|
|
•
|
Improve Aaron's store profitability;
|
•
|
Accelerate our omnichannel platform;
|
•
|
Strengthen relationships of Progressive and DAMI's current retail partners;
|
•
|
Focus on converting existing pipeline into Progressive retail partners; and
|
•
|
Champion compliance.
|
•
|
The Company reported record revenues of
$3.2 billion
in 2016 and its net earnings before income taxes increased to
$218.4 million
compared to
$213.1 million
in 2015. The Company's net earnings were
$139.3 million
versus
$135.7 million
for 2015 and its diluted earnings per share were
$1.91
compared to
$1.86
for 2015.
|
•
|
The Company generated cash from operating activities of
$465.4 million
compared to
$166.8 million
in 2015 and ended 2016 with
$308.6 million
in cash and
$225.0 million
available on our revolving credit facility. In addition, the Company returned nearly $42 million to shareholders in 2016 through share repurchases and cash dividends.
|
•
|
Progressive achieved record revenues of
$1.2 billion
in 2016, an
increase
of
17.9%
over
2015
. Progressive's revenue growth is due to a
35.6%
increase in active doors, which contributed to a
13.4%
increase in invoice volume. Progressive increased its earnings before income taxes to
$104.7 million
, compared to
$54.5 million
in 2015, due to its revenue growth and favorable lease portfolio performance in 2016.
|
•
|
Our Aaron's sales and lease ownership revenues were
$1.9 billion
in 2016, a
decrease
of
7.3%
compared to 2015. The decline is primarily the result of a
3.4%
decrease in same store sales and the net reduction of
58
Company-operated Aaron's stores during 2016, as we began implementing our initiative to identify and close underperforming stores, and consolidating their customer accounts into other stores, to improve profitability and right-size our footprint in many markets. The Company also announced plans to close or merge approximately 70 additional Aaron's stores in the second quarter of 2017. Earnings before income taxes for the Aaron's sales and lease ownership segment decreased to
$127.3 million
for 2016, compared to
$163.0 million
for 2015, primarily due to the decrease in revenue and incurring
$16.6 million
in restructuring charges related to the store closing actions.
|
|
2016
|
|
2015
|
|
2014
1
|
|||
Company-operated Aaron's Sales and Lease Ownership stores
|
|
|
|
|
|
|||
Company-operated Aaron's Sales and Lease Ownership stores open at January 1,
|
1,223
|
|
|
1,243
|
|
|
1,262
|
|
Opened
|
—
|
|
|
7
|
|
|
30
|
|
Added through acquisition
|
16
|
|
|
25
|
|
|
9
|
|
Closed, sold or merged
|
(74
|
)
|
|
(52
|
)
|
|
(58
|
)
|
Company-operated Aaron's Sales and Lease Ownership stores open at December 31,
|
1,165
|
|
|
1,223
|
|
|
1,243
|
|
|
|
|
|
|
|
|||
Franchised stores
|
|
|
|
|
|
|||
Franchised stores open at January 1,
|
734
|
|
|
782
|
|
|
781
|
|
Opened
|
1
|
|
|
10
|
|
|
23
|
|
Purchased from the Company
|
—
|
|
|
16
|
|
|
6
|
|
Purchased by the Company
|
(16
|
)
|
|
(25
|
)
|
|
(9
|
)
|
Closed, sold or merged
|
(20
|
)
|
|
(49
|
)
|
|
(19
|
)
|
Franchised stores open at December 31,
|
699
|
|
|
734
|
|
|
782
|
|
|
|
|
|
|
|
|||
Company-operated HomeSmart stores
2
|
|
|
|
|
|
|||
Company-operated HomeSmart stores open at January 1,
|
82
|
|
|
83
|
|
|
81
|
|
Opened
|
—
|
|
|
—
|
|
|
3
|
|
Closed, sold or merged
|
(82
|
)
|
|
(1
|
)
|
|
(1
|
)
|
Company-operated HomeSmart stores open at December 31,
|
—
|
|
|
82
|
|
|
83
|
|
Active Doors at December 31 (Unaudited)
|
2016
|
|
2015
|
|
2014
|
|||
Progressive Active Doors
|
17,963
|
|
|
13,248
|
|
|
12,307
|
|
For the Year Ended December 31 (Unaudited and In Thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Progressive Invoice Volume
|
$
|
884,812
|
|
|
$
|
780,038
|
|
|
$
|
471,902
|
|
|
|
|
Change
|
||||||||||||||||||||||
|
Year Ended December 31,
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Lease Revenues
and Fees
|
$
|
2,780,824
|
|
|
$
|
2,684,184
|
|
|
$
|
2,221,574
|
|
|
$
|
96,640
|
|
|
3.6
|
%
|
|
$
|
462,610
|
|
|
20.8
|
%
|
Retail Sales
|
29,418
|
|
|
32,872
|
|
|
38,360
|
|
|
(3,454
|
)
|
|
(10.5
|
)
|
|
(5,488
|
)
|
|
(14.3
|
)
|
|||||
Non-Retail Sales
|
309,446
|
|
|
390,137
|
|
|
363,355
|
|
|
(80,691
|
)
|
|
(20.7
|
)
|
|
26,782
|
|
|
7.4
|
|
|||||
Franchise Royalties and Fees
|
58,350
|
|
|
63,507
|
|
|
65,902
|
|
|
(5,157
|
)
|
|
(8.1
|
)
|
|
(2,395
|
)
|
|
(3.6
|
)
|
|||||
Interest and Fees on Loans Receivable
|
24,080
|
|
|
2,845
|
|
|
—
|
|
|
21,235
|
|
|
746.4
|
|
|
2,845
|
|
|
nmf
|
|
|||||
Other
|
5,598
|
|
|
6,211
|
|
|
5,842
|
|
|
(613
|
)
|
|
(9.9
|
)
|
|
369
|
|
|
6.3
|
|
|||||
|
3,207,716
|
|
|
3,179,756
|
|
|
2,695,033
|
|
|
27,960
|
|
|
0.9
|
|
|
484,723
|
|
|
18.0
|
|
|||||
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Depreciation of Lease Merchandise
|
1,304,295
|
|
|
1,212,644
|
|
|
932,634
|
|
|
91,651
|
|
|
7.6
|
|
|
280,010
|
|
|
30.0
|
|
|||||
Retail Cost of Sales
|
18,580
|
|
|
21,040
|
|
|
24,541
|
|
|
(2,460
|
)
|
|
(11.7
|
)
|
|
(3,501
|
)
|
|
(14.3
|
)
|
|||||
Non-Retail Cost of Sales
|
276,608
|
|
|
351,777
|
|
|
330,057
|
|
|
(75,169
|
)
|
|
(21.4
|
)
|
|
21,720
|
|
|
6.6
|
|
|||||
Operating Expenses
|
1,351,785
|
|
|
1,357,030
|
|
|
1,231,801
|
|
|
(5,245
|
)
|
|
(0.4
|
)
|
|
125,229
|
|
|
10.2
|
|
|||||
Financial Advisory and Legal Costs
|
—
|
|
|
—
|
|
|
13,661
|
|
|
—
|
|
|
nmf
|
|
|
(13,661
|
)
|
|
nmf
|
|
|||||
Restructuring Expenses
|
20,218
|
|
|
—
|
|
|
9,140
|
|
|
20,218
|
|
|
nmf
|
|
|
(9,140
|
)
|
|
nmf
|
|
|||||
Retirement and Vacation Charges
|
—
|
|
|
—
|
|
|
9,094
|
|
|
—
|
|
|
nmf
|
|
|
(9,094
|
)
|
|
nmf
|
|
|||||
Progressive-Related Transaction Costs
|
—
|
|
|
—
|
|
|
6,638
|
|
|
—
|
|
|
nmf
|
|
|
(6,638
|
)
|
|
nmf
|
|
|||||
Legal and Regulatory Income
|
—
|
|
|
—
|
|
|
(1,200
|
)
|
|
—
|
|
|
nmf
|
|
|
1,200
|
|
|
nmf
|
|
|||||
Other Operating (Income) Expense, Net
|
(6,446
|
)
|
|
1,324
|
|
|
(1,176
|
)
|
|
(7,770
|
)
|
|
(586.9
|
)
|
|
2,500
|
|
|
212.6
|
|
|||||
|
2,965,040
|
|
|
2,943,815
|
|
|
2,555,190
|
|
|
21,225
|
|
|
0.7
|
|
|
388,625
|
|
|
15.2
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
OPERATING PROFIT
|
242,676
|
|
|
235,941
|
|
|
139,843
|
|
|
6,735
|
|
|
2.9
|
|
|
96,098
|
|
|
68.7
|
|
|||||
Interest Income
|
2,699
|
|
|
2,185
|
|
|
2,921
|
|
|
514
|
|
|
23.5
|
|
|
(736
|
)
|
|
(25.2
|
)
|
|||||
Interest Expense
|
(23,390
|
)
|
|
(23,339
|
)
|
|
(19,215
|
)
|
|
51
|
|
|
0.2
|
|
|
4,124
|
|
|
21.5
|
|
|||||
Other Non-Operating Expense
|
(3,563
|
)
|
|
(1,667
|
)
|
|
(1,845
|
)
|
|
1,896
|
|
|
113.7
|
|
|
(178
|
)
|
|
(9.6
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
EARNINGS BEFORE INCOME TAXES
|
218,422
|
|
|
213,120
|
|
|
121,704
|
|
|
5,302
|
|
|
2.5
|
|
|
91,416
|
|
|
75.1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
INCOME TAXES
|
79,139
|
|
|
77,411
|
|
|
43,471
|
|
|
1,728
|
|
|
2.2
|
|
|
33,940
|
|
|
78.1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
NET EARNINGS
|
$
|
139,283
|
|
|
$
|
135,709
|
|
|
$
|
78,233
|
|
|
$
|
3,574
|
|
|
2.6
|
%
|
|
$
|
57,476
|
|
|
73.5
|
%
|
|
|
|
Change
|
||||||||||||||||||||||
|
Year Ended December 31,
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales and Lease Ownership
1
|
$
|
1,852,312
|
|
|
$
|
1,997,270
|
|
|
$
|
2,040,617
|
|
|
$
|
(144,958
|
)
|
|
(7.3
|
)%
|
|
$
|
(43,347
|
)
|
|
(2.1
|
)%
|
Progressive
2
|
1,237,597
|
|
|
1,049,681
|
|
|
519,342
|
|
|
187,916
|
|
|
17.9
|
|
|
530,339
|
|
|
102.1
|
|
|||||
HomeSmart
1,3
|
25,392
|
|
|
63,204
|
|
|
64,441
|
|
|
(37,812
|
)
|
|
(59.8
|
)
|
|
(1,237
|
)
|
|
(1.9
|
)
|
|||||
DAMI
4
|
24,080
|
|
|
2,845
|
|
|
—
|
|
|
21,235
|
|
|
746.4
|
|
|
2,845
|
|
|
nmf
|
|
|||||
Franchise
5
|
58,350
|
|
|
63,507
|
|
|
65,902
|
|
|
(5,157
|
)
|
|
(8.1
|
)
|
|
(2,395
|
)
|
|
(3.6
|
)
|
|||||
Manufacturing
|
90,274
|
|
|
106,020
|
|
|
104,058
|
|
|
(15,746
|
)
|
|
(14.9
|
)
|
|
1,962
|
|
|
1.9
|
|
|||||
Other
|
950
|
|
|
1,118
|
|
|
2,969
|
|
|
(168
|
)
|
|
(15.0
|
)
|
|
(1,851
|
)
|
|
(62.3
|
)
|
|||||
Revenues of Reportable Segments
|
3,288,955
|
|
|
3,283,645
|
|
|
2,797,329
|
|
|
5,310
|
|
|
0.2
|
|
|
486,316
|
|
|
17.4
|
|
|||||
Elimination of Intersegment Revenues
|
(81,239
|
)
|
|
(103,889
|
)
|
|
(102,296
|
)
|
|
22,650
|
|
|
21.8
|
|
|
(1,593
|
)
|
|
(1.6
|
)
|
|||||
Total Revenues from External Customers
|
$
|
3,207,716
|
|
|
$
|
3,179,756
|
|
|
$
|
2,695,033
|
|
|
$
|
27,960
|
|
|
0.9
|
%
|
|
$
|
484,723
|
|
|
18.0
|
%
|
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
In May 2016, we sold our 82 Company-operated HomeSmart stores.
|
|||||||||||||||||||||||||
4
Segment revenue consists of interest and fees on loans receivable, and excludes the effect of interest expense.
|
|||||||||||||||||||||||||
5
Segment revenue consists of franchise royalties and fees.
|
|
|
|
|
|
|
|
Change
|
||||||||||||||||||
|
Year Ended December 31,
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Net gains on sales of stores
|
$
|
(126
|
)
|
|
$
|
(2,139
|
)
|
|
$
|
(1,694
|
)
|
|
$
|
2,013
|
|
|
(94.1
|
)%
|
|
$
|
(445
|
)
|
|
26.3
|
%
|
Net gains on sales of delivery vehicles
|
(1,319
|
)
|
|
(1,706
|
)
|
|
(1,099
|
)
|
|
387
|
|
|
(22.7
|
)
|
|
(607
|
)
|
|
55.2
|
|
|||||
Net (gains) losses and impairment charges on asset dispositions and assets held for sale
|
(5,001
|
)
|
|
5,169
|
|
|
1,617
|
|
|
(10,170
|
)
|
|
(196.7
|
)
|
|
3,552
|
|
|
219.7
|
|
|||||
Other Operating (Income) Expense, Net
|
$
|
(6,446
|
)
|
|
$
|
1,324
|
|
|
$
|
(1,176
|
)
|
|
$
|
(7,770
|
)
|
|
(586.9
|
)%
|
|
$
|
2,500
|
|
|
(212.6
|
)%
|
|
|
|
Change
|
||||||||||||||||||||||
|
Year Ended December 31,
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
EARNINGS (LOSS) BEFORE INCOME TAXES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales and Lease Ownership
|
$
|
127,306
|
|
|
$
|
162,996
|
|
|
$
|
145,068
|
|
|
$
|
(35,690
|
)
|
|
(21.9
|
)%
|
|
$
|
17,928
|
|
|
12.4
|
%
|
Progressive
|
104,686
|
|
|
54,525
|
|
|
4,603
|
|
|
50,161
|
|
|
92.0
|
|
|
49,922
|
|
|
nmf
|
|
|||||
HomeSmart
|
(3,479
|
)
|
|
606
|
|
|
(2,613
|
)
|
|
(4,085
|
)
|
|
(674.1
|
)
|
|
3,219
|
|
|
123.2
|
|
|||||
DAMI
|
(9,273
|
)
|
|
(1,964
|
)
|
|
—
|
|
|
(7,309
|
)
|
|
(372.1
|
)
|
|
(1,964
|
)
|
|
nmf
|
|
|||||
Franchise
|
46,766
|
|
|
48,576
|
|
|
50,504
|
|
|
(1,810
|
)
|
|
(3.7
|
)
|
|
(1,928
|
)
|
|
(3.8
|
)
|
|||||
Manufacturing
|
(27
|
)
|
|
2,520
|
|
|
860
|
|
|
(2,547
|
)
|
|
(101.1
|
)
|
|
1,660
|
|
|
193.0
|
|
|||||
Other
1
|
(48,164
|
)
|
|
(51,651
|
)
|
|
(75,905
|
)
|
|
3,487
|
|
|
6.8
|
|
|
24,254
|
|
|
32.0
|
|
|||||
Earnings Before Income Taxes for Reportable Segments
|
217,815
|
|
|
215,608
|
|
|
122,517
|
|
|
2,207
|
|
|
1.0
|
|
|
93,091
|
|
|
76.0
|
|
|||||
Elimination of Intersegment Loss (Profit)
|
607
|
|
|
(2,488
|
)
|
|
(813
|
)
|
|
3,095
|
|
|
124.4
|
|
|
(1,675
|
)
|
|
(206.0
|
)
|
|||||
Total
|
$
|
218,422
|
|
|
$
|
213,120
|
|
|
$
|
121,704
|
|
|
$
|
5,302
|
|
|
2.5
|
%
|
|
$
|
91,416
|
|
|
75.1
|
%
|
•
|
Cash and cash equivalents
increased
$293.6 million
to
$308.6 million
at
December 31, 2016
. For additional information, refer to the "Liquidity and Capital Resources" section below.
|
•
|
Lease merchandise, net
decreased
$139.6 million
to
$1.0 billion
at
December 31, 2016
primarily due to decreases in lease merchandise purchases at our Aaron's business operations and the HomeSmart disposition during the year ended
December 31, 2016
.
|
•
|
Income tax receivable
decreased
$167.3 million
to
$11.9 million
primarily due to the enactment of the Protecting Americans From Tax Hikes Act in December
2015
("the 2015 Act"), which extended bonus depreciation on eligible inventory held during 2015. Throughout
2015
, the Company made payments based on the previously enacted law, resulting in an overpayment when the 2015 Act was signed into law. The Company received a refund of $120 million in 2016 related to the 2015 overpayment.
|
•
|
Accounts payable and accrued expenses decreased
$45.9 million
to
$297.8 million
at
December 31, 2016
primarily due to decreases in lease merchandise purchases at the end of the fourth quarter of 2016 compared to the end of the fourth quarter of 2015.
|
•
|
Debt
decreased
$108.9 million
to
$497.8 million
at
December 31, 2016
due primarily to the net repayment of
$112.5 million
in revolving credit borrowings and term loans. Refer to "Liquidity and Capital Resources" for further details regarding the Company's financing arrangements.
|
•
|
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
Amounts
Committed
|
|
Period Less
Than 1 Year
|
|
Period 1-3
Years
|
|
Period 3-5
Years
|
|
Period Over
5 Years
|
||||||||||
Guaranteed Borrowings of Franchisees
|
$
|
56,721
|
|
|
$
|
46,524
|
|
|
$
|
10,197
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(In Thousands)
|
Total
|
|
Period Less
Than 1 Year
|
|
Period 1-3
Years
|
|
Period 3-5
Years
|
|
Period Over
5 Years
|
||||||||||
Debt, Excluding Capital Leases
|
$
|
494,406
|
|
|
$
|
145,031
|
|
|
$
|
229,375
|
|
|
$
|
120,000
|
|
|
$
|
—
|
|
Capital Leases
|
6,364
|
|
|
2,606
|
|
|
2,666
|
|
|
1,092
|
|
|
—
|
|
|||||
Interest Obligations
|
45,014
|
|
|
17,326
|
|
|
22,032
|
|
|
5,656
|
|
|
—
|
|
|||||
Operating Leases
|
506,562
|
|
|
107,985
|
|
|
169,635
|
|
|
114,282
|
|
|
114,660
|
|
|||||
Purchase Obligations
|
28,183
|
|
|
17,351
|
|
|
9,661
|
|
|
1,171
|
|
|
—
|
|
|||||
Retirement Obligations
|
4,436
|
|
|
3,280
|
|
|
1,113
|
|
|
32
|
|
|
11
|
|
|||||
Total Contractual Cash Obligations
|
$
|
1,084,965
|
|
|
$
|
293,579
|
|
|
$
|
434,482
|
|
|
$
|
242,233
|
|
|
$
|
114,671
|
|
|
December 31,
|
||
(In Thousands)
|
2016
|
||
Goodwill
|
$
|
526,723
|
|
Other Indefinite-Lived Intangible Assets
|
53,000
|
|
|
Definite-Lived Intangible Assets, Net
|
194,672
|
|
|
Goodwill and Other Intangibles, Net
|
$
|
774,395
|
|
|
December 31,
|
||
(In Thousands)
|
2016
|
||
Sales and Lease Ownership
|
$
|
237,922
|
|
Progressive
|
288,801
|
|
|
Total
|
$
|
526,723
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(In Thousands, Except Share Data)
|
||||||
ASSETS:
|
|
|
|
||||
Cash and Cash Equivalents
|
$
|
308,561
|
|
|
$
|
14,942
|
|
Investments
|
20,519
|
|
|
22,226
|
|
||
Accounts Receivable (net of allowances of $35,690 in 2016 and $34,861 in 2015)
|
95,777
|
|
|
113,439
|
|
||
Lease Merchandise (net of accumulated depreciation and allowances of $743,222 in 2016 and $738,657 in 2015)
|
999,381
|
|
|
1,138,938
|
|
||
Loans Receivable (net of allowances and unamortized fees of $13,830 in 2016 and $2,971 in 2015)
|
84,804
|
|
|
85,795
|
|
||
Property, Plant and Equipment, Net
|
211,271
|
|
|
225,836
|
|
||
Goodwill
|
526,723
|
|
|
539,475
|
|
||
Other Intangibles, Net
|
247,672
|
|
|
275,912
|
|
||
Income Tax Receivable
|
11,884
|
|
|
179,174
|
|
||
Prepaid Expenses and Other Assets
|
109,144
|
|
|
102,751
|
|
||
Total Assets
|
$
|
2,615,736
|
|
|
$
|
2,698,488
|
|
LIABILITIES & SHAREHOLDERS’ EQUITY:
|
|
|
|
||||
Accounts Payable and Accrued Expenses
|
$
|
297,766
|
|
|
$
|
343,673
|
|
Accrued Regulatory Expense
|
—
|
|
|
4,737
|
|
||
Deferred Income Taxes Payable
|
276,116
|
|
|
307,481
|
|
||
Customer Deposits and Advance Payments
|
62,427
|
|
|
69,233
|
|
||
Debt
|
497,829
|
|
|
606,746
|
|
||
Total Liabilities
|
1,134,138
|
|
|
1,331,870
|
|
||
Commitments and Contingencies (Note 9)
|
—
|
|
|
—
|
|
||
Shareholders’ Equity:
|
|
|
|
||||
Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at December 31, 2016 and 2015; Shares Issued: 90,752,123 at December 31, 2016 and 2015
|
45,376
|
|
|
45,376
|
|
||
Additional Paid-in Capital
|
254,512
|
|
|
240,112
|
|
||
Retained Earnings
|
1,534,983
|
|
|
1,403,120
|
|
||
Accumulated Other Comprehensive Loss
|
(531
|
)
|
|
(517
|
)
|
||
|
1,834,340
|
|
|
1,688,091
|
|
||
Less: Treasury Shares at Cost
|
|
|
|
||||
Common Stock: 19,303,578 Shares at December 31, 2016 and 18,151,560 at December 31, 2015
|
(352,742
|
)
|
|
(321,473
|
)
|
||
Total Shareholders’ Equity
|
1,481,598
|
|
|
1,366,618
|
|
||
Total Liabilities & Shareholders’ Equity
|
$
|
2,615,736
|
|
|
$
|
2,698,488
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(In Thousands, Except Per Share Data)
|
||||||||||
REVENUES:
|
|
|
|
|
|
||||||
Lease Revenues and Fees
|
$
|
2,780,824
|
|
|
$
|
2,684,184
|
|
|
$
|
2,221,574
|
|
Retail Sales
|
29,418
|
|
|
32,872
|
|
|
38,360
|
|
|||
Non-Retail Sales
|
309,446
|
|
|
390,137
|
|
|
363,355
|
|
|||
Franchise Royalties and Fees
|
58,350
|
|
|
63,507
|
|
|
65,902
|
|
|||
Interest and Fees on Loans Receivable
|
24,080
|
|
|
2,845
|
|
|
—
|
|
|||
Other
|
5,598
|
|
|
6,211
|
|
|
5,842
|
|
|||
|
3,207,716
|
|
|
3,179,756
|
|
|
2,695,033
|
|
|||
COSTS AND EXPENSES:
|
|
|
|
|
|
||||||
Depreciation of Lease Merchandise
|
1,304,295
|
|
|
1,212,644
|
|
|
932,634
|
|
|||
Retail Cost of Sales
|
18,580
|
|
|
21,040
|
|
|
24,541
|
|
|||
Non-Retail Cost of Sales
|
276,608
|
|
|
351,777
|
|
|
330,057
|
|
|||
Operating Expenses
|
1,351,785
|
|
|
1,357,030
|
|
|
1,231,801
|
|
|||
Financial Advisory and Legal Costs
|
—
|
|
|
—
|
|
|
13,661
|
|
|||
Restructuring Expenses
|
20,218
|
|
|
—
|
|
|
9,140
|
|
|||
Retirement and Vacation Charges
|
—
|
|
|
—
|
|
|
9,094
|
|
|||
Progressive-Related Transaction Costs
|
—
|
|
|
—
|
|
|
6,638
|
|
|||
Legal and Regulatory Income
|
—
|
|
|
—
|
|
|
(1,200
|
)
|
|||
Other Operating (Income) Expense, Net
|
(6,446
|
)
|
|
1,324
|
|
|
(1,176
|
)
|
|||
|
2,965,040
|
|
|
2,943,815
|
|
|
2,555,190
|
|
|||
OPERATING PROFIT
|
242,676
|
|
|
235,941
|
|
|
139,843
|
|
|||
Interest Income
|
2,699
|
|
|
2,185
|
|
|
2,921
|
|
|||
Interest Expense
|
(23,390
|
)
|
|
(23,339
|
)
|
|
(19,215
|
)
|
|||
Other Non-Operating Expense
|
(3,563
|
)
|
|
(1,667
|
)
|
|
(1,845
|
)
|
|||
EARNINGS BEFORE INCOME TAXES
|
218,422
|
|
|
213,120
|
|
|
121,704
|
|
|||
INCOME TAXES
|
79,139
|
|
|
77,411
|
|
|
43,471
|
|
|||
NET EARNINGS
|
$
|
139,283
|
|
|
$
|
135,709
|
|
|
$
|
78,233
|
|
EARNINGS PER SHARE
|
$
|
1.93
|
|
|
$
|
1.87
|
|
|
$
|
1.08
|
|
EARNINGS PER SHARE ASSUMING DILUTION
|
$
|
1.91
|
|
|
$
|
1.86
|
|
|
$
|
1.08
|
|
|
Year Ended December 31,
|
||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Net Earnings
|
$
|
139,283
|
|
|
$
|
135,709
|
|
|
$
|
78,233
|
|
Other Comprehensive Loss:
|
|
|
|
|
|
||||||
Foreign Currency Translation Adjustment
|
(14
|
)
|
|
(427
|
)
|
|
(26
|
)
|
|||
Total Other Comprehensive Loss
|
(14
|
)
|
|
(427
|
)
|
|
(26
|
)
|
|||
Comprehensive Income
|
$
|
139,269
|
|
|
$
|
135,282
|
|
|
$
|
78,207
|
|
|
Treasury Stock
|
|
Common Stock
|
|
Additional
Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
Total Shareholders' Equity
|
|||||||||||||||
(In Thousands, Except Per Share)
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
Balance, January 1, 2014
|
(17,795
|
)
|
|
$
|
(305,750
|
)
|
|
$
|
45,376
|
|
|
$
|
198,182
|
|
|
$
|
1,202,219
|
|
|
$
|
(64
|
)
|
$
|
1,139,963
|
|
Dividends, $0.0860 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,219
|
)
|
|
—
|
|
(6,219
|
)
|
||||||
Stock-Based Compensation
|
17
|
|
|
300
|
|
|
—
|
|
|
10,398
|
|
|
—
|
|
|
—
|
|
10,698
|
|
||||||
Reissued Shares
|
515
|
|
|
7,162
|
|
|
—
|
|
|
(6,290
|
)
|
|
—
|
|
|
—
|
|
872
|
|
||||||
Repurchased Shares
|
(1,001
|
)
|
|
(25,000
|
)
|
|
—
|
|
|
25,000
|
|
|
—
|
|
|
—
|
|
—
|
|
||||||
Net Earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
78,233
|
|
|
—
|
|
78,233
|
|
||||||
Foreign Currency Translation Adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
(26
|
)
|
||||||
Balance, December 31, 2014
|
(18,264
|
)
|
|
(323,288
|
)
|
|
45,376
|
|
|
227,290
|
|
|
1,274,233
|
|
|
(90
|
)
|
1,223,521
|
|
||||||
Dividends, $0.0940 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,822
|
)
|
|
—
|
|
(6,822
|
)
|
||||||
Stock-Based Compensation
|
5
|
|
|
89
|
|
|
—
|
|
|
13,605
|
|
|
—
|
|
|
—
|
|
13,694
|
|
||||||
Reissued Shares
|
107
|
|
|
1,726
|
|
|
—
|
|
|
(783
|
)
|
|
—
|
|
|
—
|
|
943
|
|
||||||
Net Earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
135,709
|
|
|
—
|
|
135,709
|
|
||||||
Foreign Currency Translation Adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(427
|
)
|
(427
|
)
|
||||||
Balance, December 31, 2015
|
(18,152
|
)
|
|
(321,473
|
)
|
|
45,376
|
|
|
240,112
|
|
|
1,403,120
|
|
|
(517
|
)
|
1,366,618
|
|
||||||
Dividends, $0.1025 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,420
|
)
|
|
—
|
|
(7,420
|
)
|
||||||
Stock-Based Compensation
|
4
|
|
|
68
|
|
|
—
|
|
|
20,160
|
|
|
—
|
|
|
—
|
|
20,228
|
|
||||||
Reissued Shares
|
217
|
|
|
3,188
|
|
|
—
|
|
|
(5,760
|
)
|
|
—
|
|
|
—
|
|
(2,572
|
)
|
||||||
Repurchased Shares
|
(1,373
|
)
|
|
(34,525
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(34,525
|
)
|
||||||
Net Earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
139,283
|
|
|
—
|
|
139,283
|
|
||||||
Foreign Currency Translation Adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
(14
|
)
|
||||||
Balance, December 31, 2016
|
(19,304
|
)
|
|
$
|
(352,742
|
)
|
|
$
|
45,376
|
|
|
$
|
254,512
|
|
|
$
|
1,534,983
|
|
|
$
|
(531
|
)
|
$
|
1,481,598
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(In Thousands)
|
||||||||||
OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net Earnings
|
$
|
139,283
|
|
|
$
|
135,709
|
|
|
$
|
78,233
|
|
Adjustments to Reconcile Net Earnings to Net Cash Provided by (Used in) Operating Activities:
|
|
|
|
|
|
||||||
Depreciation of Lease Merchandise
|
1,304,295
|
|
|
1,212,644
|
|
|
932,634
|
|
|||
Other Depreciation and Amortization
|
82,378
|
|
|
80,203
|
|
|
85,600
|
|
|||
Accounts Receivable Provision
|
167,923
|
|
|
163,111
|
|
|
99,283
|
|
|||
Provision for Credit Losses on Loans Receivable
|
11,251
|
|
|
937
|
|
|
—
|
|
|||
Stock-Based Compensation
|
21,470
|
|
|
14,163
|
|
|
10,863
|
|
|||
Deferred Income Taxes
|
(35,162
|
)
|
|
38,970
|
|
|
(7,157
|
)
|
|||
Other Changes, Net
|
(2,086
|
)
|
|
(4,815
|
)
|
|
2,214
|
|
|||
Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions:
|
|
|
|
|
|
||||||
Additions to Lease Merchandise
|
(1,615,064
|
)
|
|
(1,775,479
|
)
|
|
(1,465,501
|
)
|
|||
Book Value of Lease Merchandise Sold or Disposed
|
433,464
|
|
|
510,657
|
|
|
456,713
|
|
|||
Accounts Receivable
|
(149,826
|
)
|
|
(173,159
|
)
|
|
(110,269
|
)
|
|||
Prepaid Expenses and Other Assets
|
1,229
|
|
|
(35,649
|
)
|
|
(5,332
|
)
|
|||
Income Tax Receivable
|
167,290
|
|
|
(54,351
|
)
|
|
(117,894
|
)
|
|||
Accounts Payable and Accrued Expenses
|
(51,643
|
)
|
|
68,775
|
|
|
(12,788
|
)
|
|||
Accrued Litigation Expense
|
(4,737
|
)
|
|
(22,463
|
)
|
|
(1,200
|
)
|
|||
Customer Deposits and Advance Payments
|
(4,621
|
)
|
|
7,508
|
|
|
5,639
|
|
|||
Cash Provided by (Used in) Operating Activities
|
465,444
|
|
|
166,761
|
|
|
(48,962
|
)
|
|||
INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Loans Receivable Originated
|
(72,897
|
)
|
|
(11,700
|
)
|
|
—
|
|
|||
Repayments of Loans Receivable
|
64,739
|
|
|
15,211
|
|
|
—
|
|
|||
Proceeds from Maturities and Calls of Investments
|
—
|
|
|
—
|
|
|
89,993
|
|
|||
Outflows on Purchases of Property, Plant & Equipment
|
(57,453
|
)
|
|
(60,557
|
)
|
|
(47,565
|
)
|
|||
Acquisitions of Businesses and Contracts, Net of Cash Acquired
|
(9,762
|
)
|
|
(73,295
|
)
|
|
(700,509
|
)
|
|||
Proceeds from Dispositions of Businesses and Contracts, Net of Cash Disposed
|
35,899
|
|
|
13,976
|
|
|
16,525
|
|
|||
Proceeds from Sale of Property, Plant, and Equipment
|
19,393
|
|
|
7,515
|
|
|
6,032
|
|
|||
Cash Used in Investing Activities
|
(20,081
|
)
|
|
(108,850
|
)
|
|
(635,524
|
)
|
|||
FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Proceeds from Issuances of Debt
|
98,928
|
|
|
290,090
|
|
|
904,956
|
|
|||
Repayments of Debt
|
(208,607
|
)
|
|
(330,747
|
)
|
|
(441,603
|
)
|
|||
Acquisition of Treasury Stock
|
(34,525
|
)
|
|
—
|
|
|
—
|
|
|||
Dividends Paid
|
(7,420
|
)
|
|
(6,822
|
)
|
|
(7,823
|
)
|
|||
Excess Tax (Deficiencies) Benefits From Stock-Based Compensation
|
(665
|
)
|
|
348
|
|
|
1,392
|
|
|||
Issuance of Stock Under Stock Option Plans
|
550
|
|
|
1,038
|
|
|
4,388
|
|
|||
Other
|
(132
|
)
|
|
(425
|
)
|
|
(4,366
|
)
|
|||
Cash (Used in) Provided by Financing Activities
|
(151,871
|
)
|
|
(46,518
|
)
|
|
456,944
|
|
|||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
127
|
|
|
—
|
|
|
—
|
|
|||
Increase (Decrease) in Cash and Cash Equivalents
|
293,619
|
|
|
11,393
|
|
|
(227,542
|
)
|
|||
Cash and Cash Equivalents at Beginning of Year
|
14,942
|
|
|
3,549
|
|
|
231,091
|
|
|||
Cash and Cash Equivalents at End of Year
|
$
|
308,561
|
|
|
$
|
14,942
|
|
|
$
|
3,549
|
|
Cash Paid (Received) During the Year:
|
|
|
|
|
|
||||||
Interest
|
$
|
22,511
|
|
|
$
|
23,405
|
|
|
$
|
16,344
|
|
Income Taxes
|
(54,258
|
)
|
|
91,720
|
|
|
187,709
|
|
Active Doors at December 31 (Unaudited)
|
2016
|
|
2015
|
|
2014
|
|||
Progressive Active Doors
1
|
17,963
|
|
|
13,248
|
|
|
12,307
|
|
|
December 31,
|
||||||
(In Thousands)
|
2016
|
|
2015
|
||||
Merchandise on Lease
|
$
|
786,936
|
|
|
$
|
826,872
|
|
Merchandise Not on Lease
|
212,445
|
|
|
312,066
|
|
||
Lease Merchandise, net of Accumulated Depreciation and Allowances
|
$
|
999,381
|
|
|
$
|
1,138,938
|
|
|
Year ended December 31,
|
||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Beginning Balance
|
$
|
33,405
|
|
|
$
|
27,573
|
|
|
$
|
8,323
|
|
Merchandise Written off, net of Recoveries
|
(134,110
|
)
|
|
(130,548
|
)
|
|
(80,692
|
)
|
|||
Provision for Write-offs
|
134,104
|
|
|
136,380
|
|
|
99,942
|
|
|||
Ending Balance
|
$
|
33,399
|
|
|
$
|
33,405
|
|
|
$
|
27,573
|
|
|
Year Ended December 31,
|
|||||||
(Shares In Thousands)
|
2016
|
|
2015
|
|
2014
|
|||
Weighted Average Shares Outstanding
|
72,354
|
|
|
72,568
|
|
|
72,384
|
|
Dilutive Effect of Share-Based Awards
|
659
|
|
|
475
|
|
|
339
|
|
Weighted Average Shares Outstanding Assuming Dilution
|
73,013
|
|
|
73,043
|
|
|
72,723
|
|
|
Year Ended December 31,
|
||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Beginning Balance
|
$
|
34,861
|
|
|
$
|
27,401
|
|
|
$
|
7,172
|
|
Accounts Written Off
|
(167,094
|
)
|
|
(155,651
|
)
|
|
(79,054
|
)
|
|||
Accounts Receivable Provision
|
167,923
|
|
|
163,111
|
|
|
99,283
|
|
|||
Ending Balance
|
$
|
35,690
|
|
|
$
|
34,861
|
|
|
$
|
27,401
|
|
|
Year Ended December 31,
|
||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Bad Debt Expense
|
128,333
|
|
|
122,184
|
|
|
60,514
|
|
|||
Provision for Returns and Uncollected Renewal Payments
|
39,590
|
|
|
40,927
|
|
|
38,769
|
|
|||
Accounts Receivable Provision
|
$
|
167,923
|
|
|
$
|
163,111
|
|
|
$
|
99,283
|
|
|
December 31,
|
||||
FICO Score Category
|
2016
|
|
2015
|
||
600 or Less
|
1.8
|
%
|
|
1.1
|
%
|
Between 600 and 700
|
78.1
|
%
|
|
79.8
|
%
|
700 or Greater
|
20.1
|
%
|
|
19.1
|
%
|
|
December 31,
|
||||||
(In Thousands)
|
2016
|
|
2015
|
||||
Prepaid Expenses
|
$
|
75,485
|
|
|
$
|
76,118
|
|
Assets Held for Sale
|
8,866
|
|
|
6,976
|
|
||
Deferred Tax Asset
|
5,912
|
|
|
—
|
|
||
Other Assets
|
18,881
|
|
|
19,657
|
|
||
|
$
|
109,144
|
|
|
$
|
102,751
|
|
|
December 31,
|
||||||
(In Thousands)
|
2016
|
|
2015
|
||||
Accounts Payable
|
$
|
71,941
|
|
|
$
|
98,655
|
|
Accrued Insurance Costs
|
47,649
|
|
|
55,411
|
|
||
Accrued Salaries and Benefits
|
41,612
|
|
|
47,939
|
|
||
Accrued Real Estate and Sales Taxes
|
32,986
|
|
|
32,952
|
|
||
Deferred Rent
|
31,859
|
|
|
25,110
|
|
||
Other Accrued Expenses and Liabilities
|
71,719
|
|
|
83,606
|
|
||
|
$
|
297,766
|
|
|
$
|
343,673
|
|
(In Thousands)
|
Amounts Recognized as of Acquisition Date
1
|
|
Acquisition Accounting Adjustments
2
|
|
Amounts Recognized as of Acquisition Date (as adjusted)
|
||||||
Purchase Price
|
$
|
54,900
|
|
|
$
|
—
|
|
|
$
|
54,900
|
|
|
|
|
|
|
|
||||||
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed
|
|
|
|
|
|
||||||
Cash and Cash Equivalents
|
4,185
|
|
|
—
|
|
|
4,185
|
|
|||
Loans Receivable
3
|
89,186
|
|
|
(60
|
)
|
|
89,126
|
|
|||
Receivables
|
45
|
|
|
—
|
|
|
45
|
|
|||
Property, Plant and Equipment
|
2,754
|
|
|
—
|
|
|
2,754
|
|
|||
Other Intangibles
4
|
3,400
|
|
|
(500
|
)
|
|
2,900
|
|
|||
Income Tax Receivable
|
728
|
|
|
—
|
|
|
728
|
|
|||
Prepaid Expenses and Other Assets
|
671
|
|
|
—
|
|
|
671
|
|
|||
Deferred Income Tax Assets
|
375
|
|
|
2,115
|
|
|
2,490
|
|
|||
Total Identifiable Assets Acquired
|
101,344
|
|
|
1,555
|
|
|
102,899
|
|
|||
Accounts Payable and Accrued Expenses
|
(1,709
|
)
|
|
(1,265
|
)
|
|
(2,974
|
)
|
|||
Debt
|
(45,025
|
)
|
|
—
|
|
|
(45,025
|
)
|
|||
Total Liabilities Assumed
|
(46,734
|
)
|
|
(1,265
|
)
|
|
(47,999
|
)
|
|||
Goodwill
|
290
|
|
|
(290
|
)
|
|
—
|
|
|||
Net Assets Acquired
|
$
|
54,900
|
|
|
$
|
—
|
|
|
$
|
54,900
|
|
|
Fair Value
(in thousands)
|
|
Weighted Average Life
(in years)
|
||
Technology
|
$
|
2,550
|
|
|
5.0
|
Non-compete Agreements
|
350
|
|
|
5.0
|
|
Total Acquired Intangible Assets
|
$
|
2,900
|
|
|
|
(In Thousands)
|
|
||
Proceeds from Private Placement Note Issuance
|
$
|
300,000
|
|
Proceeds from Term Loan
|
126,250
|
|
|
Proceeds from Revolving Credit Facility
|
65,000
|
|
|
Cash Consideration
|
185,454
|
|
|
Deferred Cash Consideration
|
29,106
|
|
|
Purchase Price
|
$
|
705,810
|
|
(In Thousands)
|
Amounts Recognized as of Acquisition Date (as adjusted)
1
|
|
Acquisition Accounting 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
|
|
|
|
(In Thousands)
|
2016
|
|
2015
|
||||
Trade Names and Trademarks
|
$
|
53,000
|
|
|
$
|
53,000
|
|
Goodwill
|
526,723
|
|
|
539,475
|
|
||
Indefinite-lived Intangible Assets
|
$
|
579,723
|
|
|
$
|
592,475
|
|
(In Thousands)
|
Sales and Lease
Ownership |
|
Progressive
|
|
DAMI
|
|
HomeSmart
|
|
Total
|
||||||||||
Balance at January 1, 2015
|
$
|
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
|
|
|||||
Acquisitions
|
4,345
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,345
|
|
|||||
Disposals, Currency Translation and Other Adjustments
|
(444
|
)
|
|
(1,804
|
)
|
|
—
|
|
|
(14,729
|
)
|
|
(16,977
|
)
|
|||||
Acquisition Accounting Adjustments
|
170
|
|
|
—
|
|
|
(290
|
)
|
|
—
|
|
|
(120
|
)
|
|||||
Balance at December 31, 2016
|
$
|
237,922
|
|
|
$
|
288,801
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
526,723
|
|
|
2016
|
|
2015
|
||||||||||||||||||||
(In Thousands)
|
Gross
|
|
Accumulated
Amortization |
|
Net
|
|
Gross
|
|
Accumulated
Amortization |
|
Net
|
||||||||||||
Internal Use Software
|
$
|
14,000
|
|
|
$
|
(12,665
|
)
|
|
$
|
1,335
|
|
|
$
|
14,000
|
|
|
$
|
(7,998
|
)
|
|
$
|
6,002
|
|
Technology
|
68,550
|
|
|
(18,529
|
)
|
|
50,021
|
|
|
68,550
|
|
|
(11,419
|
)
|
|
57,131
|
|
||||||
Merchant Relationships
|
181,000
|
|
|
(40,934
|
)
|
|
140,066
|
|
|
181,000
|
|
|
(25,851
|
)
|
|
155,149
|
|
||||||
Other Intangibles
1
|
6,581
|
|
|
(3,331
|
)
|
|
3,250
|
|
|
7,383
|
|
|
(2,753
|
)
|
|
4,630
|
|
||||||
Total
|
$
|
270,131
|
|
|
$
|
(75,459
|
)
|
|
$
|
194,672
|
|
|
$
|
270,933
|
|
|
$
|
(48,021
|
)
|
|
$
|
222,912
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
(In Thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Deferred Compensation Liability
|
$
|
—
|
|
|
$
|
(11,978
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(11,576
|
)
|
|
$
|
—
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
(In Thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Assets Held for Sale
|
$
|
—
|
|
|
$
|
8,866
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,976
|
|
|
$
|
—
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
(In Thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Perfect Home Notes
1
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,519
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,226
|
|
Fixed-Rate Long Term Debt
2
|
—
|
|
|
(368,408
|
)
|
|
—
|
|
|
—
|
|
|
(395,618
|
)
|
|
—
|
|
|
December 31,
|
||||||
(In Thousands)
|
2016
|
|
2015
|
||||
Land
|
$
|
22,843
|
|
|
$
|
24,300
|
|
Buildings and Improvements
|
69,935
|
|
|
76,982
|
|
||
Leasehold Improvements and Signs
|
75,786
|
|
|
98,435
|
|
||
Fixtures and Equipment
1
|
247,565
|
|
|
223,382
|
|
||
Assets Under Capital Leases:
|
|
|
|
||||
with Related Parties
|
10,573
|
|
|
10,573
|
|
||
with Unrelated Parties
|
11,063
|
|
|
11,063
|
|
||
Construction in Progress
|
4,568
|
|
|
3,853
|
|
||
|
442,333
|
|
|
448,588
|
|
||
Less: Accumulated Depreciation and Amortization
|
(231,062
|
)
|
|
(222,752
|
)
|
||
|
$
|
211,271
|
|
|
$
|
225,836
|
|
1
|
Includes internal-use software development costs of
$73.0 million
and
$60.7 million
as of
December 31, 2016
and
2015
, respectively. Accumulated amortization of internal-use software development costs amounted to
$31.1 million
and
$22.2 million
as of
December 31, 2016
and
2015
, respectively.
|
|
December 31,
|
||||||
(In Thousands)
|
2016
|
|
2015
|
||||
Credit Card Loans
|
$
|
64,794
|
|
|
$
|
13,900
|
|
Acquired Loans
|
33,840
|
|
|
74,866
|
|
||
Loans Receivable, Gross
|
98,634
|
|
|
88,766
|
|
||
|
|
|
|
|
|||
Allowance for Loan Losses
|
(6,624
|
)
|
|
(937
|
)
|
||
Unamortized Fees
|
(7,206
|
)
|
|
(2,034
|
)
|
||
Loans Receivable, Net of Allowances and Unamortized Fees
|
$
|
84,804
|
|
|
$
|
85,795
|
|
(Dollar Amounts in Thousands)
|
December 31,
|
||||||
Aging Category
1
|
2016
|
|
2015
|
||||
30-59 Days Past Due
|
6.8
|
%
|
|
7.9
|
%
|
||
60-89 Days Past Due
|
3.2
|
%
|
|
3.3
|
%
|
||
90 or more Days Past Due
|
4.3
|
%
|
|
4.1
|
%
|
||
Past Due Loans Receivable
|
14.3
|
%
|
|
15.3
|
%
|
||
Current Loans Receivable
|
85.7
|
%
|
|
84.7
|
%
|
||
Balance of Credit Card Loans on Nonaccrual Status
|
$
|
1,072
|
|
|
$
|
—
|
|
Balance of Loans Receivable 90 or More Days Past Due and Still Accruing Interest and Fees
|
$
|
—
|
|
|
$
|
—
|
|
|
December 31,
|
||||||
(In Thousands)
|
2016
|
|
2015
|
||||
Beginning Balance
1
|
$
|
937
|
|
|
$
|
—
|
|
Provision for Loan Losses
|
11,251
|
|
|
937
|
|
||
Charge-offs
|
(5,675
|
)
|
|
—
|
|
||
Recoveries
|
111
|
|
|
—
|
|
||
Ending Balance
|
$
|
6,624
|
|
|
$
|
937
|
|
|
December 31,
|
||||||
(In Thousands)
1
|
2016
|
|
2015
|
||||
DAMI Credit Facility
|
$
|
47,302
|
|
|
$
|
41,409
|
|
Revolving Facility
|
—
|
|
|
73,232
|
|
||
Senior Unsecured Notes, 3.95%, Due in Installments through April 2018
|
49,975
|
|
|
74,956
|
|
||
Term Loan, Due in Installments through December 2019
|
94,626
|
|
|
108,393
|
|
||
Senior Unsecured Notes, 4.75%, Due in Installments through April 2021
|
299,562
|
|
|
299,462
|
|
||
|
|
|
|
||||
Capital Lease Obligation:
|
|
|
|
||||
with Related Parties
|
3,095
|
|
|
4,703
|
|
||
with Unrelated Parties
|
3,269
|
|
|
4,591
|
|
||
Total Debt
|
497,829
|
|
|
606,746
|
|
||
Less: Current Maturities
|
146,515
|
|
|
156,235
|
|
||
Long-Term Debt
|
$
|
351,314
|
|
|
$
|
450,511
|
|
|
Year Ended December 31,
|
||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Current Income Tax Expense:
|
|
|
|
|
|
||||||
Federal
|
$
|
103,993
|
|
|
$
|
32,999
|
|
|
$
|
41,946
|
|
State
|
10,308
|
|
|
5,442
|
|
|
8,682
|
|
|||
|
114,301
|
|
|
38,441
|
|
|
50,628
|
|
|||
Deferred Income Tax (Benefit) Expense:
|
|
|
|
|
|
||||||
Federal
|
(33,470
|
)
|
|
35,413
|
|
|
(3,314
|
)
|
|||
State
|
(1,692
|
)
|
|
3,557
|
|
|
(3,843
|
)
|
|||
|
(35,162
|
)
|
|
38,970
|
|
|
(7,157
|
)
|
|||
|
$
|
79,139
|
|
|
$
|
77,411
|
|
|
$
|
43,471
|
|
|
December 31,
|
||||||
(In Thousands)
|
2016
|
|
2015
|
||||
Deferred Tax Liabilities:
|
|
|
|
||||
Lease Merchandise and Property, Plant and Equipment
|
$
|
185,891
|
|
|
$
|
228,174
|
|
Goodwill and Other Intangibles
|
52,135
|
|
|
47,421
|
|
||
Investment in Partnership
|
96,291
|
|
|
88,913
|
|
||
Other, Net
|
1,619
|
|
|
2,062
|
|
||
Total Deferred Tax Liabilities
|
335,936
|
|
|
366,570
|
|
||
Deferred Tax Assets:
|
|
|
|
||||
Accrued Liabilities
|
33,243
|
|
|
29,192
|
|
||
Advance Payments
|
13,087
|
|
|
15,713
|
|
||
Other, Net
|
20,277
|
|
|
14,936
|
|
||
Total Deferred Tax Assets
|
66,607
|
|
|
59,841
|
|
||
Less Valuation Allowance
|
(875
|
)
|
|
(752
|
)
|
||
Net Deferred Tax Liabilities
|
$
|
270,204
|
|
|
$
|
307,481
|
|
|
Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
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
|
2.6
|
|
|
2.7
|
|
|
2.6
|
|
Federal Tax Credits
|
(1.1
|
)
|
|
(0.5
|
)
|
|
(1.8
|
)
|
Other, Net
|
(0.3
|
)
|
|
(0.9
|
)
|
|
(0.1
|
)
|
Effective Tax Rate
|
36.2
|
%
|
|
36.3
|
%
|
|
35.7
|
%
|
|
Year Ended December 31,
|
||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at January 1,
|
$
|
3,561
|
|
|
$
|
2,644
|
|
|
$
|
1,960
|
|
Additions Based on Tax Positions Related to the Current Year
|
258
|
|
|
331
|
|
|
311
|
|
|||
Additions for Tax Positions of Prior Years
|
293
|
|
|
1,176
|
|
|
928
|
|
|||
Prior Year Reductions
|
(776
|
)
|
|
(1
|
)
|
|
(370
|
)
|
|||
Statute Expirations
|
(609
|
)
|
|
(589
|
)
|
|
(94
|
)
|
|||
Settlements
|
(133
|
)
|
|
—
|
|
|
(91
|
)
|
|||
Balance at December 31,
|
$
|
2,594
|
|
|
$
|
3,561
|
|
|
$
|
2,644
|
|
(In Thousands)
|
Contractual Lease Obligations
|
|
Severance
|
||||
Balance at January 1, 2016
|
$
|
—
|
|
|
$
|
—
|
|
Charges
|
11,830
|
|
|
3,883
|
|
||
Adjustments
1
|
(241
|
)
|
|
—
|
|
||
Restructuring Charges
|
11,589
|
|
|
3,883
|
|
||
Payments
|
(1,006
|
)
|
|
(1,804
|
)
|
||
Balance at December 31, 2016
|
$
|
10,583
|
|
|
$
|
2,079
|
|
(In Thousands)
|
Sales and Lease Ownership
|
|
Franchise
|
|
Other
|
|
Total
|
||||||||
Contractual Lease Obligations
|
$
|
11,589
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,589
|
|
Severance
|
287
|
|
|
88
|
|
|
3,508
|
|
|
3,883
|
|
||||
Fixed Asset Impairment
|
4,538
|
|
|
—
|
|
|
—
|
|
|
4,538
|
|
||||
Lease Merchandise Write-Offs
|
208
|
|
|
—
|
|
|
—
|
|
|
208
|
|
||||
Total Restructuring Expense
|
$
|
16,622
|
|
|
$
|
88
|
|
|
$
|
3,508
|
|
|
$
|
20,218
|
|
(In Thousands)
|
Contractual Lease Obligations
|
||
Balance at January 1, 2014
|
$
|
—
|
|
Charges
|
4,797
|
|
|
Payments
|
(1,570
|
)
|
|
Balance at December 31, 2014
|
3,227
|
|
|
Payments
|
(1,559
|
)
|
|
Balance at December 31, 2015
|
1,668
|
|
|
Payments
|
(766
|
)
|
|
Adjustments
1
|
110
|
|
|
Balance at December 31, 2016
|
$
|
1,012
|
|
(In Thousands)
|
Sales and Lease Ownership
|
|
HomeSmart
|
|
Other
|
|
Total
|
||||||||
Contractual Lease Obligations
|
$
|
694
|
|
|
$
|
6
|
|
|
$
|
4,097
|
|
|
$
|
4,797
|
|
Severance
|
419
|
|
|
—
|
|
|
201
|
|
|
620
|
|
||||
Fixed Asset Impairment
|
3,328
|
|
|
—
|
|
|
—
|
|
|
3,328
|
|
||||
Lease Merchandise Write-Offs
|
395
|
|
|
—
|
|
|
—
|
|
|
395
|
|
||||
Total Restructuring Expense
|
$
|
4,836
|
|
|
$
|
6
|
|
|
$
|
4,298
|
|
|
$
|
9,140
|
|
|
2016
|
2015
|
2014
|
||||||
Dividend Yield
|
0.4
|
%
|
0.3
|
%
|
0.3
|
%
|
|||
Expected Volatility
|
34.2
|
%
|
28.9
|
%
|
31.9
|
%
|
|||
Risk-free Interest Rate
|
1.3
|
%
|
1.6
|
%
|
1.9
|
%
|
|||
Expected Term (in years)
|
5.3
|
|
5.2
|
|
6.2
|
|
|||
Weighted-average Fair Value of Stock Options Granted
|
$
|
7.10
|
|
$
|
8.41
|
|
$
|
9.61
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of Exercise
Prices |
Number Outstanding
December 31, 2016 |
|
Weighted Average Remaining Contractual
Life
(in Years)
|
|
Weighted Average
Exercise Price
|
|
Number Exercisable
December 31, 2016 |
|
Weighted Average
Exercise Price
|
||||||
$10.01-15.00
|
167
|
|
|
1.79
|
|
$
|
14.11
|
|
|
167
|
|
|
$
|
14.11
|
|
15.01-20.00
|
66
|
|
|
3.15
|
|
19.92
|
|
|
66
|
|
|
19.92
|
|
||
20.01-25.00
|
623
|
|
|
9.14
|
|
22.67
|
|
|
—
|
|
|
—
|
|
||
25.01-30.00
|
356
|
|
|
7.91
|
|
28.20
|
|
|
199
|
|
|
28.13
|
|
||
30.01-32.20
|
195
|
|
|
7.98
|
|
31.95
|
|
|
58
|
|
|
32.20
|
|
||
10.01-32.20
|
1,407
|
|
|
7.52
|
|
24.21
|
|
|
490
|
|
|
22.73
|
|
|
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, 2016
|
872
|
|
|
$
|
25.05
|
|
|
|
|
|
|
|
||||
Granted
|
634
|
|
|
22.64
|
|
|
|
|
|
|
|
|||||
Exercised
|
(35
|
)
|
|
15.47
|
|
|
|
|
|
|
|
|||||
Forfeited/expired
|
(64
|
)
|
|
24.96
|
|
|
|
|
|
|
|
|||||
Outstanding at December 31, 2016
|
1,407
|
|
|
24.21
|
|
|
7.52
|
|
$
|
10,945
|
|
|
$
|
7.81
|
|
|
Expected to Vest at December 31, 2016
|
818
|
|
|
25.01
|
|
|
8.75
|
|
5,710
|
|
|
7.77
|
|
|||
Exercisable at December 31, 2016
|
490
|
|
|
22.73
|
|
|
5.21
|
|
4,541
|
|
|
7.92
|
|
|
Restricted Stock
(In Thousands)
|
|
Weighted Average
Fair Value
|
|||
Non-vested at January 1, 2016
|
821
|
|
|
$
|
29.77
|
|
Granted
|
379
|
|
|
22.81
|
|
|
Vested
|
(158
|
)
|
|
30.01
|
|
|
Forfeited
|
(89
|
)
|
|
27.61
|
|
|
Non-vested at December 31, 2016
|
953
|
|
|
27.45
|
|
|
Performance Share Units
(In Thousands)
|
|
Weighted Average
Fair Value
|
|||
Non-vested at January 1, 2016
|
345
|
|
|
$
|
32.80
|
|
Granted
|
530
|
|
|
23.19
|
|
|
Vested
|
(139
|
)
|
|
32.39
|
|
|
Forfeited/unearned
|
(43
|
)
|
|
24.59
|
|
|
Non-vested at December 31, 2016
|
693
|
|
|
25.67
|
|
|
Year Ended December 31,
|
||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Sales and Lease Ownership
|
$
|
1,852,312
|
|
|
$
|
1,997,270
|
|
|
$
|
2,040,617
|
|
Progressive
|
1,237,597
|
|
|
1,049,681
|
|
|
519,342
|
|
|||
HomeSmart
|
25,392
|
|
|
63,204
|
|
|
64,441
|
|
|||
DAMI
1
|
24,080
|
|
|
2,845
|
|
|
—
|
|
|||
Franchise
|
58,350
|
|
|
63,507
|
|
|
65,902
|
|
|||
Manufacturing
|
90,274
|
|
|
106,020
|
|
|
104,058
|
|
|||
Other
2
|
950
|
|
|
1,118
|
|
|
2,969
|
|
|||
Revenues of Reportable Segments
|
3,288,955
|
|
|
3,283,645
|
|
|
2,797,329
|
|
|||
Elimination of Intersegment Revenues
|
(81,239
|
)
|
|
(103,889
|
)
|
|
(102,296
|
)
|
|||
Total Revenues from External Customers
|
$
|
3,207,716
|
|
|
$
|
3,179,756
|
|
|
$
|
2,695,033
|
|
|
|
|
|
|
|
||||||
Earnings (Loss) Before Income Taxes:
|
|
|
|
|
|
||||||
Sales and Lease Ownership
|
$
|
127,306
|
|
|
$
|
162,996
|
|
|
$
|
145,068
|
|
Progressive
|
104,686
|
|
|
54,525
|
|
|
4,603
|
|
|||
HomeSmart
|
(3,479
|
)
|
|
606
|
|
|
(2,613
|
)
|
|||
DAMI
|
(9,273
|
)
|
|
(1,964
|
)
|
|
—
|
|
|||
Franchise
|
46,766
|
|
|
48,576
|
|
|
50,504
|
|
|||
Manufacturing
|
(27
|
)
|
|
2,520
|
|
|
860
|
|
|||
Other
3
|
(48,164
|
)
|
|
(51,651
|
)
|
|
(75,905
|
)
|
|||
Earnings Before Income Taxes for Reportable Segments
|
217,815
|
|
|
215,608
|
|
|
122,517
|
|
|||
Elimination of Intersegment Loss (Profit)
|
607
|
|
|
(2,488
|
)
|
|
(813
|
)
|
|||
Total Earnings Before Income Taxes
|
$
|
218,422
|
|
|
$
|
213,120
|
|
|
$
|
121,704
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Assets:
|
|
|
|
||||
Sales and Lease Ownership
|
$
|
1,142,474
|
|
|
$
|
1,261,040
|
|
Progressive
|
919,487
|
|
|
878,457
|
|
||
HomeSmart
|
—
|
|
|
44,429
|
|
||
DAMI
|
102,958
|
|
|
97,486
|
|
||
Franchise
|
34,188
|
|
|
53,693
|
|
||
Manufacturing
1
|
22,551
|
|
|
28,986
|
|
||
Other
|
394,078
|
|
|
334,397
|
|
||
Total Assets
|
$
|
2,615,736
|
|
|
$
|
2,698,488
|
|
|
|
|
|
||||
Assets From Canadian Operations (included in totals above):
|
|
|
|
||||
Sales and Lease Ownership
|
$
|
17,199
|
|
|
$
|
8,900
|
|
|
Year Ended December 31,
|
||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Depreciation and Amortization:
|
|
|
|
|
|
||||||
Sales and Lease Ownership
|
$
|
581,738
|
|
|
$
|
592,450
|
|
|
$
|
633,119
|
|
Progressive
|
776,207
|
|
|
661,646
|
|
|
346,343
|
|
|||
HomeSmart
|
8,103
|
|
|
20,817
|
|
|
22,407
|
|
|||
DAMI
|
993
|
|
|
218
|
|
|
—
|
|
|||
Franchise
|
1,149
|
|
|
1,429
|
|
|
1,599
|
|
|||
Manufacturing
|
1,297
|
|
|
1,482
|
|
|
1,649
|
|
|||
Other
|
17,186
|
|
|
14,805
|
|
|
13,117
|
|
|||
Total Depreciation and Amortization
|
$
|
1,386,673
|
|
|
$
|
1,292,847
|
|
|
$
|
1,018,234
|
|
|
|
|
|
|
|
||||||
Interest Expense:
|
|
|
|
|
|
||||||
Sales and Lease Ownership
|
$
|
8,257
|
|
|
$
|
7,751
|
|
|
$
|
7,834
|
|
Progressive
|
20,042
|
|
|
21,959
|
|
|
14,992
|
|
|||
HomeSmart
|
294
|
|
|
900
|
|
|
922
|
|
|||
DAMI
|
4,116
|
|
|
764
|
|
|
—
|
|
|||
Franchise
|
—
|
|
|
—
|
|
|
—
|
|
|||
Manufacturing
|
1
|
|
|
26
|
|
|
50
|
|
|||
Other
|
(9,320
|
)
|
|
(8,061
|
)
|
|
(4,583
|
)
|
|||
Total Interest Expense
|
$
|
23,390
|
|
|
$
|
23,339
|
|
|
$
|
19,215
|
|
|
|
|
|
|
|
||||||
Capital Expenditures:
|
|
|
|
|
|
||||||
Sales and Lease Ownership
|
$
|
29,561
|
|
|
$
|
23,082
|
|
|
$
|
24,135
|
|
Progressive
|
6,084
|
|
|
8,175
|
|
|
1,625
|
|
|||
HomeSmart
|
304
|
|
|
374
|
|
|
1,020
|
|
|||
DAMI
|
787
|
|
|
40
|
|
|
—
|
|
|||
Franchise
|
—
|
|
|
—
|
|
|
—
|
|
|||
Manufacturing
|
492
|
|
|
387
|
|
|
1,477
|
|
|||
Other
|
20,225
|
|
|
28,499
|
|
|
19,308
|
|
|||
Total Capital Expenditures
|
$
|
57,453
|
|
|
$
|
60,557
|
|
|
$
|
47,565
|
|
|
|
|
|
|
|
||||||
Revenues From Canadian Operations (included in totals above):
|
|
|
|
|
|
||||||
Sales and Lease Ownership
|
$
|
12,434
|
|
|
$
|
3,431
|
|
|
$
|
179
|
|
•
|
Sales and Lease Ownership earnings before income taxes were impacted by
$16.6 million
of restructuring charges incurred during the year ended
December 31, 2016
in connection with the Company's strategic decision to close Company-operated stores as discussed in Note 10.
|
•
|
HomeSmart earnings before income taxes includes a loss on the sale of HomeSmart of
$4.3 million
and additional charges of
$1.1 million
related to exiting the HomeSmart business during the year ended
December 31, 2016
.
|
•
|
Earnings before income taxes for the Other category during the year ended
December 31, 2016
were impacted by a gain of
$11.1 million
on the January 2016 sale of the Company's former corporate office building and
$3.5 million
of restructuring charges related to a reduction in workforce incurred during the year ended
December 31, 2016
.
|
•
|
Earnings before income taxes of the Other category 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.
|
•
|
Generally a predetermined amount of Corporate overhead is allocated to each reportable segment based on segment revenues.
|
•
|
Accruals related to store closures, with the exception of the 2016 restructuring plan, are not recorded on the reportable segments’ financial statements, but are maintained and controlled by corporate headquarters.
|
•
|
Interest expense has been allocated to the Sales and Lease Ownership and HomeSmart segments based on a percentage of their revenues. Interest expense is allocated to the Progressive and DAMI segments 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, 2016
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
854,427
|
|
|
$
|
789,353
|
|
|
$
|
768,982
|
|
|
$
|
794,954
|
|
Gross Profit *
|
374,268
|
|
|
352,576
|
|
|
332,487
|
|
|
339,599
|
|
||||
Earnings Before Income Taxes
|
79,728
|
|
|
61,124
|
|
|
45,282
|
|
|
32,288
|
|
||||
Net Earnings
|
49,687
|
|
|
38,501
|
|
|
29,464
|
|
|
21,631
|
|
||||
Earnings Per Share
|
0.68
|
|
|
0.53
|
|
|
0.41
|
|
|
0.30
|
|
||||
Earnings Per Share Assuming Dilution
|
0.68
|
|
|
0.53
|
|
|
0.40
|
|
|
0.30
|
|
||||
|
|
|
|
|
|
|
|
||||||||
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
|
0.68
|
|
|
0.56
|
|
|
0.33
|
|
|
0.30
|
|
||||
Earnings Per Share Assuming Dilution
|
0.68
|
|
|
0.56
|
|
|
0.33
|
|
|
0.30
|
|
•
|
The first quarter of 2016 included a gain of
$11.1 million
on the January 29, 2016 sale of the Company's former corporate office building, a loss of
$4.6 million
related to the write-down of the HomeSmart disposal group to its fair value less estimated costs to sell upon its classification as held for sale, and charges of
$3.7 million
related to the retirement of the Company's former Chief Financial Officer.
|
•
|
The second quarter of 2016 included a loss of
$1.0 million
primarily consisting of impairment charges on certain assets related to the HomeSmart segment that have been sold or are held for sale.
|
•
|
The third and fourth quarter of 2016 included restructuring expenses of
$4.7 million
and
$15.5 million
, respectively. See Note 10 for further discussion of restructuring activities.
|
•
|
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.
|
Consolidated Balance Sheets—December 31, 2016 and 2015
|
Consolidated Statements of Earnings—Years ended December 31, 2016, 2015 and 2014
|
Consolidated Statements of Comprehensive Income—Years ended December 31, 2016, 2015 and 2014
|
Consolidated Statements of Shareholders’ Equity—Years ended December 31, 2016, 2015 and 2014
|
Consolidated Statements of Cash Flows—Years ended December 31, 2016, 2015 and 2014
|
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
|
Amendment No. 6 to Note Purchase Agreement by and among Aaron’s, Inc. and certain other obligors and the purchasers, dated as of June 30, 2016 (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 filed with the SEC on August 4, 2016).
|
10.8
|
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).
|
10.9
|
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).
|
10.10
|
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).
|
10.11
|
Amendment No. 3 to Note Purchase Agreement by and among Aaron’s Inc. and certain other obligors and the purchasers dated as of June 30, 2016 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, 2016 filed with the SEC on August 4, 2016).
|
10.12
|
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).
|
10.13
|
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).
|
10.14
|
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).
|
10.15
|
Amendment No. 3 to Note Purchase Agreement by and among Aaron’s Inc. and certain other obligors and purchasers dated as of June 30, 2016 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, 2016 filed with the SEC on August 4, 2016).
|
10.16
|
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).
|
10.17
|
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).
|
10.18
|
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).
|
10.19
|
Third 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 June 30, 2016 (incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 filed with the SEC on August 4, 2016).
|
10.20
|
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).
|
10.21
|
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).
|
10.22
|
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).
|
10.23
|
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).
|
10.24
|
Fourth 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 June 30, 2016 (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 filed with the SEC on August 4, 2016).
|
10.25
|
Fifth 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 6, 2016 (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on December 12, 2016).
|
10.26
|
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).
|
10.27
|
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).
|
10.28
|
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).
|
10.29
|
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).
|
10.30
|
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).
|
10.31
|
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).
|
10.32
|
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).
|
10.33
|
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).
|
10.34
|
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).
|
10.35
|
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 (incorporated by reference to Exhibit 10.29 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on February 29, 2016).
|
10.36
|
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 (incorporated by reference to Exhibit 10.30 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on February 29, 2016)
|
10.37
|
Eleventh 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 May 5, 2016 (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 filed with the SEC on May 5, 2016).
|
10.38
|
Twelfth 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 June 30, 2016 (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2016).
|
|
|
|
Management Contracts and Compensatory Plans or Arrangements
|
10.40
|
Aaron’s Inc. Employees Retirement Plan, as amended and restated, effective January 1, 2016 (incorporated by reference to Exhibit 10.7 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 filed with the SEC on August 4, 2016).
|
10.41
|
First Amendment to the Employees Retirement Plan, dated as of June 28, 2016, to be effective October 4, 2016 (incorporated by reference to Exhibit 10.8 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 filed with the SEC on August 4, 2016).
|
10.42
|
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).
|
10.43
|
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).
|
10.44
|
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).
|
10.45
|
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).
|
10.46
|
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).
|
10.47
|
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).
|
10.48
|
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).
|
10.49
|
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).
|
10.50
|
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).
|
10.51
|
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).
|
10.52
|
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).
|
10.53*
|
Aaron's, Inc. Deferred Compensation Plan as amended and restated effective January 1, 2017.
|
10.54
|
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).
|
10.55
|
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).
|
10.56
|
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).
|
10.57
|
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).
|
10.58
|
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).
|
10.59
|
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).
|
10.60
|
Form of Director Restricted Stock Unit Award Agreement under the Aaron’s, Inc. 2015 Equity and Incentive Plan (incorporated by reference to Exhibit 99.5 of the Company’s Registration Statement on Form S-8 (333-204014) filed with the SEC on May 8, 2015).
|
10.61
|
Compensation Plan for Non-Employee Directors, as amended and Restated, effective May 4, 2016 (incorporated by reference to Exhibit 10.9 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 filed with the SEC on August 4, 2016).
|
10.62
|
Employment Agreement, dated as of April 18, 2012, by and between Aaron's, Inc. and Ronald W. Allen (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed with the SEC on April 24, 2012).
|
10.63
|
Employment Agreement, dated as of April 18, 2012, by and between Aaron's, Inc. and Gilbert L. Danielson (incorporated by reference to Exhibit 10.2 of the Registrant's Current Report on Form 8-K filed with the SEC on April 24, 2012).
|
10.64
|
Employment Agreement, dated as of November 10, 2014, by and between Aaron's, Inc. and John W. Robinson (incorporated by reference to Exhibit 10.47 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).
|
10.65
|
Amended and Restated Executive Severance Pay Plan of Aaron's, Inc., effective as of August 5, 2015 (incorporated by reference to Exhibit 10.60 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on February 29, 2016.
|
10.66
|
Waiver and Release Agreement between Aaron's, Inc. and David L. Buck, dated August 22, 2014 (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed with the SEC on August 26, 2014).
|
10.67
|
Separation Agreement between Aaron's, Inc. and K. Todd Evans dated as of April 2, 2014 (incorporated by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 filed with the SEC May 5, 2014).
|
10.68
|
Retirement Agreement between Aaron's, Inc. and R. Charles Loudermilk, Sr., dated August 24, 2012 (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed with the SEC on August 30, 2012).
|
10.69
|
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.2 of the Registrant's Current Report on Form 8-K filed with the SEC on May 14, 2014).
|
|
|
|
Other Exhibits and Certifications
|
21*
|
Subsidiaries of the Registrant.
|
23*
|
Consent of Ernst & Young LLP.
|
31.1*
|
Certification of the Chief Executive Officer of Aaron's, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2*
|
Certification of the Chief Financial Officer of Aaron's, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1*
|
Certification of the Chief Executive Officer of Aaron's, Inc. furnished herewith pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2*
|
Certification of the Chief Financial Officer of Aaron's, Inc. furnished herewith pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101
|
The following financial information from Aaron's, Inc. Annual Report on Form 10-K for the year ended December 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2016 and 2015, (ii) Consolidated Statements of Earnings for the Years ended December 31, 2016, 2015 and 2014, (iii) Consolidated Statements of Comprehensive Income for the Years ended December 31, 2016, 2015 and 2014, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014, (v) Consolidated Statements of Shareholder's Equity for the Years ended December 31, 2016, 2015 and 2014 and (v) the Notes to Consolidated Financial Statements.
|
|
|
† The Company hereby agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon the request of the SEC.
|
|
* Filed herewith.
|
|
|
|
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
|
|
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
John W. Robinson III
|
|
|
|
|
/s/ STEVEN A. MICHAELS
|
|
|
|
Chief Financial Officer and President of Strategic Operations (Principal Financial Officer)
|
Steven A. Michaels
|
|
|
|
|
/s/ ROBERT P. SINCLAIR, JR.
|
|
|
|
Vice President, Corporate Controller
(Principal Accounting Officer)
|
Robert P. Sinclair, Jr.
|
|
|
|
|
/s/ KATHY T. BETTY
|
|
|
|
Director
|
Kathy T. Betty
|
|
|
|
|
/s/ DOUGLAS C. CURLING
|
|
|
|
Director
|
Douglas C. Curling
|
|
|
|
|
/s/ CYNTHIA N. DAY
|
|
|
|
Director
|
Cynthia N. Day
|
|
|
|
|
/s/ CURTIS L. DOMAN
|
|
|
|
Director
|
Curtis L. Doman
|
|
|
|
|
/s/ WALTER EHMER
|
|
|
|
Director
|
Walter Ehmer
|
|
|
|
|
/s/ HUBERT L. HARRIS, JR.
|
|
|
|
Director
|
Hubert L. Harris, Jr.
|
|
|
|
|
/s/ RAY M. ROBINSON
|
|
|
|
Director
|
Ray M. Robinson
|
|
|
|
|
/s/ ROBERT YANKER
|
|
|
|
Director
|
Robert Yanker
|
|
|
|
|
|
Page
|
|
|
ARTICLE 1
Definitions
|
1
|
|
||
1.1
|
|
Account Balance
|
1
|
|
1.2
|
|
Act
|
1
|
|
1.3
|
|
Annual Account
|
1
|
|
1.4
|
|
Annual Deferral Amount
|
1
|
|
1.5
|
|
Annual Installment Method
|
2
|
|
1.6
|
|
Base Salary
|
2
|
|
1.7
|
|
Beneficiary
|
2
|
|
1.8
|
|
Beneficiary Designation Form
|
2
|
|
1.9
|
|
Benefit Distribution Date
|
2
|
|
1.10
|
|
Board
|
2
|
|
1.11
|
|
Bonus
|
2
|
|
1.12
|
|
Cash Director Fees
|
3
|
|
1.13
|
|
Change in Control
|
3
|
|
1.14
|
|
Code
|
3
|
|
1.15
|
|
Committee
|
3
|
|
1.16
|
|
Company
|
3
|
|
1.17
|
|
Company Contribution Amount
|
4
|
|
1.18
|
|
Company Restoration Matching Amount
|
4
|
|
1.19
|
|
Director
|
4
|
|
1.20
|
|
Disability or Disabled
|
4
|
|
1.21
|
|
Election Form
|
4
|
|
1.22
|
|
Employee
|
4
|
|
1.23
|
|
Employer(s)
|
4
|
|
1.24
|
|
ERISA
|
5
|
|
1.25
|
|
401(k) Plan
|
5
|
|
1.26
|
|
LTIP Amounts
|
5
|
|
1.27
|
|
Participant
|
5
|
|
1.28
|
|
Performance-Based Compensation
|
5
|
|
1.29
|
|
Plan
|
5
|
|
1.30
|
|
Plan Agreement
|
6
|
|
1.31
|
|
Plan Year
|
6
|
|
1.32
|
|
Restricted Stock Unit
|
6
|
|
1.33
|
|
Restricted Stock Unit Account
|
6
|
|
1.34
|
|
Restricted Stock Unit Amount
|
6
|
|
1.35
|
|
Retirement, Retire(s) or Retired
|
6
|
|
1.36
|
Separation from Service
|
6
|
|
|
1.37
|
Stock
|
8
|
|
|
1.38
|
Stock Director Fees
|
8
|
|
|
1.39
|
Trust
|
8
|
|
|
1.40
|
Unforeseeable Emergency
|
8
|
|
|
|
|
|
||
ARTICLE 2
Selection, Enrollment, Eligibility
|
8
|
|
||
2.1
|
Selection by Committee
|
8
|
|
|
2.2
|
Enrollment and Eligibility Requirements
|
9
|
|
|
|
|
|
||
ARTICLE 3
Deferral Commitments/Company Contribution Amounts/Company Restoration Matching Amounts/Restricted Stock Unit Amounts/Vesting/Crediting/Taxes
|
9
|
|
||
3.1
|
Maximum Deferral
|
9
|
|
|
|
(a) Annual Deferral Amount
|
9
|
|
|
|
(b) Restricted Stock Unit Amount
|
9
|
|
|
|
c) Short Plan Year
|
10
|
|
|
3.2
|
Timing of Deferral Elections; Effect of Election Form
|
10
|
|
|
|
(a) General Timing Rule for Deferral Elections
|
10
|
|
|
|
(b) Timing of Deferral Elections for Newly Eligible Plan Participants
|
10
|
|
|
|
(c) Restricted Stock Unit Deferral
|
11
|
|
|
|
(d) Timing of Deferral Elections for Performance-Based Compensation
|
11
|
|
|
|
(e) Timing Rule for Deferral of Compensation Subject to Risk of Forfeiture
|
12
|
|
|
3.3
|
Withholding and Crediting of Annual Deferral Amounts
|
12
|
|
|
3.4
|
Company Contribution Amount
|
12
|
|
|
3.5
|
Company Restoration Matching Amount
|
13
|
|
|
3.6
|
Restricted Stock Unit Amount
|
13
|
|
|
3.7
|
Vesting
|
13
|
|
|
3.8
|
Crediting/Debiting of Account Balances
|
14
|
|
|
|
(a) Measurement Funds
|
14
|
|
|
|
(b) Election of Measurement Funds
|
14
|
|
|
|
(c) Aaron’s, Inc. Stock Unit Fund
|
15
|
|
|
|
(d) Proportionate Allocation
|
16
|
|
|
|
(e) Crediting or Debiting Method
|
17
|
|
|
|
(f) No Actual Investment
|
17
|
|
|
3.9
|
FICA and Other Taxes
|
17
|
|
|
|
(a) Annual Deferral Amounts
|
17
|
|
|
(b) Company Restoration Matching Amounts and Company Contribution Amounts
|
17
|
|
|
|
(c) Restricted Stock Unit Amounts
|
18
|
|
|
|
(d) Distributions
|
18
|
|
|
|
|
|
||
ARTICLE 4
Scheduled Distribution; Unforeseeable Emergencies
|
18
|
|
||
4.1
|
Scheduled Distributions
|
18
|
|
|
4.2
|
Postponing Scheduled Distributions
|
18
|
|
|
4.3
|
Other Benefits Take Precedence Over Scheduled Distributions
|
19
|
|
|
4.4
|
Unforeseeable Emergencies
|
19
|
|
|
|
|
|
||
ARTICLE 5
Retirement Benefit
|
20
|
|
||
5.1
|
Retirement Benefit
|
20
|
|
|
5.2
|
Payment of Retirement Benefit
|
20
|
|
|
|
|
|
||
ARTICLE 6
Termination Benefit
|
21
|
|
||
6.1
|
Termination Benefit
|
21
|
|
|
6.2
|
Payment of Termination Benefit
|
21
|
|
|
|
|
|
||
ARTICLE 7
Disability Benefit
|
22
|
|
||
7.1
|
Disability Benefit
|
22
|
|
|
7.2
|
Payment of Disability Benefit
|
22
|
|
|
|
|
|
||
ARTICLE 8
Death Benefit
|
22
|
|
||
8.1
|
Death Benefit
|
22
|
|
|
8.2
|
Payment of Death Benefit
|
22
|
|
|
|
|
|
||
ARTICLE 9
Beneficiary Designation
|
22
|
|
||
9.1
|
Beneficiary
|
22
|
|
|
9.2
|
Beneficiary Designation; Change
|
22
|
|
|
9.3
|
Acknowledgment
|
23
|
|
|
9.4
|
No Beneficiary Designation
|
23
|
|
|
9.5
|
Discharge of Obligations
|
23
|
|
|
|
|
|
||
ARTICLE 10
Leave of Absence
|
23
|
|
||
10.1
|
Paid Leave of Absence
|
23
|
|
|
10.2
|
Unpaid Leave of Absence
|
23
|
|
|
|
|
|
||
ARTICLE 11
Termination of Plan, Amendment or Modification
|
23
|
|
||
11.1
|
Termination of Plan
|
23
|
|
|
11.2
|
Amendment
|
24
|
|
|
11.3
|
Plan Agreement
|
24
|
|
|
11.4
|
Effect of Payment
|
24
|
|
|
|
|
|
ARTICLE 12
Administration
|
24
|
|
||
12.1
|
Committee Duties
|
24
|
|
|
12.2
|
Administration Upon Change In Control
|
24
|
|
|
12.3
|
Agents
|
25
|
|
|
12.4
|
Binding Effect of Decisions
|
25
|
|
|
12.5
|
Indemnity of Committee
|
25
|
|
|
12.6
|
Employer Information
|
25
|
|
|
12.7
|
Section 16 Compliance
|
25
|
|
|
|
|
|
||
ARTICLE 13
Other Benefits and Agreements
|
26
|
|
||
13.1
|
Coordination with Other Benefits
|
26
|
|
|
|
|
|
||
ARTICLE 14
Claims Procedures
|
27
|
|
||
14.1
|
Presentation of Claim
|
27
|
|
|
14.2
|
Notification of Decision
|
27
|
|
|
14.3
|
Review of a Denied Claim
|
28
|
|
|
14.4
|
Decision on Review
|
28
|
|
|
14.5
|
Claims Based on an Independent Determination of Disability
|
29
|
|
|
14.6
|
Legal Action
|
30
|
|
|
|
|
|
||
ARTICLE 15
Trust
|
30
|
|
||
15.1
|
Establishment of the Trust
|
30
|
|
|
15.2
|
Interrelationship of the Plan and the Trust
|
30
|
|
|
15.3
|
Distributions From the Trust
|
30
|
|
|
|
|
|
||
ARTICLE 16
Miscellaneous
|
31
|
|
||
16.1
|
Status of Plan
|
31
|
|
|
16.2
|
Unsecured General Creditor
|
31
|
|
|
16.3
|
Employer’s Liability
|
31
|
|
|
16.4
|
Nonassignability
|
31
|
|
|
16.5
|
Not a Contract of Employment
|
31
|
|
|
16.6
|
Furnishing Information
|
32
|
|
|
16.7
|
Terms
|
32
|
|
|
16.8
|
Captions
|
32
|
|
|
16.9
|
Governing Law
|
32
|
|
|
16.10
|
Notice
|
32
|
|
|
16.11
|
Successors
|
32
|
|
|
16.12
|
Spouse’s Interest
|
32
|
|
|
16.13
|
Validity
|
33
|
|
|
16.14
|
Incompetent
|
33
|
|
|
16.15
|
Distribution in the Event of Income Inclusion Under Code Section 409A
|
33
|
|
16.16
|
Deduction Limitation on Benefit Payments
|
33
|
|
(a)
|
the Company consolidates or merges with or into another corporation, or is otherwise reorganized, and the Company is not the surviving corporation in such transaction or if after such transaction any other corporation, association or other person, entity or group of the shareholders thereof own, directly and/or indirectly, more than 50% of the then outstanding shares of Common Stock or more than 50% of the assets of the Company; or
|
(b)
|
more than 50% of the then outstanding shares of Common Stock of the Company are, in a single transaction or in a series of related transactions, sold or otherwise transferred to or are acquired by (except as collateral security for a loan) any other corporation, association or other person, entity or group, whether or not any such shareholder or any shareholders included in such group were shareholders of the Company prior to the Change in Control; or
|
(c)
|
all or substantially all of the assets of the Company are sold or otherwise transferred to or otherwise acquired by any other corporation, association or other person, entity or group; or
|
(d)
|
the occurrence of any other event or circumstance which is not covered by (a) through (c) above which the Committee determines affects control of the Company and constitutes a Change in Control for purposes of the Plan.
|
(a)
|
Except as otherwise provided in part (b) of this Section, the term “Employer” shall mean the Company and/or any of its subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Company to participate in the Plan and have adopted the Plan as a sponsor.
|
(b)
|
For the purpose of determining whether a Participant has experienced a Separation from Service, the term “Employer” shall mean:
|
(i)
|
The entity for which the Participant performs services and with respect to which the legally binding right to compensation deferred or contributed under this Plan arises; and
|
(ii)
|
All other entities with which the entity described above would be aggregated and treated as a single employer under Code Section 414(b) (controlled group of corporations) and Code Section 414(c) (a group of trades or businesses, whether or not incorporated, under common control), as applicable. In order to identify the group of entities described in the preceding sentence, the Committee shall use an ownership threshold of at least 50% as a substitute for the 80% minimum ownership threshold that appears in, and otherwise must be used when applying, the applicable provisions of (A) Code Section 1563 for determining a controlled group of corporations under Code Section 414(b), and (B) Treas. Reg. §1.414(c)-2 for determining the trades or businesses that are under common control under Code Section 414(c).
|
(a)
|
For a Participant who provides services to an Employer as an Employee, except as otherwise provided in part (c) of this Section, a Separation from Service shall occur when such Participant has experienced a termination of employment with such Employer. A Participant shall be considered to have experienced a termination of employment when the facts and circumstances indicate that the Participant and his or her Employer reasonably anticipate that either (i) no further services will be performed for the Employer after a certain date, or (ii) that the level of bona fide services the Participant will perform for the Employer after such date (whether as an Employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by such Participant (whether as an Employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Employer if the Participant has been providing services to the Employer less than 36 months).
|
(b)
|
For a Participant, if any, who provides services to an Employer as an independent contractor, except as otherwise provided in part (c) of this Section, a Separation from Service shall occur upon the expiration of the contract (or in the case of more than one contract, all contracts) under which services are performed for such Employer, provided that the expiration of such contract(s) is determined by the Committee to constitute a good-faith and complete termination of the contractual relationship between the Participant and such Employer.
|
(c)
|
For a Participant, if any, who provides services to an Employer as both an Employee and an independent contractor, a Separation from Service generally shall not occur until the Participant has ceased providing services for such Employer as both an Employee and as an independent contractor, as determined in accordance with the provisions set forth in parts (a) and (b) of this Section, respectively. Similarly, if a
|
(a)
|
As a condition to participation, each Director or selected Employee shall complete, execute and return to the Committee such written or electronic forms and information as the Committee may require, which may include a Plan Agreement, an Election Form and a Beneficiary Designation Form, by the deadline(s) established by the Committee in accordance with the applicable provisions of this Plan. In addition, the Committee shall establish from time to time such other enrollment requirements as it determines, in its sole discretion, are necessary.
|
(b)
|
If a Director or an Employee fails to meet all requirements established by the Committee within the period required for a specified Plan Year, that Director or Employee shall not be eligible to participate in the Plan during such Plan Year.
|
(a)
|
Annual Deferral Amount
. For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Base Salary, Bonus, LTIP Amounts, and, to the extent permitted by the Committee, Cash Director Fees and/or Stock Director Fees, up to the following maximum percentages for each deferral elected:
|
Deferral
|
Maximum Percentage
|
Base Salary
|
75%
|
Bonus
|
75%
|
LTIP Amounts
|
75%
|
Cash Director Fees
|
100%
|
Stock Director Fees
|
100%
|
(b)
|
Restricted Stock Unit Amount
. If deferrals of Restricted Stock Units are permitted by the Committee, for each grant of Restricted Stock Units, a Participant may elect to defer, as his or her Restricted Stock Unit Amount, Restricted Stock Units in the following maximum percentage:
|
Deferral
|
Maximum Percentage
|
Restricted Stock Units
|
100%
|
(c)
|
Short Plan Year
. Notwithstanding the foregoing, in the case of (i) the first Plan Year in which the Plan is in effect or (ii) an individual first becoming a Participant after the first day of a Plan Year, then to the extent required by Section 3.2 and Code Section 409A and related Treasury regulations, the maximum amount of the Participant’s Base Salary, Bonus, LTIP Amounts, Cash Director Fees or Stock Director Fees that may be deferred by the Participant for the Plan Year shall be determined by applying the percentages set forth in Section 3.1(a) to the portion of such compensation attributable to services performed after the date that the Participant’s deferral election is made.
|
(a)
|
General Timing Rule for Deferral Elections
. Except as otherwise provided in this Section 3.2, in order for a Participant to make a valid election to defer Base Salary, Bonus, LTIP Amounts, Cash Director Fees and/or Stock Director Fees, the Participant must submit an Election Form on or before the deadline established by the Committee, which in no event shall be later than the December 31st preceding the Plan Year in which such compensation will be earned.
|
(b)
|
Timing of Deferral Elections for Newly Eligible Plan Participants
. A Director or selected Employee who first becomes eligible to participate in the Plan on or after the beginning of a Plan Year, as determined in accordance with Treas. Reg. §1.409A-2(a)(7)(ii) and the “plan aggregation” rules provided in Treas. Reg. §1.409A-1(c)(2), may be permitted by the Committee to make an election to defer (i) Restricted Stock Units that may be initially granted to the Participant under the terms of the applicable Aaron’s, Inc. stock incentive plan or director compensation program subsequent to such election and which are attributable to services to be performed after such election and/or (ii) the portion of Base Salary, Bonus, LTIP Amounts, Cash Director Fees and/or Stock Director Fees attributable to services to be performed after such election, provided that the Participant submits an Election Form on or before the deadline established by the Committee, which in no event shall be later than 30 days after the Participant first becomes eligible to participate in the Plan.
|
(c)
|
Restricted Stock Unit Deferral
. For an election to defer Restricted Stock Units to be valid, (i) an Election Form must be submitted by the Participant with respect to such Restricted Stock Units, and (ii) such Election Form must be timely delivered to the Committee and accepted by the Committee no later than (A) the end of the calendar year preceding the Plan Year during which such Restricted Stock Units are initially granted to the Participant under the terms of the applicable Aaron’s, Inc. stock incentive plan or director compensation program, or (B) such other deadline established by the Committee in accordance with the requirements of Code Section 409A and related Treasury guidance or regulations, including, without limitation, such deadline as may be applicable under Section 3.2(e) below.
|
(d)
|
Timing of Deferral Elections for Performance-Based Compensation
. Subject to the limitations described below, the Committee may determine that an irrevocable deferral election for an amount that qualifies as Performance-Based Compensation may be made by submitting an Election Form on or before the deadline established by the Committee, which in no event shall be later than 6 months before the end of the performance period.
|
(e)
|
Timing Rule for Deferral of Compensation Subject to Risk of Forfeiture
. With respect to compensation (i) to which a Participant has a legally binding right to payment in a subsequent year, and (ii) that is subject to a forfeiture condition requiring the Participant’s continued services for a period of at least 12 months from the date the Participant obtains the legally binding right, the Committee may determine that an irrevocable deferral election for such compensation may be made by timely delivering an Election Form to the Committee in accordance with its rules and procedures, no later than the 30th day after the Participant obtains the legally binding right to the compensation, provided that the election is made at least 12 months in advance of the earliest date at which the forfeiture condition could lapse, as determined in accordance with Treas. Reg. §1.409A-2(a)(5).
|
(a)
|
For each Plan Year, an Employer may be required to credit amounts to a Participant’s Annual Account in accordance with employment or other agreements entered into between the Participant and the Employer, which amounts shall be part of the Participant’s Company Contribution Amount for that Plan Year. Such amounts shall be credited to the Participant’s Annual Account for the applicable Plan Year on the date or dates prescribed by such agreements.
|
(b)
|
For each Plan Year, an Employer, in its sole discretion, may, but is not required to, credit any amount it desires to any Participant’s Annual Account under this Plan,
|
(c)
|
If not otherwise specified in the Participant’s employment or other agreement entered into between the Participant and the Employer, the amount (or the method or formula for determining the amount) of a Participant’s Company Contribution Amount shall be set forth in writing in one or more documents, which shall be deemed to be incorporated into this Plan in accordance with Section 1.29.
|
(a)
|
A Participant shall at all times be 100% vested in his or her Restricted Stock Unit Account and the portion of his or her Account Balance attributable to Annual Deferral Amounts, as adjusted pursuant to Section 3.8.
|
(b)
|
A Participant shall be vested in the portion of his or her Account Balance attributable to any Company Contribution Amounts, as adjusted pursuant to Section 3.8, in accordance with the vesting schedule(s) set forth in his or her Plan Agreement, employment agreement or any other agreement entered into between the Participant and his or her Employer. If not addressed in such agreements, a Participant shall vest in the portion of his or her Account Balance attributable to any Company Contribution Amounts, as adjusted pursuant to Section 3.8, in accordance with the vesting schedule declared by the Committee in its sole discretion.
|
(c)
|
A Participant shall be vested in the portion of his or her Account Balance attributable to any Company Restoration Matching Amounts, as adjusted pursuant to Section 3.8, only to the extent that the Participant would be vested in such amounts under the provisions of the 401(k) Plan, as determined by the Committee in its sole discretion.
|
(d)
|
Notwithstanding anything to the contrary contained in this Section 3.7, in the event of a Change in Control, or upon a Participant’s Disability, Separation from Service on or after qualifying for Retirement, or death prior to Separation from Service, any amounts that are not vested in accordance with Sections 3.7(b) or 3.7(c) above, shall immediately become 100% vested.
|
(a)
|
Measurement Funds
. Subject to the restrictions found in Section 3.8(c) below, the Participant may elect one or more of the measurement funds selected by the Committee, in its sole discretion, which are based on certain mutual funds (the “Measurement Funds”), for the purpose of crediting or debiting investment experience to his or her Account Balance. As necessary, the Committee may, in its sole discretion, discontinue, substitute or add a Measurement Fund.
|
(b)
|
Election of Measurement Funds
. Subject to the restrictions found in Section 3.8(c) below, a Participant, in connection with his or her initial deferral election in accordance with Section 3.2 above, shall elect, on the Election Form, one or more Measurement Fund(s) (as described in Section 3.8(a) above) to be used to determine the amounts to be credited or debited to his or her Account Balance. If a Participant does not elect any of the Measurement Funds as described in the previous sentence, the Participant’s Account Balance shall automatically be allocated into the lowest-risk Measurement Fund, as determined by the Committee, in its sole discretion. Subject to the restrictions found in Section 3.8(c) below, the Participant may (but is
|
(c)
|
Aaron’s, Inc. Stock Unit Fund
.
|
(i)
|
The portion of a Participant’s Account Balance attributable to the deferral of Stock Director Fees and Restricted Stock Units pursuant to the terms of this Plan will be automatically and irrevocably allocated to the Aaron’s, Inc. Stock Unit Fund Measurement Fund. Participants may not select any other Measurement Fund to be used to determine the amounts to be credited or debited to the portion of their Account Balance attributable to Stock Director Fees and Restricted Stock Units. Furthermore, no other portion of the Participant’s Account Balance can be either initially allocated or re-allocated to the Aaron’s, Inc. Stock Unit Fund. Amounts allocated to the Aaron’s, Inc. Stock Unit Fund shall only be distributable in actual shares of Stock, provided that fractional shares may be distributed in cash.
|
(ii)
|
Any stock dividends, cash dividends or other non-cash dividends that would have been payable on the Stock credited to a Participant’s Account Balance shall be credited to the Participant’s Account Balance in the form of additional shares of Stock and shall automatically and irrevocably be deemed to be re-invested in the Aaron’s, Inc. Stock Unit Fund until such amounts are distributed to the Participant. The number of shares credited to the Participant for a particular stock dividend shall be equal to (A) the number of shares of Stock credited to the Participant’s Account Balance as of the payment date for such dividend in respect of each share of Stock, multiplied by (B) the number of additional whole or fractional shares of Stock actually paid as a dividend in respect of each share of Stock. The number of shares credited to the Participant for a particular cash dividend or other non-cash dividend
|
(iii)
|
The number of shares of Stock credited to the Participant’s Account Balance may be adjusted by the Committee, in its sole discretion, to prevent dilution or enlargement of a Participant’s rights with respect to the portion of his or her Account Balance allocated to the Aaron’s, Inc. Stock Unit Fund in the event of any reorganization, reclassification, stock split, or other unusual corporate transaction or event which affects the value of the Stock, provided that any such adjustment shall be made taking into account any crediting of shares of Stock to the Participant under Section 3.8.
|
(iv)
|
For purposes of this Section 3.8(c), the fair market value of the Stock shall be determined by the Committee in its sole discretion.
|
(v)
|
Notwithstanding the preceding provisions of this Section, the Committee may at any time alter the effective date of any investment or allocation involving the Aaron’s, Inc. Stock Unit Fund pursuant to Section 12.1 (relating to safeguards against insider trading). The Committee may also, to the extent necessary to ensure compliance with Rule 16b-3(f) of the Act, arrange for tracking of any such transaction defined in Rule 16b-3(b)(1) of the Act and bar any such transaction to the extent it would not be exempt under Rule 16b-3(f). The Company may also impose blackout periods pursuant to the requirements of the Sarbanes-Oxley Act of 2002 whenever the Company determines that circumstances warrant. Further, the Company may impose quarterly blackout periods on insider trading in the Aaron’s, Inc. Stock Unit Fund as needed (as determined by the Company), timed to coincide with the release of the Company’s quarterly earnings reports. The commencement and termination of these blackout periods in each quarter, the parties to which they apply and the activities they restrict shall be as set forth in the official insider trading policy promulgated by the Company from time to time.
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(d)
|
Proportionate Allocation
. In making any election described in Section 3.8(b) above, the Participant shall specify on the Election Form, in increments of one percent (1%), the percentage of his or her Account Balance or Measurement Fund, as applicable, to be allocated/reallocated.
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(e)
|
Crediting or Debiting Method
. The performance of each Measurement Fund (either positive or negative) will be determined on a daily basis based on the manner in which such Participant’s Account Balance has been hypothetically allocated among the Measurement Funds by the Participant.
|
(f)
|
No Actual Investment
. Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only, and a Participant’s election of any such Measurement Fund, the allocation of his or her Account Balance thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant’s Account Balance shall not be considered or construed in any manner as an actual investment of his or her Account Balance in any such Measurement Fund. In the event that the Company or the Trustee (as that term is defined in the Trust), in its own discretion, decides to invest funds in any or all of the investments on which the Measurement Funds are based, no Participant shall have any rights in or to such investments themselves. Without limiting the foregoing, a Participant’s Account Balance shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Company or the Trust; the Participant shall at all times remain an unsecured creditor of the Company.
|
(a)
|
Annual Deferral Amounts
. For each Plan Year in which an Annual Deferral Amount is being withheld from a Participant, the Participant’s Employer(s) shall withhold from that portion of the Participant’s Base Salary, Bonus and/or LTIP Amounts that is not being deferred, in a manner determined by the Employer(s), the Participant’s share of FICA and other employment taxes on such Annual Deferral Amount. If necessary, the Committee may reduce the Annual Deferral Amount in order to comply with this Section 3.9.
|
(b)
|
Company Restoration Matching Amounts and Company Contribution Amounts
. When a Participant becomes vested in a portion of his or her Account Balance attributable to any Company Restoration Matching Amounts and/or Company Contribution Amounts, the Participant’s Employer(s) shall withhold from that portion of the Participant’s Base Salary, Bonus and/or LTIP Amounts that is not deferred, in a manner determined by the Employer(s), the Participant’s share of FICA and other employment taxes on such amounts. If necessary, the Committee may reduce the vested portion of the Participant’s Company Restoration Matching Amount or Company Contribution Amount, as applicable, in order to comply with this Section 3.9.
|
(c)
|
Restricted Stock Unit Amounts
. For each Plan Year in which a Restricted Stock Unit Amount is being first withheld from an Employee Participant, the Participant’s Employer(s) shall withhold from that portion of the Participant’s compensation not being deferred, in a manner determined by the Employer(s), the Participant’s share of FICA and other employment taxes on such Restricted Stock Unit Amount. If necessary, the Committee may reduce the Restricted Stock Unit Amount in order to comply with this Section 3.9.
|
(d)
|
Distributions
. The Participant’s Employer(s), or the trustee of the Trust, shall withhold from any payments made to a Participant under this Plan all federal, state and local income, employment and other taxes required to be withheld by the Employer(s), or the trustee of the Trust, in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Employer(s) and the trustee of the Trust.
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(a)
|
The election of the new Benefit Distribution Date shall have no effect until at least 12 months after the date on which the election is made;
|
(b)
|
The new Benefit Distribution Date selected by the Participant for such Scheduled Distribution must be the first day of a Plan Year that is no sooner than 5 years after the previously designated Benefit Distribution Date; and
|
(c)
|
The election must be made at least 12 months prior to the Participant’s previously designated Benefit Distribution Date for such Scheduled Distribution.
|
(a)
|
If a Participant experiences an Unforeseeable Emergency prior to the occurrence of a distribution event described in Articles 5 through 8, as applicable, the Participant may petition the Committee to receive a partial or full payout from the Plan. The payout, if any, from the Plan shall not exceed the lesser of (i) the Participant’s vested Account Balance, excluding the portion of the Account Balance attributable to the Restricted Stock Unit Account, calculated as of the close of business on or around the Benefit Distribution Date for such payout, as determined by the Committee in accordance with provisions set forth below, or (ii) the amount necessary to satisfy the Unforeseeable Emergency, plus amounts necessary to pay Federal, state, or local income taxes or penalties reasonably anticipated as a result of the distribution. A Participant shall not be eligible to receive a payout from the Plan to the extent that the Unforeseeable Emergency is or may be relieved (A) through reimbursement or compensation by insurance or otherwise, (B) by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship or (C) by cessation of deferrals under this Plan.
|
(b)
|
A Participant’s deferral elections under this Plan shall also be cancelled to the extent the Committee determines that such action is required for the Participant to obtain a hardship distribution from an Employer’s 401(k) Plan pursuant to Treas. Reg. §1.401(k)-1(d)(3).
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(a)
|
In connection with a Participant’s election to defer an Annual Deferral Amount, the Participant shall elect the form of Retirement Benefit in which his or her Annual Account for such Plan Year will be paid. The Participant may elect to receive the Retirement Benefit for each Annual Account in the form of a lump sum payment or pursuant to an Annual Installment Method of 5, 10 or 15 years. If a Participant does not make any election with respect to the Retirement Benefit for an Annual Account, then the Participant shall be deemed to have elected to receive such Annual Account as a lump sum.
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(b)
|
A Participant may change the form of Retirement Benefit payment for an Annual Account by submitting an Election Form to the Committee in accordance with the following criteria:
|
(i)
|
The election shall not take effect until 12 months after the date on which the election is made;
|
(ii)
|
The new Benefit Distribution Date for such Annual Account shall be 5 years after the Benefit Distribution Date that would otherwise have been applicable to such Annual Account; and
|
(iii)
|
The election must be made at least 12 months prior to the Benefit Distribution Date that would otherwise have been applicable to such Annual Account.
|
(c)
|
The lump sum payment shall be made, or installment payments shall commence, upon the applicable Benefit Distribution Date. Remaining installments, if any, shall continue in accordance with the Participant’s election for each Annual Account and shall be paid upon each anniversary of the Benefit Distribution Date.
|
(a)
|
To the extent permitted by the Committee, in connection with a Participant’s election to defer an Annual Deferral Amount, the Participant may elect the form of Termination Benefit in which his or her Annual Account for such Plan Year will be paid. The Participant may elect to receive the Termination Benefit for each Annual Account in the form of a lump sum payment or pursuant to an Annual Installment Method of 5 years. If a Participant does not make any election with respect to the Termination Benefit for an Annual Account, then the Participant shall be deemed to have elected to receive such Annual Account as a lump sum.
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(b)
|
The lump sum payment shall be made, or installment payments shall commence, upon the Participant’s Benefit Distribution Date. Remaining installments, if any, shall be paid upon each anniversary of the Participant’s Benefit Distribution Date.
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(a)
|
This Plan is intended to be a formula plan for purposes of Section 16 of the Act. Accordingly, in the case of a deferral or other action under the Plan that constitutes a transaction that could be covered by Rule 16b-3(d) or (e), if it were approved by the Company’s Board or Compensation Committee (“Board Approval”), it is intended that the Plan shall be administered by delegates of the Compensation Committee, in the case of a Participant who is subject to Section 16 of the Act, in a
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(b)
|
This Subsection shall govern the distribution of a deferral that (i) is wholly or partly invested in the Aaron’s, Inc. Stock Unit Fund at the time the deferral would be valued to determine the amount of cash to be distributed to a Participant, (ii) either was the subject of a revised payment election or was not covered by an agreement, made at the time of the Participant’s original deferral election, that any investments in the Aaron’s, Inc. Stock Unit Fund would, once made, remain in that fund until distribution of the deferral, and (iii) is made to a Participant who is subject to Section 16 of the Act at the time the interest in the Aaron’s, Inc. Stock Unit Fund would be liquidated in connection with the distribution, and (iv) if paid at the time the distribution would be made without regard to this subsection, could result in a violation of Section 16 of the Act because there is an opposite way transaction that would be matched with the liquidation of the Participant’s interest in the Aaron’s, Inc. Stock Unit Fund (either as a discretionary transaction (within the meaning of Rule 16b-3(b)(1)) or as a regular transaction, as applicable) (a “Covered Distribution”). In the case of a Covered Distribution, if the liquidation of the Participant’s interest in the Aaron’s, Inc. Stock Unit Fund in connection with the distribution has not received Board approval by the time the distribution would be made if it were not a Covered Distribution, or if it is a discretionary transaction, then the actual distribution to the Participant shall be delayed only until the earlier of:
|
(i)
|
In the case of a transaction that is not a discretionary transaction, Board Approval of the liquidation of the Participant’s interest in the Aaron’s, Inc. Stock Unit Fund in connection with the distribution, and
|
(ii)
|
The date the distribution would no longer violate Section 16 of the Act,
e.g.
, when the Participant is no longer subject to Section 16 of the Act, when the Annual Account related to the distribution is no longer invested in the Aaron’s, Inc. Stock Unit Fund or when the time between the liquidation and an opposite way transaction is sufficient.
|
(a)
|
that the Claimant’s requested determination has been made, and that the claim has been allowed in full; or
|
(b)
|
that the Committee has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant:
|
(i)
|
the specific reason(s) for the denial of the claim, or any part of it;
|
(ii)
|
specific reference(s) to pertinent provisions of the Plan upon which such denial was based;
|
(iii)
|
a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary;
|
(iv)
|
an explanation of the claim review procedure set forth in Section 14.3 below; and
|
(v)
|
a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.
|
(a)
|
may, upon request and free of charge, have reasonable access to, and copies of all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claim for benefits;
|
(b)
|
may submit written comments or other documents; and/or
|
(c)
|
may request a hearing, which the Committee, in its sole discretion, may grant.
|
(a)
|
specific reasons for the decision;
|
(b)
|
specific reference(s) to the pertinent Plan provisions upon which the decision was based;
|
(c)
|
a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s claim for benefits; and
|
(d)
|
a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a).
|
(a)
|
Initial Claim
s. With respect to a claim for benefits under the Plan based on Disability (other than (i) approval for payment of benefits, directly or indirectly, under any long-term disability plan maintained by the Employer, or (ii) eligibility for Social Security disability benefits), the Committee shall furnish to the Claimant written notice of the disposition of a claim within 45 days after the application therefor is filed; provided, if matters beyond the control of the Committee require an extension of time for processing the claim, the Committee shall furnish written notice of the extension to the Claimant prior to the end of the initial 45-day period, and such extension shall not exceed one additional, consecutive 30-day period; and, provided further, if matters beyond the control of the Committee require an additional extension of time for processing the claim, the Committee shall furnish written notice of the second extension to the Claimant prior to the end of the initial 30-day extension period, and such extension shall not exceed an additional, consecutive 30-day period. Notice of any extension under this subsection shall specifically explain the standards on which entitlement to a benefit is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve those issues. In the event the claim is denied, the notice of the disposition of the claim shall provide the specific reasons for the denial, cites of the pertinent provisions of the Plan, an explanation as to how the Claimant can perfect the claim and/or submit the claim for review (where applicable), and a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse determination on review.
|
(b)
|
Appeals
. With respect to an appeal of a denial of benefits under the Plan based on Disability (other than (i) approval for payment of benefits, directly or indirectly, under any long-term disability plan maintained by the Employer, or (ii) eligibility for Social Security disability benefits), the Claimant or his duly authorized representative may review pertinent documents related to the Plan and in the Committee’s possession in order to prepare the appeal. The form containing the request for review, together with a written statement of the Claimant’s position, must be filed with the Committee no later than 180 days after receipt of the written notification of denial of a claim provided for in subsection (a). The Committee’s decision shall be made within 45 days following the filing of the request for review and shall be communicated in writing to the Claimant; provided, if special circumstances require an extension of time for processing the appeal, the Committee shall furnish written notice to the Claimant prior to the end of the initial 45-day period, and such an extension shall not exceed one additional 45-day period. The Committee’s review shall not afford deference to the initial adverse benefit
|
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Aaron's, Inc.
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By:
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/s/ Robert W. Kamerschen
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Title:
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Executive Vice President & General Counsel
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NAME
|
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STATE OR COUNTRY OF INCORPORATION
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Aaron Investment Company
|
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Delaware
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Aaron’s Canada, ULC
|
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Canada
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Aaron’s Foundation, Inc.
|
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Georgia
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Aaron’s Logistics, LLC
|
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Georgia
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Aaron’s Procurement Company, LLC
|
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Georgia
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Aaron’s Production Company
|
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Georgia
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Aaron’s Strategic Services, LLC
|
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Georgia
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Aaron's Progressive Holdings Company
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Delaware
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Woodhaven Furniture Industries, LLC
|
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Georgia
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99LTO, LLC
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Georgia
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Dent-A-Med, Inc.
|
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Oklahoma
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HC Recovery, Inc.
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Oklahoma
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Progressive Finance Holdings, LLC
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Delaware
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Prog Leasing, LLC
|
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Delaware
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Approve.Me LLC
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Utah
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AM2 Enterprises, LLC
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Utah
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Pango LLC
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Utah
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DAMI LLC
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Oklahoma
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Prog Finance Arizona, LLC
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Utah
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Prog Finance California, LLC
|
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Utah
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Prog Finance Florida, LLC
|
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Utah
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Prog Finance Georgia, LLC
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Utah
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Prog Finance Illinois, LLC
|
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Utah
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Prog Finance Michigan, LLC
|
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Utah
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Prog Finance New York, LLC
|
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Utah
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Prog Finance Ohio, LLC
|
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Utah
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Prog Finance Texas, LLC
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Utah
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Prog Finance Mid-West, LLC
|
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Utah
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Prog Finance North-East, LLC
|
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Utah
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Prog Finance South-East, LLC
|
|
Utah
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Prog Finance West, LLC
|
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Utah
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NPRTO Arizona, LLC
|
|
Utah
|
NPRTO California, LLC
|
|
Utah
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NPRTO Florida, LLC
|
|
Utah
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NPRTO Georgia, LLC
|
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Utah
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NPRTO Illinois, LLC
|
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Utah
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NPRTO Michigan, LLC
|
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Utah
|
NPRTO New York, LLC
|
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Utah
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NPRTO Ohio, LLC
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Utah
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NPRTO Texas, LLC
|
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Utah
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NPRTO Mid-West, LLC
|
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Utah
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NPRTO North-East, LLC
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Utah
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NPRTO South-East, LLC
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Utah
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NPRTO West, LLC
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Utah
|
1)
|
Registration Statement (Form S-8 No. 333-160357) dated June 30, 2009 pertaining to the Aaron’s, Inc. Deferred Compensation Plan, and
|
2)
|
Registration Statement (Form S-8 No. 333-171113) dated December 10, 2010 pertaining to the 2001 Stock Option and Incentive Award Plan, as Amended and Restated, and Aaron’s, Inc. Employees Retirement Plan and Trust, as Amended and Restated;
|
1.
|
I have reviewed this annual report on Form 10-K of Aaron’s, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
|
|
|
|
Date: February 24, 2017
|
|
/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
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
|
|
|
|
Date: February 24, 2017
|
|
/s/ Steven A. Michaels
|
|
|
Steven A. Michaels
|
|
|
Chief Financial Officer and President of Strategic Operations
|
(1)
|
The Annual Report on Form 10-K of the Company for the annual period ended
December 31, 2016
(the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
Date: February 24, 2017
|
|
/s/ John W. Robinson, III
|
|
|
John W. Robinson, III
|
|
|
Chief Executive Officer
|
(1)
|
The Annual Report on Form 10-K of the Company for the annual period ended
December 31, 2016
(the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
Date: February 24, 2017
|
|
/s/ Steven A. Michaels
|
|
|
Steven A. Michaels
|
|
|
Chief Financial Officer and President of Strategic Operations
|