Aarons 2000 Annual Report Download - page 23

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21
Notes to Consolidated
Financial Statements
net income (but not loss) for the period beginning July 1, 1997 and ending on the last day of such fiscal
quarter. It also places other restrictions on additional borrowings and requires the maintenance of certain
financial ratios. At December 31, 2000, $61,640,000 of retained earnings were available for dividend
payments and stock repurchases under the debt restrictions.
In September 2000, the Company entered into a credit agreement with two banks providing for
unsecured borrowings up to $10,000,000. At December 31, 2000 an aggregate of $10,000,000 bearing
interest at libor plus 1.00% was outstanding under the agreement. The debt matures in 2001.
Other Debt — Other debt at December 31, 2000 of $4,769,000 is primarily comprised of $4,200,000 of
industrial development corporation revenue bonds. The average weighted borrowing rate on these bonds
in 2000 was 4.55%. No principal payments are due on the bonds until maturity in 2015.
Note E: Income Taxes
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
(In Thousands) 2000 1999 1998
Current Income Tax Expense:
Federal $9,461 $8,020 $11,422
State 608 1,081 1,161
10,069 9,101 12,583
Deferred Income Tax Expense:
Federal 5,520 5,989 949
State 1,056 610 175
6,576 6,599 1,124
$16,645 $15,700 $13,707
Significant components of the Company’s deferred income tax liabilities and assets are as follows:
December 31, December 31,
(In Thousands) 2000 1999
Deferred Tax Liabilities:
Rental Merchandise and
Property, Plant & Equipment $25,770 $19,345
Other, Net 1,531 577
Total Deferred Tax Liabilities 27,301 19,922
Deferred Tax Assets:
Accrued Liabilities 1,324 961
Advance Payments 3,179 2,858
Other, Net 1,812 1,693
Total Deferred Tax Assets 6,315 5,512
Net Deferred Tax Liabilities $20,986 $14,410
The Company’s effective tax rate differs from the federal income tax statutory rate as follows:
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
2000 1999 1998
Statutory Rate 35.0% 35.0% 35.0%
Increases in Taxes
Resulting From:
State Income Taxes,
Net of Federal Income
Tax Benefit 2.5 2.7 2.4
Other, Net 0.4 0.3 1.6
Effective Tax Rate 37.9% 38.0% 39.0%