Aarons 2010 Annual Report Download - page 21

the tax and accounting guidance to the facts and circumstances,
income tax balances are adjusted appropriately through the income
tax provision. Reserves for income tax uncertainties are maintained
at levels we believe are adequate to absorb probable payments. Actual
amounts paid, if any, could differ significantly from these estimates.
We use the liability method of accounting for income taxes.
Under this method, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences
are expected to be recovered or settled. Valuation allowances are
established, when necessary, to reduce deferred tax assets when we
expect the amount of tax benefit to be realized is less than the car-
rying value of the deferred tax asset.
Results of Operations
Year Ended December 31, 2010 Versus Year Ended
December 31, 2009
The Aaron’s Corporate Furnishings division is reflected as a discon-
tinued operation for all periods presented. The following table shows
key selected financial data for the years ended December 31, 2010
and 2009, and the changes in dollars and as a percentage to 2010
from 2009.
Year Ended Year Ended Increase/(Decrease) % Increase/
December 31, December 31, in Dollars to 2010 (Decrease) to
(In Thousands) 2010 2009 from 2009 2010 from 2009
Revenues:
Lease Revenues and Fees $1,402,053 $1,310,709 $ 91,344 7.0%
Retail Sales 40,556 43,394 (2,838) (6.5)
Non-Retail Sales 362,273 327,999 34,274 10.4
Franchise Royalties and Fees 59,112 52,941 6,171 11.7
Other 12,853 17,744 (4,891) (27.6)
1,876,847 1,752,787 124,060 7.1
Costs and Expenses:
Retail Cost of Sales 23,013 25,730 (2,717) (10.6)
Non-Retail Cost of Sales 330,918 299,727 31,191 10.4
Operating Expenses 824,929 771,634 53,295 6.9
Depreciation of Lease Merchandise 504,105 474,958 29,147 6.1
Interest 3,096 4,299 (1,203) (28.0)
1,686,061 1,576,348 109,713 7.0
Earnings From Continuing
Operations Before Income Taxes 190,786 176,439 14,347 8.1
Income Taxes 72,410 63,561 8,849 13.9
Net Earnings From Continuing
Operations 118,376 112,878 5,498 4.9
Loss From Discontinued
Operations, Net of Tax — (277) 277 (100.0)
Net Earnings $ 118,376 $ 112,601 $ 5,775 5.1%
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