Aarons 2010 Annual Report Download - page 27

Purchase obligations are primarily related to certain advertis-
ing and marketing programs. Purchase orders or contracts for the
purchase of lease merchandise and other goods and services are
not included in the tables above. We are not able to determine the
aggregate amount of such purchase orders that represent contrac-
tual obligations, as purchase orders may represent authorizations
to purchase rather than binding agreements. Our purchase orders
are based on our current distribution needs and are fulfilled by our
vendors within short time horizons. We do not have significant
agreements for the purchase of lease merchandise or other goods
specifying minimum quantities or set prices that exceed our
expected requirements for three months.
Deferred income tax liabilities as of December 31, 2010 were
approximately $227.5 million. This amount is not included in the
total contractual obligations table because we believe this presenta-
tion would not be meaningful. Deferred income tax liabilities are
calculated based on temporary differences between the tax basis
of assets and liabilities and their respective book basis, which will
result in taxable amounts in future years when the liabilities are
settled at their reported financial statement amounts. The results of
these calculations do not have a direct connection with the amount
of cash taxes to be paid in any future periods. As a result, schedul-
ing deferred income tax liabilities as payments due by period could
be misleading, because this scheduling would not relate to liquidity
needs.
Recent Accounting Pronouncements
We are not aware of any recent accounting pronouncements that will
materially impact the Company’s consolidated financial statements
in future periods.
Quantitative And Qualitative Disclosures
About Market Risk
As of December 31, 2010, we had $24.0 million of senior unsecured
notes outstanding at a fixed rate of 5.03%. We had no balance
outstanding under our revolving credit agreement indexed to the
LIBOR (“London Interbank Offer Rate”) or the prime rate, which
exposes us to the risk of increased interest costs if interest rates rise.
Based on our overall interest rate exposure at December 31, 2010, a
hypothetical 1.0% increase or decrease in interest rates would not be
material.
We do not use any significant market risk sensitive instruments
to hedge commodity, foreign currency, or other risks, and hold
no market risk sensitive instruments for trading or speculative
purposes.
Total
Amounts Period Less Period 1–3 Period 3–5 Period Over
(In Thousands) Committed Than 1 Year Years Years 5 Years
Credit Facilities, Excluding Capital Leases $ 27,303 $ 12,002 $ 12,000 $ 3,301 $ —
Capital Leases 14,487 1,337 2,708 3,287 7,155
Operating Leases 537,918 96,305 151,784 98,324 191,505
Purchase Obligations 47,542 31,619 15,728 195 —
Total Contractual Cash Obligations $627,250 $141,263 $182,220 $105,107 $198,660
The following table shows the Company’s approximate commercial commitments as of December 31, 2010:
Total
Amounts Period Less Period 1–3 Period 3–5 Period Over
(In Thousands) Committed Than 1 Year Years Years 5 Years
Guaranteed Borrowings of Franchisees $121,014 $119,937 $ 1,077 $ — $ —
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