Aarons 2013 Annual Report Download - page 77

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Compensation deferred under the plan is credited to each participant’s deferral account and a deferred compensation liability is
recorded in accounts payable and accrued expenses in the consolidated balance sheets. The deferred compensation plan liability
was approximately $12.6 million and $9.5 million as of December 31, 2013 and 2012, respectively. Liabilities under the plan
are recorded at amounts due to participants, based on the fair value of participants’ selected investments. The Company has
established a rabbi trust to fund obligations under the plan with Company-owned life insurance. The obligations are unsecured
general obligations of the Company and the participants have no right, interest or claim in the assets of the Company, except as
unsecured general creditors. The cash surrender value of these policies totaled $14.1 million and $10.4 million as of
December 31, 2013 and 2012, respectively, and is included in prepaid expenses and other assets in the consolidated balance
sheets.
Deferred compensation expense charged to operations for the Company’s matching contributions totaled $139,000, $285,000
and $306,000 in 2013, 2012, and 2011, respectively. Benefits of $1.3 million, $616,000 and $77,000 were paid during the years
ended December 31, 2013, 2012 and 2011, respectively.
NOTE 15: SUBSEQUENT EVENTS
As previously discussed, in January 2014, the Company sold the 27 Company-operated RIMCO stores and the rights to five
franchised RIMCO stores, which leased automobile tires, wheels and rims under sales and lease ownership agreements. The
Company received total cash consideration of $10.0 million from a third party. During the year ended December 31, 2013, the
Company recognized impairment charges of $766,000 related to the write-down of the net assets of the RIMCO operating
segment (principally consisting of lease merchandise, office furniture and leasehold improvements) to fair value less cost to
sell. The Company expects any additional charges associated with the disposal of the RIMCO segment to be immaterial to
future results of operations.
In addition, in February 2014, the accelerated share repurchase program with a third-party financial institution was completed
and the Company received an additional 1.0 million shares of common stock.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
An evaluation of Aaron’s disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, was carried out by management, with the participation of the Chief Executive Officer (CEO) and Chief
Financial Officer (CFO), as of the end of the period covered by this Annual Report on Form 10-K. Based on management’s
evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of
December 31, 2013 to provide reasonable assurance that the objectives of disclosure controls and procedures are met.
Reports of Management and Independent Registered Public Accounting Firm on Internal Control Over Financial
Reporting
Management has assessed, and the Company’s independent registered public accounting firm, Ernst & Young LLP, has audited,
the Company’s internal control over financial reporting as of December 31, 2013. The unqualified reports of management and
Ernst & Young LLP thereon are included in Item 8 of this Annual Report on Form 10-K and are incorporated by reference
herein.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting, as defined in Rule 13a-15(f) under the
Securities Exchange Act of 1934, during the Company’s fourth fiscal quarter of 2013 that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.