Aarons 1999 Annual Report Download - page 18

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The Company has financed its growth through a
revolving credit agreement with several banks, trade credit
and internally generated funds. The revolving credit agree-
ment provides for unsecured borrowings up to $90.0 million
which includes a $6.0 million credit line to fund daily
working capital requirements. At December 31, 1999,
an aggregate of $72.2 million was outstanding under this
facility, bearing interest at a weighted average variable rate of
6.88%. The Company uses interest rate swap agreements as
part of its overall long-term financing program. At December
31, 1999, the Company had swap agreements with notional
principal amounts of $40.0 million which effectively fixed
the interest rates on an equal amount of the Company’s
revolving credit agreement at 6.93%.
On April 28, 1998, the Company issued through a
public offering 2.1 million shares of Common Stock. The
net proceeds to the Company after deducting underwriting
discounts and offering expenses were $40.0 million. The
proceeds were used to reduce bank debt.The Company
believes that the expected cash flows from operations,
proceeds from the sale of rental return merchandise, bank
borrowings and vendor credit will be sufficient to fund
the Company’s capital and liquidity needs for at least the
next 24 months.
In February 1999, the Company’s Board of Directors
authorized the repurchase of up to 2,000,000 shares of the
Company’s Common Stock and/or Class A Common Stock
in addition to the 471,690 shares at December 31,1999;
previously authorized. During 1999, 859,500 shares of the
Company’s stock were purchased at an aggregate cost of
$12.7 million and the Company was authorized to purchase
an additional 1,612,190 shares at December 31, 1999.
The Company has paid dividends for thirteen consecutive
years. A $.02 per share dividend on Common Stock and
on Class A Common Stock was paid in January 1999 and
July 1999, for a total fiscal year cash outlay of $816,000.
The Company currently expects to continue its policy of
paying dividends.
Impact of Year 2000
In prior years, the Company discussed the nature and
progress of its plans to become Year 2000 ready. In late
1999, the Company completed its remediation and
testing of systems. As a result of those planning and
implementation efforts, the Company experienced no
significant disruptions in mission critical information
technology and non-information technology systems and
believes those systems successfully responded to the Year
2000 date change. The Company expensed approximately
$500,000 during 1999 in connection with remediating
its systems. The Company is not aware of any material
problems resulting from Year 2000 issues, either with its
products, its internal systems, or the products and services
of third parties. The Company will continue to monitor
its mission critical computer applications and those of its
suppliers and vendors throughout the year 2000 to ensure
that any latent Year 2000 matters that may arise are
addressed promptly.