Aarons 2001 Annual Report Download - page 24

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Earnings per share is computed by dividing net income by the weighted average number
of common shares outstanding during the year which were 19,928,000 shares in 2001,
19,825,000 shares in 2000, and 20,062,000 in 1999. The computation of earnings per share
assuming dilution includes the dilutive effect of stock options and awards. Such stock options
and awards had the effect of increasing the weighted average shares outstanding assuming
dilution by 214,000 in 2001, 142,000 in 2000, and 273,000 in 1999, respectively.
December 31, December 31,
(In Thousands) 2001 2000
Land $ 10,504 $ 8,977
Buildings & Improvements 37,570 28,681
Leasehold Improvements & Signs 38,214 34,128
Fixtures & Equipment 28,357 25,786
Construction in Progress 1,788 2,051
116,433 99,623
Less: Accumulated Depreciation & Amortization (39,151) (36,449)
$ 77,282 $ 63,174
Bank Debt — The Company has a revolving credit agreement dated March 30, 2001 with
several banks providing for unsecured borrowings up to $110,000,000, which includes an
$8,000,000 credit line to fund daily working capital requirements. Amounts borrowed bear
interest at the lower of the lender’s prime rate or LIBOR plus 1.25%. The pricing under the
working capital line is based upon overnight bank borrowing rates. At December 31, 2001 and
NOTE B:
EARNINGS PER SHARE
NOTE C:
PROPERTY, PLANT &
EQUIPMENT
NOTE D:
DEBT
income at the time of extinguishment. The Company does not enter into derivatives for spec-
ulative or trading purposes.
Comprehensive Income—Comprehensive income totaled $10,382,000, $27,261,000,
and $25,602,000 for the years ended December 31, 2001, 2000 and 1999, respectively.
New Accounting Pronouncements—On January 1, 2001, the Company adopted
Statements of Financial Accounting Standards Nos. 133, 137, and 138 (collectively SFAS 133),
pertaining to the accounting for derivative instruments and hedging activities. SFAS 133 requires
the Company to recognize all derivative instruments in the balance sheet at fair value. Upon
adoption of SFAS 133, the Company recorded a charge to other comprehensive income of
$497,000, net of income taxes, resulting from a cumulative effect of a change in accounting
principle. Any subsequent gains or losses arising from these swaps have also been deferred in
shareholders’ equity as a component of accumulated other comprehensive loss. These deferred
gains and losses are recognized in the Company’s Consolidated Statements of Earnings in the
period in which the related interest payments being hedged are recognized in expense. No
significant amounts were reclassified from accumulated other comprehensive loss to earnings
during 2001.
In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards No. 141, Business Combinations. This statement eliminates the pooling
of interests method of accounting for all business combinations initiated after June 30, 2001,
and addresses the initial recognition and measurement of goodwill and other intangible assets
acquired in a business combination. The Company had no significant business combinations
after June 30, 2001.
In June 2001, the FASB issued Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets. This statement changes the accounting for goodwill
from an amortization method to an impairment only approach. Application of the non-
amortization provisions of this statement is expected to result in an increase in net income of
approximately $752,000 ($.04 per diluted share) in 2002. During fiscal 2002, the Company
will perform impairment tests for goodwill as required by this statement. If the results of these
tests indicate any impairment of goodwill, the Company will record such amount as a cumula-
tive effect of a change in accounting principle as of January 1, 2002. The Company does not
anticipate any impairment will be recorded upon adoption.
In August 2001, the FASB issued Statement of Financial Accounting Standards No. 144
(SFAS 144), Accounting for the Impairment or Disposal of Long-Lived Assets. This statement
supercedes Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of. The Company
will adopt SFAS 144 as of January 1, 2002, but does not believe the statement will have a
material effect on its consolidated financial statements.