Aarons 2001 Annual Report Download - page 25

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2000, an aggregate of $72,397,000 (bearing interest at 3.21%) and $90,000,000 (bearing
interest at 7.04%) was outstanding under the current and prior revolving credit agreements,
respectively. The Company pays a .25% commitment fee on unused balances. The weighted
average interest rate on borrowings under the revolving credit agreement (before giving effect
to interest rate swaps) was 5.77% in 2001, 7.07% in 2000 and 5.94% in 1999. The revolving
credit agreement expires March 30, 2004. In September 2000, the Company entered into a credit
agreement with two banks providing for unsecured borrowings up to $10,000,000. At December
31, 2000 an aggregate of $10,000,000 bearing interest at LIBOR plus 1.00% was outstanding
under the agreement. The debt matured in 2001.
The Company has entered into interest rate swap agreements that effectively fix the
interest rate on $20,000,000 of borrowings under the revolving credit agreement at an aver-
age rate of 6.15% until May 2003, $10,000,000 at an average rate of 7.96% until November
2003, $10,000,000 at an average rate of 7.75% until November 2003, and an additional
$20,000,000 at an average rate of 7.6% until June 2005. These swap agreements involve
the receipt of amounts when the floating rates exceed the fixed rates and the payment of
amounts when the fixed rates exceed the floating rates in such agreements over the life of
the agreements. The differential to be paid or received is accrued as interest rates change
and is recognized as an adjustment to the floating rate interest expense related to the debt.
The fair value of the liability of interest rate swap agreements included in accounts payable
& accrued expenses in the consolidated balance sheet was approximately $3,145,000 at
December 31, 2001.
The revolving credit agreement contains certain covenants which require that the Company
not permit its consolidated net worth as of the last day of any fiscal quarter to be less than
the sum of (a) $187,625,000 plus (b) 50% of the Company’s consolidated net income (but
not loss) for the period beginning January 1, 2001 and ending on the last day of such fiscal
quarter. It also places other restrictions on additional borrowings and requires the mainte-
nance of certain financial ratios. At December 31, 2001, $26,124,000 of retained earnings
were available for dividend payments and stock repurchases under the debt restrictions, and
the Company was in compliance with all covenants.
Other Debt — Other debt at December 31, 2001 of $5,316,000 is primarily comprised of
$4,200,000 of industrial development corporation revenue bonds. The average weighted
borrowing rate on these bonds in 2001 was 2.87%. No principal payments are due on the
bonds until maturity in 2015.
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
(In Thousands) 2001 2000 1999
Current Income Tax Expense:
Federal $6,239 $9,461 $8,020
State 112 608 1,081
6,351 10,069 9,101
Deferred Income Tax Expense:
Federal 953 5,520 5,989
State 215 1,056 610
1,168 6,576 6,599
$7,519 $16,645 $15,700
Significant components of the Company’s deferred income tax liabilities and assets are
as follows:
December 31, December 31,
(In Thousands) 2001 2000
Deferred Tax Liabilities:
Rental Merchandise and
Property, Plant & Equipment $28,852 $25,770
Other, Net 1,376 1,531
Total Deferred Tax Liabilities 30,228 27,301
Deferred Tax Assets:
Accrued Liabilities 2,702 1,324
Advance Payments 3,512 3,179
Other, Net 3,051 1,812
Total Deferred Tax Assets 9,265 6,315
Net Deferred Tax Liabilities $20,963 $20,986
NOTE E:
INCOME TAXES