Aarons 2008 Annual Report Download - page 22

Balance Sheet
CASH. The Company’s cash balance increased to $7.4 million at
December 31, 2008 from $4.8 million at December 31, 2007.
Fluctuations in our cash balances are the result of timing differ-
ences between when our stores deposit cash and when that cash
is available for application against borrowings outstanding under
our revolving credit facility. For additional information, refer to
the “Liquidity and Capital Resources” section below.
RENTAL MERCHANDISE. The increase of $122.8 million in rental
merchandise, net of accumulated depreciation, to $681.1 million
at December 31, 2008 from $558.3 million at December 31, 2007,
is primarily the result of continued revenue growth of new and
existing company-operated stores.
PROPERTY, PLANT AND EQUIPMENT. The decrease of $19.0 million
in property, plant and equipment, net of accumulated deprecia-
tion, to $224.4 million at December 31, 2008 from $243.4 million
at December 31, 2007, is primarily the result of an increase in
sale-leaseback activity since December 31, 2007. Additionally,
the Company recorded an $838,000 impairment loss on certain
leasehold assets in 2008.
GOODWILL. The $44.1 million increase in goodwill, to $186.0
million on December 31, 2008 from $141.9 million on December
31, 2007, is the result of a series of acquisitions of sales and
lease ownership businesses. During 2008, the Company acquired
a net of 68 stores. The aggregate purchase price for these asset
acquisitions totaled $79.8 million, with the principal tangible
assets acquired consisting of rental merchandise and certain
fixtures and equipment.
OTHER INTANGIBLES, NET. The $2.7 million increase in other
intangibles, to $7.5 million on December 31, 2008 from $4.8
million on December 31, 2007, is the result of acquisitions of
sales and lease ownership businesses mentioned above, net of
amortization of certain finite-life intangible assets.
PREPAID EXPENSES AND OTHER ASSETS. Prepaid expenses and
other assets increased $31.2 million to $67.4 million at December
31, 2008 from $36.2 million at December 31, 2007, primarily as a
result of an increase in prepaid income taxes.
ACCOUNTS PAYABLE AND ACCRUED EXPENSES. The increase of
$37.8 million in accounts payable and accrued expenses, to
$173.9 million at December 31, 2008 from $136.1 million at
December 31, 2007, is primarily the result of fluctuations in
the timing of payments.
DEFERRED INCOME TAXES PAYABLE. The increase of $66.3 million
in deferred income taxes payable to $148.6 million at December
31, 2008 from $82.3 million at December 31, 2007 is primarily
the result of bonus rental merchandise depreciation deductions
for tax purposes as a result of the Economic Stimulus Act of 2008.
CREDIT FACILITIES AND SENIOR NOTES. The $71.0 million decrease
in the amounts we owe under our credit facilities to $114.8
million on December 31, 2008 from $185.8 million on December
31, 2007, reflects net payments under our revolving credit
facility during 2008 primarily with the cash received from the
sale of the Aaron’s Corporate Furnishings division. Additionally,
we made $22.0 million in repayments on our senior unsecured
notes in 2008.
Liquidity and Capital Resources
General
Cash flows from continuing operations for the year ended
December 31, 2008 and 2007 were $79.3 million and $106.4
million, respectively. Our primary capital requirements consist
of buying rental merchandise for our stores. As Aaron Rents
continues to grow, the need for additional rental merchandise
will continue to be our major capital requirement. Other capital
requirements include purchases of property, plant and equipment
and expenditures for acquisitions. These capital requirements
historically have been financed through:
•฀cash฀flow฀from฀operations;฀
•฀bank฀credit;
•฀trade฀credit฀with฀vendors;
•฀proceeds฀from฀the฀sale฀of฀rental฀return฀merchandise;
•฀private฀debt฀offerings;฀and
•฀stock฀offerings.
At December 31, 2008, $35.0 million was outstanding
under our revolving credit agreement. The credit facilities
balance decreased by $71.0 million in 2008 primarily as a
result of net payments made on our credit facility during the
period, primarily with cash received from the sale of the Aaron’s
Corporate Furnishings division. On May 23, 2008, we entered
into a new revolving credit agreement which replaced the
previous revolving credit agreement. The new revolving credit
facility expires May 23, 2013 and the terms are consistent
with the previous agreement. The total available credit on our
revolving credit agreement is $140.0 million. We have $10.0
million currently outstanding in aggregate principal amount of
6.88% senior unsecured notes due August 2009. Additionally,
we have $48.0 million currently outstanding in aggregate prin-
cipal amount of 5.03% senior unsecured notes due July 2012,
principal repayments of which were first required in 2008.
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