Aarons 2008 Annual Report Download - page 32

accounting treatment for certain specific acquisition-related items
including: expensing acquisition-related costs as incurred, valu-
ing non-controlling interests at fair value at the acquisition date
and expensing restructuring costs associated with an acquired
business. SFAS 141R also establishes disclosure requirements for
how identifiable assets, liabilities assumed, any non-controlling
interest in an acquiree and goodwill is recognized and recorded
in an acquiree’s financial statements. SFAS 141R is to be applied
prospectively to business combinations for which the acquisition
date is on or after January 1, 2009. The impact of this Statement
on the Company’s financial statements will depend on the number
of acquisitions the Company makes and the related terms.
In May 2008, FASB issued SFAS No. 162, “The Hierarchy of
Generally Accepted Accounting Principles” (“SFAS 162”). SFAS
162 identifies the sources of accounting principles and the
framework for selecting the principles to be used in the prepa-
ration of financial statements that are presented in conformity
with generally accepted accounting principles in the United
States. This Statement is effective 60 days following the SEC’s
approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, “The Meaning of Present Fairly
in Conformity with Generally Accepted Accounting Principles.”
The Company is currently evaluating the impact of this
Statement on its financial statements.
Note B: Earnings Per Share
Earnings per share is computed by dividing net earnings by the
weighted average number of Common Stock and Class A Common
Stock outstanding during the year, which were approximately
53,409,000 shares in 2008, 54,163,000 shares in 2007, and
52,545,000 shares in 2006. 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 approximately 683,000 in 2008, 809,000 in 2007, and
832,000 in 2006.
The Company has a restricted stock plan in which shares are
issuable upon satisfaction of certain performance conditions.
As of December 31, 2008, only a portion of the performance
conditions have been met and therefore only a portion of
these shares have been included in the computation of diluted
earnings per share. The effect of restricted stock increased
weighted average shares outstanding by 97,000 in 2008 and
110,000 in 2007.
Note C: Property, Plant and
Equipment
Following is a summary of the Company’s property, plant, and
equipment at December 31:
(In Thousands) 2008 2007
Land $ 45,880 $ 50,176
Buildings and Improvements 89,987 96,804
Leasehold Improvements and Signs 81,981 85,160
Fixtures and Equipment 80,334 64,269
Assets Under Capital Lease:
with Related Parties 9,332 9,332
with Unrelated Parties 9,946 10,564
Construction in Progress 15,241 19,042
332,701 335,347
Less: Accumulated Depreciation
and Amortization (108,270) (91,900)
$ 224,431 $243,447
Note D: Credit Facilities
Following is a summary of the Company’s credit facilities at
December 31:
(In Thousands) 2008 2007
Bank Debt $ 35,000 $ 82,884
Senior Unsecured Notes 58,000 80,000
Capital Lease Obligation:
with Related Parties 9,138 9,542
with Unrelated Parties 8,677 9,364
Other Debt 4,002 4,042
$114,817 $185,832
BANK DEBT — The Company has a revolving credit agreement
with several banks providing for unsecured borrowings up to
$140.0 million. Amounts borrowed bear interest at the lower
of the lender’s prime rate or LIBOR plus 87.5 basis points. The
pricing under a working capital line is based upon overnight bank
borrowing rates. At December 31, 2008 and 2007, respectively, an
aggregate of $35.0 million (bearing interest at 1.37%) and $82.9
million (bearing interest at 5.83%) was outstanding under the
revolving credit agreement. The Company pays a .20% commit-
ment fee on unused balances. The weighted average interest rate
on borrowings under the revolving credit agreement was 3.66%
in 2008, 5.99% in 2007, and 5.97% in 2006. The revolving credit
agreement expires May 23, 2013.
Notes to Consolidated Financial Statements
30