Aarons 2008 Annual Report Download - page 41

Note N: Discontinued Operations
On September 12, 2008, the Company entered into an agreement
with CORT Business Services Corporation agreeing to sell sub-
stantially all of the assets of its Aaron’s Corporate Furnishings
division and to transfer certain of the Aaron’s Corporate
Furnishings division’s liabilities to CORT. The Aaron’s Corporate
Furnishings division, which operated at 47 stores, primarily
engaged in the business of renting and selling residential
furniture, electronics, appliances, housewares and accessories.
The Company consummated the sale of the Aaron’s Corporate
Furnishings division in the fourth quarter of 2008.
The consideration for the assets consisted of $72 million
in cash plus payments for certain accounts receivable of the
Aaron’s Corporate Furnishings division, subject to certain
adjustments, including for differences in the amount of the
Aaron’s Corporate Furnishings division’s inventory at closing
and in the monthly rent potential of the division’s merchandise
on rent at closing as compared to certain benchmark ranges
set forth in the purchase agreement. The assets transferred
include all of the Aaron’s Corporate Furnishings division’s rental
contracts with customers and certain other contracts, certain
inventory and accounts receivable, and store leases or subleases
for 27 locations. CORT assumed performance obligations under
transferred rental and certain other contracts and customer
deposits. The Company retained other liabilities of the Aaron’s
Corporate Furnishings division, including its accounts payable
and accrued expenses. Included in the 2008 results is a $1.2
million pre-tax gain on the sale of the Aaron’s Corporate
Furnishings division in the fourth quarter of 2008.
Summarized operating results for the Aaron’s Corporate
Furnishings division for the years ended December 31 are as
follows:
(In Thousands) 2008 2007 2006
Revenues $83,359 $99,972 $98,145
Earnings Before Income Taxes 7,162 11,093 12,452
Earnings From Discontinued
Operations, Net of Tax 4,420 6,850 7,732
Net assets from discontinued operations for the Aaron’s
Corporate Furnishings division included in the consolidated
balance sheet as of December 31, 2007 are as follows:
(In Thousands) December 31, 2007
Cash $ 459
Accounts Receivable, Net 5,731
Rental Merchandise 91,244
Less: Accumulated Depreciation (26,114)
65,130
Property, Plant and Equipment, Net 3,591
Goodwill, Net 1,388
Prepaid Expenses and Other Assets 1,077
Accounts Payable and Accrued Expenses (4,942)
Customer Deposits and Advanced Payments (1,182)
Net Assets Related to Discontinued Operations $71,252
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