Aarons 2009 Annual Report Download - page 22

LEASE MERCHANDISE. The increase of $1.3 million in lease mer-
chandise, net of accumulated depreciation, to $682.4 million at
December 31, 2009 from $681.1 million at December 31, 2008,
is primarily the result of continued revenue growth of new and
existing company-operated stores, partially offset by lower prod-
uct costs.
PROPERTY, PLANT AND EQUIPMENT. The increase of $3.2 million in
property, plant and equipment, net of accumulated depreciation,
to $227.6 million at December 31, 2009 from $224.4 million at
December 31, 2008, is primarily the result of a series of acquisi-
tions of sales and lease ownership businesses since December 31,
2008. In 2009 the Company recorded an impairment charge of
$3.0 million on certain properties and land parcels and an impair-
ment charge of $1.3 million related to certain leasehold improve-
ments in the Aaron’s Office Furniture stores. The Company also
recorded an $838,000 impairment loss on certain leasehold assets
in 2008.
GOODWILL. The $8.4 million increase in goodwill, to $194.4 million
on December 31, 2009 from $186.0 million on December 31, 2008,
is the result of a series of acquisitions of sales and lease owner-
ship businesses. During 2009, the Company acquired a total of 44
stores. The aggregate purchase price for these asset acquisitions
totaled $25.2 million, with the principal tangible assets acquired
consisting of lease merchandise and certain fixtures and equip-
ment.
OTHER INTANGIBLES, NET. The $2.3 million decrease in other
intangibles, to $5.2 million on December 31, 2009 from $7.5 mil-
lion on December 31, 2008, is the result of amortization of certain
finite-life intangible assets, net of acquisitions of sales and lease
ownership businesses mentioned above.
PREPAID EXPENSES AND OTHER ASSETS. Prepaid expenses and
other assets decreased $31.3 million to $36.1 million at December
31, 2009 from $67.4 million at December 31, 2008, primarily as a
result of a decrease in prepaid income taxes.
ACCOUNTS PAYABLE AND ACCRUED EXPENSES. The increase of
$3.4 million in accounts payable and accrued expenses, to $177.3
million at December 31, 2009 from $173.9 million at December
31, 2008, is primarily the result of fluctuations in the timing of
payments.
DEFERRED INCOME TAXES PAYABLE. The increase of $15.0 million
in deferred income taxes payable to $163.7 million at December
31, 2009 from $148.6 million at December 31, 2008 is primarily
the result of bonus lease merchandise depreciation deductions for
tax purposes included in the Economic Stimulus Act of 2008 and
the American Recovery and Reinvestment Act of 2009.
CREDIT FACILITIES AND SENIOR NOTES. The $59.8 million decrease
in the amounts we owe under our credit facilities to $55.0 million
on December 31, 2009 from $114.8 million on December 31, 2008,
reflects net payments under our revolving credit facility during
2009. Additionally, we made $22.0 million in scheduled repay-
ments on our senior unsecured notes in 2009.
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General
Cash flows from continuing operations for the year ended
December 31, 2009 and 2008 were $193.7 million and $79.3 mil-
lion, respectively. Purchases of sales and lease ownership stores
had a positive impact on operating cash flows in each period
presented. The positive impact on operating cash flows from
purchasing stores occurs as the result of lease merchandise, other
assets and intangibles acquired in these purchases being treated
as an investing cash outflow. As such, the operating cash flows
attributable to the newly purchased stores usually have an initial
positive effect on operating cash flows that may not be indicative
of the extent of their contributions in future periods. The amount
of lease merchandise purchased in acquisitions and shown under
investing activities was $9.5 million in 2009, $28.5 million in 2008
and $20.4 million in 2007. Sales of sales and lease ownership
stores are an additional source of investing cash flows in each
period presented. Proceeds from such sales were $32.0 million in
2009, $22.7 million in 2008 and $6.9 million in 2007. The amount
of lease merchandise sold in these sales and shown under investing
activities was $16.3 million in 2009, $11.7 million in 2008 and
$3.5 million in 2007. In addition, in 2008 the proceeds from the
sale of the Aaron’s Corporate Furnishings division shown under
investing activities were $76.4 million.
Our cash flows include profits on the sale of lease return
merchandise. Our primary capital requirements consist of buy-
ing lease merchandise for sales and lease ownership stores.
As Aaron’s continues to grow, the need for additional lease
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฀lease฀return฀merchandise;
•฀private฀debt฀offerings;฀and
•฀stock฀offerings.
At December 31, 2009, there was no balance under our
revolving credit agreement. The credit facilities balance
decreased by $35.0 million in 2009 as a result of net payments
made on our credit facility during the period. 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 $36.0 million currently outstanding in aggregate
principal amount of 5.03% senior unsecured notes due July
2012, principal repayments of which were made in 2008 and
2009, and are due in equal $12.0 million annual installments
until maturity.
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