Aarons 2009 Annual Report Download - page 24

these related party leases relate to properties purchased from
Aaron’s in December 2002 by the LLC for a total purchase price
of approximately $5.0 million. The LLC is leasing back these
properties to Aaron’s for a 15-year term at an aggregate annual
lease of $556,000. We do not currently plan to enter into any
similar related party lease transactions in the future.
We finance a portion of our store expansion through sale-
leaseback transactions. The properties are generally sold at net
book value and the resulting leases qualify and are accounted for
as operating leases. We do not have any retained or contingent
interests in the stores nor do we provide any guarantees, other
than a corporate level guarantee of lease payments, in connec-
tion with the sale-leasebacks. The operating leases that resulted
from these transactions are included in the table below.
FRANCHISE LOAN GUARANTY. We have guaranteed the borrowings
of certain independent franchisees under a franchise loan program
with several banks and we also guarantee franchisee borrowings
under certain other debt facilities. At December 31, 2009, the por-
tion that the Company might be obligated to repay in the event
franchisees defaulted was $128.8 million. Of this amount, approxi-
mately $120.2 million represents franchise borrowings outstanding
under the franchisee loan program and approximately $8.6 million
represents franchisee borrowings that we guarantee under other
debt facilities. However, due to franchisee borrowing limits, we
believe any losses associated with any defaults would be mitigated
through recovery of lease merchandise and other assets. Since its
inception in 1994, we have had no significant losses associated
with the franchise loan and guaranty program. The Company
believes the likelihood of any significant amounts being funded in
connection with these commitments to be remote. The Company
receives guarantee fees based on such franchisees’ outstanding
debt obligations, which it recognizes as the guarantee obligation
is satisfied.
We have no long-term commitments to purchase merchan-
dise. See Note F to the Consolidated Financial Statements for
further information. The following table shows our approximate
contractual obligations, including interest, and commitments to
make future payments as of December 31, 2009:
Total
Amounts Period Less Period 1–3 Period 3–5 Period Over
(In Thousands) Committed Than 1 Year Years Years 5 Years
Credit Facilities, Excluding Capital Leases $ 39,310 $ 12,006 $ 24,003 $ — $ 3,301
Capital Leases 15,734 1,185 2,609 2,936 9,004
Operating Leases 457,819 89,962 129,363 81,586 156,908
Purchase Obligations 22,988 11,408 11,380 200 —
Total Contractual Cash Obligations $535,851 $114,561 $167,355 $ 84,722 $169,213
The following table shows the Company’s approximate commercial commitments as of December 31, 2009:
Total
Amounts Period Less Period 1–3 Period 3–5 Period Over
(In Thousands) Committed Than 1 Year Years Years 5 Years
Guaranteed Borrowings of Franchisees $128,767 $126,675 $ 511 $ 1.581 $ —
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