Aarons 2009 Annual Report Download - page 25

Purchase obligations are primarily related to certain advertis-
ing and marketing programs. Purchase orders or contracts for
the purchase of lease merchandise and other goods and services
are not included in the tables above. We are not able to deter-
mine the aggregate amount of such purchase orders that repre-
sent contractual obligations, as purchase orders may represent
authorizations to purchase rather than binding agreements. Our
purchase orders are based on our current distribution needs and
are fulfilled by our vendors within short time horizons. We do
not have significant agreements for the purchase of lease mer-
chandise or other goods specifying minimum quantities or set
prices that exceed our expected requirements for three months.
Deferred income tax liabilities as of December 31, 2009 were
approximately $163.7 million. This amount is not included in
the total contractual obligations table because we believe this
presentation would not be meaningful. Deferred income tax
liabilities are calculated based on temporary differences between
the tax basis of assets and liabilities and their respective book
basis, which will result in taxable amounts in future years when
the liabilities are settled at their reported financial statement
amounts. The results of these calculations do not have a direct
connection with the amount of cash taxes to be paid in any
future periods. As a result, scheduling deferred income tax liabil-
ities as payments due by period could be misleading, because this
scheduling would not relate to liquidity needs.
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We are not aware of any recent accounting pronouncements that
will materially impact the Company’s consolidated financial state-
ments in future periods.
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As of December 31, 2009, we had $36.0 million of senior unse-
cured notes outstanding at a fixed rate of 5.03%. We had no
balance outstanding under our revolving credit agreement indexed
to the LIBOR (“London Interbank Offer Rate”) or the prime rate,
which exposes us to the risk of increased interest costs if interest
rates rise. Based on our overall interest rate exposure at December
31, 2009, a hypothetical 1.0% increase or decrease in interest rates
would not be material.
We do not use any market risk sensitive instruments to hedge
commodity, foreign currency, or other risks, and hold no market
risk sensitive instruments for trading or speculative purposes.
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