Aarons 2010 Annual Report Download - page 35

rate and equity transactions are translated using the actual rate on the
day of the transaction.
Earnings Per Share
Earnings per share is computed by dividing net earnings by the
weighted average number of shares of Common Stock outstand-
ing during the year for the year ended December 31, 2010 and
Nonvoting Common Stock and Class A Common Stock outstanding
during the year for the years ended December 31, 2009 and 2008,
which were approximately 81,194,000 shares in 2010, 81,138,000
shares in 2009, and 80,114,000 shares in 2008. 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 745,000 in 2010, 663,000 in 2009, and
1,025,000 in 2008.
Anti-dilutive stock options excluded from the computation of
earnings per share assuming dilution were 314,000, 470,000 and
2.0 million in 2010, 2009 and 2008, respectively.
The Company has issued restricted stock awards under its stock
incentive plan whereby shares vest upon satisfaction of certain
performance and vesting conditions and all performance conditions
were met at December 31, 2010. The effect of restricted stock
increased weighted average shares outstanding by 163,000 in 2010,
150,000 in 2009 and 146,000 in 2008.
Anti-dilutive shares excluded from the computation of earnings
per share assuming dilution were 275,000, 45,000 and 61,000 in
2010, 2009 and 2008, respectively.
Property, Plant
and Equipment
Following is a summary of the Company’s property, plant, and
equipment at December 31:
(In Thousands) 2010 2009
Land $ 25,067 $ 34,739
Buildings and Improvements 74,216 96,571
Leasehold Improvements and Signs 100,031 84,097
Fixtures and Equipment 109,458 90,625
Assets Under Capital Leases:
with Related Parties 8,501 8,501
with Unrelated Parties 10,564 10,564
Construction in Progress 9,485 11,900
337,322 336,997
Less: Accumulated Depreciation
and Amortization (132,410) (121,814)
$ 204,912 $ 215,183
Amortization expense on assets recorded under capital leases is
included in operating expenses and was $1.9 million, $1.2 million
and $1.2 million in 2010, 2009 and 2008, respectively. Capital
leases consist of buildings and improvements.
Credit Facilities
Following is a summary of the Company’s credit facilities at
December 31:
(In Thousands) 2010 2009
Senior Unsecured Notes $24,000 $36,000
Capital Lease Obligation:
with Related Parties 7,279 7,775
with Unrelated Parties 7,208 7,959
Other Debt 3,303 3,310
$41,790 $55,044
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, 2010 and 2009, there was a zero balance under the
Company’s revolving credit agreement. The Company pays a .20%
commitment fee on unused balances. The weighted average interest
rate on borrowings under the revolving credit agreement was 0.97%
in 2010, 1.23% in 2009 and 3.66% in 2008. The revolving credit
agreement expires May 23, 2013.
The revolving credit agreement contains financial covenants
which, among other things, prohibit the Company from exceeding
certain debt to equity levels and require the maintenance of mini-
mum fixed charge coverage ratios. If the Company fails to comply
with these covenants, the Company will be in default under these
agreements, and all amounts could become due immediately. At
December 31, 2010, $199.8 million of retained earnings was
available for dividend payments and stock repurchases under the
debt restrictions, and the Company was in compliance with all
covenants.
SENIOR UNSECURED NOTES — On July 27, 2005, the Company
sold $60.0 million in aggregate principal amount of senior unsecured
notes in a private placement to a consortium of insurance companies.
The notes bear interest at a rate of 5.03% per year and mature on
July 27, 2012. Interest-only payments were due quarterly for the first
two years, followed by annual $12.0 million principal repayments
plus interest for the five years thereafter. The related note purchase
agreement contains financial maintenance covenants, negative cov-
enants regarding the Company’s other indebtedness, its guarantees
and investments and other customary covenants substantially similar
to the covenants in the Company’s, revolving credit facility. At
D
Note
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B
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C
Note