Aarons 2012 Annual Report Download - page 75

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We believe we have meritorious defenses to all of the claims described above, and intend to vigorously defend
against the claims. However, these proceedings are still developing and due to the inherent uncertainty in litigation
and similar adversarial proceedings, there can be no guarantee that we will ultimately be successful in these
proceedings, or in others to which we are currently a party. Substantial losses from legal proceedings or the costs of
defending them could have a material adverse impact upon our business, financial position and results of operations.
At December 31, 2012, we estimated that the aggregate exposure to loss for all material pending legal proceedings
for which a loss is probable, excluding an immaterial amount for which we have already accrued, is $5.0 million,
although this belief is subject to the uncertainties and variables described above. At December 31, 2012, we estimate
that the aggregate range of losses for all material pending legal proceedings for which a loss is reasonably possible,
but less likely than probable, is from $0.7 million to $7.6 million, although this belief is also subject to the
uncertainties and variables described above. Those matters for which a reasonable estimate is not possible are not
included within estimated ranges and, therefore, the estimated ranges do not represent the Company’s maximum loss
exposure. We continually monitor our litigation exposure, and review the adequacy of our legal reserves on a
quarterly basis in accordance with applicable accounting rules.
Other Commitments
At December 31, 2012, the Company had non-cancelable commitments primarily related to certain advertising and
marketing programs of $21.7 million. Payments under these commitments are scheduled to be $17.5 million in
2013, $3.6 million in 2014, $383,000 in 2015, and $274,000 in 2016.
The Company maintains a 401(k) savings plan for all its full-time employees with at least one year of service and
who meet certain eligibility requirements. As of December 31, 2012, the plan allows employees to contribute up to
100% of their annual compensation in accordance with federal contribution limits with 50% matching by the
Company on the first 4% of compensation. The Company’s expense related to the plan was $999,000 in 2012,
$891,000 in 2011, and $841,000 in 2010.
The Company is a party to various claims and legal proceedings arising in the ordinary course of business.
Management regularly assesses the Company’s insurance deductibles, analyzes litigation information with the
Company’s attorneys and evaluates its loss experience. The Company also enters into various contracts in the
normal course of business that may subject it to risk of financial loss if counterparties fail to perform their
contractual obligations.
NOTE 9: SHAREHOLDERS’ EQUITY
The Company held 15,031,741 shares in its treasury and was authorized to purchase an additional 4,044,655 shares
at December 31, 2012. The Company repurchased 1,236,689 shares of its common stock on the open market in
2012 and 5,075,675 shares of its common stock on the open market in 2011.
The Company has 1,000,000 shares of preferred stock authorized. The shares are issuable in series with terms for
each series fixed by the Board and such issuance is subject to approval by the Board of Directors. As of December
31, 2012, no preferred shares have been issued.
On December 7, 2010, at a special meeting of the Company’s shareholders, such shareholders approved a proposal
to amend and restate the Company's Amended and Restated Articles of Incorporation to: (i) convert each
outstanding share of common stock, par value $0.50 per share (the "Nonvoting Common Stock") into one share of
Class A Common Stock (the "Class A Common Stock") and to rename the Class A Common Stock as Common
Stock (the ―Common Stock‖), (ii) eliminate certain obsolete provisions relating to the Company's prior dual-class
common stock structure, and (iii) amend the number of authorized shares to be 225,000,000 total shares of Common
Stock (the aggregate of the number of authorized shares of Nonvoting Common Stock and Class A Common Stock
prior to the approval of the Amended and Restated Articles of Incorporation). Following receipt of shareholder
approval at the special meeting, the Amended and Restated Articles of Incorporation were filed with the Secretary of
State of the State of Georgia and are now effective.
As a result of the reclassification of shares of Nonvoting Common Stock into shares of Class A Common Stock and
the other changes described above and effected by the Amended and Restated Articles of Incorporation, shares of
the combined class now titled Common Stock have one vote per share on all matters submitted to the Company's
shareholders, including the election of directors. The former Nonvoting Common Stock did not entitle the holders
thereof to any vote except as otherwise provided in the Company's Articles of Incorporation or required by law. In