Aarons 2013 Annual Report Download - page 72

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On October 4, 2013, the Company amended its Amended and Restated Articles of Incorporation to confirm that shares of
common stock the Company repurchases from time to time become treasury shares. As permitted by Georgia corporate law, the
amendment was adopted by the Board of Directors of the Company without shareholder action.
Accelerated Share Repurchase Program
In December 2013, the Company entered into an accelerated share repurchase program with a third-party financial institution
to purchase $125.0 million of the Company’s common stock, as part of its previously announced share repurchase program. The
Company paid $125.0 million and received an initial delivery of 3,502,627 shares, estimated to be approximately 80% of the
total number of shares to be repurchased under the agreement, which reduced the Company's shares outstanding at
December 31, 2013. The value of the initial shares received on the date of purchase was $100.0 million, reflecting a $28.55
price per share, which was recorded as treasury shares. The Company recorded the remaining $25.0 million as a forward
contract indexed to its own common stock in additional paid-in capital.
In February 2014, the accelerated share repurchase program was completed and the Company received 1,000,952 additional
shares determined using a volume weighted average price of the Company's stock (inclusive of a discount) during the trading
period. All amounts classified as additional paid-in capital will be reclassified to treasury shares during the first quarter of 2014
upon settlement.
NOTE 10: STOCK OPTIONS AND RESTRICTED STOCK
The Company grants stock options, restricted stock units and restricted stock awards to certain employees and directors of the
Company. Total stock-based compensation expense was $2.3 million, $6.5 million and $8.4 million in 2013, 2012 and 2011,
respectively, and was included as a component of operating expenses in the consolidated statements of earnings. Excess tax
benefits of $1.4 million, $6.0 million and $1.3 million are included in cash provided by financing activities for the years ended
2013, 2012 and 2011, respectively.
As of December 31, 2013, there was $9.1 million of total unrecognized compensation expense related to non-vested stock-
based compensation which is expected to be recognized over a period of 2.3 years.
The aggregate number of shares of common stock that may be issued or transferred under the incentive stock awards plan is
14,597,927 at December 31, 2013.
Stock Options
Under the Company’s stock option plans, options granted to date become exercisable after a period of two to five years and
unexercised options lapse ten years after the date of the grant. Options are subject to forfeiture upon termination of service. The
Company recognizes compensation cost for awards with graded vesting on a straight-line basis over the requisite service period
for each separately vesting portion of the award. The Company determines the fair value of stock options using a Black-Scholes
option pricing model that incorporates expected volatility, expected option life, estimated forfeiture rates, risk-free interest
rates, and expected dividend yields.
The expected volatility is based on the historical volatility of the Company’s common stock over the most recent period
generally commensurate with the expected estimated life of each respective grant. The expected lives of options are based on
the Company’s historical option exercise experience. Forfeiture assumptions are based on the Company’s historical forfeiture
experience. The Company believes that the historical experience method is the best estimate of future exercise and forfeiture
patterns. The risk-free interest rates are determined using the implied yield available for zero-coupon United States government
issues with a remaining term equal to the expected life of the grant. The expected dividend yields are based on the approved
annual dividend rate in effect and market price of the underlying common stock at the time of grant. No assumption for a future
dividend rate increase has been included unless there is an approved plan to increase the dividend in the near term. Shares are
issued from the Company’s treasury shares upon share option exercises.
No stock options were granted in 2013, 2012 or 2011.