Aarons 2014 Annual Report Download

Download and view the complete annual report

Please find the complete 2014 Aarons annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 102

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102

Annual Report 2014
Expanding
the customer
marketplace

Table of contents

  • Page 1
    Expanding the customer marketplace Annual Report 2014

  • Page 2
    ...and franchised stores in the United States and Canada. Progressive Leasing, a leading virtual lease-to-own company, gives customers who prefer to shop at traditional retail stores access to the lease-to-own transaction at the retailer's point-of-sale. Through its Aaron's and HomeSmart stores, Aarons...

  • Page 3
    ... ACTIVE RETAIL DOORS** * Franchised stores are not owned or operated by Aaron's, Inc. ** An active door is a retail location which did at least one transaction during the fourth quarter of each year shown. Aaron's, Inc. acquired Progressive Leasing on April 14, 2014; Progressive was not part of...

  • Page 4
    ... stores. Company-operated and franchised stores serve a critical need in our communities, and we are confident the course we set this year can accelerate revenues and improve profits. At the same time, the Progressive Leasing acquisition will allow countless customers to enjoy the benefits...

  • Page 5
    ... management team and associates had the vision to make these strategic decisions and the determination to execute them. The core business will be stronger in the coming years as a result. Leveraging the Progressive Leasing Business As we work to improve revenues and profits in the core business...

  • Page 6
    uncompromising

  • Page 7
    ... do. For 60 years, Aaron's has served customers by meeting their needs for home furnishings with quality merchandise, affordable prices, flexible payment options, and superior service. Throughout the years, as our customers' needs have changed, Aaron's has found new ways to address those needs...

  • Page 8
    ..., choose their merchandise, enter into a lease agreement, make their first payment and arrange for delivery without ever leaving home. Online customers also have the added benefit of receiving delivery, service and support from a nearby store. Through this new digital platform, Aaron's has the...

  • Page 9
    Company-Operated Store Revenues 2% OTHER 9% COMPUTERS 39% FURNITURE 24% APPLIANCES 26% ELECTRONICS

  • Page 10
    ... be approved for a lease-to-own agreement. With a no-credit-needed model similar to the Aaron's core business, Progressive helps thousands of customers obtain necessary household items. Progressive's technology and merchant support improve the customer experience and make the process as simple...

  • Page 11
    ... (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2014 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from Commission file Number. 1-13941 to...

  • Page 12
    ... 72,530,152 shares of the Company's common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's definitive Proxy Statement for the 2015 annual meeting of shareholders, to be filed subsequently with the Securities and Exchange Commission, or SEC, pursuant to Regulation...

  • Page 13
    ... 9A. CONTROLS AND PROCEDURES ITEM 9B. OTHER INFORMATION PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE GOVERNANCE ITEM 11. EXECUTIVE COMPENSATION ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS ITEM 13. CERTAIN...

  • Page 14
    ... store openings, franchises awarded, market share and statements expressing general optimism about future operating ...general economic conditions, competition, pricing, customer demand, litigation and regulatory proceedings and those factors discussed in the Risk Factors section of this Annual Report...

  • Page 15
    ...stores and 83 HomeSmart stores, our weekly pay sales and lease ownership concept. In January of 2014, we sold our 27 Company-operated RIMCO stores and the rights to five franchised RIMCO stores. We own or have rights to various trademarks and trade names used in our business including Aaron's, Aaron...

  • Page 16
    ... royalties represent an important source of revenues for us. We have added a net of 185 franchised stores since the beginning of 2010. • Business Segments As of December 31, 2014, the Company had five operating and reportable segments: Sales and Lease Ownership, Progressive, HomeSmart, Franchise...

  • Page 17
    ... of Company-sponsored financing, bulk purchasing discounts and favorable delivery terms. Our internal audit department conducts annual financial reviews of each franchisee, as well as annual operational audits of each franchised store. In addition, our proprietary management information system links...

  • Page 18
    ...and carry purchase option on select merchandise at prices competitive with traditional retailers. Many of our sales and lease ownership customers make their payments in person and we use these frequent visits to strengthen the customer relationship. Furthermore, our Progressive operating strategy is...

  • Page 19
    ...We pay all material invoices from Company headquarters in order to enhance fiscal accountability. We believe that careful monitoring of lease merchandise as well as operational expenses enables us to maintain financial stability and profitability. We use computer-based management information systems...

  • Page 20
    ...meet this requirement, we have developed the field development program, one of the most comprehensive employee training programs in the industry. Our field development program, called Aaron's University, is designed to provide a uniform customer service experience without reference to store location...

  • Page 21
    ...compete with other national and regional rentto-own businesses, as well as with rental stores that do not offer their customers a purchase option. We also compete with retail stores for customers desiring to purchase merchandise for cash or on credit. Competition is based primarily on store location...

  • Page 22
    ...standard of weekly payments. Our agreements also usually provide for a shorter term for the customer to obtain ownership. Flexible payment methods - we offer our customers the opportunity to pay by cash, check, ACH, debit card or credit card. In conventional rent-to-own stores, cash is generally the...

  • Page 23
    ... Aaron's Sales & Lease Ownership and HomeSmart stores, as well as states in which merchant partners of our Progressive business maintain operations. Most state lease purchase laws require rent-to-own companies to disclose to their customers the total number of payments, total amount and timing...

  • Page 24
    ... 31, 2014, the Company had approximately 12,400 employees. None of our employees are covered by a collective bargaining agreement and we believe that our relations with employees are good. Available Information We make available free of charge on our Internet website our Annual Report on Form...

  • Page 25
    ... plan that, in addition to acquiring Progressive Finance Holdings, LLC ("Progressive"), includes focusing on improving same store revenues in our core stores, rationalizing underperforming stores and developing our online platform. While the Company has always engaged in elements of the new strategy...

  • Page 26
    ... on lease payments, resulting in increased merchandise return costs and merchandise losses. If we cannot manage the costs of opening new stores, our profitability may suffer. Opening large numbers of new stores requires significant start-up expenses, and new stores are generally not profitable until...

  • Page 27
    ... or the expected benefits of the acquisition. Our recently acquired Progressive segment offers its lease-to-own solution through the stores of third party retailers. Progressive consequently faces some different risks than are associated with Aaron's sales and lease ownership concept, which...

  • Page 28
    ...than apply to Aaron's sales and lease ownership business, whether arising from the offer by third party retailers of Progressive's lease-purchase solution alongside traditional cash, check or credit payment options or otherwise; Reliance on automatic bank account drafts for lease payments, which may...

  • Page 29
    ..., operational and other benefits in a timely manner, our profitability may decrease. We frequently acquire other sales and lease ownership businesses. Since the beginning of 2010, we acquired the lease agreements, merchandise and assets of 137 Aaron's Sales & Lease Ownership stores and 51 HomeSmart...

  • Page 30
    ... states in which we currently operate Aaron's Sales & Lease Ownership and HomeSmart stores, as well as states in which our Progressive business has retail partners. At the present time, no federal law specifically regulates the rent-to-own industry, although federal legislation to regulate the...

  • Page 31
    ... by the Federal Trade Commission, state laws and certain Canadian provincial laws regulating the offer and sale of franchises. Because we plan to expand our business in part by awarding more franchises, our failure to obtain or maintain approvals to sell franchises could significantly impair...

  • Page 32
    availability of alternative products or other factors, however, could lead to increased merchandise return incidence and costs and/or merchandise losses. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 22

  • Page 33
    ... table sets forth certain information regarding our furniture manufacturing plants, bedding facilities, fulfillment centers, service centers, warehouses and corporate management and call center facilities: LOCATION SEGMENT, PRIMARY USE AND HOW HELD SQ. FT. Cairo, Georgia Cairo, Georgia Cairo...

  • Page 34
    ... a lease in Kennesaw, Georgia for approximately 52,000 square feet of a building which we plan to occupy in 2015. We believe that all of our facilities are well maintained and adequate for their current and reasonably foreseeable uses. ITEM 3. LEGAL PROCEEDINGS From time to time, we are party to...

  • Page 35
    ... approved by the Company's Board of Directors and publicly announced from time to time. The following table presents our share repurchase activity for the three months ended December 31, 2014: Total Number of Shares Purchased as Part of Publicly Announced Plans Maximum Number of Shares That May Yet...

  • Page 36
    ...2.25 1.43 1.44 .086 - .072 - .062 - .054 - .049 .049 Lease Merchandise, Net Property, Plant and Equipment, Net Total Assets Debt Shareholders' Equity AT YEAR END Stores Open: Company-operated Franchised Lease Agreements in Effect Number of Associates $ 1,087,032 219,417 2,456,844 606,082 1,223,521...

  • Page 37
    ...realignment of home office and field support. Our major operating divisions are the Aaron's Sales & Lease Ownership division, Progressive, HomeSmart and Woodhaven Furniture Industries, which manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in our stores...

  • Page 38
    ... fees include all revenues derived from lease agreements at Company-operated stores, including agreements that result in our customers acquiring ownership at the end of the terms, and at retail locations serviced by Progressive. Retail sales represent sales of both new and returned lease merchandise...

  • Page 39
    ...Lease merchandise write-offs totaled $99.9 million, $58.0 million and $54.9 million for the years ended December 31, 2014, 2013 and 2012, respectively. Acquisition Accounting We account for acquisitions under FASB Accounting Standards Codification 805, Business Combinations, which requires companies...

  • Page 40
    ...each year for its Sales and Lease Ownership and HomeSmart reporting units. During the three months ended December 31, 2014, the Company voluntarily changed its annual impairment assessment date from September 30 to October 1 for those reporting units. Upon the acquisition of Progressive, the Company...

  • Page 41
    ... Any incentive or allowance amounts we receive are recognized ratably over the lease term. From time to time, we close or consolidate stores. Our primary costs associated with closing stores are the future lease payments and related commitments. We record an estimate of the future obligation related...

  • Page 42
    ... 2013, respectively. If we resolve insurance claims for amounts that are in excess of our current estimates and within policy stop loss limits, we will be required to pay additional amounts beyond those accrued at December 31, 2014. The assumptions and conditions described above reflect management...

  • Page 43
    ...) Year Ended December 31, 2014 2013 2012 2014 vs. 2013 $ % $ 2013 vs. 2012 % REVENUES: Lease Revenues and Fees Retail Sales Non-Retail Sales Franchise Royalties and Fees Other COSTS AND EXPENSES: Depreciation of Lease Merchandise Retail Cost of Sales Non-Retail Cost of Sales Operating Expenses...

  • Page 44
    ... the date of sale in January 2014, (ii) leasing space to unrelated third parties in the corporate headquarters building and (iii) several minor unrelated activities. Year Ended December 31, 2013 Versus Year Ended December 31, 2012 Sales and Lease Ownership. Sales and Lease Ownership segment revenues...

  • Page 45
    ...third parties in the corporate headquarters building, (iii) the Aaron's Office Furniture division through the date of sale in August 2012 and (iv) several minor unrelated activities. Costs and Expenses Year Ended December 31, 2014 Versus Year Ended December 31, 2013 Depreciation of lease merchandise...

  • Page 46
    ... of lease merchandise, office furniture and leasehold improvements) in connection with the Company's decision to sell the 27 Company-operated RIMCO stores. In addition, the Company recognized gains of $833,000 from the sale of two Aaron's Sales & Lease Ownership stores during 2013. In 2012, other...

  • Page 47
    ...Income Taxes Information about our earnings before income taxes by reportable segment is as follows: Change (In Thousands) Year Ended December 31, 2014 2013 2012 2014 vs. 2013 $ % 2013 vs. 2012 $ % EARNINGS BEFORE INCOME TAXES: Sales and Lease Ownership Progressive HomeSmart Franchise Manufacturing...

  • Page 48
    ... to 35.7% in 2014 from 34.8% in 2013 as a result of decreased tax benefits related to the Company's furniture manufacturing operations and reduced federal credits. Income tax expense decreased $39.5 million to $64.3 million in 2013, compared with $103.8 million in 2012, representing a 38.1% decrease...

  • Page 49
    ... during 2014. Throughout the year, the Company made payments based on the enacted law, resulting in an overpayment when the act was signed. Purchases of sales and lease ownership stores had a positive impact on operating cash flows. The positive impact on operating cash flows from purchasing stores...

  • Page 50
    ... purchase our stock in the market from time to time as authorized by our Board of Directors. In December 2013, the Company paid $125.0 million under an accelerated share repurchase program with a third party financial institution and received an initial delivery of 3,502,627 shares. In February 2014...

  • Page 51
    ... of our sales and lease ownership model, where the Company remains the owner of merchandise on lease, we benefit more from bonus depreciation, relatively, than traditional furniture, electronics and appliance retailers. In future years, we anticipate having to make increased tax payments on our...

  • Page 52
    ... and marketing programs. We have no long-term commitments to purchase merchandise nor do we have significant purchase agreements that specify minimum quantities or set prices that exceed our expected requirements for three months. Retirement obligations primarily represent future payments associated...

  • Page 53
    ... 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK In connection with the Progressive acquisition, in April 2014, the Company amended its revolving credit agreement, amended certain financing agreements and entered into two new note purchase agreements, which are discussed in further...

  • Page 54
    ... results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United...

  • Page 55
    ...Financial Reporting, management's assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Progressive Finance Holdings, LLC ("Progressive"), which is included in the 2014 consolidated financial statements of Aaron's, Inc...

  • Page 56
    ... reporting was effective. On April 14, 2014, the Company acquired a 100% ownership interest in Progressive Finance Holdings, LLC ("Progressive") for merger consideration of $700 million, net of cash acquired. As permitted by Securities and Exchange Commission guidance, the scope of management...

  • Page 57
    ... 31, 2013 (In Thousands, Except Share Data) ASSETS: Cash and Cash Equivalents $ Investments Accounts Receivable (net of allowances of $27,401 in 2014 and $7,172 in 2013) Lease Merchandise (net of accumulated depreciation of $701,822 in 2014 and $594,436 in 2013) Property, Plant and Equipment, Net...

  • Page 58
    ...Year Ended December 31, 2014 Year Ended December 31, 2013 Year Ended December 31, 2012 (In Thousands, Except Per Share Data) REVENUES: Lease Revenues and Fees Retail Sales Non-Retail Sales Franchise Royalties and Fees Other COSTS AND EXPENSES: Depreciation of Lease Merchandise Retail Cost of Sales...

  • Page 59
    ... INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year End December 31, (In Thousands) 2014 2013 2012 Net Earnings Other Comprehensive (Loss) Income: Foreign Currency Translation: Foreign Currency Translation Adjustment Less: Reclassification Adjustments for Net Gains Included...

  • Page 60
    ..., December 31, 2012 Dividends, $.072 per share Stock-Based Compensation Reissued Shares Repurchased Shares Net Earnings Foreign Currency Translation Adjustment Balance, December 31, 2013 Dividends, $.086 per share Stock-Based Compensation Reissued Shares Repurchased Shares Net Earnings Foreign...

  • Page 61
    ... Litigation Expense Customer Deposits and Advance Payments Cash (Used in) Provided by Operating Activities INVESTING ACTIVITIES: Purchase of Investments Proceeds from Maturities and Calls of Investments Additions to Property, Plant and Equipment Acquisitions of Businesses and Contracts Proceeds from...

  • Page 62
    ... offers lease-purchase solutions to the customers of traditional retailers. Subsequent to the Progressive acquisition, our major operating divisions are the Aaron's Sales & Lease Ownership division (established as a monthly payment concept), Progressive, HomeSmart (established as a weekly payment...

  • Page 63
    ... typical weekly store-based lease model is 60, 90 or 120 weeks. The Company's Progressive division offers virtual lease-purchase solutions, typically over 12 months, to the customers of traditional retailers. The Company does not require deposits upon inception of customer agreements. In a number of...

  • Page 64
    ...rent-to-own ("core") business. Progressive presents lease revenues on a gross basis with sales taxes included. For the year ended December 31, 2014, the amount of Progressive sales tax recorded as lease revenues and fees and operating expenses was $30.2 million. Lease Merchandise The Company's lease...

  • Page 65
    ...amortized cost bases. Accounts Receivable Accounts receivable consist primarily of receivables due from customers of Company-operated stores and Progressive, corporate receivables incurred during the normal course of business (primarily related to vendor consideration, real estate leasing activities...

  • Page 66
    ... Other segment, respectively. In January 2014, the Company sold the 27 Company-operated RIMCO stores, which had a carrying value of $9.7 million as of December 31, 2013 (principally consisting of $7.2 million of lease merchandise and $2.5 million of property, plant and equipment). Refer to Note 4 to...

  • Page 67
    ...each year for its Sales and Lease Ownership and HomeSmart reporting units. During the three months ended December 31, 2014, the Company voluntarily changed its annual impairment assessment date from September 30 to October 1 for those reporting units. Upon the acquisition of Progressive, the Company...

  • Page 68
    ... years for customer lease contracts and internal use software and ten to 12 years for technology and merchant relationships. Indefinite-lived intangible assets represent the value of trade names and trademarks acquired as part of the Progressive acquisition. At the date of acquisition, the Company...

  • Page 69
    ... in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred...

  • Page 70
    .... Cash payments made during the year ended December 31, 2014 were principally related to the April 2014 Progressive acquisition described below. Acquisitions have been accounted for as business combinations, and the results of operations of the acquired businesses are included in the Company...

  • Page 71
    ... price of the acquisition exceeded the fair value of the net assets acquired, which resulted in the recognition of goodwill, is related to synergistic value created from the combination of Progressive's virtual customer payment capabilities with the Company's leading traditional lease-to-own model...

  • Page 72
    ...assets attributable to the Progressive acquisition are comprised of the following: Fair Value (in thousands) Weighted Average Life (in years) Internal Use Software Technology Trade Names and Trademarks Customer Lease Contracts Merchant Relationships Total Acquired Intangible Assets 1 2 1 $ 14,000...

  • Page 73
    ... table provides information related to the carrying value of goodwill by operating segment: (In Thousands) Sales and Lease Ownership Progressive HomeSmart Total Balance at January 1, 2013 Acquisitions Disposals Purchase Price Adjustments Balance at December 31, 2013 Acquisitions Disposals Purchase...

  • Page 74
    ... real estate properties using the market values for similar properties and estimated the fair value of the RIMCO disposal group based upon expectations of a sale price. In January 2014, the Company sold the 27 Company-operated RIMCO stores and the rights to five franchised RIMCO stores, which leased...

  • Page 75
    ...130,687) - 20,661 - The fair value of corporate bonds is determined through the use of model-based valuation techniques for which all significant assumptions are observable in the market. The Perfect Home notes were initially valued at cost. The Company periodically reviews the valuation utilizing...

  • Page 76
    ... of the Company's property, plant, and equipment at December 31: (In Thousands) 2014 2013 Land Buildings and Improvements Leasehold Improvements and Signs Fixtures and Equipment1 Assets Under Capital Leases: with Related Parties with Unrelated Parties Construction in Progress Less: Accumulated...

  • Page 77
    ... in the revolving credit and term loan agreement, to contemplate the acquisition of Progressive and to authorize the new 2014 senior unsecured notes. 2014 Note Purchase Agreements On April 14, 2014, the Company entered into note purchase agreements with several insurance companies, pursuant to which...

  • Page 78
    ... agreement, revolving credit and term loan agreement and franchisee loan program, as modified by the amendments described herein. The Company used the net proceeds of the sale of the senior unsecured notes to the purchasers to partially pay for the Progressive acquisition. On December 9, 2014...

  • Page 79
    ... of $100.0 million in January 2015. Significant components of the Company's deferred income tax liabilities and assets at December 31 are as follows: (In Thousands) 2014 2013 Deferred Tax Liabilities: Lease Merchandise and Property, Plant and Equipment Goodwill & Other Intangibles Investment in...

  • Page 80
    ... the lease term. The Company also leases computer equipment and transportation vehicles under operating leases expiring during the next four years. Management expects that most leases will be renewed or replaced by other leases in the normal course of business. Future minimum lease payments required...

  • Page 81
    ... carrying amount of the franchise-related borrowings guarantee, which is included in accounts payable and accrued expenses in the consolidated balance sheets, is approximately $1.4 million as of December 31, 2014. On April 14, 2014, in connection with the Progressive acquisition, the Company entered...

  • Page 82
    ... now closed. In Daniel Antoine v. Aaron's, Inc., filed in U.S. District Court for the Northern District of Georgia (Civil No.:1-14-CV-02120AT-WEJ), on July 3, 2014, plaintiff alleged that the Company violated his rights and the rights of putative class members under the Fair Credit Reporting Act by...

  • Page 83
    ...In January 2014, Aaron's sold its Company-operated RIMCO stores and the rights to five franchised stores. The acquisition agreement provides that the Company will not compete with the acquiring entity for a specified period of time in certain geographic locations surrounding the purchased stores. In...

  • Page 84
    ... of this evaluation and other cost-reduction initiatives, during the year ended December 31, 2014, the Company closed 44 underperforming Company-operated stores and restructured its home office and field support to more closely align with current business conditions. The restructuring was completed...

  • Page 85
    ... $889,000 and $2.4 million in 2014, 2013 and 2012, respectively. Benefits of tax deductions in excess of recognized compensation cost, which are included in financing cash flows, were $1.4 million, $1.4 million and $6.0 million for the years ended 2014, 2013 and 2012, respectively. As of December 31...

  • Page 86
    ... the fair value of time-based restricted stock as compensation expense on a straight-line basis over the vesting period. In 2011, the Company established a restricted stock program as a component of the 2001 Incentive Award Plan, referred to as the Aaron's Management Performance Plan ("AMP Plan...

  • Page 87
    ...long-term incentive compensation program ("LTIP Plan") and pursuant to the Company's 2001 Incentive Award Plan, the Company granted a mix of stock options, time-based restricted stock and performance share units to key executives and managers. For performance share units, which are generally settled...

  • Page 88
    ... locations. The HomeSmart division was established to offer furniture, electronics, appliances and computers to consumers primarily on a weekly payment basis with no credit requirements. The Company's Franchise operation awards franchises and supports franchisees of its sales and lease ownership...

  • Page 89
    Information on segments and a reconciliation to earnings before income taxes are as follows for the years ended December 31: (In Thousands) 2014 2013 2012 Revenues From External Customers: Sales and Lease Ownership Progressive HomeSmart Franchise Manufacturing Other Revenues of Reportable Segments ...

  • Page 90
    ...to (i) the RIMCO segment through the date of sale in January 2014 (ii) leasing space to unrelated third parties in the corporate headquarters building, (iii) revenues of the Aaron's Office Furniture division through the date of sale in August 2012 and (iv) several minor unrelated activities. The pre...

  • Page 91
    ...* Gross profit is the sum of lease revenues and fees, retail sales, and non-retail sales less retail cost of sales, non-retail cost of sales, depreciation of lease merchandise and write-offs of lease merchandise. The comparability of the Company's quarterly financial results during 2014 and 2013 was...

  • Page 92
    ... up to 100% of their incentive pay compensation, and eligible nonemployee directors can defer receipt of up to 100% of both their cash and stock director fees. Compensation deferred under the plan is credited to each participant's deferral account and a deferred compensation liability is recorded in...

  • Page 93
    ... Exchange Act of 1934, was carried out by management, with the participation of the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as of the end of the period covered by this Annual Report on Form 10-K. Based on management's evaluation, the CEO and CFO concluded that the Company...

  • Page 94
    ...Officer on our website at http://www.aarons.com or by filing a Form 8-K. ITEM 11. EXECUTIVE COMPENSATION The information required in response to this Item is contained under the captions "Compensation Discussion and Analysis," "Summary Compensation Table," "Grants of Plan Based Awards in Fiscal Year...

  • Page 95
    ..., Progressive Finance Holdings, LLC, Virtual Acquisition Company, LLC, and John W. Robinson, III in his capacity as the representative of the selling unitholders (incorporated by reference to Exhibit 2.1 of the Registrant's Current Report on Form 8-K filed with the SEC on April 15, 2014). Purchase...

  • Page 96
    ... filed with the SEC on October 15, 2013). Amended and Restated Revolving Credit and Term Loan Agreement, by and among Aaron's, Inc., as borrower, the several banks and other financial institutions from time to time party thereto and SunTrust Bank as administrative agent, dated as of April 14, 2014...

  • Page 97
    ... Dollar Discounted Accelerated Share Repurchase Agreement, dated December 3, 2013, by and between Aaron's, Inc. and Wells Fargo Securities, LLC. (incorporated by reference to Exhibit 10.40 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC February...

  • Page 98
    ... Award Agreement for awards made in or after February 2014 (incorporated by reference to Exhibit 10.31 of the Registrant's Annual Report on form 10-K for the year ended December 31, 2013 filed with the SEC on February 24, 2013). Aaron's Management Performance Plan (Summary of terms for Home Office...

  • Page 99
    ..., thereunto duly authorized, on March 2, 2015. AARON'S, INC. By: /s/ GILBERT L. DANIELSON Gilbert L. Danielson Executive Vice President, Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf...

  • Page 100
    ...Fiscal year ending December 31. Copyright© 2014 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved. The line graph above and the table below compare, for the last five fiscal years of the Company, the yearly percentage change in the cumulative total shareholder returns (assuming...

  • Page 101
    ... Amounts in Thousands, December 31, December 31, Except Per Share Data) 2014 Operations 2013 Vice President, Chief Executive Vice President, OPERATING RESULTS Information Officer General Counsel and Revenues Corporate Secretary Gilbert L. Danielson* financial highlights Kirby M. Salgado Kevin...

  • Page 102
    309 E. Paces Ferry Rd., N.E. Atlanta, Georgia 30305-2377 (404) 231-0011 www.aarons.com www.investor.aarons.com