Aarons 2014 Annual Report Download - page 50

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Debt Financing
In connection with the Company's acquisition of Progressive on April 14, 2014, the Company amended and restated its revolving
credit agreement, amended certain other financing agreements and entered into two new note purchase agreements. On
December 9, 2014, the Company amended the amended and restated revolving credit agreement, the senior unsecured notes and
the franchise loan agreement. The April 2014 and December 2014 amendments are discussed in further detail in Note 6 to the
Company's consolidated financial statements.
As of December 31, 2014, $121.9 million and $69.1 million of term loans and revolving credit balances, respectively, were
outstanding under the revolving credit agreement. Our current revolving credit facility matures December 9, 2019 and the total
available credit on the facility as of December 31, 2014 was $155.9 million.
As of December 31, 2014, the Company had outstanding $300.0 million in aggregate principal amount of senior unsecured notes
issued in a private placement in connection with the April 14, 2014 Progressive acquisition. The notes bear interest at the rate of
4.75% per year and mature on April 14, 2021. Payments of interest are due quarterly, commencing July 14, 2014, with principal
payments of $60.0 million each due annually commencing April 14, 2017.
As of December 31, 2014, the Company had outstanding $100.0 million in senior unsecured notes originally issued to several
insurance companies in a private placement in July 2011. Effective April 28, 2014, the notes bear interest at the rate of 3.95%
per year and mature on April 27, 2018. Quarterly payments of interest commenced July 27, 2011, and annual principal payments
of $25.0 million commenced April 27, 2014.
Our revolving credit agreement and senior unsecured notes, and our franchise loan agreement discussed below, contain certain
financial covenants. These covenants include requirements that the Company maintain ratios of (i) EBITDA plus lease expense
to fixed charges of no less than 1.75:1.00 through December 31, 2015 and 2.00:1.00 thereafter and (ii) total debt to EBITDA of
no greater than 3.25:1.00 through December 31, 2015 and 3.00:1.00 thereafter. In each case, EBITDA refers to the Company’s
consolidated net income before interest and tax expense, depreciation (other than lease merchandise depreciation), amortization
expense and other non-cash charges. If we fail to comply with these covenants, we will be in default under these agreements, and
all amounts will become due immediately. We were in compliance with all of these covenants at December 31, 2014 and believe
that we will continue to be in compliance in the future.
Share Repurchases
We 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, the accelerated share repurchase program was completed and the
Company received an additional 1,000,952 shares of common stock. As of December 31, 2014, the Company has 10,496,421
shares authorized for repurchase.
Dividends
We have a consistent history of paying dividends, having paid dividends for 27 consecutive years. Our annual common stock
dividend was $.086 per share, $.072 per share and $.062 per share in 2014, 2013 and 2012, respectively, and resulted in
aggregate dividend payments of $7.8 million, $3.9 million and $5.8 million in 2014, 2013 and 2012, respectively. At its
November 2014 meeting, our Board of Directors increased the quarterly dividend by 9.5%, raising it to $.023 per share. The
Company also increased its quarterly dividend rate by 23.5%, to $.021 per share, in November 2013 and by 13.3%, to $.017 per
share, in November 2012. Subject to sufficient operating profits, any future capital needs and other contingencies, we currently
expect to continue our policy of paying dividends.
If we achieve our expected level of growth in our operations, we anticipate we will supplement our expected cash flows from
operations, existing credit facilities, vendor credit and proceeds from the sale of lease return merchandise by expanding our
existing credit facilities, by securing additional debt financing, or by seeking other sources of capital to ensure we will be able to
fund our capital and liquidity needs for at least the next 12 to 24 months.