Aarons 2014 Annual Report Download - page 52

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At December 31, 2014, the portion that we might be obligated to repay in the event franchisees defaulted was $89.8 million.
However, due to franchisee borrowing limits, we believe any losses associated with any defaults would be mitigated through
recovery of lease merchandise and other assets. Since its inception in 1994, we have had no significant associated losses. We
believe the likelihood of any significant amounts being funded in connection with these commitments to be remote.
Contractual Obligations and Commitments. The following table shows our approximate contractual obligations, including
interest, and commitments to make future payments as of December 31, 2014:
(In Thousands) Total
Period Less
Than 1 Year
Period 1-3
Years
Period 3-5
Years
Period Over
5 Years
Debt, Excluding Capital Leases $ 594,241 $ 109,866 $ 135,000 $ 229,375 $ 120,000
Capital Leases 11,841 2,731 5,347 2,672 1,091
Interest Obligations 85,448 21,417 36,731 21,645 5,655
Operating Leases 519,294 116,564 171,070 105,935 125,725
Purchase Obligations 20,839 17,991 2,485 363 —
Retirement Obligations 7,678 3,473 4,144 26 35
Regulatory 27,200 27,200 — — —
Total Contractual Cash Obligations $ 1,266,541 $ 299,242 $ 354,777 $ 360,016 $ 252,506
For future interest payments on variable-rate debt, which are based on a specified margin plus a base rate (LIBOR), we used the
variable rate in effect at December 31, 2014 to calculate these payments. Our variable rate debt at December 31, 2014 consisted
of our borrowings under our revolving credit facilities. Future interest payments related to our revolving credit facilities are
based on the borrowings outstanding at December 31, 2014 through their respective maturity dates, assuming such borrowings
are outstanding at that time. The variable portion of the rate at December 31, 2014 ranged between 2.06% and 2.17% for all of
our variable-rate debt. Future interest payments may be different depending on future borrowing activity and interest rates.
The following table shows the Company’s approximate commercial commitments as of December 31, 2014:
(In Thousands)
Total
Amounts
Committed
Period Less
Than 1 Year
Period 1-3
Years
Period 3-5
Years
Period Over
5 Years
Guaranteed Borrowings of Franchisees $ 89,800 $ 89,800 $ — $ — $ —
Purchase obligations are primarily related to certain advertising 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 with the retirement of the Company's founder and
Chairman of the Board during the year ended December 31, 2012, the Chief Operating Officer during the year ended December
2013 and both the Chief Executive Officer and the Chief Operating Officer during the year ended December 31, 2014.
Deferred income tax liabilities as of December 31, 2014 were approximately $268.6 million. This amount is not included in the
total contractual obligations table because we believe this presentation would not be meaningful. Deferred income tax liabilities
are calculated based on temporary differences between the tax basis of assets and liabilities and their respective book basis,
which will result in taxable amounts in future years when the liabilities are settled at their reported financial statement amounts.
The results of these calculations do not have a direct connection with the amount of cash taxes to be paid in any future periods.
As a result, scheduling deferred income tax liabilities as payments due by period could be misleading, because this scheduling
would not relate to liquidity needs.
Recent Accounting Pronouncements
Refer to Note 1 to the Company's consolidated financial statements for a discussion of recently issued accounting
pronouncements.