Aarons 2014 Annual Report Download - page 70

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60
NOTE 2: ACQUISITIONS
During the years ended December 31, 2014 and 2013, net cash payments related to the acquisitions of businesses and contracts
were $700.5 million and $10.9 million, respectively. 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’s results of operations from their dates of acquisition. Progressive contributed revenues of $549.5
million and earnings before income taxes of $4.6 million from April 14, 2014 through December 31, 2014.
The effect of the Company’s other acquisitions on the consolidated financial statements for the years ended December 31, 2014
and 2013 was not significant.
Progressive Acquisition
On April 14, 2014, the Company acquired a 100% ownership interest in Progressive, a leading virtual lease-to-own company,
for a total purchase price of $705.8 million, inclusive of cash acquired of $5.8 million. Progressive provides lease-purchase
solutions through over 15,000 retail locations in 46 states. The Company believes the Progressive acquisition will be
strategically transformational and will strengthen its business.
The following table reconciles the total estimated purchase price of the Company’s acquisition of Progressive:
(In Thousands)
Proceeds from Private Placement Note Issuance $ 300,000
Proceeds from Term Loan 126,250
Proceeds from Revolving Credit Facility 65,000
Cash Consideration 185,454
Deferred Cash Consideration 29,106
Estimated Purchase Price $ 705,810
Refer to Note 6 to these consolidated financial statements for additional information regarding the debt incurred to partially
finance the Progressive acquisition.
The initial deferred cash consideration had amounts outstanding as of December 31, 2014 which consist of $3.6 million of
merger consideration payable in January 2015, as well as $3.3 million in withheld escrow amounts.
The purchase price includes a primary escrow of $35.8 million to secure indemnification obligations of the sellers relating to
the accuracy of representations, warranties and the satisfaction of covenants. The primary escrow funds will be distributed
15 months from the April 14, 2014 closing date, after deducting for any claims. In addition, the purchase price includes a
secondary escrow of $15.8 million to secure indemnification obligations of the sellers relating to certain acquired tax-related
contingent liabilities. The Company believes that the $15.8 million is fully recoverable from the secondary escrow account and
has included this indemnification asset as a receivable in the Company’s preliminary acquisition accounting. The secondary
escrow is subject to current and future claims of the Company and any remaining undisputed balance is payable to the sellers
36 months from the April 14, 2014 closing date.