Aarons 2014 Annual Report Download - page 76

Download and view the complete annual report

Please find page 76 of the 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

66
The Company has estimated that the carrying value of its Perfect Home notes approximates fair value and, therefore, no
impairment is considered to have occurred as of December 31, 2014. While no impairment was noted during 2014, if
profitability is delayed as a result of the significant start-up expenses associated with Perfect Home, there could be a change in
the valuation of the Perfect Home notes that may result in the recognition of an impairment loss in future periods.
NOTE 5: PROPERTY, PLANT AND EQUIPMENT
Following is a summary of the Company’s property, plant, and equipment at December 31:
(In Thousands) 2014 2013
Land $ 24,861 $ 26,021
Buildings and Improvements 83,053 84,520
Leasehold Improvements and Signs 107,380 120,702
Fixtures and Equipment1196,965 172,483
Assets Under Capital Leases:
with Related Parties 10,573 10,574
with Unrelated Parties 10,564 10,550
Construction in Progress 2,086 4,347
435,482 429,197
Less: Accumulated Depreciation and Amortization (216,065)(197,904)
$ 219,417 $ 231,293
1 Includes internal-use software development costs of $50.3 million and $36.3 million as of December 31, 2014 and 2013,
respectively. Accumulated amortization of internal-use software development costs amounted to $14.8 million and
$9.5 million as of December 31, 2014 and 2013, respectively.
Amortization expense on assets recorded under capital leases is included in operating expenses and was $1.7 million,
$1.7 million and $1.2 million in 2014, 2013 and 2012, respectively. Capital leases consist of buildings and improvements.
Assets under capital leases with related parties included $6.9 million and $5.8 million in accumulated depreciation and
amortization as of December 31, 2014 and 2013, respectively. Assets under capital leases with unrelated parties included
$5.7 million and $5.1 million in accumulated depreciation and amortization as of December 31, 2014 and 2013, respectively.
NOTE 6: INDEBTEDNESS
Following is a summary of the Company’s debt at December 31:
(In Thousands) 2014 2013
Revolving Facility $ 69,116 $ —
Senior Unsecured Notes, 3.95%, Due in Installments through April 2018 100,000 125,000
Term Loan, Due in Installments through December 2019 121,875 —
Senior Unsecured Notes, 4.75%, Due in Installments through April 2021 300,000 —
Capital Lease Obligation:
with Related Parties 6,157 7,412
with Unrelated Parties 5,684 7,042
Other Debt 3,250 3,250
$ 606,082 $ 142,704
Revolving Credit Agreement and Term Loan
In connection with the April 14, 2014 acquisition of Progressive, the Company amended and restated its revolving credit
agreement to, among other things, (i) provide for a new $126.3 million term loan, which was fully funded at closing, and (ii)
increase the revolving credit commitments from $140.0 million to $200.0 million (including increases in the existing letter of
credit subfacility from $10.0 million to $20.0 million and the existing swingline loan subfacility from $15.0 million to
$25.0 million). The amendments also, among other things, conform the covenants, representations, warranties and events of
default to those contained in the 2014 note purchase agreements described below, to contemplate the acquisition of Progressive,
to authorize the new 2014 senior notes and to increase the applicable margin for Eurodollar loans under the credit facility.