Aarons 2015 Annual Report Download - page 23

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Our workforce is comprised primarily of employees who work on an hourly basis. In certain areas where we operate, there is significant competition for
employees. The lack of availability of an adequate number of hourly employees or an increase in wages and benefits to current employees could adversely
affect our business, results of operations, cash flows, financial condition and ability to service our debt obligations. We are subject to applicable rules and
regulations relating to our relationship with our employees, including wage and hour regulations, health benefits, unemployment and sales taxes, overtime
and working conditions and immigration status. Accordingly, legislated increases in the federal minimum wage, as well as increases in additional labor cost
components such as employee benefit costs, workers’ compensation insurance rates, compliance costs and fines, would increase our labor costs, which could
have a material adverse effect on our business, prospects, results of operations and financial condition.
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The price of our common stock has been volatile and can be expected to be significantly affected by factors such as:
• our ability to meet market expectations with respect to the growth and profitability of each of our operating segments;
• quarterly variations in our results of operations, which may be impacted by, among other things, changes in same store revenues or when and how
many locations we acquire or open;
• quarterly variations in our competitors’ results of operations;
• changes in earnings estimates or buy/sell recommendations by financial analysts;
• state or federal legislative or regulatory proposals, initiatives, actions or changes that are, or are perceived to be, adverse to our operations;
• the stock price performance of comparable companies; and
• continuing unpredictable global and regional economic conditions.
In addition, the stock market as a whole historically has experienced price and volume fluctuations that have affected the market price of many specialty
retailers in ways that may have been unrelated to these companies’ operating performance.
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The application of indirect taxes, such as sales tax, is a complex and evolving issue, particularly with respect to the lease-to-own industry generally and our
virtual lease-to-own Progressive and Aarons.com businesses more specifically. Many of the fundamental statutes and regulations that impose these taxes were
established before the growth of the lease-to-own industry and e-commerce and, therefore, in many cases it is not clear how existing statutes apply to our
various businesses. In addition, governments are increasingly looking for ways to increase revenues, which has resulted in discussions about tax reform and
other legislative action to increase tax revenues, including through indirect taxes. This also could result in other adverse changes in or interpretations of
existing sales, income and other tax regulations. For example, from time to time, some taxing authorities in the United States have notified us that they
believe we owe them certain taxes imposed on transactions with our customers. Although these notifications have not resulted in material tax liabilities to
date, there is a risk that one or more jurisdictions may be successful in the future, which could have a material adverse effect on our results of operations.
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