Aarons 2015 Annual Report Download - page 48
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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.
The Company, through its DAMI business, is a party to financial instruments (loans receivable) with off-balance-sheet risk in the normal course of business to
meet the financing needs of its cardholders. These financial instruments primarily include commitments to extend unsecured credit. As of December 31, 2015,
there were approximately 82,000 active credit cards outstanding, of which 81,800 had remaining credit available of $378.7 million. The rates and terms of
such commitments to lend are competitive with others in the market in which the Company operates. As such, the commitment amount above, if borrowed, is
a reasonable estimate of fair value. While these amounts represented the total available unused credit card lines, the Company does not anticipate that all
cardholders will access their entire available line at any given point in time. Commitments to extend unsecured credit are agreements to lend to a customer so
long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses.
Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash
requirements. The Company evaluates cardholder creditworthiness individually.
Refer to Note 1 to the Company's consolidated financial statements for a discussion of recently issued accounting pronouncements.
In connection with the acquisition of DAMI in October 2015, the Company made minor amendments to its revolving credit facility agreements and certain
financing agreements, and assumed a new secured revolving credit agreement. Refer to Note 7 to the consolidated financial statements for more information.
As of December 31, 2015, we had $375 million of senior unsecured notes outstanding at a weighted-average fixed rate of 4.6%. Amounts outstanding under
our unsecured revolving credit agreements as of December 31, 2015 consisted of $109.4 million in term loans and $75.0 million of revolving credit balances.
The secured revolving credit agreement had $41.8 million outstanding as of December 31, 2015. Borrowings under these revolving credit agreements are
indexed to LIBOR or the prime rate, which exposes us to the risk of increased interest costs if interest rates rise. Based on the Company's variable-rate debt
outstanding as of December 31, 2015, a hypothetical 1.0% increase or decrease in interest rates would increase or decrease interest expense by $2.3 million
on an annualized basis.
We do not use any significant market risk sensitive instruments to hedge commodity, foreign currency or other risks, and hold no market risk sensitive
instruments for trading or speculative purposes.
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