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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Aarons Holdings Company Inc | NYSE:AAN | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.16 | 2.36% | 6.95 | 7.05 | 6.88 | 6.90 | 151,037 | 01:00:00 |
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Georgia
|
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58-0687630
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(State or other jurisdiction of
incorporation or organization)
|
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(I. R. S. Employer
Identification No.)
|
|
|
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400 Galleria Parkway SE, Suite 300
Atlanta, Georgia |
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30339-3194
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(Address of principal executive offices)
|
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(Zip Code)
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Large Accelerated Filer
|
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ý
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Accelerated Filer
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o
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Non-Accelerated Filer
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o
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(Do not check if a smaller reporting company)
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Smaller Reporting Company
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|
o
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Title of Each Class
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|
Shares Outstanding as of
October 28, 2016
|
Common Stock, $.50 Par Value
|
|
71,417,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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Item 3. Defaults Upon Senior Securities
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|
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Item 4. Mine Safety Disclosures
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Item 5. Other Information
|
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ITEM 1.
|
FINANCIAL STATEMENTS
|
|
(Unaudited)
|
|
|
||||
(In Thousands, Except Share Data)
|
September 30,
2016 |
|
December 31,
2015 |
||||
ASSETS:
|
|
|
|
||||
Cash and Cash Equivalents
|
$
|
319,486
|
|
|
$
|
14,942
|
|
Investments
|
20,948
|
|
|
22,226
|
|
||
Accounts Receivable (net of allowances of $34,726 in 2016 and $34,861 in 2015)
|
86,784
|
|
|
113,439
|
|
||
Lease Merchandise (net of accumulated depreciation and allowances of $737,104 in 2016 and $738,657 in 2015)
|
957,981
|
|
|
1,138,938
|
|
||
Loans Receivable (net of allowances and unamortized fees of $12,225 in 2016 and $2,971 in 2015)
|
83,548
|
|
|
85,795
|
|
||
Property, Plant and Equipment at Cost (net of accumulated depreciation of $229,724 in 2016 and $222,752 in 2015)
|
213,163
|
|
|
225,836
|
|
||
Goodwill
|
528,634
|
|
|
539,475
|
|
||
Other Intangibles (net of accumulated amortization of $68,823 in 2016 and $48,021 in 2015)
|
255,195
|
|
|
275,912
|
|
||
Income Tax Receivable
|
13,605
|
|
|
179,174
|
|
||
Prepaid Expenses and Other Assets
|
72,046
|
|
|
59,434
|
|
||
Total Assets
|
$
|
2,551,390
|
|
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$
|
2,655,171
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|
LIABILITIES & SHAREHOLDERS’ EQUITY:
|
|
|
|
||||
Accounts Payable and Accrued Expenses
|
$
|
263,657
|
|
|
$
|
300,356
|
|
Accrued Regulatory Expense
|
—
|
|
|
4,737
|
|
||
Deferred Income Taxes Payable
|
271,566
|
|
|
307,481
|
|
||
Customer Deposits and Advance Payments
|
62,901
|
|
|
69,233
|
|
||
Debt
|
496,170
|
|
|
606,746
|
|
||
Total Liabilities
|
1,094,294
|
|
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1,288,553
|
|
||
Commitments and Contingencies (Note 6)
|
|
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SHAREHOLDERS' EQUITY:
|
|
|
|
||||
Common Stock, Par Value $.50 Per Share: Authorized: 225,000,000 Shares at September 30, 2016 and December 31, 2015; Shares Issued: 90,752,123 at September 30, 2016 and December 31, 2015
|
45,376
|
|
|
45,376
|
|
||
Additional Paid-in Capital
|
249,615
|
|
|
240,112
|
|
||
Retained Earnings
|
1,515,318
|
|
|
1,403,120
|
|
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Accumulated Other Comprehensive Income (Loss)
|
(72
|
)
|
|
(517
|
)
|
||
|
1,810,237
|
|
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1,688,091
|
|
||
Less: Treasury Shares at Cost
|
|
|
|
||||
Common Stock: 19,335,553 Shares at September 30, 2016 and 18,151,560 at December 31, 2015
|
(353,141
|
)
|
|
(321,473
|
)
|
||
Total Shareholders’ Equity
|
1,457,096
|
|
|
1,366,618
|
|
||
Total Liabilities & Shareholders’ Equity
|
$
|
2,551,390
|
|
|
$
|
2,655,171
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(In Thousands, Except Per Share Data)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
REVENUES:
|
|
|
|
|
|
|
|
||||||||
Lease Revenues and Fees
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$
|
673,869
|
|
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$
|
661,856
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$
|
2,104,157
|
|
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$
|
2,017,610
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Retail Sales
|
6,131
|
|
|
6,988
|
|
|
23,546
|
|
|
26,055
|
|
||||
Non-Retail Sales
|
67,349
|
|
|
81,708
|
|
|
219,264
|
|
|
262,194
|
|
||||
Franchise Royalties and Fees
|
13,898
|
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|
15,574
|
|
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44,965
|
|
|
48,069
|
|
||||
Interest and Fees on Loans Receivable
|
6,480
|
|
|
—
|
|
|
16,545
|
|
|
—
|
|
||||
Other
|
1,255
|
|
|
1,568
|
|
|
4,285
|
|
|
4,629
|
|
||||
|
768,982
|
|
|
767,694
|
|
|
2,412,762
|
|
|
2,358,557
|
|
||||
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
||||||||
Depreciation of Lease Merchandise
|
317,127
|
|
|
302,029
|
|
|
987,398
|
|
|
912,377
|
|
||||
Retail Cost of Sales
|
4,093
|
|
|
4,537
|
|
|
15,050
|
|
|
17,090
|
|
||||
Non-Retail Cost of Sales
|
60,316
|
|
|
73,567
|
|
|
195,685
|
|
|
236,882
|
|
||||
Operating Expenses
|
331,977
|
|
|
345,514
|
|
|
1,011,002
|
|
|
998,989
|
|
||||
Restructuring Expenses
|
4,658
|
|
|
—
|
|
|
4,658
|
|
|
—
|
|
||||
Other Operating Expense (Income), Net
|
2
|
|
|
(962
|
)
|
|
(5,972
|
)
|
|
(2,145
|
)
|
||||
|
718,173
|
|
|
724,685
|
|
|
2,207,821
|
|
|
2,163,193
|
|
||||
OPERATING PROFIT
|
50,809
|
|
|
43,009
|
|
|
204,941
|
|
|
195,364
|
|
||||
Interest Income
|
868
|
|
|
483
|
|
|
1,796
|
|
|
1,714
|
|
||||
Interest Expense
|
(5,745
|
)
|
|
(5,524
|
)
|
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(17,961
|
)
|
|
(17,115
|
)
|
||||
Other Non-Operating Expense, Net
|
(650
|
)
|
|
(1,412
|
)
|
|
(2,642
|
)
|
|
(1,223
|
)
|
||||
EARNINGS BEFORE INCOME TAXES
|
45,282
|
|
|
36,556
|
|
|
186,134
|
|
|
178,740
|
|
||||
INCOME TAXES
|
15,818
|
|
|
12,362
|
|
|
68,482
|
|
|
64,757
|
|
||||
NET EARNINGS
|
$
|
29,464
|
|
|
$
|
24,194
|
|
|
$
|
117,652
|
|
|
$
|
113,983
|
|
EARNINGS PER SHARE
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.41
|
|
|
$
|
0.33
|
|
|
$
|
1.62
|
|
|
$
|
1.57
|
|
Assuming Dilution
|
$
|
0.40
|
|
|
$
|
0.33
|
|
|
$
|
1.61
|
|
|
$
|
1.56
|
|
CASH DIVIDENDS DECLARED PER SHARE:
|
|
|
|
|
|
|
|
||||||||
Common Stock
|
$
|
0.025
|
|
|
$
|
0.023
|
|
|
$
|
0.075
|
|
|
$
|
0.069
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
||||||||
Basic
|
72,608
|
|
|
72,586
|
|
|
72,667
|
|
|
72,558
|
|
||||
Assuming Dilution
|
73,199
|
|
|
73,076
|
|
|
73,231
|
|
|
72,966
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net Earnings
|
$
|
29,464
|
|
|
$
|
24,194
|
|
|
$
|
117,652
|
|
|
$
|
113,983
|
|
Other Comprehensive (Loss) Income:
|
|
|
|
|
|
|
|
||||||||
Foreign Currency Translation Adjustment
|
(241
|
)
|
|
(156
|
)
|
|
445
|
|
|
(132
|
)
|
||||
Total Other Comprehensive (Loss) Income
|
(241
|
)
|
|
(156
|
)
|
|
445
|
|
|
(132
|
)
|
||||
Comprehensive Income
|
$
|
29,223
|
|
|
$
|
24,038
|
|
|
$
|
118,097
|
|
|
$
|
113,851
|
|
|
Nine Months Ended
September 30, |
||||||
(In Thousands)
|
2016
|
|
2015
|
||||
OPERATING ACTIVITIES:
|
|
|
|
||||
Net Earnings
|
$
|
117,652
|
|
|
$
|
113,983
|
|
Adjustments to Reconcile Net Earnings to Cash Provided by Operating Activities:
|
|
|
|
||||
Depreciation of Lease Merchandise
|
987,398
|
|
|
912,377
|
|
||
Other Depreciation and Amortization
|
61,592
|
|
|
59,659
|
|
||
Accounts Receivable Provision
|
119,680
|
|
|
117,898
|
|
||
Provision for Credit Losses on Loans Receivable
|
7,461
|
|
|
—
|
|
||
Stock-Based Compensation
|
15,492
|
|
|
10,692
|
|
||
Deferred Income Taxes
|
(33,800
|
)
|
|
(106,122
|
)
|
||
Other Changes, Net
|
(3,329
|
)
|
|
(3,835
|
)
|
||
Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions:
|
|
|
|
||||
Additions to Lease Merchandise
|
(1,134,644
|
)
|
|
(1,234,441
|
)
|
||
Book Value of Lease Merchandise Sold or Disposed
|
311,518
|
|
|
354,240
|
|
||
Accounts Receivable
|
(92,687
|
)
|
|
(99,849
|
)
|
||
Prepaid Expenses and Other Assets
|
(10,244
|
)
|
|
(861
|
)
|
||
Income Tax Receivable
|
165,569
|
|
|
111,098
|
|
||
Accounts Payable and Accrued Expenses
|
(40,367
|
)
|
|
382
|
|
||
Accrued Regulatory Expense
|
(4,737
|
)
|
|
(15,920
|
)
|
||
Customer Deposits and Advance Payments
|
(6,094
|
)
|
|
(5,991
|
)
|
||
Cash Provided by Operating Activities
|
460,460
|
|
|
213,310
|
|
||
INVESTING ACTIVITIES:
|
|
|
|
||||
Investments in Loans Receivable
|
(54,747
|
)
|
|
—
|
|
||
Proceeds from Loans Receivable
|
50,569
|
|
|
—
|
|
||
Outflows on Purchases of Property, Plant and Equipment
|
(45,920
|
)
|
|
(37,418
|
)
|
||
Proceeds from Property, Plant and Equipment
|
19,483
|
|
|
5,941
|
|
||
Acquisitions of Businesses and Contracts
|
(9,671
|
)
|
|
(16,841
|
)
|
||
Proceeds from Dispositions of Businesses and Contracts
|
36,295
|
|
|
13,976
|
|
||
Cash Used in Investing Activities
|
(3,991
|
)
|
|
(34,342
|
)
|
||
FINANCING ACTIVITIES:
|
|
|
|
||||
Proceeds from Debt
|
94,928
|
|
|
30,151
|
|
||
Repayments on Debt
|
(206,455
|
)
|
|
(142,072
|
)
|
||
Dividends Paid
|
(5,454
|
)
|
|
(5,008
|
)
|
||
Acquisition of Treasury Stock
|
(34,524
|
)
|
|
—
|
|
||
Excess Tax (Deficiencies) Benefits from Stock-Based Compensation
|
(696
|
)
|
|
340
|
|
||
Issuance of Stock Under Stock Option Plans
|
276
|
|
|
984
|
|
||
Cash Used in Financing Activities
|
(151,925
|
)
|
|
(115,605
|
)
|
||
Increase in Cash and Cash Equivalents
|
304,544
|
|
|
63,363
|
|
||
Cash and Cash Equivalents at Beginning of Period
|
14,942
|
|
|
3,549
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
319,486
|
|
|
$
|
66,912
|
|
NOTE 1.
|
BASIS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Stores as of September 30 (Unaudited)
|
2016
|
|
2015
|
||
Company-operated stores
|
|
|
|
||
Sales and Lease Ownership
|
1,228
|
|
|
1,218
|
|
HomeSmart
|
—
|
|
|
82
|
|
Total Company-operated stores
|
1,228
|
|
|
1,300
|
|
Franchised stores
|
703
|
|
|
764
|
|
Systemwide stores
|
1,931
|
|
|
2,064
|
|
Active Doors at September 30 (Unaudited)
|
2016
|
|
2015
|
||
Progressive Active Doors
1
|
15,493
|
|
|
12,132
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
(Shares In Thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Weighted average shares outstanding
|
72,608
|
|
|
72,586
|
|
|
72,667
|
|
|
72,558
|
|
Dilutive effect of share-based awards
|
591
|
|
|
490
|
|
|
564
|
|
|
408
|
|
Weighted average shares outstanding assuming dilution
|
73,199
|
|
|
73,076
|
|
|
73,231
|
|
|
72,966
|
|
(In Thousands)
|
September 30, 2016
|
|
December 31, 2015
|
||||
Customers
|
$
|
33,022
|
|
|
$
|
35,153
|
|
Corporate
|
23,054
|
|
|
26,175
|
|
||
Franchisee
|
30,708
|
|
|
52,111
|
|
||
|
$
|
86,784
|
|
|
$
|
113,439
|
|
(In Thousands)
|
2016
|
|
2015
|
||||
Bad debt expense
|
$
|
91,635
|
|
|
$
|
87,817
|
|
Provision for returns and uncollected renewal payments
|
28,045
|
|
|
30,081
|
|
||
Accounts receivable provision
|
$
|
119,680
|
|
|
$
|
117,898
|
|
(In Thousands)
|
Foreign Currency
|
||
Balance at January 1, 2016
|
$
|
(517
|
)
|
Other comprehensive income
|
445
|
|
|
Balance at September 30, 2016
|
$
|
(72
|
)
|
(In Thousands)
|
Amounts Recognized as of Acquisition Date
1
|
|
Measurement Period Adjustments
2
|
|
Amounts Recognized as of Acquisition Date (as adjusted)
|
||||||
Purchase Price
|
$
|
54,900
|
|
|
$
|
—
|
|
|
$
|
54,900
|
|
|
|
|
|
|
|
||||||
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed
|
|||||||||||
Cash and Cash Equivalents
|
4,185
|
|
|
—
|
|
|
4,185
|
|
|||
Loans Receivable
3
|
89,186
|
|
|
(60
|
)
|
|
89,126
|
|
|||
Receivables
|
45
|
|
|
—
|
|
|
45
|
|
|||
Property, Plant and Equipment
|
2,754
|
|
|
—
|
|
|
2,754
|
|
|||
Other Intangibles
|
3,400
|
|
|
(500
|
)
|
|
2,900
|
|
|||
Income Tax Receivable
|
728
|
|
|
—
|
|
|
728
|
|
|||
Prepaid Expenses and Other Assets
|
671
|
|
|
—
|
|
|
671
|
|
|||
Deferred Income Tax Assets
|
375
|
|
|
2,115
|
|
|
2,490
|
|
|||
Total Identifiable Assets Acquired
|
101,344
|
|
|
1,555
|
|
|
102,899
|
|
|||
Accounts Payable and Accrued Expenses
|
(1,709
|
)
|
|
(1,265
|
)
|
|
(2,974
|
)
|
|||
Debt
|
(45,025
|
)
|
|
—
|
|
|
(45,025
|
)
|
|||
Total Liabilities Assumed
|
(46,734
|
)
|
|
(1,265
|
)
|
|
(47,999
|
)
|
|||
Goodwill
|
290
|
|
|
(290
|
)
|
|
—
|
|
|||
Net Assets Acquired
|
$
|
54,900
|
|
|
$
|
—
|
|
|
$
|
54,900
|
|
NOTE 3.
|
FAIR VALUE MEASUREMENT
|
(In Thousands)
|
September 30, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Deferred Compensation Liability
|
$
|
—
|
|
|
$
|
(12,436
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(11,576
|
)
|
|
$
|
—
|
|
(In Thousands)
|
September 30, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Assets Held for Sale
|
$
|
—
|
|
|
$
|
9,285
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,976
|
|
|
$
|
—
|
|
(In Thousands)
|
September 30, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Perfect Home Notes
1
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,948
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,226
|
|
Fixed-Rate Long-Term Debt
2
|
—
|
|
|
(372,778
|
)
|
|
—
|
|
|
—
|
|
|
(395,618
|
)
|
|
—
|
|
1
|
The Perfect Home notes are carried at cost. The Company periodically reviews the carrying amount utilizing company-specific transactions or changes in Perfect Home’s financial performance to determine if the notes are impaired.
|
2
|
The fair value of fixed-rate long-term debt is estimated using the present value of underlying cash flows discounted at a current market yield for similar instruments. The carrying amount of fixed-rate long-term debt was
$350.0 million
and
$375.0 million
at
September 30, 2016
and
December 31, 2015
, respectively.
|
(In Thousands)
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
Credit Card Loans
|
|
$
|
56,010
|
|
|
$
|
13,900
|
|
Acquired Loans
|
|
39,763
|
|
|
74,866
|
|
||
Loans Receivable, Gross
|
|
95,773
|
|
|
88,766
|
|
||
|
|
|
|
|
||||
Allowance for Loan Losses
|
|
(5,588
|
)
|
|
(937
|
)
|
||
Unamortized Fees
|
|
(6,637
|
)
|
|
(2,034
|
)
|
||
Loans Receivable, Net
|
|
$
|
83,548
|
|
|
$
|
85,795
|
|
Aging Category
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
30-59 days past due
|
|
7.1
|
%
|
|
7.9
|
%
|
||
60-89 days past due
|
|
3.4
|
%
|
|
3.3
|
%
|
||
90 or more days past due
|
|
4.6
|
%
|
|
4.1
|
%
|
||
Past due loans receivable
|
|
15.1
|
%
|
|
15.3
|
%
|
||
Current loans receivable
|
|
84.9
|
%
|
|
84.7
|
%
|
||
Balance of loans receivable 90 or more days past due and still accruing interest and fees
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
REVENUES:
|
|
|
|
|
|
|
|
||||||||
Sales and Lease Ownership
|
$
|
437,075
|
|
|
$
|
470,478
|
|
|
$
|
1,405,990
|
|
|
$
|
1,487,217
|
|
Progressive
|
308,397
|
|
|
265,986
|
|
|
913,636
|
|
|
773,551
|
|
||||
HomeSmart
|
—
|
|
|
15,137
|
|
|
25,392
|
|
|
47,453
|
|
||||
DAMI
1
|
6,480
|
|
|
—
|
|
|
16,545
|
|
|
—
|
|
||||
Franchise
|
13,898
|
|
|
15,574
|
|
|
44,965
|
|
|
48,069
|
|
||||
Manufacturing
|
21,051
|
|
|
24,014
|
|
|
67,564
|
|
|
78,048
|
|
||||
Other
|
102
|
|
|
307
|
|
|
739
|
|
|
1,002
|
|
||||
Revenues of Reportable Segments
|
787,003
|
|
|
791,496
|
|
|
2,474,831
|
|
|
2,435,340
|
|
||||
Elimination of Intersegment Revenues
|
(18,021
|
)
|
|
(23,802
|
)
|
|
(62,069
|
)
|
|
(76,783
|
)
|
||||
Total Revenues from External Customers
|
$
|
768,982
|
|
|
$
|
767,694
|
|
|
$
|
2,412,762
|
|
|
$
|
2,358,557
|
|
|
|
|
|
|
|
|
|
||||||||
EARNINGS (LOSS) BEFORE INCOME TAXES:
|
|
|
|
|
|
|
|
||||||||
Sales and Lease Ownership
2
|
$
|
23,385
|
|
|
$
|
32,348
|
|
|
$
|
118,910
|
|
|
$
|
132,079
|
|
Progressive
|
24,655
|
|
|
5,617
|
|
|
75,652
|
|
|
44,761
|
|
||||
HomeSmart
3
|
(40
|
)
|
|
(335
|
)
|
|
(3,693
|
)
|
|
239
|
|
||||
DAMI
|
(2,524
|
)
|
|
—
|
|
|
(7,686
|
)
|
|
—
|
|
||||
Franchise
4
|
11,022
|
|
|
11,327
|
|
|
35,922
|
|
|
37,218
|
|
||||
Manufacturing
|
(545
|
)
|
|
349
|
|
|
859
|
|
|
2,007
|
|
||||
Other
5
|
(11,430
|
)
|
|
(12,397
|
)
|
|
(33,401
|
)
|
|
(35,545
|
)
|
||||
Earnings Before Income Taxes for Reportable Segments
|
44,523
|
|
|
36,909
|
|
|
186,563
|
|
|
180,759
|
|
||||
Elimination of Intersegment Loss (Profit)
|
759
|
|
|
(353
|
)
|
|
(429
|
)
|
|
(2,019
|
)
|
||||
Total Earnings Before Income Taxes
|
$
|
45,282
|
|
|
$
|
36,556
|
|
|
$
|
186,134
|
|
|
$
|
178,740
|
|
(In Thousands)
|
September 30,
2016 |
|
December 31,
2015 |
||||
Assets:
|
|
|
|
||||
Sales and Lease Ownership
|
$
|
1,130,717
|
|
|
$
|
1,261,040
|
|
Progressive
|
872,168
|
|
|
878,457
|
|
||
HomeSmart
|
—
|
|
|
44,429
|
|
||
DAMI
|
95,211
|
|
|
97,486
|
|
||
Franchise
|
33,465
|
|
|
53,693
|
|
||
Manufacturing
1
|
24,943
|
|
|
28,986
|
|
||
Other
|
394,886
|
|
|
291,080
|
|
||
Total Assets
|
$
|
2,551,390
|
|
|
$
|
2,655,171
|
|
•
|
Generally a predetermined amount of each reportable segment’s revenues is charged to the reportable segment as an allocation of corporate overhead.
|
•
|
Accruals related to store closures are not recorded on the reportable segments’ financial statements, but are maintained and controlled by corporate headquarters.
|
•
|
Interest expense has been allocated to the Sales and Lease Ownership and HomeSmart segments based on a percentage of their revenues. Interest expense is allocated to the Progressive and DAMI segments based on a percentage of the outstanding balances of its intercompany borrowings and of the debt incurred when it was acquired.
|
(In Thousands)
|
Severance
|
Fixed Assets
|
Total
|
||||||
Balance at January 1, 2016
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Restructuring Expenses
|
2,115
|
|
2,543
|
|
4,658
|
|
|||
Payments
|
(1,229
|
)
|
—
|
|
(1,229
|
)
|
|||
Impairment and Assets Written Off
|
—
|
|
(2,543
|
)
|
(2,543
|
)
|
|||
Balance at September 30, 2016
|
$
|
886
|
|
$
|
—
|
|
$
|
886
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Active Doors at September 30 (Unaudited)
|
2016
|
|
2015
|
||
Progressive Active Doors
|
15,493
|
|
|
12,132
|
|
For the Three Months Ended September 30 (Unaudited and In Thousands)
|
2016
|
|
2015
|
||||
Progressive Invoice Volume
|
$
|
207,079
|
|
|
$
|
187,452
|
|
|
Three Months Ended
September 30, |
|
Change
|
|||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
REVENUES:
|
|
|
|
|
|
|
|
|||||||
Sales and Lease Ownership
1
|
$
|
437,075
|
|
|
$
|
470,478
|
|
|
$
|
(33,403
|
)
|
|
(7.1
|
)%
|
Progressive
2
|
308,397
|
|
|
265,986
|
|
|
42,411
|
|
|
15.9
|
|
|||
HomeSmart
1
|
—
|
|
|
15,137
|
|
|
(15,137
|
)
|
|
nmf
|
|
|||
DAMI
3
|
6,480
|
|
|
—
|
|
|
6,480
|
|
|
nmf
|
|
|||
Franchise
4
|
13,898
|
|
|
15,574
|
|
|
(1,676
|
)
|
|
(10.8
|
)
|
|||
Manufacturing
|
21,051
|
|
|
24,014
|
|
|
(2,963
|
)
|
|
(12.3
|
)
|
|||
Other
|
102
|
|
|
307
|
|
|
(205
|
)
|
|
(66.8
|
)
|
|||
Revenues of Reportable Segments
|
787,003
|
|
|
791,496
|
|
|
(4,493
|
)
|
|
(0.6
|
)
|
|||
Elimination of Intersegment Revenues
|
(18,021
|
)
|
|
(23,802
|
)
|
|
5,781
|
|
|
24.3
|
|
|||
Total Revenues from External Customers
|
$
|
768,982
|
|
|
$
|
767,694
|
|
|
$
|
1,288
|
|
|
0.2
|
%
|
nmf - Calculation is not meaningful
|
|
|
|
|
|
|
|
|||||||
1
Segment revenue principally consists of lease revenues and fees, retail sales and non-retail sales, and is presented on an accrual basis.
|
||||||||||||||
2
Segment revenue consists of lease revenues and fees.
|
||||||||||||||
3
Segment revenue consists of interest and fees on loans receivable, and excludes the effect of interest expense.
|
||||||||||||||
4
Segment revenue consists of franchise royalties and fees.
|
|
Three Months Ended
September 30, |
||||||
(In Thousands)
|
2016
|
|
2015
|
||||
Personnel costs
|
$
|
144,490
|
|
|
$
|
149,777
|
|
Occupancy costs
|
51,805
|
|
|
53,406
|
|
||
Lease merchandise adjustments
|
36,556
|
|
|
38,791
|
|
||
Bad debt expense
|
35,425
|
|
|
38,626
|
|
||
Advertising
|
9,013
|
|
|
8,383
|
|
||
Other operating expenses
|
54,688
|
|
|
56,531
|
|
||
Operating Expenses
|
$
|
331,977
|
|
|
$
|
345,514
|
|
|
Three Months Ended
September 30, |
||||||
(In Thousands)
|
2016
|
|
2015
|
||||
Net gains on sales of stores
|
$
|
(36
|
)
|
|
$
|
(892
|
)
|
Net gains on sales of delivery vehicles
|
(298
|
)
|
|
(449
|
)
|
||
Impairment charges and net losses on asset dispositions and assets held for sale
|
336
|
|
|
379
|
|
||
Other operating expense (income), net
|
$
|
2
|
|
|
$
|
(962
|
)
|
|
Three Months Ended
September 30, |
|
Change
|
|||||||||||
|
|
|
|
|
2016 vs. 2015
|
|||||||||
(In Thousands)
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
EARNINGS (LOSS) BEFORE INCOME TAXES:
|
|
|
|
|
|
|
|
|||||||
Sales and Lease Ownership
1
|
$
|
23,385
|
|
|
$
|
32,348
|
|
|
$
|
(8,963
|
)
|
|
(27.7
|
)%
|
Progressive
|
24,655
|
|
|
5,617
|
|
|
19,038
|
|
|
338.9
|
|
|||
HomeSmart
|
(40
|
)
|
|
(335
|
)
|
|
295
|
|
|
88.1
|
|
|||
DAMI
|
(2,524
|
)
|
|
—
|
|
|
(2,524
|
)
|
|
nmf
|
|
|||
Franchise
2
|
11,022
|
|
|
11,327
|
|
|
(305
|
)
|
|
(2.7
|
)
|
|||
Manufacturing
|
(545
|
)
|
|
349
|
|
|
(894
|
)
|
|
(256.2
|
)
|
|||
Other
3
|
(11,430
|
)
|
|
(12,397
|
)
|
|
967
|
|
|
7.8
|
|
|||
Earnings Before Income Taxes for Reportable Segments
|
44,523
|
|
|
36,909
|
|
|
7,614
|
|
|
20.6
|
|
|||
Elimination of Intersegment Profit
|
759
|
|
|
(353
|
)
|
|
1,112
|
|
|
315.0
|
|
|||
Total
|
$
|
45,282
|
|
|
$
|
36,556
|
|
|
$
|
8,726
|
|
|
23.9
|
%
|
nmf - Calculation is not meaningful
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, |
|
Change
|
|||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
REVENUES:
|
|
|
|
|
|
|
|
|||||||
Sales and Lease Ownership
1
|
$
|
1,405,990
|
|
|
$
|
1,487,217
|
|
|
$
|
(81,227
|
)
|
|
(5.5
|
)%
|
Progressive
2
|
913,636
|
|
|
773,551
|
|
|
140,085
|
|
|
18.1
|
|
|||
HomeSmart
1
|
25,392
|
|
|
47,453
|
|
|
(22,061
|
)
|
|
(46.5
|
)
|
|||
DAMI
3
|
16,545
|
|
|
—
|
|
|
16,545
|
|
|
nmf
|
|
|||
Franchise
4
|
44,965
|
|
|
48,069
|
|
|
(3,104
|
)
|
|
(6.5
|
)
|
|||
Manufacturing
|
67,564
|
|
|
78,048
|
|
|
(10,484
|
)
|
|
(13.4
|
)
|
|||
Other
|
739
|
|
|
1,002
|
|
|
(263
|
)
|
|
(26.2
|
)
|
|||
Revenues of Reportable Segments
|
2,474,831
|
|
|
2,435,340
|
|
|
39,491
|
|
|
1.6
|
|
|||
Elimination of Intersegment Revenues
|
(62,069
|
)
|
|
(76,783
|
)
|
|
14,714
|
|
|
19.2
|
|
|||
Total Revenues from External Customers
|
$
|
2,412,762
|
|
|
$
|
2,358,557
|
|
|
$
|
54,205
|
|
|
2.3
|
%
|
nmf - Calculation is not meaningful
|
|
|
|
|
|
|
|
|||||||
1
Segment revenue principally consists of lease revenues and fees, retail sales and non-retail sales, and is presented on an accrual basis.
|
||||||||||||||
2
Segment revenue consists of lease revenues and fees.
|
||||||||||||||
3
Segment revenue consists of interest and fees on loans receivable, and excludes the effect of interest expense.
|
||||||||||||||
4
Segment revenue consists of franchise royalties and fees.
|
|
Nine Months Ended September 30,
|
||||||
(In Thousands)
|
2016
|
|
2015
|
||||
Personnel costs
|
$
|
464,447
|
|
|
$
|
457,719
|
|
Occupancy costs
|
157,294
|
|
|
156,925
|
|
||
Lease merchandise adjustments
|
98,587
|
|
|
98,294
|
|
||
Bad debt expense
|
91,635
|
|
|
87,817
|
|
||
Advertising
|
30,667
|
|
|
28,094
|
|
||
Other operating expenses
|
168,372
|
|
|
170,140
|
|
||
Operating Expenses
|
$
|
1,011,002
|
|
|
$
|
998,989
|
|
|
Nine Months Ended
September 30, |
||||||
(In Thousands)
|
2016
|
|
2015
|
||||
Net gains on sales of stores
|
$
|
(4
|
)
|
|
$
|
(2,231
|
)
|
Net gains on sales of delivery vehicles
|
(1,002
|
)
|
|
(1,400
|
)
|
||
Impairment charges and net (gains) losses on asset dispositions and assets held for sale
|
(4,966
|
)
|
|
1,486
|
|
||
Other operating income, net
|
$
|
(5,972
|
)
|
|
$
|
(2,145
|
)
|
•
|
Cash and cash equivalents
increased
$304.6 million
to
$319.5 million
at
September 30, 2016
from
$14.9 million
at
December 31, 2015
. For additional information, refer to the "Liquidity and Capital Resources" section below.
|
•
|
Accounts receivable, net
decreased
$26.6 million
to
$86.8 million
at
September 30, 2016
from
$113.4 million
at
December 31, 2015
primarily due to decreases in non-retail sales at the end of the third quarter of 2016 compared to the end of the fourth quarter of 2015.
|
•
|
Lease merchandise, net decreased
$181.0 million
to
$958.0 million
at
September 30, 2016
from
$1.1 billion
at
December 31, 2015
primarily due to decreases in lease merchandise purchases at our core operations and the HomeSmart disposition during the
nine months
ended
September 30, 2016
.
|
•
|
Income tax receivable
decreased
$165.6 million
primarily because the Company received income tax refunds, net of payments of
$88.6 million
, during the
nine months
ended
September 30, 2016
. The enactment of the Protecting Americans From Tax Hikes Act in December 2015 ("the 2015 Act") extended bonus depreciation on eligible inventory held during 2015. Throughout 2015, the Company made payments based on the previously enacted law, resulting in an overpayment when the 2015 Act was signed into law and the Company applied for a refund at that time. The income tax receivable balance was further reduced due to adjustments to the provision for federal income taxes recorded during the
nine months
ended
September 30, 2016
.
|
•
|
Accounts payable and accrued expenses
decreased
$36.7 million
due primarily to decreases in lease merchandise purchases at the end of the third quarter of 2016 compared to the end of the fourth quarter of 2015.
|
•
|
Debt
decreased
$110.6 million
due primarily to the net repayment of
$111.5 million
in revolving credit borrowings, term loans and capital lease obligations. Refer to "Liquidity and Capital Resources" below for further details regarding the Company's financing arrangements.
|
•
|
cash flows from operations;
|
•
|
private debt offerings;
|
•
|
bank debt;
|
•
|
trade credit with vendors;
|
•
|
proceeds from the sale of lease return merchandise; and
|
•
|
stock offerings.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
Total Number of Shares Purchased
|
Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
1
|
|||||
July 1, 2016 through July 31, 2016
|
—
|
|
—
|
|
—
|
|
10,496,421
|
|
|
August 1, 2016 through August 31, 2016
|
—
|
|
—
|
|
—
|
|
10,496,421
|
|
|
September 1, 2016 through September 30, 2016
|
1,372,700
|
|
$
|
25.15
|
|
1,372,700
|
|
9,123,721
|
|
Total
|
1,372,700
|
|
$
|
25.15
|
|
1,372,700
|
|
|
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
|
|
AARON’S, INC.
|
|
|
|
|
(Registrant)
|
|
|
|
|
Date:
|
November 2, 2016
|
By:
|
/s/ Steven A. Michaels
|
|
|
|
Steven A. Michaels
|
|
|
|
Chief Financial Officer,
|
|
|
|
President Strategic Operations
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
Date:
|
November 2, 2016
|
By:
|
/s/ Robert P. Sinclair, Jr.
|
|
|
|
Robert P. Sinclair, Jr.
|
|
|
|
Vice President,
|
|
|
|
Corporate Controller
|
|
|
|
(Principal Accounting Officer)
|
1 Year Aarons Chart |
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