Note A — Basis of Presentation
The consolidated financial statements include the accounts of Aaron’s, Inc. (the “Company”) and its
wholly owned subsidiaries. All significant intercompany accounts and transactions have been
eliminated.
The consolidated balance sheet as of March 31, 2011, and the consolidated statements of earnings
and cash flows for the three months ended March 31, 2011 and 2010, are unaudited. The preparation
of interim consolidated financial statements requires management to make estimates and assumptions
that affect the amounts reported in these financial statements and accompanying notes. Management
does not believe these estimates or assumptions will change significantly in the future absent
unsurfaced and unforeseen events. Generally, actual experience has been consistent with
management’s prior estimates and assumptions; however, actual results could differ from those
estimates.
Certain information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the United States have been
condensed or omitted. In the opinion of management, all adjustments (generally consisting of
normal recurring accruals) considered necessary for a fair presentation have been included in the
accompanying financial statements. We suggest you read these financial statements in conjunction
with the financial statements and notes thereto included in the Company’s Annual Report on Form
10-K filed with the Securities and Exchange Commission for the year ended December 31, 2010. The
results of operations for the quarter ended March 31, 2011 are not necessarily indicative of
operating results for the full year.
Certain reclassifications have been made to the prior periods to conform to the current period
presentation. Prior period share information has been adjusted to reflect the conversion of
the former Nonvoting Common Stock into shares of Class A Common Stock and renaming the Class A
Common Stock as Common Stock.
Accounting Policies and Estimates
See Note A to the consolidated financial statements in the 2010 Annual Report on Form 10-K.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments with maturity dates of less than
three months when purchased.
Lease Merchandise
Lease merchandise adjustments for the three month periods ended March 31 were $9.5 million in 2011
and $9.6 million in 2010. These charges are recorded as a component of operating expenses under the
allowance method, which includes losses incurred but not yet identified.
Goodwill and Other Intangibles
During the three months ended March 31, 2011 the Company recorded $816,000 in goodwill, $118,000 in
customer relationship intangibles, $74,000 in non-compete intangibles, and $17,000 in acquired
franchise development rights in connection with a series of acquisitions of sales and lease
ownership businesses. Customer relationship intangibles are amortized on a straight-line basis
over their estimated useful lives of two years. Other intangible assets are amortized using the
straight-line method over the life of the asset. Amortization expense was $500,000 and $791,000 for
the three month periods ended March 31, 2011 and 2010, respectively. The aggregate purchase price
for these asset acquisitions totaled $1.5 million, with the principal tangible assets acquired
consisting of lease merchandise and fixtures and equipment. These purchase price allocations are
tentative and preliminary; the Company anticipates finalizing them prior to December 31, 2011. The
results of operations of the acquired businesses are included in the Company’s results of
operations from the dates of acquisition and are not significant.
Stock Compensation
The results of operations for the three months ended March 31, 2011 and 2010 include $599,000 and
$716,000, respect
Free historical financial statements for Aaron's Co. Inc..
See how revenue, income, cash flow, and balance sheet financials have changed over 51 quarters since 2011. Compare with AAN stock chart to see long term trends.
Data imported from Aaron's Co. Inc. SEC filings. Check original filings before making any investment decision.