Aarons 2010 Annual Report Download - page 23

Revenues
The 10.1% increase in total revenues, to $1.753 billion in 2009
from $1.593 billion in 2008, was due mainly to a $132.0 million,
or 11.2%, increase in lease revenues and fees, plus an $18.7 million,
or 6.0%, increase in non-retail sales. The $132.0 million increase
in lease revenues and fees revenues was attributable to our sales and
lease ownership division, which had an 8.1% increase in same store
revenues during the 24-month period ended December 31, 2009
and added a net 68 company-operated stores since the beginning
of 2008.
The 6.0% increase in non-retail sales (which mainly represents
merchandise sold to our franchisees), to $328.0 million in 2009
from $309.3 million in 2008, was due to the growth of our franchise
operations and our distribution network. The total number of
franchised sales and lease ownership stores at December 31, 2009
was 597, reflecting a net addition of 113 stores since the beginning
of 2008.
The 17.6% increase in franchise royalties and fees, to $52.9
million in 2009 from $45.0 million in 2008, primarily reflects an
increase in royalty income from franchisees, increasing 15.9% to
$42.3 million in 2009 compared to $36.5 million in 2008. The
increase is due primarily to the growth in the number of franchised
stores and same store growth in the revenues of existing stores.
Other revenues increased 8.5% to $17.7 million in 2009 from
$16.4 million in 2008. Included in other revenues in 2009 is a
$7.8 million gain from the sales of the assets of 39 stores. Included
in other revenues in 2008 is an $8.5 million gain on the sales of the
assets of 41 stores.
Cost of Sales
Cost of sales from retail sales decreased 2.5% to $25.7 million in
2009 compared to $26.4 million in 2008, with retail cost of sales as
a percentage of retail sales decreasing to 59.3% from 61.1% in 2008
as a result of improved pricing and lower product cost.
Cost of sales from non-retail sales increased 5.8%, to $299.7
million in 2009 from $283.4 million in 2008, and as a percentage
of non-retail sales, was consistent at 91.4% in 2009 and 91.6% in
2008.
Expenses
Operating expenses in 2009 increased $66.1 million to $771.6 mil-
lion from $705.6 million in 2008, a 9.4% increase. As a percentage
of total revenues, operating expenses were 44.0% for the year ended
December 31, 2009, and 44.3% for the comparable period in 2008.
Depreciation of lease merchandise increased $45.1 million to
$475.0 million in 2009 from $429.9 million during the comparable
period in 2008, a 10.5% increase. As a percentage of total lease
revenues and fees, depreciation of lease merchandise decreased to
36.2% from 36.5% a year ago, primarily due to product mix and
lower product cost from favorable purchasing trends.
Year Ended Year Ended Increase/(Decrease) % Increase/
December 31, December 31, in Dollars to 2009 (Decrease) to
(In Thousands) 2009 2008 from 2008 2009 from 2008
Revenues:
Lease Revenues and Fees $1,310,709 $1,178,719 $ 131,990 11.2%
Retail Sales 43,394 43,187 207 0.5
Non-Retail Sales 327,999 309,326 18,673 6.0
Franchise Royalties and Fees 52,941 45,025 7,916 17.6
Other 17,744 16,351 1,393 8.5
1,752,787 1,592,608 160,179 10.1
Costs and Expenses:
Retail Cost of Sales 25,730 26,379 (649) (2.5)
Non-Retail Cost of Sales 299,727 283,358 16,369 5.8
Operating Expenses 771,634 705,566 66,068 9.4
Depreciation of Lease Merchandise 474,958 429,907 45,051 10.5
Interest 4,299 7,818 (3,519) (45.0)
1,576,348 1,453,028 123,320 8.5
Earnings From Continuing
Operations Before Income Taxes 176,439 139,580 36,859 26.4
Income Taxes 63,561 53,811 9,750 18.1
Net Earnings From Continuing
Operations 112,878 85,769 27,109 31.6
(Loss) Earnings From Discontinued
Operations, Net of Tax (277) 4,420 (4,697) (106.3)
Net Earnings $ 112,601 $ 90,189 $ 22,412 24.9%
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