Aarons 2015 Annual Report Download - page 30

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Aaron’s, Inc. ("we", "our", "us", "Aaron’s" or the "Company") is a leader in the sales and lease ownership and specialty retailing of furniture, consumer
electronics, computers, and home appliances and accessories throughout the United States and Canada.
On April 14, 2014, the Company acquired a 100% ownership interest in Progressive Finance Holdings, LLC ("Progressive"), a leading virtual lease-to-own
company, for merger consideration of $700.0 million, net of cash acquired. Progressive provides lease-purchase solutions in 46 states on a variety of
products, including furniture and bedding, mobile phones, consumer electronics, appliances and jewelry. It does so by purchasing merchandise from third-
party retailers desired by those retailers’ customers, and in turn leasing that merchandise to the customers on a lease-to-own basis. Progressive consequently
has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional retailers.
On July 15, 2014, the Company announced that a rigorous evaluation of the Company-operated store portfolio had been performed, which, along with other
cost-reduction initiatives, resulted in the closure of 44 underperforming stores and the realignment of home office and field support. In the ordinary course of
business, we continually review, and as appropriate adjust, the amount and mix of Company-operated and franchised stores to help optimize overall
performance. These adjustments included closing additional underperforming Company-operated stores during 2015.
On October 15, 2015, the Company acquired a 100% ownership interest in Dent-A-Med, Inc., d/b/a the HELPcard®, (collectively, "DAMI") for $50.7 million,
net of cash acquired. The Company also assumed $44.8 million of debt in the form of a secured revolving credit facility in connection with the acquisition.
DAMI offers a variety of second-look financing programs for below-prime customers that are originated through a federally insured bank and, along with
Progressive's existing technology-based application and approval process, allows the Company to provide retail partners one source for financing and leasing
transactions with below-prime customers.
Our major operating divisions are Aaron’s Sales & Lease Ownership, Progressive, HomeSmart, DAMI and Woodhaven Furniture Industries, which
manufactures and supplies the majority of the upholstered furniture and bedding leased and sold in our stores.
Total revenues increased from $2.235 billion in 2013 to $3.180 billion in 2015, primarily as a result of the Progressive acquisition during 2014. Total
revenues for the year ended December 31, 2015 increased $484.7 million, or 18.0%, over the prior year. Progressive revenues for the twelve months ended
December 31, 2015 were $1.0 billion compared to $519.3 million for the period from the acquisition date to December 31, 2014. The increase in Progressive
revenues was partially offset by a decrease of $48.5 million in revenue from our traditional lease-to-own store-based ("core") business primarily resulting from
a 4.1% decrease in Company-operated same store revenues.
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