Aarons 1999 Annual Report Download

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1999 Annual Report
Growing Across America

Table of contents

  • Page 1
    1999 Annual Report Growing Across America

  • Page 2
    ... Furniture Rental and Rental Purchase" and offers both individual and corporate customers a wide range of residential and office furniture, consumer electronics, household appliances and accessories for rental, rental purchase and sale. The Company's major operations are the Aaron's Rental Purchase...

  • Page 3
    ... Profit Margin Net Profit Margin Return on Average Equity $318,408 219,831 72,760 183,718 9.22 28.4% 9.4 5.9 14.5 $272,174 194,163 51,727 168,871 8.22 23.4% 9.3 5.7 15.1 17.0% 13.2 40.7 8.8 12.2 100,000 50,000 0 '95 '96 '97 '98 '99 Rent-to-Rent Stores Company-Operated Rental Purchase Stores Stores...

  • Page 4
    ... own distribution system of five large centers in strategic locations across the country, giving Aaron's competitive advantages in quick delivery and a wide selection of merchandise. The strong growth of our Company in 1999 required new management at various levels and new positions to meet current...

  • Page 5
    ... growth led by the highly successful and increasingly profitable rental purchase division including its elite corps of multi-store franchise owners. We have developed the concept that rental purchase consumers love. If we will open the stores, they will come. That's why we expect another record year...

  • Page 6
    ...Stores are located in cities ranging from Denver with six stores to the little town of Harlingen, Texas, one of four towns with Aaron's stores on the Rio Grande River bordering Mexico. "We really do give our customers the best product at the best price," Day said. "It feels good to go about our work...

  • Page 7
    ...99 in Americus, Georgia. In November teams of Aaron's Rental Purchase volunteers built two Habitat houses simultaneously in Houston, Texas and Tampa, Florida. In each city 75 Aaron's associates volunteered for the house-building projects. One of the Aaron's volunteers, Mike McNeil of Auburndale, Fla...

  • Page 8
    ... rental purchase. Supporting the growth of Aaron's Rental Purchase is a major expansion of national advertising to increase the division's name recognition in its markets. In 1999, Aaron's acquired the title sponsorship rights to the NASCAR Busch Grand National Car Race at the Atlanta Motor Speedway...

  • Page 9
    ... owners are able to open a larger number of stores more quickly and reach their profit goals, resulting in increasing profitability to them and the Company. Aaron's consistently ranks among the best franchise programs in the entire country, placing near the top in national surveys. The criteria used...

  • Page 10
    ... Aaron's Rental Purchase as a customer accounts manager in 1995 after 10 years with a company in the conventional rent-to-own business. He became manager of the Aaron's store in Irving, Texas within a few months after joining the Company. What appeals to Wee is the Aaron's program allowing customers...

  • Page 11
    ... of the store's location and analysis of market competition. Training in the management and operation of the stores is provided, and the franchise owner benefits from purchasing discounts and valuable support in advertising and publicity. The Aaron's approach is a two-way street of cooperation...

  • Page 12
    ... The Aaron Direct centers serve third party providers and national accounts as well as corporations that desire furniture, housewares and other products to furnish apartments for temporary housing for companies relocating employees. Aaron Rents is also targeting the growing small office/home office...

  • Page 13
    .... Blades, Store Manager,Rent-to-Rent, Our customers come - Keith Tucson, Arizona in, select what they need, pay the first month's rent and after 12 months they own it." K eith Blades began his rental career with Aaron Rents in Phoenix and moved to Tucson in 1995. His store has benefited from...

  • Page 14
    ... room and bedroom furniture in the stores. To complement the manufacturing division, Aaron Rents has developed a network of five distribution centers to serve the rapidly growing number of rental purchase stores. These centers enable the division to deliver merchandise to customers on a same or...

  • Page 15
    ... End Stores Open: Company-Operated Franchised Rental Agreements in Effect Number of Employees 1 320 155 295,000 3,600 291 136 227,400 3,400 292 101 219,800 3,100 240 61 179,600 2,550 212 36 158,900 2,160 Systemwide revenues include rental revenues of franchised Aaron's Rental Purchase stores...

  • Page 16
    ... (10.0%) increase in rentals and fees revenues, plus a $26.4 million (139.1%) increase in non-retail sales. Of this increase in rentals and fees revenues, $32.7 million was attributable to the Aaron's Rental Purchase division. Rentals and fees from the Company's rent-to-rent operations increased...

  • Page 17
    ..., 1999 and 1998 were $140.3 million and $120.6 million, respectively. Such cash flows include profits on the sale of rental return merchandise. The Company's primary capital requirements consist of acquiring rental merchandise for both rent-to-rent and Company-operated Aaron's Rental Purchase stores...

  • Page 18
    ..., proceeds from the sale of rental return merchandise, bank borrowings and vendor credit will be sufficient to fund the Company's capital and liquidity needs for at least the next 24 months. In February 1999, the Company's Board of Directors authorized the repurchase of up to 2,000,000 shares of the...

  • Page 19
    ...Equity Accounts Payable & Accrued Expenses Dividends Payable Deferred Income Taxes Payable Customer Deposits & Advance Payments Bank Debt Other Debt Total Liabilities Commitments & Contingencies Shareholders' Equity Common Stock, Par Value $.50 Per Share; Authorized: 25,000,000 Shares; Shares Issued...

  • Page 20
    Consolidated Statements of Earnings Year Ended December 31, 1999 Year Ended December 31, 1998 Year Ended December 31, 1997 (In Thousands, Except Per Share) Revenues Rentals & Fees Retail Sales Non-Retail Sales Other $318,154 62,296 45,394 11,515 437,359 $289,272 62,576 18,985 8,826 379,659 $231,...

  • Page 21
    ...Shareholders' Equity Additional Paid-In Capital (In Thousands) Treasury Stock Shares Amount Common Stock Common Class A Retained Earnings Balance, December 31, 1996 Reacquired Shares Dividends Reissued Shares... Shares Dividends Reissued Shares Net Earnings Balance, December 31, 1999 The...

  • Page 22
    ... (1,083) 1,587 105,295 Investing Activities Additions to Property, Plant & Equipment Book Value of Property Retired or Sold Additions to Rental Merchandise Book Value of Rental Merchandise Sold Contracts & Other Assets Acquired Cash Used by Investing Activities (21,030) 5,833 (218,933) 95,840 (11...

  • Page 23
    ... the month they are due. Rental payments received prior to the month due are recorded as deferred rental revenue. Revenues from the sale of residential and office furniture and other merchandise are recognized at the time of shipment. Comprehensive Income - As of January 1, 1998, the Company adopted...

  • Page 24
    ...12%), respectively, was outstanding under this agreement. The Company pays a .22% commitment fee on unused balances. The weighted average interest rate on borrowings under the revolving credit agreement (before giving effect to interest rate swaps) was 5.94% in 1999, 6.41% in 1998, and 6.29% in 1997...

  • Page 25
    ... represent bargain purchase options. The Company also leases transportation equipment under operating leases expiring during the next 3 years. Management expects that most leases will be renewed or replaced by other leases in the normal course of business. Future minimum rental payments, including...

  • Page 26
    ...1998, and $8.58 in 1997. Pro forma information regarding net earnings and earnings per share is required by FAS 123, and has been determined as if the Company had accounted for its employee stock options granted in 1999, 1998 and 1997 under the fair value method. The fair value for these options was...

  • Page 27
    ...779,000 $ 9.38 Note I: Franchising of Aaron's Rental Purchase Stores The Company franchises Aaron's Rental Purchase stores. As of December 31, 1999 and December 31, 1998, 277 and 227 franchises had been awarded, respectively. Franchisees pay a non-refundable initial franchise fee of $35,000 and an...

  • Page 28
    ... on a monthly payment basis with no credit requirements. The rent-to-rent division rents and sells residential and office furniture to businesses and consumers who meet certain minimum credit requirements. The Company's franchise operation sells and supports franchises of its rental purchase concept...

  • Page 29
    ... of Aaron Rents, Inc. and Subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of earnings, shareholders' equity and cash flows for the years ended December 31, 1999, 1998 and 1997. These financial statements are the responsibility of the Company's management. Our...

  • Page 30
    ...$15.75 18.13 11.50 10.56 $.02 .02 .02 $.02 .02 .02 Store Location Map First Quarter Second Quarter Third Quarter Fourth Quarter At December 31, 1999 Company-Operated Rental Purchase Franchised Rental Purchase Rent-to-Rent Total Stores Manufacturing & Distribution Centers 213 155 107 475 16 28

  • Page 31
    ... Region Corporate Information Corporate Headquarters 309 E. Paces Ferry Rd., N.E. Atlanta, Georgia 30305-2377 (404) 231-0011 http://www.aaronrents.com Subsidiary Aaron Investment Company 10th & Market Streets Mellon Bank Building 2nd Floor Wilmington, Delaware 19801 (302) 888-2351 Shareholder...

  • Page 32
    309 East Paces Ferry Road, N.E. Atlanta, Georgia 30305-2377 404.231.0011