Aarons 1999 Annual Report Download - page 4

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chise owners who continue to expand their
territories, dramatic proof of our franchise
program’s success among these experienced
business people and successful entrepreneurs.
A new financing plan has also given stronger
impetus to our franchising program.
The rent-to-rent division’s results did not
meet our expectations due to market weak-
nesses, while unusually strong pricing competi-
tion affected revenues and earnings. However,
this cash-generating division is implementing a
plan to meet the challenges of the market and
to improve profitability in 2000.
Our manufacturing division, MacTavish
Furniture Industries, turned in another record
year, producing more than $50 million of
furniture at cost and supplying a significant
portion of the furniture needed in our stores.
Our manufacturing capability, unmatched by
any competitor, is supported by our 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 and future
demands. B. Lee Landers, Jr., formerly with
Southern Company, was appointed to the
newly created position of Vice President, Chief
Information Officer of Aaron Rents, confirming
the increasing significance of technology in our
businesses. David M. Rhodus, formerly with a
Fortune 500 company, joined our corporate
staff as Vice President, Legal. James L. Cates
was elected Corporate Secretary of the
Company in addition to serving as Vice
President, Risk Management. Robert P. Sinclair, Jr.
was named Vice President, Corporate Controller.
James C. Johnson was named Vice President,
Internal Audit. In our fast-expanding rental
purchase division, two officers were promoted
from regional managers to new positions: Joseph
N. Fedorchak, Vice President, Eastern Operations, and
David L. Buck, Vice President, Western Operations.
Eight consecutive years of record growth!
The exceptional people of Aaron Rents, Inc. did
it again in 1999. They set new records in both
revenues and earnings for the eighth year in a
row. They turned in a winning performance in
both Company and franchised operations to
make our 45th year one to celebrate.
Aaron’s winning concept of customer service
continued to gain market share across the
country as we opened on the average a new
store every week. In 1999 we expanded into
8 more states, and by year end our total store
count reached 475 in 40 states. In the past two
years we have opened 100 stores.
Revenues for 1999 rose to a record $437.4
million, an increase of 15% over $379.7 million
for 1998. Earnings increased to a record $25.6
million, gaining 19% over the $21.5 million
for the previous year. Earnings per share reached
$1.28 ($1.26 assuming dilution) compared to
$1.06 ($1.04 assuming dilution) for 1998.
The fourth quarter of 1999 was our 33rd
consecutive quarter of record earnings and our
32nd consecutive quarter of record revenues.
This confirms the validity of our concept and
reflects the commitment of our people to the
Aaron’s way of doing business.
Last year our rental purchase franchising
gained strong momentum. It was our best year
of franchise sales. The Aaron’s Rental Purchase
division again achieved record revenues with
growth of 31% for the year, reaching $261.6
million compared to $200.0 million for 1998.
This division accounted for 60% of total 1999
revenues, reflecting the success of the Aaron’s
concept over the past six years. During that
period, the number of rental purchase stores
has increased from 82 to 368, including 155
franchised stores. In 1999 the Company
acquired 17 franchised stores, while 41 new
franchised stores were opened.
Our backlog of franchised stores that will be
opened in the future reached a record 122 stores
at the end of 1999. Approximately three-fourths
of these stores will be opened by existing fran-
To Our Shareholders