Aarons 2001 Annual Report Download - page 29

manufacturing division manufactures upholstery, office furniture, lamps and accessories, and
bedding predominantly for use by the other divisions.
Measurement of Segment Profit or Loss and Segment Assets
The Company evaluates performance and allocates resources based on revenue growth
and pre-tax profit or loss from operations. The accounting policies of the reportable segments
are the same as those described in the summary of significant accounting policies except
that the sales and lease ownership division revenues and certain other items are presented on
a cash basis. Intersegment sales are completed at internally negotiated amounts ensuring
competitiveness with outside vendors. Since the intersegment profit and loss affect inventory
valuation, depreciation and cost of goods sold are adjusted when intersegment profit is
eliminated in consolidation.
Factors Used by Management to Identify the Reportable Segments
The Company’s reportable segments are business units that service different customer
profiles using distinct payment arrangements. The reportable segments are each managed
separately because of differences in both customer base and infrastructure.
Information on segments and a reconciliation to earnings before income taxes are as follows:
Years Ended December 31,
(In Thousands) 2001 2000 1999
Revenues From External Customers:
Sales & Lease Ownership $380,404 $312,921 $252,284
Rent-to-Rent 150,002 174,918 173,579
Franchise 13,913 12,621 9,079
Other 4,243 4,057 1,551
Manufacturing 47,035 54,340 54,550
Elimination of Intersegment Revenues (47,801) (54,807) (53,941)
Cash to Accrual Adjustments (1,115) (1,130) 257
Total Revenues From External Customers $546,681 $502,920 $437,359
Earnings Before Income Taxes:
Sales & Lease Ownership $ 11,314 $ 19,527 $ 20,630
Rent-to-Rent 9,152 16,346 14,369
Franchise 9,212 7,484 5,042
Other (3,244) (943) (1,072)
Manufacturing (587) 728 717
Earnings Before Income Taxes For Reportable Segments 25,847 43,142 39,686
Elimination of Intersegment Profit (1,449) (441) (357)
Cash to Accrual Adjustments (1,151) (804) 855
Other Allocations & Adjustments (3,392) 2,009 1,118
Total Earnings Before Income Taxes $ 19,855 $ 43,906 $ 41,302
Assets:
Sales & Lease Ownership $241,245 $205,043 $139,177
Rent-to-Rent 107,882 128,163 138,349
Franchise 13,991 12,961 10,755
Other 17,533 17,485 16,097
Manufacturing 16,545 16,727 14,030
Total Assets $397,196 $380,379 $318,408
Depreciation & Amortization:
Sales & Lease Ownership $121,953 $ 97,139 $ 78,385
Rent-to-Rent 29,736 34,557 32,946
Franchise 444 412 347
Other 690 354 492
Manufacturing 725 647 576
Total Depreciation & Amortization $153,548 $133,109 $112,746
Interest Expense:
Sales & Lease Ownership $ 4,620 $ 2,750 $ 1,702
Rent-to-Rent 3,010 2,496 2,317
Franchise 119 144 117
Other (1,491) 235 (31)
Total Interest Expense $ 6,258 $ 5,625 $ 4,105
26