Aarons 2003 Annual Report Download - page 13

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11
The Company continues to pursue
acquisition opportunities to comple-
ment new store openings and to achieve
economies of scale in such areas as distribution
and marketing. In terms of economic returns,
the most attractive targets are competitive stores
where the acquisition terms exclude storefronts
and real estate obligations and the book of
acquired contracts is folded into an existing
Aaron’s store, significantly leveraging fixed costs.
The Company also seeks acquisitions of small
chains (20–25 units) and single units to increase
penetration in existing markets and to enter new
markets. Generally, these acquisitions are based
on a multiple of rental revenue, and the stores
are converted to the Aaron’s name as quickly as
possible in order to leverage advertising and
name recognition.
Acquisitions
Strengthening Existing Markets and Entering New
Aaron’s acquired rental contracts of 98 stores in
2003, including 26 franchise stores, resulting in
a net gain of 59 new storefronts obtained through
acquisition. The acquired stores are excellent
additions to the store base. The Company’s strong
cash flow has helped fund the acquisition program.
This store in El Paso, Texas was opened as a
franchise store in 2002 and was acquired by the
Company in 2003. This profitable and growing
store represents an ideal acquisition for Aaron’s.