Aarons 2005 Annual Report Download - page 11

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broader consumer market, such as high definition tele-
visions and personal computers. Typically,the price
points of electronics begin to decline within a few years
of introduction, and this pattern has held true with video-
cassette recorders, DVDs, big screen televisions and other
items. New products in the electronics market have been
important to growth and Aaron Rents should continue to
benefit from the proliferation of entertainment products
and declining product costs. Flat screen televisions, for
example, are becoming a mass market product, and
Aaron Rents recently introduced three LCD (liquid
crystal display) models as pricing has declined to levels
affordable to the Company’s target market.
Recently, the Company began an experiment
offering a large selection of custom rims and
tires for lease. Personalization and accessoriza-
tion of cars have broadened from a niche market
of aftermarket aficionados to a large nationwide
market, particularly with young adults. With
nine recently opened RIMCO stores, the
Company is testing participation in this rapidly
growing aftermarket automotive market.
RNT
1996 –Death of
Addie Loudermilk,
mother and early partner
of Charlie Loudermilk
1998 –Secondary
offering of 2.1 million
shares raises $40 million
1998 –Stock listed
on the NYSE
Manufacturing
Inorder to maintain a high level of customer service,
assure timely deliveries and control the quality of the
furniture offered, Aaron Rents opened a 10,000
square-foot furniture manufacturing plant in Gwinnett
County, Georgia, in 1971. The original plant was
expanded exponentially within several years, and the
MacTavish Furniture Industries division was established
with additional plants in Florida and Georgia. The
Florida furniture plants were sold and operations relo-
cated to the expanded Georgia facilities a few years
ago. At the time of the Company’s initial public offering
in 1982, MacTavish produced slightly over $5 million,
at cost, of furniture per year. In 2005, the MacTavish
division manufactured furniture valued in excess of $80
million for distribution to the Company’sstores. The
Company continues to believe that vertical integration
is a competitive advantage, though a changed one.
MacTavish designs and manufactures furniture using
modular components so that products can easily be
refurbished and returned to rental inventoryor sold
after coming off rent. Products are built for durability
and comfort with extra coils, padding and hardwood.
Because the vast majority of furniture is now on lease
rather than short-term
rentals, the refurbishment
function has become far
less important. The range
of products manufactured
has also changed over the
years based on cost consider-
ations and other variables.
MacTavish produces bedding,
upholstered furniture, lamps
Electronics and Appliances 52%
Furniture 33%
Computers 13%
Other 2%
Company-Operated Sales & Lease Ownership
Store Rental Revenues