Aarons 2010 Annual Report Download - page 6

Our 55th year of operations was exciting,
challenging and rewarding. We are proud of the
Company’s operating results which we believe refl ect
the strength of our business model and the talent
of our associates.
We celebrated several milestones during 2010 in
addition to our 55th anniversary. Highlights include
the following.
Aaron’s had more than 1.4 million customers of
Company-operated and franchised stores at the
end of 2010, a gain of 10% for the year. Customer
count on a same store basis for Company-operated
stores and franchised stores was up 7.2% and 7.3%,
respectively, from last year.
Revenues for the year were a record $1.877 billion,
an increase of 7% from 2009. In addition, our
franchisees reported an 11% increase in revenues
to $841.3 million, although those revenues are not
revenues of Aaron’s, Inc.
Net earnings for the year were also a record —
$118.4 million, a 5% increase over the $112.6
million earned in 2009. Fully diluted earnings per
share were $1.44 compared to $1.37 in the prior
year.
We are particularly proud of the consistent same
store revenue growth in our system, driven by
our increasing number of stores and customers.
For the year, same store revenues increased 4% in
Company-operated stores and 3% in franchised
stores. Many of our stores in states and market areas
with unemployment rates exceeding 10% reported
strong same store revenue gains in 2010, and
our stores over fi ve years old collectively achieved
positive same store revenue growth. We believe
this organic growth is impressive evidence of the
fl exibility, appeal, and economic resiliency of our
sales and lease ownership model.
Our Woodhaven Furniture Industries division
manufactured approximately $79 million, at cost, of
furniture and bedding in 2010 to meet the growing
demand by Aaron’s stores for furniture products.
Woodhaven’s 12 plants were also able to improve
production and operating effi ciencies during
the year, furthering Aaron’s distinct quality and
cost advantage.
In June, we made the decision to cease all the
operations of the Aaron’s Offi ce Furniture division.
The offi ce furniture business is highly cyclical and
the division has not been profi table for a number
of years. At the end of the year, there was one
store open to liquidate remaining merchandise.
The closure of this division resulted in charges to
operating expenses during the year of approximately
$.07 per diluted share.
During 2010, Aaron’s opened 91 new Company-
operated stores and 72 new franchised stores.
The Aaron’s Sales & Lease Ownership total net
store count increased 8% for the year. We expect
a comparable percentage increase in new stores
in 2011. We also awarded area development
agreements to open 120 new franchised stores. At
the end of 2010 there were 282 franchised stores
awarded that are expected to be opened over the
next several years.
For most of our corporate history, the Company
has required external capital to meet growth targets.
Over the past few years, Aaron’s has been generating
cash fl ow and we expect to internally fund our
growth in 2011 and into the foreseeable future. At
year end, the Company had $72 million of cash
on hand and no bank debt. During the year, we
declared a three-for-two stock split, increased our
dividend for the seventh year in a row and used
some of our cash fl ow for stock repurchases. The
Company reacquired 1,478,805 shares of Common
Stock in 2010 and is currently authorized to
purchase an additional 4,401,815 shares.
At December 31, 2010, the Aaron’s Sales & Lease
Ownership division consisted of 1,138 Company-
operated stores, 658 franchised stores, 11 Company-
operated RIMCO stores and six franchised RIMCO
stores. The Company also had one Aaron’s Offi ce
Furniture store. The total number of stores open at
the end of 2010 was 1,814.
A major event in 2010 was the conversion of the
Company’s non-voting Common Stock into voting
Class A Common Stock on a one-for-one basis.
All shares of the Company’s Common Stock were
converted into shares of Class A Common Stock,
and the Class A Common Stock was renamed as the
To OUr Shareholders
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